Ethics Flashcards
Regulation that is intended to curb the unethical practice of charging consumers unearned fees for settlement services
RESPA
Regulation whose initial goal of informing consumers about the cost of credit has expanded to address many ethical issues, including deceptive advertising practices, predatory lending, deceptive appraisal practices, and the origination of loans without considering a borrower’s repayment ability
TILA
The component of TILA that addresses predatory lending practices by prohibiting particular acts and practices that were formerly associated with transactions for subprime loans
HOEPA
Creates legal requirements for lenders to meet their ethical obligations to protect the privacy of personal information that consumers share during lending transactions
Gramm-Leach-Billey Act
Prohibits the unethical practice of discriminating against loan applicants based on personal characteristics, such as gender, race, national origin, and marital status
ECOA
Allows the federal government to prosecute those who willfully and knowingly make false statements on their loan applications
Federal False Statements Act
Two FBI categorizations for mortgage fraud
- Fraud for Profit
2. Fraud for housing
Three characteristics to qualify for exception of affiliated business arrangement referral under RESPA
- Affiliation is disclosed to the customer
- Use of the affiliate is not required
- Benefit is limited to the ownership interest in the affiliated business
Involves the offering of mortgage credit exclusively on the basis of the equity that a consumer has in his or her home, without consideration of repayment ability.
Equity-based Lending
Government agency that enforces the Fair Housing Act
HUD
Protected classes under the Fair Housing Act
Race Color National origin Religion Sex Familial status Handicap
Amends ECOA by prohibiting discrimination based on sexual orientation and gender identity
Housing Opportunities Made Equal Act of 2013
Perform purely administrative and/or clerical tasks under the supervision, and on behalf, of licensed mortgage professionals
Loan Processors
Transferred the oversight of Fannie Mae and Freddie Mac from HUD and the Office of Federal Housing Enterprise Oversight to the Federal Housing Finance Agency (FHFA). FHFA has much more involvement with Fannie Mae and Freddie Mac than the former regulatory agencies had.
The Housing and Economic Recovery Act of 2008
Established the Uniform Standards of Professional Appraisal Practice (USPAP) as the generally-accepted appraisal standards in the United States.
Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA)
Under TRID, these fee amounts cannot change from the initial Loan Estimate:
- Fees charged by a creditor or one of its affiliates
- Fees paid to a provider of settlement services if the loan applicant is not allowed to shop
- Fees paid to a mortgage broker
- Fees paid for transfer taxes
The following “changed circumstances” allow for settlement costs to vary by 10%+
- Natural Disaster
- Title Insurer goes out of business before closing
- New information is uncovered
UDAAP Penalties under Dodd-Frank
$5,000 each day a violation continues
$25,000 each day a reckless violation continues
$1 million each day a known violation continues
When must a lender respond to a complaint they are forwarded from the CFPB?
15 Calendar Days
An individual who accepts a fee, ranging from $500 to several thousand dollars, to provide his/her name, Social Security Number, and other personal information for use on a mortgage application.
Straw Buyer
An individual who accepts a fee to falsely claim ownership to a property. Falsified or fabricated title documents, including sham warranty deeds, are created to support the fraudulent claim that the indvidual is the owner and occupier of the property securing the loan.
Straw Seller
When a fictitious borrower obtains a mortgage loan and “secures” it with fictitious property
Air Loan
When fraudulent real estate brokers or investors try to unload property with an inflated value and questionable title history on an unsuspecting buyer. When these buyers ask to inspect the property, the seller may discourage an inspection or rush the potential buyer through the home.
Cursory Inspection
Executed by forcing the sale of a home for less than it is worth and reselling it at its true value
Property “Flopping”
This law is intended to facilitate the prosecution of those who commit mortgage fraud and to increase the financial resources that are available to investigate and prosecute fraud cases.
Fraud Enforcement and Recovery Act (FERA)
Fraud that applies to fraudulent actions against government agencies, such as HUD and the Federal Housing Administration
Conspiracy
