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Regulations Flashcards

1
Q

what is the Safeguard rule?

A

instructs lenders/businesses on how to keep their Customer’s information safe

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2
Q

what is the pretexting policy?

A

keeps others from gaining information from false pretenses (pretending)

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3
Q

what regulation does the Opt-Out Rule belong to?

A

Gramm Leach Bliley (GLBA)

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4
Q

which section of RESPA prohibits Kickbacks?

A

RESPA Section 8

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5
Q

what does section 6 of RESPA cover?

A

Servicing

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6
Q

What is the penalty for violating section 9 of RESPA?

A

Seller can be sued up to 3x the amount they charged the buyer (Treble Damages)

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7
Q

What does RESPA section 9 cover?

A

Title/ Title Insurance

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8
Q

what does RESPA section 10 cover?

A

Escrow Account Limits

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9
Q

what is the limit on escrow accounts?

A

Monthly limit (1/12 of annual amount)

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10
Q

how much escrow can be collected at closing?

A

up to 2 months

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11
Q

what is the amount of excess in escrow that will be returned to the borrower after the annual escrow analysis?

A

any amount $50 or more will be returned to the borrower

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12
Q

what are the application steps?

A
  1. address
  2. Loan amount
  3. Income
  4. Estimated Value
  5. Name
  6. Social Security Number
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13
Q

within how many days must the must the Initial Disclosure be given to the borrower?

A

within 3 business days of the application

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14
Q

what are the exceptions that could stop the initial disclosure?

A
  1. the borrower withdraws

2. the Lender turns down the loan within 3 business days

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15
Q

what information must the lender provide the borrower during the initial disclosure?

A
  • Home loan Toolkit
  • Loan Estimate
  • Mortgage servicing disclosure
  • HUD approved counselor List
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16
Q

what information is provided to the borrower before signing?

A
  • any affiliated business arrangement disclosure (AFBA)

- closing disclosure

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17
Q

how much ownership of a business must a broker have to require an AFBA?

A

at least 1% ownership

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18
Q

what must be provided to the borrower at closing?

A
  • Final Closing Disclosure

- Initial Escrow Statement

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19
Q

How long after closing must the Initial Escrow Statement be provided?

A

45 days

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20
Q

when does the servicer provide the servicing transfer statement?

A
  • 15 days prior to leaving the borrower

- 15 days prior to servicing the new borrower

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21
Q

what transactions does RESPA not cover?

A
  1. Agriculture (25 acres or more)
  2. Business/ commercial
  3. Cash sale
  4. Temporary financing
  5. Vacant land
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22
Q

what should the lender provide the borrower when selling them an ARM loan?

A

CHARM Booklet

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23
Q

what is another name for the APR?

A

the Effective Rate

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24
Q

what is another name for the interest rate?

A

Note rate/ Nominal rate

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25
what are the penalties for violating TILA?
- $5,000 for a single violation - $25,000 for reckless violation - $1,000,000 for knowingly violating
26
what is the amount of time for a W2/ self-employed borrower to meet underwriting income standards?
2 years
27
what is the anti flip policy on FHA loans?
a borrower cannot purchase a home from a seller that recently bought a property within the past 90 days
28
what does the MARS rule prevent?
prevents any upfront/ unearned fees
29
how many installments on a transaction until TILA regulations kick in?
anything more than 4 installments
30
if a borrower decides to rescind, how long does the lender have to return any money collected related to the loan?
within 20 calendar days
31
when does the 3 day cooling period begin?
the day after signing
32
when do funds reach the borrower after the cool off period ends?
midnight of the third day
33
what how many copies of the disclosure must each borrower receive?
2 copies for EACH borrower on the loan
34
what are the exceptions to the 3 day cool off period?
1. Purchases 2. 2nd home 3. construction/ commercial property
35
what happens to the right of rescission if the borrower is not properly notified?
Extends to 3 years
36
what fee can be collected before any disclosures?
Credit report fee
37
how long must TILA disclosures be kept?
2 years
38
how long must the Loan estimate be kept?
3 years
39
How long must the Closing Disclosure be kept?
5 years
40
what are the 3 credit reporting bureaus?
1. Equifax 2. Experian 3. TransUnion
41
what form is used to verify tax records?
4506T
42
what the purpose of the Patriot Act?
- to identify terrorist threats | - run background checks
43
what is the borrower entitled to if denied based on their credit report?
- a copy of the credit report | - the information on the credit agency that was used to provide their information
44
what are the reasons for a borrower to receive a free copy of their credit report?
- if denied due to Adverse Action - if a victim of Identity Theft - if a victim of Fraud - if on Public Assistance
45
how long does negative information stay on a credit report?
7 years
46
how long does a bankruptcy stay on a credit report?
10 years
47
how long do criminal convictions remain on a credit report?
Forever
48
what HOEPA section is a high Cost loan?
section 32
49
what HOEPA section is a high Priced loan?
section 35
50
what is the rate trigger for a high priced loan?
if the APR exceeds the APOR by: - 6.5% on the first lien - 8.5% on the 2nd lien
51
what is the 1st trigger test for higher priced loans?
if (loan amount) x (points and fees) exceed the threshold | -
52
what is the second trigger test for higher cost loans?
if the APR > (APOR + 1st lien trigger)
53
what is the 3rd trigger test for higher priced loans?
if the Lender charges pre-payment penalty greater than 2% OR if Lender charges pre-payment penalty longer than 36 months
54
what are the protected classes according to ECOA?
- sex - race - religion - color - national origin - age - marital status - public assistance
55
how long does the lender have to notify the borrower of their decision after receiving the application?
30 days
56
how long does the borrower have to request the appraisal report?
90 days (3 months)
57
how long does the lender have to send the appraisal report after it has been requested by the borrower?
30 days (1 month)
58
what is sent if the lender decides to move forward?
the commitment letter
59
how long must ECOA disclosures be kept?
25 months
60
what is the penalty for violating ECOA?
$10,000 per violation
61
what is the earliest day to sign after disclosures are delivered?
the 7th business day
62
when is the Initial Disclosure required after receiving the application?
within 3 business days
63
how many days before closing must any change of circumstance be sent to to the borrower?
4 days
64
how much can the APR vary from the initially disclosed rate on a traditional 30 year mortgage?
1/8 (.125) on a fixed
65
how much can the APR vary on a non-traditional mortgage?
1/4 (.25) on an ARM
66
what does MAP prohibit?
any deceptive or misleading advertising
67
how long are government appraisals?
6 months
68
how long are conventional appraisals?
4 months
69
when is the appraisal provided to the borrower?
3 days before close
70
what are the 3 methods of appraisals?
1. cost approach 2. income approach 3. sales comparison
71
how does the income approach measure value?
measures value through rental income
72
how does the sales comparison find value?
uses comparable properties within 1 mile that have been sold in the past 6 months
73
what does the cost approach refer to?
land
74
what are the adjustment limits on a sales comparison?
cannot exceed more than 25% of the gross | and 15% of the net
75
which type of title insurance is ALWAYS required on a transaction?
Lender's title insurance
76
how soon must errors on a closing disclosure be corrected?
within 30 days
77
who does ownership extend to in Tenancy in Common?
ownership rights extend to estate/heirs, not partnership
78
who does ownership extend to in Tenancy in Entirety?
spousal ownership
79
who does ownership extend to in Joint Tenancy?
ownership extends to partners
80
what is the Anti-Steering form?
the form disclosing 3 mortgage options
81
what is the GFE under TRID?
Loan Estimate
82
what is the HUD1 under TRID?
the Closing Disclosure
83
what section of TILA is HOEPA?
section 32
84
what is the Acceleration Clause
when the lender can demand full payment of borrower defaults
85
what is the Alienation Clause?
when the borrower decides to sell home, the lender can demand payment
86
what are the VA funding fees?
- 3.6% (cash out) - .5% (IRRRL) - 0% for 10% disability or more - 2.3% (first time) - 1.4% (for 10% or more down payment)
87
what is the FHA funding fee?
1.75% UFMIP
88
what are the Qualified Mortgage qualifications?
- 3% of loan amount if >$110,260 - $3,308 if >$66,150 but <110,260 - 5% of loan amount if >$22,052 - $1,103 if > $13,737 but < $22,052 - 8% of loan amount if < $13,783
89
what regulation considers child support and alimony as income ?
Regulation B ECOA
90
how long must child support continue to be considered as income?
3 years
91
what act allows the borrower to freeze their credit?
FACTA
92
what is a silent 2nd?
a 2nd mortgage not reported on credit report, but will show up on the title
93
processor vs underwriter?
- Processor gathers information to send to underwriter | - Underwriters use the information to write rules
94
What begins March 1st?
HMDA
95
what are the different names for an application?
- URLA - 1003 - 65
96
what is ZERO Tolerance?
"on the lender" | -the amount does not change
97
what is 10% tolerance?
the amount can vary up to 10% if the lender chooses the lender option
98
what is NO Tolerance?
"on the buyer" | -the amount can vary to any amount
99
what is form 1004
the Appraisal
100
what is form 1005?
VOE- employment
101
what is form 1006
VOD- Deposit
102
what is form 1008?
the Summary
103
what is CAVERS?
a report ran to see if there's any Federal Debt

NMLS Exam (4 decks)

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