Are New Mortgage Rules Not Hurting Fair Credit Mortgage Lending?
Beginning in January 2014, mortgage lenders will be required to meet the rules set by the Consumer Financial Protection Bureau which will require them to verify that borrowers will be able to repay the loans that they take out. In response to this, many lenders have made it clear that they will only be able to comply with these rules by making loans that have as little risk as possible.
One concern that many individuals have is that these strict new rules will actually exclude certain groups and minorities from being able to qualify for a loan in the first place. In response, regulators and the Federal Reserve have made it clear that they believe that lenders should be able to meet the requirements set by the new rules without violating laws designed to ensure that everyone has the opportunity to purchase a home. These fair lending laws exist to protect minority groups from possible discrimination.
One of the protections set forth by the consumer bureau, as part of the Dodd Frank law of 2010, that is offered to lenders who are making mortgages only to borrowers with a small amount of debt and that have no risky features built into them is that they will be protected in some ways from any lawsuits that may come forth as a result of these new ability to pay rules.
Lenders are encouraged to constantly monitor and evaluate not only the risks associated with the loans that they offer, but also the policies that they have implemented in order to ensure that they are not in violation of fair lending laws, that way everyone can have a chance to own a home. It may be necessary, however, for supervisors with lending institutions to take a look at mortgages on a case-by-case basis in some situations in order to ensure that both fair lending and ability to pay rules are being met.
Because the rules are designed in large part to protect the country from another housing crisis that threw the nation into a deep recession in 2007, many experts believe that ensuring that all borrowers are able to repay their loans is the best way to prevent another meltdown in the housing industry. Individuals receiving loans that were predatory in nature or that they simply could not afford to pay back left a huge number of foreclosures, which had a negative effect on the entire economy.