Aside from college, home ownership is one of the most expensive ventures that Americans will ever embark on. Buying a home has a plethora of costs associated with it aside from just the home itself, and, while it is easy to rely on the help of a real estate professional, it is always a good rule of thumb to have an understanding of the process. By studying the laws and regulations that protect consumers, you empower yourself to make the best decision about your future asset. Listed below are six laws that every future homeowner should be familiar with.
Secure and Fair Enforcement for Mortgage Licensing Act
The SAFE Act was established in 2008. Its purpose is to enhance consumer protection, reduce fraud by requiring states to enact legislation compliant with the federal act, and mandate nationwide licensing. The SAFE act also established the Nationwide Mortgage licensing system and registry. Meaning that you are able to research any lender offering you services to see if they are compliant with the legislation and any infractions that were brought against them. You can check the status of any lender by visiting: http://www.nmlsconsumeraccess.org
Dodd-Frank Wall Street Reform and Consumer Protection Act
The Dodd-Frank Act was signed into law by President Obama on July 21, 2010 , in response to the economic crisis of 2008. This act was a sweeping reform intended to protect the American taxpayer from abusive financial service practices.
It also established the Consumer Financial Protection Bureau. The CFPB received rule making authority of the SAFE Act, and oversees other acts that protect the consumer from predatory practices.
To enforce its role in protecting consumer interests, the CFPB has the authority to take legal action against companies and people that violate “federal financial law.” The CFPB also has the authority to require any company or person to compensate victims for any harm caused, also known as redress. The agency maintains a civil penalty fund for any occasion in which redress is not enough to fully compensate the harmed party.
The CFPB has a host of tools and educational resources that help consumers stay informed of their rights, and also provides the necessary information to report an infringement upon those rights. To learn more visit: http://www.consumerfinance.gov
Community Reinvestment Act
The Community Reinvestment Act, also known as the CRA, was enacted in 1977 and then heavily revised in 1995. The CRA was put into place to encourage banks to provide banking services to the communities that they are chartered to serve.
It also prohibits any form of redlining which is the practice of refusing to provide financing in a particular area because of location. The CRA also allows for the publication of ratings and evaluations of all qualifying institutions to allow for accountability. To check the status of your local bank visit: http://apps.occ.gov/crasearch/default.aspx
Real Estate Settlement Procedures Act
Also known as RESPA, the act was established in 1974 and is considered a consumer protection statute. It allows consumers to be more knowledgeable about the costs of settlement services and reduces the cost by prohibiting any kind of undisclosed referral fees and kickbacks.
It also requires loan originators to provide detailed disclosures regarding any transfers, sales, or assignments of mortgage servicing rights. This act is also under the supervision of the CFPB and is applicable to any federally related mortgage loans.
Equal Credit Opportunity Act
The Equal Credit Opportunity Act was passed in 1974 and affects any institution that regularly extends credit, or who are involved with granting credit. It dictates that all consumers are given the equal opportunity to obtain credit and prohibits the discrimination of anyone on the basis of things such as race, color, religion, national origin, sex, marital status, or age. This act is also overseen by the CFPB.
Truth in Lending Act
This act, also known as TILA, requires the clear disclosure of any key terms in a lending arrangement and also all costs. Prior to this act, an advertiser only advertised attractive credit or lease terms, therefore distorting the actual costs.
Under TILA specific terms trigger a proper disclosure. Those terms include the amount of the down payment, the amount of any payment, the number of payments or the period of repayment, and the amount of any finance charge. TILA provides for the meaningful disclosure of consumer credit and lease terms so that consumers may shop and compare lending arrangements more effectively.
When you enlist the services of a real estate professional you are enlisting the help of an individual who is trained and versed in the laws and regulations that pertain to real estate. However, when you are well versed in the laws and regulations yourself you become empowered enough to make an informed decision and to also ensure that you are receiving the best value for the hard-earned money that you spend.