The mortgage settlement process--sometimes called mortgage closing--can be confusing. A settlement may involve several interested parties and a variety of documents and fees. This guide helps you understand the steps involved in the settlement process. Although the focus here is on settlements for home purchases, much of the guidance will also apply if you refinance a mortgage...
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Have interest rates fallen? Or do you expect them to go up? Has your credit score improved enough so that you might be eligible for a lower-rate mortgage? Would you like to switch into a different type of mortgage? The answers to these questions will influence your decision to refinance your mortgage. But before deciding, you need to understand all that refinancing involves. Your home may be your most valuable financial asset, so you want to be careful when choosing a lender or broker and specific mortgage terms. Remember that, along with the potential benefits to refinancing, there are also costs...
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You could lose your home and your money if you borrow from unscrupulous lenders who offer you a high-cost loan based on the equity you have in your home. Certain lenders target homeowners who are elderly or who have low incomes or credit problems — and then try to take advantage of them by using deceptive practices. The Federal Trade Commission, the nation’s consumer protection agency, cautions all homeowners to be on the lookout for.
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Idaho Department of Finance Frequesntly Asked Questions (FAQ) about Consumer Finance.
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This website gives you an overview of ARMs, explains how ARMs work, and discusses some of the issues that you might face as a borrower...
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Idaho Legal Aid Services Fair Lending: Predatory Lending Abuses Brochure.
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What is predatory lending?
Predatory lending is the practice of preying on, or taking advantage of, an individual or group of people that may have a difficult time buying or refinancing a home such as people who may be poor, uneducated, elderly, or in a protected class. Under the Fair Housing Act, a protected class is a group of people who share common characteristics and are protected from discrimination on the basis of race, religion, national origin, color, disability, familial status, and gender.
How do I know if I've been a victim?
Sometimes it's hard to know you've been a victim of predatory lending. The following videos provide an example of a bad lending experience (i.e. predatory lending) and what a good lending experience should be...click to watch and learn.
Example of Predatory Lending
[video:http://www.youtube.com/v/OLtMtxIzo8s width:425 height:355 align:center]
Example of Good Lending
[video:http://www.youtube.com/v/1NTkVkGoQ0Q width:425 height:355 align:center]
The work that provided the basis for this publication was supported by funding under a grant with the U.S. Department of Housing and Urban Development. The substance and findings of the work are dedicated to the public. The author and publisher are solely responsible for the accuracy of the statements and interpretations contained in this publication. Such interpretations do not necessarily reflect the views of the federal government.
What other information and resources do you have available?
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The work that provided the basis for this page was supported by funding under a grant with the U.S. Department of Housing and Urban Development. ILAS is solely responsible for the accuracy of the statements and interpretations contained in this presentation. Such interpretations do not necessarily reflect the views of the federal government.
Predatory lending is the practice of preying on, or taking advantage of, an individual or group of people that may have a difficult time buying or refinancing a home such as people who may be poor, uneducated, elderly or in the protected classes (race, religion, national origin, color, disability, familial status, gender).
“In conventional lending [prime loans], you're dealing with borrowers with high credit scores, solid income and single-family residences -- basic [well qualified] borrowers…”
“…in subprime, you're dealing with people who can't prove any income, have low [credit] scores, have had bankruptcies, have way too much credit or need higher loan to values on their property.”
--Charlie Cartwright, LenderBase Corp.
Consider that subprime lenders grade customers the same way that elementary school teachers grade children. Depending on an applicant's credit score, debt-to-income ratio, ability to verify income and other variables, a lender or broker assesses a letter grade that typically ranges from "A+" down to "D." The loan officer then charges a rate appropriate to that category. Because the distinctions between categories are often slight, borrowers can move up the scale without much effort.
For example, lenders tend to grade people based on how many times they were 30 or 60 days late with their mortgage payments in the past year. Having two "30-day lates" might push them into the "A-" category while having just one would keep them in the "A" zone. As a result, a customer who was late twice, but one of the late payments was 11 months ago, can improve a notch by just waiting a few extra days to borrow. By doing so, that customer could save a half a percentage point, or 50 basis points, on the interest rate, according to pricing sheets wholesale lenders send to mortgage brokers.
provide credit to persons with past credit problems, insufficient credit history, previous bankruptcy, spotty employment, and others that do not meet credit standards in the prime (conventional) loan market.
From 1993 to 1998, the # of subprime refinancing loans increased ten-fold. Subprime loans are three times more likely in low income neighborhoods than in high-income neighborhoods. Subprime loans are five times more likely in black neighborhoods than in white neighborhoods. Racial disparity is so great that homeowners in high-income black areas are twice as likely as homeowners in low-income white areas to have subprime loans. –HUD No. 00-75
Seniors become targets because:
(For more information see www.responsiblelending.org)
1. Credit insurance premiums should not be financed into the loan up-front in a lump-sum payment.
2. Borrower should not be charged excessive points and fees for conventional, FHA or VA loans. Please check with your Department of Finance or HUD if you have questions or a suspicion that you are being charged excessive points.
3. Loans should not include prepayment penalties because prepayment penalties trap borrowers in high-rate loans, which too often leads to foreclosure, and prepayment penalties are hidden, deferred fees that strip significant equity.
4. Fees that lenders rebate to brokers in exchange for placing a borrower in a higher interest rate than the borrower qualifies for. Brokers originate over half of all mortgage loans and a small number of brokers are responsible for a large percentage of predatory loans.
5. Lenders should make sure that borrowers get the lowest-cost loan they qualify for.
6. Lenders should not allow clauses in the loan contracts that force the borrower into arbitration in the event of a dispute for wrongful practices.
7. Flipping of borrowers occurs through repeated fee-loaded refinancing. Lenders refinance subprime loans over and over, taking out home equity wealth in the form of high fees each time without providing the borrower with a net tangible benefit.
8. Balloon payments are a condition of a loan when a very large payment comes due a few years into the loan.
9. Interest only payments are loans where the borrower’s payments only cover the interest portion of the loan and not principle.
10. Debt shifting is when unsecured debt is shifted into a secured mortgage.
11. When lenders recommend subprime loans for people who qualify for conventional loans.
1. A lender or investor tells you that they are your only chance of getting a loan or owning a home. You should be able to take your time to shop around and compare prices and houses.
2. You are told that the Federal Housing Administration insurance protects you against property defects or loan fraud – it does not.
3. You are told that refinancing can solve your credit or money problems.
4. You are told that you can only get a good deal on a home improvement if you finance it with a particular lender.
1. The house you are buying costs a lot more than other homes in the neighborhood, but isn’t any bigger or better.
2. You are asked to sign a sales contract or loan documents that are blank or that contain information which is not true.
3. The cost or loan terms at closing are not what you agreed to.
1. Before you buy a home, attend a homeownership education course offered by the U.S. Department of Housing and Urban Development (HUD)-approved, non-profit counseling agencies.
2. Interview several real estate professionals (agents), and ask for and check references before you select one to help you buy or sell a home.
3. Get information about the prices of other homes in the neighborhood. Don't be fooled into paying too much.
4. Hire a properly qualified and licensed home inspector to carefully inspect the property before you are obligated to buy. Determine whether you or the seller is going to be responsible for paying for the repairs. If you have to pay for the repairs, determine whether or not you can afford to make them.
5. Shop for a lender and compare costs. Be suspicious if anyone tries to steer you to just one lender.
6. Read everything carefully and ask questions. Do not sign anything that you don't understand. Before signing, have your contract and loan agreement reviewed by an attorney skilled in real estate law, consult with a trusted real estate professional or ask for help from a housing counselor with a HUD-approved agency. If you cannot afford an attorney, take your documents to the HUD-approved housing counseling agency near you to find out if they will review the documents or can refer you to an attorney who will help you for free or at low cost.
7. Be suspicious when the cost of a home improvement goes up if you don't accept the contractor's financing.
8. Do NOT let anyone persuade you to make a false statement on your loan application, such as overstating your income, the source of your down payment, failing to disclose the nature and amount of your debts, or even how long you have been employed. When you apply for a mortgage loan, every piece of information that you submit must be accurate and complete. Lying on a mortgage application is fraud and may result in criminal penalties.
9. Do NOT let anyone convince you to borrow more money than you know you can afford to repay. If you get behind on your payments, you risk losing your house and all of the money you put into your property.
10. Never sign a blank document or a document containing blanks. If information is inserted into the loan document by someone else after you have signed, you may still be bound to the terms of the contract. Insert "N/A" (i.e., not applicable) or cross through any blanks.
11. Be honest about your intention to occupy the house. Stating that you plan to live there when, in fact, you are not (because you intend to rent the house to someone else or fix it up and resell it) violates federal law and is a crime.
12. Make sure that your mortgage payment is no more than 30% of your net income. Make sure you include all of your expenses in determining the 30%.
U.S. Department of Housing and Urban Development (HUD)
1-800-669-9777
-or-
1-800-927-9275 (TDD)
Idaho Legal Aid Services
(208) 345-0106 in Boise local calling area, statewide toll-free 1-866-345-0106
En español llamada gratis estatal, 1-866-954-2591 o 454-2591 en la área local de llamadas en Caldwell
Intermountain Fair Housing Council
(208) 383-0695 in Boise
-or-
1-800-717-0695 (toll-free)
On the Web:
For legal advice regarding senior citizens:
Idaho Legal Aid’s Senior Legal Hotline
Mon-Fri 9 am-12 pm and 1 pm to 4 pm
Statewide toll-free, 1-866-345-0106 or 345-0106 in the Boise local calling area
En español llamada gratis estatal, 1-866-954-2591 o 454-2591 en la área local de llamadas en Caldwell.
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ILAS Fair Lending Project poster, which identifies some common warning signs of predatory lending, is available for printing and posting at your business.
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Idaho Legal Aid Services Fair Lending Project:
How to Escalate Your Case
File a Complaint against the Bank at:
https://appsec.helpwithmybank.gov/olcc_form/
When You File a Bank Complaint On-line:
Have you checked our Get Answers section for information about National Bank regulations and your rights as a bank customer?
Have you tried to resolve your complaint with your financial institution? The OCC recommends that you attempt to resolve your complaint with your financial institution first. Please contact your financial institution to allow them the opportunity to resolve your issue(s).
1. Check to make sure that your financial institution is a National Bank. Search Financial Institutions. If the bank is not a National Bank, you should contact the appropriate regulator to submit your complaint.
Note: Effective July 21, 2011, the Office of Thrift Supervision became part of the Office of the Comptroller of the Currency. The OCC's Consumer Assistance Group assists national bank and federal savings association, or thrift customers; see our OCC/OTS Integration Page for more information.
2. Please select only ONE of the following methods to file your complaint. Do not mail, e-mail, or fax additional information unless requested.
Complete the Online Customer Complaint Form (Recommended). For security purposes, the form contains user time limitations. If your session exceeds the limitations, any information you have entered may be lost. To avoid this, gather all necessary information prior to entering the form. See the section: Learn what to include in your complaint.
Print an OCC Complaint Form (PDF). [En Español (PDF)] To view PDF files, you will need Acrobat Reader. For your convenience, all forms including the online version, request the same information.
Write and mail or fax a letter to the OCC.
3. Have questions? Discuss your question or concern with a customer assistance specialist.
Call the OCC Customer Assistance Group at 1-800-613-6743.
TDD Number 713-658-0340.
4. What can you expect from us.
Check the status of an existing case.
Note: Effective July 21, 2011, the Office of Thrift Supervision became part of the Office of the Comptroller of the Currency. The OCC's Consumer Assistance Group assists national bank and federal savings association, or thrift customers; see our OCC/OTS Integration Page for more information.
How to File a Complaint when there is Discrimination in Lending:
If there is discriminatory lending under the Fair Housing Act based on race, religion, national origin, color, disability, sex, and or familial status, for Idaho, file a complaint with the Region X Department of Housing and Urban Development Fair Housing and Equal Opportunity Office at:
FHEO HUB Office
909 1st Ave., Ste. 205, 0AE
Seattle, WA 98104
(800) 877-0246 or (206) 220-5170
TDD: (206) 220-5185
FAX: (206) 220-5447
or
http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/online-complaint
or you can print a form and mail it to the address above.
For More Information and or Assistance Contact:
Consumers as well as housing providers and lenders, may contact the Fair Housing/Fair Lending Legal Advice line by calling Idaho Legal Aid Services, Monday through Friday, 9:00 a.m. to 12:00 p.m., M.S.T., (208) 345-0106 in Boise calling area, or statewide toll-free 1-866-345-0106, or (TTY) 1-800-245-7573. En español llamada gratis estatal, 1-866-954-2591 o 454-2591 en la área local de llamadas en Caldwell or on the web at www.idaholegalaid.org. If you are a senior, you may also call the Idaho Senior Legal Hotline toll-free 1-866-345-0106 or 345-0106 in the Boise calling area, Monday and Tuesday 9:00 a.m. to 12:00 p.m. and 1:00 p.m. to 3:00 p.m., M.S.T. and on Wednesdays from 1:00 p.m. to 3:00 p.m. M.S.T. Visit our web site at www.idaholegalaid.org for fair lending and fair housing information and materials. E-mail the Fair Lending Advice Line at fairlending@idaholegalaid.org.
“The work that provided the basis for this publication was supported by funding under a grant with the U.S. Department of Housing and Urban Development. The substance and findings of the work are dedicated to the public. The author and publisher are solely responsible for the accuracy of the statements and interpretations contained in this publication. Such Interpretations do not necessarily reflect the views of the Federal Government.”
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Si usted es propietario de una vivienda y necesita dinero para pagar cuentas o para hacer reparaciones en su casa, es posible que crea que un préstamo sobre el valor neto de la vivienda (home equity loan en inglés) sea la solución. (Un préstamo sobre el valor neto de la vivienda se refi ere a un préstamo garantizado por la inversión neta en el hogar tras restarla del valor total de la hipoteca.) Pero no todos los
préstamos y prestamistas son iguales—usted haría bien en comparar. El costo de obtener préstamos de instituciones de préstamo que cobran cargos altos puede resultar excesivo y en algunas ocasiones abusivo. Por ejemplo, algunos prestamistas— comúnmente conocidos como “prestamistas depredadores”—buscan a propietarios de bajos ingresos o que tienen problemas de crédito o son de edad avanzada para engañarlos sobre las condiciones y los términos del préstamo u otorgarles préstamos que en realidad no pueden pagar.
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Providing the information below will allow you to calculate how much you can afford to spend on a home. However, many additional factors play a part in the loan qualification process.
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The U.S. Department of Housing and Urban Development (HUD) has created a webpage for resources for renters during the Coronavirus pandemic. It includes information on rental assistance, tips on communicating with your landlord, Center for Disease Control Eviction Moratorium Order, and information regarding mortgages.
Please visit this webpage for more information: https://www.hud.gov/coronavirus/renters
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Si usted no paga su hipoteca en fecha o si paga un monto menor a su mensualidad, usted incurre en incumplimiento de pago de su préstamo. Las consecuencias del incumplimiento de pago pueden ser costosas. La Comisión Federal de Comercio (Federal Trade Commission, FTC), la agencia nacional de protección del consumidor, dice que es importante entender los costos que tiene el incumplimiento de pago. La agencia también destaca que si está teniendo problemas para cumplir con los pagos de su hipoteca, se comunique lo antes posible con el administrador de su préstamo para hablar sobre sus opciones. Cuanto más tiempo se tarde en llamar, menos opciones tendrá...
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Cuando usted obtiene un préstamo hipotecario, es posible que piense que la entidad de préstamo conservará y administrará su préstamo hasta que termine de pagarlo o hasta que venda su casa. Frecuentemente no es así. En el mercado actual, los préstamos y los derechos de administrarlos se compran y se venden con bastante frecuencia. En muchos casos, la compañía a la cual usted le envía sus pagos no es la compañía dueña del préstamo. Una casa es una de las compras de más valor que usted haga en su vida, por eso es importante que sepa quién administra sus pagos y que se los acrediten correctamente a su cuenta hipotecaria. La Comisión Federal de Comercio (Federal Trade Commission, FTC), la agencia nacional de protección del consumidor, quiere que usted sepa qué es lo que hace un administrador de préstamos hipotecarios y cuáles son sus derechos como prestatario...
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Owning a home is part of the American dream. But high home prices may make the dream seem out of reach. To make monthly mortgage payments more affordable, many lenders offer home loans that allow you to (1) pay only the interest on the loan during the fi rst few years of the loan term or (2) make only a specifi ed minimum payment that could be less than the monthly interest on the loan...
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Your home is likely your most valuable asset, and you have an interest in maintaining ownership, protecting your equity and preserving your credit rating. This manual describes how you can better protect yourself from scams and deceptive business practices aimed at homeowners. Mortgage fraud, foreclosure rescue schemes and other deceptive practices have invaded our state, offering empty promises and stealing the dream of home ownership. Both Idaho and federal law offer some protections against mortgage fraud. Some of these laws are discussed in this manual. However, prevention is the best remedy for combating fraud, and you can best protect yourself by understanding your rights and obligations as a homeowner.
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The Federal Deposit Insurance Corporation has created a guide on how to recognize and protect yourself from mortgage rescue scams. Please see the attached for more information.
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The National Consumer Law Center, Inc. has created a free chapter on Homeowner Rights During the Covid-19 Pandemic. This Chapter covers issues such as Fannie Mae, Freddie Mac, Federal Housing Agency (FHA), VA, and USDA mortgage loans, state-based pandemic-related relief, portfolio and private label securities, and foreclosures.
This Chapter is accessible for free here: https://library.nclc.org/free-access-new-chapter-homeowner-rights-during-covid-pandemic.
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Below is a module created by Idaho Legal Aid Services related to common legal issues surrounding seniors or the elderly and protecting their home in relation to issues like Medicaid, foreclosure, deed, reverse mortgages, and letting others reside with you.. The module is available in English and Spanish.
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Please find attached a template letter that you can use to request information from your mortgage servicer for information regarding escrow accounts if your mortgage loan is currently in forebearance.
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The Consumer Financial Protection Bureau created a "Shopping for Your Home Loan" guide for persons looking to buy home. This guide includes tips and advice before you purchase a home or settle on a home loan company.
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The Center for Responsible Lending has created the following "8 Signs of Predatory Mortgage Lending", which you may find below or on their website: https://www.responsiblelending.org/issues/8-signs-predatory-mortgage.
"Points" or "discount points" are the lender's fee for making the loan. Generally, a charge of three points—3% or less of the loan amount—is a good deal, including such necessities as an appraisal and title insurance. Get your credit score in advance and research typical fees in your area.
A "prepayment penalty" requires you to pay a steep fee before refinancing. The penalty period can last several years and cost thousands of dollars.
Brokers can make more money if they boost the interest rate above the lender's actual charge. Ask if your broker will be paid a "yield-spread premium" – a financial reward lenders pay for inflated interest rates.
Predatory lenders often target senior citizens and people of color to place them in unnecessarily expensive loans. Don't respond to ads that say bad credit doesn't matter, and be especially wary of lenders or brokers who contact you or those who try to rush you into decisions.
Beware of adjustable-rate loans that can rise significantly, especially if it isn't possible for the interest rate to go lower, only higher. Make sure you understand the worst-case scenario for future payments. And don't count on a future refinance to rescue you from an unaffordable loan.
Predatory lenders are notorious for selling bad deals by promising that they will refinance the loan later. If a loan stretches you too much now or in the future, just say no.
Repeated refinances—"flipping"—mean you lose more money in points and fees every time. Don't be tempted by a bit of cash when you might end up owing even more on your house, losing valuable equity, and paying more than necessary.
Know in advance whether your monthly mortgage payment will include the costs of property taxes and insurance (i.e., whether the lender has established an escrow account for these costs). Unscrupulous lenders make house payments seem artificially low by not counting all costs—which you will be required to pay.
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This chart by the National Consumer Law Center (NCLC) provides a summary of relief options available for borrowers facing a COVID-19 related hardship. The options that a borrower has depends on the loan investor. For loans it covers, Section 4022 of the Coronavirus Aid, Relief, and. Economic Security (CARES) Act requires forbearance for borrowers with COVID-19 hardships and some investors have expanded on those provisions.
For more detailed analysis, read "Mortgage Relief for Homeowners Affected by COVID-19" on NCLC’s Digital Library here: https://library.nclc.org/mortgage-relief-homeowners-affected-covid-19.
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Reverse mortgages are becoming popular in America. HUD's Federal Housing Administration (FHA) created one of the first. The Home Equity Conversion Mortgage (HECM) is FHA's reverse mortgage program which enables you to withdraw some of the equity in your home. The HECM is a safe plan that can give older Americans greater financial security. Many seniors use it to supplement social security, meet unexpected medical expenses, make home improvements and more. You can receive free information about reverse mortgages in general by calling AARP toll free at (800) 209-8085. Since your home is probably your largest single investment, it's smart to know more about reverse mortgages, and decide if one is right for you!
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Refinancing is a process in which you pay off one or more existing debts with a new home loan. If you have perfect credit, refinancing is sometimes a good way to obtain a lower interest rate or to convert a variable rate loan to a fixed rate. However, if you are in the midst of financial difficulties, if you have too much debt, or if you have bad credit, refinancing is loaded with pitfalls. We recommend that you be very careful when
refinancing debts. Many refinancing loans hurt consumer. Here are twelve things to consider before refinancing...
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