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Tuesday, July 10, 2012

CFPB Issues Proposed High-Cost Mortgage Rule

The CFPB has issued a proposed rule that would expand what is considered a “high-cost mortgage” and also provide more protection for consumers who take out such loans.

Under the current rules, a mortgage is considered high-cost if the points and fees charged to the consumer exceed 8% of the loan amount. The proposed rule would lower that threshold to 5% for most loans.

The proposal also would generally ban balloon payments for such loans; completely ban prepayment penalties and loan modification fees; cap late fees; and restrict fees charged when consumers ask for a payoff statement.

The proposed rule also would require consumers to receive housing counseling before taking out a high-cost mortgage.

Comment on the proposal are due Sept. 7.
The CFPB plans to issue a final rule in January 2013.

Read the proposed rule.

2 comments:

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