Virtually every mortgage a lender makes must now be evaluated, first and foremost, on the borrower’s ability to repay the loan. This means that the borrower must be able to repay the loan for years, not just during the first few months when a “teaser” interest rate keeps monthly payments low. These new mortgages will be referred to as “Qualified Mortgages” or “QMs.” QMs are designed to be safer and easier to understand than the loans that lead to the recent financial crisis. New CFPB rules also limit the points and fees lenders can charge for making a QM.
There are a number of other rules designed to safeguard consumers from predatory lending practices. These rules include, but are not limited to, the following:
- Mortgage lenders and servicers are required to send you a clear monthly statement so you can see how they are crediting your payments.
- Mortgage lenders and servicers are required to fix mistakes promptly.
- Mortgage lenders and servicers are required to credit payments the day they get them.
- Mortgage lenders and servicers are required to give you early notice if you have an adjustable rate mortgage and your interest rate is about to change.
- Mortgage lenders and servicers are required to call or contact borrowers by the time they are 36 days late on their mortgage.
- With limited exceptions, mortgage lenders and servicers cannot initiate a foreclosure until the borrower is more than 120 days delinquent.
- Mortgage lenders and servicers cannot start a foreclosure while they are also working with a homeowner who has submitted an application for a loan modification or other alternative for help.
- Mortgage lenders and servicers are required to advise borrowers who fall behind on their mortgages of all of the workout options available to them.
- Mortgage lenders and servicers are required to explain to a borrower why a mortgage modification was denied.
If you feel that your lender or servicer has violated any of these rules, please feel free to contact Garland Griffiths Knaupp at (503) 846-0707 for a one-hour consultation or visit the CFPB website at http://www.consumerfinance.gov for more information.
It is very important to contact an attorney as early in the process as possible to protect your rights as a consumer. If you think you have been harmed, you may have as little as 1 year from the harm to file suit to enforce the rules in court.