In the age of the real estate crash and the foreclosure crisis, many Chicagoans found themselves with subprime mortgages and the inability to make any headway on their home loans. Now, while the risk of foreclosure in Illinois remains a reality for many homeowners, many more find themselves in a better financial situation. One of the reasons that more homeowners are under control of their financial futures, according to a recent news release from the Consumer Financial Protection Bureau (CFPB), is the institution of laws aimed at protecting consumers.
Consumer advocates have emphasized that soon-to-be home buyers simply need more information about the terms of their loans, and how those terms are likely to impact their financial futures. A new rule that aims toward the goal is now in effect.
Know Before You Owe and Mortgage Disclosure Requirements
The “Know Before You Owe” mortgage disclosure rule represents one of those legal changes. As the CFPB explains, the “disclosures required for getting most mortgages have been redesigned to help you shop around to compare offers and find the loan that is best for you.” In addition to underlining the need for consumers to shop around to find the best mortgage for their needs, the new rule also requires the following:
- Lenders to give homeowners more time to review the terms of a mortgage prior to acceptance;
- Lenders allowing homeowners to ask direct questions or to seek advice about the terms of a loan from an experienced consumer protection lawyer.
The Know Before You Owe rule is not entirely new. The Dodd-Frank Act mandated mortgage disclosure changes for new homeowners. At the same time, the new rule does even more for consumers. In addition to disclosures, as we mentioned, it also gives soon-to-be homeowners additional time to understand the terms of the loan and to ask questions they need to know to feel comfortable with the mortgage. For most Americans who apply for a mortgage on or after October 3rd, the new disclosures will be mandatory.
Helping Consumers to Avoid Costly Mistakes
The Know Before You Owe initiative from the CFPB is designed ultimately to prevent consumers from seeing “costly surprises” once they agree to the terms of a mortgage. When it comes to getting a fair mortgage and affordable terms based on your income and lifestyle, education is the key. In addition to “making the mortgage process easier” for consumers, the CFPB’s initiative also comes with tools to help you make the right decisions—and ultimately to avoid foreclosure—including but not limited to:
- Sample loan estimate for consumers considering a mortgage;
- Closing disclosure for soon-to-be homeowners so they do not have any financial surprises when it comes time to close on a house;
- Tools to help you learn more about the process of getting a mortgage, including information about local rates, loan options, and the steps in a closing; and
- Budgeting information, including worksheets and checklists to help you get through the process of buying a home affordably.
If you have concerns about how the new rule will affect you, or if you have questions about avoiding foreclosure, it is important to seek advice from an experienced Oak Park foreclosure defense lawyer. Do not hesitate to contact the Emerson Law Firm. We can discuss your case with you today.
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