Florida’s Fair Lending Act
Abusive lending harms communities by discouraging homeownership. To combat unfair and deceptive lending, state governments have enacted consumer protection legislation that specifically targets predatory practices. The Florida Fair Lending Act, which went into effect in 2002, prohibits certain predatory tactics, imposes fee restrictions on high-cost home loans and requires that the lender make a number of disclosures to the borrower in such loans.
The Florida Department of Finance enforces the law, which can include steep penalties for violations.
The Florida Fair Lending Act specifically prohibits:
Charging prepayment penalties after a three-year period has expired
Increasing the interest on a loan after it has gone into default
Refinancing a loan within the first 18 months, unless it benefits the borrower
Calling a loan due when the borrower has complied with its terms
Extending credit without heed to the borrower's ability to pay
Paying home improvement contractors directly
Charging late fees in excess of five percent of the payment
Balloon payments on loans maturing in less than ten years
Florida Fair Lending Law also requires lenders to disclose certain facts about the loan at least three days prior to closing. Among other information, the lender must disclose that:
A mortgage will be placed on the borrower's home, and the home could be lost in the event of foreclosure.
Interest rates and terms can vary, depending on the lender or broker.
Borrowers can and should seek financial advice prior to closing from a qualified adviser or credit counseling agency.
Loan applicants do not have to accept the loan, even though an application has been filled out.
Changes in loan terms require another three-day disclosure period.
Consumers have a number of rights and resources to help defend themselves against unfair and deceptive lending practices.
This information on the Florida Fair Lending Act is offered by the law firm of Christian N. Scholin, Attorney at Law, 561-459-2587, www.scholinlaw.com.
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