Full implementation of the Dodd/Frank financial reform bill will create a dramatically fairer mortgage market
Washington, DC – Until now it has been standard practice for many brokers and lenders to get kickbacks for putting borrowers in more expensive loans; the rules of the game have been rigged against the public. The new policy on “yield spread premiums” – as these kickbacks are called – issued yesterday by the Federal Reserve will end these payments. It will save consumers money, and make the mortgage market safer. The new rules go into effect in April.
The Dodd/Frank bill includes some further improvements in rules against yield spread premiums, and steering borrowers to more costly loans, along with other key safeguards to make the market work for consumers and communities, like prohibitions on penalties that trap borrowers in high rate loans, and prohibitions on making loans that borrowers cannot afford to repay.
“This final rule from the Federal Reserve is a milestone marking a victory for home buyers, especially lower-income buyers and people of color, who have needlessly been overcharged on mortgages for years. We look forward to further strengthening of mortgage protections as the recent financial reform bill is fully implemented,” said Michael Calhoun, President of the Center for Responsible Lending.