Responsible Home Buying Act

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Amendments adopted February 11: SB 1090-9 Amendments SB 1090-4 Amendments

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For Borrowers

	Will this bill increase consumer protections?

	Yes. Responsible borrowers need understandable information to make the best decision. Brokers are now managing the most important financial transaction families will make. As mortgage products have become more complex, borrowers must be able to rely on the expertise and advice of the lender. Even though realtors, stock brokers, attorneys and other financial representatives have this duty, the people that coordinate your largest transaction currently do not.

	Will it save me money?

	SB 1090 will end the practice of rewarding lenders who steer someone into a loan that carries a higher interest rate than the borrower actually qualifies for. It also limits excessive prepayment penalties and caps points and fees at 5%.

	Will it make it harder to refinance?

	No. SB 1090 stops equity stripping, not lending. SB 1090 will ensure your next loan has a tangible net benefit and doesn't include prepayment penalties and extra fees. Passage of this bill should give you more confidence in your next loan.

For Lenders

	Will this this limit the products I can offer?

	No. It does not ban subprime or nontraditional loans, it just clarifies lending standards to ensure the borrower's ability to pay.

How will it be determined if a new home loan is in the borrower's interest?

The bill directs creditors to determine if it is in the best interest of the borrower in light of all of the borrower's circumstances and taking into account the terms, interest rate and annual percentage rate, points and fees and other charges associated with a home loan for which the borrower qualifies.

How will it be determined if a refinance loan is in the borrower's interest?

A tangible net benefit standard is a measure commonly used by responsible lenders to help their customers evaluate a loan. This standard is currently required in 20 states. Rules will be adopted by the Department of Consumer and Business Services, which shall require, at a minimum, a comparison between the cost and terms of the existing home loan and the cost and terms of the new home loan.