New rules aim to prevent predatory lending and protect borrowers

  • The U.S. Treasury Department tightens a mortgage-lending regulation
  • New rules require federally certified lenders to consider borrowers’ ability to repay loans
  • Exemption used by some lenders to offer ‘no doc’ loans is narrowed
  • Enhanced scrutiny for CDFI-certified consumer-loan businesses charging interest rates above 36%
  • Prohibition on selling collection rights to charged-off customer debt
  • New rules aim to prevent predatory lending and avoidable foreclosures

The U.S. Treasury Department has issued new rules that tighten a mortgage-lending regulation. The rules require federally certified lenders, known as Community Development Financial Institutions (CDFIs), to consider borrowers’ ability to repay loans. This narrows the exemption used by some lenders to offer ‘no doc’ loans, which allowed them to bypass Dodd-Frank rules. The new rules also include enhanced scrutiny for CDFI-certified consumer-loan businesses charging interest rates above 36% and a prohibition on selling collection rights to charged-off customer debt. These regulations aim to prevent predatory lending and avoidable foreclosures.

Factuality Level: 7
Factuality Justification: The article provides information about new rules issued by the U.S. Treasury Department that narrow an exemption used by some mortgage lenders to offer ‘no doc’ loans. It explains the changes in regulations for Community Development Financial Institutions (CDFIs) and how they must now consider borrowers’ ability to repay loans. The article includes quotes from experts and stakeholders, as well as information about the impact of the new rules on CDFIs and borrowers. Overall, the article provides factual information about the new rules and their implications.
Noise Level: 4
Noise Justification: The article provides information on the new rules issued by the U.S. Treasury Department regarding federally certified lenders known as Community Development Financial Institutions. It discusses the changes in regulations and the impact on lenders offering ‘no doc’ loans. The article also mentions the misuse of CDFIs and the revisions made to the certification rules. It provides some insights into the new criteria for CDFI certification and the implications for mortgage lenders. However, the article lacks in-depth analysis and does not provide actionable insights or solutions.
Financial Relevance: Yes
Financial Markets Impacted: The new rules issued by the U.S. Treasury Department will impact federally certified lenders known as Community Development Financial Institutions (CDFIs). These lenders will now be required to consider borrowers’ ability to pay back loans, which may affect their lending practices and potentially impact the mortgage market.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article discusses new rules issued by the U.S. Treasury Department that will impact federally certified lenders known as Community Development Financial Institutions (CDFIs). These rules require CDFIs to consider borrowers’ ability to pay back loans, which may have implications for the mortgage market. However, there is no mention of any extreme events or significant impacts in the article.
Public Companies: Change Company (null)
Private Companies: California-based Change Company,Change Lending,Champions Funding,Foundation Mortgage,Fig Loans
Key People: Andrew Kushner (Senior Policy Counsel at the Center for Responsible Lending), Marcia Sigal (Acting Director of the CDFI Fund), Marc Halpern (Chief Executive of Foundation Mortgage), Jeff Zhou (Co-founder of Fig Loans), Annie Donovan (Former CDFI Fund Director), Jacob Adelman (Author)

Reported publicly: www.marketwatch.com