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CFPB Issues Proposed High-Cost Mortgage Rule

Posted on 7/10/2012

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 percent of the loan amount. The proposed rule would lower that threshold to 5 percent 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. The comment deadline for the proposal is Sept. 7, and the CFPB plans to issue a final rule in January 2013.

To read the proposal visit: http://files.consumerfinance.gov/f/201207_cfpb_proposed-rule_high-cost-mortgage-protections.pdf


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