Fed Law Flashcards
An annual escrow analysis must be conducted yearly to prevent overages and shortages to a borrower’s escrow account. Per RESPA, the information obtained through this analysis must be provided to the borrower within which time frame?
30 days from conducting the escrow analysis.
Which of the following does not appear on the HUD-1 settlement statement?
Contract sales price, city and county taxes, annual percentage rate, or initial interest rate.
Annual percentage rate.
On a residential mortgage lending transaction, the mortgagor will receive and sign all but which at settlement?
HUD1, mortgage servicing disclosure statement, promissory note, security instrument.
Mortgage servicing disclosure statement
What does SAFE stand for?
Secure and Fair Enforcement for Mortgage Licensing Act
Purpose of SAFE
To enhance consumer protection and reduce fraud by establishing minimum standards for the licensing and registration of state licensed mortgage loan originators
Which two regulations are associated with SAFE?
Regulation G and regulation H
What is regulation G
Requires registration of federally regulated entities.
What is regulation H?
Regulation H applies to non-federally regulated entities that engage in mortgage related activity non-depository lending institutions and mortgage brokers. Those who are regulated under regulation age are required to fulfill national education and testing requirements and may be required to fulfill education requirements for each state in which they hold a license
Who is required to be licensed?
Mortgage loan originator’s as well as independent contractors acting as processors or underwriters must register with NMLS and obtain a unique identifier and a license
What must mortgage loan originator applicants provide the NMLS?
Fingerprints for a criminal history background check, personal history and experience, and authorization for an independent credit report.
Forms MU1-4 apply to what?
Company form, individual form, branch form, individual licensing form.
Prelicensing education requirement
Three hours of federal law and regulations, three hours of ethics, two hours of non-traditional mortgage lending standards, 12 hours undefined. this comprises the 20 hours safe training.
What score most applicants achieve to pass the safe exam?
Applicants must achieve a passing score of at least 75% on both the federal and state components of the written test. They must complete the continuing education requirement annually to maintain their license. If they failed to maintain a valid license for five years or longer, they must go through the initial application process and test again
What is RESPA and what is its purpose
Real estate settlement and procedures act. It’s purpose is to protect consumers by regulating cost and business arrangement disclosure’s. It provides consumers with the opportunity to shop for the best possible mortgage solution. It is regulated by the consumer financial protection bureau.
Which loans does RESPA apply to?
It applies to federally regulated mortgage loans that are secured by first or subordinated to lean on residential property. Residential property includes residential dwellings designed for the occupancy of 1 to 4 family is an individual units of condominiums, cooperatives, mobile homes, and trailers.
Which loans are exempt from the regulations of RESPA?
Remember ABC 25. Agriculture, business purpose, commercial use. loans on property of 25 acres or more.
List the disclosures associated with RESPA.
The good faith estimate.
The HUD1 and HUD1A.
The settlement cost booklet.
The affiliated business arrangement disclosure.
The homeownership counseling organization’s list disclosure.
What is the good faith estimate and when is it given to the consumer?
The good faith estimate is the initial disclosure of the estimated settlement costs of the mortgage loan. It must be provided to the borrower no later than three business days after receipt of a loan application or information sufficient to complete an application. The estimate is good for 10 business days.
What information is included in the good faith estimate?
The estimate includes the loan amount, loan term, interest-rate, monthly payment, whether or not the principal balance can rise, whether or not the payment can change, any prepayment penalties or balloon payments that may apply, and whether or not the borrower has chosen to escrow their taxes and insurance.
What is defined as a business day under RESPA?
Any day on which the offices of the business entity are open to the public for carrying on substantially all of the entities business functions.
Under the good-faith settlement, what charges may not increase at settlement?
The origination charge, charges or credit for an interest rate lock once the rate is locked, adjusted origination charge, and transfer taxes.
Which charges on the good faith estimate may increase up to 10% at settlement?
Title services and lenders title insurance when the lender selects the settlement service provider for the borrower selects a provider identified by the lender. Lender required settlement services when the lender selects the provider. Owners title insurance when the lender selects the provider or the borrower selects a provider identified by the lender. And government recording charges.
Which charges on the good faith estimate may change by any amount at settlement?
Title services and lenders title insurance when the borrower selects a settlement service provider not identified by the lender, owners title insurance when the borrower selects a provider not identified by the lender, the initial deposit for the borrowers escrow account, daily interest, and homeowners insurance.
What are the HUD – 1 and the HUD-1a?
They are settlement statements that clearly show all the Final charges in connection with the settlement of the loan. It is different from the good faith estimate because it is not just an estimate, it provides the final charges. One is for purchases, one – a is for refinance.
When must be HUD be provided to the consumer?
It must be provided to the consumer at the time of settlement, or one business day prior to closing at the consumers request.
What is the settlement cost booklet and when must it be given to the consumer?
It explains the settlement process and advises borrowers they have the right to negotiate loan terms. It must be given to a homebuyer within three business days of a mortgage loan application for a purchase transaction.
What is the affiliated business arrangement and when must it be given to a consumer?
It is a disclosure that must be given to the consumer if the lender has recommended an affiliated business for settlement services. The disclosure is due at the time of referral. The disclosure includes a description of the business arrangement including the percentage of ownership of the interest of the referring party and service provider, an estimate of the cost for the provider, and a statement that the borrower is not required to use the referral.
