About Federal Mortgage Law
Mortgage lending institutions are governed by laws that the federal government enact to protect the public. The laws and regulations expressly protect mortgage borrowers and their financial information. The mortgage industry, whether banks or individual mortgage companies, must adhere to the rules at all times or face fines and even imprisonment punishments for any frauds or prejudices committed against consumers.
Truth in Lending Act
Annual percentage rates (APR), financed amounts, total payments and total sales prices fall under the umbrella of the Truth in Lending Act (TILA). They are stringent rules that lenders must abide by, and they are expected to present these facts to the borrower in writing.
Fair Housing Act
Enacted in 1968, the Fair Housing Act prohibits discrimination in home purchases or rental transactions. The Act specifically forbids all discriminatory acts against consumers by reason of race, sex, color or religion.
Real Estate Settlement Protection Act
The Real Estate Settlement Protection Act (RESPA) dictates that real estate disclosures must be made to consumers and prohibits lenders from increasing prices that raise closing costs.
RESPA also prohibits bribes and illegal activities such as a seller requiring that the consumer use the seller's favored title insurance carrier in the purchase of a home. The law also limits escrow accounts in contracts.
Equal Credit Opportunity Act
Equal Credit Opportunity Act (ECOA) forbids discriminatory credit practices and regulates the types of questions lenders can ask consumers. Discrimination based on sex, race, marital status, religion, national origin and age are prohibited under ECOA. Verbal or written discouragement of applications is prohibited under the law.
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act requires that debt collectors treat consumers fairly and without shoddy practices of harassment, and the Act forbids the disclosure of consumers' debt data to individuals who are not bargainers in transactions between the lender and the borrower.