Federal Law Flashcards
Highlights of the Secure and Fair Enforcement for mortgage Licensing Act of 2008 (SAFE ACT, Title V, and economic recovery act)
- Established tests, background check, credit scores.
- The requirements for obtaining a MLO license
Highlights and Disclosure/Notices of Truth in Lending Act (TILA) 1968
- Reg Z
Highlights - disclosure of APR, informed use of credit
-provides right of recission (3 days after refinance)
-Advertising = requires disclosure of certain terms or trigger terms
3/7/3 Rule - earliest close 7 days after initial disclosure; 3 business-day waiting period before consummation if disclosure required.
Penalties
-Violate rescission rights = borrower can rescind the loan for 3 years.
-hoepa = liable to borrower for all finance; cant sell on secondary market
-Civil liability, class action suits, FINES!
Disclosure/Notices
-Within 3 business days of completed application
At closing:
Notice of right to rescind (2 copies)
(Records must be kept for 2 years )
Highlights and Disclosure/Notices of Real Estate Settlement Procedures Act (RESPA) 1974
Reg X
Highlights
-Settlement Services
-Helps consumer shop
-Prohibits kickbacks, fee-splitting and unearned fees
-Sets limits on escrow
-Requires the HUD-1 and GFE = replaced by CD and Loan Estimate (LE)
-Penalties = 10,000/ 1 year in jail or both per violation
Disclosure/Notices
-Within 3 buss days of app:
- requires certain documents books to be made available including
- LE, mortgage disclosure, HUD booklet
-Affiliated Business Arrangements rules
-At Settlement:
- CD
-Initial Escrow Statement
-After Settlement:
- Annual Escrow statement
- 2 months in reserves = refund
- Servicing Transfer Statement
- 15 days before and after transfer (Hello/Goodbye Letter)
Highlights and Disclosure/Notices of Homeowner’s Protection Act (HPA) 1998
Highlights
- PMI cancellation when LTV reaches 80%
-Auto Terminates when LTV reaches 78%
Disclosure/Notices
-Initial dis of HPA provisions with annual statement
-disclosure of cancellation and automatic termination dates of fixed rate loans
Highlights and Notices/Disclosure of Home Ownership and Equity Protecton Act (HOEPA) 1994
Highlights -High-cost home loans -Doesn’t apply to : purchases, reverses, helocs, or business loans. -APR tests -Points and fees test -Prepayment penalty test -Requires homeownership counseling Notices/Disclosure - Must disclose to the borrower within 3 buss days before closing if the loan is a high cost loan or disclosure
Highlights of Higher-Priced Loans - Truth in Lending Act as amended by Housing and Economic Recovery Act of 2008
- Called Section 35 Loans
- These are loans where the APR exceed APR by:
- 5% or more first lien loans
3. 5% or more for subordinate lien loans
- 5% or more first lien loans
- Must have escrow accounts
Highlights and Disclosure/Notices of Fair Credit Reporting Act (FCRA) 1968
Reg V
Highlights
- Rstricts use of credit reports
-requires accuracy on credit reports
-remove 7 years on most negative credit, 10 years on bankruptcies
-Fraud alerts (90 days)
-CRA must block info resulting from identity theft
Notice/Disclosure
Adverse action notice requirements
-Disclose credit reporting agency used
-disclose the CRA is not responsible for the denial
-disclose the CRA provides a free copy of the exact report
-must be given within 30 days off app
-reason for the denial
Highlights and Notices/Disclosure of Fair and accurate credit transaction act of 2003 (FACTA)
Highlights
-Improves consumer access to credit information
-Resolution of consumer disputes
-Prevention and detection of identity theft
Notices/Disclosure
Notice to home loan applicant disclosure
-disclosure of credit score to the borrower
-score factors, ranges of scores, date score computed
-provided by the credit reporting agency with the credit report
Highlights of National do not call registry
- 31 days to put someone on their list to not call
- numbers placed on the list will remain permanently
- 8am-9pm
- penalties =16,000
Highlights of Gramm-Leach-Bliley Act or Financial modernization Act of 1999 ( Privacy Act)
- Protect confidentiality of non-public personal information (NPI or NPPI)
- Safegourd Rule - Keeping borrower’s information safe
- Pretexting Rule - prohibits sharing of information with pretenders
- opt out rule - allows borrowers to opt-out of sharing information with non-affiliates.
Highlights of Fair Housing Act 1968
Specifically prohibits for race, color, religion, sex, or national origin but adds DISABILITY
Highlights and Notices/Disclosure of Equal Credit Opportunity Act (ECOA) 1974
Reg B
Highlights
-Prohibits discrimination on everything but disability, that’s FHA
Cannot
-discourage applying
-ask about spouse or child rearing
-ask about child support or alimony as income
Can
-Inquire about race, ethnicity or sex for HMDA
Notices/Disclosure
-Approval, Counteroffer, Adverse action
-Within 30 days of application
Appraisal Notice
-Copy of appraisal after paid upon request within a reasonable period of time
ECOA Notice
Highlights and Notice/Disclosure of Home Mortgage Disclosure Act (Federal Reserve Board, HMDA) 1975
Reg C
Highlights
-Used to track info to prevent discrimination
-prevent redlining and blockbusting
-report info to the regulator
-must keep files for 3 years
Can be taken:
- face to face (guess)
- Mail
- telephone
- Internet
Notice/Disclosure
-1003 monitoring section x of the loan appHighlights of FTC Red Flags
-protect sensitive personal data
-implementation of a written plan to detect and prevent identity theft
-penalty = 3,500 per incidence of non-compliance
-Identifying red flags:
- Account activity
Inconsistent information
Highlights of Dodd-Frank
- Created the CFPB
- Prohibits Unfair Lending Practices
- Penalties for irresponsible lending
- Expands consumer protection on high-cost mortgages
- Additional disclosures
- Housing counseling expansion
