Federal Mortgage Related Laws Flashcards
What is the Homeowner’s Protection Act (HPA)?
Federal law requiring private mortgage insurance (PMI) be automatically cancelled when the LTV reaches 78%. Borrowers have the ability to request cancellation when the LTV reaches 80%.
What does HOEPA stand for?
Home Ownership and Equity Protection Act (HOEPA)
What is HOEPA?
Federal law that sets rules for high-cost loans.
A loan that is subject to HOEPA cannot:
Feature a balloon payment, negative amortization, or a prepayment penalty and cannot be refinanced within one year by the original creditor unless doing so is clearly in the best interest of the borrower.
What are section 32 loans?
High-cost mortgage loans
HOEPA does not apply to the following loans:
Purchases, reverse mortgages, HELOCS, business loans.
What are section 35 loans?
Higher-Priced Mortgage Loans (HPML)
What is the requirement under Fair Lending, Fair Housing, and ECOA?
All consumers have the right to apply for a loan unless they are under 18 years of age.
Which Law and Regulation is the Home Ownership Equity Protect Act (HOEPA) under?
Truth in Lending Act (TILA) and Reg Z
What items are restricted under HOEPA?
Predatory lending, abusive lending practices, negative amortization, prepayment penalties, balloon lending, subprime lending, equity stripping, and not meeting Ability To Repay (ATR) requirments.
What is the Average Prime Offered Rate?
APOR - an index that is published weekly. It is added to High Cost and High-Priced Triggers.
Who publishes the APOR Index?
Federal Financial Institutions Examination Council (FFIEC)
What are the 3 triggers for High Cost Lending?
6.5% on first mortgage, 8.5% on a second mortgage, and 5% fee trigger for loans over $20,000
What are the triggers for High-Priced Lending?
1.5% for first mortgages, 3.5 % for second mortgages and no fee trigger.
Pre-payment penalties are not allowed by which agencies?
Fannie Mae, Freddy Mac, USDA, FHA, and VA
