Four Laws That Mortgage Brokers Have to Respect at All Times
Leaders in the residential mortgage business have to account for a lot more than how best to serve borrowers. Lawmakers have tried to protect consumers by passing many acts that restrict how mortgage brokerages operate.
Successful brokers often spend significant portions of their professional lives figuring out how best to ensure compliance with these regulations. A post from Dustin Dimisa at his personal website details some of the statutes that one high-profile broker tackled in this fashion early on in his career.
Compliance is an Integral Part of the Mortgage Business
When a consumer takes out a mortgage loan, many years and large sums of money will almost always be at stake. Making an initially minor-seeming mistake or even failing to understand certain terms of the agreement can end up being incredibly costly.
Legislators at the federal and state levels have tried to help shield consumers from the negative effects of both their own mortgage-related missteps and the malfeasance of unscrupulous brokers. As a result, every mortgage that gets issued today can only legally do so when the requirements established in a number of legislative acts have been satisfied.
A mortgage brokerage that does anything but a reliable, efficient job of living up to these standards will never last long in the business. Compliance has to be not only faultless but also efficient and not disruptive. Some of the laws that mortgage brokers like Dimisa most often have to think about and account for are the:
- Real Estate Settlement Procedures Act. As recently as the 1970s, the standard real estate settlement process was regarded by many as unacceptably opaque and complex. That left too many consumers falling afoul of the various traps that shady brokerages and others could set up within it. The Real Estate Settlement Procedures Act was designed to encourage transparency and fair dealing, instead.
- Home Mortgage Disclosure Act. Although it has relied heavily on public funding and guarantees for many years, the mortgage industry was not always easy for the average person to come to grips with. The Home Mortgage Disclosure Act ensures that there will always be plenty of publicly available information about the goings-on within this especially important industry.
- Fair Credit Reporting Act. A single negative mark on a person’s credit report can end up costing many thousands of dollars. Mortgage lenders and others must always comply with the Fair Credit Reporting Act to ensure that their submissions are accurate and truthful. Brokers who do not keep up with their obligations under this act can even be forced to compensate borrowers.
- Truth in Lending Act. Informed consumers inevitably make better decisions about borrowing than others. The Truth in Lending Act helps ensure that loan applicants will always have access to the facts they need to make informed, appropriate choices.
Many Other Acts and Regulations to Account For
With these being only a few of the laws that mortgage brokers need to account for, maintaining compliance can certainly be challenging. Mortgage brokers who learn how to make compliance the norm, though, often end up becoming leaders in the field. Compliance is so central to the modern mortgage industry that excellence at ensuring it will always be respected and rewarded.