We all know that the Dodd-Frank Act was put into place as a sort of safeguard for borrowers to be able to avoid home default. The Ability to Repay Rule is one of the more well-known provisions of the Dodd-Frank Act, with the end goal of making sure borrowers don’t buy homes they can’t reasonably afford. There is another provision of the Dodd-Frank Act that you should know about: the Anti-Steering Protection Act.
This rule prohibits lenders from monetizing on the conditions or terms of the loan type they sell you. Essentially, lenders can’t make money by “steering” you towards a loan that costs you more money. You won’t be able to give your lender any compensation that varies (other than principal) depending on the loan type, because this is now illegal. In other words, your lender is now acting more like a grocery store clerk than a car salesman.
This is a huge source of protection for borrowers. However, you still need to be made aware of several factors:
Overall, make sure that you always shop around for a lender. Even though the Dodd-Frank has made leaps and bounds towards protecting borrowers and ensuring borrower preparedness, you still need to make sure you’re working with a lender that you trust.