Ability-to-Repay Rule for Mortgages Nears CFPB Approval
Richard Cordray wants lenders to adhere to the most basic tenet of banking: making sure borrowers can repay. Getting them to agree on how is proving tougher.
The director of the Consumer Financial Protection Bureau is aiming to discourage lenders from making home loans with risky features and outlining steps they must take to verify borrowers’ finances, as part of the “qualified mortgage” or QM regulation. Banks that follow the guidelines will gain legal protection against borrower defaults.
“Here’s what should be the least surprising lending advice you’ve ever heard: If you are going to lend money, you should probably care about getting paid back,” Raj Date, the agency’s deputy director, said in a speech April 20 in Los Angeles.
The rule, which may be released as soon as next month, is dividing the banking industry with the largest mortgage firms such as Wells Fargo & Co. and Bank of America Corp. siding with some consumer groups that the provision should allow certain lawsuits. Trade groups whose members include smaller lenders are holding out for a version that would protect bankers entirely from being sued, arguing that without the provision, home loans will be costlier and harder to obtain.
Rest here…
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Whatever happened to I vent? I miss her inputs.
To Tell…. – she was bullied off this site! Liken to your title (To Tell The Truth) she was doing just that! Some posters just could not handle the truth being told……I miss her as well.
Well wow. There’s lots of shovels being used to dig holes to bury the evidence, and lots of covering
your ass going on, in the banking area as well as in the government.
Largest International Money Laundering Network in History Formed During Obama Administration; U.S. Banks’ Theft of Home Owners’ Money Laundered Through Cayman Islands, Isle of Man and Numerous Offshore-Based Affiliates. alleging that while the Obama Administration was publicly encouraging loan modifications for home owners, it was privately ratifying the formation of these shell companies in violation of the United States Patriot Act, and State and Federal law. The case further alleges that through these obscure foreign companies, Bank of America, J.P. Morgan, Wells Fargo Bank, Citibank, Citigroup, One West Bank, and numerous other federally chartered banks stole hundreds of millions of dollars of home owners’ money during the last decade and then laundered it through offshore companies.
http://www.marketwatch.com/story/home-owners-across-the-nation-sue-all-bank-servicers-and-their-offshore-havens-spire-law-officially-announces-filing-of-landmark-lawsuit-2012-04-23
Can anyone tell me why this is being treated as news? For years, each of the regulatory agencies (state and federal) have had this regulation and simply ignored it! In the event the agencies do not have applicable Unfair and Deceptive Acts and Practices (UDAP) provisions of their own, the FTC Act does provide coverage, as do most states, both as actionable claims and as contract defenses.
My concern with the CFPB was that relying on government to take action is often far riskier than having the ability to manage your own defense under the “private attorney general” provisions such as Truth In Lending Act and Real Estate Settlement Procedures Act.
Please explain to me why we are pretending that the wheel is only now approaching the point where it can be released for use instead of buying an existing set of wheels and getting things moving.
Lou Bruno
Somewhere it was written that a loan that is given where there is no reasonable expectation that the loan can be repaid is null and void, unenforceable, a fraud. So why all this re writing of history? To make us forget that society has already dealt with this crap before and rendered its decision? It is the loan underwriters fault and problem, by law. The loans were fraud. Thus, there are no ‘liars loans’ because the the underwriters are liable. IMHO.
The loans were underwriter/loan origination fraud.
Failure to require indemnification of every loan is the accessory before the fact to mortgage fraud, a defacto prima fascia admission of guilt to conspiracy to commit mortgage fraud.Waiving the requirement for indemnification is a defacto prima fascia admission of guilt to conspiracy to commit mortgage fraud. Indemnification is no issue, to a
non criminal loan originator/lender/underwriter. Waiver of indemnification only aides abets mortgage fraud conspirators who ‘claim’ to be abiding by the rules, versus those who are abiding by the rules. Investigate!
The banks and mortgage companies should put the borrowers in an adjustable rate as before.
Then when the borrower is on the hook, raise the interest rate so all the financial information needed to get the loan is obsolete and the homeowner bankrupts and is foreclosed on.
now, that is good business.
(for the banks)
Could someone please explain to me why lenders use “gross” income for figuring out how much money someone can borrow/repay on a mortgage versus using “net” income (after taxes). Anyone with common sense knows that if gross income is used and then taxes are raised, it puts borrowers into a tigher bind to try and meet monthly expenses?
Vicki – it would be done that way if we had a tax base that was EQUAL for every citizen. However, not all states have income tax or state tax and the federal tax program as it stands is not uniform. Therefore, it could hinge on discrimination if a person in one state could qualify to buy a home and in another state with the same circumstances could not! It is common knowledge that the majority of taxes paid in this country are paid by the middle & lower class. They don’t have the advantages or loopholes that are provided to the elite wealthy. Why do you think Occupy came about???? Besides, each state has the authority to raise/lower their state tax base. I, for one, who lives in Florida do not have or pay state taxes. Using “gross” income is a more uniform means of providing the so-called American Dream to each and every citizen. And, just to make matters more complicated the IRS is not even a legal entity; a collection agency that legally has NO POWER to tax the people!!! Just check your constitutional ammendments.