Mortgage rules to be more transparent
Buying a house is more of a necessity as renting is considered to be a waste of money. Buying a house is not an easy task, rather it involves great planning and even greater preparations. One has to accumulate wealth in the form of cash before even thinking of buying a house. The down payment, processing fee and little other basic expenditure have to be met by the buyer; apart from this the lending agencies are always there for the rest part of the support.
However, many a times it is seen that lending rules and mortgage rules have a hidden clause which is revealed to the buyer only later. After he learns the hidden cost he is taken aback and has to bear the pressure of both repayment and this additional cost which he was never prepared for.
There is a proposal from consumer oversight agency to make the mortgages more transparent for the borrowers. They proposed to protect the consumers or borrowers from any clause which is kept hidden at the time of signing the borrowing papers. This is done looking at the foreclosures and other unwanted incidents in the nation off late.
Richard Cordray, Director of CFPB says, “From processing payments to evaluating struggling home owners and helping then avoid foreclosures the bottom line is to treat consumers fairly by preventing surprises and run around.”
The country has experienced a large number of foreclosures. In fact, five leading banks in US entered into a settlement of $25 billion in the beginning of this year as a foreclosure action.
The transparency is also needed to ensure that homeowners do not have to take force placed insurance which are more expensive than a normal insurance for a mortgage, which a borrower can find on his own.
According to the new changes the lending agencies will have to give an advance notice and required details of pricing to a buyer or a borrower. The insurance provided by the servicers can be cancelled if the borrower can prove that he already has insurance for the mortgage.
Servicers will also have to inform the borrowers about the ways to avoid foreclosures by modifying the loan.
Many have supported the move.
Bob Davis, executive Vice President of American Bankers Association says, “It is important that consumers receive clear and accurate information about their mortgage loan.”
With growing foreclosures such changes were quite needed to keep the trust f buyers in the housing market.