Statement Against Predatory Lending Practices
425.com Mortgage Online
425.com has adopted this Statement Against Predatory
Lending Practices, as well numerous other safeguards and procedures, including
Best Practices as recommended by the Mortgage Bankers Association of America, in
order to help insure that our customers receive fair and equitable treatment in
the origination of their mortgage from 425.com
425.com strongly disapproves of abusive or predatory lending
practices by any of its employees or agents, and requires its employees to
receive training to spot predatory lending practices in an effort to prevent
them. 425.com requires all new loan brokers and correspondents to acknowledge
425.com Best Practices and Anti-Predatory Lending Policy, and to adhere to
practices intended to eliminate predatory lending and treat all borrowers fairly
and equitably. In addition, 425.com complies with all applicable state and
federal laws and regulations, including, but not limited to the Equal Credit
Opportunity Act, the Fair Housing Act, the Fair Credit Reporting Act, the Truth
in Lending Act, and the Real Estate Settlement Procedures Act. 425.com 's Best
Practices policies are listed below.
Prospective borrowers are encouraged to seek loan counseling
prior to obtaining a mortgage, and the US Department of Housing and Urban
Development can provide you with a list of loan counselors in your area (see
http://www.hud.gov/consumer/ or
http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm for more information,
or contact HUD at 1-888-466-3487).
Best Practices
- Borrowers Should Not Be Steered to Inappropriate Products.
Borrowers should be offered the best available products for
which the borrower would qualify based on his/her
creditworthiness. 425.com 's automated underwriting system, as
reflected in 425.com, automatically seeks the highest
credit grade available for each borrower and prices a loan
accordingly.
- Lenders Should Determine That All Borrowers Have the
Ability to Repay Their Loans. A lender's credit decision
should be based primarily on the repayment ability of the
borrower. 425.com has established a policy which restricts the
origination of a loan solely on the basis of the borrower's
equity, without regard to proper underwriting. 425.com underwriting
utilizes, among other things, income, assets, as well as
mortgage and credit histories. 425.com requires that all borrowers
meet prescribed debt-to-income ratios as specified in Lender's
underwriting guidelines. Currently, the maximum debt-to-income
ratio is 55% (lower for certain products). 425.com typically qualifies ARM
loans at a rate of 1% above the start rate on all 6 month and 1
year ARM's.
- Lenders Should Not "Flip" Customers.
"Flipping" refers to the practice where a lender
refinances a loan with a larger loan where the additional
proceeds are largely used for fees and charges, and resulting in
the borrower's equity being stripped from the property. 425.com
requires a 12-month listing history as well as the sales history
that must be validated by the appraisal department to detect
artificially inflated values. 425.com also requires a 12-month chain
of title on all transactions. Loan transactions for properties
with multiple refinances in the last 24 months must also
demonstrate an economic value to the borrower.
- All Borrowers Should Be Fully Informed of All Loan Terms
and Conditions, Including the Risks and Benefits of the Loan
Transaction. Applicable disclosures should comply with legal
requirements and should provide adequate explanation of all
pertinent loan terms and conditions, including any yield-spread
or service-release premium. In addition, marketing practices and
materials should not be deceptive or exploitative. 425.com discloses
yield spread premium on the following documentation:
Advance Disclosures, Final Disclosures, Lenders Closing Instructions, State specific forms, Final HUD-1. In addition, 425.com provides its own Good Faith Estimate in all brokered transactions.
- Fees and Rates. Fees and rates should be representative
of the associated credit risks and/or costs and services
associated with the origination of the loan and properly
disclosed. Loan fees must be proportionate to the costs of
origination and the credit risk presented to the borrower. 425.com
has restricted first mortgage loans from exceeding the Section
32 and state-specific high cost rate and fees limitations, and
yield spread premium is limited to 3% on all loans. 425.com has a
clearly defined risk to rate price sheet that is published on
425.com Direct.
- Insurance Bundling. Lump-sum insurance products, such
as credit life insurance, disability insurance, home warranties,
etc., should not be a condition of the loan. 425.com does not engage
in the practice of financing lump-sum or single-premium credit
life insurance or similar products, and prohibits such practices
in any transaction in which it is involved
- Prepayment Penalties. Prepayment penalties should be
fair and fully disclosed. 425.com 's prepayment penalties follow
Federal and State laws. 425.com offers many loan programs with a no
prepayment penalty option at higher rates.
- Benefit to the Borrower. All loans must be made based
on a bonafide and documented benefit to the consumer. 425.com
requires employees to evaluate the benefit of each loan to the
borrower. Examples of benefits include, without limitation,
reduction of rate below borrower's current rate for a 24-month
period, reduction in monthly PITI, reduction in overall monthly
payments through debt consolidation, conversion of mortgage from
ARM to fixed rate, conversion of a mortgage from a longer term
to a shorter term, cash out/cash in hand greater than all fees
connected with loan (payoff of the prepayment penalty is
considered in this evaluation).
- Upcharging. The assessment of extra charges above an
actual third party fee. 425.com has prohibited the collection of any
excess fees above an actual third party fee. 425.com policy requires
copies of all third party invoices as a condition to close.
- Anti-Predatory Lending Policy. 425.com strongly disapproves
of abusive or predatory lending practices by any of its
employees or agents, and requires its employees to receive
training to spot predatory lending practices in an effort to
prevent them. 425.com requires all new loan brokers and
correspondents to acknowledge 425.com 's Best Practices and
Anti-Predatory Lending Policy, and to adhere to practices
intended to eliminate predatory lending and treat all borrowers
fairly and equitably.
- Fair Lending/Non-Discrimination. 425.com is an equal
housing broker and lender and, in accordance with the Federal Equal Credit
Opportunity Act, 425.com employs business practices that promote
fair lending and will not tolerate discrimination relative to
borrower race, color, religion, sex, handicap, familial status,
age, national origin or ancestry. 425.com fully supports the letter
and spirit of these laws and does not condone discrimination in
any mortgage transaction.
- Industry & Community Involvement. 425.com is committed
to involvement with trade organizations, community groups,
national associations, mortgage bankers, as well as state and
local associations to continually develop and implement
practices and disclosures that respond to the needs of
consumers, and to scan and respond to new
potential legislation which creates the need for consumer disclosures and protections.
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