Proposed New Rules For Home Loans May Affect FHA Mortgages ...

The Washington Post and Bloomberg News are reporting on a set of proposed rule changes by the Consumer Finance Protection Bureau that will, if implemented, change the way banks and customers interact on FHA loans, conventional mortgages and VA guaranteed loans.

According to an article on WashingtonPost.com, the proposed regulations would ?go beyond the standards for mortgage servicing that state attorneys general wrote into a court settlement reached with major banks on March 12? and the measures would also modify existing rules in the Real Estate Settlement Procedures Act (RESPA).

At the Consumer Finance Protection Bureau (CFPB) official site, you?ll find a list of proposed changes which includes a requirement for monthly mortgage statements with clear details on loan amounts, the amount due, and how payments are applied to the principal and interest.

There is also a proposed requirement for interest rate adjustment warnings?as much as half a year or more notice ?before the first rate adjustment, as well as earlier and improved notices before rate adjustments causing an increase in a consumer?s mortgage payments.?

Another major improvement is listed as ?prompt crediting of payments?. According to the CFPB official site, the new rule would require payments to be applied the day they are received. Additionally, ?the handling of partial payments is clarified.?

There are also proposed changes to how banks would be required to deal with delinquent FHA, conventional,and VA loans. ?Delinquent borrowers will be able to contact the right people at their servicer to get information and take steps to avoid foreclosure?? and ?Servicers would be required to appropriately review borrower applications for loan modifications or other options to avoid foreclosure,? according to CFPB.

These, and other changes listed on the CFPB site are not yet official?they are under review until October, 2012. If and when they are implemented after the review period, several federal laws such as RESPA, the Dodd-Frank Act and others will be amended to include the new requirements.

Source: http://www.fhanewsblog.com/2012/08/proposed-new-rules-for-home-loans-may-affect-fha-mortgages/

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