In today’s economic and financial times, it is important not to make a quick decision when selecting a wholesale lender. With increased regulations impacting the mortgage industry, it is prudent to take into consideration a mortgage lenders’ style, i.e., risk-taker versus more conservative.

The more mindful the lender is of current regulations, the more apt they are to ensure the independent brokers with whom he\she deals are also abiding by the same regulations.

While not intended to be punitive, the new laws are, in essence, helping to from the modern-day mortgage industry, one than everyone can trust and understand. The new laws to which we refer include:
The Patriot Act Put into effect after 9/11 to aide the Federal government’s efforts to combat the funding of terrorist activities and money laundering schemes, this legislation requires that all financial lending facilities receive, verify and document identification for each loan applicant.
Real Estate Settlement Protection Act (RESPA)
This law basically stipulates how mortgages need to be sold to consumers. Hence, it impacts all affiliated persons of the mortgage loan transaction process from appraisers and lenders to title purveyors and real estate agents. Reforms were recently presented which will standardize closing costs, make costs more transparent and provide the option of kick-backs.

Truth-in-Lending-Act (TILA)
Designed to ensure consumers understand the complete nature of their mortgage, by requiring that lenders | creditors provide each with a complete statement outlining in full, the agreed upon costs, terms, points and fees. Plus, under the TILA, lenders | creditors must cite the maximum rates consumers may be charged in interest rates. TILA also provides consumers with significant legal power should they need to dispute or report any irregularities.

Anti-predatory lending legislation
This term has been used to categorize unethical lenders who charge above regulation recommended interest rates mortgages to persons with either poor or no credit. This practice has been seen to be an abuse occurring in the mortgage industry that is now punishable by fines and | or repeal of one’s license.

It is very key for Brokers to stay abreast of these new regulations as they can, in fact, be pegged with penalties should they dishonor or go against any of them.

On the lighter side, many of these regulations are positive. For example, anti-predatory lending laws are very favorable towards consumers looking to receive a fair and equitable loan agreement.