Most borrowers may not realize that 2014 has ushered in a new era of so-called “qualified mortgages”, which carry new rules to protect both consumers and the lending industry from creating another subprime meltdown.
The bottom line, according to the Consumer Financial Protection Bureau: Virtually every mortgage a lender makes must now be evaluated based on the borrower’s ability to repay that loan.
“That means the borrower should be able to repay the loan for many years, not just during the first few months when an initial ‘teaser’ interest rate may keep the monthly payment low,” the CFPB says in a new fact sheet released to the public this week along with other helpful online resources.
New rights are putting an end to the runaround consumers get from servicers, the CFPB says.
From now on, mortgage servicers must:
- Send you a clear monthly statement so you can see how they are crediting your payments;
- Fix mistakes promptly;
- Credit payments as of the day they get them;
- Give you early notice if you have an Adjustable Rate Mortgage and your interest rate is about to change. This should give you more time to shop for a new mortgage or get help if you have trouble with the new payment.
The new CFPB rules also require mortgage servicers to help borrowers who fall behind on their mortgages by letting them know all the options available to them.
If a borrower submits a complete application for assistance early enough — usually this is called a “loss mitigation application”— the mortgage servicer must evaluate the borrower for all the options that may be available to the borrower. These new rules should eliminate the need for multiple applications to be considered for different foreclosure alternatives.