The fourth and a very important factor we consider in evaluating the borrower’s qualification for a loan involves creditworthiness. A detailed examination of the borrower’s credit report will reveal certain information about the borrower. We will order a residential mortgage credit report form one of the major Credit Reporting Repositories. The credit report is analyzed to determine the borrower’s pay habits, and past patterns in meeting financial obligations. (Programs for slow or poor credit are available.) The borrower will be asked to provide a statement explaining any credit derogative.

If a borrower has elected to pay cash and has no credit accounts, creditworthiness can still be evaluated by demonstrating a willingness to pay in a timely manner with "rent receipts" and "receipts for utility bills"; a form of silent credit.

Because a borrower has experienced credit difficulties in the past, due to unforeseen circumstances, will not automatically signal a reject for a loan. The borrower’s statement and reasons for credit derogative are carefully evaluated before a final decision is made.

Compensating Factors – Mortgage lenders, the secondary market, and mortgage insurers are increasingly permitting compensating factors which is a term that refers to a borrower’s circumstances that warrant more flexible underwriting.

Commitment Letter – After your loan is approved, we will send a commitment letter. This is a formal offer or loan commitment. It will state the amount and terms of the loan. You will be given a certain amount of time to accept the loan offer and close. You should read and understand the commitment letter before signing. A counselor from a housing counseling agency or an attorney can assist you if the terms identified in the letter are unclear

Commitment Letter

(Example)

October 12, 2000

Jane Doe

1 Moving Avenue

Anytown, USA 00000

Dear Mr. and Mrs. Doe:

We are pleased to advise that your mortgage loan application has been approved for a fixed-rate real estate mortgage on the property located at 3 Residence Plaza, Anytown USA 00000 subject to the following terms:

• Amount of Loan $82,850.00

• Term 30 years

• Interest Rate 8%

In order to accept this commitment, you must sign and date the original and return it to us on or before September 19, 1997. This commitment will expire if the loan is not closed under the terms specified by October 9, 1997.

I order to close this transaction, the following document must be furnished to us for review. Please contact Ms. Time about obtaining the following:

Preliminary Title Report

Survey

This commitment is subject to all laws and regulations governing the transaction.

At the established time for closing, please arrange to bring to the closing certified bank funds or a cashier’s check for the funds needed to close the transaction. Make the check payable to __________________.

Please call me if you have questions. Thank you for the opportunity to be of service to you.

Sincerely;

Vice President

Residential Lending

I accept the terms as outlined in your letter dated September 4, 1997. (Please sign. Do not print.) Signature: _______________________ Date: ______________

Fair Housing Laws

This Section would not be complete without a brief review of Fair Housing Laws.

Laws have been passed by Congress to protect home buyers against certain types of discrimination in housing. The purpose of these laws is to create a single, unbiased market where everyone has the opportunity to purchase a home and live where she or he chooses.

The Fair Housing Act prohibits discrimination in housing or mortgage lending and the provision of insurance or brokerage services because of:

• Race or color

• National Origin

• Sex

• Familial status (one or more children under 18; also applies to pregnant women.)

• Handicap or disability

• Creed

• Religion

• Age

What is prohibited?

No one may take any of the following actions based on the above basis:

• Refuse to rent or sell housing

• Refuse to negotiate for housing

• Make housing unavailable

• Deny housing

• Set different terms, conditions or privileges for sale or rental of a dwelling

• Provide different services or facilities

• Falsely deny that housing is available for inspection, sale or rental

• For profit, persuade owners to sell or rent (blockbusting)

• Steering – Conscientious direction of person to or away from specific areas

• Redlining – Refusing to make loan or issue insurance policies in certain areas

• Coerce, intimidate or harass someone for exercising their fair housing rights

• No one may refuse to reasonable accommodate the needs of persons with disabilities

In mortgage lending, no one may take any of the following actions based on the above bases:

• Refuse to make a mortgage loan

• Refuse to provide information regarding loans

• Impose different terms or conditions on a loan

• Discriminate in appraising property

• Refuse to purchase a loan

• Set different terms or conditions for purchasing a loan

The Equal Credit Opportunity Act prohibits denials of credit based on race, color, religion, national origin, sex, age, marital status or receipt of public assistance.

If you believe that you have encountered discrimination, you should contact a local fair housing agency or your local HUD office, or call (toll-free) 1-800-669-9777. Hearing impaired persons may call (TDD) 1-800-927-9275.

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