CFPB Mortgage Overhaul Bans Lots of Shady Practices
While also protecting banks from lawsuits
By Kevin Spak, Newser User
Posted Jan 10, 2013 7:26 AM CST
In this Aug. 22, 2011, file photo, a sold sign is posted in front of a new home in Springfield, Ill.   (AP Photo/Seth Perlman)

(Newser) – The newly-minted Consumer Financial Protection Bureau is circulating a series of new mortgage regulations that would ban some of the least savory tactics of the bubble era, the New York Times reports. Banks won't be able to offer deceptive teaser rates, or charge balloon payments, for example. They'll also have to document customers' ability to pay—no more no-document "liar loans"—and won't be able to make loans that would saddle them with debt exceeding 43% of their income.

Banks that follow these new rules will in turn be exempt from lawsuits, which the bureau hopes will encourage more lending. If nothing else, it has earned the industry's approval. "Now everybody knows if you stay inside these lines, you are safe," the CEO of the Mortgage Bankers Association said. He cautioned, however, that credit wouldn't necessarily loosen immediately when the rules kick in next year, because nearly all mortgages are being sold to Fannie Mae and Freddie Mac, whose underwriting standards haven't changed.

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Showing 3 of 7 comments
$4565535
Jan 10, 2013 10:54 AM CST
Liz Warren should have been in charge of the CFPB.
wd56
Jan 10, 2013 9:28 AM CST
Ummm it can't be that good if the "Industry" is happy with the new rules....
DougMasters
Jan 10, 2013 8:49 AM CST
"Banks that follow these new rules will in turn be exempt from lawsuits, which the bureau hopes will encourage more lending" Uh, like exempt from lawsuits of any kind? Exempt from lawsuits from people? Govt? lawsuits only in reference to the one specific loan? The types of loans in general? My knee jerk rifle says to shoot but I think I am not understanding the nature of what is being discussed on this point.