Mortgage Laws and Consumer Rights
The mortgage industry is governed by laws and regulations related to lending practices of lenders, banks and mortgage companies. There are laws as well to protect consumers or borrowers and their financial information.
Besides there are laws on the mortgage process that each consumer goes through, broker licensing rules, foreclosure laws and regulations related to mortgage disclosure, PMI and other aspects of the mortgage process. Being a consumer, you should be aware of the basic mortgage laws so that you know the consumer rights which will help you fight out odd situations in your mortgage.
Given below is a brief idea of the mortgage/housing laws you should be aware of.
1. Real Estate Settlement Procedures Act: This law covers purchase mortgages, refinance loans, home improvement loans, home equity lines of credit, assumptions etc on 1-4 unit homes. The RESPA ensures that borrowers receive disclosures after applying for a loan.
2. Home Mortgage Disclosure Act: This law requires that lenders or financial institutions should maintain data about home purchase, pre-approvals, refinance and home improvement loans on 1-4 unit homes and multi-family dwellings.
3. Truth in Lending Act: The TIL regulation deals with written disclosures that should be provided to the consumers and their rescission rights. Some of the disclosures are that which speak about mortgage APR,finance charge, amount financed, total payment etc.
4. New Homeowners Protection Act: This law applies to loans which are originated on or after July29, 1999. The Act enforces rules for homeowners and lenders regarding cancellation of the Private Mortgage Insurance or PMI.
5. Fair Housing Act: The provisions under this Act prohibit any discrimination in housing transactions, be it purchase and rental, depending upon race, sex, color national origin, religion and familial status.
6. Community Reinvestment Act (CRA): The CRA is meant to ensure that financial institutions and lenders meet the credit needs of consumers having high as well as low income.
7. Equal Credit Opportunity Act: The ECOA prohibits credit discrimination based on race, marital status, religion, national origin, age etc.
8. Gramm-Leach-Bliley Act: The provisions under this law help maintain consumer privacy in terms of their personal financial information.
Know-how of the laws help you understand your rights as a consumer and make you aware of how the industry works. It helps you avoid being defrauded by lenders/brokers or any industry professional.