Term
| When was the Truth In Lending Act passed? |
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Definition
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Term
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Definition
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Term
| What agency is responsible for issuing regulations for compliance with RESPA? What are these regulations called? |
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Definition
| HUD. The regulations are called Regulation X. |
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Term
| What 7 types of loans are not covered by RESPA? |
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Definition
1. 25 acres or more
2. Business purpose loans (business, commercial, or ag)
3. Temporary financing, such as a bridge or swing loan, EXCEPT for convertible loans, OR the term is 2 or more years
4. Vacant land loans, if no building will take place
5. Assumed loans, if approval of lender isn't needed
6. if a loan is converted to a different loan with similar terms, EXCEPT if a new note is req'd
7. loans sold in the secondary mkt |
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Term
| What does the term “federally related mortgage loan” mean? 4 sections. |
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Definition
1. loan is secured by 1st or subordinate lien designed for 1 to 4 families
2. loan is made by a lender whose accounts are insured by an agency of the United States
3. intended to be sold by the originating lender to Fannie Mae, Ginnie Mae or Freddie Mac
4. if they are made through a federal urban development program
5. if the lender is regulated as a creditor under the Truth in Lending Act. |
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Term
| What's a "thing of value"? |
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Definition
| It has a very broad meaning that includes virtually any benefit. |
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Term
| What is "Settlement services"? |
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Definition
Any service provided in connection reminds borrowers: “At each of these steps you have the opportunity to negotiate the terms, conditions, and costs to your advantage.”
with a real estate settlement |
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Term
| What does The term “Secretary'' mean? |
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Definition
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Term
| What must a loan applicant receive within 3 days of applying for a loan? 3 things |
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Definition
Good Faith Estimate
Information booklet “Buying Your Home”
Mortgage servicing disclosure statement
These aren't req'd if app is turned down |
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Term
| What's in the information booklet “Buying Your Home” that applicants receie within 3 days of applying? (5 things) |
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Definition
explains each step of the settlement or closing
reminds borrowers: “At each of these steps you have the opportunity to negotiate the terms, conditions, and costs to your advantage.”
explains the protections which RESPA creates for borrowers
reviews the costs involved in closing on a mortgage
warns borrowers that providing false information on a loan application can lead to loss of the home, a poor credit rating, and even criminal prosecution |
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Term
| What's in the Mortgage Servicing Disclosure Statement? |
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Definition
It states whether the lender will service the loan or transfer it to another lender
It must also include complaint resolution information
If application is taken in person, it must be provided at that time |
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Term
| What's req'd to give to borrowers one day before closing? |
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Definition
| Copy of HUD-1, if requested by borrower |
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Term
| What Disclosures are Required at the Settlement? |
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Definition
HUD-1 settlement statement
escrow account statement at the time of settlement or within 45 calendar days of settlement
The statement lists the charges which the borrower will pay from the fund during the first twelve months of the loan |
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Term
| What is The “effective date of transfer”? |
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Definition
| The date that a borrower’s mortgage payment is first due to the servicer who has accepted the loan |
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Term
| When must The “effective date of transfer” be supplied to the borrower? |
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Definition
| must be provided not more than 15 days before the effective date of the transfer |
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Term
| How are consumers protected after loan servicing is xferred? |
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Definition
| During the 60-day period after the date of transfer, no late fee can be imposed for any timely payment which the borrower sends to the transferor instead of sending it to the new loan service provider. |
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Term
| When might an escrow account not be req'd? |
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Definition
| if the LTV ratio is below 80%. |
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Term
| When waiving escrow requirements, what fees might a lender charge? |
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Definition
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Term
| What must lenders do before establishing an escrow account? |
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Definition
| perform an initial escrow account analysis |
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Term
| When must lenders provide borrowers with an initial escrow account statement? |
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Definition
| at the time of settlement or within 45 calendar days of settlement |
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Term
| When must the notice of transfer be provided to borrowers? |
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Definition
| must be provided not more than 15 days before the effective date of the transfer |
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Term
| When is the annual escrow statement due? |
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Definition
| within 30 days of the completion of the escrow account computation year |
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Term
| How do you project a trial balance for the escrow account? |
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Definition
| Add all payments out of escrow for the year, divide by 12. This is the number you start with for the payment amt the borrow must make to escrow. |
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Term
| After projecting trial balance, what's the 2nd step? |
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Definition
| Look at total payments that will be made over the year, then look at the lowest month (in the negatives). Add whatever it takes to make it zero. Ex: if -250, add 250. |
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Term
| What is the 3rd step in figuring the escrow account (adding cushion)? |
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Definition
Cannot exceed 1/6 of estimated total disbursements.
Regulations don't require a cushion. |
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Term
| After the 3 steps, how do you determine the max. allowed to deposit in escrow, upon creation of the account? |
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Definition
1. Take the amt. needed to "zero" the lowest month
2. Add it to the cushion(1/6 of total payments out of escrow for the year) |
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Term
| What does section 8 (b) of RESPA cover? |
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Definition
| Unlawfullness of charging fees for unearned services |
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Term
| What does section 8(a) of RESPA cover? |
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Definition
| Prohibits kickbacks or fee splitting |
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Term
| What's the 2-part test to determine if a fee is OK to charge? |
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Definition
1. Was the service actually performed?
2. Was the payment reasonably related to the work performed? |
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Term
| How can a lender avoid a charge of having an "affiliated business arrangement"? |
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Definition
Face-to-face, electronic and written referrals: must disclose arrangement at time of referral
Phone: must disclose within 3 days |
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Term
| What's the RESPA limit on escrow fees? |
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Definition
| Can't require more than needed to cover escrow payments since the last charge was made until the due date of the first payment |
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Term
| Can there be fees for TILA doc prep? |
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Definition
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Term
| What are the fees for individual RESPA violations for mtg servicing xfers? |
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Definition
| Actual cost of violation, up to $1,000 if habit, + atty fees |
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Term
| What are the fees for class action RESPA violations for mtg servicing xfers? |
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Definition
| Actual damages. If pattern, up to $500k or 1% of servicer's net worth, whichever is less, + atty fees |
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Term
| How long does a loan servicer have to correct a problem once discovered, before borrower brings suit? |
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Definition
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Term
| What's the fine for not filing an initial or annual escrow statement? |
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Definition
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Term
| What's the cap for fines to a servicer who doesn't file initial or annual escrow statements? |
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Definition
| They can't be fined more than $110k. |
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Term
| How much is the fine for intentionally not filing escrow statements? |
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Definition
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Term
| How soon must action be taken for servicers who don't file escrow statements? Statute of limitations? |
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Definition
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Term
| Fine for forcing borrower to use particular title company? Statute of limitations? |
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Definition
| 3X the charges. Must be brought within a year. |
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Term
| What are the fines for violating RESPA section 8? |
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Definition
$10k
imprisonment
both
3X the amount of fees charged, due to borrower |
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Term
| Who has authority in each state to bring RESPA section 8 charges, in addition to individuals? Statutes of limitations? |
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Definition
Atty general
insurance commissioner
individuals: 1 yr limit.
Above: 3 yr limit. |
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Term
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Definition
| rules, which prescribe the nature and the timing of the disclosures that are required by the TILA law |
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Term
| What's the penalty for Reg. Z violations? Where's the burden of proof? |
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Definition
$5k fine
imprisonment
both
Burden of proof rests w/ creditor |
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Term
| What does TILA NOT apply to? (6) |
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Definition
Business, ag, commercial or org. credit
Credit over $25k, if NOT secured by real property
Public utility credit
Credit extended by broker registered with SEC
Student loans
Home fuel budget plans |
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Term
| Under TILA, what charges are NOT finance charges? (6) |
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Definition
App fees
Late fees, delinquent fees, etc
Charges for paying items that overdraw an account
Fees chg'd for participating in a credit plan
Seller's points
Real estate-related charges, such as appraisal fees, etc. |
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Term
| What are the req's for providing HELOC customers with a right to rescind? (5) |
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Definition
-Must provide 2 copies
-Must state that creditor has a security interest in the house
-Customer has right to rescind
-Date the rescision period expires (3 days from consummation or receiving disclosure, whichever is later)
-Effects of rescision |
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Term
| How soon must creditors supply disclosures to applicants of HELOCs? |
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Definition
| No later than 3 business days from app |
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Term
| What 2 things qualifies a loan as high-cost HOEPA loan? |
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Definition
rate is 8% over Treasurer securities corresponding to it
Points & fees incurred exceed either $400 or 3% of loan amt |
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Term
| What's prohibited for HOEPA loans? |
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Definition
Refi'ing before 12 months
Loaning money without documenting ability to pay
Evading HOEPA by identifying loan as open-end credit
Due On Demand clauses, unless used to protect lender from borrower fraud etc. |
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Term
| What is required under ECOA regarding appraisals? Timeline? |
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Definition
Must provide an appraisal, or notice that an appraisal is available, provided no later than when the loan decision is made.
Must provide an appraisal within 30 days of receiving a written request for one. |
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Term
| What are the penalties for violations of ECOA? |
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Definition
$10k in individual actions
$500k or 1% of net worth, whichever is less, in class actions
Atty fees can also be awarded |
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Term
| FHA discrimination penalties include what? |
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Definition
Actual & punitive damages & atty fees
For patterns of discrimination,up to $55k for first violation, $100k for subsequent violations |
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Term
| What is the HMDA, and what does it require? |
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Definition
Home Mortgage Disclosure Act of 1975.
covered lenders must collect information on all applications for home purchase, home improvement and refinancing of these loans. HMDA covers all residential loans, including multi family dwellings. |
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Term
| Which lenders are covered by HMDA? |
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Definition
lenders who are:
-federally regulated
-loan is insured/guaranteed by govt agency
-lender intends to sell loan to Fannie Mae or Freddie Mac |
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Term
| What lenders are exempt from HMDA? |
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Definition
-financial institution with assets of less than $28mil
-not withina Metropolitan Statistical Area (MSA)
-mtg company with less than $10 mil, incl. parent company |
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Term
| What must lenders do annually, if covered under HMDA? |
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Definition
| Compile data annually on LARs (loan/application registers). |
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Term
| If state-chartered banks don't join the Federal Reserve System, who regulates them? |
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Definition
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Term
| What is the FHLB, and what does it do? |
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Definition
Federal Home Loan Bank system. Regulates savings associations, i.e. "thrifts".
OTS, Office of Thrift Supervision, regulates FHLB member associations |
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