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.