A number of acts have been passed by the United States Federal Government in order to protect the interest of consumers of real estate and mortgage loans. The following are some of the important acts and this article would give you a brief idea about them:
1. Real Estate Settlement Procedures Act (RESPA) 2. Home Mortgage Disclosure Act (HMDA) 3. Truth in Lending Act (TILA) 4. New Homeowners Protection Act 5. Fair Housing Act (FHA)
1. Real Estate Settlement Procedures Act
The Real Estate Settlement Procedures Act, also termed as RESPA, was approved by the U.S. Congress in the year 1974. This act has been enacted at Title 12, Chapter 27 of the United States Code.
Purpose of the Real Estate Settlement Procedures Act
This act was introduced for the reason that several companies related to the purchasing and selling of real estate like realtors, lenders, title insurance companies and builders were frequently involved in offering secret kickbacks to one another, raising the expenses of real estate deals and confusing price contest by aiding deceptive merchandising strategies. RESPA is associated with settlement processes and closing costs. It necessitates that the consumers obtain disclosures during different times of the deal and prohibits kickbacks or bribes which inflate the expenses of settlement services. This act is implemented by the Housing and Urban Development Department in the United States.
2. Home Mortgage Disclosure Act
The Home Mortgage Disclosure Act or HMDA was passed in the United States in the year 1975. This act necessitates financial institutions to keep data and make them known to the public on a yearly basis regarding home purchase pre-qualification, home purchases, home improvement and applications for refinance regarding 1 to 4 unit and multifamily residences. It necessitates loan centers and branches to exhibit a Home Mortgage Disclosure Act notice.
Purpose of the Home Mortgage Disclosure Act
The Federal Reserve Board planned the Home Mortgage Disclosure Act with the aim of:
• Assisting public functionaries to allocate investments in the public sector • Finding out whether financial institutions are attending to the housing requirements of communities • Distinguish where unfair lending operations are taking place
3. Truth in Lending Act
The Truth in Lending Act or TILA is a federal law in the United States that was passed in 1968. The act has been planned to safeguard the consumers in credit dealings by necessitating transparent disclosure of the principal terms and conditions of the lending agreement and every expense. This act is included in title I of the Consumer Credit Protection Act, as modified.
Purpose of the Truth in Lending Act
The aim of the Truth in Lending Act is to encourage the knowledgeable utilization of consumer credit by necessitating revelation about the terms and conditions and expenses to regulate the mode in which expenses related to borrowing are estimated and made known. The Truth in Lending Act also offers consumers the authority to revoke particular credit transactions which contain a lien on the primary residence of a consumer, standardizes particular credit card operations and renders a way for unbiased and well-timed settlement of credit billing disagreements.
4. New Homeowners Protection Act
The Homeowners Protection Act of 1998 is a federal law in the United States. It is also termed as PMI (Private Mortgage Insurance) Cancellation Act. It came into effect in the year 1999. The act was modified in 2000 to offer technical adjustments and explanation and since then it is known as the New Homeowners Protection Act.
Purpose of the New Homeowners Protection Act
The purpose of the New Homeowners Protection Act is to deal with difficulties faced by homeowners in invalidating Private Mortgage Insurance coverage. The act lays down the terms and conditions of cancellation and termination of Private Mortgage Insurance, sets up apprisal and revelation needs and necessitates the refund of undeserved premium.
5. Fair Housing Act
The Fair Housing Act is also known as the Civil Rights Act of 1968. It was ratified by the then President of the United States, Lyndon Johnson. This act was intended to be a review of the Civil Rights Act of 1964.
Purpose of the Fair Housing Act
The objective of the Fair Housing Act is to forbid unfair practices related to the selling, leasing and funding of housing on the basis of religion, race, nationality and since 1974, gender. Since 1988, the act also offers protection to the families with children, disabled individuals, as well as civil rights activists.
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