Home Buyers Tips
Role of the Real Estate Broker
first person you consult about buying a home is a real estate agent
or broker. Although real estate brokers provide helpful advice on
many aspects of home buying, they may serve the interests of the
seller, and not your interests as the buyer. The most common
practice is for the seller to hire the broker to find someone who
will be willing to buy the home on terms and conditions that are
acceptable to the seller. Therefore, the real estate broker you are
dealing with may also represent the seller. However, you can hire
your own real estate broker, known as a buyer¡¦s broker, to represent
your interests. Also, in some states, agents and brokers are allowed
to represent both buyer and seller.
Even if the
real estate broker represents the seller, state real estate
licensing laws usually require that the broker treat you fairly. If
you have any questions concerning the behavior of an agent or
broker, you should contact your State¡¦s Real Estate Commission or
real estate broker will offer to help you obtain a mortgage loan. He
or she may also recommend that you deal with a particular lender,
title company, attorney or settlement/closing agent. You are not
required to follow the real estate broker¡¦s recommendation. You
should compare the costs and services offered by other providers
with those recommended by the real estate broker.
Selecting an Attorney
Before you sign
an agreement of sale, you might consider asking an attorney to look
it over and tell you if it protects your interests. If you have
already signed your agreement of sale, you might still consider
having an attorney review it. An attorney can also help you prepare
for the settlement. In some areas attorneys act as
settlement/closing agents or as escrow agents to handle the
settlement. An attorney who does this will not solely represent
your interests, since, as settlement/closing agent, he or she may
also be representing the seller, the lender and others as well.
If choosing an
attorney, you should shop around and ask what services will be
performed for what fee. Find out whether the attorney is experienced
in representing home buyers. You may wish to ask the attorney
questions such as:
What is the
charge for negotiating the agreement of sale, reviewing documents
and giving advice concerning those documents, for being present at
the settlement, or for reviewing instructions to the escrow agent or
attorney represent anyone other than you in the transaction?
attorney be paid by anyone other than you in the transaction?
in many areas of the country attorneys are not normally involved in
the home sale. For example, escrow agents or escrow companies in
western states handle the paperwork to transfer title without any
Processing Your Loan Application
several federal laws which provide you with protection during the
processing of your loan. The Equal Credit Opportunity Act ("ECOA"),
the Fair Housing Act, and the Fair Credit Reporting Act ("FCRA")
prohibit discrimination and provide you with the right to certain
ECOA prohibits lenders from discriminating against credit applicants
on the basis of race, color, religion, national origin, sex, marital
status, age, the fact that all or part of the applicant's income
comes from any public assistance program, or the fact that the
applicant has exercised any right under any federal consumer credit
protection law. To help government agencies monitor ECOA compliance,
your lender or mortgage broker must request certain information
regarding your race, sex, marital status and age when taking your
Housing Act also prohibits discrimination in residential real estate
transactions on the basis of race, color, religion, sex, handicap,
familial status or national origin. This prohibition applies to both
the sale of a home to you and the decision by a lender to give you a
loan to help pay for that home. Finally, your locality or state may
also have a law which prohibits discrimination.
there are differences in the types and amounts of settlement costs
charged to the borrower -- for example, some borrowers are charged
greater fees for mortgages depending on their credit worthiness.
These differences may be justified or they may be unlawfully
discriminatory. It is important that you examine your settlement
documents closely, especially lines 808-811 on the HUD-1 settlement
statement, and do not hesitate to compare your settlement costs with
those of your friends and neighbors.
If you feel you
have been discriminated against by a lender or anyone else in the
home buying process, you may file a private legal action against
that person or complain to a state, local or federal administrative
agency. You may want to talk to an attorney; or you may want to ask
the federal agency that enforces ECOA (the Board of Governors of the
Federal Reserve System) or the Fair Housing Act (HUD) about your
rights under these laws.
Prompt Action/Notification of Action Taken.
Your lender or mortgage broker must act on your application and
inform you of the action taken no later than 30 days after it
receives your completed application. Your application will
not be considered complete, and the 30 day period will not begin,
until you provide to your lender or mortgage broker all of the
material and information requested.
Statement of Reasons for Denial.
If your application is denied, ECOA requires your lender or mortgage
broker to give you a statement of the specific reasons why it denied
your application or tell you how you can obtain such a statement.
The notice will also tell you which federal agency to contact if you
think the lender or mortgage broker has illegally discriminated
Obtaining Your Credit Report.
The Fair Credit Reporting Act ("FCRA") requires a lender or mortgage
broker that denies your loan application to tell you whether it
based its decision on information contained in your credit report.
If that information was a reason for the denial, the notice will
tell you where you can get a free copy of the credit report. You
have the right to dispute the accuracy or completeness of any
information in your credit report. If you dispute any information,
the credit reporting agency that prepared the report must
investigate free of charge and notify you of the results of the
Obtaining Your Appraisal.
The lender needs to know if the value of your home is enough to
secure the loan. To get this information, the lender typically hires
an appraiser, who gives a professional opinion about the value of
your home. ECOA requires your lender or mortgage broker to tell you
that you have a right to get a copy of the appraisal report. The
notice will also tell you how and when you can ask for a copy.
Your Right to File Complaints
Lawsuits. If you have a
problem, the best place to have it fixed is at its source (the
lender, settlement agent, broker, etc.). If that approach fails and
you think you have suffered because of a violation of RESPA, ECOA or
any other law, you may be entitled to sue in a federal or state
court. This is a matter you should discuss with your attorney.
Most settlement service providers are supervised by a governmental
agency at the local, state and/or federal level, some of which are
listed in the Appendix to this Booklet. Your state's Attorney
General may have a consumer affairs division. If you feel that a
provider of settlement services has violated RESPA or any other law,
you can complain to that agency or association. You may also send a
copy of your complaint to the HUD Office of Consumer & Regulatory
Affairs. The address is listed in the Appendix.
Servicing Errors. If
you have a question any time during the life of your loan, RESPA
requires the company collecting your loan payments (your "servicer")
to respond to you. Write to your servicer and call it a "qualified
written request under Section 6 of RESPA." A "qualified written
request" should be a separate letter and not mailed with the payment
coupon. Describe the problem and include your name and account
number. The servicer must investigate and make appropriate
corrections within 60 business days.