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As a new homebuyer, it’s important to be aware of your rights. There are federal and state laws in place that protect homebuyers from unfair treatment and misleading information when applying for a loan. The following information is from The office of Minnesota Attorney General Keith Ellison, click here to visit the source.
Equal Credit Opportunity Act
This is a federal law that the prohibits lenders from discriminating against the borrower for reasons related to race, color, religion, national origin, sex, marital status, age or status in relation to public assistance.
Minnesota Human Rights Act
This is a state specific law that is similar to the Equal Credit Opportunity Act. It prohibits discrimination by lenders, sellers, or real estate agents in the sale of financing of property due to race, color, creed (personal beliefs), religion, national origin, sex, marital status, status in relation to public assistance, disability, sexual orientation or familial status.
Real Estate Settlement Procedures Act (RESPA)
This is a federal law that regulates a lender’s closing or settlement practices. It requires that lenders make disclosures and treat you fairly by:
- Giving you a copy of the Consumer Financial Protection Bureau’s booklet, “Your Home Loan Toolkit,” within three days after you apply for a loan.
- Giving you a Loan Estimate of the closing (or “settlement”) costs within three days after you apply for a loan.
- Itemizing all loan closing charges on a Settlement Statement, also known as the Closing Disclosure. This law also gives you the right to inspect these forms before the closing on your home. To exercise this important, but often overlooked right, ask your closing agent or lender for a copy of the form sooner, if it’s prepared.
- Prohibiting lenders and agents from receiving hidden kickbacks or referral fees for referring customers to anyone for any transaction involving a federally related mortgage loan.
- Restricting the amount of money a lender can ask you to put in escrow.
Loan Transfers
If your lenders transfers the servicing of your loan to another lender, they are required to give you at least a 15-day notice before completing the transfer.
The notice must include the transfer date; the name, address and phone number of the new servicer; and the name of an individual or department of the new servicer that you can call.
During a 60-day period after the transfer date, you may not be charged a late fee if you accidentally send [timely] payments to the original lender instead of the new lender whom the servicing of your loan has been transferred to.
Closing Disclosure
This is a disclosure your lender is required to provide to you that insures you are informed of all the fees and costs of the loan. The lender must provide the closing disclosure 3 business days before the closing date.
Fair Credit Reporting Act
There are three large national credit bureaus that keep credit reports on you. These reports include a lot of financial data about you, and is a vital component of how lenders determine your eligibility for a loan. Due to its significance and because many people have found errors in their reports, this act gives you the right to challenge the accuracy of the information in your credit report.
