The Dodd-Frank Wall Street Reform and Consumer Protection Act has been signed into law by the President. Hidden inside that Act are tidbits that many will see as beneficial, but which all add to the cost of running both the government and the banks.
In addition, many of these new provisions assume that consumers are incompetent, and unable to understand or deal with their own finances.
For instance, the law requires banks to inform homeowners that their adjustable rate mortgage is due to reset in six months. Lenders will have to include a good faith estimate of the new monthly payment, inform them of financial options, and give them contact information for credit counseling agencies.
This provision assumes that borrowers didn’t pay attention when they took out an adjustable rate mortgage – and that the reset will come as a surprise. Unfortunately, that seems to be the case in many instances. But is it government’s role to protect us from ourselves?
Another provision calls for the creation of a new Office of Financial Education. This new office will offer financial counseling and publish consumer information to improve consumer’s financial literacy.
With many non-profit, free counseling opportunities already available, and with the wealth of consumer information available on sites such as this one, do we need a new government bureaucracy to educate consumers?
Because consumers pay outrageous interest rates for Payday Loans, the new law provides grants for experimental small loan programs that could be a less expensive alternative to payday loans. To obtain these loans, consumers must take advantage of financial literacy and education opportunities such as free debt counseling.
Next, the new law seeks to protect consumers from foreclosure rescue scams through an intensive awareness campaign. Granted, many such scams are proliferating as the credit crisis deepens. They range from bogus counseling services to fake loan modification assistance, to tricks that have caused homeowners to sign over their homes entirely.
And for low and moderate income homeowners facing legal action from mortgage lenders, taxpayers will now be providing grants to cover legal assistance. Tenants involved in legal disputes with landlords will also be eligible for assistance.
One provision that even I can agree with is a new ability to report lender misdeeds. The financial reform act establishes a single toll-free number to call should you encounter unfair or deceptive landing practices. Complaints will then be routed to the appropriate agency and “must” be responded to in a timely fashion.
In addition, the law calls for the establishment of an Internet site for the submission of complaints.
Author:Mike Clover
CreditScoreQuick.com
