See a video of a woman who details her struggle in paying for a house.
View full sizeU.S. Rep. Dan Maffei holds a roundtable discussion about the new Consumer Financial Protection Bureau with constituents affected by banking practices. Behind Maffei, Jean Abelson, of Fayettville, holds her head.Syracuse, NY -- Joan M. Valerino of Fayetteville says she bought a house that was more than she could afford because she wanted her elderly mother to live with her.
Now she’s stuck with a $1,500 a month mortgage payment that takes up 60 percent of her fixed income, she told Congressman Dan Maffei today.
“I’m pretty much at fault,” she said. “I rushed into it. They shouldn’t have given it to me.”
A new Consumer Financial Protection Bureau created when President Barack Obama signed the Wall Street Reform and Consumer Protection Act Wednesday may have prevented a bank from selling Valerino more mortgage than she could have afforded, Maffei said.
Such a bureau is needed to be an advocate for consumers with banks, he said.
“This is an attempt to level the playing field, and get a referee in the game,” he told the nine people who squeezed into his office in the federal building in Syracuse this morning for a press conference about the bill.
The consumers represent the hundreds of people who have contacted his office seeking intercession with banks, either because of high fees being charged, credit card problems or help in modifying their mortgages, Maffei said. The Democrat from DeWitt sits on the Financial Services Committee of the House.
Most of the nine were placed in financial jeopardy through no fault of their own. Several told tales of lost jobs, or a divorce, which affected their ability to repay credit cards, or mortgages. Then unsympathetic banks inundated them with paperwork only to refuse to modify mortgage payments, or credit card payments, they said.
The financial protection bureau will write and enforce rules governing financial products sold to consumers, such as mortgages and credit cards, Maffei said. It will have an 800 number that people can call to complain about treatment by banks or credit card companies, he said.
Also under the new law mortgage brokers will no longer be able to earn a bonus for encouraging people to take a higher interest rate when they actually qualify for a lower rate.
Lenders will have to make sure that applicants can afford the loans they’re offered.
Lenders will not be allowed to charge penalties to prepay balloon loans, adjustable rate mortgages or interest-only mortgages.