The Consumer Financial Protection Bureau (CFPB) came into being just over three years ago, brought into existence by the Dodd-Frank Act of 2010. The goal of having the CFPB is to protect consumers and remove marauding mortgage lenders. The mission of the CFPB is to benefit American consumers and make financial service and product markets fair and optimal. The CFPB educates consumers, enforces federal purchaser finance regulations, and gathers and analyzes relevant data. The new guidelines the CFPB has put into play are designed to be beneficial, but may turn out to have a negative effect.
The CFPB has to abide by existing laws that other agencies controlled. There are a few new requirements that are important for consumers and mortgage experts to know. One program is called “Know Before You Owe,” which allows borrowers to access a Truth in Lending disclosure and a Good Faith Estimate from the CFPB’s website; www.consumerfinance.gov. The documents were designed to help borrowers educate themselves and determine the best mortgage suited to their needs. The CFPB recommends combining the two documents into one because they can be confusing to consumers.
For those facing foreclosure, they can talk with an HUD-approved counselor to attempt to prevent it through various means. Consumers can browse numerous resources available in their state of residence on the HUD website. Veterans and armed forces personnel can also receive assistance from the Veteran Administration. The CFPB recommends reporting foreclosure scammers who allegedly offer instant help at a high cost and then do little if anything to assist consumers.
Qualifications for a mortgage loan have changed, and for the betterment of consumers. To qualify for a loan, the borrower must have a credit score of 620 or above and have enough documented income. Under these premises, they are eligible for an FHA 30-year fixed loan at 3.25%.
The new regulations supported by the CFPB protect consumers. However, overprotection can be counterproductive. Only time will tell if the new CFPB laws will be good for the real estate market. The one good thing is that the changes proposed by the Dodd-Frank Act are clarified.
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