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Recent Lawsuits Reveal Need to Review TILA
Posted on: June 10, 2015 by Newmark Insurance
After allegations against 2 California mortgage companies abusing the TILA surfaced, some real estate practices are being questioned. The real estate industry was reformed to prevent illegal transfer of funds years ago, yet the issue reemerged this month. To ensure these types of misconducts don’t bankrupt your business or destroy your reputation, installing Real Estate Professional Liability Insurance plan is advised.
The Truth in Lending Act, or the “Compensation Rule” was implemented in 2011 to promote the informed use of consumer credit by requiring disclosures about its terms and cost. In other words, this law stopped allowing mortgage brokers to receive financial gains for driving higher-rate loans without the consumer knowing. However, 2 companies have been accused of funneling illegal money into their personal accounts in a sneaky fashion. RPM Mortgage used employee expense accounts to deposit profits from closed loans’ interest rates. However, this “bonus” scheme was deemed illegal with the implementation of the TILA in 2011. The second, Guarantee Mortgage (which is no longer in operation), was investigated for syphoning funds to through a third-party marketing firm to branch managers.
In order to prevent this kind of scam from happening to you, it is advised you shop around for mortgage rates and compare in a true “apples to apples” format. Compare each of the bottom line costs to avoid any hidden fees or charges in your provided rate. Getting three separate rates from a combination of different lenders is a great way to weigh your options, as well.
Although the real estate industry is a lucrative one, there are integral challenges associated with the lending process. NewMark Insurance Services can provide you with comprehensive Mortgage Broker Professional Liability Insurance to guarantee your business does not suffer any potential damages from malpractice and unlawful transactions. To learn more, contact us today at (855) 777-6549.