Know your rights

Knowing what your rights are can play a major role in the defense against home-owner deception. There is a always this fiduciary relationship between broker and client; one of trust, however that relationship can be severely compromised when the borrower does not know where the boundaries are, or if the broker has already danced on top of them.

I asked many of my clients if they have ever heard of things like HOPA (Home Owner Protection Act) or TILA (Truth in Lending Act). Due to an astonishing number of clients that responded, “I have not idea what that is” I decided to briefly outline what these things are and how they benefit and protect you.

Your broker should be responsible and competent and explain these federal guidelines and acts to you in a clear and concise manner. If he or she can not do this, it’s time to cut them loose and find someone who is familiar with these terms.

Below you will find a brief explanation of each and as always please email or call with any questions. Remember that it is always beneficial to arm yourself with as much information as possible. Happy Reading.

TRUTH IN LENDING ACT (TILA) aka REG Z
The Truth in Lending Act (TILA) of 1968 is a US Federal law designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs. The purpose of TILA is to promote the informed use of consumer credit by requiring disclosures about its terms and cost. TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer’s principal dwelling, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes.
Under TIL, the lender must disclose to the borrower the annual percentage rate (APR). The APR reflects the effective yield on a loan including origination fees and discount points. All fees are considered the income of the lender regardless of any costs they are designed to cover.

RESPA (REAL ESTATE SETTLEMENT PROCEDURES ACT) aka REG X
RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD.

FCRA (FAIR CREDIT REPORTING ACT)
A federal law that is designed to prevent inaccurate or obsolete information from entering or remaining in a credit report. The law requires credit bureaus to adopt reasonable procedures for gathering, maintaining and disseminating information and bars credit bureaus from reporting negative information that is older than seven years, except a bankruptcy, which may be reported for ten.

ECOA (EQUAL CREDIT OPPORTUNITY ACT) aka REG B
The Equal Credit Opportunity Act prohibits credit discrimination on the basis of sex, race, marital status, religion, national origin, age, or receipt of public assistance. In certain situations, creditors may request some of this information, except information about religion, but creditors may not use it to discriminate when deciding whether to grant credit.
HMDA (HOME MORTGAGE DISCLOSURE ACT) aka REG C

This regulation provides the public with loan data that can be used to assist: in determining whether financial institutions are serving the housing needs of their communities; public officials in distributing public-sector investments so as to attract private investment to areas where it is needed; and in identifying possible discriminatory lending patterns. This regulation applies to certain financial institutions, including banks, savings associations, credit unions, and other mortgage lending institutions.

HOMEOWNERS PROTECTION ACT (referred to as ho-pah)
The Homeowners Protection Act of 1998 (the Act) offers residential mortgages borrowers three rights related to private mortgage insurance: disclosure, cancellation, and automatic termination. The Act requires lenders to inform mortgage borrowers of their rights under the Act. Also, the Act allows borrower-initiated cancellation of private mortgage insurance (PMI) and requires its termination by the lender when the borrower has accumulated a certain equity level in the home (78%).