High Cost Home Loan Counseling

Frequently Asked Questions

What is a high cost home loan?
The legislation defines a high cost home loan as a loan that exceeds one of two thresholds:

Interest Rate Threshold
For First Mortgages: 8% over the U.S. Treasury securities
For Second Mortgages and Consumer Mobile Homes: 10% over the U.S. Treasury securities

Points and Fees Threshold
Loans more than $20,000: 5% of the loan
Loans less than $20,000: the lesser of 8% of the loan or $1,000
Non-real Estate Mobile Homes ($20,000 or more): 3% of the loan
If a loan is determined to be a "high cost loan," the borrower must receive mandatory, free counseling on the advisability and appropriateness of the loan for the borrower.

Why am I required to seek counseling?
If a loan is determined to be a high cost home loan, according to the established thresholds, the borrower is required to receive mandatory, free counseling as to the advisability of the loan transaction, as well as the appropriateness of the loan for the borrower. Counselors must be approved by the South Carolina State Housing Finance and Development Authority.

What is reviewed in the counseling session?
The South Carolina Department of Consumer Affairs has provided the Checklist of items that must be provided by the lender and reviewed by the counselor and borrower. After reviewing the items on the Checklist and counseling the borrower on the advisability and appropriateness of the loan, the counselor will sign the Checklist, which will allow the loan process to proceed.

The following items are covered in the counseling session:

Borrower's Individual Circumstances
Purpose of loan
Borrower's credit history
History of repeated financing
Amount of equity in home
Borrower's ability to repay
Did the borrower shop or compare rates and terms with other lenders?
Right to cancel within three days in refinancing transactions

Loan Terms
Amount of Loan
Interest rate/Annual Percentage Rate (APR)
Whether the loan contains a fixed or variable rate
Duration of the loan
Monthly payment amount
Whether the loan is for real estate, or for manufactured housing

Loan Fees
Loan origination fee
Discount points
Commitment fee
Broker compensation (including the yield spread premium)
Loan application fee
Other lender fees

What information must I and my lender provide the counselor?
It is the responsibility of the borrower and the lender to ensure that prior to the counseling session, the counselor receives all the appropriate information needed to conduct the counseling session (the Truth-In-Lending Disclosure, the Good Faith Estimate, and a copy of the borrower's credit report). If the counselor does not have all that he or she needs to counsel you properly, the counselor will not be able to certify that you have received counseling, therefore prohibiting the loan from proceeding.

When making the appointment with your counselor, the counselor should let you know when he/she would like to receive your information and how you can get it to him or her. You and your lender will need to coordinate how to get this information to the counselor. Some counselors will prefer to review the documents prior to your appointment, so it is a good idea to have the lender mail or fax the information to the counselor as soon as possible in order to minimize the amount of time you will have to spend in the counselor's office.

Who arranges for the counseling session?
There are two options:

Borrower Arranges
The borrower can obtain the list of counselors in his or her area by:
- Accessing the online list: Counselor List
- Calling the South Carolina State Housing Finance and Development Authority toll free counseling hotline at 1-866-756-2895, or
- The lender can provide the borrower with the list of counselors (obtained online, or by calling 1-866-756-2895)

In this case, the borrower needs to arrange for a time to meet with the counselor. The borrower will need to tell the Lender to whom and when to send the necessary information to the counselor.

Lender Arranges
With the borrower's permission and input, the Lender may schedule an appointment for the borrower to meet with a counselor and make the necessary arrangements to get the counselor the necessary information.

How can I prevent becoming a victim of predatory lending?
Read the Fast Facts on Predatory Lending provided by the Department of Consumer Affairs. Also, consider visiting the U.S. Department of Housing and Urban Development's website at www.hud.gov, which contains a great deal of information for prospective homebuyers and individuals considering refinancing their homes.

How do I become a South Carolina State Housing Finance and Development Authority-approved counselor?
Minimum criteria to become a South Carolina State Housing Finance and Development Authority-approved counselor:

- Counselors must complete a half-day training seminar offered by the South Carolina State Housing Finance and Development Authority.
- Counselors must have a background in either housing counseling, credit/financial counseling, or in the mortgage industry.
- Counselors may not work for or represent any lending/brokerage institution, nor may they have a conflict of interest that could really or potentially prevent the counselor from acting in the best interests of the borrower.
- Counselors may not be a practicing real estate agent, broker or appraiser.
- Counselors should be willing to provide occasional counseling outside normal working hours.
- Counselors will be expected to maintain standards of integrity and professionalism, and must sign the Counselor Assurance that outlines these standards.

For more information on how to become an approved High Cost Consumer Home Loan Counselor, please contact Lisa Bussey at 803-896-8777, or by emailing lisa.bussey@schousing.com.

Where do I find the Checklist of items that need to be sent to the counselor?
The Checklist is provided by the Department of Consumer Affairs. Access it here: Checklist.

How do I find a list of South Carolina State Housing Finance and Development Authority-approved counselors?
Access it here: List.