Obtaining an audit should be the first step on your quest to successfully modify your home loan. If you are behind on your mortgage payments, facing default or foreclosure the audit is a critical tool that will be used as leverage to argue your case with your Lender(s).

Again, it will highlight the laws that were broken, if any, by your broker or by your lender. Over 80% of Mortgages Have Violations, we find violations in *RESPA and *TILA.

Loans with illegal terms or conditions are not enforceable. Mortgage payments are not accepted during the foreclosure or litigation process. Lenders will choose the most rational and fiscally sensible response when presented with the legal facts. Most lenders will choose Loan Modification as the most financially sensible option.

Keep in mind, you are not alone in this nationwide financial crisis. Times are extremely tough for millions of homeowners like you and thankfully there many active laws and consumer groups to protect you.

Understand this fact, before you can effectively get your lender to modify your loan, YOU MUST KNOW WHAT VIOLATIONS ARE CONTAINED IN YOUR LOAN DOCUMENTS.

Did the loan officer accurately disclose the loan terms to you? ·
Did you sign a separate broker fee agreement?
Was your home’s value inflated by the lender’s appraiser?
Did the lender fail to verify your ability to repay the loan?
Were you given all federal and state disclosures?
Were you properly notified of your right to cancel the loan?
Do your closing documents contain any technical errors?
Were you charged excessive or undisclosed fees?
Has your loan been sold without your knowledge?
Any and all applicable federal and state law violations

Knowing the answer to these questions is the key to obtaining a favorable outcome during the Loan Modification process. The factual and legal leverage you will get from a Mortgage Audit Analysis will give you the best chance to get your loan modified.

A Mortgage Loan Audit Analysis Report is a complete assessment of all factual findings identifying violations along with other areas of fraudulent discovery so you can pursue possible legal claims against your broker and/or lender.

So, if you are in foreclosure, the best way to stop your foreclosure is to get a loan audit, then get your loan modified.

Abstract of Judgment
Summary of a court judgment creating a lien against a property when filed with the county recorder.

Abstract of Title
The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.

Acceleration Clause
The clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other covenant.

Addendum
Any addition or change to a contract.

Adjustable Rate Mortgage (ARM)
A loan with an interest rate that fluctuates based on a specified financial index, such as Treasury securities, or the 11th District Cost of Funds, etc.

Agent
A licensed representative of the state to conduct real estate transactions.

Agreement of Sale
Also known as an agreement to convey. A signed, written contract entered into between the seller (vendor) and buyer (vendee) for sale of real property (land) under certain specific terms and conditions.

Alienation Clause
A term of a mortgage which requires that the borrower pay in full the principal and interest due upon the sale of the property. ( See Acceleration or Due-on-Sale Clause)

All-Inclusive Deed of Trust
A form of deed of trust that, in addition to any other amounts actually financed, includes the amounts of any prior deeds of trust. Sometimes referred to as a wrap-around or over-riding trust deed.

Amortization
The repayment of a debt in installments.

Appraisal
A valuation or an estimation of value of property by disinterested persons of suitable qualifications; the process of ascertaining a value of an asset or liability that involves expert opinion rather than explicit market
transactions.

Appreciation
The difference between the increased value of the property and the original value.

Arrears
Generally, being overdue in an installment payment.

Assignee
The person to whom a transfer of interest is made. Hence an assignee of an Agreement of Purchase and Sale may buy the property and enforce the contract in the same fashion as the original party.

Assignment
The method by which a right or contract is transferred from one person (the assignor) to another (the assignee).

Assumable Mortgage
A mortgage that can be taken over (“assumed”) by the buyer when a home is sold. If interest rates have risen, an assumable mortgage at a low rate may prove a selling point for the property.

Balloon Payment
A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.

Bankruptcy
An action filed in a federal bankruptcy court that allows a creditor to reorganize or discharge credit obligations due to insolvency. A property owner may halt foreclosure action by filing bankruptcy. Bankruptcies remain on a credit record for seven years and can severely limit a person’s ability to borrow.

Chapter 7 – “Debtor Wipeout” The court oversees the liquidation of the debtors’ non-exempt assets, distributing the cash proceeds proportionally amongst their creditors.

Chapter 11 – This is a business reorganization proceeding.

Chapter 13 – “Debtor Workout” This is the almost-automatic choice of most trustors seeking to use a bankruptcy filing to delay the in- evitable trustee’s sale as long as they can. The purpose of this proceeding is to give a “wage earner” time for rehabilitation . . . a temporary respite free from the collection efforts of creditors.

Beneficiary
A person entitled to receive money or assets from a trust or an estate. A lender is a beneficiary with a deed of trust or a note as a security for a loan.

Bid
An offer by an intending purchaser to pay a designated price for property which is about to be sold at auction.

Blanket Deed of Trust
A deed of trust secured by more than one lot or parcel of land.

Borrower
He to whom a thing or money is lent at his request.

Breach
The breaking or violating of a law, a right, obligation, engagement, or duty, either by commission or omission.

Broker
A agent authorized by the state to deal in real estate.

Buy-Down mortgage
A financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discount points are given to the lender by the builder or seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time.

Buyers Market
A market condition where there are fewer buyers than there are sellers. Usually indicated when a property is on the market for more than 90 days and interest rates are very high. (12% or higher)

Capital Gain
A profit earned from the sale of an asset.

Cash Flow
The surplus left over out of the rents after paying out all operating expenses and mortgage payments.

Certificate of Sale
A certificate issued at a judicial sale that entitles the buyer to receive a deed after confirmation of court for the purchase of the property.

Chain of Title
A succession of conveyances that comprises the title record history to a specific parcel of real property.

Closing Costs
Expenses supplementary to the sale of real estate, which includes loan, title and appraisal fees.

Closing Date
The date agreed upon which the buyer takes over the property.

Cloud on Title
Any outstanding claim that contradicts the title record, if valid, would impair the owners title.

Code
A collection of laws relating to a certain topic, such as real property, patents, etc.

Co-signer
A co-signer signs a promissory note and takes responsibility for the debt.

Collateral
Real estate or personal property which is pledged as security for a debt.

Collection
Obtain payment or liquidation of a debt or claim, either by personal solicitation or legal proceedings.

Comparables
Similar properties used as yardsticks to determine the market value of a certain property.

Complaint
The original or initial pleading by which an action is commenced; a written statement of the essential facts constituting the offense charged.

Contingency
A specified condition that must be fulfilled before a contract becomes firm and binding.

Contract
An agreement between two or more persons that creates an obligation to do or not to do a particular thing.

Conventional Loan
A loan that requires no insurance or guarantees.

Conveyance
A written instrument that transfers title to or an interest in land from one party to another (i.e. a deed, an assignment, a bill of sale, etc.)

Counteroffer
A response given to an offer.

Credit report
A document from a credit bureau setting forth a credit rating and pertinent financial data concerning a person or a company and used by banks, merchants, suppliers and the like in evaluating a credit risk.

Creditor
One to whom money is owed.

Debt
A sum of money due by a certain and express agreement; a specified sum of money owing to one person from another, including not only obligation of debtor to pay but the right of the creditor to receive and enforce payment.

Debt Ratio
To compare the total monthly payments of all of the borrower’s debts (including the mortgage) with the gross monthly income of the borrower. It evaluates the borrower’s ability to pay mortgage. Also called Debt-to-Income ratio.

Debtor
An entity that owes a debt; one who owes a debt.

Decree of Foreclosure
A court order to set out the outstanding amount on a delinquent mortgage in order to sell the property to pay the mortgagee.

Deed
A written instrument that, when executed and delivered, conveys title to or an interest in real estate.

Deed in lieu of foreclosure
A process whereby the owner, with the approval of the lender, deeds the property to the lender to avoid foreclosure. Lenders are generally reluctant to accept a “deed in lieu” unless the title is free and clear of any other encumbrances junior to theirs and the owners execute an estoppel affidavit acknowledging that they are acting volitionally, with informed consent.

Deed of Reconveyance
A instrument that releases and discharges a deed of trust, when the mortgage has been paid out.

Deed of Trust (Trust Deed)
A three party security instrument conveying the legal title to real property as security for the repayment of a loan. The owner is called the “trustor”. The neutral third party to whom the bare legal title is conveyed (and who is called on to liquidate the property if need be) is the “trustee”. The lender is the “beneficiary”. When the loan is paid off the trustee is directed by the beneficiary to issue a deed of reconveyance to the trustor, which extinguishes the trust deed lien.

Default
The failure to make payments in full, on time or at all or to live up to any other obligations placed on the borrower by the loan agreement.

Defeasance Clause
A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan.

Defendant
The person who defends against a claim asserted in a Court action.

Deficiency Judgment
A judgment entered in a lawsuit when a property is sold for less than the amount of the loan.

Delinquency
A condition when the payment is being late but not yet in default.

Demand Letter
Also known as a Breach Letter or Notice of Intent to Foreclose. Notice to the borrower that he/she is in “breach” of the terms of the Note and advising of the right to “cure” the default.

Department of Housing and Urban Development (HUD)
A federal department that focuses on programs regarding housing and renewal of city communities.

Department of Veterans Affairs (VA)
An independent federal agency which oversees programs for military veterans, including loan and mortgage programs. This agency allows most veterans to purchase a house without a down payment.

Disclosure Statement
Document disclosing the terms of a loan.

Due-on-Sale Clause
A clause in a mortgage which requires that the mortgage be paid out in full upon the sale of the property.

Due Diligence
Such a measure of prudence, activity, or assiduity, as is properly to be expected from a reasonable and prudent man under the particular circumstance.

Equity
The surplus of value which may remain after existing liens are deducted from the property.

Equity Right of Redemption
The right to avoid foreclosure action by paying off the debts, interest, and fees that have accumulated on the property.

Escrow Account
A bank account generally held in the name of the depositor and an escrow agent which is returnable to the depositor or paid to a third person on the fulfillment of a condition.

Estate
The total assets a person has when he dies, including real property.

Estoppel Certificate
A certificate in which a borrower certifies the amount owed on a mortgage loan and the rate of interest.

Eviction
The act of depriving a person of the possession of land or rental property that he has held or leased.

Fair Market Value
The amount at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts.

Fannie Mae
Its an official name of the Federal National Mortgage Association which is one of the largest agencies that buys mortgages from lenders and resells them as securities on the secondary mortgage market.

FHA
Stands for Federal Housing Administration. It’s a branch of H.U.D. It’s basic function is to direct housing in a way that Congress mandates by issuing mortgage insurance to institutional lenders on the loans they make. With such loan insurance, lenders are willing to lend with smaller down payments and at lower rates of interest.

FHA Loans
A loan program offering low-rate mortgages to buyers who are willing to make a down payment as small as 3 percent.

First Mortgage
A mortgage that is in first position and has priority as a lien over all other mortgages.

Foreclosure
A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document. The foreclosure procedure brings the rights of all parties to a conclusion and passes the title in the mortgaged property to either the holder of the mortgage or a third party who may purchase the realty at the foreclosure sale, free of all encumbrances affecting the property subsequent to the mortgage.

Garnishment
A statutory proceeding whereby person’s property, money, credits in possession or under the control of, or owing by, another are applied to payment of the former’s debt to third person by proper statutory process against debtor and garnishee.

Good Faith Estimate
Institutional lender estimates the costs a borrower will incur, including inspection fees and loan-processing charges.

Grantee
The person to whom the title of the property is granted.

Grantor
The person (seller) who grants title to another person (buyer).

Home Equity Line of Credit
A loan that is secured by the owners property which can be repaid and borrowed again at the owners convenience.

Home Equity Loan
Owners who borrow against the equity in their homes.

HUD 1 Statement
A form, usually given by a bank, that includes the costs of purchasing a home.

Indemnify
Any losses and damages endured by another person that you are fully responsible for.

Instrument
A legal written document.

Involuntary lien
A lien issued against a property without the owners approval.

Judgment
The final decision of the court resolving the dispute and determining the rights and obligations of the parties.

Judicial Foreclosure
A foreclosure process which is executed via a court action.

Landlord
He who, being the owner of an estate of land, or rental property, has leased it to another person.

Lease
An agreement involving payment of rent for possession of real estate for a specific period of time.

Lease Option
A lease that contains the right to purchase a property for a specific price during a given time frame.

Lender
He from whom a thing or money is borrowed.

Lien
A claim or charge on a property for payment of some debt, obligation or duty.

Lis pendens
A term meaning “legal action pending” that gives notice of an action or proceeding affecting the title of the property.

Loss Mitigation Department
A department which helps homeowners avoid foreclosure; the lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan

Marketable Title
A title with no claims or defects that could otherwise hinder a property being sold.

Mechanic’s lien
A claim created by state statutes for the purpose of securing priority of payment of the price or value of work performed and materials furnished in erecting or repairing a building or other structure, and as such, attaches to the land as well as buildings and improvements erected thereon.

Mortgage
An interest in land created by a written instrument providing security for the performance of a duty or the payment of a debt.

Mortgagee
The entity, usually a bank or financial institution, who lends money to a borrower.

Mortgagor
The person who borrows the money from a lender to purchase a property.

Multiple Listings Service (MLS)
A listing of properties from local real estate agents that consist of all homes available in an area. For-Sale-by-Owner properties are not listed in this database.

Notice of Default (NOD)
A notice that is sent out by the lender when a mortgage payment is late in an attempt to cure or make the loan current.

Notice of Rescission
A legal document used when the defaulting party has cured or corrected the default

Notice of Sale
The notice of an impending foreclosure sale required by the state. It recites the legal description of the property being foreclosed upon and gives the time, date and place of the pending sale.

Offer to Purchase
A contract expressing of a person’s willingness to purchase a certain property on terms expressed in the offer.

Power of Attorney
A written document signed by the owner which authorizes someone else to act in behalf of the owner.

Power of Sale
A clause commonly inserted in mortgages and deeds of trust that are in default, giving the mortgagee (or trustee) the right and power to advertise and sell the mortgaged property at public auction to satisfy the debt.

Pre-Foreclosure
Term used to discuss delinquent properties before they go to the foreclosure auction.

Quit Title
An action at law to remove an adverse claim or cloud from the title of property.

Quit Claim Deed
A deed of conveyance that releases any title, interest, or claim, which the grantor may have in the premises.

Real Estate Owned (REO)
Property acquired back by the lender after it has gone to auction.

Recorder
A public official that is responsible for keeping all the records of real estate transactions.

Redemption Period
The time allotted to the mortgagor to reclaim his/her property after it has been sold at an auction. Not all states have a redemption period.

Sales Contract
A contract to which the buyer and seller agree to terms of sale.

Second Mortgage
A second loan placed upon a property in addition to an existing first loan.

Sheriff’s Sale
The sale of a property to satisfy a debt or judgment.

Short Sale
The sale of a property under or at market value that’s lower than the loan balance.

Subject To
The transfer of rights to pay a debt from one party to another, with the original party remaining liable for the debt if the second party defaults.

Tax Deed
A type of deed used to convey title after real property is sold at auction by public authority for non-payment of taxes.

Tax Lien
A lien on real estate in favor of a state or local government that may be foreclosed on for the non-payment of taxes.

Tenant
A person in possession of real property with the owner’s permission.

Title
Evidence of ownership of land.

Title Company
Firms that examine properties to ensure that the title to a piece of property is clear and free of any encumbrances. They also issue title insurance.

Title Insurance
An insurance policy that provides protection for lenders and buyers against any losses caused by defects in the title.

Title Report
A report which sets out the current state of title to a property.

Title Search
A search within the public records to determine ownership and that there are no claims or liens against the property.

Torrens Title
A torrens title contains a listing of all legal instruments (mortgages, judgments, liens) that have been recorded on the property from its origin.

Trust Account
A special account used by a broker or escrow agent to safeguard funds for a buyer or seller.

Trust Deed
A three party security instrument conveying the legal title to real property as security for the repayment of a loan. The owner is called the “trustor”. The neutral third party to whom the bare legal title is conveyed (and who is called on to liquidate the property if need be) is the “trustee”. The lender is the “beneficiary”. When the loan is paid off the trustee is directed by the beneficiary to issue a deed of reconveyance to the trustor, which extinguishes the trust deed lien.

Trustee
A legally empowered person who holds or controls a piece of property for another person.

Trustee’s Deed
A deed given to the successful high bidder after a foreclosure auction.

Trustee’s Sale
An auction where a trustee may sell a property that has defaulted in effort to pay the outstanding debt that is owed.

Unsecured debt
Debt not secured by collateral.

Vacate
To make vacant or empty.

Warranty Deed
Deed in which the grantor warrants good clear title.

Without Recourse
Giving the lender no right to seek payment or seize assets in the event of nonpayment from anyone other than the party specified in the debt contract.

Wraparound Mortgage
The financing technique in which the payment of the existing mortgage is continued by the seller and a new, higher interest loan, which is larger than the existing mortgage, is paid by the borrower.

Yield
The return on investment or the amount of profit stated as a percentage of the amount invested.

Zoning
Regulations that control the use of land within a jurisdiction.

FILE A COMPLAINT TO (OCC) Office of the Comptroller of the Currency Consumer Complaints and Assistance ABOUT AN INSTITUTION WHO IS GOVERNED BY THE REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 (RESPA ACT): OCC Website HERE

FILE A COMPLAINT TO (FDIC) FEDERAL DEPOSIT INSURANCE CORPORATION ABOUT AN INSTITUTION WHO IS GOVERNED BY THE REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 (RESPA ACT): FDIC HERE

FILE A COMPLAINT TO (HUD) HOUSING AND URBAN DEVELOPMENT ABOUT AN INSTITUTION WHO IS GOVERNED BY THE REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 (RESPA ACT): HERE

REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

AN ACT

To further the national housing goal of encouraging homeownership by regulating certain lending practices and closing and settlement procedures in federally related mortgage transactions to the end that unnecessary costs and difficulties of purchasing housing are minimized, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SHORT TITLE

SECTION 1. This Act may be cited as the “Real Estate Settlement Procedures Act of 1974″.

[Codified to 12 U.S.C. 2601 note]

[Source: Section 1 of the Act of December 22, 1974 (Pub. L. No. 93-533; 88 Stat. 1724), effective June 20, 1975]

FINDINGS AND PURPOSE

SEC. 2. (a) The Congress finds that significant reforms in the real estate settlement process are needed to insure that consumers throughout the Nation are provided with greater and more timely information on the nature and costs of the settlement process and are protected from unnecessarily high settlement charges caused by certain abusive practices that have developed in some areas of the country. The Congress also finds that it has been over two years since the Secretary of Housing and Urban Development and the Administrator of Veterans’ Affairs submitted their joint report to the Congress on “Mortgage Settlement Costs” and that the time has come for the recommendations for Federal legislative action made in that report to be implemented.
(b) It is the purpose of this Act to effect certain changes in the settlement process for residential real estate that will result–
(1) in more effective advance disclosure to home buyers and sellers of settlement costs;
(2) in the elimination of kickbacks or referral fees that tend to increase unnecessarily the costs of certain settlement services;
(3) in a reduction in the amounts home buyers are required to place in escrow accounts established to insure the payment of real estate taxes and insurance; and
(4) in significant reform and modernization of local recordkeeping of land title information.

[Codified to 12 U.S.C. 2601]

[Source: Section 2 of the Act of December 22, 1974 (Pub. L. No. 93-533; 88 Stat. 1724), effective June 20, 1975]

DEFINITIONS

SEC. 3. For purposes of this Act–
(1) the term “federally related mortgage loan” includes any loan (other than temporary financing such as a construction loan) which–
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(A) is secured by a first or subordinate lien on residential real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from one to four families, including any such secured loan, the proceeds of which are used to prepay or pay off an existing loan secured by the same property; and
(B)(i) is made in whole or in part by any lender the deposits or accounts of which are insured by any agency of the Federal Government, or is made in whole or in part by any lender which is regulated by any agency of the Federal Government; or
(ii) is made in whole or in part, or insured, guaranteed, supplemented, or assisted in any way, by the Secretary or any other officer or agency of the Federal Government or under or in connection with a housing or urban development program administered by the Secretary or a housing or related program administered by any other such officer or agency; or
(iii) is intended to be sold by the originating lender to the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, or a financial institution from which it is to be purchased by the Federal Home Loan Mortgage Corporation; or
(iv) is made in whole or in part by any “creditor”, as defined in section 103(f) of the Consumer Credit Protection Act (15 U.S.C. 1602(f)), who makes or invests in residential real estate loans aggregating more than $1,000,000 per year, except that for the purpose of this Act, the term “creditor” does not include any agency or instrumentality of any State;
(2) the term “thing of value” includes any payment, advance, funds, loan, service, or other consideration;
(3) the term “settlement services” includes any service provided in connection with a real estate settlement including, but not limited to, the following: title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, pest and fungus inspections, services rendered by a real estate agent or broker the origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of loans), and the handling of the processing, and closing or settlement;
(4) the term “title company” means any institution which is qualified to issue title insurance, directly or through its agents, and also refers to any duly authorized agent of a title company;
(5) the term “person” includes individuals, corporations, associations, partnerships, and trusts;
(6) the term “Secretary” means the Secretary of Housing and Urban Development;
(7) the term “affiliated business arrangement” means an arrangement in which (A) a person who is in a position to refer business incident to or a part of a real estate settlement service involving a federally related mortgage loan, or an associate of such person, has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1 percent in a provider of settlement services; and (B) either of such persons directly or indirectly refers such business to that provider or affirmatively influences the selection of that provider; and
(8) the term “associate” means one who has one or more of the following relationships with a person in a position to refer settlement business: (A) a spouse, parent, or child of such person; (B) a corporation or business entity that controls, is controlled by, or is under common control with such person; (C) an employer, officer, director, partner, franchisor, or franchisee of such person; or (D) anyone who has an agreement, arrangement, or understanding, with such person, the purpose or substantial effect of which is to enable the person in a position to refer settlement business to benefit financially from the referrals of such business.

[Codified to 12 U.S.C. 2602]

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[Source: Section 3 of the Act of December 22, 1974 (Pub. L. No. 93-533; 88 Stat. 1724), effective June 20, 1975, as amended by section 2 of the Act of January 2, 1976 (Pub. L. No. 94-205; 89 Stat. 1157), effective January 2, 1976; section 461(a) of title IV of the Act of November 30, 1983 (Pub. L. No. 98-181; 97 Stat. 1230), effective January 1, 1984; section 908(a) and (b) of title IX of the Act of October 28, 1992 (Pub. L. No. 102--550; 106 Stat. 3873) effective October 28, 1992; section 2103(c)(1) of title II of the Act of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--400), effective September 30, 1996]

UNIFORM SETTLEMENT STATEMENT

SEC. 4. (a) The Secretary, in consultation with the Administrator of Veterans’ Affairs, the Federal Deposit Insurance Corporation, and the Director of the Office of Thrift Supervision, shall develop and prescribe a standard form for the statement of settlement costs which shall be used (with such variations as may be necessary to reflect differences in legal and administrative requirements or practices in different areas of the country) as the standard real estate settlement form in all transactions in the United States which involve federally related mortgage loans. Such form shall conspicuously and clearly itemize all charges imposed upon the borrower and all charges imposed upon the seller in connection with the settlement and shall indicate whether any title insurance premium included in such charges covers or insures the lender’s interest in the property, the borrower’s interest, or both. The Secretary may, by regulation, permit the deletion from the form prescribed under this section of items which are not, under local laws or customs, applicable in any locality, except that such regulation shall require that the numerical code prescribed by the Secretary be retained in forms to be used in all localities. Nothing in this section may be construed to require that that part of the standard form which relates to the borrower’s transaction be furnished to the seller, or to require that that part of the standard form which relates to the seller be furnished to the borrower.
(b) The form prescribed under this section shall be completed and made available for inspection by the borrower at or before settlement by the person conducting the settlement, except that (1) the Secretary may exempt from the requirements of this section settlements occurring in localities where the final settlement statement is not customarily provided at or before the date of settlement, or settlements where such requirements are impractical and (2) the borrower may, in accordance with regulations of the Secretary, waive his right to have the form made available at such time. Upon the request of the borrower to inspect the form prescribed under this section during the business day immediately preceding the day of settlement, the person who will conduct the settlement shall permit the borrower to inspect those items which are known to such person during such preceding day.

[Codified to 12 U.S.C. 2603]

[Source: Section 4 of the Act of December 22, 1974 (Pub. L. No. 93--533; 88 Stat. 1725), effective June 20, 1975, as amended by section 3 of the Act of January 2, 1976 (Pub. L. No. 94--205; 89 Stat. 1157), effective January 2, 1976; section 2103(g)(1) of title II of the Act of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--401), effective September 30, 1996]

SPECIAL INFORMATION BOOKLETS

SEC. 5. (a) The Secretary shall prepare and distribute booklets to help persons borrowing money to finance the purchase of residential real estate better to understand the nature and costs of real estate settlement services. The Secretary shall distribute such booklets to all lenders which make federally related mortgage loans.
(b) Each booklet shall be in such form and detail as the Secretary shall prescribe and, in addition to such other information as the Secretary may provide, shall include in clear and concise language–
(1) a description and explanation of the nature and purpose of each cost incident to a real estate settlement;
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(2) an explanation and sample of the standard real estate settlement form developed and prescribed under section 4;
(3) a description and explanation of the nature and purpose of escrow accounts when used in connection with loans secured by residential real estate;
(4) an explanation of the choices available to buyers of residential real estate in selecting persons to provide necessary services incident to a real estate settlement; and
(5) an explanation of the unfair practices and unreasonable or unnecessary charges to be avoided by the prospective buyer with respect to a real estate settlement.
Such booklets shall take into consideration differences in real estate settlement procedures which may exist among the several States and territories of the United States and among separate political subdivisions within the same State and territory.
(c) Each lender shall include with the booklet a good faith estimate of the amount or range of charges for specific settlement services the borrower is likely to incur in connection with the settlement as prescribed by the Secretary.
(d) Each lender referred to in subsection (a) shall provide the booklet described in such subsection to each person from whom it receives or for whom it prepares a written application to borrow money to finance the purchase of residential real estate. Such booklet shall be provided at the time of receipt or preparation of such application.
(e) Booklets may be printed and distributed by lenders if their form and content are approved by the Secretary as meeting the requirements of subsection (b) of this section.

[Codified to 12 U.S.C. 2604]

[Source: Section 5 of the Act of December 22, 1975 (Pub. L. No. 93--533; 88 Stat. 1725), effective June 20, 1975, as amended by section 4 of the Act of January 2, 1976 (Pub. L. No. 94--205; 89 Stat. 1158), effective January 2, 1976]

SERVICING OF MORTGAGE LOANS AND ADMINISTRATION OF ESCROW ACCOUNTS

SEC. 6. (a) Disclosure to Applicant Relating to Assignment, Sale, or Transfer of Loan Servicing.—Each person who makes a federally related mortgage loan shall disclose to each person who applies for the loan, at the time of application for the loan, whether the servicing of the loan may be assigned, sold, or transferred to any other person at any time while the loan is outstanding.
(1) IN GENERAL.—Each person who makes a federally related mortgage loan shall disclose to each person who applies for any such loan, at the time of application for the loan–
(A) whether the servicing of any such loan may be assigned, sold, or transferred to any other person at any time while such loan is outstanding;
(B) at the choice of the person making a federally related mortgage loan–
(i) for each of the most recent 3 calendar years completed (at the time of such application), the percentage (rounded to the nearest quartile) of loans made by such person for which the servicing has been assigned, sold, or transferred as of the end of the most recent calendar year completed, except that–
(I) for any loan application during the 12-month period beginning on the date of the enactment of the Cranston-Gonzalez National Affordable Housing Act, the information disclosed under this subparagraph may be for only the most recent calendar year completed, and for any loan application during the 12-month period beginning 1 year after the date of the enactment of the Cranston-Gonzalez National Affordable Housing Act, the information disclosed under this subparagraph may be for the most recent 2 calendar years completed; and
(II) this subparagraph may not be construed to require the inclusion, in the percentage disclosed, of any loans the servicing of which has been assigned, sold, or transferred by the person making the loan to a transferee servicer that is an affiliate or subsidiary of such person; or
{{4-28-00 p.7075}}
(ii) a statement that the person making the loan has previously assigned, sold, or transferred the servicing of federally related mortage loans; and
(C) if the person who makes the loan does not engage in the servicing of any federally related mortgage loans, that there is a present intent on the part of such person (at the time of such application) to assign, sell, or transfer the servicing of such loan to another person.
(2) MODEL DISCLOSURE STATEMENTS.—Not later than 90 days after the date of the enactment of the Cranston-Gonzalez National Affordable Housing Act, the Secretary shall develop a model disclosure statement for notification to applicants under paragraph (1) with respect to servicing procedures, transfer practices and requirements, and complaint resolution. The model statement shall provide for the person originating the loan to disclose their capacity to service loans and the best available estimate of the percentage of all loans made by such person for which the servicing will be assigned, sold, or transferred during the 12-month period beginning upon the origination. The estimate shall be expressed as one of the following range of possibilities–between 0 and 25 percent, between 26 and 50 percent, between 51 and 75 percent, or between 76 and 100 percent. This paragraph may not be construed to require the inclusion, in the estimate disclosed, of any loans the servicing of which will be assigned, sold, or transferred by the person originating the loan to a transferee servicer that is an affiliate or subsidiary of such person.
(3) SIGNATURE OF APPLICANT.—Any disclosure of the information required under paragraph (1) shall not be effective for purposes of this section unless the disclosure is accompanied by a written statement, in such form as the Secretary shall develop before the expiration of the 90-day period beginning on the date of the enactment of the Cranston-Gonzalez National Affordable Housing Act, that the applicant has read and understood the disclosure and that is evidenced by the signature of the applicant at the place where such statement appears in the application.
(b) Notice by Transferor or Loan Servicing at Time of Transfer.—
(1) NOTICE REQUIREMENT.—Each servicer of any federally related mortgage loan shall notify the borrower in writing of any assignment, sale, or transfer of the servicing of the loan to any other person.
(2) TIME OF NOTICE.—
(A) IN GENERAL.—Except as provided under subparagraphs (B) and (C), the notice required under paragraph (1) shall be made to the borrower not less than 15 days before the effective date of transfer of the servicing of the mortgage loan (with respect to which such notice is made).
(B) EXCEPTION FOR CERTAIN PROCEEDINGS.—The notice required under paragraph (1) shall be made to the borrower not more than 30 days after the effective date of assignment, sale, or transfer of the servicing of the mortgage loan (with respect to which such notice is made) in any case in which the assignment, sale, or transfer of the servicing of the mortgage loan is preceded by–
(i) termination of the contract for servicing the loan for cause;
(ii) commencement of proceedings for bankruptcy of the servicer; or
(iii) commencement of proceedings by the Federal Deposit Insurance Corporation or the Resolution Trust Corporation for conservatorship or receivership of the servicer (or an entity by which the servicer is owned or controlled).
(C) EXCEPTION FOR NOTICE PROVIDED AT CLOSING.—The provisions of subparagraphs (A) and (B) shall not apply to any assignment, sale, or transfer of the servicing of any mortgage loan if the person who makes the loan provides to the borrower, at settlement (with respect to the property for which the mortgage loan is made), written notice under paragraph (3) of such transfer.
(3) CONTENTS OF NOTICE.—The notice required under paragraph (1) shall include the following information:
(A) The effective date of transfer of the servicing described in such paragraph.
(B) The name, address, and toll-free or collect call telephone number of the transferee servicer.
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(C) A toll-free or collect call telephone number for (i) an individual employed by the transferor servicer, or (ii) the department of the transferor servicer, that can be contacted by the borrower to answer inquiries relating to the transfer of servicing.
(D) The name and toll-free or collect call telephone number for (i) an individual employed by the transferee servicer, or (ii) the department of the transferee servicer, that can be contacted by the borrower to answer inquiries relating to the transfer of servicing.
(E) The date on which the transferor servicer who is servicing the mortgage loan before the assignment, sale, or transfer will cease to accept payments relating to the loan and the date on which the transferee servicer will begin to accept such payments.
(F) Any information concerning the effect the transfer may have, if any, on the terms of or the continued availability of mortgage life or disability insurance or any other type of optional insurance and what action, if any, the borrower must take to maintain coverage.
(G) A statement that the assignment, sale, or transfer of the servicing of the mortgage loan does not affect any term or condition of the security instruments other than terms directly related to the servicing of such loan.
(c) Notice by Transferee of Loan Servicing at Time of Transfer.—
(1) NOTICE REQUIREMENT.—Each transferee servicer to whom the servicing of any federally related mortgage loan is assigned, sold, or transferred shall notify the borrower of any such assignment, sale, or transfer.
(2) TIME OF NOTICE.—
(A) IN GENERAL.—Except as provided in subparagraphs (B) and (C), the notice required under paragraph (1) shall be made to the borrower not more than 15 days after the effective date of transfer of the servicing of the mortgage loan (with respect to which such notice is made).
(B) EXCEPTION FOR CERTAIN PROCEEDINGS.—The notice required under paragraph (1) shall be made to the borrower not more than 30 days after the effective date of assignment, sale, or transfer of the servicing of the mortgage loan (with respect to which such notice is made) in any case in which the assignment, sale, or transfer of the servicing of the mortgage loan is preceded by–
(i) termination of the contract for servicing the loan for cause;
(ii) commencement of proceedings for bankruptcy of the servicer; or
(iii) commencement of proceedings by the Federal Deposit Insurance Corporation or the Resolution Trust Corporation for conservatorship or receivership of the servicer (or an entity by which the servicer is owned or controlled).
(C) EXCEPTION FOR NOTICE PROVIDED AT CLOSING.—The provisions of subparagraphs (A) and (B) shall not apply to any assignment, sale, or transfer of the servicing of any mortgage loan if the person who makes the loan provides to the borrower, at settlement (with respect to the property for which the mortgage loan is made), written notice under paragraph (3) of such transfer.
(3) CONTENTS OF NOTICE.—Any notice required under paragraph (1) shall include the information described in subsection (b)(3).
(d) Treatment of Loan Payments During Transfer Period.—During the 60-day period beginning on the effective date of transfer of the servicing of any federally related mortgage loan, a late fee may not be imposed on the borrower with respect to any payment on such loan and no such payment may be treated as late for any other purposes, if the payment is received by the transferor servicer (rather than the transferee servicer who should properly receive payment) before the due date applicable to such payment.
(e) Duty of Loan Servicer To Respond to Borrower Inquiries.—
(1) NOTICE OF RECEIPT OF INQUIRY.—
(A) IN GENERAL.—If any servicer of a federally related mortgage loan receives a qualified written request from the borrower (or an agent of the borrower) for information relating to the servicing of such loan, the servicer shall provide a written response acknowledging receipt of the correspondence within 20 days (excluding legal public holidays, Saturdays, and Sundays) unless the action requested is taken within such period.
{{4-28-00 p.7077}}
(B) QUALIFIED WRITTEN REQUEST.—For purposes of this subsection, a qualified written request shall be a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that–
(i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and
(ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.
(2) ACTION WITH RESPECT TO INQUIRY.—Not later than 60 days (excluding legal public holidays, Saturdays, and Sundays) after the receipt from any borrower of any qualified written request under paragraph (1) and, if applicable, before taking any action with respect to the inquiry of the borrower, the servicer shall–
(A) make appropriate corrections in the account of the borrower, including the crediting of any late charges or penalties, and transmit to the borrower a written notification of such correction (which shall include the name and telephone number of a representative of the servicer who can provide assistance to the borrower);
(B) after conducting an investigation, provide the borrower with a written explanation or clarification that includes–
(i) to the extent applicable, a statement of the reasons for which the servicer believes the account of the borrower is correct as determined by the servicer; and
(ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower; or
(C) after conducting an investigation, provide the borrower with a written explanation or clarification that includes–
(i) information requested by the borrower or an explanation of why the information requested is unavailable or cannot be obtained by the servicer; and
(ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower.
(3) PROTECTION OF CREDIT RATING.—During the 60-day period beginning on the date of the servicer’s receipt from any borrower of a qualified written request relating to a dispute regarding the borrower’s payments, a servicer may not provide information regarding any overdue payment, owed by such borrower and relating to such period or qualified written request, to any consumer reporting agency (as such term is defined under section 603 of the Fair Credit Reporting Act).
(f) DAMAGES AND COSTS.—Whoever fails to comply with any provision of this section shall be liable to the borrower for each such failure in the following amounts:
(1) INDIVIDUALS.—In the case of any action by an individual, an amount equal to the sum of–
(A) any actual damages to the borrower as a result of the failure; and
(B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $1,000.
(2) CLASS ACTIONS.—In the case of a class action, an amount equal to the sum of–
(A) any actual damages to each of the borrowers in the class as a result of the failure; and
(B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not greater than $1,000 for each member of the class, except that the total amount of damages under this subparagraph in any class action may not exceed the lesser of–
(i) $500,000; or
(ii) 1 percent of the net worth of the servicer.
(3) COSTS.—In addition to the amounts under paragraph (1) or (2), in the case of any successful action under this section, the costs of the action, together with any attorneys fees incurred in connection with such action as the court may determine to be reasonable under the circumstances.
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(4) NONLIABILITY.—A transferor or transferee servicer shall not be liable under this subsection for any failure to comply with any requirement under this section if, within 60 days after discovering an error (whether pursuant to a final written examination report or the servicer’s own procedures) and before the commencement of an action under this subsection and the receipt of written notice of the error from the borrower, the servicer notifies the person concerned of the error and makes whatever adjustments are necessary in the appropriate account to ensure that the person will not be required to pay an amount in excess of any amount that the person otherwise would have paid.
(g) ADMINISTRATION OF ESCROW ACCOUNTS.—If the terms of any federally related mortgage loan require the borrower to make payments to the servicer of the loan for deposit into an escrow account for the purpose of assuring payment of taxes, insurance premiums, and other charges with respect to the property, the servicer shall make payments from the escrow account for such taxes, insurance premium, and other charges in a timely manner as such payments become due.
(h) PREEMPTION OF CONFLICTING STATE LAWS.—Notwithstanding any provision of any law or regulation of any State, a person who makes a federally related mortgage loan or a servicer shall be considered to have complied with the provisions of any such State law or regulation requiring notice to a borrower at the time of application for a loan or transfer of the servicing of a loan if such person or servicer complies with the requirements under this section regarding timing, content, and procedures for notification of the borrower.
(i) DEFINITIONS.—For purposes of this section:
(1) EFFECTIVE DATE OF TRANSFER.—The term “effective date of transfer” means the date on which the mortgage payment of a borrower is first due to the transferee servicer of a mortgage loan pursuant to the assignment, sale, or transfer of the servicing of the mortgaged loan.
(2) SERVICER.—The term “servicer” means the person responsible for servicing of a loan (including the person who makes or holds a loan if such person also services the loan). The term does not include–
(A) the Federal Deposit Insurance Corporation or the Resolution Trust Corporation, in connection with assets acquired, assigned, sold, or transferred pursuant to section 13(c) of the Federal Deposit Insurance Act or as receiver or conservator of an insured depository institution; and
(B) the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Resolution Trust Corporation, or the Federal Deposit Insurance Corporation, in any case in which the assignment, sale, or transfer of the servicing of the mortgage loan is preceded by–
(i) termination of the contract for servicing the loan for cause;
(ii) commencement of proceedings for bankruptcy of the servicer; or
(iii) commencement of proceedings by the Federal Deposit Insurance Corporation or the Resolution Trust Corporation for conservatorship or receivership of the servicer (or an entity by which the servicer is owned or controlled).
(3) SERVICING.—The term “servicing” means receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan, including amounts for escrow accounts described in section 10, and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the loan.
(j) TRANSITION.—
(1) ORIGINATOR LIABILITY.—A person who makes a federally related mortgage loan shall not be liable to a borrower because of a failure of such person to comply with subsection (a) with respect to an application for a loan made by the borrower before the regulations referred to in paragraph (3) take effect.
(2) SERVICER LIABILITY.—A servicer of a federally related mortgage loan shall not be liable to a borrower because of a failure of the servicer to perform any duty under subsection (b), (c), (d), or (e) that arises before the regulations referred to in paragraph (3) take effect.
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(3) REGULATIONS AND EFFECTIVE DATE.—The Secretary shall, by regulations that shall take effect not later than April 20, 1991, establish any requirements necessary to carry out this section. Such regulations shall include the model disclosure statement required under subsection (a)(2).

[Codified to 12 U.S.C. 2605]

[Source: Section 6 of the Act of December 22, 1974 (Pub. L. No. 93--533; 88 Stat. 1726), effective June 20, 1975, as repealed by section 5 of the Act of January 2, 1976 (Pub. L. No. 94--205; 89 Stat. 1158), effective January 2, 1976; as added by section 941 of title IX of the Act of November 28, 1990 (Pub. L. No. 101--625; 104 Stat. 4405), effective November 28, 1990; as amended by section 312 of title III of the Act of April 10, 1991 (Pub. L. No. 102--27; 105 Stat. 154), effective April 10, 1991; section 345 of title III of the Act of September 23, 1994 (Pub. L. No. 103--325; 108 Stat. 2239), effective September 23, 1994; section 2103(a) of title II of the Act of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--399), effective September 30, 1996]

SEC. 7. Exempted Transactions
(a) IN GENERAL.–This Act does not apply to credit transactions involving extensions of credit–
(1) primarily for business, commercial, or agricultural purposes; or
(2) to government or governmental agencies or instrumentalities.
(b) INTERPRETATION.–In prescribing regulations under section 19(a), the Secretary shall ensure that, with respect to subsection (a) of this section, the exemption for credit transactions involving extensions of credit primarily for business, commercial, or agricultural purposes, as provided in section 7(1) of the Real Estate Settlement Procedures Act of 1974 shall be the same as the exemption for such credit transactions under section 104(1) of the Truth in Lending Act.

[Codified to 31 U.S.C. 2606]

[Source: Section 7 of the Act of December 22, 1974 (Pub. L. No. 93--533; 88 Stat. 1727), effective June 20, 1975, as repealed by section 6 of the Act of January 2, 1976 (Pub. L. No. 94--205; 89 Stat. 1158), effective January 2, 1976; added by section 312 of title III of the Act of September 23, 1994 (Pub. L. No. 103--325; 108 Stat. 2221), effective September 23, 1994; as amended by section 2103(b) of the Act of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--399), effective September 30, 1996]

PROHIBITION AGAINST KICKBACKS AND UNEARNED FEES

SEC. 8. (a) No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.
(b) No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed.
(c) Nothing in this section shall be construed as prohibiting (1) the payment of a fee (A) to attorneys at law for services actually rendered or (B) by a title company to its duly appointed agent for services actually performed in the issuance of a policy of title insurance or (C) by a lender to its duly appointed agent for services actually performed in the making of a loan, (2) the payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed, (3) payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and brokers, (4) affiliated business arrangements so long as (A) a disclosure is made of the existence of such an arrangement to the person being referred and, in connection with such referral, such person is provided a written estimate of the charge or range of charges generally made by the provider to which the person is referred (i) in
{{4-28-00 p.7080}}the case of a face-to-face referral or a referral made in writing or by electronic media, at or before the time of the referral (and compliance with this requirement in such case may be evidenced by a notation in a written, electronic, or similar system of records maintained in the regular course of business); (ii) in the case of a referral made by telephone, within 3 business days after the referral by telephone, (and in such case an abbreviated verbal disclosure of the existence of the arrangement and the fact that a written disclosure will be provided within 3 business days shall be made to the person being referred during the telephone referral); or (iii) in the case of a referral by a lender (including a referral by a lender to an affiliated lender), at the time the estimates required under section 5(c) are provided (notwithstanding clause (i) or (ii)); and any required written receipt of such disclosure (without regard to the manner of the disclosure under clause (i), (ii), or (iii)) may be obtained at the closing or settlement (except that a person making a face-to-face referral who provides the written disclosure at or before the time of the referral shall attempt to obtain any required written receipt of such disclosure at such time and if the person being referred chooses not to acknowledge the receipt of the disclosure at that time, that fact shall be noted in the written, electronic, or similar system of records maintained in the regular course of business by the person making the referral), (B) such person is not required to use any particular provider of settlement services, and (C) the only thing of value that is received from the arrangement, other than the payments permitted under this subsection, is a return on the ownership interest or franchise relationship, or (5) such other payments or classes of payments or other transfers as are specified in regulations prescribed by the Secretary, after consultation with the Attorney General, the Secretary of Veterans Affairs, the Federal Home Loan Bank Board, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Secretary of Agriculture. For purposes of the preceding sentence, the following shall not be considered a violation of clause (4)(B): (i) any arrangement that requires a buyer, borrower, or seller to pay for the services of an attorney, credit reporting agency, or real estate appraiser chosen by the lender to represent the lender’s interest in a real estate transaction, or (ii) any arrangement where an attorney or law firm represents a client in a real estate transaction and issues or arranges for the issuance of a policy of title insurance in the transaction directly as agent or through a separate corporate title insurance agency that may be established by that attorney or law firm and operated as an adjunct to his or its law practice.
(d)(1) Any person or persons who violate the provisions of this section shall be fined not more than $10,000 or imprisoned for not more than one year, or both.
(2) Any person or persons who violate the prohibitions or limitations of this section shall be jointly and severally liable to the person or persons charged for the settlement service involved in the violation in an amount equal to three times the amount of any charge paid for such settlement service.
(3) No person or persons shall be liable for a violation of the provisions of section 8(c)(4)(A) if such person or persons proves by a preponderance of the evidence that such violation was not intentional and resulted from a bona fide error notwithstanding maintenance of procedures that are reasonably adapted to avoid such error.
(4) The Secretary, the Attorney General of any State, or the insurance commissioner of any State may bring an action to enjoin violations of this section.
(5) In any private action brought pursuant to this subsection, the court may award to the prevailing party the court costs of the action together with reasonable attorneys fees.
(6) No provision of State law or regulation that imposes more stringent limitations on affiliated business arrangements shall be construed as being inconsistent with this section.

[Codified to 12 U.S.C. 2607]

[Source: Section 8 of the Act of December 22, 1974 (Pub. L. No. 93--533; 88 Stat. 1727), effective June 20, 1975, as amended by section 7 of the Act of January 2, 1976 (Pub. L. No. 94--205; 89 Stat. 1158), effective January 2, 1976; section 461(b) and (c) of title IV of the Act of November 30, 1983 (Pub. L. No. 98--181; 97 Stat. 1231), effective January 1, {{4-28-00 p.7081}}1984; section 570(g) of title V of the Act of February 5, 1988 (Pub. L. No. 100--242; 101 Stat. 1950), effective February 5, 1988; and section 13 of the Act of June 13, 1991 (Pub. L. No. 102--54; 105 Stat. 275), effective June 13, 1991; section 2103(c)(2) and (d) of title II of the Act of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--400), effective September 30, 1996]

TITLE COMPANIES

SEC. 9. (a) No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company.
(b) Any seller who violates the provisions of subsection (a) shall be liable to the buyer in an amount equal to three times all charges made for such title insurance.

[Codified to 12 U.S.C. 2608]

[Source: Section 9 of the Act of December 22, 1974 (Pub. L. No. 93--533; 88 Stat. 1728), effective June 20, 1975]

ESCROW ACCOUNTS

SEC. 10. (a) IN GENERAL.– A lender, in connection with a federally related mortgage loan, may not require the borrower or prospective borrower–
(1) to deposit in any escrow account which may be established in connection with such loan for the purpose of assuring payment of taxes, insurance premiums, or other charges with respect to the property, in connection with the settlement, an aggregate sum (for such purpose) in excess of a sum that will be sufficient to pay such taxes, insurance premiums and other charges attributable to the period beginning on the last date on which each such charge would have been paid under the normal lending practice of the lender and local custom, provided that the selection of each such date constitutes prudent lending practice, and ending on the due date of its first full installment payment under the mortgage, plus one-sixth of the estimated total amount of such taxes, insurance premiums and other charges to be paid on dates, as provided above, during the ensuing twelve-month period; or
(2) to deposit in any such escrow account in any month beginning with the first full installment payment under the mortgage a sum (for the purpose of assuring payment of taxes, insurance premiums and other charges with respect to the property) in excess of the sum of (A) one-twelfth of the total amount of the estimated taxes, insurance premiums and other charges which are reasonably anticipated to be paid on dates during the ensuing twelve months which dates are in accordance with the normal lending practice of the lender and local custom, provided that the selection of each such date constitutes prudent lending practice, plus (B) such amount as is necessary to maintain an additional balance in such escrow account not to exceed one-sixth of the estimated total amount of such taxes, insurance premiums and other charges to be paid on dates, as provided above, during the ensuing twelve-month period: Provided, however, That in the event the lender determines there will be or is a deficiency he shall not be prohibited from requiring additional monthly deposits in such escrow account to avoid or eliminate such deficiency.
(b) NOTIFICATION OF SHORTAGE IN ESCROW ACCOUNT.–If the terms of any federally related mortgage loan require the borrower to make payments to the servicer (as the term is defined in section 6(i)) of the loan for deposit into an escrow account for the purpose of assuring payment of taxes, insurance premiums, and other charges with respect to the property, the servicer shall notify the borrower not less than annually of any shortage of funds in the escrow account.
(c) ESCROW ACCOUNT STATEMENTS.–
(1) INITIAL STATEMENT.–
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(A) IN GENERAL.–Any servicer that has established an escrow account in connection with a federally related mortgage loan shall submit to the borrower for which the escrow account has been established a statement clearly itemizing the estimated taxes, insurance premiums, and other charges that are reasonably anticipated to be paid from the escrow account during the first 12 months after the establishment of the account and the anticipated dates of such payments.
(B) TIME OF SUBMISSION.–The statement required under subparagraph (A) shall be submitted to the borrower at closing with respect to the property for which the mortgage loan is made or not later than the expiration of the 45-day period beginning on the date of the establishment of the escrow account.
(C) INITIAL STATEMENT AT CLOSING.–Any servicer may submit the statement required under subparagraph (A) to the borrower at closing and may incorporate such statement in the uniform settlement statement required under section 4. The Secretary shall issue regulations prescribing any changes necessary to the uniform settlement statement under section 4 that specify how the statement required under subparagraph (A) of this section shall be incorporated in the uniform settlement statement.
(2) ANNUAL STATEMENT.–
(A) IN GENERAL.–Any servicer that has established or continued an escrow account in connection with a federally related mortgage loan shall submit to the borrower for which the escrow account has been established or continued a statement clearly itemizing, for each period described in subparagraph (B) (during which the servicer services the escrow account), the amount of the borrower’s current monthly payment, the portion of the monthly payment being placed in the escrow account, the total amount paid into the escrow account during the period, the total amount paid out of the escrow account during the period for taxes, insurance premiums, and other charges (as separately identified), and the balance in the escrow account at the conclusion of the period.
(B) TIME OF SUBMISSION.–The statement required under subparagraph (A) shall be submitted to the borrower not less than once for each 12-month period, the first such period beginning on the first January 1st that occurs after the date of the enactment of the Cranston-Gonzalez National Affordable Housing Act, and shall be submitted not more than 30 days after the conclusion of each such 1-year period.
(d) PENALTIES.–
(1) IN GENERAL.–In the case of each failure to submit a statement to a borrower as required under subsection (c), the Secretary shall assess to the lender or escrow servicer failing to submit the statement a civil penalty of $50 for each such failure, but the total amount imposed on such lender or escrow servicer for all such failures during any 12-month period referred to in subsection (b) may not exceed $100,000.
(2) INTENTIONAL VIOLATIONS.–If any failure to which paragraph (1) applies is due to intentional disregard of the requirement to submit the statement, then, with respect to such failure–
(A) the penalty imposed under paragraph (1) shall be $100; and
(B) in the case of any penalty determined under subparagraph (A), the $100,000 limitation under paragraph (1) shall not apply.

[Codified to 12 U.S.C. 2609]

[Source: Section 10 of the Act of December 22, 1974 (Pub. L. No. 93--533; 88 Stat. 1728), effective June 20, 1975, as amended by section 8 of the Act of January 2, 1976 (Pub. L. No. 94--205; 89 Stat. 1158), effective January 2, 1976, as amended by section 942(a) of title IX of the Act of November 28, 1990 (Pub. L. No. 101--625; 104 Stat. 4411), effective November 28, 1990; section 2103(g)(2) of title II of the Act of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--401), effective September 30, 1996]

* * * * *

{{4-28-00 p.7083}}

PROHIBITION OF FEES FOR PREPARATION OF TRUTH-IN-LENDING, UNIFORM SETTLEMENT, AND ESCROW ACCOUNT STATEMENTS

SEC. 12. No fee shall be imposed or charge made upon any other person (as a part of settlement costs or otherwise) by a lender in connection with a federally related mortgage loan made by it (or a loan for the purchase of a mobile home), or by a servicer (as the term is defined under section 6(i)), for or on account of the preparation and submission by such lender or servicer of the statement or statements required (in connection with such loan) by sections 4 and 10(c) of this Act or by the Truth in Lending Act.

[Codified to 12 U.S.C. 2610]

[Source: Section 12 of the Act of December 22, 1974 (Pub. L. No. 93--533; 88 Stat. 1729), effective June 20, 1975, as amended by section 942(b) of title IX of the Act of November 28, 1990 (Pub. L. No. 101--625; 104 Stat. 4412), effective November 28, 1990]

ESTABLISHMENT ON DEMONSTRATION BASIS OF LAND PARCEL RECORDATION SYSTEM

SEC. 13. [Repealed]

[Source: Section 13 of the Act of December 22, 1974 (Pub. L. No. 93--533; 88 Stat. 1730), effective June 20, 1975; as repealed by section 2103(h) of title II of the Act of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--401), effective September 30, 1996]

REPORT OF THE SECRETARY ON NECESSITY FOR FURTHER CONGRESSIONAL ACTION

SEC. 14. [Repealed]

[Source: Section 14 of the Act of December 22, 1974 (Pub. L. No. 93-533; 88 Stat. 730), effective June 20, 1975; as repealed by section 2103(h) of title II of the Act of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--401), effective September 30, 1996]

DEMONSTRATION TO DETERMINE FEASIBILITY OF INCLUDING STATEMENTS OF SETTLEMENT COSTS IN SPECIAL INFORMATION BOOKLETS

SEC. 15. [Repealed]

[Source: Section 15 of the Act of December 22, 1974 (Pub. L. No. 93-533; 88 Stat. 1730), effective June 20, 1975; as repealed by section 2103(h) of title II of the Act of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--401), effective September 30, 1996]

JURISDICTION OF COURTS

SEC. 16. Any action pursuant to the provisions of section 6, 8 or 9 may be brought in the United States district court or in any other court of competent jurisdiction, for the district in which the property involved is located, or where the violation is alleged to have occurred, within 3 years in the case of a violation of section 6 and 1 year in the case of a violation of section 8 or 9 from the date of the occurrence of the violation, except that actions brought by the Secretary, the Attorney General of any State, or the insurance commissioner of any State may be brought within 3 years from the date of the occurrence of the violation.

[Codified to 12 U.S.C. 2614]

[Source: Section 16 of the Act of December 22, 1974 (Pub. L. No. 93-533; 88 Stat. 1731), effective June 20, 1975, as amended by section 461(d) of title IV of the Act of November 30, 1983 (Pub. L. No. 98-181; 97 Stat. 1232), effective January 1, 1984; section 2103(e) of title II of the Act of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--400), effective September 30, 1996]

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VALIDITY OF CONTRACTS AND LIENS

SEC. 17. Nothing in this Act shall affect the validity or enforceability of any sale or contract for the sale of real property or any loan, loan agreement, mortgage, or lien made or arising in connection with a federally related mortgage loan.

[Codified to 12 U.S.C. 2615]

[Source: Section 17 of the Act of December 22, 1974 (Pub. L. No. 93-533; 88 Stat. 1731), effective June 20, 1975]

RELATION TO STATE LAWS

SEC. 18. This Act does not annul, alter, or affect, or exempt any person subject to the provisions of this Act from complying with, the laws of any State with respect to settlement practices, except to the extent that those laws are inconsistent with any provision of this Act, and then only to the extent of the inconsistency. The Secretary is authorized to determine whether such inconsistencies exist. The Secretary may not determine that any State law is inconsistent with any provision of this Act if the Secretary determines that such law gives greater protection to the consumer. In making these determinations the Secretary shall consult with the appropriate Federal agencies.

[Codified to 12 U.S.C. 2616]

[Source: Section 18 of the Act of December 22, 1974 (Pub. L. No. 93-533; 88 Stat. 1731,) effective June 20, 1975, as amended by section 9 of the Act of January 2, 1976 (Pub. L. No. 94-205; 89 Stat. 1159), effective January 2, 1976]

AUTHORITY OF THE SECRETARY

SEC. 19. (a) The Secretary is authorized to prescribe such rules and regulations, to make such interpretations, and to grant such reasonable exemptions for classes of transactions, as may be necessary to achieve the purposes of this Act.
(b) No provision of this Act or the laws of any State imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or interpretation thereof by the Secretary or the Attorney General, notwithstanding that after such act or omission has occurred, such rule, regulation, or interpretation is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.
(c)(1) The Secretary may investigate any facts, conditions, practices, or matters that may be deemed necessary or proper to aid in the enforcement of the provisions of this Act, in prescribing of rules and regulations thereunder, or in securing information to serve as a basis for recommending further legislation concerning real estate settlement practices. To aid in the investigations, the Secretary is authorized to hold such hearings, administer such oaths, and require by subpena the attendance and testimony of such witnesses and production of such documents as the Secretary deems advisable.
(2) Any district court of the United States within the jurisdiction of which an inquiry is carried on may, in the case of contumacy or refusal to obey a subpena of the Secretary issued under this section, issue an order requiring compliance therewith; and any failure to obey such order of the court may be punished by such court as a contempt thereof.
(d) Delay of Effectiveness of Recent Final Regulation Relating to Payments to Employees.–
(1) IN GENERAL.–The amendment to part 3500 of title 24 of the Code of Federal Regulations contained in the final regulation prescribed by the Secretary and published in the Federal Register on June 7, 1996, which will, as of the effective date of such amendment–
(A) eliminate the exemption for payments by an employer to employees of such employer for referral activities which is currently codified as section 3500.14(g)(1)(vii) of such title 24; and
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(B) replace such exemption with a more limited exemption in new clauses (vii), (viii), and (ix) of section 3500.14 of such title 24,
shall not take effect before July 31, 1997.
(2) CONTINUATION OF PRIOR RULE.–The regulation codified as section 3500.14(g)(1)(vii) of title 24 of the Code of Federal Regulations, relating to employer-employee payments, as in effect on May 1, 1996, shall remain in effect until the date the amendment referred to in paragraph (1) takes effect in accordance with such paragraph.
(3) PUBLIC NOTICE OF EFFECTIVE DATE.–The Secretary shall provide public notice of the date on which the amendment referred to in paragraph (1) will take effect in accordance with such paragraph not less than 90 days and not more than 180 days before such effective date.

[Codified to 12 U.S.C. 2617]

[Source: Section 19 of the Act of December 22, 1974 (Pub. L. No. 93-533), as added by section 10 of the Act of January 2, 1976 (Pub. L. No 94-205; 89 Stat. 1159), effective January 2, 1976, and as amended by section 461(e) of title IV of the Act of November 30, 1983 (Pub. L. No. 98--181; 97 Stat. 1232), effective January 1, 1984; section 2103(f) of title II of the Act of September 30, 1996 (Pub. L. No. 104--208; 110 Stat. 3009--401), effective September 30, 1996]

EFFECTIVE DATE

SEC. 20. The provisions of this Act, and the amendments made thereby, shall become effective one hundred and eighty days after the date of the enactment of this Act.

[Codified to 12 U.S.C. 2601 note]

[Source: Section 19 of the Act of December 22, 1974 (Pub. L. No. 93-533; 88 Stat. 1731), effective June 20, 1975, as renumbered by section 10 of the Act of January 2, 1976 (Pub. L. No. 94-205; 89 Stat. 1159), effective January 2, 1976]

FILE A COMPLAINT TO (FDIC) FEDERAL DEPOSIT INSURANCE CORPORATION ABOUT AN INSTITUTION WHO IS GOVERNED BY THE REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 (RESPA ACT): HERE

FILE A COMPLAINT TO (HUD) HOUSING AND URBAN DEVELOPMENT ABOUT AN INSTITUTION WHO IS GOVERNED BY THE REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 (RESPA ACT): HERE

Sample Written Complaint to Lender

The following is a sample qualified written request from you, the borrower, to a lender. Use this format to address complaints under the Real Estate Settlement Procedures Act (RESPA). Be sure to read more about RESPA, and your rights under this Act, elsewhere on the RESPA site.

Attention Customer Service:

Subject: [Your loan number]
[Names on loan documents]
[Property and/or mailing address]

This is a “qualified written request” under Section 6 of the Real Estate Settlement Procedures Act (RESPA).

I am writing because:

* Describe the issue or the question you have and/or what action you believe the lender should take.

* Attach copies of any related written materials.

* Describe any conversations with customer service regarding the issue and to whom you spoke.

* Describe any previous steps you have taken or attempts to resolve the issue.

* List a day time telephone number in case a customer service representative wishes to contact you.

I understand that under Section 6 of RESPA you are required to acknowledge my request within 20 business days and must try to resolve the issue within 60 business days.

Sincerely,

[Your name]

REMEMBER: This letter SHOULD NOT be included with your mortgage payment, but should be sent separately to the customer service address.

REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) Enforcement

Civil law suits

Individuals have one (1) year to bring a private law suit to enforce violations of Section 8 or 9. A person may bring an action for violations of Section 6 within three years. Lawsuits for violations of Section 6, 8, or 9 may be brought in any federal district court in the district in which the property is located or where the violation is alleged to have occurred.

HUD, a State Attorney General or State insurance commissioner may bring an injunctive action to enforce violations of Section 6, 8 or 9 of RESPA within three (3) years.
Loan servicing complaints

Section 6 provides borrowers with important consumer protections relating to the servicing of their loans. Under Section 6 of RESPA, borrowers who have a problem with the servicing of their loan (including escrow account questions), should contact their loan servicer in writing, outlining the nature of their complaint. The servicer must acknowledge the complaint in writing within 20 business days of receipt of the complaint. Within 60 business days the servicer must resolve the complaint by correcting the account or giving a statement of the reasons for its position. Until the complaint is resolved, borrowers should continue to make the servicer’s required payment.

A borrower may bring a private law suit, or a group of borrowers may bring a class action suit, within three years, against a servicer who fails to comply with Section 6′s provisions. Borrowers may obtain actual damages, as well as additional damages if there is a pattern of noncompliance.
Other enforcement actions

Under Section 10, HUD has authority to impose a civil penalty on loan servicers who do not submit initial or annual escrow account statements to borrowers. Borrowers should contact HUD’s Office of RESPA and Interstate Land Sales to report servicers who fail to provide the required escrow account statements.

Filing a REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) Complaint with (HUD)

Persons who believe a settlement service provider has violated RESPA in an area in which the Department has enforcement authority (primarily sections 6, 8 and 9), may wish to file a complaint. The complaint should outline the violation and identify the violators by name, address and phone number. Complainants should also provide their own name and phone number for follow up questions from HUD. Requests for confidentiality will be honored. Complaints should be sent to:

Director, Office of RESPA and Interstate Land Sales
US Department of Housing and Urban Development
Room 9154
451 7th Street, SW
Washington, DC 20410

Information Links

Promissory Note Discovery

Rescind Your Mortgage

Truth In Lending Act – PDF

Mortgage Forgiveness Debt Relief

Foreclosure Dismissal

RESPA ACT – Loan Regulations

Foreclosure Counseling Assistance

Foreclosure Prevention Act of 2008

Additional information from IRS of extending the program into the year 2012 with links to IRS forms and more articles with FAQ’s at midway of this page.

Direct Link to IRS for the Mortgage Forgiveness Debt Relief Act of 2007

The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007 (see News Release IR-2008-17). Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.

What does that mean?
Usually, debt that is forgiven or canceled by a lender must be included as income on your tax return and is taxable. The Mortgage Forgiveness Debt Relief Act of 2007 allows you to exclude certain canceled debt on your principal residence from income.

Does the Mortgage Forgiveness Debt Relief Act of 2007 apply to all forgiven or canceled debts?
No, the Act applies only to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes.

What about refinanced homes?
Debt used to refinance your home qualifies for this exclusion, but only up to the extent that the principal balance of the old mortgage, immediately before the refinancing, would have qualified.

Does this provision apply for the 2007 tax year only?
It applies to qualified debt forgiven in 2007, 2008 or 2009.

If the forgiven debt is excluded from income, do I have to report it on my tax return?
Yes. The amount of debt forgiven must be reported on Form 982 and the Form 982 must be attached to your tax return.

Do I have to complete the entire Form 982?
Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Adjustment), is used for other purposes in addition to reporting the exclusion of forgiveness of qualified principal residence indebtedness. If you are using the form only to report the exclusion of forgiveness of qualified principal residence indebtedness as the result of foreclosure on your principal residence, you only need to complete lines 1e and 2. If you kept ownership of your home and modification of the terms of your mortgage resulted in the forgiveness of qualified principal residence indebtedness, complete lines 1e, 2, and 10b. Attach the Form 982 to your tax return.

Where can I get this form?
You can download the form at IRS.gov, or call 1-800-829-3676. If you call to order, please allow 7-10 days for delivery.

How do I know or find out how much was forgiven?
Your lender should send a Form 1099-C, Cancellation of Debt, by January 31, 2008. The amount of debt forgiven or cancelled will be shown in box 2. If this debt is all qualified principal residence indebtedness, the amount shown in box 2 will generally be the amount that you enter on lines 2 and 10b, if applicable, on Form 982.

Can I exclude debt forgiven on my second home, credit card or car loans?
Not under this provision. Only canceled debt used to buy, build or improve your principal residence or refinance debt incurred for those purposes qualifies for this exclusion.

If part of the forgiven debt doesn’t qualify for exclusion from income under this provision, is it possible that it may qualify for exclusion under a different provision?
Yes. The forgiven debt may qualify under the “insolvency” exclusion. Normally, a taxpayer is not required to include forgiven debts in income to the extent that the taxpayer is insolvent. A taxpayer is insolvent when his or her total liabilities exceed his or her total assets. The forgiven debt may also qualify for exclusion if the debt was discharged in a Title 11 bankruptcy proceeding or if the debt is qualified farm indebtedness or qualified real property business indebtedness. If you believe you qualify for any of these exceptions, see the instructions for Form 982.

Is there a limit on the amount of forgiven qualified principal residence indebtedness that can be excluded from income?
There is no dollar limit if the principal balance of the loan was less than $2 million ($1 million if married filing separately for the tax year) at the time the loan was forgiven. If the balance was greater, see the instructions to Form 982, page 4.

Is there anything else I need to know before filing?
Yes. Because the Mortgage Forgiveness Debt Relief Act of 2007 was passed so late in the year, the software systems used by tax preparers and at the Internal Revenue Service need to be updated to accept the revised Form 982. The IRS expects to be able to process the new Form 982 electronically on March 3, 2008.

ADDITIONAL INFORMATION FROM IRS FOR THE YEAR 2008 – 2012 EXTENSION:

DIRECT LINK TO IRS ARTICLE

Updated with FAQs at bottom — Feb. 28, 2008
Updated with new link — Dec. 11, 2008

IR-2008-17, Feb. 12, 2008

WASHINGTON — Homeowners whose mortgage debt was partly or entirely forgiven during 2007 may be able to claim special tax relief by filling out newly-revised Form 982 and attaching it to their 2007 federal income tax return, according to the Internal Revenue Service.

Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, enacted Dec. 20, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was $2 million or less. The limit is $1 million for a married person filing a separate return. Details are on Form 982 and its instructions, available now on this Web site.

“The new law contains important provisions for struggling homeowners,” said Acting IRS Commissioner Linda Stiff. “We urge people with mortgage problems to take full advantage of the valuable tax relief available.”

The late-December enactment means that reporting procedures for this law change were not incorporated into tax-preparation software or IRS forms. For that reason, people using tax software should check with their provider for updates that include the revised Form 982. Similarly, the IRS is now updating its systems and expects to begin accepting electronically-filed returns that include Form 982 by March 3. The paper Form 982 is now being accepted, but the IRS reminds affected taxpayers to consider filing electronically, which greatly reduces errors and speeds refunds.

The new law applies to debt forgiven in 2007, 2008 or 2009. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief. In most cases, eligible homeowners only need to fill out a few lines on Form 982 (specifically, lines 1e, 2 and 10b).

The debt must have been used to buy, build or substantially improve the taxpayer’s principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.

Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available. See Form 982 for details.

Borrowers whose debt is reduced or eliminated receive a year-end statement (Form 1099-C) from their lender. For debt cancelled in 2007, the lender was required to provide this form to the borrower by Jan. 31, 2008. By law, this form must show the amount of debt forgiven and the fair market value of any property given up through foreclosure.

The IRS urges borrowers to check the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. Borrowers should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for their home ( Box 7).

Note: Legislation enacted in October 2008 extended this relief through 2012. Thus this relief now applies to debt forgiven in calendar years 2007 through 2012.

* Frequently asked questions on the Mortgage Forgiveness Debt Relief Act
* Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness
* 1099-C
* Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonment

Violations of the Truth in Lending Act (Regulation Z) have proven to be very effective defenses for homeowners currently facing the prospect of a mortgage loan foreclosure, literally stopped the foreclosure action from continuing forward, once the findings of violations of either HOEPA or Truth in Lending have been found.

Improper calculations of finance charges directly related to the Truth in Lending statement of (TIL) have been found in over 80% of mortgage loans originated by banks and mortgage lenders over the last 5 years, creating huge liability for banks and mortgage lenders to refund ALL of the finance charges and other loan costs associated with the mortgage loan. In addition, the mortgage loan itself could be completely rescinded, leaving a ZERO mortgage balance owed by the homeowner!

However, it does not end there. Violations of both Regulation Z (Truth in Lending) could yield additional penalties to the bank or mortgage lender, including:

*Requiring the bank or mortgage lender to refund ALL sums paid over the life of the mortgage loan

*Reimbursement of all court costs and legal fees

*Triple damages may be awarded to the homeowner if litigated in court.

The violations of Truth in Lending are quite severe, as many of our nation’s top banks and mortgage-lending companies are finding. For the tens of thousands of homeowners who fell victim to Predatory Lending by unscrupulous mortgage brokers and loan officers, this news could not have come at a better time.

For a mortgage loan to be considered rescind able under Federal law, a borrower must demonstrate:

*The mortgage loan was secured by a principal dwelling of the person for whom the credit was extended.

*The loan was not used to purchase an existing home or construct a new home.

*The mortgage loan was a refinance of a previous loan either: 1) held by a different mortgage lender than the original lender, or 2) the borrower refinanced with the original lender and took cash out of the subject property.

*The loan was closed less than three (3) years ago.

*AND one of the following applies:

-The loan is currently in foreclosure and any mortgage broker fee was not included in the finance charge

-The loan is currently in foreclosure and the finance charge was understated by more than $35

-A material disclosure was not provided to the borrower, including the disclosure of the correct:

*APR (Annual Percentage Rate)

*Finance Charge

*Total of Payments

*Payment Schedule

*Existence of a variable rate feature, if applicable.

*Information with respect to the notice of Right to Rescind.

-The loan is not in foreclosure AND the finance charge exceeds .50% of the mortgage loan amount or $100, whichever is greater.

Information Links

Promissory Note Discovery

Rescind Your Mortgage

Truth In Lending Act – PDF

Mortgage Forgiveness Debt Relief

Foreclosure Dismissal

RESPA ACT – Loan Regulations

Foreclosure Counseling Assistance

Foreclosure Prevention Act of 2008

(something I wrote few years ago, my thoughts on the subject at that time, just did not share it until now.)

As I sit here in my thinking chair, I can’t shake a familiar feeling from long time ago. Could it be? Again? Am I hallucinating or is it just too real.

I have seen this before. Experienced it. Started my business in it. But never really sat down and thought about it.

Of course, I was 20 years younger, just married and in the beginning of my business career. Now, I seem to look at things differently.

The reader by now must be thinking; is he mad? What in the heck is he talking about? Should I continue to read the writings of a madman?

HISTORY!

I AM TALKING ABOUT HISTORY!

More precisely about – HISTORY REPEATS ITSELF!

The Prologue:

In 1987 the bank loan and savings meltdown went down and nobody seems to remember it. I do, because by 1990 I was in full swing buying and selling foreclosures in South Florida. I was able to buy houses at .30 cents on the dollar and there was no shortage for 9 years of them. The last house foreclosure I bought was in 1999. After that everything became overpriced. It was no longer lucrative for my taste.

Now, many folks who read this will say; WHAT A FOOL! HE MISSED THE GREATEST REAL ESTATE MARKET IN AMERICA SINCE THE INVENTION OF SLICED BREAD!

Or, did he?

Did I mention when all those great investors were buying at over inflated prices (the same stuff I bought for .30 cents on the dollar), I was selling.

You see, when you have the experience of ten years of foreclosure investing and not to mention renting and being a landlord you notice signs others don’t see.

One sign is this; when the general public figures out that real estate is a good investment, and starts throwing billions of dollars at the real estate market, whether it’s in their neighborhood or wall street THE SMART MONEY ALREADY SOLD.

Get It!!!

The smart money is out of the market with serious profits and is watching and waiting happily for everyone else to commit financial suicide.

The Story:

This is my opinion and I am entitled to one.

BECAUSE THE SMART MONEY PLANNED IT THAT WAY!

Real Estate meltdown is nothing but a elaborate plan on how to get the old days of .30 cents on the dollar back. (CRAZY?)

On top of all this real estate melting, our employment is at risk with better jobs gone forever for most of Americans. As the economy slows, more and more Americans walk around with a pink slip in their hand. Small business owners are closing doors. People are running out of savings and getting desperate. Crime is increasing everywhere. Tempers are flaring and uneasiness with tension grips the American public.

It’s a perfect boiling point for SMART MONEY TO APPEAR AGAIN and do what they do best – MAKE MONEY

Let’s start with 1999.

As the internet bubble started to inflate more and more crazy profits were created and people everywhere started buying all kinds of real estate for investment (because as the great American saying goes – “American real estate is the most solid investment in the world”) and slowly the real estate prices increased and foreclosures started to dry up.

The .30 cents on the dollar days were gone forever – or were they?

The internet bubble burst all the sudden in 2001. It all happened because someone raised questions about the viability and real market value of virtual internet companies who were nothing but few servers and computers wide but were worth $10 to over $100 per share market price. I wonder who actually brought up that insignificant fact of overvalued and inflated market price. Over night the stock market plunged and that was before the terrible September 11 or 911.

After the internet bubble blew there was a lot of uncertainty and America was slowly sliding into a recession, businesses were closing doors, massive layoffs everywhere, economic downsizing and so on.

I remember gasoline in 2001 went up and so did price of food like milk, orange juice, cooking oil etc. (sounds familiar)

September 11, 2001 or 911:

George Bush just came in as a new president and here we go. In the middle of our country facing a recession and people loosing jobs the unthinkable happened. 911! I have two relatives who almost did not make it that day, one was at the top of World Trade Center Tower 2.

Now, as terrible as it was, and as all the conspiracy theorists are talking, the financial events that followed are the ones I am most interested in.

First, soon after 911, the Federal Bank started to cut interest rates at which it lent money to other banks.

VERY SMALL UNKNOWN FACT IS THIS – THE FEDERAL BANK OF UNITED STATES OF AMERICA IS A PRIVATE BUSINESS ENTITY NOT CONTROLLED BY THE AMERICAN GOVERNMENT!

Now, the banks turned around and slashed their interest rates at which they lent money to home buyers. The beginning of the real estate meltdown. Not only did the banks slash interest rates on mortgage loans, they also started creating all kinds of mortgage loans for everyone to qualify. Stated Income Stated Assets Loans also called liar loans, 100% Financing, No Income Verification Loans, No Income No Assets Loans, 125% Financing, Zero Down No income No Asset Loans, No Income No Asset Loans for Foreign Nationals, Adjustable Rate Loans (ARM). ETC. ETC. ETC.

WHAT WERE THEY THINKING. HOW COULD THEY LET THIS HAPPEN? PLANNED AND PREMEDITATED?

MAYBE…

I remember clearly when the real estate bubble burst, someone again said, hey, what happens if the people getting all these exotic loans loose a job and can’t pay it back? Sounds Familiar!

The only outcome to this kind of frivolous and carefree lending guidelines is a complete reversal and financial meltdown of real estate and economy as a whole. When those folks who called me a fool for not buying in the best real estate market since sliced bread started to slide into foreclosure, they no longer were smiling and calling names. They were crying and all the profits they made were quickly evaporating including their own cash. With foreclosures looming, most just gave up their investments and walked. Angry, without their real estate and broke.

I sold everything by 2006 and never bought since 1999. Am I smart? No, just cautious, I remembered what happened in 1987 with the Savings and Loan banks.

So the real estate meltdown started in July of 2006 and as far as I can see its just picking up steam. What is actually happening here. What are the inner workings of this real estate melting machine.

As, far as money is concerned it is always changing hands, in bad times as in good times. The only difference is who is getting it and who is loosing it.

The Melting Machine:

If the smart money sold at some point then they will also want to buy at some point. Since it is smart money we are talking about here they will never buy at the top or sell at the bottom. Since a lot of smart money is affiliated with the Federal Bank and most likely owns their own banks and investment houses, it is starting to get really clear to me this whole melt down was planned and an exit strategy was put in place long time ago.

What happens when a person goes into foreclosure? In the end you will loose the property but before the inevitable end comes you will try to save your home. So you pay late fees and try to catch up, the bank looks like it wants to help you by putting everything on the back of the loan, they do forbearance and some loan modifying but is their heart really there.

NO!

Banks heart is only in their money and keeping their investors happy. To keep investors happy you must make money! NOTE: Countrywide made alone 280 million dollars in late fees alone last year 2007. Why would they care if you are in foreclosure or not. They make more money when a person goes into foreclosure then they would waiting 30 years for you to repay the loan.

How? Like this: They collect late fees from you when you are constantly late. If, you go into foreclosure as most people are in the high risk loans, they get paid by the mortgage insurance you have been so kind to pay for all this time, so why would they want to work out something with a owner who has shown incredible instability in the ability to pay the loan. They make all their money back plus fees from the mortgage insurance and probably get paid for things you and I don’t even know about. Hey, nobody said banking was a clean business. After they get paid by the MPI, MIP, (Mortgage Protection Insurance) they sell the property or entire properties in bulk.

TO WHOM?

The whisper on the grape wine is saying Offshore Hedge funds and Foreign Investors. Could it be the same banks and investors here who forced you into foreclosure without any mercy for you or your family; are buying your homes at .30 CENTS ON THE DOLLAR. AMAZING!

The same investors who lent you the money for your home with an exotic mortgage loan are now buying your property back at .30 cents on the dollar through FOREIGN OFFSHORE CORPORATIONS.

Lets throw into the mix Freddie Mac and Fannie Mae who now reward your bank like Wachovia, Chase, Countrywide, Bank of America and the list goes on, with up to $2200 to short sale your house opposed the measly $800 bucks they offer to do loan modification to save your home from foreclosure. The short sales are also being sold to Offshore Investors – the flip side of the bank who gave you the mortgage loan at .30 cents on the dollar.

Loan Modification and the Foreclosure Prevention Act of 2008 Myths

I thought when George Bush signed the Foreclosure Prevention Act of 2008 it might actually help a lot of people. This is why I direct The Helpful Hands Foundation to help folks in foreclosure needs. But, as time progresses it is coming painfully clear that George Bush and the gang did us no favors. It almost seems as false hope because banks are not even paying attention to the ACT. They play games and deny, deny, deny.

It is clear they are interested more in forcing foreclosure or short sale (as that is where the bank makes it’s money) opposed to helping you keep the property. Homestead or Investor alike.

SOLUTION:

We as people must work together to force the hands of foreclosure judges, commissioners, mayors and all county officials. We have to keep in mind the higher you go in politics the hands in the pot increase so your voice will be diluted by those politicians who are there for the money. City officials generally on the most part are trying to solve the problems in their cities and counties and will be more apt to listen to our common folk complaints. The Helpful Hands Foundation always advises you to go to every hearing as to your foreclosure and always at every opportunity you must let the foreclosure judge know what is happening. Only then with enough voices will we be able to tip the scales in our favor.

SAD END:

If we don’t unify as one public voice, this is what will continue to happen:

The bank makes money on late fees, then they short sale the house or take it back in foreclosure, in short sale their MIP PMI or MPI (Mortgage Protection Insurance) covers them for their losses as well as in foreclosure, then they sell it off to offshore foreign investor and get reimbursed from insurance for the loss, (tax payers money), then the foreign investor waits or sells it at a profit later back to us.

The viscous circle of .30 cents on the dollar will continue unless we put a stop to it as American people. Keep this in mind as we continue the fight.

· National Foreclosure Information

· Promissory Note Discovery

· Rescind Your Mortgage

· Truth In Lending Act – PDF

· Mortgage Forgiveness Debt Relief

· Foreclosure Dismissal

· RESPA ACT – Loan Regulations

· Foreclosure Counseling Assistance

· Foreclosure Prevention Act of 2008

Direct Link to Fannie Mae Site – Fannie Mae to Increase Cash Incentives Paid to Servicers to Avoid Foreclosure

Washington, D.C. — As part of its ongoing efforts to support borrowers facing foreclosure and promote responsible servicing practices, Fannie Mae (FNM/NYSE) announced today that it will increase the cash incentives paid to servicers that pursue alternatives to foreclosure.

“We are working closely with our loan servicing partners to make the process of helping borrowers keep their homes as streamlined as possible and we continue to enhance delegation to ensure decisions can be made quickly. These loss mitigation incentives encourage our servicers to implement workout solutions and drive better processing and response time,” said Jason Allnutt, vice president for credit loss management at Fannie Mae.

Fannie Mae will increase loss mitigation incentives paid to servicers for foreclosure prevention options available to help a delinquent borrower prevent foreclosure. The company continues to pursue a variety of options to work with a delinquent borrower including repayment plans, HomeSaver AdvanceTM, loan modifications, pre-foreclosure sales, and deeds-in-lieu of foreclosure.

Incentive payments for repayment plans (where a borrower makes up the past-due payments over time) will be doubled to $400. Fannie Mae will begin an incentive payment of $700 for a loan modification where the terms of the loan are renegotiated. As an additional effort to help cash-strapped borrowers, Fannie Mae will prohibit servicers from assessing a modification fee to borrowers.

The recently announced HomeSaver Advance offers servicers a solution for borrowers experiencing a temporary financial hardship. HomeSaver Advance provides an advance to cover past-due mortgage payments in exchange for a separate, unsecured loan. The HomeSaver Advance incentive structure will be modified to pay servicers based on the performance of the mortgage loan, with an initial incentive of $200 and an additional $500 to be paid after the borrower makes three consecutive timely scheduled payments.

Incentive payments for short sales (pre-foreclosure sales) will range from $1,000 to $1,500 and payments for deeds-in-lieu of foreclosure will increase to $1,000.

Fannie Mae is working with lenders, loan servicing companies, and policy makers to respond to the housing and mortgage market crisis with a goal to minimize the impact on families and communities by helping to prevent foreclosures, supporting counseling efforts and providing greater market stability. For more information, go to fanniemae.com and select “Keys to Recovery Initiatives.”

Fannie Mae is a shareholder-owned company with a public mission. We exist to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America’s secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. In 2008, we mark our 70th year of service to America’s housing market. Our job is to help those who house America.

Fannie Mae Resource Center Telephone 1-800-7FANNIE (1-800-732-6643)

· Promissory Note Discovery

· Rescind Your Mortgage

· Truth In Lending Act – PDF

· Mortgage Forgiveness Debt Relief

· Foreclosure Dismissal

· RESPA ACT – Loan Regulations

· Foreclosure Counseling Assistance

· Foreclosure Prevention Act of 2008

· Freddie Mac Doubles Financial Incentives to Servicers Who Help Borrowers Avoid Foreclosure