The Consumer Financial Protection Bureau (CFPB) recently introduced a new set of rules to help Latino homeowners who have been hit by the housing crisis and to protect all consumers from risky practices that helped cause the crisis.
The Ability-to-Repay rules include having all potential homeowners give financial info for lenders’ verification. To qualify for a loan, borrowers must have sufficient assets to pay back the loan. Another regulation holds lenders accountable for the consumer’s ability to repay both the principal and interest over the long term, not only during the introductory period, according to a recent Fox News Latino article.
The National Council of La Raza lauded the new rules, claiming that they help create a better definition of a “Qualified Mortgage” and ensure that Latinos are protected from predatory lenders. The CFPB defines “Qualified Mortgages” as loans in which borrowers cannot have negative-amortization, where the amount owed increases for a period due to the borrower not paying the interest and the unpaid interest getting added to the amount borrowed, according to the article.
Qualified Mortgages include loans bought by Fannie Mae and Freddie Mac as well as mortgages insured by the Federal Housing Administration, the U.S. Department of Veterans Affairs and the U.S. Department of Agriculture.
