With a variety of new rules taking effect soon, truth in lending is the goal
Over the next two years, consumers may feel like an overscheduled soccer mom when trying to keep track of new rules and regulations written to provide them greater protection.
There are restrictions on credit card issuers, most of which become law in February. Starting next month, prohibitions on certain mortgage lending practices, as well as new disclosure requirements, will be in place.
I want to focus on the mortgage rules. It will no longer be enough to just inform consumers of their rights with dense written statements.
The rules feature bans on a variety of standard and, in many cases, predatory industry practices involving loans made on or after Oct. 1. The rules prohibit hyped appraisals, abusive fees, and deceptive advertising. Subprime borrowers, or those with less than stellar credit histories, are getting new protections.
Here are some of the changes:
■Mortgage lenders and brokers are banned from coercing or encouraging a real estate appraiser to misrepresent the value of a home. We are mandating that buyers be given an accurate appraisal so they don’t end up borrowing more money than the home is worth.
Also, lenders can’t tell an appraiser a minimum home value needed to approve a loan.
■ Loan servicers, the companies that collect mortgage payments, will be prohibited from failing to credit a loan payment on the date it is received. Servicers can’t snatch a late-payment fee from a borrower’s monthly loan payment without giving advance notice, providing borrowers a chance to make sure they are making a full loan payment to avoid being hit with a dizzying array of fees.
■Lenders working with “high-priced’’ mortgages - a new category - have to consider an applicant’s ability to repay the loan. Imagine that!
A higher-priced mortgage loan is one with an interest rate that is 1.5 percentage points above prime rates for first liens, 3.5 above prime rates for junior liens.
Lenders of higher-priced mortgages will be required to verify a loan applicant’s income and assets using reliable third-party documents.
■New advertising rules will force lenders to be upfront about so-called fixed rates. For example, one rule prohibits any advertisement from indicating a rate or payment is fixed if it can change. Perhaps if this had been required years ago, many borrowers would not have taken out exotic loans with escalating interest rates.
For home equity lines of credit, if a large “balloon payment’’ is due at the end of the loan term, this has to be disclosed with equal prominence and in close proximity to any minimum payment information.
For more information: www.fdic.gov/consumernews.
Michelle Singletary is a columnist for The Washington Post. 
