The Agencies and Acronyms that Protect First Home Buyers

The Enforcers of Integrity, Disclosure and Transparency

Written by Carly Hallman

Before you buy a home, you might want to know these important agencies and acronyms that protect you and your family. There are good reasons they were established. Buying a home has been known to leave families in a heap of trouble for many a generation due to a lack of knowledge and worse so when these agencies did not exist to protect home buyers. The CFPB, FCRA, RESPA, FHA, HUD, TILA, HOA, LMNOP …Other than the the last one that is made up, the first 7 will probably affect many aspects of your home purchase. If you understand them, you will be glad they are there and can help. They will be there to Enforce Integrity, Disclosure and Transparency. With about $150,000 + at stake, its a GOOD thing.

These acronyms stand for laws, regulations, and groups, it’s very easy to get them mixed up. Use this useful glossary of housing terms to stay on top of the crazy lingo. Don’t get overwhelmed when financial advisers use some of these complex-seeming terms. Many of them, like “CFPB regulations” and “HOA fees,” are normal kinds of phrases you’ll likely hear as you’re getting ready to buy your first home.

Here is some important information to keep in mind:

Frist Time Home Buyer Protection and Rights

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Processes, Rights, and Organizations That First-Time Home-Buyers Need to Know

Buying your first home? Then you’re probably running into a lot of difficult-to-understand technical jargon and mumbo-jumbo. Don’t worry: Knowledge is power, and we’re here to help empower you!

Acronyms are meant to make communication between technical professionals easier and quicker. Unfortunately, they can make certain topics extremely difficult for newbies and outsiders to understand. Here are some of the most common acronyms you may encounter and what they mean. Along the way, we’ll teach you a little about your rights as a home-buyer!

CFPB
Consumer
Financial
Protection
Bureau

The CFPB was born in 2010 as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which itself was a response to the Great Recession.

The CFPB oversees banks, credit unions, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors, and more. If you’re seeking a mortgage or having difficulty paying one, you’ll want to understand the CFPB and how it operates. We’ll get into more detail about that later. As you’ll discover, the CFPB oversees and enforces many of the protections and acts that will affect you as a home-buyer!

FCRA
Fair
Credit
Reporting
Act

The FCRA is enforced by the CFPB. It ensures that you have a right to accurate information in your credit reports.

Your credit reports are essential records for anyone with a mortgage or loan or anyone renting property. They contain data about your repayments, whether a debt collector is taking action against you, what liens or judgments exist, bankruptcies, and more. You can request a free copy of your credit report once a year from a credit reporting agency, and you should! Always ensure that your reports are accurate and report any errors.

RESPA
Real
Estate
Settlement
Procedures
Act

RESPA is an important act that helps keep the price of real estate settlements fair. Before the act was passed in 1974, different branches of the real estate settlement process — lenders, agents, and insurers, for example — were notorious for giving each other kickbacks and inflating the cost of real estate for the consumer. Nasty tactics like bait-and-switching of prices and interest rates were also common. Under RESPA, you are entitled to know where the costs of real estate are coming from and to choose between different options for insurance, loans, and other fees.

The CFPB is the current enforcer of RESPA.

HUD
The U.S. Department of
Housing and
Urban
Development

HUD offers affordable public housing to low-income families as well as the elderly and disabled individuals. Housing Agencies (HAs) manage the actual housing, and HUD provides stipends and funding to make that housing affordable to low-income tenants.

If you need a place to live and think you might qualify for low-cost public housing, you should contact your local HA or HUD field office for details.

HUD also provides mortgage insurance through the FHA. This insurance makes it easier for families to get mortgages they need to buy property. Some FHA-insured mortgages that are foreclosed upon become “HUD homes” and are offered on the public market.

FHA
Fair
Housing
Act

The FHA makes it illegal for sellers of real estate or landlords to discriminate against potential renters or buyers based on their background.

HUD enforces the FHA, though anyone who believes that they have experienced discrimination in the home-buying or renting process can pursue the case independently through the courts.

TILA
Truth
In
Lending
Act

TILA mandates that certain lenders provide you with loan cost information. This makes it possible for you to compare different loans and shop around for the best deal. It doesn’t just manage mortgages and home costs but credit card practices and consumer credit in general.

It also gives you a three-day window to back out of any loan with no cost to you. This part of TILA is designed to protect you against high-pressure sales tactics — if you regret your decision two days after agreeing to a loan, you can still escape with no penalty.

HOA
Home
Owners’
Association

An HOA is typically a nonprofit corporation. HOAs are established by real estate developers to sell and market available homes, but they’re often given over to the local homeowners once the developer makes their exit.

The laws that govern HOAs vary from state to state, so it’s important to understand what your HOA can and can’t do when you move in. Joining an HOA is often a requirement if you buy a home within its jurisdiction.

Homeowners are usually elected to the board of directors of their HOA by members of the community.

When you’re looking to buy property and must become a member of an HOA, make sure you understand all of their regulations and fees. Sometimes, HOA regulations will work to your advantage by keeping the community organized and clean. Other times, an HOA’s fees may feel unjustified or their regulations might restrict what you perceive to be necessary freedoms.

Sources:

https://en.wikipedia.org/wiki/Consumer_Financial_Protection_Bureau
https://en.wikipedia.org/wiki/Fair_Credit_Reporting_Act
https://en.wikipedia.org/wiki/Real_Estate_Settlement_Procedures_Act
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/ramh/res/respamor
http://portal.hud.gov/hudportal/HUD?src=/topics/rental_assistance/phprog
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/reo/reobuyfaq
http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/FHLaws/yourrights
https://en.wikipedia.org/wiki/Fair_Housing_Act
https://en.wikipedia.org/wiki/Truth_in_Lending_Act
http://www.occ.treas.gov/topics/consumer-protection/truth-in-lending/index-truth-in-lending.html
https://en.wikipedia.org/wiki/Homeowner_association
http://www.investopedia.com/articles/mortgages-real-estate/08/homeowners-associations-tips.asp

Do homeowners need to worry about CFPB regulations?

The Consumer Financial Protection Bureau, or CFPB, was created to help consumers after the recession and was designed to help avoid potentially predatory loans and excessive fees. CFPB regulations are in the consumer’s best interest, and compliance is a good thing to watch out for. If a lender isn’t within compliance for a housing loan, it can be a big problem for them and you. Use the CFPB’s many online tools to become acquainted with what to expect.

How does the Fair Credit Reporting Act (FCRA) factor into buying a home?

Banks and organizations collect information about you and arrange it into reports and scores, and you’re allowed access to some of that information. When you’re getting ready to buy a home, you need to make sure your credit score is up to a standard (which is usually a minimum score of 580 or more for subprime mortgages). Under this law, you have certain rights as a consumer, such as the ability to dispute inaccurate claims or request information.

Are “CFPB compliant” or “FCRA compliant” good things to hear?

Sure, but that’s sort of like putting “not a murderer” and “doesn’t insult people” on your résumé;. it shouldn’t impress you much. It’s certainly a good thing, though, because not being compliant with either would be a problem.

What is TILA-RESPA?

The Real Estate Settlement Procedures Act (RESPA) and the Truth In Lending Act (TILA) are two different laws that both regulate the settlement process to avoid bait-and-switching, kickbacks, and inaccurate loan cost information. After 2015, the CFPB combined the two disclosures into one to make everything simpler for consumers and banks. Now, you’ll see TILA/RESPA Integrated Disclosure (TRID) forms.

Are HUD and the FHA the same thing or related?

The U.S. Department of Housing and Urban Development (HUD) enforces the Fair Housing Act (FHA), so they are indeed related. One is a department with staff and management; the other one is a law. The FHA makes it illegal for lenders to make a lending decision based on factors like race or religion. If someone believes they’ve been discriminated against, they can contact HUD. In addition to enforcing the FHA, HUD also ensures that there’s affordable, public, low-income housing available for families and the elderly, among other things.

Is buying a HUD home a good or bad thing?

It depends. There’s nothing really wrong with it, and you can get a great deal on the house. A HUD home was usually acquired after a foreclosure and may need an inspection, among other things.

Are there fees associated with homeowners’ associations?

Often there are, yes. An HOA, or homeowners’ association, will usually be a nonprofit corporation that will have a set of rules, as well as a fee, though the amount of that fee and the quality of those rules will vary drastically depending on the neighborhood.

These definitions of common home-buying acronyms, as well as their explanations, may come in useful as you shop for a home and a loan. For more information, contact the team at TitleMax®!


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