New Rules Protect Lenders from Lawsuits reports Watchtower Mortgage

(EstateNewsWire.com, January 24, 2013 ) Henderson, NV -- United States regulators will be unveiling a new set of home mortgage rules on Thursday that are set to provide lenders with a greater shield from lawsuits. The move is hoping to increase legal certainty that will lead to an easement on credit terms for potential borrowers.

The Consumer Financial Protection Bureau's current rules are designed to ensure lenders are able to properly judge a borrower's ability to repay a mortgage debt when they obtain a new loan. The So-called 'qualified mortgages' are supposed to meet these standards; however, following the residential crisis that started half a decade ago, there has been emphasis to improve the rules in general.

The rule set changes within the measure have made it one of the more contested post-crisis U.S. Measures on the docket. That is in part due to lenders having pushed hard for the CFPB to make a broad change to ensure that credit availability will be attainable while it also shields them firm litigation risks from borrower defaults.

Fears over the rules has lead to tight mortgage standards in the previous two years, according to lenders and policy makers. Lenders are simultaneously struggling under the servicing rules that have been imposed on mortgages, while the uncertainty around the future government-controlled mortgage financiers Fannie Mae and Freddie Mac. The new capital rules under the Basel reforms, as well as the measures the demand lenders to retain portions of securities mortgage debt are also causing a struggle for the lenders.

The CFPB has sided with the industry over consumer groups thanks to lenders admitting they would discontinue the lending to borrowers who had defaulted loans.

“They recognized the need to create as broad a credit box as possible to make sure the industry and investors in mortgage securities would extend capital and credit into a marketplace knowing that if they followed the rules they wouldn’t be caught by some unforeseen legal risk,” said David Stevens, Mortgage Bankers Association chief executive.

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