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By Syd Johnson
This bill of rights was laid out by Franklin Raines, president of Fannie Mae
on January 15, 2000. The Mortgage Consumer Bill of Rights is a pledge fof $2
trillion over 10 years to help consumers gain access to home ownership. It
also includes an “Open Book” approach to underwriting where customers can see
all of the factors that go into evaluating their creditworthiness and the
process of applying for a home loan.
One of the most ambitious parts of this plan is to bring more technology to
the Mortgage Industry and reduce their paperwork by over 17%. Less reliance
on paper, equals more automated evaluations and quicker loan approvals. This
means customers who look for lenders and apply online are definitely at the
forefront of the Mortgage industry.
The basic tenets of the Mortgage Consumer Bill of Rights
All Americans Have A Right to Access to Mortgage Credit
Fannie Mae hopes to decrease the gap in home ownership between whites and
blacks, low income earners and middle class families, and other underserved
populations. There are more procedures and practices in place to prevent
predatory lending, fraud and discrimination. You can be assured that you can
usually find a lender that will approve and finance your loan even if you are
not extremely wealthy or you don’t have perfect credit.
Consumers have a right to the lowest-cost mortgage for which they qualify.
Fannie Mae is chartered as a private company to hold down the costs of
mortgages. Their strategy is to offer mortgage products that allow lenders to
qualify more home buyers for low cost conventional financing. There are
mortgage programs to allow lenders to serve the needs of first time home
buyers, women, minorities, rural and inner city residents, singles and more.
One of their most popular packages is the Timely Rewards Program. If you have
less than ideal credit, you can qualify for mortgage rates that are up to 2%
lower than the sub-prime market, and the rate can be reduced another 1% if
you make all of your loan payments on time for the first 24 months.
Homeowners have a right to know the true cost of a mortgage
Customers have a right know the true cost of their mortgage. There are many
components that make up a mortgage package, each with its own variable cost.
Make sure that you know what is in your package and the exact dollar amounts
before you close on your home loan. Some of the items are down payments,
interest rates, points, closing fee, appraisal costs and insurance payment
for the first month.
To encourage this open practice nationwide, Fannie Mae has created a True Cost
Calculator. Customers can enter their information and see what the true total
cost will be for their mortgage, and their options for saving some money.
Homeowners have right to be free of regulatory burden
You have the right to get new homes and mortgage financing without too much
intrusion from the government as far as regulatory fees, paperwork and time
are concerned. This does not free your or your builder from abiding by local
laws and zoning ordinances. Instead, this type interference will be reduced
and not hamper your ability to qualify for a mortgage, or leave you open to
huge fees when you try to close.
Homeowners have a right to know about mortgage decisions
There will be more transparency among lenders and brokers so that customers
know what goes into a mortgage package, who makes the decisions, when are
decisions being made, and what you can do if the outcome is not what you
intended, or what you would like to happen. It should always be clear, or
feel free to ask your Broker, Banker or Lender: what else can you do to make
the application process smooth and efficient?
And what are your rights as far as making changes later on and if there are
any fees attached to changing your mind.
Every banker or lender in the industry should be familiar with your Mortgage
Bill of Rights. You can find out more at the Fannie Mae Website.
Syd Johnson is the Executive Editor of RapidLingo.com (http://RapidLingo.com),
the Mortgage and Real Estate Financing solutions site. You can see more
articles at http://www.rapidlingo.com (http://www.rapidlingo.com).
This article can be freely distributed as long as the author`s bio is included
and an active link to http://www.rapidlingo.com (http://www.rapidlingo.com)
is included.
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