Michelle Frericks, Realtor®

Posts Tagged ‘HUD’

HUD investigation: Pregnancy discrimination WASHINGTON – July 22, 2010 – The U.S. Department of Housing and Urban Development announced yesterday that it will launch multiple investigations into the lending practices of some mortgage lenders to determine if they illegally denied mortgages because the mother was pregnant or a family member had a short-term disability. The action follows a report published this week in the New York Times outlining lending practices that possibly violate the Fair Housing Act.

“Denying a mortgage to people just because they’re having a baby is flat wrong,” says Vice President Joe Biden, chair of the White House Task Force on Middle Class Families. “Mothers on maternity leave have jobs, they have income, and they shouldn’t have to lose their deal to close on a house because they had a baby.”

“Lenders have every right to ascertain the incomes of families to determine whether they are eligible for a mortgage loan, but they have no right to use a pregnancy or a short-term disability as a cause to deny that family a mortgage they would otherwise qualify for,” says HUD Secretary Shaun Donovan. “Having a child should be a time for a family to celebrate and must not be a cause for unfair lending practices.”

HUD enforces the Fair Housing Act that prohibits discrimination in lending based on sex, familial status (pregnancy or children in the family), or disability. The Act protects consumers from discrimination based on a borrower’s maternity leave if the borrower can demonstrate that she intends to return to work and otherwise continues to meet the income requirements to qualify for the loan.

However, a published report in the New York Times indicated that some mortgage lenders may be denying credit to borrowers because of a pregnancy or maternity leave.

“This report is profoundly disturbing and requires immediate action,” says John Trasviña, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, the office that will direct the investigations. “Lenders must not carry out due diligence responsibilities in ways that have the practical effect of discriminating against recent or expectant mothers.”

HUD’s Federal Housing Administration (FHA) requires its approved lenders to review a borrower’s income to determine whether they can reasonably be expected to continue paying their mortgage for the first three years of the loan. FHA-insured lenders cannot, however, inquire about future maternity leave.

If a borrower is on maternity or short-term disability leave at the time of closing, lenders must document the borrower’s intent to return to work, that the borrower has the right to return to work, and that the borrower qualifies for the loan taking into account any reduction of income due to their leave.

Meanwhile, HUD is also reviewing Fannie Mae and Freddie Mac’s underwriting guidelines to determine if they satisfy the Fair Housing Act, including income verification of persons taking parental or disability leave.

© 2010 Florida Realtors®

WASHINGTON – March 26, 2010 – A 2009 U.S. District Court decision indicated that add-on fees – commonly known as transaction fees – not accompanied by specific services violate federal law. As a result, many large real estate brokers altered their commission rate and fee procedures.

The Department of Housing and Urban Development (HUD) recently clarified the government’s position on add-on fees. General counsel Helen Kanovsky emphasized that federal law under the Real Estate Settlement Procedure Act (RESPA) regulates how the commission should be disclosed – but it does not prescribe how a real estate agent or broker determines the charge for his/her services.

The commission may be disclosed as a flat fee, a percentage of the sales price, or a combination of the two.

On the revised HUD-1 settlement sheet, commissions are now reported as dollar amounts rather than percentages in the 700 series. If the total charges disclosed in the 700-series exceed the amount of commission in the listing or buyer brokerage agreement, then HUD can review those charges to determine whether additional services were provided for the excess amount charged.

Any charge for which no, or nominal, services were performed, or that duplicates other fees, violates RESPA.

Experts say small and midsize brokerages unaware of the court decision should review their commission policies now to avoid legal trouble.

Still have questions? Call Florida Realtors Legal Hotline at (407)-438-1409. The hotline is an included member benefit, except for the cost of a long-distance call.

© 2010 Florida Realtors®

NOTE: I don’t charge transaction fees!

Great video that explains it all…

http://link.brightcove.com/services/player/bcpid1785312249?bclid=1740033302&bctid=61485517001