Housing prices are third, and mortgage rates remain substantially above their prepaandemics level. Now, with the season of purchase of the spring house, buyers have a new concern: an important federal consumer guard dog has been limited.
Without the Consumer Financial Protection Office, the agency responsible for supervising most of the aspects of the housing purchase process, consumer defenders say that housing buyers must be their own guard dogs.
“Now, when you buy a house, you are much more vulnerable to be deceived,” said Sharon Cornelissen, housing director of the América Consumer Federation. “It is important to be on guard, because they are taking off railings.”
Buying a house is the biggest financial decision that most Americans will take in their lives. The typical housing price is approximately $ 397,000, according to the National Association of Real Estate Agents, but prices are much higher in some parts of the country. In several California counties, for example, the average price at the end of last year was more than $ 1.5 million, with monthly payments of mortgages exceeding $ 8,000.
What role has the consumer office played in the purchase of housing?
The consumer office was created after the financial and housing crisis in 2007-8 to optimize the supervision of lenders and financial companies that serve consumers. Over the years, the office has moved to relieve the process of purchasing mortgages by offering simplified forms and educational tools, and has taken measures against a variety of banks and lenders. In 2022, for example, the office ordered Wells Fargo to pay $ 3.7 billion for poor handling of a variety of customer accounts, including the incorrect denial of thousands of requests for modifications of mortgage loans that in some cases led the borrowers to lose their homes to “injury” gifts.
On January 17, in the last days of the Biden Administration, the office reached an agreement with Draper and Kramer Mortgage Corporation for discouraging borrowers to request loans to buy houses in neighborhoods in black and Hispanic majority in Chicago and Boston. In an email, the lender’s lawyers said that Draper and Kramer “consider the matter closed and denies” the statements of the office, but decided to establish themselves in part to avoid “prolonged legal costs.”
What has changed under the Trump administration?
Since President Trump assumed the position on January 20, the consumer office has adopted a non -intervention approach. Last month, he launched legal actions against Rocket Homes Real Estate, who had been accused in December of illegally directing the possible borrowers to an affiliate, Rocket Mortgage. In a statement sent by email, Rocket Homes said that “it has always connected buyers with high -performance agents based only on objective criteria as how well they helped housing buyers to achieve their dream dream dream.”
The office also dropped a lawsuit against Vanderbilt Mortgage and Finance, owned by Berkshire Hathaway, for granting loans to buyers of manufactured houses who knew they could not afford to pay them. A rule that requires that mortgage lenders verify that borrowers can pay was a key aspect of the established changes after the financial crisis, when many people lost their homes because they could not make payments of their loans. In a previous statement, Vanderbilt said that the lawsuit was “unfounded and false, and is the last example of politically motivated regulatory overreach.” Vanderbilt also said that it exceeds the legal requirements to assess the ability to pay a borrower.
Alys Cohen, a main lawyer of the National Consumer Law Center, said the office had stopped supervising if the lenders complied with consumer protection laws. Other federal regulators supervise the banks, he said, but their main approach is the safety and general solidity of an institution, instead of its consumer treatment. States also regulate banks and other lenders.
“People can be exposed to high prices and hidden relationships that may not know,” he said. (The center has joined a lawsuit that opposes administration’s efforts to dismantle the consumer office).
The Consumer Office did not respond to an email in search of comments about its activities.
Relaxed supervision occurs when buyers navigate what has been a challenging real estate market. Lawrence Yun, chief economist of the National Association of Real Estate Agents, said in a statement that “it is evident that high prices of housing and higher mortgage rates tension the affordability” in January, when pending house sales fell almost 5 percent.
Mortgage rates have recently dropped, with the average rate of an mortgage loan of fixed rate to 30 years that fell to 6.63 percent to Thursday, below 6.76 percent a week earlier, Freddie Mac’s mortgage financing giant reported.
How can housing buyers manage costs and reduce risks?
The investigation carried out by the consumer office found that only half of the borrowers buy better terms and interest rates by taking a new mortgage loan or refinancing a mortgage. That may be due to the fact that obtaining quotes takes time, and consumers can be confused by comparing complex options, leading them to trust a loan officer who already know or a single derivation of an agent or real estate friend.
However, buying with different lenders to compare costs can save the borrowers thousands of dollars, according to an investigation by Freddie Mac. Obtaining two rates contributions could save up to $ 600 annually, and getting at least four appointments could save more than $ 1,200 per year, Freddie Mac said.
Housing buyers use references from their real estate agents for suppliers such as titles insurers and housing inspectors, but borrowers must also buy for these suppliers, housing defenders say. The consumer office found last year that the closing costs of mortgage loans had increased significantly, partly because the increase in interest rates led more borrowers to pay for “discount points”, to reduce the rate of their loans.
Mrs. Cohen, from the Consumer Law Center, also suggested taking an education course for housing buyers, particularly if you are a buyer for the first time. (Lenders may require courses in some cases, as if seeking help with an initial payment). The courses, offered in person or online, help buyers to understand what it implies finding, finance and owner of a house, including how to select a lend. To find a course approved by the Department of Housing and Urban Development, see the agency’s website.
What happens if I find a problem with my mortgage or my lender at home?
You can file a complaint with the consumer office, although it is not clear if complaints are processed. “The law is,” said Cornelissen. “It is more difficult to enforce” without the office.
In a judicial presentation this week, the chief of cabinet of the office of response to the office consumer said that many people “do not receive timely answers to their complaints” and that for those who face urgent situations, such as losing their home in an imminent mortgage execution, “there simply there is no one in the CFPB to help.”
Christopher Peterson, professor at the Faculty of Law of Quinney of the University of Utah and expert in consumer law, said: “I still think it is worth complaining.” It is not clear, he said, how legal struggles will be resolved for efforts to “discourage” the consumer office, but the law requires the office to maintain a complaint process.
After showing an error message for weeks, the website of the consumer office is now opened directly to its complaint portal.
He may also complain with the consumer protection arm of the consumer office of his state attorney, said Peterson. State regulators do not always have the same resources and experience as federal agencies, he said, but can assume a larger application role if the consumer office is diminished.
Mrs. Cohen also pointed out that if she had certain types of mortgages backed by the Government, as an insured by the Federal Housing Administration, she could communicate with the National Center for Services of HUD, which works with the borrowers to prevent mortgage execution. HUD budget cuts can reduce the functions of the Services Center, he said, but from now on it remains an option.
Can I take my mortgage lender to the courts?
Some consumption loans require private arbitration of disputes outside the courts, but that is not the case with mortgages, Peterson said. If you think it was overloaded or mistreated, you can bring legal actions yourself. Such statements can be complicated, he said, but because the purchase of a house “can affect its financial destination for a long period of time,” a lawsuit may be worth it.
A way to find a lawyer who specializes in the Consumer Rights Law is to search the National Association of Consumer Defenders.
