Over the course of the last year, federal laws regarding loan modifications have changed radically. Between the end of George W. Bush’s presidency and Barak Obama’s new administration, federal laws have opened new opportunities for homeowners to avert foreclosure and have access to loan modifications.
Basically, there are four core laws which create the guidelines for all mortgages. These laws attempt to make the guidelines uniform, based upon equality and that they be administered fairly. All lenders are required to operate under certain rules, regulations and procedures when taking loan applications. The rules are: the Real Estate Settlement Procedures Act (RESPA), the Truth in Lending Act (TILA), Equal Credit Opportunity ACT (ECOA) and the Fair Credit Reporting Act (FCRA). Some of these laws are quite old and were passed in a very different era, but Congress hopes that these rules provide the kinds of guidance that will help people borrow money to get a home without being taken advantage of.
RESPA requires lenders to give a good faith estimate of all closing costs that you are likely to pay. The hope is to keep the borrower from being forced to pay hidden fees at closing.
TILA requires that annual percentage rate (APR), term of the loan and total costs be disclosed to a borrower prior to extending credit to the borrower. This information must be obvious on documents presented to the consumer before signing, as well as on periodic billing statements (although that is less often). Obviously, subprime mortgages, and other “creative” forms of mortgages, may have violated this law.
ECOA prohibits any discrimination in lending based on race, creed, religion, national origin, sex, marital status or age. Discrimination does not just mean refusing to give a mortgage, it could also mean taking advantage of people and giving them unfavorable mortgage terms just because of their minority status.
FCRA promotes accuracy, fairness and privacy of information in the files of consumer reporting agencies. When you apply for a mortgage, the lender always pulls a credit report and FCRA gives you access to the report they pull. If you have ever been rejected for a credit card, you will doubtless have received a letter explaining the decision and informing you of your right to view your credit report; this is due to FCRA.
California loan modification attorneys are familiar with the state and federal laws governing loan modifications, as well as how those laws can be used to benefit your situation. If you are facing foreclosure, there is a chance that your mortgage company might have violated one of these statutes. This could be used as leverage either during a loan modification or even during litigation. The federal government is still investigation how often mortgage companies such as Countrywide violated these laws in selling people subprime mortgages. Having a mortgage with a highly fluctuating interest rate certainly seems to violate some of the federal laws mentioned above, as does the tactic of lying about the borrower’s income (which some real estate agents did quite often). A loan modification attorney can be a big help in figuring out just how the laws governing mortgages can benefit you.