July 22, 2010 -- On Wednesday, President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Click HERE to read an exclusive interview with President Obama about the new law.
Click HERE to read the full transcript of the story.
Here are more details about the Consumer Protection provisions of the Wall Street Reform and Consumer Protection Act of 2010:
Mortgage brokers will no longer be able to earn a bonus -- called a "yield spread premium" -- for steering people to mortgages with higher interest rates when they actually qualify for a lower rate.
Lenders will have to vet applicants' finances to make sure they really can afford the loans they are offered. If the loan is an Adjustable Rate Mortgage, or ARM, the lender will have to certify that the borrower can afford the monthly payment even if it adjusts to its highest possible level.
Lenders will not be allowed to charge prepayment penalties on balloon loans, ARMs or interest-only mortgages and will only be able to charge prepayment penalties on fixed rate mortgages during the first three years.
Alternative financial companies such as payday lenders, check cashiers and pawn brokers will be comprehensively regulated under the new law for the first time. Debt collectors and debt settlement companies will be included too.
Stockbrokers will likely be required to act in the clients' best interest instead of their own. Currently this "fiduciary" standard applies to registered investment advisers but not to brokers who are salespeople but who often give investment advice.
Consumers will still be entitled to get a free copy of their credit score anytime they're turned down for a loan or get a less favorable loan than they could have.
The law calls for the formation of a new Consumer Financial Protection Bureau, to replace the patchwork which exists now. It will be the central clearinghouse for taking in and investigating consumer complaints about abusive financial products.