Dodd-Frank Wall Street Reform and Consumer Protection Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act is a significant piece of legislation that was passed in 2010 in response to the financial crisis of 2008. The act was designed to improve financial stability and protect consumers from abusive lending practices and other forms of financial exploitation.
The act includes a wide range of provisions that impact the mortgage industry, including:
The creation of the Consumer Financial Protection Bureau (CFPB), which is responsible for regulating the financial industry and protecting consumers from unfair, deceptive, or abusive practices.
The establishment of new standards for mortgage lending, including the ability-to-repay rule, which requires lenders to verify a borrower's ability to repay a loan before making the loan.
The prohibition of certain practices, such as steering borrowers into high-cost loans or charging prepayment penalties.
The requirement that lenders provide borrowers with clear and transparent disclosures about the terms of their loans, including the annual percentage rate (APR), the total amount of interest and fees, and the total amount of payments.
The establishment of new rules for mortgage servicing, including requirements for prompt payment crediting, error resolution, and foreclosure prevention.