The November 2022 elections had unexpected results, and it is uncertain how it will affect mortgage regulations. However, lenders can prepare for compliance priorities by understanding the priorities of the Consumer Financial Protection Bureau, upcoming changes, and market conditions. This will help them maintain profitability in a challenging housing market.
Consumer Financial Protection Bureau's Focus for 2023: Fair Lending and Elimination of Junk Fees
In 2023, the Consumer Financial Protection Bureau (CFPB) will likely have an aggressive approach to protecting consumers. One of the top priorities for enforcement will be fair lending, which prohibits discrimination in residential mortgage loans. The CFPB will also focus on eliminating junk fees charged by banks that disproportionately affect low-income residents and people of color. Lenders will need to review their fee structure to ensure they comply with federal, state, and local regulations.
Updates on Legal Documents Requirement for Fannie Mae and Freddie Mac in 2023
Starting on January 1, 2023, Fannie Mae and Freddie Mac require new notes and security instruments for loans delivered to them. These documents replace the old ones used since 2001. Soon lenders will also need to include the Supplemental Consumer Information Form in the loan file for new conventional loans and use the updated IRS Form 4506-C to prevent fraud.
Loan Products to Consider in a Rising Interest Rate Market
Home equity loans, ARMs and buydowns are loan products to keep an eye on in the current market. Home equity activity continues to gain momentum with homeowners. ARMs have lower interest rates in the short term but may not be as attractive in the long run as rates are expected to decrease for fixed rate mortgages. Lastly, buydowns can help reduce financial pressure for buyers by temporarily reducing the amount of interest they pay. Interest rates for home equity loans and lines of credit may decrease soon.
Staying on top of compliance trends can help lenders identify and manage potential risks, avoid costly mistakes, and maintain a positive reputation in the industry. We’ll be releasing more information on these priorities soon. In the meantime, be sure to subscribe to our dedicated Compliance Blog where Fred and his team of experts share the latest compliance information.
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