Mortgage Law Attorneys
Mortgage Law and Regulations That Protect The Consumer
A Mortgage is a document in which the owner pledges his/her/its title to real property to a lender as security for a loan described in a promissory note. To be enforceable the mortgage must be signed by the owner (borrower), acknowledged before a notary public, and recorded with the County Recorder or Recorder of Deeds.
Following is a brief description of different mortgage law and regulations meant to govern the mortgage lending process, protect mortgage borrowers, and govern the practices of financial institutions with regard to mortgage lending and protection of borrower financial information. All of the following are federal laws and regulations. Many states may have additional laws governing the mortgage process and protecting consumers.
Truth in Lending Act
Enacted in 1968, the Truth in Lending Act (TILA), which is part of the Consumer Credit Protection Act, is a federal law that sets forth certain written disclosure requirements. Disclosures required by the act include:
Finance Charge – this is the amount charged to the borrower for a loan
Annual Percentage Rate (APR) – this is the actual realized interest rate taking into account other items such as pre-paid interest (points) and certain other charges
Amount Financed – this is the amount that the consumer is actually borrowing
Total of Payments – this is the total amount of payments made over the life of a loan
Total Sales Price – this is the total amount of a real estate purchase including the down payment and mortgage amount
The Truth in Lending Act also sets forth advertising requirements for lenders as well as rescission rights for consumers. The rescission rights in TILA allow consumers’ 3 business days to back out of a loan transaction.
Fair Housing Act
Also adopted in 1968, the Fair Housing Act prohibits discrimination in housing related transactions (purchase and rental) based upon race, color, sex, religion, national origin, familial status (with or without children), or handicap.
Mortgage Law Overview
A mortgage provides an interest in land as security for a loan or other obligation. It is the most common method of mortgage financing real estate transactions. The mortgagor is the party transferring the interest in land. The mortgage loan officer, usually the finance company in the mortgage process, is the provider of the loan or other interest given in exchange for the security interest.
Normally, mortgage payments are paid in installments that include both interest and a payment on the principle amount that was borrowed. Failure to make payments according to mortgage company regulations results in the foreclosure of the mortgage. Foreclosure allows the lenders to declare that the entire mortgage debt is due and must be paid immediately. This is accomplished through an acceleration clause in the mortgage allowed through mortgage lender laws. Failure to pay the mortgage debt once foreclosure of the land occurs leads to seizure of the security interest and it’s sale to pay for any remaining mortgage debt. The list below are topics pertaining to foreclosure and predatory mortgage lending:
– The foreclosure process depends on state law and the terms of the mortgage. The most common processes are court proceedings (judicial foreclosure) or grants of power to the mortgagee to sell the property (power of sale foreclosure). Many states regulate acceleration clauses and allow late payments to avoid foreclosure.
– Three theories exist regarding who has legal title to a mortgaged property. Under the title theory title to the security interest rests with the mortgagee. Most states, however, follow the lien theory under which the legal title remains with the mortgagor unless there is foreclosure.
– The mortgagor and the mortgagee generally have the right to transfer their interest in the mortgage. Some states hold that even when the purchaser of a property subject to a mortgage approval does not explicitly take over the mortgage the transfer is assumed. Mortgagees employ due-on-sale and due-on-encumbrance clauses to prevent the transfer of mortgages.
Call or email the law office of Boyette, Cummins & Nailos, PLLC, for your free consultation*. We will sit down with you and discuss all of your options regarding your real estate needs.
CLERMONT AND LAKE COUNTY MORTGAGE LAW ATTORNEYS