Term
| What is RESPA, when was it enacted, who implemented it and what does it do? |
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Definition
Real Estate Settlement Protection Act (REG X) was enacted in 1974, was implemented by the Consumer Financial Protection Board (enforced by HUD)
REG X protects the borrower by requiring creditors to provide GFE, and other disclosures, regulates Origination Charges, Defines Finance Charges, etc. |
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Term
| What Escrow Limits Does RESPA Set? |
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Definition
RESPA Limits Escrow Cushions to 1/6 of total annual disbursements.
Lender can collect no more than 1/12 of the annual disbursements plus the amount to cover any escrow account shortage.
Lender required to return any excess of more than $50 over the 1/6 cushion to the borrower. |
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Term
| When must the GFE be provided? |
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Definition
The Good Faith Estimate must be provided no later than 3 business days after a lender receives an application.
Lender is exempt from 3-day rule if the lender denies the application or the borrower withdraws the application
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Term
What fees can the lender charge as a condition for providing the GFE?
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Definition
| The Lender can only charge a fee limited to the cost of the credit report |
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Term
| How long must the GFE be available to the borrower |
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Definition
| At least 10 business days from when the GFE is provided, but may be available longer if LO extendes this requirements |
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Term
| What are the GFE tolerances for fees |
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Definition
Zero Tolerance: orgination charge, transfer taxes, adjusted orgination charge, the credit or charge for interest rate chosen (when Interest Rate Locked)
10% Tolerance: lender required settlement services, title services, title insurance fees, owner's title insurance
Goverment recording charges |
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Term
| What are the penalties for GFE Toleance Violations (Section 5 of RESPA) |
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Definition
| LO may cure the toleance vilation by reimbursing to the borrower the exceed amount, settlement or within 30 calendar days after settlement. |
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Term
| What is HPA and who regulates it? |
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Definition
HPA Homeowners Protection Act of 1998, was intially regulated by the Federal Reserve Board but is now overseen by the CFPB. Requires Private Mortgage Insurance (PMI) on conventional loans with LTVs of 80% or more.
Law does not cover VA or FHA loans. |
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Term
| Conventional Loans, when is PMI required. |
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Definition
Requires Private Mortgage Insurance (PMI) on conventional loans with LTVs of 80% or greater.
Lenders must or servicers must cancel PMI coverage automatically once the mortgage balance has been paid down to 78% of the ORIGINAL PROPERTY VALUE.
The Homowners Protection Act (HPA) requires.
Can be cancelled at 80% by request from borrower, where the borrower meets lender requirements (current on payments, etc.) |
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