Financing Legislation

Question 1

Regulation Z

Answer 1

Enacted by the federal reserve board to enforce the TILA, requires that credit institutions inform borrowers of the true costs of obtaining credit.
Generally applies when a credit transaction is secured by a residence. Does not apply to business or commercial loans or agricultural loans.

Question 2

Truth in Lending Act

Answer 2

A consumer must be fully informed of all finance charged and the true cost of financing before a transaction is completed. Must disclose any loan fees, finder fees, service charges, points, and interest. Must disclose APR.

Question 3

Helping families save their homes Act

Answer 3

2009, amended tila by requiring that consumers are to be notified of the sale or transfer of their mortgage loans. Must provide disclosure no later than 30 days after date on which loan was sold

Question 4

Creditor

Answer 4

For purposes of regulation Z, is any person who extends consumer crédité more than 25 x a year, no more than 5 times each year if transactions involve dwellings as security.

Question 5

3-business-day right of recession

Answer 5

The borrower has 3 business days in which to rescind (cancel) the transaction by notifying the lender.
THIS right of recession does not apply to owner occupied residential purchase money or first mortgage or deed of trust loans. Applies to refinancing a home mortgage or a home equity loan

Question 6

Provides strict regulations of RE advertisement. Can say “flexible terms available” but if details are given they must state the APR

Answer 6

If variable mortgage is advertised, must state

• the number and timing of payments
• the amount of the largest and smallest payments
• a statement of the fact That the actual payments will vary between these two extremes

Question 7

Triggering terms

Answer 7

Specific credit terms- down payment, monthly payments dollar amount of financing charge, terms of loan, etc.
Can not be used in advertising unless includes
-cash price
-required down payment
-number, amount, and due dates of all payments
-annual percentage rate
-total of all payments to be made

Question 8

Equal credit opportunity act

ECOA

Answer 8

Prohibits discrimination in the lending process based on the credit applicants race, color, religion, national origin, sex, marital status, age, or receipt of public assistants. Only to be considered on the basis of income, the stability of the source of that income, net worth, and credit rating.
Enforced by federal trade commission and department of justice

Question 9

If loan rejected

Answer 9

Federal fair credit reporting act requires that the lender detail the reasons for the rejection in a statement that must be provided to the applicant within 30 days.

Question 10

Community reinvestment

Answer 10

Refers to the responsibility of financial institutions to help meet their communities needs for low-income and moderate-income housing.

Question 11

Community reinvestment act of 1977

Answer 11

Updated 1995 and 2005; financial instituons are expected to meet the deposit and credit needs of their communities; participate and invest in local community development and rehabilitation projects; and participate in loan programs for housing, small businesses, and small farms.

Question 12

Real Estate Settlement Procedures Act

RESPA

Answer 12

Applies to any residential real estate transaction involving a new first mortgage loan. Is designed to ensure that the buyer and seller are both fully informed of all costs related to closing the transaction.

Question 13

Underwriters must consider

Answer 13

Collateral, credit reputation, and capacity