New Rules Protect Consumers Seeking Home Loans As Well As Consumers With Existing Home Loans

Ruth Fremso, The New York Times, reports under new rules, servicers must send you a clear monthly statement, credit your payments on the day they are received and fix any mistakes promptly.

The rules, issued by the federal Consumer Financial Protection Bureau, were issued in early 2013 but begin next week.

Beginning Jan. 10, lenders must take steps to make sure you, as a borrower, can afford to repay the loan you are seeking, based on your income, debts and credit history. That may sound like common sense, but during the housing crisis many borrowers ended up with loans — sometimes called “no-documentation” loans — that they couldn’t afford. Often, borrowers took out adjustable rate loans with payments that were affordable to them at an initially low “teaser” interest rate, but that became unaffordable once the interest rate increased.


Many lenders already have adopted some of the changes, but the new rules make the requirements “more precise,” said Mike Calhoun, president of the nonprofit Center for Responsible Lending. “You’re less likely to have hidden surprises.”

One way lenders can comply with the new rules is by making what’s called a qualified mortgage, which is a loan with features aimed at making it safer for consumers. For instance, such loans can’t have risky features like interest-only payments or negative amortization, in which the principal balance on your loan increases over time. In general, the borrower’s debt, including mortgage payments, can’t total more than 43 percent of gross monthly income (although there are exceptions to that cap for the next several years). And points and fees are limited to 3 percent of the loan amount.

Under the new rules, if a lender makes a qualified loan, it is presumed to be one that the borrower can repay — and that gives the lender some legal protections, Mr. Calhoun said. Lenders may make loans that don’t meet the criteria for a qualified loan, but they still must make a “good faith” effort to determine that the borrower can make the payments, according to the consumer protection bureau.

There are also new rules for mortgage servicers, the company that handles collection of payments on your loan. Servicers must send you a clear monthly statement, credit your payments on the day they are received and fix any mistakes promptly.

The rules also specify the steps servicers must take if you fall behind on your payments. For instance, servicers must take the initiative to contact most borrowers if they are 36 days late on their loan payment. Also, servicers can’t start a foreclosure until the borrower is more than 120 days delinquent on a loan. Under the new rules, you must have time to submit an application for a loan modification or other assistance, and perhaps appeal a decision that goes against you, before a foreclosure occurs.

Alys Cohen, a lawyer at the National Consumer Law Center, said the servicing rules could have a significant effect. More than a million loans were 90 days or more late in the third quarter of 2013, based on data from the Mortgage Bankers Association. She said she was concerned, however, that while the new lending rules might offer protections, they also might make it more difficult for lower-income borrowers to qualify for a loan.

Peter Carroll, assistant director of mortgage markets for the consumer bureau, said he did not think credit would be restricted under the new rule. The bureau’s analysis shows that roughly 95 percent of loans made in the current market meet the criteria for qualified mortgages, he said.

Here are some additional questions about the new mortgage rules:

■ Do any new rules apply if I have an adjustable-rate mortgage, or ARM?

Your servicer must send you an early notice if you have an ARM and your interest rate is about to change. This is so that you can have time to shop for a new loan or seek help if you think you can’t afford the higher payment.

■ What happens if I can’t make my mortgage payments?

You can submit a request for help, often known as a “loss mitigation” application. Consumer protections are strongest if you submit it within 120 days of your first missed payment, but you can submit it later. Your servicer must evaluate you for all potential options, like a lower monthly payment or a reduced interest rate or a short-sale of your home. Once your application is complete, the servicer can’t start foreclosure while evaluating your request. If it rejects your request, it must explain why. The rules set deadlines by which the servicer must respond. Click here for more details.

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MasterBilt Homes did an excellent job building our home! They made our dream possible on design, placement of our home on our lot, and a construction loan that worked out well for us. They were very professional in both construction and communication with us throughout the process. They were also very fair and workable if changes were needed. It was a pleasure to be associated with Jim and Andrea throughout the project. MasterBilt offered a home warranty that they followed through on, and everything on our home is in great condition almost two years later! We would highly recommend them to any potential buyer in the future! They will not be disappointed! Masterbilt Homes is a trustworthy builder. Bari and Laurie Higgins

This was our first time buying new construction and MaterBilt Homes made the process easy. We bought one of their finished semi-custom spec homes and we are very happy with our experience. They worked with us to find the right house for us, including exploring building from scratch, and were very responsive with any questions we had. Once we moved in, they exceeded our expectations in how quick they were to address any minor things that needed to be addressed. It is nice to deal with a smaller company where you get to know everyone and get a personalized experience.


Matt and Suzanne

Having built a home before with another builder that proved to be very frustrating, we were very nervous and cautious to build again. However, meeting and getting to know Jim and Dre from Masterbuilt Homes made us feel excited and comfortable to work with them. As the home progressed, they were great. Always responsive to all of our questions and concerns. Now having been in the home for about seven months, I can say that we are very satisfied with it and feel very comfortable recommending Masterbuilt to anyone. Thank you Jim and Dre.

Diana and Noah

Jim, Clark, Andrea and Lizzie are by far the most amazing people ever. The have made us feel like a part of their family through this house building process. Not only have they been patient and understanding, but they truly care about our family and want this to be a great experience and have minimal stress. I don't have enough words of praise for this team. Highly recommend this builder.

Ryan and Michelle

We had a wonderful experience building our first custom home with Jim and the rest of the MasterBilt team!!! Having never built before, we were a little overwhelmed with the whole process, but Jim was super patient and guided us along the way with all our important design decisions. He was flexible, efficient and always strived to keep us on budget but most importantly, made sure we were happy with whatever choices were made. We ended up with a beautiful custom built home that was exactly what we envisioned. We highly recommend MasterBilt Homes to anyone who is in the market for a custom built home!

Our home building experience with Masterbilt homes was outstanding! Jim and Clark are experienced craftsman who created a home exceeding our expectations in beauty, form and function. The Masterbilt team of craftsman were knowledgeable professional and pleasant to work with.   Throughout the entire build process, we felt comfortable knowing we were in the best of hands. It is always a pleasure when you work with professionals resulting in a finished home that exceeds your expectations. Thanks to the Masterbilt team that made it happen!

Marcos and Sharlene Ramirez

We love our home had a wonderful experience building with Masterbilt! Dre and Jim were great to work with, answering all of our questions and helping us walk through the daunting process of building our first home. Dre, especially takes customer care to the next level and wanted to make sure we were 100% satisfied with every aspect of our new home. She went above and beyond in working closely alongside us throughout the whole building process. Not only is she super friendly and amazing at her job, she is also patient, honest and thoughtful. I valued her opinion greatly and found myself frequently asking her for advice on all things house related. When we were trying to stay on budget, Jim was able to offer us simple solutions to make sure that was possible as well. Additionally, they followed up with us multiple times after we had moved in to make sure everything was going smoothly. Overall, I would highly recommend building with Masterbilt Homes.  

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The Combs Family

Dear Jim & Clark:

We want to thank you both for all of your support and guidance in the rebuilding of our home. The loss of our home in the Waldo Canyon fire on June 26, 2012, was overwhelming, but with your patience and understanding of our situation we felt we were working with true friends.

We want you to know that we appreciate your dedication and enthusiasm when it came to the construction of our home, but also for your diligence, competence and desire to have your finished product be the best it can possibly be. Your hard work and attention to detail cannot be matched!

In addition, we felt your contractors and subcontractors were able, professional, and exacting in their work. More importantly, they were the nicest group of people. Congratulations for assembling this great collection of talent.

Our home will not be what it was before the fire….it will be a thousand times better thanks to you.

So, from the bottom of our hearts we want to thank you for your understanding and kindness during the rebuild of our home. We love our new home and appreciate all that you have done to make that happen.


Gus & Gaile Combs