The State of Vermont signed a new law which protects homeowners who are at risk of losing their mortgages. The measures were advocated by Paulette Thabault, the Commissioner of Banking, Insurance Securities and Health Care Administration and supported by the financial services industry. How do these measures help homeowners? How will it change the relationship between banks and borrowers?

Enhanced Mortgage Assistance

The new bill provides an enhanced mortgage assistance to borrowers. Although Vermont has been one of the states least affected by the mortgage crisis, the new law provides practical assistance to homeowners who are struggling to meet their mortgage payments. The program, which was included in Governor Douglas’ Economic Growth Initiative, directs homeowners to credit counseling, refinancing options and other alternatives to foreclosure.

Streamlined Licensing

One of the problems the mortgage crisis uncovered was an inconsistent licensing process and ineffective bureaucracy, which was a burden to financial institutions but failed to protect consumers. The new law has the ambitious goal of reducing the regulatory burden on lending institutions, improve the communication between regulators and reduce fraud by changing the licensing process and industry standards.

These changes include setting a minimum competency level for all mortgage loan originators, requiring all borrowers to complete a minimum of 20 hours of pre-license education, introducing special screening of mortgage loan originators, improve communication between  state regulators so fraudsters cannot hop from one state to another and bolster anti-fraud measures. Let’s add some details to those general measures.

The additional screening of loan originators will require regulators to deny the application of loan originators who have committed a felony in the last seven years, have ever committed a financial felony or have had a similar license revoked. This will increase the penalty of committing any type of financial fraud and helps protect consumers from financial consultants with a criminal or unethical work history.

The expansion of anti-fraud regulations includes a list of practices which mortgage originators cannot practice, such as misleading borrowers, collective fees which are not approved by state regulators, advertising loan terms which are not available and bribing or otherwise influencing the work of an appraiser.

If you live in Vermont and need assistance with your mortgage, call 1-888-568-4547. For more information on what to do if you are having problems with your mortgage read our next article on Vermont’s Government Mortgage Assistance.

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