Term
Mortgage Law 5
1 What is RESPA's purpose? |
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Definition
- Manditory Required disclosure of closing costs in order to shop for services.
- Protect from excess costs & unearned fees
- Establishes prohibited practices. |
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Term
Mortgage Law
What Regulatory Agency establishes RESPA? |
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Definition
Real estate settlement procedures act of 1974.
Originally managed by HUD
consumer financial protection Board
Also known as regulation X (12 CFR 1024.1)
Applies to federally regulated mortgage loans |
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Term
Mortgage Law
What loans does RESPA cover? |
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Definition
FHA
collateral ins by the gov (flood ins)
Funds from regulated lender federal government FDIC or NCUA
Intended for sale to Fannie or Freddie
Creditor regulated by Tila
Involves a federally related mortgage loan |
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Term
Mortgage Law
What transactions aren't covered by RESPA? |
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Definition
25 acres greater
Business, commercial, agriculture
Temporary and bridge loans
Loans for vacant land
Loans secured by vacant land
Except for land with manufactured home 2 years
Sale of loan to secondary market
Loan conversions when a new note is not required |
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Term
Mortgage Law
Terms
What is included in RESPA Settlement services? |
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Definition
Service is provided by appraisers inspectors credit reporting agencies title insurers and loan processors.
Any service provided in connection with the real estate settlement including title searches title examination title certificates title insurance attorney services surveys credit reports past fungus inspections. |
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Term
Mortgage Law
Terms
RESPA - Thing of value |
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Definition
| Any payment finance loan service money discounts commission salary stock opportunities to participate special thinking terms tickets and supplied at another's expense |
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Term
Mortgage Law
Terms
RESPA Agreement or Understanding |
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Definition
| A written or verbal agreement or an agreement established through a practice, pattern, or course of conduct, to offer things of value in exchange for the referral of settlement business |
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Term
Mortgage Law
Terms
RESPA Fee Splitting & kickbacks |
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Definition
| Sharing of fees among providers. No one shall give or accept any split, or % of any charge other than for actual services rendered. |
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Term
Mortgage Law
Terms
RESPA Markups |
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Definition
Unilateral increase in the cost of settlement and retention of the additional fee by the party making the mark-up.
This is only illegal if the fee is actually "split" between two parties |
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Term
Mortgage Law
Terms
RESPA Affiliated Business Arrangement |
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Definition
Ownership of multiple settlement service providers. Profit sharing across these entities is permissible under RESPA.
There must be an "affiliated business arrangement disclosure" |
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Term
Mortgage Law
Terms
RESPA Sham Affiliated Business Arrangement |
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Definition
A partnership or venture created between settlement service providers for the illegal purpose of splitting fees.
HUD's Policy statement on "sham controlled business arrangements" governs factors in determination.
CFPB enforces. Use HUD until CFPB issues new rules |
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Term
Mortgage Law
Terms
RESPA Sham Affiliated Business Arrangement |
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Definition
A partnership or venture created between settlement service providers for the illegal purpose of splitting fees.
HUD's Policy statement on "sham controlled business arrangements" governs factors in determination.
CFPB enforces. Use HUD until CFPB issues new rules |
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Term
Mortgage Law
Terms
RESPA Borrower Credit |
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Definition
YSP "Yield Spread Premium" the borrower credit is a fee paid to the borrower by the lender when loan is originated at a higher interest rate than the lowest the borrower qualifies for.
It is used to subsidize closing costs (Origination or broker fee) to create a low or no fee transaction |
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Term
Mortgage Law 5
RESPA Disclosures (5) |
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Definition
1 Good Faith Estimate
2 Settlement Cost Information Booklet
3 Mortgage Servicing Disclosure Statement
4 Affiliated Business Arrangement Disclosure
5 HUD-1 Settlement Statement |
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Term
Mortgage Law 5
RESPA Disclosures (5)
Name the disclosures |
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Definition
1 Good Faith Estimate
2 Settlement Cost Information Booklet
3 Mortgage Servicing Disclosure Statement
4 Affiliated Business Arrangement Disclosure
5 HUD-1 Settlement Statement |
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Term
Mortgage Law 5
RESPA Disclosures (5)
1 GFE requirements |
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Definition
Within 3 b-days of taking loan app.
Broker is responsible regardless of lender selection
Components:
Lender & Broker charges
Title charges
Government charges
Prepaid Items & Deposits |
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Term
Mortgage Law 5
RESPA Disclosures (5)
1 GFE
1)Name the Lender & Broker charges |
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Definition
| fees for loan origination, appraisals, credit reports,inspections, mortgage services & Underwritting. |
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Term
Mortgage Law 5
RESPA Disclosures (5)
1 GFE
2)What are the title Charges? |
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Definition
Title costs: Search, insurance notary fees
extended coverage assures land is encumbrance free. |
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Term
Mortgage Law 5
RESPA Disclosures (5)
1 GFE
3) What are the Government Charges |
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Definition
recording cost in public records,
real estate tax |
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Term
Mortgage Law 5
RESPA Disclosures (5)
1 GFE
4) Prepaid Items & Deposits |
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Definition
paid by borrower in advance and include:
pro-rated taxes,
home owner ins & flood ins
PMI
interim interest |
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Term
Mortgage Law 5
RESPA Disclosures (5)
1 GFE Law
(Regulation X 11/17/2008) |
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Definition
2008- reasonable estimate, costs good for 10 days of issuance.
CFPB Federal Register rule for
"Single integrated initial disclosure"
Includes both GFE & TIL |
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Term
Mortgage Law 5
RESPA Disclosures (5)
1 GFE
Not to exceed costs |
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Definition
Origination fee
Interest Rate locking fee
Adjusted origination charge while rate locked
State/local property transfer tax |
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Term
Mortgage Law 5
RESPA Disclosures (5)
1 GFE
Costs not to exceed 10% |
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Definition
Lender-required settlement services chosen by lender
Lender- required services, title services and title ins when borrower uses provider id'd by loan originator
Gov recording charges |
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Term
Mortgage Law 5
RESPA Disclosures (5)
1 GFE
over charge |
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Definition
| Loan originator has 30 days to cure excess |
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Term
Mortgage Law 5
RESPA Disclosures (5)
1 GFE
Retention |
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Definition
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Term
Mortgage Law 5
RESPA Disclosures (5)
1 GFE
Changed circumstance |
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Definition
Reg X - must be issued within 3 days of knowledge of changed information/circumstance
Acts of God - War, disaster, other emergency
Information particular to borrow found to be wrong
New information about borrower
Other circumstance - boundary dispute, need for flood ins or environmental issues |
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Term
Mortgage Law 5
RESPA Disclosures (5)
Def of completed Loan Appliction |
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Definition
Received 6 items
Borrowers Name, Monthly income, SSN
Property address
est value of Property
The loan amount requested |
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Term
Mortgage Law 5
RESPA Disclosures (5)
2) Settlement Cost Booklet (information booklet) |
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Definition
Due 3 days after loan app completed.
Only has to go to 1 party (i.e. husband & wife)
CFPB adopted HUD (Dodd Frank update every 5 years)
Explains:
settlement
Borrowers right to negotiate
Warns borrowers of penalties for providing false info
Different for HELOC (Home Equity Line of Credit) |
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Term
Mortgage Law 5
RESPA Disclosures (5)
3) Mortgage Servicing Disclosure |
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Definition
Due 3 days completion of Loan App for purchase
States if Loan servicing can be sold, assigned or transferred.
Must include:
-Acknowledged receipt, lender's intent to sell loan, assign, transfer.
-Statement that lender/broker hasn't/doesn't service loans after funding and indication (%) of loans that where assigned sold or transferred
-Statement of borrowers rights to resolve complaints |
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Term
Mortgage Law 5
RESPA Disclosures (5)
4) Affiliated Business Arrangement Disclosure |
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Definition
Must disclose at time of referral.
Include:
- Arrangement description, % ownership of interest in referring party / provider.
-Cost estimate charged by provider (referral fee)
- Notification borrower isn't required to use referral
(lenders can require use of specific attorney, appraiser, credit agency) |
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Term
Mortgage Law 5
RESPA Disclosures (5)
5 HUD-1 Settlement statement |
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Definition
Due at time of closing. (request 1 day prior)
HUD-1 Borrower & Seller
HUD-1A Borrower only (refi or 2nd mortgage)
Actual closing costs |
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Term
RESPA Protection After closing Section 10
Escrow statement & annual evaluation |
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Definition
Requires:
-Initial escrow statement is due within 45 days of settlement.
-Annual escrow analysis
-Limit cushion borrow maintains in escrow 1/6 set yearly
outlay.
- Generally refund surpluses over $50 within 30days of analysis. |
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Term
RESPA Protection After closing Section 6
Servicing Transfer Disclosure requirements |
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Definition
-Due 15 days prior to transfer (by transferring lender)
-Ensures borrowers have notice with loan service is transferred.
Protocol for complaints.
-May not assess late fees for a period of 60 days after the transfer |
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Term
| What is required to submit a loan to underwritting? |
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Definition
Validated Loan app
confirmation of property value
Title search |
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Term
What is not included on a title report
a)Property description
b)Tax rate
c) Property history
d) Liens |
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Definition
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Term
Who insure accuracy of title report
a) Ins Co.
b) Title Co.
c) An abstractor Attorney |
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Definition
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Term
| Where does a lender documentation fee appear in a HUD disclosure? |
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Definition
| Loan Fees/Direct Loan Costs section of the HUD 1 disclosure. |
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Term
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Definition
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Term
| Which section of GLB Act prohibits access of private info under false pretense? |
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Definition
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Term
| Who is temp appointed under revenue laws to value where there is no appraiser |
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Definition
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Term
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Definition
| Housing and Community Facilities Programs |
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Term
| Under HFCP who does the borrower work directly with? |
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Definition
| Private lender, like a bank or credit union. |
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Term
| How many months can a conditional license be suspended for failing to submit transcripts? |
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Definition
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Term
| Morality appears to be __________ & ___________ in nature. |
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Definition
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Term
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Definition
Federal Financial Institutions Examination Council
empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions.
FRB, FDIC, NCUA (National Credit Union Admin),
OCC (Office of the Comptroller of the Currency),
CFPB |
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Term
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Definition
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Term
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Definition
| National Credit Union Administration |
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Term
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Definition
| Consumer Financial Protection Board |
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Term
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Definition
Financial Institutions Regulatory & Interest Rate Control Act
1978. |
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Term
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Definition
Mortgage Disclosure Improvement Act - 2008
Amendment of Regulation Z. Truth in Lending.
*Adds disclosure requirements for non-purchase money transactions.
- home refinance & non HELOC - home equity loans
- loans secured by dwelling
- HELOC's not covered |
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Term
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Definition
Truth in lending Act. 1968
Governed by CFPB
AKA Regulation Z |
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Term
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Definition
| The regulations implementing the TILA of 1968 |
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Term
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Definition
Home Mortgage Disclosure Act -1975
AKA Regulation C
Requires Financial institutions to maintain annually disclose data about home purchases, pre-approvals, home improvement & refinancing applications for 1-4 unit & multifamily dwellings. |
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Term
| Agency that enforces HDMA or regulation C? |
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Definition
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Term
| What is form 1003 - Fannie Mae? |
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Definition
| It is the Uniform Residential Loan Application. |
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Term
| To find an index date, what do you refer to first? |
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Definition
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Term
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Definition
| Itself, not a debt; it is the lenders security for a debt. |
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Term
| MDIA seeks to inform borrowers about.. |
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Definition
The Mortgage Disclosure Improvement Act
Informs borrowers about estimated mortgage loan costs. (not fees) |
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Term
What reduces the amount of money that can be borrowed by most home buyers?
a) Higher interest rates
b) lower interest rates
c) higher mortgage value
d) Lower mortgage rate |
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Definition
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Term
| What is the calculation for future value of investment in loan calc? |
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Definition
| FV (rate, nper [, pmt] [, pv] [, type]) |
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Term
True/False
Hazard ins is a generic term referring to property ins on your home. |
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Definition
False.
It is specific, it covers only physical damage to property. |
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Term
True/False
Flood Ins is issued only by National Flood Insurance Plan |
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Definition
False
The NFIP is National Flood Insurance Program. |
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Term
| What are the two parts of an ARM interest rate |
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Definition
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Term
Interest Rates
What is the "extra" amount a lender adds to the index |
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Definition
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Term
| What is the purpose of a 1003 Mortgage application |
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Definition
Its a verification application to help lenders determine your ability to pay off your mortgage (loan).
Fraud penalties: $1,000,000.00 & 1 year in prison |
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Term
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Definition
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Term
| Federal regulation that implements RESPA is? |
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Definition
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Term
| What is the minimum duration charges are binding in a GFE |
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Definition
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Term
| Regulation Z was issued to implement TILA by? |
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Definition
| Board of Governors of Federal Reserve System |
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Term
How long is the retention period for RESPA:
Mortgage Servicing Disclosure Statement? |
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Definition
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Term
How long is the retention period for RESPA:
HUD-1 or HUD-1A Settlement Statement? |
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Definition
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Term
How long is the retention period for RESPA:
Affiliated Business Arragement Disclosures? |
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Definition
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Term
True/False
Regulation X states when selling or transferring the servicing,
Lenders must include the HUD-1/1A settlement statement and the new owner must carry it for 5years or until sold or paid off or transferred again? |
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Definition
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Term
| What regulation prohibits: Giving or accepting referral fees, kickbacks, or "things of value" unless actual work is done? |
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Definition
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Term
| What regulation prohibits fee splitting? |
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Definition
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Term
| What 4 things does HUD look for to identify Prohibited Practices in Settlement (referrals)? |
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Definition
- Exchange of "Things of value"
- Fee-Splitting
- Unreasonable / excessive charges (i.e. double billing)
- Illegal "agreement or understanding" 2 parties share a written agreement to share things of value in exchange for referrals. |
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Term
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Definition
| It is the Office for the Comptroller of the Currency |
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Term
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Definition
| HMDA (Home Mortgage Disclosure Act) |
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Term
| Who enforces GLB Privacy Act |
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Definition
|
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Term
| What is the Gramm-Leach-Bliley Act? |
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Definition
Known as the Privacy Act - Enacted 1999
Requires Financial institutions to insure the security & confidentiality of customer records.. |
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Term
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Definition
Secure And Fair Enforcement Act: 2008
Also known as "Title V"
Enforced by CFPB (2010)
a Federal registration system ("Federal Registry") for individual employees of Agency-regulated institutions who engage in the business of residential mortgage loan origination. |
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Term
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Definition
Safe And Fair Enforcement (licensing) Act: 2008
Enforced by CFPB
a Federal registration system ("Federal Registry") for individual employees of Agency-regulated institutions who engage in the business of residential mortgage loan origination |
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Term
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Definition
Fair and Accurate Credit Transactions Act: 2003
Enforced by FTC
Credit reporting, identity theft, Red flag dection |
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Term
| What are FACTA Red Flag rules? |
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Definition
Implemented 10/31/07
This Section requires that all organizations subject to the legislation must develop and implement a written "Identity Theft Prevention Program" to DETECT, PREVENT and MITIGATE identity theft in connection with the opening of certain new and certain existing accounts. |
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Term
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Definition
Home Owners Protection Act: 1998
Enforced by FTC
AKA - PMI Cancellation act |
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Term
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Definition
| With PMI, the lender can recover costs associated with the resale of foreclosed property, and accrued interest payments or fixed costs, such as taxes or insurance policies, paid prior to resale. |
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Term
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Definition
| When the principal balance of the mortgage is scheduled to reach 78% of the original value of the secured property. (based solely on the amortization schedule) |
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Term
| What is the Flood Disaster Protection Act also known as? |
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Definition
Regulation H : 1968
Enforcement: FRB |
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Term
Mortgage Law
TILA
What is closed-end Credit |
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Definition
| A loan extended in a lump sum all at one time. Like a traditional mortgage. |
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Term
Mortgage Law
TILA
What is open-end credit? |
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Definition
| Revolving credit. HELOC is a common example. |
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Term
Mortgage Law
TILA
What are Home Equity Plans |
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Definition
| Loans structured as open-end credit |
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Term
Mortgage Law
TILA
Trigger Terms |
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Definition
| Advertising triggers that "trigger" specific information be included by TILA |
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Term
Mortgage Law
TILA
CHARM booklet |
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Definition
| educational booklet about risks associated with ARM's |
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Term
Mortgage Law
TILA
What loans are covered? |
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Definition
dwelling secures the debt
procedes are used for personal family or household purposes. |
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Term
Mortgage Law
TILA
What 4 items are prominently displayed on TIL disclosure? |
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Definition
APR
Finance Charge
Amount Financed
Total of Payments |
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Term
Mortgage Law
TILA
What are the 2 rescission rules |
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Definition
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Term
Mortgage Law
TILA & Reg Z
Penalties for violations |
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Definition
Closed-end: min $400 max $4000
HELOCs: $100 max $1000
Class Action total recovery $500,000 or 1% creditors net worth. |
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Term
Mortgage Law
TILA
What wilful TILA violation penalties (criminal) |
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Definition
| $5000, a year in prison or both. |
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Term
| What is the Right of Recission? |
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Definition
Its purpose is to protect home owners equity.
Applies to refinance & home equity loans (2nd mortgage).
3 days. 3 years if TIL is violated. |
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Term
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Definition
-Willful Noncompliance - $100 - 1000. actual damage, cost of action & attorney fees
- obtaining under false pretense <= 2 years prison.
- Unauthorized disclosure <= 2 years prison |
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Term
FACTA
What is an Active Duty Alert? |
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Definition
| Statement in consumer reporting agency file stating an individual is on active duty. |
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Term
FACTA
What are the 3 types of covered accounts covered by red flag rules? |
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Definition
- Offered or maintained by financial institution or creditor
- Intended for personal family or household use
- Designed to permit multiple payments/transactions |
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Term
| What is the Dodd-Frank act? |
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Definition
Wall Street Reform & Consumer Protection Act of 2010
16 Titles
CFPB is principle Regulator
Subtitle
A - Residential mortgage loan standards
B - Minimum standard for mortgages
C - High cost mortgages (extends HOEPA) |
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Term
| What is Patriot act's mortgage implications |
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Definition
Title III Money Laundering - mortgage lending transactions.
Enforced by FinCEN (Financial Crime Enforcement Network)
Monitors & reports on financial crimes |
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Term
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Definition
US Patriot Act
Residential Mortgage Lender or originator.
Each RMLO must
- have an AML program (anti $ laundering)
- SARS report within 30 days
- Report Receipt of Currency >$5000 |
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Term
SARS
How long is data retention? |
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Definition
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Term
| What Privacy Practices are prohibited by GLB? |
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Definition
Sharing of account numbers
Limitation on re-disclosure & reuse is limited, based on failure to opt out |
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Term
| What are penalties for violating GLB? |
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Definition
| FTC can penalize up to $10,000 |
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Term
| What is the GLB Safeguards Rule? |
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Definition
A company must have a security program that has the following:
-designated co-ordinator
-internal/external risk index
- Regular system testing
- Oversight of service providers |
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Term
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Definition
Do Not Call implementation Act 2003
enforced by FTC
Must be updated every 31 days |
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Term
| What are the penalties for violating the Telemarketing Sales rule? |
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Definition
| $16,000 / violation, each day is considered a separate violation. |
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