The Consumer Financial Protection Bureau has issued regulations to protect borrowers from loans they cannot afford and make banks more responsible for those loans.
Some of the new rules include the requirement that homeowners will get a monthly statement of account or a coupon book to make payments showing the current mortgage balance, payment amount and next due date.
Mortgage companies are also required to get more documentation to prove that the borrower can repay the loan. To underwrite a mortgage, the bank must see current income or assets, employment info, current payments and debt for bills or child support and credit history. A borrower’s credit score is a very important factor in loan approval so a borrower should keep close tabs on his or her credit rating and correct problems.
Debt to income ratio is an important factor. Debt must be less than 43 percent of income.
If a borrower is having trouble meeting his or her obligations, the bank must meet with the borrowers and try to work it out. The bank cannot start a foreclosure earlier than 120 after default.
Banks are also required to contact mortgagees in a timely manner, no more than 36 days after a late payment.