Financial reform elicits a couple of cheers
Under the new financial reform legislation recently passed by Congress, you will still be able to receive a free credit report each year from the three major credit reporting agencies. Cheers.
In addition to your credit report, you will now also be able to see your credit score if it hurts you in some way.
For example, if a mortgage lender, a credit card issuer, insurance company or a landlord quotes you a more expensive interest rate than the conventional rate, or a more expensive premium price or, in the case of a landlord, refuses to rent you an apartment because of problems with your credit score, you now have the right to demand the company or individual give you (for free) the credit score causing your problems. Cheers again.
But hold off on any more cheering. There is nothing that says you can’t ask to see your credit score even if you like the interest rate or result of your application.
Other protections seem almost as tepid. One analysis described them more like closing the barn door after all the animals have left.
For example, under the new legislation, lenders will have to check and confirm a prospective borrower’s income and assets. (Hate to break it to our legislators, but most lenders have already learned that lesson. They’ve been checking, and rechecking, income for some time now.)
Other rules include a ban on prepayment penalties for people with an adjustable rate and other more complex types of mortgages.
The legislation also bans bonuses for mortgage brokers and bank employees based on the type of loans they sell. This rule is aimed at eliminating any incentives mortgage brokers may have to put a borrower, who might qualify for a lower interest rate loan, into a more expensive product.
The new legislation will also cap mortgage origination fees to 3 percent of the loan.(There are exceptions for required, upfront mortgage insurance premiums, as well as Federal Housing Administration loans and for points that borrowers choose to pay to lower their mortgage interest rate.)
