Consumers are (finally) in the driver’s seat. A fundamental shift has occurred thanks to the housing crisis and the troubled economy that has taken control away from big business and given it to the people. The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed by President Obama on July 21, 2010 to add some teeth, and a new federal agency to educate, protect, and support consumers in a sea of uncertain economic times and in the face of increased scams. Under the Act, the new Bureau was created within the Federal Reserve Board and has authority to oversee any person or company dealing in any “consumer financial product or service”. The definitions contained in the Act are broad. It targets unfair and deceptive financial practices and requires that all financial products conform to federal consumer financial laws.
It will take some time for the new Bureau and the Act to work its magic. Currently, the implementation of the Act is in the hands of Treasury Secretary Timothy Geithner. He has a deadline of September 19, 2010 to designate a transfer date, when legal authority will shift to the new bureau from the FTC and HUD. It must be no earlier than Jan. 17 and no later than Jan. 21, 2011.
The first benefits of this Act will be felt in the real estate industry. One of the first targets is in setting uniform standards for appraisals. Also, a national hotline system will allow homeowners to lodge complaints and alert the Bureau of unfair and deceptive lending practices of mortgage lenders. The new agency will also assume control of a key consumer protection statute – RESPA — the Real Estate Settlement Procedures Act. The bureau seeks to streamline the existing disclosures in the home purchase process and provide revised truth-in-lending and good faith estimate disclosures. Another benefit will be to require all loan officers to make good faith verifications that mortgage applicants have the ability to repay the loans they are seeking. The lack of this effort is largely what led to the downfall of the real estate market, and to the increasing default rates on mortgages across the United States.
The Federal Trade Commission has also expanded its consumer information and is fighting the good fight for consumers and homeowners across the nation. On its website, www.ftc.gov/bcp/consumer there lies a plethora of information easily accessible to consumers and homeowners to be informed about the latest programs available for consumers, and alerts for the most recent scams in areas such as automobiles, credit cards, home loans, and identity theft.
In North Carolina, Attorney General Roy Cooper has led the way for our state in consumer protection, and has created an easy way for consumers to sound off and report unfair and deceptive scams that prey on NC consumers and homeowners. For more information visit, www.ncdoj.com/consumer. On this site, consumers can submit a complaint, find help, or call the Attorney General’s office directly and speak to someone about their specific situation. If you or someone you know has been a victim of a mortgage prevention or loan modification scam, please report it to the NC Attorney General so we can keep these scammers out of NC, and put them out of business.
The best defense we have as consumers is to educate ourselves and those around us. Please read and research any financial product or services that you may consider. If the person is encouraging you to sign up quickly, without due consideration, they are not looking out for your best interests. There are people out there who are legitimately helping consumers with financial products and services, so do your homework to find the good ones!
