Home Loan Lending Laws
- The Fair Housing Act prohibits discrimination in the sale, rental and financing of real estate based on race, religion, sex, family status or disability. Under the law, mortgage lenders may not refuse to make a mortgage or refuse to provide information about loans to applicants based on these characteristics. Further, mortgage lenders are prohibited from imposing different terms or conditions on a loan or discriminate in appraising a property based on these characteristics.
- The Truth in Lending Act requires creditors to disclose all finance charges and related transactions in writing to consumers. The purpose of the act is to inform consumers of the actual cost of obtaining a credit account, including interest rates, fees and closing costs.
- The Home Ownership and Equity Protection Act is an amendment of the Truth in Lending Act. This home lending law requires mortgage lenders to disclose information to home buyers about high-cost home equity or refinance loans. Under the act, mortgage lenders must meet certain requirements regarding loans with high rates or high fees. For example, lenders must disclose the annual percentage rate of the loan, the regular payment amount and the loan amount, including credit insurance premiums and other fees. Once information has been disclosed, the borrower has three days to decide whether to accept the loan agreement, even if loan documents have already been signed.
- The Real Estate Settlement Procedures Act involves closing costs and loan settlement processes. The law requires lenders to provide disclosures to consumers regarding closing costs and settlement services at the time of the loan application, before loan closing, at the settlement of the loan transaction and annually after settlement of the loan. According to HUD, these laws also prohibit fee-splitting and receiving unearned fees for services not actually performed, such as monetary kickbacks for loan referrals.