CFPB Rules Close Door on 'Teaser' Rates

The new rule essentially outlaws the "liar loans" that contributed to the crisis. In those, lenders required no proof that borrowers had the assets and income required to pay back the loan, in effect inviting applicants to lie about their financial resources. Not only will lenders now have to verify applicants' finances, they will have to make sure applicants will have the wherewithal to make any larger payments that may result from future rate adjustments, as is common with adjustable-rate mortgages.