Apr
19

New Mortgage Lending Rules Proposed by Fed

April 19, 2012

The federal government proposed new rules aimed at giving homeowners more options to avoid foreclosure, as well as giving an honest portrayal of monthly mortgage payments in an effort to protect borrowers.

Congress PhotoThe new rules, which will be formally proposed this summer and finalized by January 2013, would mark a great improvement in dealing with mortgage lenders for current and future Chicago home owners.

In the aftermath of the 2008 financial crisis, Congress ordered changes to be made in the rules covering the mortgage service industry.

The Consumer Financial Protection Bureau’s proposed rules would require mortgage servicers to:

  • Give all borrowers standardized monthly statements.
  • Warn borrowers about interest rate or insurance changes.
  • Make “good-faith efforts” to contact borrowers at risk of foreclosure and give them options to avoid losing their homes.

Stipulations include improving record-keeping practices and offering foreclosure counseling to those in need.

“By fixing these root causes of mortgage servicing problems – and securing transparency and accountability for borrowers – consumers would have clearer information about their options to keep their homes and would be in a better position to hold servicers accountable for their decisions,” Richard Cordray, the agency’s director, said during a speech in Washington on Tuesday.

So what shenanigans were mortgage servicers taking part in that required Congress to get involved?

A nasty little thing called “robo-signing” sits at the top of the list. Robo-signing is when a bank employee signs off on thousands of documents and affidavits without ever verifying the information contained within causing the housing foreclosure crisis to lengthen and slow the housing market down.

With Congress determined to offset these negatives and improve mortgage lending rules, Cordray insisted that these new rules would be backed up with “sharp teeth.”

About The Author

Read All Stories By Mitch Levinson

Mitch Levinson is the author of “Internet Marketing: The Key to Increased New Home Sales” published by BuilderBooks. He is an Internet marketing expert with expertise in search engine optimization, website development, email marketing, social media and CRM consulting services. He is known for creating effective programs that can be tracked through analytics to prove effectiveness and ROI. Mitch is founder and president of MLC New Home Marketing and MLC FlatFee Realty, as well as managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Chicago and Atlanta. He currently leads the Chicago team. A Multi-Million Dollar Sales Producer who earned an MBA in Computer Information Systems and eCommerce, he brings a unique perspective and experience to the field of real estate communications. Mitch combines the two interests in order to help home builders and developers gain a competitive advantage through the Internet and technology. When he isn’t behind a computer, he enjoys participating in sports and coaching his kids’ teams. Mitch resides in Arlington Heights, Ill., a northwest suburb of Chicago, with his family, which includes two rambunctious labs. Visit my Google+ profile.

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