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%).

“Housing experts suggest reasons for record breaking number of listings”, was the headline in an article written by Glen Creno of The Arizona Republic.

This article truly captured my thoughts, in regards to what is happening in the housing market. This is a wonderful time to purchase a home! The story you are about to read is happening all over the nation. These next few years will totally reshape the world of real estate: Dave and Karen Rysdam got a jolt when pricing their Glendale home to put on the market.

They wanted to sell in the low $600,000s, but their agent recommended an aggressive price in the low $500,000s.

Surprised, the couple consulted an appraiser, who offered similar advice. Reluctantly, they listed the house for $519,900.

“The initial reaction was, ‘This is too low.’ But when you take the emotions out and look at factual data, it feels like it is right given today’s market conditions,” Dave said.

The Rysdams are among a record number people trying to sell their homes in today’s slowed market.

The glut of housing poses problems for an ailing market struggling to find its feet in the wake of a housing frenzy. Listings have been climbing steadily since the boom fizzled. Analysts have said reducing inventory is necessary for recovery in both the new and resale markets, yet resale listings are at an all-time high.

So what is driving the numbers? Analysts point to several things:

• Sellers are unrealistic. Many are pricing homes higher than what buyers are willing to pay.

• It’s partly cyclical. Sellers dust off their homes after the holidays and put them back on the market for the spring buying season.

• Investors are unloading homes. Those left over from the boom are trying to get rid of houses that are declining in value.

“They are the amateur speculators of last year or the year before,” Valley housing analyst RL Brown said, noting that big inventory means price softness. “Their ‘wink-wink’ loan of two or three years ago is about to change into a serious burden.”

Brown, who heads Home Builders Marketing, sees a few other types of would-be sellers who are helping push the number of listings higher. One is the house shopper who sees lending standards tightening in the wake of the subprime loan scandal and figures and believes he better get a loan now because he won’t qualify in a few months.

Another is the casual seller just seeing what kind of offers her home may draw.

Then there is the seller who absolutely has no idea what is happening in the market and what homes are worth, Brown said.

“They are the dialed-out folks,” he said.

The Rysdams don’t seem to fit in that category.

Dave, director of financial systems for Honeywell Aerospace, combed his neighborhood to check out the competition. The Rysdams spent about $20,000 upgrading the house for sale.

The couple bought their house for about $205,000 in 1994 and expected to do well selling it because they didn’t pull “a penny” of equity out. They are averaging a showing a day, but if they don’t get an acceptable price, they are prepared to walk away from a $30,000 deposit on a new house.

“For us, the only real variable is what we get out of this house,” he said. “I’m a finance guy. … The market doesn’t care how much I owe on my house. It’s irrelevant to what the market will pay for your house.”

Not all homeowners are of the same mind. Some agents say they are going on listing appointments only to find cranky and argumentative sellers. Agents are turning down listings because sellers won’t budge from their target prices, a radical change from the boom years when agents scrambled to secure listings that sold in a few days or even a few hours.

“If you go to a lawyer or a doctor, you are paying a lot for that opinion,” said Doreen Drew of Coldwell Banker Daisy Mountain. “But in real estate, they argue with you, even though they are paying huge amounts for you to sell their house.”

Housing analyst Tim Sullivan of the Sullivan Group in San Diego thinks resale listings should stabilize and maybe begin to fall midsummer.

Drew said she thinks it will take most of this year to work inventory down to more healthy levels. She said more of the sellers she deals with are realistic about prices, and after six or seven counteroffers, a house may sell.

But buyers still hold the upper hand, she said. And she has seen that directly at one of her listings.

“The buyers want everything,” she said. “Sellers don’t want to give up everything. In this house, the seller has reduced the price $50,000. In her mind, she has done all she could do. And now the buyer wants her two favorite chairs.”

http://www.azcentral.com/news/articles/0409listings0409.html (2007)

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