Tennessee Enacts Home Loan Protection Act

After years of heated debate, the Tennessee Home Loan Protection Act has become law. This law protects consumers against some high-cost mortgage loans and the brokers and lenders who make them.

Most traditional mortgage loans have fees of 1 to 2 percent. If fees total more than 5 percent, the new law will trigger stricter regulations and certain fees are capped. The law also protects home owners against some mortgage “flipping,” and high cost loans cannot increase the principle over the course of the loan. Also, payments that are twice as large as regular payments, or balloon payments, are restricted. One of the biggest changes the law introduced is the requirement that high-cost mortgage loans must now include a notice to borrower.

Although many feel the law did not go far enough to protect consumers, it does provide reasonable steps to protect homeowners while limiting restrictions that threaten to curtail subprime lending, the business of making loans available to people with low incomes and spotty credit. If you believe you have been the victim of a predatory lender, please feel free to contact our office.

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