Concept of Mortgage Lending Flashcards
What does RESPA stand for?
Real Estate Settlement Procedures Act
What agency enforces RESPA?
CFPB- Consumer Financial Protection Bureau
What are the 3 purposes of RESPA?
1- PROTECT CONSUMERS BECOME BETTER EDUCATED IN SHOPPING FOR SERVICES
2-PROTECT CONSUMERS FROM UNEARNED FEES, KICKBACKS, REFERRALS
3-PROTECT CONSUMERS BY LIMITING THE AMOUNTS THE HOMEBUYER PUTS IN ESCROW
CFPB AND RESPA are under what regulation?
REGULATION X
What are the 6 items that complete an application?
Name
Social Security number
Monthly Income
Loan Amount
Estimated Property Value
Property Address- this triggers day one of your 3-day disclosure period
A creditor must deliver Disclosures to the borrower within how many days?
three business days of receipt of application
RESPA defines a business day as?
a business day as any day on which the offices of the business entity are open to the
public for carrying on substantially all of the entity’s business functions.
Special Information Booklet
SECTION 5 OF RESPA was published to help who?
is published by the Bureau to help consumers applying for
federally related mortgage loans understand real estate transactions.
The special information booklets are not required for?
Refinance Transactions
What does the LE stand for?
Loan Estimate
Define Closing Cost
The expenses incurred and paid at the time of settlement in the transfering of property
What is ECOA stand for?
Equal Credit Opportunity Act
How many sections of RESPA impact and guide the mortgage industry in protecting borrowers from abusive practices?
4 Sections of RESPA - be able to identity each section
Section 6- definition? Mortgage Servicing
Section 8- definition? Prohibits Kickbacks and referral
Section 9- definition?
Section 10- definition? Limits on Escrow
The ____________ was created in 1933 to Insure consumer deposits.
FDIC Federal Deposit Insurance Coporation
Do FHA loans have mortgage insurance for the life of the loan
True or False?
True
FHA is a department of ________and the __________ development
HUD is a
Department of Housing and Urban Develpment
Do Mortgage Banking companies take deposits from consumers?
NO
What is a Mortgage Banker?
is a company, individual, or entity that originates, processes, underwrites, closes/funds and may service mortgage loans.
Temporary loans, such as construction loans and 25 acres or more, commercial loans exempt from RESPA?
YES
What is the only fee that can be charged before disclosing?
Credit Report
The Dodd-Frank Act Established the
CFPB- Consumer Financial Protection Bureau
What information is gathered to make a full application?
NAME
SOCIAL SECURITY
INCOME
LOAN AMOUNT
EST PROPERTY VALUE
PROPERTY ADDRESS
Section 8 of RESPA
prohibits Kickbacks
a thing of value- includes money, things, discounts, salarie, commissions and fees.
What is an oral or written action directed to a person which has
the effect of affirmatively influencing the selection by any person of a provider of a settlement
service.
A Referral
An Escrow account can’t have more than ____ dollars or more must be returned to the borrower
$50
If a referring party gives the ABA disclosure to the consumer at or prior to the referral is this a violation?
NO
A written list of _________ is provided to the borrower no later than 3 business days after receiving an application
10 closest housing counseling organizations to the borrower’s current zip code
What is HOPEA
Home Ownership and Equity Protection Act Loans
If the lender has either an affiliate relationship or a direct or beneficial ownership, interest of more than 1 percent in a provider of settlement services, they are considered to have a what agreement?
Affiliated Business Arrangement Disclosure
What is included in the inital escrow account?
estimated taxes, insurance, and other charges to be paid from the escrow account
What Regulation C disclosures is included in the initial disclosures packet?
Regulation C, Home Mortgage Disclosure ACT
What do CFPS’s rules and laws relate to?
Privacy protection
Consumer identification
Prohibiting discrimination
Does FHA Insure the property, borrower or banks?
Banks To insure banks against losses for defaults on home loans
What Market consists of lender making mortgage loans directly to the borrowers
The Primary Market
Secondary Market does what 5 things?
consists of private investor
government-sponsored enterprises- buy and sell mortgage
created to moderate real estate cycles
give lenders new money
standardize loan criteria
What is one function of the secondary market?
provide lenders with more money to make home loans
What was the purpose of FHFA?
To promote a stronger and safer US housing financial system
What best describes a non-conforming loan?
Jumbo
What insures bank deposits?
FDIC
Does violating Section 8’s kickback fees, referral fees, and unearned fees are criminal and civil penalties?
YES
What does NMLS stand for?
National Mortgage Licensing System
RESPA Section 9 prohibits what?
prohibits a seller from requiring the home buyer to use a particular title insurance company. Buyers may sue sellers
RESPA Section 10 Limits on Escrow accounts what?
The initial amount the borrower is required to put into the escrow account
What is TILA?
Truth in Lending Act
What is the definition of a dwelling?
Means a residential structure that contains one to found units, whether or not that structure is attached to a real property or not.
What defines a creditor?
any person who regularly extends consumer credit for transactions secured by a dwelling if they extend credit 6 or more times in the preceding calendar year
What is a law that prohibits prefatory lending?
SAFE ACT
Secure and Fair Enforcement for Mortgage License
True or False? Origination is the process of making or initialing a new loan?
True
What is mortgage servicing?
The continued maintenance of a loan after the loan transaction has closed
What does a prequalification determine?
how much a potential borrower MIGHT be eligible to borrow
