Minnesota Attorney General's Office
1400 Bremer Tower
445 Minnesota Street
St. Paul, MN 55101
M - F 8 am - 5 pm
Home Buyer's Handbook
Federal and state laws protect you from unfair treatment and misleading information when you apply for a loan. Here are some of the laws regulating lending practices:
Equal Credit Opportunity Act
This federal law prohibits lenders from discriminating against any person because of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to contract), or status with regard to public assistance. Likewise, a seller, real estate agent or any other agent of the seller may not discriminate based on these factors.
If you feel a lender may have discriminated against you in violation of this federal law, you should contact the appropriate federal agency, depending on the type of lender involved:
|If the lender is a:||Contact:|
|National Bank||Office of the Comptroller of the Currency,
Customer Assistance Group
1301 Mckinney Street
Houston, TX 77010
|State or Federally Chartered Savings Association||Office of Thrift Supervision
Consumer Affairs Program
1700 G Street, NW
Washington, D.C. 20552
|Federal Credit Union||National Credit Union Administration
Office of Public Affairs
1775 Duke Street
Alexandria, VA 22314-3428
|Non-Federal Reserve State-Chartered Bank||Federal Deposit Insurance Corporation
Division of Supervision and Consumer Protection
550 17th Street, NW
Washington, D.C. 20429
Real Estate Settlement Procedures Act ("RESPA")
RESPA is a federal law regulating a lender's closing or settlement practices. It requires that lenders make disclosures and treat you fairly by:
- Giving you a copy of HUD’s booklet, Buying Your Home: Settlement Costs and Information, within three days after you apply for a loan.
- Giving you a Good Faith Estimate of the closing (or “settlement”) costs within three days after you apply for a loan.
- Itemizing all loan closing charges on a “Uniform Settlement Statement,” also known as the HUD-1 form. This law also gives you the right to inspect the HUD-1 form at least 24 hours before the closing on your home. To exercise this important, but often overlooked right, ask your closing agent or lender for a copy of the HUD-1 form sooner, if it’s prepared.
- Prohibiting lenders and agents from receiving hidden kickbacks or referral fees for referring customers to anyone for any transaction involving a federally-insured loan.
- Restricting the amount of money a lender can ask you to put in escrow.
For more information about RESPA, contact the Minnesota Office of the U.S. Department of Housing and Urban Development (HUD) at: (612) 370-3000.
Like a stock or a bond, a home loan has value and your lender can sell it. In fact, your loan might be bought and sold to various lenders throughout its term. Under RESPA, your original lender must tell you when you make your loan application whether your loan might be serviced by another lender and the percentage of loans your lender has assigned, sold or transferred over the past three years. Your lender also must disclose his or her capacity to service loans. You will be asked to sign a statement saying that you’ve read and understood the disclosure.
If your lender transfers the servicing of your loan to another lender, he or she must give you no less than a 15-day notice before the transfer. This notice must include: the date of the transfer; the name, address and toll-free or collect call telephone number of the new servicer; and the name of an employee of the new servicer whom you can call. If you send timely payments to the lender who transferred your loan, rather than to the new lender servicing your loan, you may not be charged a late fee during a 60-day period after the date of the transfer.
Your lender is required to give you a Truth-in- Lending Disclosure Statement that ensures that you are informed of all the fees and costs of the loan. The statement is an estimate of the total financing charges you’ll pay over the life of the loan, including the APR, the amount of interest you will pay and how much your total payments will be for the term of the loan.
Fair Credit Reporting Act
Three large national credit bureaus keep credit reports on you. These reports include financial data about you (such as whether you pay your bills, whether you pay on time, whether you have been sued and whether you have filed for bankruptcy). The Fair Credit Reporting Act gives you the right to challenge the accuracy of any information in your credit report. Because these reports are so important in getting a loan — and because many consumers have found errors in their credit reports — it is a good idea to check your reports at least once per year.
Every year consumers can get a free credit report from each of the credit agencies — Equifax, TransUnion and Experian. The credit bureaus have created a centralized website, toll-free telephone number and mailing address for Minnesota consumers to order their reports. Annual reports may be requested the following way:
- Logging on to: www.AnnualCreditReport.com,
- Calling: 1-877-322-8228.
- Writing: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA., 30348-5281
Although consumers can only receive their credit reports for free once per year, consumers may still request additional reports from the three credit bureaus.
National Credit Bureaus
PO Box 105851
Atlanta, GA 30348-5851
PO Box 2000
Chester, PA 19022
PO Box 2104
Allen, TX 75013-9595
For more information about your rights concerning your credit report, contact the Federal Trade Commission at: 1-877-FTC-HELP (1-877-382-4357), or check out the Federal Trade Commission’s website at: www.ftc.gov.