Federal Mortgage-Related Laws section Flashcards
1
Q
What does (RESPA) Stand For
A
Real Estate Settlement and Procedures Act
2
Q
What ACT protects consumers from excessive settlement costs and unearned fees
A
Real Estate Settlement and Procedures Act
3
Q
What ACT Limits the amount of funds that creditors can require consumers to deposit into escrow accounts
A
Real Estate Settlement and Procedures Act
4
Q
What ACT Establish disclosures, policies, and procedures to facilitate timely communications between loan servicers and consumers
A
Real Estate Settlement and Procedures Act
5
Q
What does (CFPB) stand for
A
Consumer Financial Protection Bureau
6
Q
Who is responsible for the enforcement of Real Estate Settlement and Procedures Act(RESPA) and for issuing implementing regulation
A
Consumer Financial Protection Bureau (CFPB)
7
Q
What is Regulation X (12 C.F.R. §1024.1 et seq.)
A
RESPA’s regulations
8
Q
The addition of Subpart C to Regulation X, addressing mortgage servicing is an example of changes made to ( ) by the ( ) over time.
A
(RESPA) - Real Estate Settlement and Procedures Act
(CFPB) - Consumer Financial Protection Bureau
9
Q
What does RESPA apply to
A
“federally-related mortgage loans
10
Q
Loans secured by a first or subordinate lien on residential property are known as
A
federally-related mortgage loans by RESPA
11
Q
loans secured by a first or subordinate lien on residential property are covered under ( ) and are considered ( )
A
RESPA and federally-related mortgage loans
12
Q
Loans made with collateral insured by the federal government (e.g., flood insurance
A
RESPA applies to “federally-related mortgage loans,” which are defined as loans secured by a first or subordinate lien on residential property which are:
13
Q
Loans made with funds from a lender regulated by the federal government or that has deposits insured by the federal government (e.g., depository institutions regulated by the FDIC or NCUA)
A
RESPA applies to “federally-related mortgage loans,” which are defined as loans secured by a first or subordinate lien on residential property which are:
14
Q
Loans Intended for sale to Fannie Mae or Freddie Mac
A
RESPA applies to “federally-related mortgage loans,” which are defined as loans secured by a first or subordinate lien on residential property which are:
15
Q
loans Made by a creditor regulated under the Truth-in-Lending Act,
A
RESPA applies to “federally-related mortgage loans,” which are defined as loans secured by a first or subordinate lien on residential property which are:
16
Q
Made by a mortgage broker and assigned to a creditor
A
RESPA applies to “federally-related mortgage loans,” which are defined as loans secured by a first or subordinate lien on residential property which are:
17
Q
Transactions involving a federally-related mortgage loan include most loans secured by a lien first or subordinate positions? for residential properties( T _ F )
A
Both True
18
Q
The definition of “federally-related mortgage loans,” the requirements of RESPA apply to
A
virtually every home loan secured by a mortgage. Because the definition is so broad
19
Q
Does RESPA apply to Loans for business, commercial, or agricultural purposes?
A
No
20
Q
Does RESPA apply to
A
Temporary financing, such as construction loans (if the loan may be converted to permanent financing by the same lender, the exemption does not apply)
21
Q
If temporary financing, such as construction loans (if the loan may be converted to permanent financing by the same lender, Temporary financing, such as construction loans (if the loan may be converted to permanent financing by the same lender, the exemption does not apply)does the exemption apply?
A
no
22
Q
Does RESPA apply to Loans for business, commercial, or agricultural purposes?
A
No
23
Q
Does RESPA apply to Loans secured by vacant land
A
no
24
Q
When is a loan secured by vacant land or unimproved property?
A
when no proceeds of the loan will be used to construct a one-to-four-family residential structure
25
If the proceeds from a loan will be used to locate a manufactured home or construct a structure within two years from the settlement date will it be exempt?
No
26
Does RESPA apply to loan assumptions which are permissible without lender approval
no
27
Does RESPA apply to Transactions between lenders and investors for the sale of a closed loan to a purchaser in the secondary market
no
28
Does RESPA apply to Loan conversions, when a new note is not required and the provisions are consistent with those of the original mortgage
no
29
RESPA section 8 covers?
prohibition against giving or receiving a fee, kickback, or “anything of value” pursuant to an “agreement or understanding” for the referral of settlement business.
30
There are a number of terms in RESPA that relate to the Section 8 prohibition
Affiliated business arrangement, Agreement or understanding, Bona fide discount point, Borrower credit, Fee-splitting and kickbacks, Markups
31
Many service providers have a business relationship and an ownership interest in other settlement service providers. For example, a mortgage company may have an ownership interest in a title company, What is this called( )is the relationship permissible under any circumstances?( )
Affiliated business arrangement
Yes, the relationship must be disclosed to a borrower through an “affiliated business arrangement disclosure.”
32
Can an agreement of understanding for a referral be stated or written
yes
33
Can an agreement of understanding for a referral be not written or verbalized but established through a practice, pattern, or course of conduct, to offer things of value in exchange for the referral of settlement business
yes
34
Discount points paid by the borrower which reduce the interest rate. Typically, one point is equal to 1% of the principal amount of the loan are known as
Bona fide discount point
35
Borrower credit also know as YSP an abbreviation for?
yield spread premium
36
the borrower credit is a fee paid to the borrower by the lender when a loan is originated at a higher interest rate than the lowest rate for which the borrower qualifies known as
yield spread premium
37
The borrower credit know as ( ) is used to
“yield spread premium”
subsidize closing costs, such as the origination or broker fee, because it is financed so that out-of-pocket closing costs are “borrowed” from the lende
38
Do RESPA nor Regulation X define “fee-splitting” or “kickbacks
No
39
Fee-splitting and kickbacks terms are generally understood to refer to
paying or accepting unearned fees, or marking up the fee for a particular settlement service and splitting the overage with another settlement service provider
40
Has the supreme court rules that Markups are a violation of RESPA
NO
41
Are there any instances where Markups are a violation of RESPA
when an upcharge is split between two parties. paying or accepting unearned fees, or marking up the fee for a particular settlement service and splitting the overage with another settlement service provider
42
While unilateral markups without fee-splitting do not violate RESPA, the Truth-in-Lending Act includes a rule stating
that the amount charged for settlement services may not exceed the amount actually received by the settlement service provider for that service (12 C.F.R. §1026.19(f)(3)(i))
43
Since marking up fees for settlement services may lead to litigation
the practice is one that should not be used without obtaining legal advice and consulting state law, as many states prohibit a lender from marking up third-party charges
44
a person, other than an employee of a lender, that renders origination services and serves as an intermediary between a borrower and a lender in a transaction that involves a federally-related mortgage loan. This includes persons that close loans in their own name in table-funded transactions
Mortgage broker
45
an action, either written or oral, that influences the selection of a provider of a settlement service.
Referral
46
borrowers depend on a number of settlement service providers to prepare for closing. Third-party services are provided by appraisers, inspectors, credit reporting agencies, title insurers, and loan processors.
Settlement service
47
Origination of a loan, including taking applications, loan processing, and underwriting and funding is an example of what type of service
Settlement service
48
Rendering of services by a mortgage broker, including counseling, taking applications, obtaining verifications and appraisals, loan processing and origination services, and communicating with a borrower/lender is an example of what type of service
Settlement service
49
Providing services related to origination, processing, or funding of a mortgage is an example of what type of service
Settlement service
50
Providing title services is an example of what type of service
Settlement service
51
Rendering of services by an attorney is an example of what type of service
Settlement service
52
Preparation of documents (notarization, delivery, recordation) is an example of what type of service
Settlement service
53
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Rendering of:
Credit reports
Appraisals
Inspections
is an example of what type of service
```
Settlement service
54
Conducting settlement by a settlement agent and related services
Providing services involving:
Mortgage insurance
Hazard, flood, or other casualty insurance
Homeowner’s warranties
Mortgage life, disability, or similar insurance
Real property taxes
Other assessments or charges on real property
Rendering of services by a real estate agent or broker
Providing any other services for which a settlement service provider requires payment
are examples of what type of service
Settlement service
55
a partnership or joint venture created between settlement service providers for the illegal purpose of splitting fees under the guise of a bona fide affiliated business arrangement.
Sham affiliated business arrangement
56
this term includes, but is not limited to, any payment, advance, loan, or service including money, discounts, commissions, salaries, stock, opportunities to participate in a money-making program, tickets to theatre or sporting events, services at special rates, and trips at another’s expense. This term also covers special financial arrangements, such as distributions of partnership profits, increased equity in a company, special banking terms, or the reduction of existing debt. The regulations state that the term “payment” is “synonymous with the giving or receiving of any ‘thing of value’ and does not require transfer of money” (12 C.F.R. §1024.14(d)
Thing of value
57
Loan Estimate is an example of what type of disclosure intended to provide consumers with the information that they need to shop for settlement services
mandatory disclosures required by RESPA
58
Closing Disclosure is an example of what type of disclosure intended to provide consumers with the information that they need to shop for settlement
mandatory disclosures required by RESPA
59
special information booklet, is an example of what type of disclosure intended to provide consumers with the information that they need to shop for settlement
mandatory disclosures required by RESPA
60
affiliated business arrangement disclosure is an example of what type of disclosure intended to provide consumers with the information that they need to shop for settlement
mandatory disclosures required by RESPA
61
disclosures related to mortgage servicing and escrow accounts, and, in certain transactions, the Good Faith Estimate and HUD-1 Settlement Statement. is an example of what type of disclosure intended to provide consumers with the information that they need to shop for settlement
mandatory disclosures required by RESPA
62
A special information booklet is due no later than
no later than three business days after a mortgage loan application is received or prepared
63
A special information booklet is due no later than three business days after a mortgage loan application is received or prepared, A special information booklet is due no later than three business days after a mortgage loan application is received or prepared
Your Home Loan Toolkit: A Step-by-Step Guide
64
This booklet:
Explains the settlement process
Tells borrowers that they have the right to negotiate the terms of a loan
Reviews the protections that RESPA creates for borrowers
Warns borrowers that their use of false information on a loan application can lead to loss of their home, a poor credit rating, and even criminal prosecution for fraud
“Your Home Loan Toolkit: A Step-by-Step Guide.”
65
The special information booklet must be provided by the lender, by in-person delivery or by placing it in the mail, within
three business days of receiving or preparing a mortgage loan application
66
If a borrower uses a mortgage broker, is it the mortgage broker’s responsibility to provide the booklet
yes
67
If there are multiple borrowers, such as spouses, is only one special information booklet disclosure necessary
Yes and it may be provided to any one of the borrowers.
68
Creditors are very limited in the changes they may make to the special information booklet and those changes are
add their contact information to its cover
The booklet may also be reproduced in any form, stamped with a mortgage professional’s contact information and translated into any language
69
The special information booklet can not
be combined into a larger document with other disclosures
70
Consumers who are shopping for an open-end loan, such as a HELOC, must receive an information brochure called
What You Should Know about Home Equity Lines of Credit
71
What You Should Know about Home Equity Lines of Credit was originally written by
the Federal Reserve Board
72
is the "What You Should Know about Home Equity Lines of Credit booklet required for a refinance
NO
73
is the "What You Should Know about Home Equity Lines of Credit booklet required for a A closed-end loan secured by a subordinate lien
no
74
is the "What You Should Know about Home Equity Lines of Credit booklet required for A reverse mortgage loan
no
75
If the lender denies the borrower’s application before the end of the three-business-day period for disclosure, is a special information booklet required
No
76
When must a settlement service provider disclose the an affiliated business arrangement to the loan applicant
at the time of making the referral (
77
Appendix D to Regulation X includes
recommended format and language for use in disclosing an affiliated business arrangement.
78
what is the record retention requirement for affiliated business arrangement disclosures
5 years
79
Describe the business arrangement, including the percentage of ownership interest of the referring party and service provider
Indicate that the referral may result in a financial benefit for the referring party
Estimate the costs that will be charged by the provider to whom the loan applicant is referred
Advise the borrower that he/she is not required to use the service provider to whom he/she was referred and that other providers are available (note, however, that lenders can require the use of a particular attorney, appraiser, and credit reporting agency are disclosures that must be made in the
Affiliated Business Arrangement Disclosure
80
RESPA and Regulation X impose a requirement on servicers to provide notice to consumers of any assignment, sale, or transfer of servicing. The entity that is making the transfer is known as the
transferor servicer
81
transferor servicer must provide notice to the consumer no less than
15 days before the effective date of the transfer of servicing
82
The entity that receives servicing rights is known as the
transferee servicer,” and must provide notice to the consumer no more than 15 days after the transfer.
83
the “transferee servicer,” must provide notice to the consumer no more than
15 days after the transfer.
84
Is a combined transfer notice from both servicers is permitted if provided to the consumer
yes as long as its at least 15 days before the effective date of the transfer.
85
The effective date of the transfer
A name, address, and toll-free phone number that the consumer can use to contact the transferee servicer for answers to questions about the transfer
The date on which the transferor servicer will no longer accept payments and the transferee will accept them (these must be the same date or consecutive dates)
An indication of whether the transfer will impact the continued availability of optional insurance products
A statement that the transfer does not change the terms or conditions of the mortgage are rights that must be outlines in the
notice of transfer of servicing rights
86
If a consumer sends an on-time payment to the transferor servicer during the 60-day period that begins on the effective date of the transfer, can the payment be treated as late for any reason
No
87
Requiring an annual escrow account analysis is an example of how regulation X
prevents loan servicers from overcharging for escrow payments
88
Limiting the cushion that a borrower must maintain to cover unanticipated disbursements to is an example of how regulation X( ) and that amount and that amount is
prevents loan servicers from overcharging for escrow payments
one sixth of the estimated total annual disbursements
89
Regulation x requires the refund of any surpluses greater than or equal to $50 within
30 days after completion of the escrow account analysis that reveals a surplus
90
Regulation x stipulates that the servicer may credit the amount towards the next year’s escrow payments
If the surplus is less than $50,
91
To ensure that borrowers know about amounts deposited into and disbursed from escrow accounts.
RESPA has established special disclosure requirements
92
When is the Initial escrow account statement given
this disclosure is typically given at settlement
93
How many days does the lender have to deliver the Initial escrow account statement
45 days from settlement to deliver it.
94
The mandatory disclosures that are related to escrow accounts include
the initial escrow account statement and the annual escrow account statement
95
Initial escrow account statement: this disclosure is typically given at( ) However, the lender has( ) days from settlement to deliver it
at settlement.
45 Days
96
The amount of the borrower’s mortgage payment and the portion that is deposited into the escrow account
Itemized estimated taxes, insurance, and other payments to be made from the escrow account during the computation year
The amount that the servicer has selected as a cushion are all required to be shown in the
A “trial running balance” (the accounting process used to reach target balances over the course of a computation year)
The initial escrow statement
97
Annual escrow account statement: this disclosure is due within
30 days
98
ECOA’s implementing regulations are known collectively as
Regulation B
99
The CFPB is the agency that is primarily responsible for implementing and enforcing
ECOA
100
the Office of Fair Lending and Equal Opportunity is directly responsible for enforcing
the Office of Fair Lending and Equal Opportunity is directly responsible for enforcing
101
Does the FTC also retains some of the authority that it historically held for enforcing the compliance of non-depository lenders, mortgage brokers, and mortgage loan originators with ECOA.
yes
102
ECOA applies to transactions for the extension of credit by any person who regularly
extends, renews or continues credit
103
Does Ecoa also apply to person who “…regularly refers applicants to creditors, or selects or offers to select creditors to whom requests for credit can be made.”
yes
104
Unlike RESPA and TILA, ECOA applies to
extensions of credit for business, commercial, and agricultural use.
105
what is HELOC
Home Equity Line of Credit
106
a creditor’s refusal to offer credit in the amount or according to the terms requested by a loan applicant (with the exception of a successful negotiation of loan terms and conditions between a creditor and an applicant). is known as
Adverse action
107
utilizing a factor, value, or weight that is less favorable to elderly applicants than warranted by the creditor’s experience, or that is less favorable than the factor is known as
Negative factor or value
108
Within ( ) days of receipt of a loan or credit application, lenders must notify consumers in writing of action taken
30 days
109
Where there is more than one applicant for a mortgage loan, Notice of Action Taken is only required to be given
False
110
Notice of Incomplete Application must be given within
30 days
111
A notice of the right to receive a copy of all written appraisals associated with the transaction is required ( ) and must be supplied within ( )days
a transaction involves a mortgage loan that will be secured by a first lien on a dwelling
3
112
A notice of the right to receive a copy of all written appraisals associated with the transaction is required ( ) and must be supplied within ( )days
a transaction involves a mortgage loan that will be secured by a first lien on a dwelling
3 of the loan application
113
A copy of all appraisals and other written valuations is require( ) and is due
When a transaction involves a mortgage loan that will be secured by a first lien on a dwelling
These are due “promptly” after they are completed or at least three business days prior to consummation, whichever is earlier. Borrowers may waive the timing requirement as long as they still receive an appraisal copy at or prior to consummation
114
Are notices of the right to receive a copy of all written appraisals and A copy of all appraisals and other written valuations required for second liens, other subordinate loans, and loans that are not secured by a dwelling (e.g., loans secured solely by land).
no
115
Exceptions to Providing the Appraisal Report Creditors must deliver a copy of an appraisal “promptly upon completion” or three business days prior to consummation, whichever is earlier; Unless
timing requirement may be waived by the borrower, and he or she may agree to receive a copy at or before consummation. In order to do this, the borrower must submit an oral or written request to the creditor three business days prior to consummation
116
If the creditor denies a loan application or the application is withdrawn by the consumer, the obligation to provide copies of valuations still exists. However, the deadline is extended to?
30 days after the date on which the creditor determines the transaction will not proceed
117
The Home Mortgage Disclosure Act (HMDA) is a
federal fair lending law that was enacted with the goal of discouraging redlining
118
after notifying an applicant of action taken or of incompleteness, the creditor must retain the following records:
Any application that it receives
Any information required to be obtained concerning the applicant’s characteristics for the purposes of monitoring ECOA compliance
Any other written or recorded information used in evaluating the application and not returned to the applicant
A copy of:
The Notice of Action Taken
The statement of specific reasons for adverse action taken
Any written statement submitted by the applicant alleging a violation of ECOA or Regulation B
For how long?
25 Months
119
When a creditor adopts a neutral policy without discriminatory intent, and the policy has a discriminatory impact, this is known as
disparate impact, and there is some potential for liability under ECOA
120
ECOA stands for
Equal Credit Opportunity Act
121
what does CCPA stand for
Consumer Credit Protection Act
122
what does TILA stand for
Truth in Lending Act
123
The regulations issued pursuant to TILA are known as
Regulation Z
124
The loans that are covered by TILA are subject to two sets of rules:
those for open-end credit and those for closed-end credit
125
There are three general terms that loan originators will encounter throughout the law and Regulation Z
application, business day, and consummation
126
With regard to transactions for mortgage credit, a complete application includes the following six pieces of information:
The consumer’s name
Social Security Number, which is used to obtain a credit report
Income
The address of the property to secure the loan
An estimate of the value of the property securing the loan
The loan amount sought
(12 C.F.R. §1026.2(a)(3)(ii))
127
One of the primary goals of TILA is the establishment
f uniform standards for stating the cost of credit.
