Law:
Home Ownership and Equity Protection
Act, or HOEPA, of 1994 Amends
the Truth in Lending Act
What it covers: Certain high-priced mortgage loans
What it does for consumers: Sets disclosure rules for lenders and shields consumers from predatory home equity lending.
Covers first-lien mortgages
that have an APR that's more
than 8 percentage points above
the comparable Treasury yield
Covers second-lien mortgages that have an APR at least 10 percentage points above the rates on comparable Treasury notes
Covers loans
whose fees and points associated
with closing cost the consumer
at least $528 or 8 percent of
the total loan amount
Requires written disclosure to the consumer at least three business days before the loan is finalized
Must disclose APR, payment amounts, loan amounts, balloon payment and maximum monthly payment for variable rate loans.
Consumer must receive notice that he or she retains the right to not sign the loan agreement, despite having applied for the loan
Written notice should be given that if the consumer fails to make mortgage payments, he or she may forfeit the house
Borrower has three days to sign the loan
Prohibits certain conditions of loans covered by HOEPA
Most balloon payments
Negative amortization
Default interest rates that exceed interest rate prior to default
Most prepayment penalties
Ignore consumer's repayment ability and grant the loan based on the home's collateral value
For more information,
visit the FTC's Web site.
If you have a complaint
against a lender, you can submit
it to the commission for nondepository
lenders and to your state's
attorney general. If you want
to recover monetary loss from
a lender in violation of the act,
you'll need to contact an attorney.
Law:
Home Mortgage Disclosure Act,
or HMDA, of 1975
What it covers: loan application register information
What it does for consumers: It requires certain mortgage lenders and financial institutions in metropolitan areas to report demographic data on its mortgage borrowers and applicants and pricing information on high-priced loans to the government for the previous calendar year by March 1.
Makes loan application
register, or LAR, information
available upon request
Aggregate reports on HMDA-reporting lenders inside a metropolitan area also available
Data reported includes loan originations, approval rates and loan applications that were denied, withdrawn or otherwise closed refinanced loans, home purchase loans and home improvement loans.
Report should
disclose loan type, loan purpose,
loan amount, action taken on
application, occupancy and applicant's
sex, ethnicity, race and income.
Institutions regulated by the
Office of Thrift Supervision,
or OTS, or the Office of the
Comptroller of the Currency,
or OCC, must report reasons
for denial -- other lenders
have the option to cite.
Lenders must make their disclosure statements available to the public at their home office within three business days after the institution receives the report from the FFIEC
Branch offices located in other MSAs may make their disclosure statements available within 10 business days of receiving it in at least one branch office in each MSA where they have offices or explain that disclosure statements are available upon written request to an address indicated in a public notice. These disclosure statements should arrive within 15 days after the lending institution receives a written consumer request.
For more information or to order a report on an individual lender, go to the FFIEC Web site. Beginning with the 2005 disclosure and aggregate reports, reports obtained from the FFIEC Web site won't be available for paper copy or on CD-ROM. Reports from calendar year 1999 leading up to 2005 are available online for free. Consumers may also obtain reports from their lenders. To request reports from 1998 or earlier, go to http://www.ntis.gov.
Law:
Real Estate Settlement Procedures
Act, or RESPA, of 1974
What it covers: certain mortgage loans
What it does for consumers: It sets disclosure rules for closing costs and procedures and prohibits abusive practices.
Applies to mortgage loans on a one-to-four family residential property.
Lenders must
provide a good faith estimate
of settlement costs to applicants
before the closing. Actual charges
may differ.
Requires lenders to issue a Mortgage Servicing Disclosure Statement, which declares who will service the loan
Section 8 prohibits kickbacks and illegal markups
Section 9 outlaws a requirement that the buyer purchase title insurance from a particular company
Section 10 caps consumer payments into an escrow account. An annual account analysis should flag amounts over $50 and return them to the buyer.
Allows borrowers to request the HUD-1 Settlement Statement, which details the finalized list of closing costs one day before closing
Requires the lender
or mortgage broker to provide
Affiliated Business Arrangement
Disclosure documentation if
the consumer gets referred to
a business with which the lender
has a business relationship
Depending on the section violated and the timing of the grievance, you can file a complaint with the U.S. Department of Housing and Urban Development, your state's attorney general or insurance commissioner or file a lawsuit. For more about enforcing RESPA violations, visit the U.S. Department of Housing and Urban Development's Web site.
If you want to know more about what to expect before and during closing, read the Bankrate feature, "Understanding the closing process."
Sources: The Federal Reserve, Federal Deposit Insurance
Corp., Federal Financial Institutions Examinations Council, Federal
Trade Commission, U.S. Department of Housing and Urban Development,
Bankrate.com
Note: This chart is only intended to supply a brief overview of each consumer protection law and should be used as a reference guide for the laws listed. Not all consumer protection laws were included in this chart. Please refer to the Federal Reserve's Web site for information on other consumer laws.
