New rules likely for mortgage fees
10th May: Federal regulators plan to introduce new mortgage lending rules this summer.
This was revealed by the Consumer Financial Protection Bureau yesterday.
Tighter mortgage lending rules in the offing–As per the information, regulators plan to ban mortgage brokers engaged in the practice of origination charges on the basis of the loan size.
The federal agency said the new rules will make it mandatory for loan officials and brokers to pass special training and clear criminal background checks.
Giving details about the planned proposals, director of the federal agency, Richard Cordray, said the aim is to bring greater amount of transparency into the market to offer consumers more clarity regarding various options.
Bonanza for potential home buyers–Potential buyers of homes will find it easier to know and compare mortgages from a variety of money lenders under the new rules for mortgage fees, the agency informed.
Now days, mortgages come in varied types of points and fees making it difficult for the consumers to make comparisons, Cordray maintained. So, new rules will give consumers a choice to choose the appropriate loan for them, Cordray affirmed.
New mortgage lending rules will restrict the ability of mortgage brokers and financial institutes including banks to demand a certain amount as transaction fee. So, this means an end to all abusive charges on consumers wanting to purchase a house.
Moreover, if the consumer is willing to upfront discount points payments, lenders will have to offer a lower interest rate and an option of a loan without points, the consumer bureau stated. Money lenders have been accused to be charging points from the consumers without reducing the rate of interest. This practice reached its pitch during economic crisis.
Banking groups cry foul, consumer groups welcome changes—Meanwhile, it does not come as a surprise that many banking groups are crying foul over the new proposals regarding mortgage fees.
According to vice president of mortgage markets division of American Bankers Association, Rod Alba, the habit of churning out new rules every now and then is a source of big worry for banks. Its nothing but an additional burden on the banks, he maintained.
Consumer groups have welcomed the changed mortgage rules saying these were necessary to offer protection to borrowers.