The Federal Government has passed laws that state every borrower has to receive a good faith estimate of costs and a truth in lending report within three days of filling out their loan application. Before the loan funds the borrower can get up to three of four more of these documents from the various bankers and lenders who touch the loan. The problem is they are a bit confusing and not user friendly. Most borrowers will not even look at these, except for a cursory glance. It is a big mistake, but an understandable one. Therefore I have inscribed a Borrowers Bill of Rights, that if followed, will save borrowers countless sleepless nights, a parcel of money and a lot of wasted years of mortgage payments. The following is the Borrowers Bill of Rights, as I see it :

1. Every borrower who is given a rate for a loan in writing with an APR is entitled to a complete explanation of the APR (Annual Percentage Rate). The APR should include all of the closing costs including any and all points charged. The points should be expressed in a numerical amount and also a dollar figure.

2. When a borrower receives a truth in lending on an option arm the borrower should be apprised of the negative amortization that will occur based on the interest rate at the time of the closing. The interest rate is almost always higher than the start rate(teaser rate) and when the negative is calculated the borrower will understand the true ramifications of negative amortization as it applies to his or her loan.

3. Prepayment penalties are most often misunderstood. When a borrower has a prepayment penalty it is imperative that the term of the penalty is spelled out before the borrower gets to the closing. The details of the penalty must also be stated for both sale and refinance of the property during the time frame when the penalty is operative.

4. A "no cost" loan should also have an example of a " no point loan " when being presented to the borrower so the borrower can determine the legitimacy of the statement.

5. All borrowers should understand that interest only loans are merely an option and not an actual loan. They should be shown how an interest only loan works including what happens to the balance and payment after a principal payment is made.