New Mortgage Laws and their Benefits
In the year 2008, there have been some changes in the existing mortgage laws. Also, some new laws have been passed to help debtors in time of default. But the most important mortgage law of the year 2008 is Housing and Recovery Act. Check out the 4 new mortgage laws given below:
Housing and Recovery Act 2008: To stop the mortgage meltdown, a collection of 6 “Acts” has been formed under HERA, i.e. Housing and Recovery Act of 2008. Given below are the 6 Acts formed under HERA:
1 Federal Housing Finance Regulatory Reform Act of 2008: According to the new mortgage laws, Federal Housing Finance Agency (FHFA) is established to look after some of the regulatory functions that were previously done by Office of Federal Housing Enterprise Oversight. FHA has also been empowered to take actions if “regulated entities” are in default. Regulated entities that fall under the authority of FHFA are as follows:
- Fannie Mae
- Freddie Mac
- Federal Home Loan Banks
HERA has also established a Federal Housing Finance Board that looks after issues such as formation of guidelines for market risk, interest rate risk etc. This board is authorized with other duties too, such as monitoring the condition of under capitalized regulated entity, capital restoration plan, timely review and many more.
2 HOPE for Homeowners Act 2008: This new law falls under Title IV of HERA. The purpose of this law is to provide refinancing loans at low interest or reduced principal that are insured by HUD.
3. S.A.F.E Mortgage Licensing Act: Secure and Fair Enforcement for Mortgage Licensing Act is also known as the S.A.F.E Mortgage Licensing Act that looks after the residential mortgage industry. The functions of the S.A.F.E Licensing Act comprises of the following:
- Provide application for license, report any requirement for state licensed loan originator.
- Provide a thorough report on licensing
- Ensure anti fraud measures for consumers
- Keep a check on the subprime mortgage market
4. FHA Modernization Act 2008: According to this Act, a mortgagor needs to pay in cash at least 3.5% of property value as down payment. This is the new rule of HUD secretary to qualify for FHA mortgage insurance.
5. FHA Manufacturing Housing Loan Modernization Act 2008: Under this law, HERA states that the bar against unearned fees that falls under Real Estate Settlement Procedures Act of 1974 also applies to the sale of manufactured homes that are insured by FHA loan or extension credit.
6. Mortgage Disclosure Improvement Act: In Mortgage Disclosure Improvement Act of HERA, the lender has to disclose details about the mortgage loan to the consumer at least 7days before the closing. The lender has to provide debtors with details on loan terms and conditions. The disclosure should state prominently in proper size and format that “you are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”.
New Foreclosure Law 2008: The aim of this law is to prevent foreclosure. According to this law, the lender cannot forward a notice of default immediately to the borrower. He has to wait for 30 days and then contact the debtor to explore options of payments. He will have to offer plans to the debtor by which the debtor can avoid foreclosure.
Home Mortgage Bill 2008: This new law aims at providing relief to defaulted homeowners with help of refinance home loan option. According to this law, the FHA will pay up to $300 billion for refinancing home loan.
New Foreclosure Rescue Fraud Prevention Act: This foreclosure law is a relief to the borrowers. The foreclosure rescue consultant tries to arrange for some alternative payment plan with the lender. According to the law, a written agreement which should also have the signature of the consumer must be obtained before offering any service.
The new mortgage laws stated above have been enforced to help consumers. But make sure to consult with your lender first in order to avoid legal problems.
Not only that, if you do have a property or estate, before discussing with your lender get in touch your real estate lawyer first. Or else you can take legal advice from any reputed law firms.
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