CFPB Cements Important Mortgage Protections

January 17, 2013

The Consumer Financial Protection Bureau (CFPB) issued new rules on January 10, 2013, putting in place important protections for mortgage borrowers.  The so-called "ability to repay" rule implements provisions of the Dodd-Frank Act that require lenders to underwrite mortgage loans with a reasonable belief that the borrower can repay the loan on the terms at origination.

Seems like common sense, right?  But we learned during the mortgage boom that when regulators fall asleep at the wheel, and lenders are given free rein to compete in a race to the bottom, really bad things happen and common sense is the first thing to go out the window.

I discussed the new rule and its implications for lenders and consumers on Minnesota Public Radio the morning the rules came out.  Enjoy.