- Mortgagees benefit from a series of increasing stringent federal disclosure laws from 1968 to the present.New Home image by Ryan LeBaron from Fotolia.com
One Florida insurance law deals with disclosure requirements related to mortgages. The state of Florida also complies with several federal laws that deal with mortgage disclosure requirements. Five of them define the basics of these requirements: the 1968 Federal Truth in Lending Act; the 1968 Federal Fair Housing Act; the 1974 Federal Real Estate Settlement Procedures Act; the 1998 Homeowner's Protection Act; and the 2008 Federal Mortgage Disclosure Improvement Act. These laws cumulatively require lenders to give borrowers additional rights, disclose these rights and clarify and further disclose existing rights.
1968 Federal Truth in Lending Act (TILA)
- The framers of TILA intended it to require mortgage lenders to disclose to borrowers the actual cost of the mortgage, including the total sale price, the amount financed, the total finance cost, the total number of payments and the annual percentage rate (APR). Critics of the law noted numerous deficiencies, including the fact that the APR requirement does not take into account compounding of interest within the year.
The 1968 Federal Fair Housing Act (FFHA or FHA)
- The FFHA deals primarily with discrimination in housing. It does, however, have a disclosure requirement, namely that lenders complying with the act advertise their compliance by displaying the Equal Housing Lender Logo along with the "Equal Housing Lender" slogan.
The 1974 Federal Real Estate Settlement Procedures Act (RESPA)
- The framers of RESPA intended it to remedy deficiencies in the 1968 Truth in Lending Act, and to end work-arounds devised to weaken the earlier act's effect. RESPA has many requirements, but in general, RESPA requires additional disclosures of settlement costs, first at the time of the loan application, again before the loan closes, once more at the closing and one last time after the closing. It also contains additional consumer protection requirements that effectively become disclosure requirements, because the lender must acknowledge them to the borrower.
The 1998 Homeowner's Protection Act
- The Homeowner's Protection Act (HPA), sometimes known as the PMI (Private Mortgage Insurance) act, requires lenders to make disclosures related to an insurance policy that lenders require mortgagees to carry when the downpayments equal less than 20 percent of the purchase price. It intended to remedy a problem that lenders failed to cancel it when borrowers had paid down their loans and had achieved greater than 20 percent equity. It also provided that lenders must automatically cancel the insurance in that circumstance for borrowers who have not made payments 30 or more days late in the previous year. It also required lenders to disclose this right to buyers at the closing.
The 2008 Federal Mortgage Disclosure Improvement Act (MDIA)
- 1968's TILA failed to address some issues related to disclosure. MDIA remedies these deficiencies by requiring additional wording related to truth in lending, accuracy of APR disclosures, and by requiring the borrower to sign statements affirming timing requirements related to disbursements and lender disclosures.
The 2007 Florida State Anti-Coercion Statement
- Florida State insurance law (Rule 4-124.002) provides that "the lender may not require the applicant to take [mortgage protection] insurance through any particular agent or company." The law requires that the mortgage applicant sign an anti-coercion statement affirming that she has not been coerced in this regard.