Are there mortgage fraud laws?Answer:
Currently, the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) are the mortgage fraud laws, used to protect borrowers. Not that they are in fact mortgage fraud laws; rather, they are laws protecting the borrower and are violated on a daily basis, as statistics shows.
The Truth in Lending Act was enacted in 1968 by the Congress. It is part of the Consumer Protection Act. Since mortgage interest rates can be calculated in many different ways, borrowers are often vulnerable to deceptive business practices. The Truth in Lending Act requires that as many fees as possible are disclosed early in the lending process to avoid mortgage fraud.
The Federal Reserve Board, protecting the consumer from mortgage fraud, has published a handbook on adjustable rate mortgages to help educate borrowers on tricky ARMs.
Mortgage fraud laws and regulations are quite necessary and can be really restrictive to violating lenders. A lender or broker violating the disclosure requirements in the TILA may face a lawsuit filed for twice the amount of the mortgage, which can be a substantial sum.
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