Here are some ways through which the

Cornelius Jackson

HERE ARE SOME WAYS THROUGH WHICH THE MORTGAGE INDUSTRY ALREADY PROTECTS CONSUMERS

Purchasing a home is one of the largest investments one can make in life. The transaction of buying a home involves large sums of money where if someone takes advantage of you, they can walk away with substantial amounts at your expense. Fortunately, there are numerous mortgage rules in place to protect consumers against irresponsible and dishonest lenders. Although there is no sure way to eliminate risk completely, consumer protection laws present better odds to home buyers. Some of the mortgage rules that protect consumers are discussed below.

1. FAIR LENDING.

The mortgage industry is regulated by certain laws that prohibit lenders from any form of discrimination to consumers in the mortgage lending arena. The

Equal Credit Opportunity Act (ECOA) made it illegal for lenders to practice any form of discrimination against borrowers based on one’s race, color, religion, nationality, sex, marital status, age. It also prohibits lenders from discriminating a borrower whether all or part of the borrower’s income comes from a public assistance program, or whether the borrower has in good faith exercised a right under the Consumer

Credit Protection Act. Moreover, the Fair Housing

Act prohibits discrimination in residential real estate transactions based on one’s race, color, religion, sex, handicap, familial status, or nationality of origin. The

ECOA and Fair Housing Act laws apply throughout the loan process, from the time of inquiry until the time you finish paying the loan.

2. MORTGAGE DISCLOSURE LAW.

The Consumer Financial Protection Bureau (CFPB) issued a major regulation referred to as

‘Know Before You Owe’ that requires lenders to provide clear and accurate disclosures to borrowers during the lending process. The regulation requires lenders to disclose two major documents or forms to consumers; the Loan Estimate which highlights the key loan features, risks and costs of loans, and the Closing Disclosure which indicates all the costs of the mortgage transaction. The two documents are designed to be used together to help consumers understand the information in the documents, compare between different loan terms and prevent surprises for consumers during closing. Moreover, the CFPB regulation requires lenders to give consumers ample time to go through the forms and make decisions.

3. ADDITIONAL PROTECTIONS.

Other regulations that protect the consumer include;

• Originators are prohibited from directing consumers to a particular loan on the basis that that loan would make more money to the originator. • Kickbacks are also prohibited.

It’s important you understand the mortgage laws that protect you to avoid falling for dishonest lenders who will end up costing you money for nothing. The mortgage industry is flooded with lenders, some genuine and others fraudulent. Understanding what you’re entitled to is key to achieving a successful homebuying process.

Work cited.

https://www.fdic.gov/consumers/assistance/protection/ mortgages.html