Mortgage Borrowers' Rights

A real property mortgage will most likely be the largest and most important loan you get during your lifetime. It's one you will be paying off for as long as 30 years. So, it pays to take your time when going through the process. It's important to make sure you understand what you're signing. Part of this due diligence is getting to know your rights on mortgages.

State law regulates loan servicing and mortgage lending for homeownership. But the federal government has also created laws to protect consumers. The goal is to protect borrowers (mortgagors) and inform them about their rights when dealing with:

• Creditors (lenders such as banks, credit unions, and other financial situations)
• Loan origination, loan modification, and refinance options
• Mortgage costs, including upfront fees and mortgage insurance
• Avoidance of situations that lead to foreclosure sales
• Details about home loan payments (including the terms of any deed of trust)

For related articles and resources, see FindLaw's Borrower's Rights and Qualifying for a Mortgage sections.

Consumer Protection Laws for Mortgages

The Real Estate Settlement Procedures Act (RESPA) protects consumers from abuses during the residential real estate purchase and loan process. It achieves these goals by requiring mortgage loan lenders and mortgage servicing companies to disclose relevant:

• Settlement costs
• Lending practices in relation to a mortgaged property
• Banking relationships (including relationships with third parties like escrow companies)

As a borrower, knowing your homeowners' rights can help you to:

• Avoid foreclosure proceedings (through forbearance programs)
• Keep steady on your monthly payments (and eventual full repayment)
• Understand the federal law protections governing the terms of the loan

Similarly, the Truth in Lending Act of 1968 (TILA) is a piece of federal legislation designed to provide more transparency for mortgage borrowers. It aims to make it easier for the average consumer to compare loans and refinancing opportunities before choosing between mortgage lenders. Among other provisions, the law requires disclosure about:

1. The actual cost of a consumer credit transaction
2. Details on the terms of a loan or promissory note, including prepayment conditions in the loan application and its amendments
3. Interest rates, due dates, and other relevant information in plain language

Lenders have a general duty to provide written notice to you on critical developments about your loan. For example, they must give written notice if you default on your loan and face foreclosure. At other times, they must respond when you send them a written request for information relating to your mortgage profile.

Borrower's Rights on Fees

According to the list of borrower's rights on HUD's booklet, Shopping for Your Home Loan, you have the right to:

• Shop for the best loan for you and compare the charges of different mortgage brokers and lenders
• Be informed about the total cost of your loan, including the interest rate, points, and other fees
• Ask for a good faith estimate of all loan and settlement charges before you agree to the loan and pay any fees
• Know what fees are not refundable if you decide to cancel the loan agreement

Borrower's Rights on Loan Details

You also have the right to:

• Ask your mortgage broker to explain exactly what the mortgage broker will do for you
• Know how much the mortgage broker is getting paid by you and the lender for your loan
• Ask questions about charges and loan terms that you do not understand
• A credit decision that is not based on your race, color, religion, national origin, sex, marital status, age, or whether any income is from public assistance
• Know the reason if your loan got turned down
• Ask for the HUD settlement costs booklet

Who Holds Lenders Accountable

Understanding your rights to fair lending can help you report violations. Authorities may step in when your rights may have been violated. Several agencies may hear complaints. Your city or state's local department of housing can help. You should also consider filing a complaint with the Consumer Financial Protection Bureau (CFPB). The CFPB is a federal agency that offers additional information about your rights. It can also help enforce mortgage rights when lenders commit violations.

Need an Attorney?

Between staying up to date on your mortgage payments and building home equity, you have a lot to worry about. It's not easy maintaining a healthy credit report and paying your mortgage insurance premiums. You may find an array of challenges to overcome as a homeowner. If you have more questions about your rights as a borrower, seek the contact information and telephone number of a real estate attorney in your area.