Dodd Frank

Question 1

Dodd-Frank

Answer 1

Wall Street Reform and Consumer Protection Act 2010

Question 2

Purpose of Dodd-Frank

Answer 2

To protect consumers from abusive financial services and practices (put in place to change other laws)

Question 3

Title X of Dodd-Frank

Answer 3

Created the CFPB

Question 4

What is the CFPB?

Answer 4

Consumer Financial Protection Bureau

Question 5

Title XIV of Dodd-Frank

Answer 5

Sets MLO & UW standards, defines who is and is NOT an MLO, Appraisal Activties

Question 6

What is the record retention for Dodd-Frank?

Answer 6

QM- 3 years
ATR- 3 years
MLO Compensations- 3 years

Question 7

What is a QM?

Answer 7

1. Does not result in an increase in balance (neg am)
   Is not interest only
2. Does not have a balloon payment
3. Must verify ATR
4. Must verify income
5. For ARMs borrower must qualify based on the max rate within the first 5 years of loan
6. Meet DTI ratio (BE=43% or less)
7. Term cannot exceed 30 years
8. Total points and fees cannot exceed 3% of the total loan amount
9. Can have a prepayment penalty within the first 36 months only
10. Cannot exceed 2% of the outstanding loan balance during the first 2 years
    11.Cannot exceed 1% of the outstanding loan balance in the 3rd year

Question 8

What do lenders get for having a QM loan

Answer 8

QM grants safe harbor for the lender

Question 9

What is Subtitle A of Title XIV?

Answer 9

1. Limitations on MLO Compensation
2. Prohibits Steering customers
3. Defining who is a MLO and NOT a MLO

Question 10

What exemptions are there for MLO compensation?

Answer 10

Loan Amount and Volume

Question 11

What defines a MLO?

Answer 11

1. Take a residential mortgage loan application (URLA)
2. Assisting consumers in obtaining or applying to obtain a mortgage
3. Offer to negotiate the terms of the mortgage

Question 12

What is NOT a MLO?

Answer 12

1. Perform purely admin and clerical tasks
2. Performs only real estate brokerage activities
3. A person that provides mortgage financing for the sale of 3 properties or less in any 12 month period

Question 13

What is Subtitle B of Title XIV?

Answer 13

Addresses the minimum ATR underwriting standards for mortgages

Question 14

What information is needed to address minimum ATR for underwriting standards?

Answer 14

1. Current income and assets
2. Current employment status
3. Monthly mortgage payment for the new loan
4. Monthly payment on simultaneous loans secured by the property (2nd lien)
5. Monthly payment for the property taxes and insurance
6. Monthly DTI
7. Credit History
8. Debts, alimony, and child support obligations