Mortgage Consumer Bill of Rights
The Mortgage Consumer Bill of Rights was laid out on January 15, 2000 by Franklin Raines, president of Fannie Mae. This Bill of Rights is a pledge for $2 trillion over the next 10 years to help home buyers purchase homes. It also includes an open book procedure to underwriting so that potential borrowers can see all the factors that are involved when their creditworthiness is evaluated and how the entire process of the loan application happens.
The Mortgage Consumer Bill of Rights is plan to introduce more technology into the mortgage industry and thereby, reducing the paperwork involved by over 17 percent. The concept is very simple. If there is less paperwork and more automation, it will lead to faster approvals of mortgages.
If we go by this Bill, it means that borrowers who are applying for mortgages online are at a definite advantage.
Some of the basic tenets of the Mortgage Consumer Bill of Rights are as follows:
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All Americans have the right to access mortgage credit. Fannie Mae hopes to decrease the gap in home ownership between blacks and whites, low income earners and middle class, and other communities that are being underserved at the moment.
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Consumers now have the right to get the lowest mortgage possible for which they qualify. Many borrowers may not know this but Fannie Mae was formed as a private company to reduce the costs of mortgages. Their strategy is offer mortgage products so that lenders can qualify more borrowers for low cost conventional financing.
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Home owners have the right to know the true cost of a mortgage. There are many components in a mortgage and it is these that have the cost. Borrowers have the right to know the variable cost of each component before the close their home loan.
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Home owners have the right to be free of regulatory burden. Which means, you have the right to purchase a home and get mortgage financing for it without too much interference from the government with regard to regulatory fees, paperwork and time. However, you still have to follow the local laws and zoning ordinances.
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Home owners have the absolute right to know about mortgage decisions. The Bill ensures that there is transparency between the lender and broker so that borrower knows what his mortgage package involves, who makes the decisions, when the decision is made, and what a borrower can do if the decision is not what he anticipated or expected.
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