The Anti-Steering Disclosure Explained

Federal regulations prohibit a mortgage loan originator from "steering" a loan applicant into a particular loan program or a rate option that is not in the borrower's best interest. Those regulations contain a safe-harbor provision that protects the loan originator and lender from liability in the event of an alleged violation of the anti-steering provisions by a regulator.

In order to comply with the safe-harbor provisions of the regulations most mortgage loan originators will provide an Anti-Steering Disclosure at some point prior to the closing of the mortgage loan transaction.

The disclosure form utilized by most originators shows a loan applicant a range of rate options for the type of loan program or programs (fixed or ARM) in which the applicant has shown an interest.  The disclosure utilized by AmeriFund and most loan originators shows an applicant a low rate option with higher loan costs, a higher rate option with reduced costs, and the the loan costs for the rate contained in the consumer's loan application.  If the consumer has made application for a program with high-risk features such as negative-amortization, the disclosure also shows the rate and costs that could be obtained without that feature.

The Anti-Steering Disclosure was developed to reduce the risk of a loan consultant steering an applicant into a higher rate that provides more profit to the lender or loan originator.

The following is an example of the provisions in the Anti-Steering Disclosure that show the lowest and highest rate options for the requested loan program.