There is no shortage of documentation, articles, and even books available to help a VA loan borrower navigate not only the housing market but also the VA loan program. The difficulty is often finding the specific answer to a specific question without having to weed through all of the stuff you either already know, don’t care about, or don’t see how it applies to you. There’s good news and bad news.
The good news is that those specific answers are out there. The bad news is you probably will have to dig through stuff to find them. Granted, lots of questions can be answered by a VA-approved lender, but it’s always valuable to be a knowledgeable borrower before you ever speak to a lender. As such, there are some important laws that have been enacted that directly affect a VA loan borrower that both first-time and experienced buyers should be very familiar with.
First, you definitely want to be familiar with the Consumer Credit Protection Act (found here http://www.fdic.gov/regulations/laws/rules/6500-200.html). The Consumer Credit Protection Act directly affects any borrower, including a VA borrower. While the Consumer Credit Protection Act brings a lot of safeguards for the borrower, probably the most influential one is the ability of a borrower to correct errors on their credit report. Errors are very common, and they can be devastating to a credit report. The Consumer Credit Protection Act allows the borrower to provide documentation to correct errors that may have appeared on their credit report. It’s good to know everything else that’s in there as well. For example, did you know that a credit report can not adjust your credit score based on assumptions that you may become pregnant or have a child in the near future? Also, the Act prohibits credit reporting agencies from using or accessing your information for anything other than official credit report requests. There’s lots of other things in there that are very good to be aware of.
Next in line is the Truth in Lending Act (TILA), sometimes referred to as the Federal Consumer Credit Protection Act. TILA, found here: http://www.fdic.gov/regulations/compliance/manual/pdf/V-1.1.pdf is a 92-page document with the sole purpose of making sure that lenders and borrowers are honest with each other during the lending process. Specifically, the TILA makes provisions that a lender must provide the borrower with all the terms and conditions of the agreement before the borrower commits to it. The idea is that the borrower should have the ability to compare and contrast offers and make a smart and accurate decision based on complete information about the different offers available. The TILA also has a very useful chart (page 8) that shows what charges a lender must put on the borrower, can put on the borrower, and must not put on the borrower. The TILA is definitely a valuable read (and re-read) for anyone looking to get a VA loan.
Recently updated is the Real Estate Settlement Procedures Act (RESPA), which can be found here: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/res/respa_hm. The RESPA goes along with the TILA, in that it primarily involves information that a lender must give a borrower in relation to their loan. The RESPA ensures that the lender must provide the borrower with information about settlement costs, monthly mortgage payments, estimates on closing costs and anything else the borrower might be expected to pay and when they would be expected to pay it. It is also a good thing to know well.
Last but not least is the Equal Credit Opportunity Act, enacted in 1975 and protecting minorities ever since. The ECOA prohibits any discrimination based on race, color, religion, national origin, sex or marital status, or age. Obviously, a law can only do so much to prevent discrimination, but the ECOA gives the borrower more power to get the loan they are eligible for regardless of any of the above. The ECOA can be found here: http://consumer.findlaw.com/credit-banking-finance/equal-credit-opportunity-act.html.
These four laws are great starting points as you try to become an expert in all things VA loans, but they are far from the whole story. It’s good to do as much research as you can before committing to a certain deal from a lender.