RESPA Flashcards
1
Q
What is RESPA applicable to?
A
All federally related mortgage loans
2
Q
What is a federally related mortgage loan?
Two categories to be satisfied (category 2 has 5 sub categories)
additional 3 loans that apply outside of the two categories
A
Loans (non temp), including refinancings that satisfy the following two criteria:
-Loan is secured by first or sub lien on residential real property, located within a state (1-4 families, construction to perm, construction only with term of 2+ yrs, condos, cooperatives, manufactured homes)
-Loan falls into one of the following:
–made by lender, creditor, or dealer
–insured by fed agency
–made in connection with HUD program
–intended to be sold to FNMA, GNMA, or FHLMC
–subject of a home equity conversion or reverse mortgage issued by a lender or creditor
Federally related mortgage loans also include:
-installment sales contracts
-land contracts
-contracts for deeds on otherwise qualifying residential property
3
Q
What transactions are exempt from RESPA? (7)
A
-loan primarily for business, commercial, or agriculture
-temp loan (construction only loan of 2 yrs or less, or more but made to a contractor)
-Bridge/ swing loans
-loan secured by vacant or unimproved property, where no proceeds will be used to construct a 1-4 fam, locate a manufactured home or construct a structure within 2 yrs from settlement
-assumption that does not require lender approval
-conversion of loan to different terms which are consistent with provisions of original mortgage, as long as new note is not required
-bona fide transfer of a loan to secondary market (mortgage servicing requirements still apply)
4
Q
What disclosures do open-end reverse mortgages receive?
A
Open-end disclosures rather than GFEs or HUD-1s
5
Q
Most closed end mortgages are exempt from the requirement to provide what disclosures?
Why?
A
GFE, HUD-1 settlement statement, and application servicing disclosures.
Instead these loans are subject to disclosure, timing, and other requirements under TRID.
6
Q
What types of loans are partially exempt from RESPA disclosures? (2)
A
-Mortgage loans subject to TRID
-no interest loans secured by subordinate liens made for the purpose of down payment or similar home buyer assistance, property rehabilitation, energy efficiency, or foreclosure avoidance.
7
Q
What loan types use the TRID Disclosures? (3)
A
-most closed end mortgage loans
-construction only loans
-Loans secured by vacant land or by 25 or more acres
8
Q
What loan types use the existing TIL, RESPA disclosures (HUD-1, GFE)? (3)
A
-HELOCs (TILA disclosures)
-Reverse mortgages (TILA and GFE disclosures)
-Chattel-secured mortgages (TILA disclosures not RESPA)
9
Q
When is the Special information booklet required to be provided?
A
For mortgage loans not subject to TRID:
-at the time a written application is submitted, or
-no later than 3 business days after the application is received
The Special Information Booklet may also be required under 12 CFR 1026.19(g) for those closed-end mortgage loans subject to the TILA-RESPA Integrated Disclosure Rule. A discussion of those requirements is located in the Regulation Z examination procedures
10
Q
For what loan types does the Special information booklet not need to be provided? (4)
A
-refinancing transactions
-closed-end subordinate lien mortgage loans
-reverse mortgage transactions
-federally related mortgage loan not intended for the purchase of 1-4 fam
11
Q
What loan types are required to receive a good faith estimate?
A
Closed-end reverse mortgages
12
Q
When is the GFE required to be provided to customers?
A
Within 3 business days of receipt of an application.
The LO is not required to provide it if within the 3 days the application is denied or withdrawn.
13
Q
What 6 pieces of information are needed from a borrower to be considered an application?
A
- Name
- Gross monthly income
- SSN for credit report
- Property address
- Estimate of property value
- Mortgage loan amount sought
14
Q
Can a LO require, as a condition of providing the GFE, that the borrower provide supplemental documentation to verify the information provided by the borrower on the application?
A
No, however, the LO is not prohibited from using its own sources to verify information or requesting information beyond the 6 pieces required for an application.
Additionally, supporting documentation can be requested for verification after the GFE has been issued in order to complete final underwriting.
15
Q
Can an LO charge a borrower a fee to obtain a GFE?
A
No, unless the fee is limited to the cost of the credit report.
16
Q
True or false: A GFE is required for a open-end line of credit.
A
False, the GFE is not required for open-end lines of credit. Disclosures for this loan type are required under TILA.
17
Q
True or false: Regulation X establishes a minimum period of availability for which an interest rate must be honored.
A
False, the loan originator must determine the expiration date for the interest rate of the loan stated on the GFE.
18
Q
Does RESPA require that the estimated settlement charges and loan terms listed on the GFE be honored by the loan originator?
A
Yes, they must be honored for at least 10 business days from the date the GFE was provided.
19
Q
Where must the interest rate expiration date and period of availability be listed on the GFE?
A
In the important dates section of the form.
20
Q
What is required to be included as part of the Origination Charge Note in Block 1 of Block A on the GFE?
A
Disclosure of all charges that the LOs involved in the transaction will receive for originating the loan (excluding charges for points).
Lender processing and underwriting fees, any fees to the mortgage broker.
21
Q
What is the tolerance of the Origination Charge Note in Block 1 of Block A of the GFE?
A
Zero Tolerance, this amount cannot change in settlement.
22
Q
What is the definition of a mortgage broker under RESPA?
A
Person or entity (not an employee of lender) that renders origination services and serves as an intermediary between a lender and a borrower in a transaction involving a federally related mortgage loan, including such person or entity that closes the loan in its own name and table funds the transaction.
23
Q
For a transaction on a reverse mortgage involving a mortgage broker, what is required to be disclosed in Block 2 of Block A of the GFE?
A
Disclosure of a “credit” or charge (points) for the rate chosen. This is the same as the net payment to the mortgage broker (sum of all payments base on loan amount, flat rate/compensation, and in a table funded transaction the loan amount less the price paid for the loan by the lender)
24
Q
Is it a credit or a charge on the GFE when the net payment to the mortgage broker from the lender is positive?
A
Credit to the borrower and it is disclosed as a negative amount.
For example, if the lender pays a yield spread premium to a mortgage broker for the loan set forth in the GFE, the payment must be disclosed as a “credit” to the borrower for the particular interest rate listed on the GFE (reflected on the GFE at Block 2, checkbox 2).
25
Are points paid by the borrower for the interest rate chosen considered a credit or charge on the GFE?
Charge
GFE at Block 2 third checkbox
26
Can a loan include both a charge (points) and a credit (yield spread premium)?
No
27
Are loan originators required to include information about alternative loan options in the trade off table on page 3 of the GFE?
No, this can be provided at the LOs option.
There is also a shopping cart on page three that allows the consumer to fill in loan terms and settlement charges from other lenders or brokers to compare loans.
28
What can a LO do if the settlement charges exceed the charges listed on the GFE by more than the permitted tolerances?
They may cure the tolerance violation by reimbursing the borrower the amount by which the tolerance was exceeded, at settlement or within 30 calendar days after settlement.
29
What fees from the GFE fall into the zero tolerance category? (4)
-LO origination charges, including processing and underwriting fees
-credit or charge to interest rate chosen (yield spread/points) while rate is locked
-adjusted origination charge while the rate is locked
-state/local property transfer taxes.
30
What fees from the GFE fall into the 10% tolerance category? (3)
(for this category of fees, while each fee my increase or decrease, the sum of the charges at settlement may not be greater than 10% above the sum of the amounts included on the GFE)
-LO required settlement services (LO selects third party settlement provider)
-LO required services, title services, required title insurance and owner's title insurance when the borrower selects a third party provider identified by the LO
-Govt recording charges
31
What fees from the GFE fall into the No tolerance category (5)?
(these are not subject to any tolerance restriction, they can change without any limitation)
-LO required services where the borrower selects their own provider
-Title services, lenders title insurance, owners title insurance when borrower selects their own provider
-Initial escrow deposit
-Daily interest charges
-Homeowner's insurance
32
The Lender is bound to the terms outlined in the GFE (tolerances provided) unless what?
Unless a new GFE is provided prior to settlement typically due to changed circumstances
33
What are the 4 "changed circumstances" under RESPA, which allow the lender to provide a new GFE?
-acts of god, war, disaster, or other emergency
-information particular to the borrower or transaction that was relied on in providing the GFE that is found to be inaccurate after the GFE has been provided
-new info particular to the borrower or transaction that was not relied on in providing the GFE
-Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems.
34
What does changed circumstances not include?
Changed circumstances do not include the borrower’s name, the borrower’s monthly income, the property address, an estimate of the value of the property, the mortgage loan amount sought, and any information contained in any credit report obtained by the loan originator prior to providing the GFE, unless the information changes or is found to be inaccurate after the GFE has been provided.
In addition, market price fluctuations by themselves do not constitute changed circumstances
35
What are changed circumstances affecting settlement costs?
circumstances that resulted in increased costs for settlement services such that the charges at settlement would exceed the tolerances
36
What are changed circumstances affecting the loan?
circumstances that affect the borrower's eligibility for the loan.
37
What should be done if the underwriting verification indicates the borrower is ineligible for the loan provided in the GFE?
The LO is no longer bound to the original GFE. If a new GFE will be provided it must be done within 3 business days of receiving the new info and must document the reason the new GFE was provided.
38
Can information collected prior to issuing the GFE later become the basis for a "changed circumstance"?
Not unless it can demonstrate:
-there was a change in the particular info
-info was inaccurate
-that the LO did not rely on that particular info in issuing the GFE.
The LO must document the reasons for issuing the revised GFE, such as non-reliance on such info or the inaccuracy of such info.
39
Can the origination charge on the GFE (Block 1 pg2) change due to an expired interest rate lock, or a rate that has not been locked?
What about any other interest rate dependent charges?
No, this would only change if there is a changed circumstance or borrower requested change.
However, if the interest rate is locked or changes then all interest rate dependent charges are subject to change. The LO would need to provide a new GFE showing the revised interest rate dependent charges and terms. All other charges and terms must remain the same as on the original GFE (unless changed circumstances or borrower request result in increased cost for settlement services or change the borrowers eligibility)
40
What special circumstances apply when providing a revised GFE on new home purchases?
For new home purchases, where settlement is expected to occur more than 60 calendar days from the time the GFE was provided, the LO may disclose on the GFE that any time up to 60 calendar days prior to closing the LO may issue a revised GFE.
If the LO does not provide such a disclosure they cannot issue a revised GFE except as otherwise provided by RESPA.
41
Are volume based discounts a violation of RESPA section 8?
Discounts negotiated between LOs and other settlement service providers, where the discount is ultimately passed on to the borrower in full, is NOT, depending on the circumstances of a particular transaction, a VIOLATION.
42
What is a HUD-1?
What is the HUD-1A?
For closed-end reverse mortgages, the document that the settlement agent must provide to the borrower at or before settlement. This doc itemizes all charges imposed on the buyer and seller in connection with the settlement. This is used for transactions where there is a buyer and seller.
HUD-1A can be used for transactions with no seller (sub liens, refinance). In these situations a HUD-1 may be completed by using the borrower's side of the settlement statement or using the HUD-1A
43
Are HUD-1 (settlement statements) required for home equity plans?
No, subject to TRID instead.
44
When reimbursing a consumer for settlement charges over tolerance, when should a creditor provide the reimbursement by?
A borrower will be deemed to have received timely reimbursement if the financial institution delivers or places the payment in the mail within 30 calendar days after settlement.
45
Are inadvertent or technical errors on a settlement statement considered a violation of RESPA?
Yes, unless a Revised HUD-1/1A is provided to the borrower within 30 calendar days after settlement.
46
True or false:
The LO must provide the information included in the "loan terms" section of the HUD-1 form to the settlement agent in a format that permits the agent to enter the info in the appropriate spaces without having to refer to the loan documents.
True
47
Are creditors permitted to list an average charge for a settlement service on the HUD-1 or GFE?
Yes, they are permitted to use an average rather than the exact cost for service as long as the charge is computed according to 1024.8(b)(2).
Also this is only permitted for third party vendor charges, not so for the provider's own internal charges.
Cannot be used where the charge is based on the loan amount or value of the property.
48
When does a one-day advance inspection of the settlement statement apply?
For closed end reverse mortgages and upon request by the borrower, the doc must be completed and available for inspection during the business day immediately proceeding the day of settlement.
49
Who should receive the HUD-1? (4)
-borrower
-seller (if applicable)
-lender(if not settlement agent)
-settlement agents
50
Can a creditor charge a fee for preparing the settlement statement, escrow statement, or other TILA disclosure?
NO
51
What is prohibited under RESPA section 8? (2)
Violations: Kickbacks and Unearned fees
-any person who gives or accepts a fee, kickback, or thing of value (payments, commissions, gifts, special privileges) for the referral of settlement business
-any person who gives or accepts any portion, split or % of a charge for RE settlement services other than services actually performed.
52
Is it a violation of RESPA section 8 if a single party charges and retains a settlement service fee, and that fee is unearned or excessive?
No this is not a violation
53
What are the penalties and liabilities for violating RESPA section 8? (3)
-Civil liability equal to 3x the amount of any charge paid for such settlement service
-possibility of paying attorney fees and costs
-Fine not more than $10,000 or imprisonment for not more than 1 year or both.
54
What is an affiliated business arrangement?
If an LO or associate has either an affiliate relationship or a direct or beneficial ownership interest of more than 1% in a provider of settlement services and the LO directly or indirectly refers business to the provider
55
Are affiliated business relationships a violation of RESPA section 8?
No as long as the person making the referral has provided each person whose business is referred an Affiliated Business Arrangement Disclosure (Appendix D).
56
What must be disclosed on an Affiliated Business Arrangement Disclosure? (2)
-Nature of the relationship (expl ownership and financial interest) between the provider and the LO
-Estimated charge or range of charges generally made by such provider.
57
When is the Affiliated Business Arrangement Disclosure required to be provided?
At the time of Loan application, with the GFE, or at the time of referral.
58
Can a LO require the use of an affiliated provider?
No, however there are some exceptions including attorney, credit reporting agency, and appraiser.
59
True or false: Sellers can require borrowers use a particular title insurance company as a condition of selling the property.
False, This is prohibited.
60
What amount of escrow funds can be collected at settlement or upon creation of an escrow account?
The amount is restricted to only what is sufficient to pay taxes and insurance from the date of the last payment until the initial payment date
61
What can a servicer charge a borrower monthly for escrow?
A monthly sum equal to 1/12 of the total annual escrow payments the servicer reasonably anticipates paying from the account.
The servicer may add an amount to maintain a cushion no greater than 1/6 of the estimated total annual payments from the account.
62
What must a confirmed successor in interest be treated as?
A borrower
63
Before establishing an escrow account a servicer must do what?
Conduct and analysis to determine the periodic payments and the amount to be deposited in the account.
64
What must be provided to a customer if a transfer in servicing occurs and the new servicer changes the monthly payment or the accounting method used by the old servicer?
The new servicer must provide the borrower with an initial escrow account statement within 60 days of the date of transfer.
65
What must a servicer do annually regarding escrow accounts?
They must conduct an annual escrow account analysis to determine if a surplus, shortage, or deficiency exists.
66
What should a servicer do if the annual escrow account analysis discloses a surplus?
What if is is less than $50?
If the mortgage payment is current:
They shall refund the surplus to the borrower if it is greater or equal to $50. This must be done within 30 days of the date of the analysis.
If it is less than $50, the servicer can still return it to the borrower or credit it against the next year's escrow payments.
67
What should a servicer do if the annual escrow account analysis discloses a shortage of less than one month's escrow payments? (3)
Possible courses of action:
-allow shortage and do nothing
-require the borrower to repay the shortage amount within 30 days
-require the borrower to repay the shortage amount in equal monthly payments over at least a 12 mo period.
68
What should a servicer do if the annual escrow account analysis discloses a shortage greater or equal to one month's escrow payment? (2)
Possible courses of action:
-allow shortage or do nothing
-require borrower to repay in equal monthly payments over at least 12 months.
69
What should a servicer do if the annual escrow account analysis discloses a deficiency less than one month's escrow account payment? (3)
-allow the deficiency
-require repayment within 30 days
-require repayment in two or more equal monthly payments
70
What is the difference between a shortage and a deficiency in escrow accounts?
Shortage: Balance is positive but there isn't enough to pay tax and insurance for the future
Deficiency: Balance is negative. Likely due to the servicer having to advance funds to pay taxes and insurance on the borrower's behalf.
71
What should a servicer do if the annual escrow account analysis discloses a deficiency greater or equal to one month's escrow payment? (2)
-allow it
-require repayment in two or more equal monthly payments
72
Does a servicer need to notify the borrower if a shortage or deficiency exists in the account?
Yes they must notify the borrower at least once during the computation year.
73
When does the servicer need to submit the Initial escrow account statement to the borrower?
What should it include? (6)
At settlement or within 45 calendar days of settlement for escrow accts established as a condition of the loan.
Includes:
-monthly mortgage payment
-portion going to escrow
-itemize estimated taxes, insurance premiums, and other charges
-disbursement date of charges
-amount of cushion
-trial running balance.
74
When should a servicer submit to the borrower an annual escrow account statement?
And only after what?
Within 30 days of the completion of the computational year.
Only after the servicer has conducted an escrow account analysis.
75
What must be included as part of the annual escrow account statement? (9)
-account history
-projections for the next year
-current mortgage payment and portion going to escrow
-amount of past year's monthly mortgage payment and portion that went to escrow
-total amount paid into the escrow account during past year
-amount paid from the account to taxes, insurance premiums and other charges
-balance at the end of the period
-explanation of how surplus, shortage or deficiency is being handled
-If applicable, reasons by estimated low monthly balance was not reached.
76
What is a short year statement and why is it used?
Can be issued to end the escrow account computational year and establish the beginning date of a new computational year.
Provided upon transfer of servicing or within 60 days of receiving pay off funds.
77
Can a servicer force place insurance if it is able to disburse funds from the borrowers escrow account to maintain hazard insurance?
What about for small servicers?
No they may not force place unless they are unable to disburse funds from the borrower's escrow account to maintain insurance.
A servicer is unable to disburse funds only if the servicer has a reasonable basis to believe that either the borrower's property is vacant or the borrower's hazard insurance has terminated for reasons other than non-payment.
Small servicers have a limited exemption in this matter. They may purchase force placed insurance and charge the borrower for the cost of that insurance if it is less than the amount the servicer would need to disburse to ensure timely payment of the hazard insurance premium.
78
When must a servicer pay escrow disbursements?
By the disbursement date. This can be calculated by the servicer using the date on or before the deadline for payment (taxes/insurance) or may make annual lump sum payments to take advantage of a discount.
79
What qualifies as a small servicer? (3)
As of Jan 1st of most recent year:
-services (with affiliates) 5000 or fewer mortgage loans, all of which they are the creditor or assignee
-they are a housing finance agency
-they are a non-profit entity that servicer 5000 or fewer mortgage loans, for which they are also the creditor
80
how long does a servicer have to get into compliance if they are no longer a small servicer?
they have 6 mos from the time it ceases to qualify or until Jan 1 whichever is later.
81
What types of mortgage loans are not considered in determining if a servicer qualifies as a small servicer? (4)
-mortgage loans serviced where the servicer does not receive any compensation or fees
-reverse mortgages
-timeshare secured mortgages
-certain seller financed transactions.
82
Are creditors required to provide the Homeownership counseling organizations list to all loans?
What are they required to provide?
No just to federally related mortgage loans except reverse mortgages or timeshare mortgages.
The lender must provide a clear and conspicuous written list of homeownership counseling services in the loan applicant's location, no later than 3 business days after receipt of application.
83
What types of applications does mortgage servicing (RESPA) apply to?
Early intervention, continuity of contact, and loss mitigation only apply to a mortgage loan secured by a principal residence.
Mortgage loan includes refinances, but does not include HELOCs.
84
Can a servicer that is a debt collector treat a confirmed successor in interest as a "consumer" under the FDCPA?
Yes because a consumer under the FDCPA includes any person who meets the definition of a confirmed successor in interest.
85
What is a successor in interest? (5)
Person who has an ownership interest in property securing a mortgage loan through:
-transfer by devise, descent, or operational law on death of joint tenant/tenant by entirety
-Transfer to relative resulting from death of borrower
-Transfer where spouse or child become owner of borrower's property
-transfer through divorce, legal separation, incidental property settlement agreement where spouse becomes owner
-Transfer to an inter vivos trust where borrower remains beneficiary and does not relate to transfer or occupancy rights.
86
What is a confirmed successor in interest?
Successor in interest where the servicer has confirmed their identity and ownership interest in the property.
87
What is the definition of delinquency for the purpose of periodic statements?
Borrower's mortgage loan is considered delinquent beginning on the date a payment sufficient to cover principal, interest, and escrow (if applicable), becomes due and unpaid.
The borrower remains delinquent until no periodic payment is due and unpaid (even if the borrower is afforded a period after the due date to pay before the servicer assesses a late fee).
88
How many days delinquent is the following borrower on January 31st?
assume a borrower’s mortgage loan requires borrower to make periodic payments of principal, interest, and escrow by the
first of each month. The borrower fails to make a payment on January 1 or on any day in January.
If the borrower makes a periodic payment on Feb 3rd, which payment should the servicer apply the funds to? How many days delinquent is the borrower on Feb 4th?
30 days delinquent on Jan 31
The servicer applies the Feb 3rd payment to the outstanding January payment. Then the borrower is 3 days delinquent on Feb 4th
89
Are servicers required to provide written notice and acknowledgement form to confirmed successors in interest who have not assumed the mortgage loan and are not otherwise liable on it?
What must be included as part of the written notice? (3)
Not required, but servicers have the option to provide written notice and acknowledgement form in this situation. At this point, all other written notice requirements and live contact requirements do not apply until the SII acknowledges.
If provided the following must be included on the written notice:
-that confirmed successor in interest may be entitled to receive certain notices and communications about the mortgage loan, if not provided to another SII on the account.
-in order to receive such notices the SII must provide the servicer the acknowledgement form.
-that the confirmed SII is entitled to submit notices of error, requests for information, and requests for payoff statements. (explanation on how to exercise rights for each and address info)
90
What types of loans require the Servicing Disclosure Statement as part of Mortgage servicing transfer disclosures?
When is it required to be provided?
What must it include?
Reverse mortgages
Must be provided within 3 business days (excluding weekends and holidays) after receipt of the application.
Must advise whether the servicing of the mortgage loan may be assigned, sold or transferred to any other person at any time.
91
When is the Notice of transfer of Loan Servicing required to be provided?
From the transferor?
From the transferee?
Can the notices be combined?
When any mortgage loan is assigned, sold or transferred, the transferor must provide the disclosure at least 15 days before the effective date of the transfer.
The transferee must provide it not more than 15 days after the effective date of the transfer.
Both notices may be combined into one notice if provided at least 15 days before the effective date of the transfer.
Notices provided at settlement also satisfy the timing requirements.
92
What must be included in the Notice of Transfer of Loan servicing? (6)
-effective date of the transfer
-contact info for the transferee
-contact info for the transferor
-date transferor will cease accepting payments, and date transferee will begin accepting payments (can be the same or consecutive)
-if transfer will affect terms or availability of optional insurance and any action the borrower must take to maintain coverage.
-statement that transfer does not affect the terms or conditions of mortgage.
93
What transfers are not considered an assignment, sale, or transfer of mortgage loans servicing for disclosure requirements?
If there is no change in the payee, address for payment, account number, or amount of payment:
-transfers between affiliates
-transfers resulting from mergers or acquisitions
-transfers between master servicers when the subservicer remains the same.
94
When are error resolution procedures triggered?
When a borrower submits an error notice to the servicer. And servicers cannot "cease communication" (FDCPA) unless the borrower specifically withdraws the request for action regarding the error.
95
What are the requirements for an error notice from the borrower? (3)
Must be in writing and identify the following:
-Borrower's Name
-Info to identify the account
-alleged error
96
Error resolution procedures apply to what alleged errors? (12)
-Failure to accept payments
-Failure to properly apply payments (P&I, Escrow, Other charges)
-Failure to credit payment timely
-Failure to pay taxes, insurance or other charges by due date
-failure to refund escrow account balance within 20 buis days after payoff
-imposition of fee or charge without reason
-failure to provide accurate payoff balance
-Failure to provide accurate loss mitigation options
-failure to transfer accurate and timely info to transferee
-Starting foreclosure proceeding prior to allowed time
-violation of foreclosure procedures
- any other error related to servicing
97
What are errors not covered under error resolution procedures? (4)
error in:
-origination
-underwriting
-subsequent sale or securitization
-determination to sell, assign or transfer the servicing of a loan
98
If the servicer establishes an address where borrowers can send error resolution notices, they must include this address on what communications? (4)
-any periodic statement or coupon book
-website
-early intervention notice
-loss mitigation notice
This address must also be used for receiving information requests and servicer must notify borrower before changing the address.
99
After receiving an error resolution notice, when must a servicer provide written acknowledgement to the borrower?
Within 5 business days (excludes weekends and holidays) after receiving the error notice.
100
How long does a servicer have to investigate and respond to an error resolution notice?
Can they extend this period?
What about timing for specific types of errors? (2)
Generally, they have 30 business days (no weekend/holidays) from receipt of the error.
They may extend the period 15 business days, if prior to expiration of the 30 day period above they notify the borrower in writing of the extension and reasons.
Servicer must respond within 7 business days if the alleged error is failure to provide an accurate payoff balance.
Servicer must respond by the earlier of 30 business days or the date of a foreclosure sale if the error involves making a foreclosure notice or filing, or moving for foreclosure in violation of 1024.41(g)(j).
101
In response to the notice of error, what should a servicer do if the servicer corrects the alleged error?
They must advise the borrower of the correction and when the correction took effect, and provide contact info for further assistance.
102
In response to the notice of error, what should happen if the servicer determines that it committed an error or errors different than or in addition to those identified by the borrower?
They must correct the error and advise the borrower of the correction, when it took effect, and provide contact information for further assistance.
103
In response to the notice of error, what should happen if the servicer determines after a reasonable investigation that no error occurred?
What if the borrower requests documentation used to determine the outcome of the investigation?
The servicer must state that it determined that no error occurred, the reasons for its determination, and the borrower’s right to request documents relied upon by the servicer in reaching its determination and how the borrower can make such a request, and provide contact information, for further assistance.
If the borrower requests the documents, the servicer must provide them within 15 business days (no weekends or holidays) at no cost to the borrower. They need not provide confidential, proprietary, or privileged info.
104
Can a servicer require supporting documentation of the alleged error in order to conduct the investigation?
No, the servicer may request documentation but must still conduct a reasonable investigation even if the borrower does not provide the documentation requested.
105
In what two situations is a servicer not required to provide the 5 day acknowledgement letter or response notice to an Error dispute?
If either:
The servicer corrects the errors and notifies borrower within 5 business days of receiving ER notice.
The servicer receives ER notice 7 or fewer days before a foreclosure sale and the asserted error pertains to the timing of the foreclosure process. The servicer need only make a good faith attempt to reach the borrower orally or in writing to notify them of outcome of investigation and reason if they determined no error occurred.
106
Under Error resolution procedures, a servicer does not need to provide the 5 day acknowledgement notice, response notice, or provide adverse info to credit agencies within 60 days, if they reasonably determine what? (3)
Does the servicer need to notify the borrower if the error meets any of these exceptions?
-Duplicate error notice
-Overbroad notice of error (cannot reasonably determine the specific alleged error)
-untimely notice of error (sent 1 year + after loan was discharged or transferred)
The servicer must still provide written notice to the borrower within 5 business days after determining the ER notice meets one of these exceptions.
107
Can a servicer provide adverse information to credit reporting agencies after receiving an error notice?
In the 60-day period after receiving an error notice, a servicer may not furnish adverse information to any consumer reporting agency regarding any payment that is the subject of the error notice.
108
Are there differences in the procedures regarding an error notice vs. an information request?
They are similar. The key difference is in the response to an information request vs error notice. But receipt requirements and the acknowledgement letter are the same.
109
When must a servicer respond to an information request?
Generally within 30 business days (no weekends/holidays) of receipt
Extension allowed up to 15 additional business days if they notify borrower in writing prior to expiration of 30 days.
A servicer must respond with 10 business days after receipt if the borrower requested identity or contact info for the owner or assignee of a mortgage loan.
110
What are the two ways a servicer could respond in writing to an information request?
By either:
-Providing the requested info and contact info, for further assistance
-conducting a reasonable search for the info and advising borrower if the info is unavailable. If unavailable, including the reason for that determination and contact info for further assistance.
111
Is the 5 day acknowledgement letter required for an information request, if the servicer responds to the borrower within 5 business days of receiving a request?
No as long as the servicer provides the requested info and contact info.
112
Regarding an information request, what are the 5 exceptions to providing an acknowledgement notice and response notice?
Does a servicer need to notify a borrower if these exceptions apply to the request?
Requirements do not apply if the servicer reasonably determines:
-the info requested was already previously requested
-info was not directly related to the borrower's mortgage account
-info request is overbroad or unduly burdensome. (unreasonable volume of documents requested or could not provide within required time frame)
-info request is sent 1yr + after loan discharges or transferred.
-the info is confidential/proprietary or privileged
If they determine one of the exceptions applies, servicer must provide written notice to borrower within 5 business days after determining and include basis relied on.
113
Can a servicer charge a fee for an information request or error notice?
Not as a condition of assistance. They may charge a fee for providing a beneficiary notice.
114
What procedures should servicers follow when receiving a request from a potential successor in interest?
Information request procedures for timing and notification requirements.
But the response must provide written description of documents required to confirm identity and ownership interest in property, as well as contact info.
115
Are servicers required to establish procedures regarding successors in interest?
Yes (except small servicers).
They do not need to be written procedures, but must reasonably facilitate communication with potential SII, promptly confirm identity and ownership interest.
116
What types of insurance are applicable under the force placed insurance provisions of RESPA? (1)
What is excluded? (2)
Restrictions on obtaining and assessing charges and fees for forced placed insurance apply to:
-Hazard insurance that a servicer obtains on behalf of the owner to insure the property securing the mortgage loan.
Exclusions include:
-Flood insurance
-Hazard insurance obtained by the borrower but renewed by the borrower's servicer (with agreement)
117
What are the requirements a servicer must meet before charging force placed insurance?
Servicers may not assess charges or fees for force placed insurance unless they satisfy 4 requirements.
-Servicer must have a reasonable basis to believe that a borrower has failed to maintain required hazard insurance. (lack of evidence from servicer, insurance provider, or insurance agent)
-Servicer must provide written notice to borrower at least 45 days before assessing a charge or fee
-Servicer must send a reminder notice at least 30 days after the initial notice is mailed or delivered and at least 15 days before assessing fees or charges.
-By the end of the 15 day period beginning on the date the servicer delivers the reminder notice, the servicer must NOT have received evidence of continuous insurance. (can require dec page, insurance policy, etc) Then they can force place.
118
What must be included as part of the initial notice (45 day letter) for force placed insurance? (11)
-Date
-Servicer name & address
-Borrower name & address
-request that borrower provide hazard insurance information for ___ property address
-Statement that insurance has expired, is expiring, or has insufficient coverage and that the servicer lacks evidence.
-Statement that insurance is required and that servicer has or will purchase insurance at borrowers expense
-request that borrower promptly provide insurance information.
-Description of the requested insurance info and how borrower can provide it and if it must be in writing.
-Statement that insurance coverage servicer has/will purchase may cost significantly more than, and provide less coverage than, hazard insurance purchased by the borrower.
-servicer phone number for inquiries
-statement advising borrower review additional info provided (if applicable)
119
What must be included in the reminder letter (15 day letter) for force placed insurance? (4)
If the servicer has not received any information from borrower.
-Date
-All info from initial notice (11 things)
-advise that it is the second and final notice
-identify the annual cost of force placed insurance (reasonable estimate if unavailable)
120
What must be included in the reminder letter (30 day letter) for force placed insurance?
If the servicer received insurance info, but not evidence that sufficient coverage has been in place continuously. (12)
-Date
-Servicer name & address
-borrower name & address
-request that borrower provide hazard insurance info on (address) property
-statement that insurance coverage servicer has/will purchase may cost significantly more than, and provide less coverage than insurance purchased by the borrower
-servicer phone number for borrower inquiries
-statement advising borrower to review info provided (if applicable)
-the annual cost of FP insurance or estimate
-statement that servicer received insurance info borrower provided
-request that borrower provide the missing info
-statement that borrower will be charged for insurance servicer purchases during the period the servicer cannot verify coverage.
121
Can the servicer provide additional information on any of the force placement notices beyond what is required?
No. The only exception is the loan account number.
The servicer may however provide additional information on separate pages contained in the same transmittal.
122
If a servicer receives new information regarding a borrower's hazard insurance after beginning production on the 30 day letter (insufficient info version), is the servicer required to update the notice?
Not if the notice was put into production a reasonable time prior to the servicer delivering the notice to the borrower. (5 business days is a reasonable time)
123
What are the two requirements a servicer must meet before assessing charges or fees on a borrower to renew or replace existing force placed insurance?
-Must provide a renewal notice at least 45 days prior to assessing any premium charge or fee (must be before each anniversary of purchasing FP insurance)
-By the end of the 45 day period beginning when they delivered the letter, the servicer must NOT have received evidence of insurance.
124
What elements must be included as part of the FP renewal letter? (11)
-date
-servicer's name and address
-borrower name and address
-request borrower update hazard insurance info for (address) property
-statement that FP insurance is expiring or has expired and that the servicer intends to renew or replace it as required
-statement that insurance may cost significantly more than and provide less coverage than when purchased by the borrower (provide annual cost/estimate of FP insurance)
-statement that if the borrower purchases insurance they should promptly advise the servicer
-description of the requested insurance info and how the borrower may provide such info
-servicer phone number for inquiries
-statement to review additional provided info (if applicable)
125
True or false:
If the servicer receives evidence that the borrower lacked insurance for some period of time after the existing force-placed insurance expired, the servicer may promptly assess a premium charge or fee related to renewing or replacing the existing force-placed insurance for that period of time.
True
126
What are the required procedures if the servicer receives evidence that the borrower has had required hazard insurance coverage in place during the same period the servicer had FP insurance?
The servicer has 15 days to cancel the FP insurance, refund FP charges and fees for the period of overlapping coverage, and remove all FP charges and fees from the borrower's account for that period.
127
Servicer are required to maintain policies and procedures that are reasonably designed to achieve what objectives? (5)
-accessing and providing timely and accurate information
-properly evaluating loss mitigation applications
-facilitating oversight of, and compliance by, service providers
-facilitating transfer of information during servicing transfers
-informing borrowers of the written error resolution and information request procedures.
128
When do early intervention requirements apply?
exceptions? (4)
Servicer must engage in certain efforts to contact delinquent borrowers. These requirements apply only to mortgage loans secured by the borrower's principal residence.
exemptions include:
-Small servicers
-reverse mortgage transactions
-mortgage loans for which the servicer is a qualified lender
-borrowers performing under loss mitigation agreements (non performers excluded)
129
What is considered a qualified lender?
Under the Farm Credit Act, a lender that:
-extends ag credit to a farmer, rancher, or producer/ harvester of aquatic products
-other creditors with respect to loans discounted or pledged under the farm credit act.
130
What are the two main procedures a bank/servicer must perform for early intervention requirements?
-servicers must make a good faith effort to establish live contact with a borrower no later than the 36th day of delinquency.
-Servicers must send a borrower a written notice within 45 days after the borrower becomes delinquent and again no later than 45 days after each payment due date so long as the borrower remains delinquent. However, servicer is not required to provide the written notice more than once in any 180 day period. After the 180 day period, if the borrower is 45 days + delinquent they must send another notice, if not wait to send notice until 45 days is reached.
ex: a servicer who provided the written notice to the borrower within 45 days after the borrower became delinquent on January 1 would not be required to send another written notice if the borrower failed to make the February 1 payment
131
When is a borrower considered "delinquent" to trigger early intervention requirements?
(When does the clock start for delinquency?)
Delinquency begins on the date a periodic payment sufficient to cover principal, interest, and escrow (if applicable) becomes due and unpaid, until such time as no periodic payment is due and unpaid.
Borrowers following the terms and agreements of a loss mitigation program are not considered delinquent under early intervention, but may be considered delinquent for other purposes under the servicing rules.
132
After establishing live contact with a delinquent borrower under early intervention procedures, what is a servicer required to inform a borrower about?
Of any loss mitigation options, if appropriate. (servicer's discretion)
ex: servicer informing a borrower about loss mitigation options after the borrower notifies the servicer during live contact of a material adverse change in financial circumstances that is likely to cause a long-term delinquency for which loss mitigation options may be available, or a servicer not providing information about loss mitigation options to a borrower who has missed a January 1 payment and notified the servicer that the full late payment will be transmitted to the servicer by February 15.
133
Under Early intervention procedures, what elements must be included in the written notice provided to borrowers within 45 days after delinquency? (5)
-encourage borrower to contact servicer
-servicer number and address for loss mitigation
-describe examples of loss mitigation options (if applicable)
-provide loss mitigation application instructions or advise how to obtain more information on loss mitigation
-list either the CFPB or HUD website to access a list of homeownership counselors and HUD toll free number for homeownership counseling.
134
What are the transfree's written notice obligations under early intervention for the following scenario?
Assume a borrower has monthly payments, with a payment due on March 1. The transferor servicer provides the notice required by 12 CFR 1024.39(b) on April 10. The loan is transferred on April 12. Assume the borrower remains delinquent.
Transferee servicer is not required to provide another written notice until 45 days after May 1, the first post-transfer payment due date. (June 15th)
135
Regarding Early intervention, What elements are required for the written notice for a debtor in bankruptcy?
What are the timing requirements for this notice? (4)
If the debtor is not exempt under FDCPA or Title 11 bankruptcy, a servicer must comply with the following modified written notice requirements:
-Content is the same but may not contain a request for payment
-Timing:
--If the borrower is delinquent when they become a debtor in bankruptcy, servicer must provide notice no later than 45th day after borrower files bankruptcy
--If the borrower is not delinquent at the time of filing, but becomes delinquent while a debtor in bankruptcy, servicer must provide notice no later than the 45th day of borrower's delinquency
--servicer must comply regardless whether they provided the written notice in preceding 180 days
--notice is not required more than once during a bankruptcy case.
136
Regarding early intervention requirements for a debtor in bankruptcy, what events trigger a servicer to resume compliance with the live contact and written notice provisions on an account that was previously exempt? (3)
After the next payment due date that follows the earliest of the following events:
-bankruptcy case is dismissed
-bankruptcy case is closed
-borrower reaffirms personal liability for the mortgage loan
137
What are the partial exemptions to the early intervention requirements for a debtor in bankruptcy? (2)
-live contact requirements are exempt if the borrower is a debtor in title 11 bankruptcy
-written notice requirements are exempt when a borrower on the loan has evoked FDCPA cease communication protections and either no loss mitigation is available or the borrower is a debtor in bankruptcy under title 11 (there is a modified written notice if these conditions are not met)
138
Regarding Early intervention, what are the modified written notice requirements when a borrower has evoked cease communication protections under FDCPA and a loss mitigation option is available or no borrower on the loan is a debtor in bankruptcy? (content and timing requirements)
Content:
-statement that servicer may or intends to invoke its remedy of foreclosure
-may not contain a request for payment
Timing:
-prohibited from providing notice more than once in 180 day period
-if borrower is 45 days delinquent at end of 180 days, servicer provides the notice again no later than 190 days after the original notice
-if borrower is less than 45 days delinquent at end of 180 days, servicer provides notice 45 days after delinquent payment due date or 190 days after prior notice, whichever is later.
139
Is a servicer in violation of the FDCPA provision for cease communication if they provide the early intervention notice, loss mitigation info, or assistance in response to borrower initiated communication after a borrower has invoked this right?
No
140
Servicers must maintain policies and procedures to facilitate continuity of contact between the borrower and servicer for what loan types?
Exemptions to this requirement? (3)
This applies only to mortgage loans secured by borrower's principal residence.
Exemptions include small servicers, reverse mortgages, or mortgage loans for which the servicer is a qualified lender.
141
What is expected to be included as part of the required continuity of contact policies and procedures?
Generally:
-assign personnel to a delinquent borrower at time written notice is provided to help provide assistance and loss mitigation options until borrower makes two consecutive timely payments under agreement.
-ensure the servicer can provide a live response in a timely manner
Ensure personnel can perform certain functions
-including providing accurate info on:
--loss mitigation options
--actions borrowers must take to be evaluated, apply, and appeal
--status of LM application
--circumstance in which servicer may refer borrower's account to foreclosures
--loss mitigation deadlines
-are able to:
--timely retrieve a complete record of payment history and all written info borrower has provided to servicer for LM
--provide these documents to other people required to evaluate borrower for LM
--provide borrower with info on submitting an error notice or information request
142
What transactions are subject to loss mitigation procedures?
Exemptions?
-Mortgage loans that are a principal residence
Exceptions:
-Small servicers
-reverse mortgages
-qualified lenders
143
A servicer that receives a loss mitigation application at least 45 days before foreclosure sale must take what two steps?
-Promptly review application to determine if complete
-Notify borrower in writing within 5 business days (no weekends or holidays) that they received the application and state whether it is complete or not.
144
Does the following example constitute a loss mitigation application?
Borrower requests a servicer determine if the borrower is "prequalified" for a loss mitigation program by evaluating the borrower against preliminary criteria to determine borrower eligibility.
Yes this constitutes a loss mitigation application.
A loss mitigation application includes an oral or written request by the borrower where the borrower expresses an interest in applying for a loss mitigation option and provides information a servicer would evaluate in connection with a loss mitigation application. A loss mitigation application is considered expansively and includes any “prequalification” for a loss mitigation option.
145
When is a loss mitigation application considered complete, and what should a servicer do if they receive an incomplete application?
An application is complete when it contains all the information the servicer requires from the borrower to evaluate an application for loss mitigation options.
Upon receiving an application that is not complete, a servicer is generally required to exercise reasonable diligence in obtaining documents and information to complete the application. (e.g., promptly contacting the
borrower to obtain missing information or determining whether information exists in the servicer’s files already
that may provide the information missing from the borrower’s application).
146
For a loss mitigation application that is received 45 days or more before foreclosure and is incomplete, the notice of application receipt must advise what two things?
-What additional documents or info are needed
-reasonable date by which the borrower must submit them
reasonable date is generally 30 days from notice but can be no later than the earliest of:
--Date info received would be considered stale for a LM application
--120th day of delinquency
--90 days before a foreclosure sale
--38 days before a foreclosure sale
And can be no less than 7 days from the date of the notice.
147
A servicer that receives a COMPLETE loss mitigation application more than 37 days before a foreclosure sale must take what two steps within 30 days?
-Servicer must evaluate the borrower for all loss mitigation options available (no required standards, but procedures must ensure servicer can properly evaluate someone for loss mitigation options otherwise its a violation of 1024.38(b)(2)(v)
-Within 5 business days from receiving the complete application the servicer must provide the borrower with a written notice (notice of complete application) stating which loss mitigation options, if any, they will offer to the borrower. The notice must state the time frame borrowers have to accept/reject the offer and if applicable the right to appeal and how to do so.
148
What are the three exceptions that permit a servicer to offer a loss mitigation option based on an incomplete application?
-Offers that are not based on an evaluation of an incomplete application (option offered as if there were no application, or offer is not based on any evaluation of information included in the incomplete application)
-Reasonable time exception: Servicer exercised diligence in obtaining documents and info to complete an application, but is still incomplete after a significant period of time. Servicer can then evaluate the incomplete application and offer loss mitigation. (Significant period of time depends on timing of foreclosure process i.e. 15 days when borrower is less than 50 days from foreclosure vs. 120 days delinquent)
-Servicer may offer a short term payment forbearance program or repayment plan based on evaluation of incomplete application.
149
A servicer can offer a short term payment plan or forbearance plan to a borrower after evaluating an incomplete application.
After a servicer offers a short-term repayment plan or forbearance plan, the servicer must provide the borrower with a written notice stating what? (4)
-Specific payment terms and duration of plan
-that the servicer offered the plan based on an evaluation of an incomplete application.
-That other loss mitigation options may be available
-that borrower has option to submit a complete application to receive an evaluation for all loss mitigation options available to the borrower regardless of whether the borrower accepts the program or plan.
150
True or false:
A servicer can initiate foreclosure on a borrower that is performing pursuant to the terms of a forbearance program or repayment plan.
False: If the borrower is performing pursuant to the terms of a forbearance program or repayment plan offered under this provision, a servicer may not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, and it may not move for foreclosure judgment or an order of sale or conduct a foreclosure sale.
151
For a borrower under a forbearance or short term repayment plan due to an incomplete application, are servicers required to comply with continuous contact requirements?
Not as long as the borrower is performing under the plan. If they are unperforming or request assistance the servicer must initiate reasonable diligence efforts.
Additionally, near the end of the plan, if the borrower remains delinquent a servicer must contact the borrower to determine if they wish to complete the loss mitigation application and pursue a full evaluation.
152
What is a facially complete loss mitigation application? (3)
A loss mitigation application is facially complete when
(i) the servicer’s initial notice under 12 CFR 1024.41(b) advised the borrower that the application was complete,
(ii) the servicer’s initial notice under 12 CFR 1024.41(b) requested additional information from the borrower to complete the application and the borrower submits such additional information, or
(iii) the servicer is required to provide the borrower a written notice of a complete application
Then the servicer later discovers that additional information or corrections are required to complete the application. At this point the servicer would need to request the missing or corrected information, and the application will be treated as facially complete until all information is corrected/updated within a reasonable period. If the borrower does not complete the application within this period it is considered incomplete.
153
What must be included as part of a notice of complete loss mitigation application? (6)
• That the loss mitigation application is complete;
• The date the servicer received the complete application;
• That the servicer expects to complete its evaluation within 30 days of the date it received the complete application;
• That the borrower is entitled to certain foreclosure protections because the servicer has received the
complete application, and, as applicable, either:
o If the servicer has not made the first foreclosure notice or filing required by applicable law, that the
servicer cannot make the first notice or filing to commence a foreclosure before evaluating the borrower’s complete application; or
o If the servicer has made the first foreclosure notice or filing, that the servicer has begun the foreclosure process and that the servicer cannot conduct a foreclosure sale before evaluating the borrower’s complete application.
• That the servicer may need additional information at a later date; and
• That the borrower may be entitled to additional protections under state or federal law.
154
When would a servicer not be required to provide a notice of complete loss mitigation application? (3)
• The servicer has already provided the borrower a notice under 12 CFR 1024.41(b)(2)(i)(B) informing the
borrower the application is complete and the servicer has not requested any additional information;
• The application was not complete more than 37 days before a foreclosure sale; or
• The servicer has already provided the borrower a notice regarding its determination of the borrower’s application
155
If a servicer is lacking third party information needed to evaluate a loss mitigation application, they must provide a written notice informing the borrower of what? (4)
• That the servicer has not received the third-party documents or information that the servicer requires to determine which loss mitigation options, if any, it will offer to the borrower;
• Of the specific documents or information that the servicer lacks;
• That the servicer has requested such documents or information; and
• That the servicer will complete its evaluation of the borrower for all available loss mitigation options promptly upon receiving the documents or information.
156
What can a servicer do if they have exercised reasonable diligence to obtain third party information on a loss mitigation application, but the servicer has been unable to obtain such information for a significant period of time and is unable to complete the application?
the servicer may deny the application and provide the borrower with a written notice in accordance with 12 CFR 1024.41(c)(1)(ii). In conjunction with such notice, the servicer must provide a copy of the written notice provided under 12 CFR 1024.41(c)(4)(ii)(B).
157
If a servicer denies a loss mitigation application for any trial or permanent loan modification option, they must notify the borrower of what? (2)
Certain disclosures are required when a servicer denies an application for? (3)
The notice must state:
-specific reasons for denying each trial or permanent loan modification option
-if applicable, that the borrower was not evaluated on other criteria.
However, certain disclosures are required when a servicer denies an application for:
-investor criteria and use of a waterfall
-net present value calculation
-reasons listed on a hierarchy of eligibility criteria
158
What additional disclosures must be included in the denial notice for a loss mitigation application that was denied due to investor criteria and use of a waterfall? (2)
o If the servicer denies a loan modification option based upon investor criteria, the servicer must identify the owner or assignee of the mortgage loan and the specific criteria that the borrower failed to satisfy.
o When an owner or assignee has established an evaluation criteria that sets an order ranking for evaluation of loan modification options (commonly known as a “waterfall”) and a borrower has qualified for a particular loan modification option in the waterfall, it is sufficient for the servicer to inform the borrower, with respect to other loan modification options ranked below any such option offered to a borrower, that the investor’s requirements include the use of such a waterfall and that an offer of a loan modification option necessarily results in a denial for any other loan modification options below the option for which the borrower is eligible in
the ranking.
159
What additional disclosures must be included in the denial notice for a loss mitigation application that was denied due to net present value calculation?
If the denial was based upon a net present value calculation, the servicer must disclose the inputs used in the calculation.
160
What additional disclosures must be included in the denial notice for a loss mitigation application that was denied due to reasons listed on a hierarchy of eligibility criteria? (2)
The following applies if the servicer uses a hierarchy of eligibility criteria and, after reaching the first criterion that causes a denial, does not evaluate whether the borrower would have satisfied the remaining criteria. In this instance, the servicer need only
(i) provide the specific reason or reasons why the borrower was actually rejected, and
(ii) notify the borrower that the borrower was not evaluated on other criteria. A servicer is not required to determine or disclose whether a borrower would have been denied based on other criteria if the servicer did not actually evaluate these additional criteria.
161
A servicer offering a loss mitigation option must provide the borrower with a minimum period of time to accept or reject the option, depending on when the servicer receives a complete application. If the application was complete 90 days or more before a foreclosure sale, the servicer must give the borrower at least __ days to decide. If it was complete fewer than 90 but more than 37 days before a foreclosure sale, the servicer must give the borrower at least __ days to decide.
14 and 7
162
A borrower's failure to respond to a loss mitigation offer on time can be treated as a rejection with what two exceptions?
First, a borrower who is offered a trial loan modification plan and submits payments that would have been owed under that plan before the deadline for accepting must be given a reasonable time to fulfill any remaining requirements of the servicer for acceptance of the trial loan modification plan.
Second, a servicer must give a borrower who has a pending appeal until 14 days after the servicer provides notice of its determination regarding resolution of that appeal to decide whether to accept any offered loss mitigation option.
163
A servicer cannot make the first foreclosure notice or filing for any judicial or non-judicial process until what? (3)
-borrower is more than 120 days delinquent
-foreclosure is based on a borrower's violation of a due-on-sale clause, or
-the servicer is joining a superior or subordinate lienholder's foreclosure action.
164
What types of documents would be considered as the first notice or filing for a judicial foreclosure?
Where foreclosure procedure requires a court action or proceeding, the first notice or filing is the earliest document required to be filed with a court or other judicial body to commence the action or proceeding. Depending on the particular foreclosure process, examples of these documents could be a complaint, petition, order to docket, or notice of hearing;
165
What types of documents would be considered as the first notice or filing for a non-judicial foreclosure with a recording or publication requirement?
what if there is no recording or publication requirement?
Where foreclosure procedure does not require an action or court proceeding (such as under a power of sale), the first notice or filing is the earliest document required to be recorded or published to initiate the foreclosure process.
Where foreclosure procedure does not require an action or court proceeding, and also does not require any document to be recorded or published, the first notice or filing is the earliest document that establishes, sets, or schedules a date for the foreclosure sale.
166
Would a document provided to a borrower that is not initially required to be filed, recorded or published be considered the first notice or filing of a foreclosure?
No because the documents must later be included as an attachment accompanying another document that is required to be filed, recorded, or published to carry out a foreclosure.
167
What foreclosure procedures must a servicer follow if a borrower submits a complete loss mitigation application before the 120th day of delinquency or before the servicer makes the first foreclosure notice/ filing? (3)
What If a borrower submits a complete loss mitigation application after the servicer has made the first foreclosure notice or filing but more than 37 days before a foreclosure sale?
Then the servicer cannot make the first foreclosure notice or filing unless one of the following occurs:
(i) the servicer sends a notice to the borrower stating that the borrower is ineligible for any loss mitigation option and if an appeal is available, either the borrower did not timely appeal, or the appeal has been denied;
(ii) the borrower rejects all the offered loss mitigation options; or
(iii) the borrower fails to perform under a loss mitigation agreement.
The servicer cannot conduct a foreclosure sale or move for foreclosure judgment or order of sale. They must instruct counsel to not make a dispositive motion for foreclosure judgement or order of sale. They can move forward with foreclosure proceedings if the above notice has occurred.
168
A borrower has the right to appeal a servicer’s denial of a loss mitigation application for any trial or permanent loan modification available to the borrower if the borrower submitted a complete application __ days or more before a foreclosure sale (or during the pre-foreclosure period set forth in 12 CFR 1024.41(f)).
The borrower must commence the appeal within___ days after the servicer provides the notice stating the servicer’s determination of which loss mitigation options, if any, it will offer to the borrower.
90
14
169
Within 30 days of the borrower making the loss mitigation appeal, the servicer must provide a notice to the borrower stating: (2)
How long must a servicer give the borrower to respond to the appeal offer if applicable?
(i) whether it will offer the borrower a loss mitigation option based on the appeal, and
(ii) if applicable, how long the borrower has to accept or reject this loss mitigation option or a previously offered loss mitigation option.
If the servicer offers a loss mitigation option after an appeal, the servicer must provide the borrower at least 14 days to decide whether to accept the offered loss mitigation option.
170
Although small servicers are exempt from most policy and procedure requirements, continuity of contact requirements, and loss mitigation requirements they are still subject to what foreclosure requirements? (4)
Small servicers cannot make the first foreclosure notice or filing required by any judicial or non-judicial foreclosure process until
(i) the borrower is more than 120 days delinquent,
(ii) the foreclosure is based on a borrower’s violation of a due-on-sale clause, or
(iii) the servicer is joining a superior or subordinate lienholder’s foreclosure action.
If the borrower is performing according to the terms of a loss mitigation agreement, a small servicer also cannot make the first foreclosure notice or filing, move for a foreclosure judgment or order of sale, or conduct a foreclosure sale.
171
Transactions covered under RESPA Section 8 must meet what too applicability requirements?
The transaction is covered if it is:
-a settlement service,
-involving a federally related mortgage loan.
172
What three elements must be satisfied to be considered a violation of RESPA section 8?
Components of a violation – all 3 elements must be satisfied:
- Payment or transfer of a thing of value
- Pursuant to an agreement to refer settlement service business
- Resulting in an actual referral
173
Is this a lead or referral under RESPA section 8?
Real estate brokers agreed to provide contact information for persons who were looking for houses to a mortgage company. The mortgage company pays a fixed amount to the broker each time.
Lead
174
Is this a lead or referral under Respa section 8?
Real estate brokers agreed to provide contact information for persons who were looking for houses to a mortgage company. The mortgage company pays a fixed amount per lead.
In addition to simply providing the contact information, the real estate brokers also
-encouraged their real estate agents to introduce the “contacts” to the mortgage company loan officers, or set up a meeting to discuss if that person qualifies to buy a home (“warm handoff”)
-agreed that they would provide the contact information exclusively to the mortgage company
-encouraged agents to give implied or express endorsements
-paid agents additional amounts for each “contact” they steered to the mortgage company
Referral
175
What are the RESPA section 8 safe harbor provisions? (4)
(exceptions to referrals)
A payment of a fee to an attorney for services actually rendered;
A payment by a title company to its agent for services actually performed in the issuance of a title insurance policy;
A payment by a lender to its agent or contractor for services actually performed in the origination, processing, or funding of a loan;
An employer’s payment to its own employees for any referral activities.
