Homeowner Bill of Rights

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The Importance of a
Homeowner Bill of Rights

New Mortgage Finance Rules Are Good for Lenders, Borrowers, and Investors

   The homeowner bill of rights provides long overdue protections for homeowners from abuses in the servicing of mortgages and is an important step toward reviving a dormant private mortgage finance industry. “As we have learned over the past few years, the nation is not well-served by the inconsistent patchwork of standards in place today, which fails to provide the needed support for both homeowners and investors,”said President Obama.  “A fair set of rules will allow lenders to be transparent about options and allow borrowers to meet their responsibilities to understand the terms of their commitments.”

   President Obama’s homeowner bull of rights goes one step further. It lays out a set of principles that “ensure borrowers and lenders are playing by the same common-sense rules.” Specifically, it requires:

  •   Servicers and lenders to offer a much simpler mortgage disclosure form that clearly outlines relevant fees and penalties, so that homeowners will better understand their loan terms
  • Servicers and mortgage investors to develop standards that reduce conflicts of interests that ultimately harm the homeowner
  • Homeowners to be provided with a right of appeal in order to protect them against improper foreclosure

   Better servicing rules such as these benefit not only homeowners but also mortgage insurers and investors, as well as the Federal Housing Administration and Fannie Mae and Freddie Mac—the two housing finance giants now under federal conservatorship. Private mortgage insurers experienced losses when they had to make insurance payouts for mortgages that were improperly originated and serviced. Fannie Mae and Freddie Mac have filed suit on mortgages they guaranteed but claim were fraudulently originated and serviced. And private-label mortgage-backed securities investors—those who purchased mortgage-backed securities that were not guaranteed by the federal government in some fashion—believe that servicers modified loans in ways that put their own interests first and those of investors second.

"This material [article] was published by the Center for American Progress" (online)
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