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LAWS Flashcards

(58 cards)

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1
Q

RESPA

A

Real Estate Settlement Procedures Act

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2
Q

(Reg X)

A

Real Estate Settlement Procedures Act

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3
Q

Real Estate Settlement Procedures Act

A

seeks to ensure that consumers throughout the nation are provided with greater and more timely info on the nature and costs of the settlement process & are protected from unnecessarily high settlement charges caused by certain abusive practices

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4
Q

RESPA

A
  • requires effective advanced disclosure of costs
  • eliminates kickbacks and referral fees
  • limits amt held in escrow or reserve accts
  • reforms recordkeeping of local land title info
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5
Q

Federally-related mortgage loan

A

any loan secured by a first or subordinate lien on a residential property designed for the occupancy of 1 - 4 families made by any lender which meets the following criteria:

  • its deposits are insured by the fed
  • it is regulated by the fed
  • the loan is insured by HUD
  • the lender: intends to sell the loan to Fannie Mae, Freddie Mac, or Ginnie Mae OR makes more than $1Mil in residential real estate loans / year
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6
Q

aggregate escrow analysis

A

to ensure that the proper amount is being held in escrow or reserve accts

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7
Q

RESPA does not apply to the following transactions:

A
  • Loans on vacant or unimproved property
  • Loans for business, commercial, or agricultural purposes
  • Construction loans, unless:
    • The lender issues a commitment for permanent financing, or
    • They are used to purchase the property
  • An assumption of a loan where the creditor’s approval is not required
  • The conversion of a federally-related mortgage loan
  • The transfer of a loan to the secondary mortgage market
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8
Q

TILA

A

Truth In Lending Act

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9
Q

Regulation Z

A

TILA

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10
Q

Truth in Lending Act

A

part of the Consumer Credit Protection Act; intended to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit

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11
Q

finance charges

A

the costs of obtaining credit paid by the consumer, expressed as a dollar amt

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12
Q

prepaid finance charges

A

charges which are paid separately before or at the time of consummation or which are withheld from the proceeds of the loan

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13
Q

HOEPA

A

Home Ownership and Equity Protection Act

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14
Q

Home Ownership and Equity Protection Act

A

deals with high-cost home loans; loans APR exceeds the avg prime offer rate (APOR) for a comparable transaction by more than:

  • 6.5% for a first lien loan
  • 8.5% for a first lien loan of less than $50k and secured by a dwelling that is personal property or
  • 8.5% for a subordinate lien
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15
Q

HPML

A

Higher Priced Mortgage Loan

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16
Q

Higher Priced Mortgage Loans

A

a closed-end consumer credit transaction secured by the borrower’s principal dwelling that has an APR that exceeds the APOR by:

  • if a first-lien loan eligible for purchase by Freddie Mac (not exceeding conforming loan limit), 1.5 percentage points
  • if a first-lien jumbo loan, 2.5 percentage points
  • if a subordinate-lien loan, 3.5 percentage points
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17
Q

ATR

A

Ability to Repay

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18
Q

Dodd-Frank Act

A

authorized creation of the Consumer Financial Protection Bureau (CFPB), which implemented the ATR & Qualified Mortgage Rule

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19
Q

Ability to Repay Rule

A

requires a creditor to make a reasonable, good faith determination that a person applying for a residential mortgage loan has a reasonable ability to repay the loan according to its terms

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20
Q

Exceptions to ATR

A
  • HELOCS
  • Timeshares
  • Reverse Mortgages
  • Temporary or bridge loans w/ terms of less than 12 mos
  • construction loan of 12 mos or less that are part of construction-to-permanent loans
  • loans made by a housing finance agency or other gov agency
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21
Q

qualified mortgage

A
  • has a loan term of no more than 30 years
  • does not provide for points and fees that exceed 3% of the total loan amt
  • a loan transaction that provides for substantially-equal periodic payments that does not:
    • provide for negative amortization
    • allow the deferral of the payment of principal, or
    • result in a balloon payment
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22
Q

prepayment penalties

A

prohibited on high-cost home loans and HPMLs; may not be impose after the first 3 years of the loan term

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23
Q

conditions where a mortgage loan may include a prepayment penalty

A
  • the loan is a fixed-rate qualified mortgage loan
  • the penalty is permitted by law
  • the transaction has an APR tha tmay not increase after the consummation
  • the fee does not exceed:
    • if prepaid during the first 2 years of the loan, 2% of the outstanding balance prepaid
    • if prepaid during the third year of the loan, 1% of the outstanding balance is prepaid
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24
Q

Affiliated Business Arrangement Disclosure Statement

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A

an arrangement in which a person is in a position to refer real estate settlement service business for a federally-related mortgage loan and has either an affiliate relationship with, or a direct or beneficial ownership interest of more than 1% in, a provider of settlement services and refers business to, or influences the selection of, that provider; must be provided on a separate piece of paper to the borrower at or before the time of a face-to-face referral or a referral made in writing or by electronic media, within three business days of a telephone referral, or, if referred by the lender, at the time the Loan Estimate is provided.

25
Loan Originator Compensation Rule
granted under the Dodd-Frank Act
26
under the LCR, a loan originator's compensation may not be based on:
- any loan terms or conditions of a loan - the terms of multiple transactions by a single loan originator - the terms of multiple transactions by multiple loan originators
27
small servicer is a servicer that
- services, along with any affiliates, 5,000 or fewer mortage loans which the servicer is the creditor or assignee - is a housing finance agency - is a nonprofit entity that services 5,000 or fewer mortgage loans for which the servicer is the creditor
28
how many days does a creditor have to deliver a LE to a borrower after an application is submitted?
3 BUSINESS days
29
how many days before consummation of the loan must the creditor provide the borrower with the LE?
7 BUSINESS days
30
Fees that may not vary at all from the amount stated in the LE (Zero Tolerance)
- fees paid to the creditor, mortgage broker, or an affiliate of either - fees paid for third-party provider services or which the consumer canNOT shop for - Transfer taxes
31
Fees that may vary by 10% of what was stated in the LE (10% Tolerance)
- recording fees | - third-party provider fees for which the consumer was allowed to shop for
32
of days a LE is good for
10 BUSINESS days
33
charges that may change from the amount stated on the LE without being subject to a tolerance limitation
- prepaid interest - property insurance premiums - amounts required to be placed into escrow accts - 3rd party service providers for which the consumer was allowed to shop and which were NOT on the prover list offered by the lender - charges for 3rd-party service providers NOT required by the creditor
34
closing disclosure
the document stating the final terms and conditions of a mortgage loan transaction
35
when must lender provide the borrower with a closing disclosure?
within 3 BUSINESS days prior to consummation; any revisions made must be provided to the consumer at or before consummation
36
consummation of a loan
defined by state law so it may vary, but is typically the day the borrower becomes legally obligated to the loan
37
3 circumstances in which a revised closing disclosure must be issued with a retstarte waiting period
- the loan's disclosed APR becomes inaccurate - changes in the terms of the loa product offered - addition of a prepayment penalty
38
Fair Housing Act (FHA)
prohibits discrimination in the sale or rental of a dwelling on the basis of race, color, religion, handicap, familial status, national origin
39
what constitutes discrimination under FHA
- refuses to sell or rent a dwelling or to negotiate the sale or rental of a dwelling - offers different terms or conditions in the sale or rental of a dwelling - represents to an individual that a dwelling is not available when in fact it is - charges different rates and fees or offers different terms in a mortgage loan transaction
40
redlining
the practice of denying services in certain neighborhoods based on racial and/or ethnic factors; prohibited by FHA and state law
41
Equal Credit Opportunity Act (ECOA) (REG B)
prohibits lenders from discriminating in any aspect of a credit transaction based on - race - color - religion - national origin - sex - marital status - age (unless borrower is too young to sign a contract) - receipt of income form a public assistance program - exercise of rights under the Consumer Credit Protection Act
42
the ECOA valuations rule
upon receipt of an application a lender has 3 days ro notify a borrower of his/her right to receive a copy of any appraisal or valuation performed on the property that is subject of the loan application
43
when must an appraisal be shared
- promptly upon completion - at least 3 business days before closing - if the borrower waives this right, it must be provided at closing
44
HMDA - Home Mortgage Disclosure Act - REG C
requires certain lenders, based on asset, size, location and housing related lending activity to report data regarding its mortgage lending activity
45
information that must be reported for each transaction under HMDA
- loan # - date of application - type & purpose of loan - owner occupancy status - loan amt - type of action taken - location, by MSA, state, county and census tract - race, ethnicity, and sex of applications and gross annual income - type of entity purchasing the loan, if sold on the secondary market within a year of consummation
46
FCRA - Fair Credit Reporting Act (Reg V)
regulates consumer reporting agencies
47
Under the FCRA, a consumer report may be requested or used:
- By the consumer - To assist in the evaluation of an application for credit - By a potential investor, servicer, or current insurer to determine the value of the credit or the prepayment risk associated with an existing credit obligation - By a creditor or insurer in the solicitation of credit or insurance offers
48
MAP RULE - Mortgage Acts and Practices Advertising Rule (Reg N)
a federal rule governing the advertising of mortgage products
49
mortgage credit product
any form of credit that is secured by real property or a dwelling and that is offered or extended to a consumer primarily for personal, family, or household purposes (not business)
50
E-Sign Act ((Electronic Signatures in Global and National Commerce Act
governs the circumstances under which electronic signatures may be accepted on certain disclosures and documents
51
two types of loan fraud
fraud for housing & fraud for profit
52
fraud for housing
borrower lies about income/assets in order to qualify for a mortgage loan
53
fraud for profit
may involve a number of individuals and can include occupancy fraud, documentation fraud, appraisal fraud
54
GLB Act - Gramm-Leach-Bliley Act (Reg P)
enacted to protect the privacy of consumer personal info
55
nonpublic personal information (NPI)
any personally-identifiable financial info that a financial institution obtains in connection with providing a financial product or service, unless that info is otherwise publicly available
56
personally-identifiable financial info
info provided to a financial institution by a consumer in connection with a credit transaction, or information secured by the financial institution in connection with such a transaction
57
SAFE Act (Secure and Fair Enforcement for Mortgage Licensing Act)
regulates the mortgage industry on a national level; establishes minimum credit standards for licensure, requiring mortgage loan originators be either state-licensed or federally registered
58
Dodd-Frank Act
- establishment of the Consumer FInancial Protection Bureau (CFPB) - authorization of the qualified mortgage rule - requiring an assessment of the borrower's ability to repay a mortgage (establishment of the Ability to Repay Rule) - restricts loan originator compensation (authorizing the Loan Originator Compensation Rule) - requires ne wborrower disclosures to replace GFE and TILA disclosures (i.e., TILA-RESPA Integrated Disclosure Rule) - limits loan terms such as prepayment penalties, negative amortization, balloons, etc
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