Your home loan toolkit: A step-by-step guide

Find information on home loans in this recently published toolkit from the U.S. Consumer Financial Protection  Bureau.
Home loans

Know Before You Owe: Making the mortgage process easier for you

"Since opening our doors over four years ago we’ve heard from homebuyers that the process of buying a home is overwhelming and confusing. We’ve heard that closing is often rushed, not allowing enough time to review before signing on the dotted line. For consumers who apply for most mortgages on or after October 3, 2015, the stress of shopping for a mortgage will be reduced, as our new mortgage disclosure rule takes effect. The new rule and disclosures ease the process of taking out a mortgage, helping you save money, and ensuring you know before you owe.

Here’s what will change:

• Four overlapping disclosure forms will be streamlined into two forms, the Loan Estimate and the Closing Disclosure.
• You’ll have more time to review your closing documents. Currently, lenders must give you your HUD-1 Settlement Statement disclosure 24 hours in advance, if you request it; after October 3, you’ll receive your Closing Disclosure three business days before you sign the forms and accept the terms of your mortgage, no request needed.

Here’s how these changes will improve the mortgage process:

• The new forms will make it easier to understand complicated mortgage terms.
• The Loan Estimate makes it easier to shop around and compare loan offers from multiple lenders. Consider applying for loans from at least three lenders before choosing a mortgage so you can find the best deal for you.
• The three days required between getting your Closing Disclosure and signing on the dotted line allow you to make sure there aren’t major changes from the deal you were offered on your Loan Estimate. It also gives you time to ask your lender all the questions you might have about the terms of your mortgage and consult with a lawyer or housing counselor..."
  Mortgages

Three things to do before closing: What we learned from studying eClosing

"We’ve heard from many consumers about the overwhelming process of closing on a mortgage, which can be confusing and difficult. Closing is the part of the mortgage process where you accept the terms of your loan, the last step before you owe, and usually before you owe more than you ever have in your life.

As part of our broader efforts to improve the overall mortgage experience, we’ve been exploring how technology can be used to address some of those pain points in the closing process.

Today we’re releasing the results of a pilot program where we explored tools and process changes that can help consumers better navigate closing by accessing and signing their closing documents in different ways. Specifically, we examined what would happen if there was more technology involved in the mortgage closing process, with documents being delivered electronically earlier together with online tools and resources. The electronic delivery and signing of closing documents using electronic signatures is sometimes referred to as eClosing.

We wanted to study the idea that by using technology as a tool, consumers may be better informed and prepared – putting them in the driver’s seat at closing..."
Closing

Snapshot of reverse mortgage complaints December 2011 – 2014

"Reverse mortgages are a special type of loan that allows homeowners, 62 and older, to borrow against the accrued equity in their homes. Reverse mortgages can help some older homeowners meet financial needs, but they can jeopardize retirement security if not used carefully.

We’ve heard many complaints from consumers who have experienced problems with reverse mortgages. Today we are releasing a report on those complaints.

This Snapshot provides an overview of consumer complaints submitted to the CFPB involving reverse mortgages from December 2011 through December 2014. The most common reverse mortgage complaint is about difficulty with changing the loan terms, and problems communicating with loan servicers..."

Reverse mortgage

Updated reverse mortgage guide: Two things you should know

"More and more homeowners are considering tapping their home equity as they approach retirement age. Getting a reverse mortgage is one way that some older homeowners can do that. Reverse mortgages are a special type of home equity loan sold to homeowners aged 62 years and older, which are repaid when the borrowers sell the home, move out, or die. It’s a complicated type of loan that works best for homeowners who carefully consider all of their options..."
Reverse mortgages

Servicemembers, you have new mortgage protections in 2014

"It’s no secret that the housing crisis in recent years was particularly hard on military families. Servicemembers and their spouses at installations around the country, and even abroad, cited problems with mortgages as some of their most serious financial challenges. But now, the CFPB has written new mortgage rules that can help..."
Servicemember and Mortgages

FTC Warns Mortgage Advertisers that Their Ads May Violate Federal Law

"After reviewing hundreds of mortgage advertisements, the Federal Trade Commission staff has sent letters to 20 companies, warning them that their ads may be deceptive.

The FTC sent the letters in coordination with the Consumer Financial Protection Bureau (CFPB), which issued warning letters to approximately a dozen other companies.  The CFPB sent its warning letters to mortgage brokers and lenders.  Both agencies have opened nonpublic law enforcement investigations of other advertisers that may have violated federal law..."
FTC Warns Mortgage Advertisers that Their Ads May Violate Federal Law

FTC Cracks Down on Phony Mortgage Relief Schemes

"The Federal Trade Commission has filed three separate suits in federal court to halt the allegedly deceptive tactics of three operations that preyed on distressed homeowners by falsely claiming they could save their homes from foreclosure, and then charging them thousands of dollars up-front, while delivering little or no help and often driving them deeper into debt..
FTC Cracks Down on Phony Mortgage Relief Schemes

The Subprime Crisis: Is Government Housing Policy to Blame

"A growing literature suggests that housing policy, embodied by the Community Reinvestment Act (CRA) and the affordable housing goals of the government sponsored enterprises, may have caused the subprime crisis. The conclusions drawn in this literature, for the most part, have been based on associations between aggregated national trends. In this paper we examine more directly whether these programs were associated with worse outcomes in the mortgage market, including delinquency rates and measures of loan quality..."

2010 Mortgage Fraud Report Year in Review
"The purpose of this study is to provide insight into the breadth and depth of mortgage fraud crimes perpetrated against the United States and its citizens during 2010. This report updates the 2009 Mortgage Fraud Report and addresses current mortgage fraud projections, issues, and the identification of mortgage fraud “hot spots.” The objective of this study is to provide FBI program managers and the general public with relevant data to better understand the threat posed by mortgage fraud..."

FBI - Mortgage Fraud
"These scams hit us right where we live.
From foreclosure frauds to subprime shenanigans, mortgage fraud is a growing crime threat that is hurting homeowners, businesses, and the national economy. We have developed new ways to detect and combat mortgage fraud, including collecting and analyzing data to spot emerging trends and patterns. And we are using the full array of investigative techniques to find and stop criminals before the fact, rather than after the damage has been done..."

HELP US MAKE IT EASIER TO SHOP FOR A MORTGAGE
Find information on newly proposed simplified mortgage disclosure information from the Consumer Finance Protection Bureau.

FTC Issues Final Rule to Protect Struggling Homeowners from Mortgage Relief Scams
"Rule Outlaws Advance Fees and False Claims, Requires Clear Disclosures
Homeowners will be protected by a new Federal Trade Commission rule that bans providers of mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they decide is acceptable.

“At a time when many Americans are struggling to pay their mortgages, peddlers of so-called mortgage relief services have taken hundreds of millions of dollars from hundreds of thousands of homeowners without ever delivering results,” FTC Chairman Jon Leibowitz said. “By banning providers of these services from collecting fees until the customer is satisfied with the results, this rule will protect consumers from being victimized by these scams.”

The FTC is issuing the Mortgage Assistance Relief Services (MARS) Rule to protect distressed homeowners from mortgage relief scams that have sprung up during the mortgage crisis. Bogus operations falsely claim that, for a fee, they will negotiate with the consumer’s mortgage lender or servicer to obtain a loan modification, a short sale, or other relief from foreclosure. Many of these operations pretend to be affiliated with the government and government housing assistance programs. The FTC has brought more than 30 cases against operations like these, and state and federal law enforcement partners have brought hundreds more..."

Federal Financial Institution Regulators Announce Availability of 2009 Data on Mortgage Lending
"The Federal Financial Institutions Examination Council (FFIEC) today announced the availability of data on mortgage lending transactions at 8,124 U.S. financial institutions covered by the Home Mortgage Disclosure Act (HMDA). Covered institutions include banks, savings associations, credit unions, and mortgage companies. The HMDA data made available today cover 2009 lending activity--applications, originations, purchases of loans, denials, and other actions such as incomplete or withdrawn applications.

The data include nearly 15 million applications (of which nearly 9 million resulted in loan originations) and 4.3 million loan purchases, for a total of 19.3 million actions. The data also include information on 210,000 requests for preapprovals that did not result in a loan.

The data include disclosure statements for each financial institution, aggregate data for each metropolitan statistical area (MSA), nationwide summary statistics regarding lending patterns, and Loan/Application Registers (LARs) for each financial institution (LARs modified for borrower privacy). The FFIEC prepares and distributes this information on behalf of its member agencies (Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, and Office of Thrift Supervision) and the Department of Housing and Urban Development..."

What You Need to Know: New Rules for Mortgage Transfers
"The Federal Reserve Board on Monday announced final rules to implement a statutory amendment to the Truth in Lending Act requiring that consumers receive notice when their mortgage loan has been sold or transferred. The new disclosure requirement became effective in May 2009, upon enactment of the Helping Families Save Their Homes Act. Under that act, a purchaser or assignee that acquires a mortgage loan must provide the required disclosures in writing within 30 days.

To provide compliance guidance and greater certainty on the new requirements, the Board published interim rules in November 2009, which were effective immediately. To allow covered parties time to make any necessary operational changes, they may continue to follow the November 2009 interim rules until the mandatory compliance date for the final rules, which is January 1, 2011.*

Consumers can learn more about mortgage transfer disclosures by accessing a new online publication, "What You Need to Know: New Rules for Mortgage Transfers." It explains what consumers can expect from their mortgage lenders regarding notification of mortgage transfers..."

New Federal Reserve Mortgage Borrowers Rules
"The Federal Reserve Board on Monday announced final rules to protect mortgage borrowers from unfair, abusive, or deceptive lending practices that can arise from loan originator compensation practices. The new rules apply to mortgage brokers and the companies that employ them, as well as mortgage loan officers employed by depository institutions and other lenders.

Today, lenders commonly pay loan originators more compensation if the borrower accepts an interest rate higher than the rate required by the lender (commonly referred to as a "yield spread premium"). Under the final rule, however, a loan originator may not receive compensation that is based on the interest rate or other loan terms. This will prevent loan originators from increasing their own compensation by raising the consumers' loan costs, such as by increasing the interest rate or points. Loan originators can continue to receive compensation that is based on a percentage of the loan amount, which is a common practice..."

5 Tips for Shopping for a Mortgage
Tips for shopping for a mortage from the Federal Reserve Board.

FBI Issues 2008 Mortgage Fraud Report
"According to the Federal Bureau of Investigation’s 2008 Mortgage Fraud Report, released today, mortgage fraud Suspicious Activity Reports (SARs) referred to law enforcement increased 36 percent to 63,713 during fiscal year (FY) 2008, compared to 46,717 reports in FY 2007. While the total dollar loss attributed to mortgage fraud is unknown, financial institutions reported losses of at least $1.4 billion, an increase of 83.4 percent from FY 2007.

“Mortgage fraud hurts borrowers, financial institutions, and legitimate homeowners,” said Assistant Director Kevin Perkins, FBI Criminal Investigative Division. “The FBI, in conjunction with our law enforcement, regulatory, and industry partners, continues to diligently pursue perpetrators of mortgage fraud schemes.”"
View full report

Federal Agencies Propose Rule to Implement S.A.F.E. Act Mortgage Loan Originator Registration Requirements
"The Federal financial institution regulatory agencies are together issuing for public comment proposed rules requiring mortgage loan originators who are employees of agency-regulated institutions to meet the registration requirements of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (S.A.F.E. Act).

The S.A.F.E. Act requires the agencies to jointly develop and maintain a system for registering residential mortgage loan originators who are employees of agency-regulated institutions, including national and State banks, savings associations, credit unions, and Farm Credit System institutions, and certain of their subsidiaries. These mortgage loan originators must be registered with the Nationwide Mortgage Licensing System and Registry (Registry), a database established by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators to support the licensing of mortgage loan originators by the States. As part of this registration process, mortgage loan originators must furnish to the Registry background information and fingerprints for a background check. The S.A.F.E. Act generally prohibits employees of an agency-regulated institution from originating residential mortgage loans without first registering with the Registry..."

FTC Alleges That Mortgage Lender Charged Hispanics Higher Prices for Loans
"The Federal Trade Commission has charged a home mortgage lender and its owner with violating federal law by charging Hispanic consumers higher prices for mortgage loans than non-Hispanic white consumers – price disparities that cannot be explained by the applicants’ credit characteristics or underwriting risk. The FTC seeks to bar future violations and obtain redress for consumers...

According to the FTC’s complaint, the defendants violated the Equal Credit Opportunity Act (ECOA) in pricing mortgage loans. They allegedly gave loan officers and branch managers wide discretion to charge, in addition to the risk-based price, “overages” through higher interest rates and higher up-front charges. The defendants allegedly paid loan officers a percentage of the overages as a commission and failed to monitor whether Hispanic consumers were paying higher overages than non-Hispanic white borrowers..."