Federal Laws Flashcards
According to the Fair and Accurate Credit Transaction Act, when are borrowers entitled to get a copy of their credit scores for no reason?
A borrower has no right to a free copy of his credit cores.
(FACTA, an amendment to FCRA, implemented the rule that requires the credit bureaus to provide a free credit report to everyone yearly. This does not include their credit scores)
FACTA: Fair Accurate Credit Transaction Act
FCRA: Fair Credit Reporting Act
Which is not a disclosure required within 3 business days of receiving an application?
Environmental Hazard Disclosure
(The Loan Estimate, Home Loan Toolkit and CHARMS booklet are all required under TILA to be disclosed within 3 business days of application)
Which rule dictates how instructions are required to dispose of consumer’s information?
The Disposal Rule
(The Disposal Rule under FACTA dictates how lenders should dispose of consumer information, this includes a requirement for lenders to come up with reasonable measures to protect against unauthorized access. The Disposal Rule is why you are required to shred documents!)
In compliance with Regulation Z, how long is a lender required to maintain the Closing Disclosure?
5 years
Which of the following is NOT calculated into the APR?
Realtors Commission
APR=Annual Percentage Rate
(The realtor’s commission is paid by the seller and not the borrower. It is also not financed into the loan so it would not be calculated into the APR like the interest rate, origination fee and any discount points.)
The practice of getting people to sell their homes at bargain prices by suggesting that certain ethnic groups are going to move into the area is nicknamed:
Blockbusting
(Blockbusting is the practice of persuading owners to sell property cheaply because of the fear of people of another race or class moving into the neighborhood, and thus profiting by reselling at a higher price)
An MLO is looking over a borrower’s credit report and sees a fraud alert, under the Economic Growth, Regulatory Relief and Consumer Protection Act, how long can a fraud alert be on a borrower’s credit report?
1 year
The responsibility of financial institutions to meet both the deposit and credit needs of the community, including the needs of low-income families, is called?
The Community Reinvestment Act (CRA) (1977)
(The Community Reinvestment Act (CRA), enacted in 1977, requires the Federal Reserve and other federal banking regulators to encourage financial institutions to help meet the credit needs of the communities in which they do business, including low- and moderate-income (LMI) neighborhoods)
If a loan originator is in a face-to-face loan interview with the applicant, and the applicant does not wish to answer the questions in Section 8 on the 1003, the loan officer must:
Fill out the info based on visual observation.
(HMDA requires that if an MLO is doing a face-to-face interview and the applicant does not wish to answer the demographic questions on the 1003 that the MLO fill in the information based on their own visual observation.)
HMDA: Home Mortgage Disclosure Act
RESPA does not apply to:
Vacant Land
(RESPA does not apply to vacant land, large tracts of land (25 acres or more – even if there is a dwelling on it), commercial or business loans, the government, or temporary financing (like bridge loans))
RESPA: Real Estate Settlement Procedures Act
Under what law is a lender required to provide an adverse action disclosure if the borrower’s credit is the reasoning for all or part of the decision to deny the loan application:
Regulation V
Under Reg V is when a lender is required to pull out an Adverse Action Disclosure due to the borrowers credit. (Loan application gets denied)
(Persons that obtain and use information about consumers to determine the consumer’s eligibility for products, services, or employment, Persons that share such information among affiliates, and. Furnishers of information to consumer reporting agencies.)
An MLO is required to protect a borrower’s non-public personal information, per what federal law?
Regulation P
Under Reg P is when an MLO is required to protect a borrowers non-public personal info.
(governs the treatment of nonpublic personal information about consumers by the financial institutions for which the Board has primary supervisory authority.)
The Borrower is entitled to the disclosure of the costs of a mortgage loan through the Loan Estimate:
Within 3 business days of the loan application.
(TRID requires the Loan Estimate be provided within 3 business days of application. Remember PENCIL -once you have those six things, you have an application.)
TRID: TILA-RESPA Integrated Disclosures (Terms and guidelines a borrower must know before getting a mortgage)
PENCIL:
P- Property Addy
E- Estimated Value of Property
N- Name
C(S)- Social Security/Credit
I- Income
L- Loan Amount
What is NOT likely to happen if the lender/investor finds fraud?
A 1% interest rate increase on the loan.
(When a lender finds fraud on a loan and they did not originate it, most of the time the originating lender will have to retake possession of the loan and deal with the fraud. Finding of fraud does not constitute any change in the terms of the loan but can cause the loan to become due and payable)
How many days in advance of transferring a loan to another lender must the current mortgage servicer inform that customer of the transfer to another lender who will subsequently be servicing the loan?
15 days
(Under RESPA, the former servicer is required to provide a disclosure at least 15 days before the effective date of transfer, this letter is referred to as the Goodbye Letter.)
