The home loan industry will soon have to adapt to new mortgage rules that will offer borrowers much needed protection against lender abuses and reckless lending standards. But the changes may not please all borrowers.
Some of the new mortgage rules the Consumer Financial Protection Bureau has issued this year will influence qualification requirements and the types of mortgages that borrowers get. The new standards go into effect next year -- but expect lenders to start adjusting to the new policies in coming months.
The gist of one of the main rules is simple: Lenders will be required to ensure that borrowers have the ability to repay their mortgages. In return, lenders will be protected from borrower lawsuits so long as they issue "safe" mortgages that follow guidelines.
These safe mortgages are what the CFPB calls "qualified mortgages." As defined by the CFPB, only 12.8 percent of new mortgages in 2012 met the "qualified mortgage" standard, according to real estate data provider CoreLogic.
The new mortgage rules won't affect the majority of people seeking to buy a home or refinance their home loans, because lenders have already tightened their lending standards since the financial crisis.