Lenders are prohibited from making a loan without regard to the borrower's ability to repay the loan from income and assets OTHER THAN the home's value. And, in the future, the homeowner does NOT need to prove that a lender violating this prohibition by demonstrating that it is part of a "pattern or practice."
Creditors are required to verify the income and assets they rely on to determine the borrower's ability to repay.
Prepayment penalties are banned if the payment can change in the first four years of the loan. For higher priced loans, the prepayment penalty period cannot last for more than two years. This is a far stricter rule than originally proposed.
Creditors are required to establish escrow accounts for property taxes and homeowner's insurance for all first-lien mortgage loans.
Creditors and brokers are prohibited from coercing a real estate appraiser to misstate a home's value.
Companies that service mortgage loans are prohibited from engaging in certain practices, such as pyramiding late fees. Servicers are also now required to credit the consumer's loan payment as of the date of receipt.
Creditors must provide a good faith estimate of the loan costs, including a schedule of payments, within three days after a consumer applies for any mortgage loan secured by a consumer's principal dwelling. Currently, only early cost estimates are required. Consumers cannot be charged ANY FEE, except a reasonable fee for obtaining the consumer's credit history, until they have received the early disclosures.
Advertising must become more truthful and can no longer present as being "fixed", when indeed the rate can change under the fine print.
These new rules take effect October 1, 2009. The single exception is the new escrow requirement, which has been extended to 2010, to allow lenders to establish new escrow systems, as needed.
And, just as important, President Bush signed into law the most aggressive package to combat the country's housing crisis on July 30th. I am waiting for someone smarter than me to break the sections down and explain in simple English before I relay the news to you!
So, 'til next time, it's all good!