California Wants Mortgages 'completely' Explained By Real Estate Agents

Here's what the California Department of Real Estate is reminding the state's licensed realtors in the agency's latest quarterly bulletin ...

"It is incumbent upon brokers and salespeople to completely detail the terms of these loans both in their advertising and when consulting with consumers and discussing different loan options. That includes an explanation of the rates at which interest can accrue and the effects of deferred interest. Licensees who sell these programs based on their benefits (i.e., low payment options), must also explain the risks involved and help their clients determine if such a program is right for them or not. Payment option, interest only and other such ARM (adjustable-rate) loan products may not be right for everyone, especially first-time buyers and those who are trying to afford a home for which they may not otherwise qualify. An agent or broker representing a buyer should be aware of the type of loan being used to finance the purchase. If the buyer has been offered a payment option ARM or similar loan product, the licensee should confirm that all of the terms and possible effects (both positive and negative) have been explained by the mortgage broker or lender. The terms of these loans are laid out in the adjustable rate note, addendums and disclosures. While it is incumbent on all buyers to read and understand these documents, the details can be daunting. There are many variations of these loans on the market today. It is the fiduciary duty of each licensee to completely explain the terms and discuss the relative merits and risks of these loan products well before the point of signing loan documents."

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