Your home is important
to you and your family. That’s why the Mortgage Bankers Association
of America along with the Colorado Mortgage Lenders Association
is working to protect you from deceptive and fraudulent sales
tactics when taking out a mortgage or a home equity loan.
One of the first and important steps you can take to protect yourself
from deceptive and fraudulent lending practices is to understand
the rights you have as a consumer when borrowing money to purchase,
refinance or renovate a home. If you are told by a lender you
don’t have these rights, then you should seek additional
information before making any decisions.
“A Borrower’s Bill of
Rights”
• A borrower has the
right to clear and forthright explanations of the terms and conditions
of the loan.
• A borrower has the right to timely and truthful disclosures
regarding the rates and costs of the loan.
• A borrower has the right to accurate disclosure of final
annual percentage rate and amount of regular payments at the time
of loan closing/settlement.
• A borrower has the right not to be subject to deceptive
marketing practices.
• A borrower has the right to obtain credit counseling prior
to closing on the loan.
• A borrower has the right to have a lender consider a borrower’s
ability to repay the loan before such credit is extended.
• A borrower should receive a tangible benefit when charged
a fee or a higher interest rate to refinance a loan.
• A borrower the right to not be subject to a requirement
that he or she finance any portion of points or fees.
• A borrower has the right to decline credit insurance in
connection with a loan.
• A borrower has the right to a fair and equitable resolution
to any disputes related to their loan.
• A borrower has the right to have favorable information
reported to credit bureaus on a timely basis.
The majority of mortgage lenders want you to purchase or a refinance
your home utilizing credit you can afford. These lenders operate
within strict laws and regulations that govern the mortgage industry.
They will spend time with you so you can understand the process
of being approved for a mortgage loan. All responsible lenders
will discuss with you the Borrower’s Bill of Rights and answer
satisfactorily any concerns you may have.
If a lender is unwilling to resolve your concerns, you have several
different options you can choose. First, you can call another
mortgage lender and have them answer your questions and obtain
your mortgage financing from them. Secondly, you can call Colorado
Mortgage Lenders Association Consumer Help Line and qualified
personnel can assist you with questions or concerns regarding
the mortgage process. Their toll-free number is 800-611-4830.
Lastly, you can send an email to the Mortgage Bankers Association
of America’s website at www.StopMortgageFraud.com.
The Colorado Mortgage Lenders Association and the Mortgage Bankers
Association of America want the consumer to have access to fair
and honest lending practices. They will not allow a handful of
deceptive lenders to discredit the majority of the nation’s
mortgage bankers who have a history of fighting housing and lending
discrimination.
“The Ten Warning Signs of Predatory
Lending”
The questions below are a good way for you to know if someone
could be misleading you about a loan and its costs to you. Just
because you answer “yes” to these questions does not
mean you are or have been a victim of predatory lending. But,
if you answer “yes” to some of the questions, we recommend
you contact either the CMLA Consumer Help Line or send an email
to the MBAA’s web site, as mentioned above.
1. If you have a balloon loan (one in which after a series of
loan payments the entire loan balance is due in a large lump sum),
will you need to obtain another loan to finance that final lump-sum
amount?
2. Were you required to buy credit insurance, insurance that will
repay the debit if you die or become disabled? (Note: credit insurance
is optional and will not affect your loan decision if you decline
to buy it. It can, however, add considerable cost to the loan
transaction. You should decide whether you are going to purchase
credit insurance carefully.)
3. Have you refinanced your loan several times, and in each instance
increased either your monthly payment and/or the total amount
you owe on your home?
4. After settlement, were you surprised to find that the monthly
payments on your mortgage loan were higher than you anticipated
based on the initial disclosures?
5. Did you incur any unexpected costs at settlement that were
not explained to you prior to the settlement?
6. Were you asked to leave signature lines or any other important
line item of any form blank? Did the lender or broker alter any
information you entered on your loan application?
7. Check your loan file. Are any of the following disclosures
missing?
a. Good Faith Estimate
b. Special Information Booklet
c. Truth in Lending
d. HUD-1 Settlement Statement
8. Do your documents reveal that your interest rate calculation
will change to
require you to pay “daily interest” in instances when
your payments are
low?
9. Is your loan amount on the loan you obtained higher than the
value of the
Home?
10. Were you encouraged to include false information on your loan
application?
