Throughout the United States, decades of poor lending practices have recently contributed to the cause of the highest government bailouts in history. In an effort to prevent this disaster from repeating, the federal government passed laws that restrict certain lending practices. Officially, the new laws (from 2010) are designed to protect individual consumers from unfair and abusive lending practices. They are also in place to ensure that the mortgage borrower has access to necessary information in order to fully understand the costs and terms of a loan.
Here are the ten most important things you need to know about the new mortgage laws regulating this turbulent field of borrowing and lending:
1. Mortgage lenders and brokers are prohibited from encouraging or threatening appraisers to misrepresent the value of a home.
2. Payments must be credited on the date they are received and must inform the borrower of any late-payment fees.
3. For those applicants considered a subprime credit risk, a lender is not permitted to raise the price of the loan without regard to the borrower’s ability to repay the loan from any income or assets apart the home’s value.
4. All income and assets used to qualify for loan approval must be verified.
5. Wage earners without sufficient income are required to borrow within their means. This leaves low income families unable to borrow nearly as much money as before for a home, if any at all.
6. There are also new rules that require a minimum waiting period of seven days between disclosure and closing. Disclosures must be resent if the APR changes, and no fees can be charged prior to the client receiving the loan disclosure documents.
7. Deceptive or misleading advertising regarding payments or teaser rates is prohibited.
8. All loan officers at financial institutions and mortgage brokers will be required to register with the government and disclose information about their background and disciplinary history.
9. The background information of your lender will be in a database available to consumers.
10. State governments are obligated to set licensing and minimum educational requirements for loan originators.
Source: Tina Walker
Dy Associates is an Oakland Real Estate company specializing in commercial, home and investment property in the Oakland and East Bay Area. We provide real estate services including buyer agent, seller agent, short sales, commercial and investment acquisitions, loan facilitation, hard money lending, financing assistance property management. Articles are provided as information only. We do not provide legal or general investment advice.