Owning a Home: Tools and resources for homebuyers (Guides from the CFPB)

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If you’re in the market for a home, these guides are a big help.

This article is provided to CRC by the Consumer Financial Protection Bureau.

Owning a Home

  • Owning a Home is a suite of tools and resources to educate, support, and empower consumers to shop effectively for a mortgage and to make better, more informed decisions throughout the mortgage process. It helps consumers understand the basics of mortgages, orient themselves to the market and the steps of the home loan process, and consider factors that may affect their own mortgage decision. The tools and resources aim to create a culture of shopping in the mortgage market by helping consumers understand what types of mortgages may be available to them, get organized to successfully navigate the mortgage shopping process, and learn what questions to ask along the way. The Owning a Home tools and resources described below are available at gov/owning-a-home/

KNOW THE PROCESS

  • The Owning a Home suite includes an interactive guide, Know the process, to help consumers navigate the mortgage process. The guide includes action steps, information, and tips that take consumers from the beginning of the process, when they are preparing to buy a home, through closing, when they sign for their mortgage loan. The guide includes four sections: Prepare to shop, Explore loan choices, Compare loan offers, and Get ready to close. The guide also includes links to the other Owning a Home tools and resources, described below, which allow consumers to consider factors specific to their situations. This guide is available at gov/owning-a-home/.

EXPLORE INTEREST RATES

  • The Owning a Home suite includes a tool that helps consumers explore the range of interest rates they might expect to be offered, and how much they might be able to save – for example, by shopping among different lenders, changing their down payment amount, or improving their credit score. The tool helps consumers orient themselves to the market and understand how shopping around for different offers or terms might affect their bottom line. This tool is available at gov/owning-a-home/explore-rates/.

UNDERSTAND LOAN OPTIONS

  • Understand loan options is a consumer guide to understanding the basics of mortgage loans and the key choices that make up a loan option, such as loan term, loan type, and interest rate type. Knowing what kind of loan options exist can prepare a consumer for talking to lenders and getting the best deal. This resource is available at gov/owning-a-home/loan-options/.

LOAN ESTIMATE AND CLOSING DISCLOSURE EXPLAINERS

  • New forms make it easier for consumers to understand and compare terms of different mortgage loans. The Owning a Home suite includes interactive sample disclosure forms that help consumers understand the details and terms used on the forms. The interactive sample disclosure for the Loan Estimate form is available at gov/owning-a-home/loan-estimate/. The interactive sample disclosure for the Closing Disclosure form is available at consumerfinance.gov/owning-a-home/closing-disclosure/.

CLOSING RESOURCES

  • Closing on a home and mortgage can be stressful. A mortgage loan is a major financial commitment, and consumers should review the loan contract and other materials carefully. However, there are a lot of documents to review. The Owning a Home suite includes two resources to help consumers navigate the process: a closing checklist and a guide to key closing documents. Both resources are available at gov/owning-a-home/process/close/.

8 Reasons Not to Get an Online Payday Loan

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

While online payday loans are advertised heavily on the internet, consumers should be very, very wary of giving out their personal information on the internet.  It may appear that you are giving your personal information to a lender, but oftentimes you are giving your personal information to a lead generator, who will then take your information and sell it to lenders, oftentimes to multiple lenders.  Or, they may sell your information to companies who contact you and harass you to try and collect money for loans you never received, as the stories below demonstrate.

We will continue adding stories about the dangers of applying for online payday loans, so check back soon.

8.  The owner of two online payday loan businesses that charged interest rates ranging from 89% to 169%, plus fees, will no longer be doing business in Pennsylvania. According to the state’s Department Banking and Securities in Harrisburg, Pa., the Anaheim, Calif.-based companies were not licensed by the state and made loans to more than 18,000 consumers for more than seven years. Pennsylvania Bans Online Payday Lender (Peter Strozniak, Credit Union Times. July 25 2014).

7. Many online payday loan companies will sell off the contact information provided when you got the loan. They will also sell off the lists of individuals who may not have repaid the loan, although the loan may have been illegal in the first place. This information then gets diffused among some of the most unethical, illiterate and inconsiderate scam artists on the planet, who will in the future start to phone or email the names on the list. Scams engender fear of legal consequences (E. Kent Winward, Standard Examiner. July 25, 2014)

6. Consumers say they were contacted after filing out loan applications online. Some of the applications were on Cash Advance USA or Fast Cash USA’s websites. Others say they filled out applications on sites that appeared unrelated. The victims say they were told to make upfront payments but never received their loans.  Bogus payday loan offers siphon money from victims (Kimberly Essex, 48WAFF.com July 24, 2014)

5.  Tiffany Kelker was stuck. In January 2011, finding herself in need of some financial assistance after the holidays, she had taken out a $600 “payday loan” from an online lending business that advertised fast cash. In the ensuing months, however, the Billings, Mont., mother of five watched as the company withdrew money electronically from her bank account, according to court documents. Eventually the lender took more than $1,800 in interest charges alone, which court records calculated as an annual percentage rate of 780 percent. Kelker would eventually file suit against Geneva Roth Ventures Inc., an Internet-based lending operation headquartered in Mission, Kan. Payday loan case showcases brutal interest rates in an industry under fire  (Dugan Arnett, Kansas City Star, July 19, 2014)

4. “According to the complaint, the defendants used consumers’ personal financial information it had collected through its websites to withdraw $30 from the bank accounts of tens of thousands of consumers, without authorization and without providing anything of value in return. ‘These defendants deceived consumers to get their sensitive financial data and used it to take their money,’ said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. ‘The FTC will continue putting a stop to these kinds of illegal practices.’” Phony Payday Loan Brokers Settle FTC Charges (FTC Press Release, July 11, 2014)

3. “Many consumers in this case were victimized twice,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “First when they inquired about payday loans online and their personal information was not properly safeguarded, and later, when they were harassed and intimidated by these defendants, to whom they didn’t owe any money.” At the FTC’s Request, Court Halts Collection of Allegedly Fake Payday Debts (Federal Trade Commission, July 1, 2014)

2. “The scammers use your personal information to hack your bank account and steal your identity. Remember, the information they purchase from the website lead generators includes names, addresses, phone numbers, social security numbers, bank account numbers, routing numbers, email addresses and even IP addresses. ” Payday loan pretender comes clean (Connie Thompson, KOMOnews.com, June 19, 2014)

1.  “Once you made that application, you basically sent up a red flag with them that you are someone in need of this money, and you need it on a short-term basis,” he told me. “That’s when the vultures come out.” I Applied For An Online Payday Loan. Here’s What Happened Next (Pam Fessler, NPR News, November 6, 2013)

CONSUMERS:  Have you had a bad experience with an online payday loan?  You should file a complaint with the Consumer Financial Protection Bureau.  Not only will it likely help with your case, but you’ll be giving this agency important information as they design new rules to regulate payday lending this year.  You can file a complaint with the CFPB here, and you can read about their work on payday lending, including enforcement actions here.

Action step: If you’re angry about what you read, consider signing our new petition to the Consumer Financial Protection Bureau, calling on Richard Cordray to implement strong consumer safeguards in the new rules they’re designing for payday loans.  You can sign it here: CFPB Petition

To stay up to date on financial justice issues in California, especially as they relate to low income communities, and communities of color, you can follow the California Reinvestment Coalition on our Facebook page, via TwitterGoogle+, watch our movies on our YouTube Channelsign up to receive our newsletter and action alerts, and of course, visit our website.

Two laws signed by Governor Brown will help Consumers in California Facing Illegal Debt Collection Practices

Two laws were recently signed into law by Governor Jerry Brown, both laws are positive developments for California consumers.

1) Deficiency Collections on Foreclosure   SB 426 prohibits deficiency collections and adverse credit reporting on non-recourse loans following a non-judicial foreclosure. A deficiency is the outstanding balance of a mortgage and the foreclosure sale amount. In spite of existing anti-deficiency protections for residential borrowers in California, some creditors and debt collectors have been attempting to collect debts by non-judicial means after a foreclosure. SB 426 makes clear that this practice is illegal. CRC and Housing Economic Rights Advocates co-sponsored the legislation. For more information, visit Senate Majority Leader Corbett’s webpage: Governor Signs Corbett Bill Protecting Struggling Homeowners, Borrowers

2. Debt Collectors in California will have to prove that the borrower owes a debt  SB 233 requires debt buyers and collection agencies to prove in court that a borrower owes a debt that they agency owns, the balance of that debt and that the debt is still within the statute of limitations and subject to collections before any judgment can be issued against the borrower. Public Good Law Center sponsored this legislation. An article in the Visala Times Delta explains the need for this bill- “Governor signs bill that holds debt collectors to stricter standards“ by Valerie Gibbons, July 12, 2013

According to the article, the bill traces its origins to State Senator Lou Correa (D-Anaheim), who was told his wages would be garnished after a default judgment on a debt. The only problem was that Senator Correa didn’t know about the debt because he didn’t owe it. According to the article, the mix-up took years for him to clear up the mistake the collection agency made.  And, Correa isn’t alone- according to the article, debt collectors/buyers hold the unenviable spot of #1 industry for complaints to the Federal Trade Commission, which has over 100,000 cases “in the federal pipeline against the firms.”

Resources from the CFPB if you are dealing with debt collectors  If you’re dealing with debt collectors who are engaging in illegal practices, you will also be happy to know that the Consumer Financial Protection Bureau is taking steps to regulate the collection industry. As of July 10, 2013, the CFPB will begin taking complaints about debt collectors on their website. (Click on “debt collection.”)

Model letters to use with debt collectors The CFPB also recently released five model letters that consumers can use if they’re dealing with a debt collector. Click here to access them.

1) Needs more information on the debt- For consumers who need more information about a debt.

2) Wants to dispute the debt and wants debt collector to prove responsibility or stop communication- Tells collector that you’re disputing the debt, instructs the collector to stop contacting you until they provide evidence that you’re responsible for the debt.

3) Restrict how and when debt collector contacts you- to tell the collector your preferred way to be contacted.

4) Have hired a lawyer- this will direct the collectors to contact your lawyer instead of you.

5) Wants debt collector to stop any and all contact- it’s important to note that sending this letter doesn’t stop a debt collector from continuing to pursue other remedies, like a lawsuit.

To stay up to date on financial justice issues in California, especially as they relate to low income communities and communities of color, you can follow the California Reinvestment Coalition on our Facebook page, via Twitter, watch our movies on our YouTube Channelsign up to receive our newsletter and action alerts, and of course, visit our website.