As stated in the news, announced
on Tuesday, April 10th, the
Consumer Financial Protection Bureau is considering new rules aimed at mortgage
services to protect consumers against “costly surprises.”
According to this news,
the bureau’s new rules will strengthen the requirements of services to issue
mortgage statements. It will require the mortgage services to be more clear and
transparent; for example, it requires the issuers to better disclosure about
fees or changes in a loan’s interest rate. Put it differently, the bureau wants
to ensure consumers, at any time, can know how much they owe, what they are
paying, and how their payments are being applied. It is said that these new
rules would be the federal government’s first major move to crack down on the
entire mortgage serving industry crisis.
Moreover, the new rules
coincide with new standards set forth by a large settlement deal between states
attorneys general and the five largest banks. The Consumer Financial Protection
Bureau’s rules would ask all services to ensure better transparency for all
borrowers. According to the bureau, the
new rules would start to take effect next January.
Additionally, the rules
would also tackle so called “force-placed” insurance. Force-placed insurance is
property insurance that banks take out for homeowners who either miss an
insurance payment or just do not have as much insurance as banks would like.
The new rules would require the mortgage services to ask homeowners for proof
of insurance before charging for force-placed insurance.
In terms of my view, I
support the new rules which will strengthen the regulations of the entire
mortgage industry. Although the rules are seemed as clichés, they are actually
fundamentals for the development of an industry.
1 comment:
Non-performing loans in the mortgage market is one of the direct reasons for the 2008 financial crisis. Since no banks are willing to hold on those 30-year fixed-rate mortgage loans, the government agencies including Freddie Mac and Fannie Mae have to purchase the loans. Protecting consumer is a good step forward but trying to address the problem of non-performing loans should be more important.
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