Chapter 9:

Question 1

HOEPA

Answer 1

1994. Home Ownership and Equity Protection Act.establishes disclosure requirements and prohibits deceptive and unfair practices in lending. Reg Z

Question 2

higher-priced loan

Answer 2

a loan where the APR of a mortgage loan exceeds the average prime offer rate by:
1. 1.5% for a first mortgage lien
2. 2.5% for a first lien jumbo loan (loan amount over $453,100)
3. 3.5% for a subordinate mortgage lien
Escrow Account: 5 year minimum
Originator must verify payback ability.
Uses the average prime offer rate as an index.

Question 3

contribution plan

Answer 3

based on contributions made by the employee, and possibly by the employer (as a company matching contribution) and the plan is controlled by the employee.

Question 4

defined benefit plan

Answer 4

is a pension plan with sole contributions and control coming from the employer.

Question 5

non-deferred profits-based compensation plan

Answer 5

any non-deferred compensation arrangement where an individual loan originator may be paid variable, additional compensation based in whole or in part on the mortgage-related business profits of the person paying the compensation, any affiliate, or a business unit in the person’s or the affiliate’s organization.

Question 6

High Cost Loan

Answer 6

a closed-end loan secured by a borrower’s principal residence. The rules primarily affect refinancing and home equity installment loans. original mortgage - 6.5%. second mortgage - 8.5%. Costs More than 5%.

Question 7

Section 32

Answer 7

The Home Ownership and Equity Protection Act (HOEPA) of 1994 defines high-cost mortgages. These also are known as Section 32 mortgages because Section 32 of Regulation Z of the federal Truth in Lending Act implements the law. It covers certain mortgage transactions that involve the borrower’s primary residence.