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El Banco de Ahorros Hudson City pagará $27 millones para aumentar el acceso al crédito en vecindarios mayormente afroamericanos e hispanos que discriminaba

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Cuando usted está buscando una hipoteca, no debería tener que preocuparse por que lo discriminen. La Ley de Igualdad de Oportunidades de Crédito (ECOA, por sus siglas en inglés) prohíbe que los prestamistas discriminen a los solicitantes debido a su raza o etnicidad. La Oficina para la Protección Financiera del Consumidor (CFPB) y el Departamento de Justicia (DOJ) presentaron una demanda alegando que el Banco de Ahorros Hudson City violó la Ley ECOA desde el 2009 hasta el 2013 cuando excluyó a ciertos vecindarios mayormente afroamericanos e hispanos de los servicios financieros equitativos por medio de la delimitación ilegal (redlining” en inglés).  La demanda alega que Hudson City ubicó casi todas sus sucursales y escogió corredores hipotecarios fuera de los vecindarios mayormente afroamericanos e hispanos, entre otras acciones. Es decir, Hudson City intencionalmente desalentó a prestatarios potenciales que buscaban acceso equitativo al crédito en vecindarios mayormente afroamericanos e hispanos en los estados de Nueva Jersey, Nueva York, Connecticut y Pensilvania.  Mapas mostrando los sucursales y corredores hipotecarios de Hudson City, sus áreas de evaluación de crédito y aplicaciones de crédito presentadas a Hudson City se pueden ver aquí.

El CFPB trabaja para  protegerle de la discriminación ilegal y hace que las empresas se responsabilicen por sus acciones. Trabajamos no solo para que los mercados financieros para los consumidores funcionen,  creando normas más eficaces y haciendo que esas normas se cumplan.  También educamos y empoderamos a los consumidores para que puedan mejorar sus vidas financieras.

El CFPB y el Departamento de Justicia están presentando una orden judicial, que de ser aprobada, requerirá que Hudson City:

  • Mejore su sistema de cumplimiento para prevenir discriminación en el futuro,
  • Pague $25 millones para subsidiar préstamos hipotecarios en los vecindarios mayormente afroamericanos e hispanos que fueron excluidos,
  • Agrande la comunidad a la que le ofrece servicios bajo la Ley de Reinversión en la Comunidad (CRA, por sus siglas en inglés) para que incluya los vecindarios mayormente afroamericanos e hispanos anteriormente excluidos,
  • Establezca dos sucursales nuevas para servir vecindarios mayormente afroamericanos e hispanos,
  • Invierta $750,000 en alianzas con organizaciones comunitarias que brindan asistencia en los vecindarios mayormente afroamericanos e hispanos e
  • Invierta $1,000,000 en publicidad y esfuerzos de acercamiento en los vecindarios mayormente afroamericanos e hispanos,
  • Invierta $500,000 proporcionando educación financiera a los residentes de los vecindarios mayormente afroamericanos e hispanos y
  • Pague una multa de $5.5 millones.

La orden de hoy representa el acuerdo legal más significativo hasta la fecha sobre la delimitación  (“redlining”) de vecindarios para excluir ciertos vecindarios de los servicios financieros, basado en el monto de  subsidios directos que serán proporcionados a las comunidades afectadas.

Protecciones contra la discriminación

Bajo la Ley ECOA, es ilegal que un acreedor discrimine en cualquier aspecto de una transacción de crédito en base a ciertas características, como la raza y la etnicidad. Si usted cree que un prestamista lo ha discriminado, puede presentar una queja (página en inglés) en línea o llamando al (855) 411-2372.

Para más información sobre las señales de discriminación y lo que puede hacer para protegerse, haga clic aquí (página en inglés).

CFPB’s new rule will shine light on mortgage market practices

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CFPB’s New Rule Will Shine Light on Mortgage Market Practices

Today the Consumer Financial Protection Bureau is updating the Home Mortgage Disclosure Act (HMDA) requirements with a new rule that will shine more light on lending practices in America’s largest consumer financial market, the mortgage market.

HMDA is a statute that provides the public and policymakers with information about the mortgage market and ensures market transparency.

HMDA requires many financial institutions to collect, report, and disclose information about their mortgage activity. The original law was enacted by Congress 40 years ago to respond to concerns that some banks may be failing to serve their communities.

Everyone in America deserves a fair shot at accessing the American Dream. The Home Mortgage Disclosure Act:

  • Helps to show whether lenders are serving the housing needs of their communities,
  • Gives public officials information that helps them make informed decisions and policies, and
  • Reveals lending patterns that could be discriminatory.

What will be changing?

To address shortcomings in market transparency exposed by the financial crisis, the Dodd-Frank Act required the CFPB to expand the types of information collected through HMDA, both by mandating certain new data points, and by authorizing the CFPB to require additional ones that would further HMDA’s purposes. The changes include:

  • New information that lenders must report: This information could help identify potential discriminatory lending practices and other issues in the marketplace. Some examples of new information include:
    • the property value
    • the term of the loan
    • the term of any prepayment penalty
    • the duration of any teaser or introductory interest rates
  • Monitoring access to credit: Financial institutions will be required to provide more information about underwriting and pricing, such as an applicant’s debt-to-income ratio, the interest rate of the loan, and the discount points charged for the loan.

New HMDA data will begin to be collected by financial institutions on January 1, 2018, and this new information, modified to protect applicant and borrower privacy, will be publicly available in 2019.

What changes will I see with this new rule?

As the name implies, HMDA is a disclosure law, and it relies in part upon public participation for its effectiveness. When you submit a mortgage application to a financial institution, you are asked to share your race, ethnicity, sex, and income. This information is collected to help federal regulators, consumer groups, researchers, and others identify possible discriminatory lending patterns in mortgage markets by examining the lending activity occurring in local markets and lenders’ practices when serving those markets. The information is only as powerful as what’s collected; when you share your data, you help ensure a more equitable market for all.

While the information is not yet available, today, you can visit our website to learn more about specific mortgage trends in your community. Here you can filter search results to get just the data you need. Once you’ve selected the data you want, you can also create custom tables and download the data in formats that suit your purposes.

The Bureau wants to improve the quality of HMDA data for today’s housing market, for the nation as a whole, and in your community. You can learn more at consumerfinance.gov/hmda.

Updated on Oct. 15, 2015

Know Before You Owe: New Mortgage Disclosures, New Rule

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New Mortgage Disclosures, New Rule

Today, the process of getting a mortgage is easier to understand because the Know Before You Owe mortgage disclosure rule is now in effect. The disclosures required for getting most mortgages have been redesigned to help you shop around to compare offers and find the loan that’s the best for you. We’ve also required lenders to give you more time to review the terms of your mortgage before accepting them, so that you can ask questions of your lender or seek advice from a housing counselor or lawyer.

You can learn more about this rule at consumerfinance.gov/knowbeforeyouowe.

We’ve put together some frequently asked questions about the new rule and how it will make the mortgage process easier for you.

What happened?

If you apply for a mortgage on or after October 3, our new disclosures are required for most mortgages. For most kinds of mortgages, you will have three business days to review your Closing Disclosure before you close. This rule is a part of our Bureau-wide Know Before You Owe mortgage initiative. We are working to make the costs and risks of financial products and services clearer, so you can make better, more informed decisions.

What’s the rule?

The Know Before You Owe mortgage disclosure rule, which was mandated by the Dodd-Frank Act, combines the required federal disclosures for most mortgages. It also requires lenders to give you your Closing Disclosure three business days before you close. This three-day period gives you time to understand the terms of your loan, compare it to the Loan Estimate you were given, and ask your advisors or lender any questions.

What are the disclosures?

The disclosures are forms that you get when you work with a lender to get a mortgage. These forms are required to help you understand the terms of your mortgage before accepting them. If you applied for a mortgage before October 3, 2015, you would have received a Good Faith Estimate and an initial Truth-in-Lending disclosure. Now, for most mortgages, you will get a Loan Estimate within three business days of submitting an application. At least three business days before you close, you will also get a Closing Disclosure. It contains a summary of the final terms of your loan. This form replaces the HUD-1 Settlement Statement and final Truth-in-Lending disclosure forms for most mortgages.

Why did you change the forms?

For more than 30 years, federal law has required lenders to provide two different disclosure forms to consumers applying for a mortgage and two different disclosure forms to consumers before they close on a mortgage. Two different agencies developed these forms since Congress first mandated them, and they had a lot of overlapping information. The two new forms, the Loan Estimate and the Closing Disclosure, combine information and mirror each other, so you can easily compare the terms you were given on the Loan Estimate with the terms on the Closing Disclosure. We tested them with consumers, lenders, and other mortgage professionals and found that the new forms help people better understand their mortgage terms and make it easier for people to find the information they need.

Will this rule delay my closing?

For most situations, the answers is no. The rule gives you three business days to review your Closing Disclosure and check it against your Loan Estimate to ensure that the deal you were proposed in the estimate is the deal you are getting. Our research found that, prior to this rule, consumers felt there wasn’t enough time to review their documents, so the rule gives you time to ensure you feel comfortable before you sign on the dotted line for your mortgage. Only where three very important things change about your loan after you get your Closing Disclosure does the rule require a second three-day review period. Minor, ordinary changes do not require an additional three-day review period.

This is a lot of information. How can I learn more about the mortgage process?

We know the prospect of getting a mortgage can seem very confusing, but we have a lot of resources that will help guide you through the process.

  1. We have a suite of tools and resources called “Owning a Home.” Here you will get step-by-step explanations of how to go about getting a mortgage and what to consider when making decisions. You’ll also find tools and resources to help you learn more about your options, make decisions, and prepare for closing.
  2. Your Home Loan Toolkit” is a downloadable booklet you can use to learn more about the mortgage process. It offers you easy to understand information, and gives you conversation starters to help you through key points in the mortgage process.
  3. When it’s time for you to get your Loan Estimate, we have a resource in “Owning a Home” that guides you through the form, page-by-page. We help you double-check the details and get definitions for unfamiliar terms. We have a similar resource for the Closing Disclosure.
  4. We also offer a tool to help you find a housing counselor. A housing counselor can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, usually at little or no cost to you.

If you have more questions, please visit consumerfinance.gov/knowbeforeyouowe where you’ll see all of our supporting documents, a timeline of our work on this project, and a video that explains the initiative. There are also answers to many detailed questions about the forms and the mortgage process in AskCFPB.

Understanding the mortgage process: Your home loan toolkit

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Understanding the mortgage process: Your home loan toolkit

The Know Before You Owe mortgage disclosure rule makes getting a mortgage easier for homebuyers and refinancers. It helps you shop for the loan that’s best for you and your family.

To help you navigate the steps you have to take to get a mortgage, take a look at our new booklet, “Your Home Loan Toolkit: A Step-By-Step Guide.” This consumer-friendly booklet can help you as you think about, apply for, and close on a mortgage. The toolkit helps you calculate how much you can afford for a home, gives you questions to ask your lender, and features worksheets and checklists to fill out during the process.

“Your Home Loan Toolkit” is a resource we revised to help make the mortgage process more understandable. Congress required us to revise an existing booklet, called the Settlement Costs Booklet or the Special Information Booklet, to include some additional information. We reviewed core concepts in the toolkit with recent homebuyers to make sure it would be useful and reduced it from 71 pages to 25. When we asked consumers about our new toolkit and whether they thought it was understandable and useful, almost all of them told us they liked the new toolkit.

You’ll get a copy of “Your Home Loan Toolkit” from your lender if you are using the loan to purchase a home

Lenders are required to give you the toolkit within three business days after you apply for a loan to buy a home. The toolkit is designed to be used with the Loan Estimate and Closing Disclosure, the two new disclosures that replace four overlapping mortgage forms for applications received on or after October 3, 2015.

You might see that a company has added its own logo to the cover of the toolkit. Companies and organizations are welcome to do this—please keep in mind that this doesn’t mean we’re endorsing that company or that we have screened the organization, their business, or the loans they might offer you.

Or, use “Your Home Loan Toolkit” whenever you start looking at mortgages

If you’re looking at mortgages, or deciding whether it’s the right time for you to buy a home, you might want to look over the toolkit today. It is filled with content that is helpful before you get to the application stage. It helps you determine how much of a monthly mortgage payment you can afford, explains how your credit affects the interest rate on your home loan, and gives you pointers on where to find more facts. You can download the toolkit. We also have a version in Spanish.

Visit Owning a Home for more detailed guidance and interactive tools

If you are looking for more information on navigating the mortgage process, visit “Owning a Home,” a digital suite of tools and resources where you can learn about loan options, explore interest rates, and print a user-friendly checklist to get you through the closing process.

Hudson City Savings Bank to pay $27 million to increase access to credit in Black and Hispanic neighborhoods it discriminated against

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When you shop for a mortgage, you should not have to worry about discrimination. The Equal Credit Opportunity Act (ECOA) prohibits lenders from discriminating against applicants on the basis of race or ethnicity. Today, the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) have filed a complaint alleging that Hudson City Savings Bank violated the ECOA by engaging in unlawful redlining from 2009 to 2013. The complaint alleges that Hudson City redlined by locating its branches and selecting mortgage brokers nearly all outside of majority-Black-and-Hispanic neighborhoods, among other actions. In other words, it intentionally discouraged potential borrowers from equal access to credit in majority-Black-and-Hispanic neighborhoods in New Jersey, New York, Connecticut, and Pennsylvania. Maps showing Hudson City’s branch and broker locations, credit assessment areas, and applications can be found here.

The CFPB is working to protect you from unlawful discrimination and to hold companies accountable for their actions. We not only help consumer finance markets work by making rules more effective, and consistently and fairly enforcing those rules, we educate and empower consumers to improve their financial lives.

The CFPB and the DOJ are filing a proposed order, which if entered will require Hudson City to:

  • Improve its compliance management system to prevent discrimination in the future,
  • Pay $25 million to subsidize mortgage loans made in the majority-Black-and-Hispanic neighborhoods that were redlined,
  • Expand the community it serves under the Community Reinvestment Act to include previously excluded majority-Black-and-Hispanic neighborhoods,
  • Create two new branches to serve majority-Black-and-Hispanic neighborhoods,
  • Spend $750,000 partnering with community-based organizations that provide assistance in majority-Black-and-Hispanic neighborhoods,
  • Spend $1 million on increased advertising and outreach in majority-Black-and-Hispanic neighborhoods,
  • Spend $500,000 on providing financial education to residents of majority-Black-and-Hispanic neighborhoods, and
  • Pay a $5.5 million penalty.

Today’s order represents the largest redlining settlement in history as measured by direct subsidies provided to affected communities.

Protections against discrimination

Under ECOA, it’s illegal for a creditor to discriminate in any aspect of a credit transaction based on certain characteristics, including race and ethnicity. If you believe a lender has discriminated against you, you can submit a complaint online or by calling (855) 411-2372.

You can learn more about the warning signs of discrimination and what you can do to protect yourself here.

Know Before You Owe: Closing Disclosure

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Loan Estimate blog

After you’ve shopped around for a mortgage and requested at least three Loan Estimates, compared the offers, and picked your loan, for most mortgages you’ll get a Closing Disclosure, at least three business days before closing.

The Closing Disclosure is a five-page form that helps you understand the key features, costs, and risks of your mortgage loan. If you applied for a loan on or after October 3, 2015, the Closing Disclosure will replace the HUD-1 Settlement Statement and Final Truth-In-Lending (TIL) forms for most mortgages.

The Closing Disclosure is a key part of our Know Before You Owe mortgage disclosure rule. To create this form we combined the two federal mortgage disclosures listed above. We tested this form with consumers and discussed the changes with industry. As part of the rule we also added new timing requirements, so you have time to review your loan terms. These changes make it easier to understand the terms of your mortgage before signing on the dotted line.

To help you understand your Closing Disclosure, we’ve created an interactive sample form. This resource helps you double-check the details and get definitions for unfamiliar terms. To make sure you’re prepared for closing, review your Closing Disclosure carefully and get our closing checklist, available in the “Owning a Home” suite of tools and resources for homebuyers.

When you’ll get your Closing Disclosure

During our work on the Know Before You Owe mortgage initiative, we reached out to loan officers, consumers, real estate professionals, and attorneys to learn about the process of closing. We learned that the documents are often hard to understand, overwhelming, and there isn’t enough time to review them.

Our rule requires lenders to send you the Closing Disclosure at least three business days before you finalize your loan. This gives you time to compare your Closing Disclosure to your Loan Estimate and ask your lender, your housing counselor, or your attorney any questions you may have.

More Resources

While our new forms are easier to understand, the mortgage process can be confusing and filled with complex terms. To help you navigate we’ve created a set of resources to help.

  • Interactive sample Closing Disclosure – Want to know where to find a particular fee, or how much money you will have to bring to the closing table? This interactive resource helps you understand the form. We’ve also made one for the Loan Estimate. These resources guide you through the forms by highlighting key information and defining terms.
  • Owning a Home” – This suite of tools and resources takes you through the process of buying a home. Here you will get detailed explanations of how to go about getting a mortgage and what to consider when making decisions. You’ll also find tools and resources to help you learn more about your options, make decisions, and prepare for closing.
  • Your Home Loan Toolkit” – This booklet has worksheets and conversation starters to help you navigate the mortgage process. You can fill it out on your computer or print a copy from our site.
  • Find a Housing Counselor – Housing counselors approved by the U.S. Department of Housing and Urban Development (HUD) can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, usually at little or no cost to you. Find a housing counselor near you with our search tool.

To learn more about the Closing Disclosure, visit consumerfinance.gov/knowbeforeyouowe. You can also learn more about the Loan Estimate on our blog.