*What disclosures are due w/n 3 days of application?

*What disclosures are due before closing?

*What disclosures are due @ closing?

*What disclosures are due after closing?

*Good Faith Estimate, Mortgage servicing disclosure statement, Speical information booklet/cost guide (purchases only)

*HUD-1A Settlement statement, Affiliated Business Arrangement disclosure

*Inital Escrow Statement(w/n 45days after closing)

*Annual escrow statement, Servicing transfer statement- if servicer transfers servicing rights to another servicer. Must notify borrower at least 15 days prior to transfer.

Real Estate Settlement Procedures Act (RESPA)

*Was enacted and effective when?

*Is implemented by what?

*Whats the point of this act?

*RESPA covers what loans?

Limits collection to escrow monies to?

_{*Enacted in 1974 and effective in 1975}

_{*Implemented by HUD's Regulation X}

_{*RESPA is a consumer protection statue that provides consumers with timely, adequate closing cost information and protects consumers against abusive practices.}

<sub>*Secured loans with a mortgage placed on a one to four family residental property.
* No more than 2 months.</sub>

Truth-In-Lending Act (TILA)

*Implemented by?

*What does it govern?

*Whats the purpose?

*What must the leader disclose to the borrower?

*Regulation Z

*Governs mortgage credit product advertising.

*To promote the informed use of consumer credit by requiring disclosures about its terms and cost. TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumers principal dwelling within 3 business days.

* APR rate, Finance charge amount, Amount financed, Total of payments, Payment schedule

Equal Credit Opportunity Act (ECOA)

*When was it passed?

*Implemented by what?

*Prohibits what?

* Passed in 1974

* Implemented by Regulation B

* DISCRIMINATION

Regulation B

*Imposes what?

* Procedural requirements to ensure compliance with the ECOA, including requiring that ceditors: 1. Take mortgage credit applications in writing, 2. Collect informaion about the applicant's race/national origin, sex, martial status, and age for monitoring purposes, 3. Provide written notice of adverse action within 30 days, 4. Retain records of applications for 25 months.

Home Mortgage Disclosure Act (HMDA)

*Was enacted in congress in what year?

*Is implemented by what?

*1975

*The Federal Reserve Board's Regulation C

Regulation C

*Provides what?

* Provides the public loan data that can be used to assist:

1. in determining whether financial institutions are serving the housing needs of their communities;

2. public offcials in distributing public-sector investments so as to attract provate investments to areas where it is needed;

3.Retain records of applications for 25 months.

Community Reinvestment Act (CRA)

*What year was this Act Enacted?

*What is this implemented by?

*What is this entended to do?

* What does this require?

* 1977

* Implemented by Regulation BB- applies only to banks and savings associations.

* Intended to prevent "red-lining" and to encourage depository institutions to help meet credit needs of the communities in which they operate, including low and moderate income neighborhoods.

* Requires that each insured depository institution's record in helping meet the credit needs of its entire community be evaluated periodically.

* Requires all financial institutions to create a CRA statement and make it available to the public at the financial intitution's place of business.

Homeowners Protection Act (HPA)

*Passed in what year?

*Effective in what year?

*Provides for what?

*What loan does this not apply for?

* Passed in 1998

* Effective in 1999

* Provides for manditory cancellation of private mortgage insurance (PMI) in certain cases.

* Does not apply to FHA loans.

Fair Credit Reporting Act

What does this do?

Fair Housing Act

*Administered by who?

* Prohibits what?

* Administered by HUD

* Prohibits discrimination by direct providers of housing, such as landlords ect, whose discriminatory practices make housing unavailable to persons because of: color, disability, familial status, national origin, race, religion, sex.

Unfair or Deceptive Practices Acts

*Implemented by?

*Defined as?

*Establishes what?

* Implemented by Regulation AA

* Defines the following as unfair or deceptive acts:

1. Assignment of wages

2. Failure to disclose potential liability to co-signers

3. Use of a 'confession of judgement'

4. Assessment of late charges on top of previously charged late charges.

* Establishes system for consumer complaint resolution reguarding a bank's unfair or deceptive trade practices.

Gramm-Leach-Bliley Act (GLB), aka "Financial Modernization Act of 1999"

*Passes in what year?

* Includes what provisions? 

* Governs what?

* Passed in 1999

* To protect consumers' personal financial information held by financial institutions. There are three principal parts to the privacy requirements: the Financial Privacy Rule, Safeguards Rule, and pretexting provisions.

* Governs the collection and disclosure of customers' personal financial information by financial institutions. It also applies to companies, whether or not they are financial institutions, who receive such information.

USA Patriot Act

*When was this passed?

*What does it require?

* Passed by Congress in 2001 as a response to the 9/11 attacks. It has ten titles, and was written to prevent, detect, and prosecute international money laundering and the financing of terrorism.

*Section 326 requires financial institutions to direct or indirectly identity verification before making a loan.

Illinois Residential Mortgage License Act of 1987

*Enacted in what year?

*Whats the purpose of this Act?

* Enacted in 1987

* The purpose of this act is to:

1. Protect Illinois consumers seeking residential mortgage loans

2. Ensure that the residential mortgage lending industry is operating fairly, honestly and effciently, free from deceptive and anti-competitive practices.

3. Regulate residential mortgage lending to benefit citizens by ensuring availabilty of residental mortgage funding.

4. Benefit responsible providers of residential mortgage loans and services.

5. Requires L.O.'s to take 6 hours of approved continuing edu. each year.

Loan Brokerage Disclosure Statement:

Illinois High Risk Home Loan Act

*Whats the purpose?

*Covers what?

*Cannot make loan if?

* Purpose is to protect borrowers who enter into high risk home loans from abuse that occurs in the credit marketplace when creditors and brokers are not suffciently regulated in IL.

* Covers loans where either the APR is 6% on the first mortgages, and 8% on ones other than the first.

* Cannot make a loan if the total DTI ratio exceeds 50%.

Must document all income via tax returns, pay stubs, accounting statements.

Cannot refi in the first 12 months unless no points or fees are charged, unless the refi results in a tangiable net benifit to the borrower.

Loan cannot be negative amortization.

Late fee is limited to 5% of the payment due.

Cannot deny credit based on location of property

Cannot deny credit on sole basis of the childbearing capacity of applicant or spouse.

Cannot engage in equity stipping or loan flipping

Role of the IDFPR (Illinois Dept. of Financial and Professional Regulation)

* Is commited to protecting Illinois citizens in their dealing with the industries and professions that IDFPR regulates and licenses.

* IDFPR has 4 devisions: Banks and Real Estate, Financial Institutions, Insurance, and Professional Regulation.

* Morgage banker and broker activities fall under the Office of Banks and Real Estates Bureau of Residential Finance.

Interest payment amount:

*Equals (rate x loan amount divided by 12)

Example: Rate=4.5%, loan amount=$117,000.

Enter 4.5 press "%" key, press "x" key, enter 117000, press "divided by" key, enter 12, and press "=" key

RESULT ($438.75).

* The amount of daily interest payable under a loan. Must calcuate in order to determine the amount of interest due from the borrower at closing. Calculation breakdown:

1. Multiply loan amount by the annual interest rate to determine the annual interest amount.

2. Divide the annual interest amount by 360 to determain the daily (per-diem) interest amount.

3. Determine the number of days remaining in the month of closing.

4. Multiply the per-diem amount by the number of days remaining in the month of closing.

Example:

Loan Amount= 125,000

Annual interest rate= 6.75%

Closing Date= March 15

First payment due date= May 1

The payment paid on May 1 will cover the interest due for April, so we need to calculate the amount of interest due from March 15 through March 31 and collect that amount @ closing.

1. 125,000 x 6.75%=8437.50

2. 8437.50 divided by 360=23.44(per-diem amount)

3. Number of days remaining in the month of closing= March 15 to March 31=17

4. Amount due from borrower @ closing=23.44 x 17=$398.48

Tax Escrow Calculations:

To determain the amount that must be collected @ closing for a property tax escrow reserve:

1. Divide annual property tax amout by 12 to determain monthly tax escrow payment.

2. Determain the number of monthly tax payments that would have been deposited between the month the last tax bill was paid and the month of the closing.

3. Add one monthly tax payment for the month after the closing month since no loan payment will be made in that month.

4. Add two monthly tax escrow payments as "cushion payments"

5. Add the number of months calculated from steps 2,3 and 4

6. Multiply the result of step 5 by the amount of the monthly tax escrow payment.

Example:

Example:

Annual property tax= $4630; tax bill is paid in two installments that are due in July and October of each year; and the loan closes in March.

1. 4630 divided by 12= 385.83

2. Nov+Dec+Jan+Feb+Mar= 5 monthly tax payments

3. April= 1 monthly tax payment

4. 2 Monthly tax payments

5. 5 + 1 + 2= 8

6. 8 x 385.83=$3086.64

Yield Spread Premium

* Simply multiply the principal amount of the loan by the difference between the actual interest rate on the loan and the rate at which the lender/investor would have purchased the loan.

EXAMPLE: Old loan monthly payment= $225,000, "buy rate"(lender/investor rate)= 5.6%, contract rate= 6.3%

(A) 6.3% - 5.6%= 0.7%

(B) 255000 x 0.7%= $1785 YSP

Refinancing Cost Recapture

* Calculation of how long it will take to recover the closing costs that are included in the loan rather than paid up front.

a. Subtract the monthly payment on the new loan from the monthly payment of the old loan.

b. Divide the closing costs being refinanced in the new loan by the result from (a.). The result will ne the number of months required to recover the financed closing costs.

EXAMPLE: Old loan monthly payment= 770.38, new monthly payment= 633.34, closing costs financed= 1260.00

ANSWER: Just over nine months!

LTV:

Relationship between the balance of the first mortgage and the value of the property. Divide the balance due on the first mortgage by the lower of the value of the appraised property.

EXAMPLE:

Purchase price=$220K, Appraised value=$230K, first mortgage balance=$190K

LTV=190K Divided by 220K= 86%

CLTV:

Combined Loan-To-Value ratio. Same as LTV, except any junior lien amount(second mort., HELOC, ect.) is added to the first mortgage amount before doing the calculation.

EXAMPLE:

Using numbers from LTV, if there was also a HELOC with a balance of $15K the calculation would be

CLTV=(190k + 15k)divided by 220K= 93%

TLV or HCLTV:

Total Loan to Value or Home Equity Line Of Credit Combined Loan-To-Value ratio- Same as CLTV, except any unused availible HELOC amount is added to the first mortgage balance and all junior lien amounts.

EXAMPLE:

Using the CLTV numbers, if the unused availible HELOC amount was $10K, the calculation would be:

TLV=(190K + 15K + 10K)divided by 220K= 98%