Brokers & The Consumer Credit Protection Act
I've received quite a bit of positive feeed-back on this article which ran in our November 1st newsletter, figured I would also post it here ... hope you find this informative:
This landmark Federal legislation, the Consumer Credit Protection Act, is the cornerstone law in the credit industry designed to enhance economic stabilization and the competition among the various financial institutions and other firms engaged in the extension of consumer credit would be strengthened by the informed use of credit. The informed use of credit results from an awareness of the cost thereof by consumers. It is the purpose of this Act to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit … more commonly referred to as The Truth in Lending Act.
This law not only regulates much of what is lawful in our consumer residential real estate mortgage lending industry, but other types of credit that's extended to the consumer. It's purpose can be summarized as follows: ‘The TILA requires full disclosure statements that outline all credit terms in simple easy-to-read language.' The Statement of Disclosure (some call it the "RegZ" others the "TIL") is the significant cornerstone of the Act.
As we all know, there's a number of service providers who supply certain services and materials to the process of building and producing an individual residential real property mortgage loan transaction. The Flood Certification people have the duty to provide the Flood Cert, the Appraiser brings the real property appraisal to the party, the credit reporting agency's duty is to provide the credit report, the title people bring the preliminary title report, and at closing issue the policy of title insurance, etc. the mortgage broker provides the RESPA required GFE and brings the borrower and his/her assembled paperwork, the wholesaler brings the money and (to answer a question I get 3 or fours times a month via our E-Mail Answers Program) as the "creditor" (as specifically defined by this Act) delivers the Statement of Disclosure (RegZ – TIL) to the borrowers.
Many service providers have an obligation to fulfill, so the consumers loan transaction will close smoothly and lawfully. One of them is not responsible to supply material or a service that's the obligation of one of the other parties.
A mortgage broker is not a ‘creditor' within the definitions set forth in 15 U.S. C. §1602(f) and 12 C.F.R. §226.2(A)(17). When a ‘creditor' (wholesaler) demands another service provider (mortgage broker) deliver the RegZ – TIL – they're creating an agency relationship as between the two of them, a situation the mortgage broker surely should avoid, as should the wholesaler. It's potentially bad for both of them.
My Raiders play tonight, hopefully they'll keep gong! Grand-Son's football game had a scheduling problem with the referees - so it was called off Saturday.
I've received quite a bit of positive feeed-back on this article which ran in our November 1st newsletter, figured I would also post it here ... hope you find this informative:
This landmark Federal legislation, the Consumer Credit Protection Act, is the cornerstone law in the credit industry designed to enhance economic stabilization and the competition among the various financial institutions and other firms engaged in the extension of consumer credit would be strengthened by the informed use of credit. The informed use of credit results from an awareness of the cost thereof by consumers. It is the purpose of this Act to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit … more commonly referred to as The Truth in Lending Act.
This law not only regulates much of what is lawful in our consumer residential real estate mortgage lending industry, but other types of credit that's extended to the consumer. It's purpose can be summarized as follows: ‘The TILA requires full disclosure statements that outline all credit terms in simple easy-to-read language.' The Statement of Disclosure (some call it the "RegZ" others the "TIL") is the significant cornerstone of the Act.
As we all know, there's a number of service providers who supply certain services and materials to the process of building and producing an individual residential real property mortgage loan transaction. The Flood Certification people have the duty to provide the Flood Cert, the Appraiser brings the real property appraisal to the party, the credit reporting agency's duty is to provide the credit report, the title people bring the preliminary title report, and at closing issue the policy of title insurance, etc. the mortgage broker provides the RESPA required GFE and brings the borrower and his/her assembled paperwork, the wholesaler brings the money and (to answer a question I get 3 or fours times a month via our E-Mail Answers Program) as the "creditor" (as specifically defined by this Act) delivers the Statement of Disclosure (RegZ – TIL) to the borrowers.
Many service providers have an obligation to fulfill, so the consumers loan transaction will close smoothly and lawfully. One of them is not responsible to supply material or a service that's the obligation of one of the other parties.
A mortgage broker is not a ‘creditor' within the definitions set forth in 15 U.S. C. §1602(f) and 12 C.F.R. §226.2(A)(17). When a ‘creditor' (wholesaler) demands another service provider (mortgage broker) deliver the RegZ – TIL – they're creating an agency relationship as between the two of them, a situation the mortgage broker surely should avoid, as should the wholesaler. It's potentially bad for both of them.
My Raiders play tonight, hopefully they'll keep gong! Grand-Son's football game had a scheduling problem with the referees - so it was called off Saturday.
posted by Secret! at 10:05 AM
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