General - Chapter 9 Lesson 3 Flashcards
Dodd-Frank Wall Street Reform + Consumer Protection Act
promote financial stability of US by improving accountability and transparency in the financial system, protect the American taxpayer by ending bailouts, and protect consumers from abusive financial services practices
Title X - Consumer Financial Protection Act
CFPB was created, tasked with/ enforcing consumer financial protection laws to prevent financial practices that are unfair, deceptive, and abusive
Title XIV - Mortgage Reform and Anti-predatory Lending Act
steps to address what congress considered abusive or predatory lending practices in the mortgage industry (apply new minimum qualifying standards, verification of ability to repay, and establish penalties for irresponsible lending)
Truth-in-lending Act + Real Estate Settlement Procedures Act
two federal laws that set forth the majority of requirements that lenders must adhere to throughout the mortgage loan process (enforced and interpreted by the consumer Financial Protection Bureau)
RESPA - Regulation X
goal is to protect consumers by requiring lenders to promptly disclose actual closing costs in a timely manner (special information booklet)
RESPa does not apply to…
finance purchase of 25+ acres, vacant land, buyer takes over an existing first lien loan
RESPA prohibits the lender from holding excess money in
impound or escrow accounts
RESPA requires…
disclosure of affiliated business arrangments
RESPA prohibits the seller from…
requiring the buyer to use a specific company for title insurance
TILA - Regulation Z
purpose is to promote the informed use of consumer credit by requiring a uniform system for disclosing loan terms and the actual, total costs involved in acquiring credit
TILA apply to
most creditors
Reg-Z regulates advertising of consumer loans
if any triggering credit terms are advertised regarding a real estate property listing, other than purchase price and APR, Reg Z requires the ad to include full financial disclosure (down payment requirement and APR, type of loan, terms of the loan and monthly payment, loan origination fees and discount points that are to be paid by the borrower, mortgage insurance premiums or any additional charges to be paid by the borrower
Considered triggering credit terms in advertising
only 5% down, 30-year mortgage, $500 down payment, $350 monthly payments
Do no invoke full disclosure
zero down, low down payment, affordable rates, or easy terms
TILa requires creditors to make…
reasonable and good faith determination of a consumer’s ability to repay any residential mortgage loan and identifies the factors a creditor must consider when making that determination
rescind
take back or withdraw an offer or contract
right of rescission
applies to any credit transaction involving the establishment of a security interest
principal residence
home equity loans, home improvement loans, refinances, home equity lines of credit
right of rescission does not apply to…
purchase loans, construction loans, commercial loans, and loans on vacation or second homes
Consumers may exercise the right to rescind the credit transaction until…
midnight of the third business day following loan consummation
TRID rule
consolidated four disclosure forms into two (loan estimate and closing disclosure)
Loan estimate
provides mortgage loan applicants with detailed information about the loan terms, settlement service provider charges, closing costs, and features of the loan program the borrower is considering (amount financed, total finance charges, payment details, and a good faith estimate of closing costs)
APR
reflects the true cost of borrowing money
Closing Disclosure
statement showing the finalized settlement costs of the loan transaction
lender
legally responsible for ensuring that the borrower receives it
Lenders must provide a final closing disclosure at settlement that provides…
the actual final details about the borrower’s loan
TRID disclosure timeline
3 business days between completed loan application and loan estimate + closing disclosure and consummation
