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Disclosures |
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Disclosures Related to Consumer Rights and Responsibilities Disclosure #21: No Borrower Funds Certification 1. Purpose: To provide you with an opportunity to declare that you have not borrowed any of the money you are using as the down payment, which has not been disclosed. The lender is concerned that if you have another loan outstanding you may be more likely to default on the first mortgage. 2. Whom does it protect? The lender, title company, and real estate professionals associated with the loan. 3. What rights do you give up? If you have, in fact, used borrowed money to help you cover the down payment or closing costs, you lied on the disclosure. Should the truth be revealed, you could be fined, up to $5,000 and/or imprisoned for up to two years. Disclosure #22: Signature Name Affidavit 1. Purpose: To have you swear that you are signing these documents using your correct legal name. The intention is to avoid fraud and/or deception. 2. Whom does it protect? The lender, title company, and any other parties associated with the transaction. 3. What rights do you give up? You cannot later claim that you were unaware that you should have used your legal or given name. In fact, your legal name may no longer be the name you were given at birth. *Note: See Disclosure # , Not One and the Same Affidavit Disclosure #23: Exemptions 1. Purpose: To disclose that the title company will not assume the responsibility of filing for the homestead, mortgage (or any other exemptions) on you behalf. 2. Whom does it protect? The title company. 3. What rights do you give up? You signature indicates you assume responsibility for filing any exemptions you may be entitled to file. If your taxes increase because they are not filed in a timely fashion, you have no recourse against the title company. *Note: Title companies who offer excellent customer services USUALLY file proper exemptions on your behalf. Disclosure #24: Inspection (FHA) 1. Purpose: To disclose several things: a. FHA does not guarantee the value or condition of your new home. b. To clarify that the appraisal is for the lender, not the consumer. c. To inform you that you have the right, as a buyer, to have an independent inspection performed on the property. 2. Whom does it protect? The lender and/or FHA. 3. What rights do you give up? You cannot later claim damages because you fail to have an inspection and uncover problems which might have been uncovered with a typical home inspection. Neither do you have any recourse against FHA because of value or condition of your home. Disclosure #25: Notice of Right of Appraisal 1. Purpose: To inform you that you are entitled to a copy of the appraisal. It also tells you how much time you are allowed to request a copy and provides the address you should use. 2. Whom does it protect? The lender and/or mortgage broker. 3. What rights do you give up? You cannot claim at a later date that you were not told how to get a copy of you appraisal. I strongly recommend you insist on having a copy of the appraisal provided at closing. You paid for it. Disclosure #26 Notice to Co-signer(s) 1. Purpose: To inform you that you are agreeing to make payments on this loan if the primary borrower is not able to do so. 2. Whom does it protect? The lender. 3. What rights do you give up? You are not in a position to avoid making payments should the primary borrower default. Disclosure #27: Right to an Attorney 1. Purpose: To let you know you can have an attorney to review your closing documents or attend closing with you. The problem is that you are usually not told this until are AT THE CLOSING and this disclosure is pushed in front of you for a signature. 2. Whom does it protect? All parties to the transaction, including the lender, builder, REALTORS®, and the title company. 3. What rights do you give up? You can not later claim you would have used an attorney had you know you could have. Disclosure #28: Occupancy Affidavit and Financial Status 1. Purpose: To have the buyer declare that this will be a property that they will occupy as their primary residence. The guidelines for the loan are different if this will be used for a rental property. 2. Whom does it protect? The lender. The risks to a lender are different on investment properties; they require larger down payments and different underwriting. 3. What rights do you give up? You cannot claim later that you did not know the lender made the loan to you for you personal home. Frequently, fraudulent loans are processed as owner-occupant.
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