Affinity 800 Facts TILA Worksheet 1-40 Flashcards

1
Q

What does TILA stand for & which 2 agencies passed it?

A

Truth in Lending Act

Passed by Consumer Credit Protection Act (CCPA) & implemented by Federal Reserve Board

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2
Q

Who administers TILA & what Regulation is TILA?

A

CFPB administers TILA (Consumer Financial Protection Bureau) & TILA is Regulation Z

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3
Q

What is the main purpose of TILA & what is it’s acronym?

A

TILA was put in place to protect consumers during credit transactions (be truthful & not misleading when it comes to advertising about credit) & deals with (CARFAC):

Credit

APR – for the sake of uniformity use APR to define finance charges

Right of Rescission

Finance charges Disclosure (similar to APR)

Advertising

CHARM booklet

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4
Q

When does TILA apply?

A

TILA is for residential & personal use mortgages (1-4 units), credit transactions of more than 4 installments

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5
Q

When does TILA not apply?

A

TILA doesn’t apply to commercial & other non-residential mortgages

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6
Q

How many installments are required for TILA to kick in?

A

More than 4 installments

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7
Q

What are the TILA disclosures & what is the acronym

A

TILA disclosures – CRAWL CTB (CRAWL CuTe BABY):

Closing Disclosure

Right to Rescind Disclosure

ARM Disclosures

When your Home is on the Line – HELOC or Home Loan or REFI

Loan Estimate

CHARM Booklet – when homeowner receives an Adjustable Rate Mortgage (ARM)

Transfer of Ownership Disclosure

Balloon Payment Disclosures

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8
Q

What is the Transfer of Ownership Disclosure & when does it apply?

A

Transfer of Ownership Disclosure – only applies to primary mortgage – when there is a new owner of a mortgage (lender to lender) – must notify borrower within 30 days of acquisition

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9
Q

How does the Transfer of Ownership Disclosure differ from the Transfer of Servicing Disclosure?

A

Transfer of Ownership discloses a new lender while Transfer of Servicing shows new servicer

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10
Q

How far in advance must a loan servicer notify consumer about rate change with ARM?

A

Sent 60 days notice before the rate changes but no earlier than 120 days (affects their payments)

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11
Q

What is the purpose of a Loan Estimate (LE), how many pages is it & when does borrower get it?

A

Loan Estimate/LE is 3-page potential/estimate of closing costs will be for the consumer that they get at or 3 business days after receiving a completed application

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12
Q

What is on a LE

A

LE disclosure includes (what you should be getting & how much $ you need to close):

APR (initial)

Estimated Cash to Close the transaction

Other loan features/terms

Settlement service provider costs

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13
Q

What is a Closing Disclosure, how many pages is it?

A

Closing Disclosure/CD is a 5-page disclosure that is provided to borrower 3 business days before closing & a final CD at closing/doc signing – provides borrower with actual closing costs

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14
Q

What is on a CD

A

Closing Disclosure includes:

Final terms of the mortgage loan

Loan costs

Various loan disclosures

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15
Q

What is the APR?

A

Annual Percentage Rate/APR % version of the $ finance charge, not just the interest rate – it’s the IR

+ finance charges spread out over the loan

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16
Q

What is higher the APR or the Interest Rate (IR)?

A

APR is higher than the interest rate

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17
Q

What is expressed as a % and is the true cost of lending?

A

APR - relationship between the cost of borrowing and total amount financed as a %

18
Q

What are other words for Interest Rate?

A

Interest Rate = Note Rate or Nominal Rate

19
Q

What is the definition of par rate?

A

Par Rate- the rate given that doesn’t require lender credits or discount points

(no adjustments)

20
Q

What is another word for APR?

A

APR= Effective Rate

21
Q

What is Total Interest Percentage (TIP) & how does it differ from APR?

A

TIP - the total interest being charged as a % vs. APR is the interest + finance charges as a %

22
Q

Per TILA what must you give if a client asks you for the Interest Rate?

A

You can’t just disclose the Interest/Nominal/Note Rate – you MUST disclose the APR as well

23
Q

What is Mortgage Disclosure Improvement Act (MDIA)?

A

MDIA is the 3-7-3 rule that says initial disclosures must be sent out within 3 business days of

completed application, loans can’t close before 7 business days after disclosures sent/mailed and if Re-disclosure happens need to wait another 3 business days.

24
Q

According to TILA when is the soonest a loan can close?

A

Loan can only close after 7 business days

25
Q

When & why are Redisclose triggered & are they a good thing?

A

Re-disclosure triggered when there is a change in APR IF:

30 year conventional fixed mortgage changes more than 1/8% (0.125)

Irregular (anything other than 30-year conventional fixed): 1/4% (0.25)

26
Q

What are examples of triggering terms that sets off a disclosure with advertising?

A

TILA- Advertising – if you use triggering terms such as $500 down payment, $1,500 monthly payment then you have to disclose the APR & amount & terms of repayment

27
Q

What is not a triggering term & therefore doesn’t require additional disclosures?

A

If advertising has APR – no other disclosures are needed ex: 5% APR, easy monthly payments

28
Q

TILA established the Right of Rescission Rule- what is it?

A

3-day cooling period if PRIMARY residence used for refi, HELOC, Home Loan, 2nd mortgage loan

29
Q

Can you use a Right of Rescission on a purchase, 2nd home or investment property?

A

NO- only your existing primary property

30
Q

How many copies do you give re: Rescind & how many borrowers does it take to rescind?

A

Each borrower must receive 2 copies & it only takes 1 person to back out

31
Q

When does the Right to Rescind expire?

A

Midnight on the 3rd business day & day of signing doesn’t count.

Ex: signed Monday – RR expires Thurs midnight

32
Q

If a lender fails to give a borrower the Right to Rescind/Right to Cancel disclosure how long does the borrower have to rescind the loan?

A

Borrower has 3 years to rescind if they never received the Right to Rescind disclosure

33
Q

If $ was collected and a borrower rescinds – how many days does escrow have to return the $?

A

20 days to return $ if borrower rescinds

34
Q

How many days does the TIL Disclosure have to be delivered w/ mobile, reverse, HELOC, equity lines of credits, dwellings not attached to land before closing?

A

7 business days before closing

35
Q

Per TILA what is a dwelling?

A

Dwelling - residential structure 1-4 units that don’t need to be attached to real property & can be a condo or coop unit (anywhere someone lives)

36
Q

What is the Loan Originator Compensation Rule & what law is it amended from?

A

Amendment of TILA – by CFPB with regards to how LOs are compensated, expand the SAFE Act & implement issues identified in Dodd Frank Act. Prohibits dual compensation

37
Q

What is Dual Compensation Rule?

A

LO can only be paid by ONE party – either lender or borrower – not both

38
Q

What is Yield Spread Premium (YSP)?

A

YSP is a form of compensation for Loan Originators – when a lender gives an LO incentive to get a borrower to agree to higher IR and the LO gets a kickback while lender unfairly gets more $ in the form of APR - now the YSP benefit goes to the borrower

39
Q

What are the penalties for violating TILA?

A

Penalties for violating TILA:

A) 5K/day for single violation

B) 25K/day reckless violation

C0 1M/day knowingly violating TRID

40
Q

Per TILA what is a business day?

A

TILA- all calendar days except Sundays & Legal Holidays (except LE/Loan Estimate: any day open to the public)