Section 32 Home Ownership and Financing - Predatory Mortgage Lending

• Library: Consumer Law and Practice 2010

Home ownership is a paramount dream. Not only is a home a place to live, raise a family, and have privacy, it is also an investment. Home ownership is an opportunity to build wealth. Most homebuyers will not have the cash to buy their home; they will have to finance their purchase. Before signing on the dotted line, homebuyers should consult with a HUD (U.S. Department of Housing and Urban Development)-approved housing counselor or with an attorney. HUD offers many free or low-cost services and information to homebuyers.

All home loan transactions are paper laden. Borrowers will sign notes, mortgages, and deeds. Also included are all requisite federal disclosures in accordance with the:

. TILA (Truth in Lending Act), 15 U.S.C. § 1601 et seq.;

. HOEPA (Home Ownership and Equity Protection Act of 1994, Pub. L. No. 103-325, 108 Stat. 2190; and

. RESPA (Real Estate Settlement Procedures Act of 1974, 12 U.S.C. § 2601 et seq.,

such as the Good Faith Estimate of settlement services mandated by RESPA and Regulation X. 24 C.F.R. § 3500.21 et seq. The HUD-1 and HUD-1A must also be provided to a borrower.

HUD-1 is available at:

www.hud.gov/offices/adm/hudclips/forms/files/1.pdf

HUD-1A is available at:

www.hud.gov/offices/adm/hudclips/forms/files/1a.pdf

Those searching for a home loan may encounter loan originators, mortgage brokers, title insurers, attorneys, and closing agents. The purchase process may be daunting.

It is important to shop for an affordable home loan. It is often advantageous for a borrower to do business with a local lender or one that maintains a local office. If a problem arises with the loan, it is easier to discuss the problem in person. It is important for a borrower to find out if the loan-servicing rights will be sold.

The kinds of loans being offered are mind boggling. Not only are there conventional and...