Mortgage FAQ for Consumers

Who should I contact if the Arkansas Securities Department does not regulate my mortgage company?

 "Helpful  Links" .  These links will assist you in determining who regulates your mortgage company.

I think that my mortgage company may be exempt from the Fair Mortgage Lending Act, how do I make sure?

The  Fair Mortgage Lending Act ,"Ark. Code Ann. § 23-39-502(9)(B) "refers to exemptions.

What laws generally govern mortgage activity regulated by the Arkansas Securities Department?

The Fair Mortgage Lending Act found at "Ark. Code Ann. § 23-59-501 " .

Where may I obtain a copy of the relevant statutes and rules?

 The "Legal"  section of the website has these documents available electronically .

My lender has raised my payments even though I have a fixed rate mortgage.  Can the lender do that?

Your original loan note determines the circumstances under which your lender can make changes to your payment.  Many times the change in payment amount comes from the escrow of your yearly homeowner's insurance premium or property tax , not the interest rate. Check with your servicer to determine the specific reason for the increase.

I have received notice that my homeowner's insurance was not paid this year, but my mortgage company pays it from my escrow account.  Do I need to do anything?

Yes.  Even though your mortgage company is responsible for paying the insurance premium, the homeowner is ultimately responsible for making sure that you have homeowner's insurance.  You should contact your insurance company immediately regarding this situation and the lender of your loan.  If your insurance gets cancelled or your policy expires, your lender can purchase insurance on the property on your behalf.  This is called "Forced-Placed Insurance" and the premiums are usually much higher than what you would normally pay. 

How do I know if the interest rate on my mortgage is too high?  From what I understand, there is no rate limit imposed by Arkansas statute.

The Arkansas Securities Department does not attempt to regulate the interest rates charged on loans unless a court finds that the loan is usurious or it appears that the rate charged on the loan violates either federal or state law or rule.  See Ark. Code Ann §§ 23-39-514(a)(2)(G) and 23-39-513(11).  The Department suggests that you contact office of the Arkansas Attorney General or a private attorney for more information on usury provisions.

I want to refinance my loan; however, I was told that the Fair Mortgage Lending Act specifies that a lender cannot refinance a loan that has not yet been seasoned for 12 months unless tangible net benefits to the borrower can be demonstrated.  How can I find out what those benefits are?

There are no definite tests as to what constitutes a tangible net benefit due to the fact-intensive nature of the inquiry and the numberous variables that may be involved. 

What is PMI?

PMI stands for Purchase Money Insurance.  PMI is usually required when you purchase a loan with less than a 20% down payment.  This is a type of guarantee that helps protect lenders against the costs of foreclosure.  In effect, mortgage insurance pays the lender a certain percentage of your original purchase price to cover a lender's loss in the unfortunate event of foreclosure.

What relevant documents are needed when filing a complaint?

"How to File a Complaint" refers that financial documents are important to the investigation of your complaint.  Please provide any legible copies of documents that support your claim.  Especially important are any documents that relate to any disclosure or written statements you may have received.  Please only send copies.  If the originals are needed, the Department will specifically request these from you.

What information should I include in my complaint?

"How to File A Complaint". You should provide any clarifying facts.  The who, what, when, where, why, and how of the transaction occurred.   The most important information is the DATES. 

What is a right of rescission and when does it apply?

Notice of the Right of Rescission (sometimes called, the right to cancel) which states the applicant has the right to cancel the transaction, how to cancel, the effects of canceling, and the date the right to cancel expires.  The transaction must be exercised within three business days of the closing of the loan. Notice of cancellation may be given by mail, telegram, or other written communications.

What functions does your Department perform with respect to the mortgage industry?

The Arkansas Securities Department works to insure that the citizens of Arkansas have access to well-managed and properly operated mortgage providers.  The Department supervises those who are licensed  to conduct business in the residential mortgage industry in Arkansas. Mortgage Brokers, Mortgage Bankers, Mortgage Servicers as well as Loan Officers must apply to the Department and meet certain licensing standards before they legally offer their services to the public.  The Securities Department has the authority to levy monetary and civil sanctions against a person or company if they are operating in Arkansas without being properly licensed.  The Department conducts compliance exams on the licensee's operations to monitor operating standards with the Arkansas Fair Mortgage Lending Act.  The Department  investigates complaints and alleged violations brought by consumers.

How do I file a complaint with the Arkansas Securities Department?

"How to File A Complaint" give you the information on filing your complaint.

Can you find an attorney to represent me?

No.  Arkansas Securities Department cannot recommend individual attorneys.  You should talk with your friends and family or contact the Arkansas Bar Association.


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