“Code of Trust” Aims to Relieve Foreclosure
As the foreclosure rates in the United States continue to rise and more and more stories come out about foreclosure rescue scams, subprime loans offered with abandon, bankruptcy filings, and general despair on the part of homeowners, good news about home buying has been hard to come by. Until now, that is.
The National Association of Hispanic Real Estate Professionals (NAHREP) has announced a Code of Trust, a kind of constitution for the proper way to conduct business in real estate. The Code, an 11-page document complete with preamble, aims to "lead in helping the Hispanic community and all Americans see their way through this cycle of reduced home values" by limiting access to credit and laying ground rules for real estate transactions.
With a focus on "sustainable homeownership," the Code of Trust seeks to keep Americans in homes they can afford, that they bought with full understanding of the mortgages and loans involved. Some of the requirements outlined in the Code include the following:
- Offering prime loans to all borrowers who qualify ("prime loan filter")
- Lending only when borrowers' credit history indicates an ability to pay
- Reviewing the credit history of every customer (NAHREP professionals will be responsible)
- Providing escrow options for all mortgages
- Educating consumers, with bilingual documents, about their options as borrowers as well as lenders' options
- Offering prepayment options when it will benefit the customer financially
- Complying in full with all state and federal laws
Generally, the Code of Trust promotes a raised awareness for borrowers and an increased accountability for lenders. The Code aims to be inclusive and comprehensive, demanding responsibility from many groups, including real estate professionals like real estate licensees, realtors, builders, home inspectors, loan closing service providers; mortgage originators; and anyone else involved in the home-selling process.
In addition to the regulations outlined in the Code, the NAHREP plans to support a "whistle-blower hotline" for those who witness non-compliant practices.
These bold attempts to establish a "level playing field" for all homebuyers come on the tail of a study released by the Association of Community Organizers for Reform Now (ACORN), which showed that "unaffordable loans disproportionately impact minority and low- and moderate-income families." The NAHREP has recognized the problem and taken action.
According to a report on Builder Online, the National Association of Realtors (NAR) lauded the efforts of the NAHREP. The NAR apparently commended the Code of Trust as a step toward ending predatory lending and a demand for accountability and responsibility from all those in the real estate business.
The NAHREP's Code of Trust seems to be a refreshing step in the right direction.