What is the purpose off the Dodd-Frank Wall Street Reform Act?
“To promote the financial stability of the United States by improving accountability
and transparency in the financial system, to end ``too big to fail’’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.”
Real Estate Settlement Procedures Act (RESPA,
Regulation X)
Regulation:
Acronym:
Year Created:
Main Purpose:
Disclosures/Notice Required:
Important Terms Related to this Law:
Regulation: Regulation X
Acronym: RESPA
Year Created: 1974
Main Purpose: Educate borrowers on the cost of their loans
Disclosures/Notice Required: Escrow notices, notice of transfer of loan
servicing, ABA
Important Terms Related to this Law: Kickbacks, referral fees, escrow
requirements, transfer of
Name the purpose of RESPA.
RESPA was enacted to protect borrowers in purchases, refinances, home improvement and home equity lines of credit, and any other federally related mortgage loans. RESPA covers properties that are one to four family dwellings, condominiums, or manufactured homes.
RESPA does not cover:
(five)
- Vacant Land
- Large Tracts of Land (25 acres or more – even if there is a dwelling on it)
- Commercial or business loans
- The government, its agencies, or instrumentalities
- Temporary financing (bridge loans or swing loans)
The maximum a lender can collect at closing is?
14 months of escrow
payments.
Before establishing an escrow account, according to RESPA, a servicer is?
required to analyze to determine the periodic payment and the amount to be deposited
into the account.
The servicer must use an escrow disbursement date that is on or before the deadline to?
avoid a penalty and may make annual lump sum payments to take advantage of a discount
According to RESPA, a servicer is required to?
disclose an initial escrow account statement
within 45 calendar days of settlement for escrow accounts that are established as a
condition of the loan.
What are two things required to be included on the initial escrow account statement?
- The monthly mortgage payment
- The portion going to escrow
What are three things that must be included in the annual escrow statement?
- Account history
- Projections for the current year
- Current mortgage payment
The servicer is required to submit to the borrower an annual statement for each escrow account within?
30 days of completion of the computation year. The servicer is required
to conduct an escrow account analysis before submitting an annual statement to the
borrower.
RESPA, Reg X, Section 6, requires that if mortgage lender anticipates that they may sell the
servicing rights of a loan, they are required to ?
let the borrower know.
The lender must notify the borrower that this may occur within?
three days after the receipt of the application.
Goodbye Letter
When a mortgage loan is assigned, sold, or transferred, the former servicer must provide a
disclosure at least 15 days before the effective date of the transfer
Hello Letter
A letter from the new servicer must also be sent within 15 days after the effective date of
the transfer.
What are three things that must be included in both the Goodbye and Hello Letter?
- The effective date of the transfer.
- The name, address, and toll-free or collect call telephone number for an
employee or department of the first servicer that can be contacted by the
borrower to obtain answers to servicing transfer inquiries. - The name, address, and toll-free or collect call telephone number for an
employee or department of the new servicer that can be contacted by the
borrower to obtain answers to servicing transfer inquiries.
During the 60 days, beginning on the date of the transfer, no late fee or another penalty
can be imposed on a borrower who has?
made a timely payment to the former servicer.
If the former servicer receives an incorrect payment on or
after the effective date of the transfer, the former servicer must ?
either transfer the payment to the new servicer or return the payment and inform the borrower of the proper recipient of the payment
Section 8 of RESPA was created to?
eliminate the payment of referral fees and kickbacks between parties in a real estate transaction.
RESPA reconsidered legitimate business relationships and established the term and
documentation required for?
Affiliated Business Arrangements (AfBA)
Define an AfBA:
- A person who may refer business to a settlement service for a federally related mortgage loan, or an associate of such person, and has either an
affiliate relationship with or a direct beneficial ownership interest of more than 1% in the provider of the settlement service. - Either person directly or indirectly who refers business to that provider or influences the selection of that provider.
When must the AfBA disclosure be delivered to the borrower?
at the time of the referral
What else does Section 8 state?
Section 8 also states that no person may give or receive a fee, kickback, or any other form of valuable compensation (a thing of value) or arrange to do so for referring a
potential borrower to a certain lender or service provider for a federally-related mortgage loan
If someone violates Section 8 of RESPA, they?
could be fined up to
$10,000, up to one year in prison, or both.
