California real estate disclosure laws California Real Estate Disclosures | Page 57

that would be charged as compared to the rates, points, and fees for
accepting a “covered loan” without a prepayment penalty.
•

A “covered loan” shall not contain a provision for negative
amortization, unless the “covered loan” is a first (senior) mortgage. The
loan originator must disclose to the borrower that the loan contains a
negative amortization provision that may add principal to the balance of
the loan.

•

A “covered loan” shall not be made unless the following disclosure,
written in 12-point font or larger, has been provided to the borrower no
later than three business days prior to signing of the loan documents for
the transaction:
CONSUMER CAUTION AND HOME OWNERSHIP
COUNSELING NOTICE
If you obtain this loan, the lender will have a mortgage on your home.
You could lose your home, and any money you have put into it, if you do not
meet your obligations under the loan.
Mortgage loan rates and closing costs and fees vary based on many
other factors, including your particular credit and financial circumstances,
your earnings history, the loan-to-value requested, and the type of property
that will secure your loan. Higher rates and fees may be justified depending
on the individual circumstances of a particular consumer’s application. You
should shop around and compare loan rates and fees.
This particular loan may have a higher rate and total points and fees
than other mortgage loans and is, or may be, subject to the additional
disclosure and substantive protections under Division 1.6 (commencing with
Section 4970 of the Financial Code. You should consider consulting a
qualified independent credit counselor or other experienced financial adviser
regarding the rate, fees, and provisions of this mortgage loan before you
proceed. For information on contacting a qualified credit counselor, ask your
lender or call the United States Department of Housing and Urban
Development's counseling hotline at 1-888-466-3487 or go to
http://www.hud.gov/fha/sfh/hcc for a list of counselors.
You are not required to complete any loan agreement merely because
you have received these disclosures or have signed a loan application. If
you proceed with this mortgage loan, you should also remember that you
may face serious financial risks if you use this loan to pay off credit card
debts and other debts in connection with this transaction and then
subsequently incur significant new credit card charges or other debts. If you
continue to accumulate debt after this loan is closed and then experience
financial difficulties, you could lose your home and any equity you have in it
if you do not meet your mortgage loan obligations.
Property taxes and homeowner's insurance are your responsibility. Not
all lenders provide escrow services for these payments. You should ask your
lender about these services.

-50-