3 Laws mortgage bankers should follow

A mortgage bank is a state-licensed body that provides mortgage loans directly to you (mortgage consumers). It offers mortgage loans from its own capital. A mortgage banker can be a company, individual or institution that originates mortgages. A mortgage banker might retain the mortgage in portfolio or sell it to an investor after the mortgage is originated. A mortgage banker may service the mortgage or sell servicing rights of the mortgage to another financial institution after a mortgage is originated. A mortgage banker earns his fees through the loan origination. This article provides you with information regarding the laws for mortgage bankers you need to know.

Laws for mortgage bankers

Here are the some of the laws for mortgage bankers. As a consumer, the knowledge may help you when you search for a mortgage banker.

1.Truth in Lending Act – The Truth in Lending Act (TILA) came into being in 1968. It is a United States federal law and it was implemented in order to protect the consumers. It mentions that there must be clear key terms of lending and costs related to it. The TILA requires disclosures about its terms, costs to standardize the manner in which costs are associated to borrowing and how they are calculated. Disclosures such as for finance charges (this is the amount charged you for a loan), Annual Percentage Rate, amount financed (the amount that you are actually borrowing), total of payments (total amount of payments made over the life of loan) and total sales price (This is the total amount of your down payment and mortgage amount).

2.Fair Housing Act – The Fair Housing Act was also adopted in 1968. It also protects you from any discrimination in housing related rental and purchase. This law states that a mortgage banker cannot discriminate you on the basis of race, sex, color, religion, national origin, familial status or if you are handicapped.

3.Secure and Fair Enforcement for Mortgage Licensing Act – This is also termed as SAFE act. It establishes two means of qualifying loan originators. One operates through the state and the other through the federal banking agencies. As per the Florida Mortgage Brokerage and Lending Act, both the mortgage bankers and brokers need to be licensed by the Office of Financial Regulation. In New York, there are differences in state qualification and regulation of mortgage brokers and bankers. They are both subjected to licensing by New York Banking Department. However, the approval criteria for both of them are quite different.

However, financial reform will change mortgage world drastically. The senate has passed the Financial Reform Act which states various rules and guidelines for the mortgage lenders to follow. The laws for mortgage bankers after the financial reform are such as they have to thoroughly check your documents in order to verify whether you can afford the mortgage loan provided to you by the banker. Thus, these laws for mortgage bankers help you protect yourself from the deception and the wrong doings of the mortgage bankers.