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 A.  In connection with any mortgage loan applications
      submitted by East Baltimore residents, EBDI Preferred
      Lenders have agreed to the following principles:

1.  EBDI Preferred Lenders will first explain at the time when a resident/borrower applies for a mortgage, and will later itemize on the “Good Faith Estimate” provided to the resident borrower:

• All points and fees being charged by the lender.

• Any mortgage insurance fee being charged by the  lender (if such insurance is required because the resident’s down payment on his or her new home is less than 20% of the total purchase price). 

• Any monthly escrow amount required for property taxes and hazard insurance (also known as homeowner’s insurance).

• Any fees to be paid to a mortgage broker, either by the lender or by the resident.

• Any other fees or costs being charged to the resident (such as loan origination fees, loan processing fees, underwriting fees, etc.) that are required to be disclosed by law.

2.  EBDI Preferred Lenders will offer the resident/borrower the lowest cost loan for which he or she qualifies.

3.  EBDI Preferred Lenders will charge the borrower the actual fee incurred by the lender and/or mortgage broker to obtain the credit report, appraisal and other documents and services required in the mortgage transaction.

4 EBDI Preferred Lenders will adhere to the disclosure requirements of the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act of 2003.

5.   EBDI Preferred Lenders will offer the borrower the opportunity to have his/her credit rescored if there are errors or inaccuracies on the credit report, and if the credit score is used as a factor in determining loan approval.  EBDI Preferred Lenders will not charge a fee for the rescoring service.\

6.  EBDI Preferred Lenders will mail the borrower a copy of the appraisal upon lender’s receipt of the appraisal.

7.   EBDI Preferred Lenders will establish for the resident/borrower an escrow account for property taxes and hazard/homeowner’s insurance.

B.  EBDI Preferred Lenders will NOT offer mortgage loans to East Baltimore residents that include any of the following:

1.      Any Single Premium Insurance Product.

•    Explanation.  Many lenders offer various insurance products to borrowers, such as life, credit, unemployment and disability insurance.  Single Premium Insurance is any type of insurance that is paid by the borrower up-front in one lump sum.  The cost for the insurance premium is added to the loan amount.  As a result, the borrower pays the entire insurance premium up front by borrowing the money and paying interest on the lump sum premium(s).
   

•     Consumer Advocates believe that offering a Single Premium Insurance Product is not in the borrower’s best interests.  If a borrower decides to purchase an insurance product, lenders can offer it so it can be paid in monthly installments.  However, insurance purchased as part of the mortgage process, even if paid monthly, is often more expensive than insurance purchased directly through an insurance agent outside of the mortgage application process.  The Community Law Center recommends that borrowers first discuss insurance offers from lenders with their real estate attorney, before agreeing to add these costs to their mortgage. 

2.      Mandatory Arbitration Clauses. 

•       Explanation.  A borrower whose mortgage includes a mandatory arbitration clause has agreed to give up his/her right to go to court if there is a dispute.  Mortgage loans from EBDI Preferred Lenders will not include a mandatory arbitration clause. 

      3.   Prepayment Penalties.

•       Explanation.  A borrower whose loan contains a prepayment penalty owes additional money to the lender if the loan is paid off within a certain time period. The length of a prepayment penalty time period varies and adds significant costs to the pay-off figure if the house is sold or refinanced during the prepayment time period.