New financial reform legislation includes provisions to prevent lenders from offering mortgages borrowers can’t afford or understand.
The Dodd-Frank Wall Street Reform and Consumer Protection Act devotes more than 200 pages to a section called the Mortgage Reform and Anti-Predatory Lending Act. It addresses issues as diverse as prepayment penalties and Chinese drywall.
The legislation says its purpose is “to assure that consumers are offered and receive residential mortgage loans on terms that reasonably reflect their ability to repay the loans and that are understandable and not unfair, deceptive or abusive.”
The following slides explain how the new legislation may affect your next mortgage.