Home Buyer's Handbook

Know Your Rights

Federal and state laws protect you from unfair treatment and misleading information when you apply for a loan.

Equal Credit Opportunity Act

This federal law prohibits lenders from discriminating against any person because of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to contract), or status with regard to public assistance.

If you feel a lender may have discriminated against you in violation of this federal law, you should contact the appropriate federal agency, depending
on the type of lender involved.

Minnesota Human Rights Act

The Minnesota Human Rights Act prohibits discrimination by sellers, real estate agents, or lenders in the sale or financing of real property due to race, color, creed, religion, national origin, sex, marital status, status with regard to public assistance, disability, sexual orientation, or familial status. The Minnesota Human Rights Act is enforced by the Minnesota Department of Human Rights, which you can reach as follows:

Minnesota Department of Human Rights
540 Fairview Avenue North, Suite 201
St. Paul, MN 55104
(651) 539-1100 or (800) 657-3704
www.mn.gov/mdhr

Real Estate Settlement Procedures Act (RESPA)

RESPA is a federal law regulating a lender’s closing or settlement practices.
It requires that lenders make disclosures and treat you fairly by:

• Giving you a copy of the Consumer Financial Protection Bureau’s booklet, “Your Home Loan Toolkit,” within three days after you apply for a loan.
• Giving you a Loan Estimate of the closing (or “settlement”) costs within three days after you apply for a loan.
• Itemizing all loan closing charges on a Settlement Statement, also known as the Closing Disclosure. This law also gives you the right to inspect these forms before the closing on your home. To exercise this important, but often overlooked right, ask your closing agent or lender for a copy of the form sooner, if it’s prepared.
• Prohibiting lenders and agents from receiving hidden kickbacks or referral fees for referring customers to anyone for any transaction involving a federally related mortgage loan.
• Restricting the amount of money a lender can ask you to put in escrow.

For more information about RESPA, contact the Minnesota Office of the U.S. Department of Housing and Urban Development (HUD) at (612) 370-3000 and the Consumer Financial Protection Bureau (CFPB) at (855) 411-2372.

Loan Transfers

If your lender transfers the servicing of your loan to another lender, he or she must give you no less than a 15-day notice before the transfer. This notice must include: the date of the transfer; the name, address and toll-free or collect call telephone number of the new servicer; and the name of an individual or department of the new servicer whom you can call. If you send timely payments to the lender who transferred your loan, rather than to the new lender servicing your loan, you may not be charged a late fee during a 60-day period after the date of the transfer.

Closing Disclosure

Your lender is required to give you a Closing Disclosure that ensures that you are informed of all the fees and costs of the loan. The five-page statement provides details about the financing charges you’ll pay over the life of the loan, including the APR, the amount of interest you will pay, and how much your total payments will be for the term of the loan.

Fair Credit Reporting Act

Three large national credit bureaus keep credit reports on you. These reports include financial data about you (such as whether you pay your bills, whether you pay on time, whether you have been sued and whether you have filed for bankruptcy). The Fair Credit Reporting Act gives you the right to challenge the accuracy of any information in your credit report. Because these reports are so important in getting a loan—and because many consumers have found errors in their credit reports—it is a good idea to check your reports at least once per year.

Every year consumers can get a free credit report from each of the credit agencies—Equifax, TransUnion and Experian. The credit bureaus have created a centralized website, toll-free telephone number, and mailing address for Minnesota consumers to order their reports. Annual reports may be requested one of the following ways:

1. Logging on to www.AnnualCreditReport.com;
2. Calling (877) 322-8228; or
3. Writing to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281

Although consumers can only receive their credit reports for free once per year, consumers may still request additional reports from the three credit bureaus.

For more information about your rights concerning your credit report, contact the Federal Trade Commission at (877) 382-4357, or check out the Federal Trade Commission’s website at www.consumer.ftc.gov.