Key Federal Agencies Stall Key Consumer Protections for Mortgage Applicants
When you apply for a mortgage to purchase a home, how do you know if you’re being quoted higher rates or fees than you deserve? Equally important: Did you know that Congress passed legislation requiring that lenders notify you whenever they price you higher — even slightly higher — than other applicants?
The 2003 law directed all lenders to issue “risk-based pricing” notices to applicants whenever negative information in their credit files leads to rates or fees that are “materially less favorable” than the terms available to other applicants. This is particularly important for mortgage applicants because even small differences in FICO (Fair Isaac) scores can lead to unfavorable quotes. For example, as of last Friday, a mortgage applicant with a FICO score of 639 would be charged 7.68 percent for a $216,000 home loan, while an applicant with a score just 21 points higher would be quoted 6.7 percent for the same size loan.
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