by Barbara Nevins Taylor

It will be a year until new rules to protect mortgage borrowers go into effect.The Consumer Financial Protection Bureau (CFPB) is drafting them and plans to work with lenders to make sure everyone is on the same page.

MORTGAGE RULES AND YOUR ISSUES

But in the meantime it’s a great idea to be aware of the issues that can make mortgage borrowing hellish and what these new mortgage rules will mean to you. One of the most important proposals is the Ability-to-Repay rule.  Sounds like common sense.  But  there are people out there who are ready to talk folks into mortgages they can’t afford.  That’s what happened in the lead-up to the housing crash. So the new rule will require lenders to try to make sure the borrower can make the payments.

CLASSIC STORY

I reported  a TV story about a woman whose broker told her to pick out any house she wanted.  She worked at department store cosmetics counter, and her husband was a New York City cab driver.  They already had a house with a  mortgage and planned to keep it.  She found her dream home with a price tag of  about $800,000.  And although her family’s income was less than $75,000, somehow the mortgage was arranged.  A year later, she was facing foreclosure and claimed that she was tricked.

That’s the kind of thing the new rules are supposed to prevent. Additional rules will also clamp down on low interest “teaser” interest rates that quickly jump to unaffordable levels.

The CFPB plan also calls for new rules to deal with appraisals, high cost loans and  upfront fees charged to arrange mortgages.

If you are looking for a mortgage now, go slow. Ask a lot of questions, make sure everything is spelled out clearly and be certain that you understand all of the fees and details.

Our video “How to Shop for Mortgage” walks you through process. If you’re refinancing How Do I Refinance My Mortgage explains it all.