RESPA

Question 1

If a mortgage servicer receives hazard insurance information, but not proof that the coverage is continuous, what are the servicer’s responsibilities?

Answer 1

The servicer must send a notice that requests proof of continuous coverage.

Question 2

Can fees be charged for completion of any RESPA or TILA disclosures?

Answer 2

No.

Question 3

Does the AfBA disclosure have to be retained in the loan file if a customer doesn’t get a settlement service from the affiliated party?

AFBA: Affiliated Business Arrangement Disclosure

Answer 3

Yes, it must be retained regardless.

Question 4

First National’s mortgage department has a large escrow operation for taxes and insurance. At closing what may the bank require of the borrowers?

A. Pay all taxes due plus a cushion not to exeed one full year of taxes in advance
B. Pay only the taxes due on the date of the closing
C. Pay the taxes due plus a cushion not to exceed 1/12 of the amount owing for next year
D. Pay all taxes plus a cushion not to exceed 1/6 of the amount owing for the next year

Answer 4

D. Pay all taxes plus a cushion not to exceed 1/6 of the amount owing for the next year

Question 5

This is hazard insurance obtained by a servicer on behalf of the owner or assignee of a mortgage loan that insures the property securing the loan.

Answer 5

Force-placed insurance

Question 6

What are the escrow accounting rules and disclosure requirements under RESPA?

Answer 6

Rules regarding how to calculate payment amounts (aggregate accounting) and statements.

Kicks in when you have a RESPA covered escrow account (account that the servicer controls on the borrowers behalf). There are a number of disclosures required, such as the initial escrow statement, annual statements and short-year statements (when the loan is sold or paid off).

Question 7

I have collected 5 pieces of information, but am waiting on the 6th and final piece of the application. Should I prepare the LE now?

LE: Loan Estimate replaces GFE: Good-faith Estimate after initial TILA

Answer 7

No, wait for all 6 pieces of customer information. Must have all six elements to prepare the LE.

Question 8

For what loans is the servicing disclosure statement provided to consumers? What disclosure is this now a part of?

Answer 8

This was only provided to applicants if the loan is closed-end and secured be a first lien. (This has been incorporated into the Loan Estimate.)

Question 9

For error resolution, a servicer must provide copies of documentation to the borrower, at no charge, within __ business days of the borrower’s request.

Answer 9

15

Question 10

T/F: No error resolution extensions are allowed for errors related to payoffs or foreclosures.

Answer 10

T

Question 11

“Your Home Loan Toolkit” must be mailed or delivered to the applicant within __ business days of receiving the application for first lien _____ _____ loan applications.

Answer 11

3

purchase money

Question 12

Transferee notice must be delivered not __ than __ days __ the effective date of the servicing transfer.

Answer 12

more
15
after

Question 13

First National Bank has a mortgage lending department that finances conventional mortgage loans and construction loans for individuals.

• Loan A is a loan to Mr. Jones for temporary construction financing for his home. The term of Loan A is 9 months. Once the home is build, Loan A will be paid by the funding of a new permanent mortgage to Mr. Jones. First national has no commitment to Mr. Jones to fund the permanent loan.
• Loan B is made to Mr. and Mrs. Williams, also for the construction of a home. Loan B is structured so advances will be made on the loan for 9 months, the expected construction period. At the end of that time, Loan B will automatically convert to a permanent mortgage.
• Loan C is a loan to Mr. and Mrs. Danvers for the purchase of a home that will be used as a rental property. The loan will be secured by the home.

Which of these loans is covered by RESPA?

Answer 13

Loan B

An interim construction loan is not covered by RESPA unless the lender has committed to provide permanent financing or unless it is for a term of 2 years or more. Therefore, Loan A is not covered. Loan B will convert to a permanent loan and is a RESPA transaction. Loan C is made to individuals for the purpose of acquiring rental property ( a business purpose loan) and therefore is not covered by RESPA.

Question 14

A _______ occurs when an existing obligation is satisfied and replaced by a new obligation with the same borrower.

Answer 14

Refinancing

Question 15

Is temporary financing, such as interim construction loans or bridge loans, with a term of less than two years covered under RESPA?

Answer 15

No, unless the loan is used as or converted to a permanent loan with the same lender.

Question 16

ACME Mortgage Company owns and services a mortgage loan for John Smith. The company received a statement from Mr. Smith’s insurance company indicating that the premium on the hazard insurance has not been paid and that it will be cancelled soon if not paid. Mr. Smith’s escrow account has insufficient funds to make the insurance payment. Under what circumstances may ACME Mortgage Company force place hazard insurance on Mr. Smith’s property and charge him for the premium?

a. Once they notify Mr. Smith and give him an opportunity to make the payment, ACME can force place a policy.
b. ACME may not force place a policy in this case, it must advance funds to the escrow amount to make the payment so the insurance will continue
c. ACME does not have to give advance notice; once the policy is finally cancelled, they can force place a policy
d. ACME can force place a policy as it is not more expensive than the original premium.

Answer 16

b. ACME may not force place a policy in this case, it must advance funds to the escrow amount to make the payment so the insurance will continue.

Question 17

What loans are covered under Reg Z?

Answer 17

Borrower: individual or personal purpose trust
Purpose of funds: consumer
Collateral: secured by residential real property (meaning land) *RESPA = “Dirt” (residential means 1-4 family residence sits or will sit on it).

Almost the same as Reg Z, but RESPA has the collateral requirement

Question 18

T/F: Before each anniversary of the force placed policy, the servicer must mail a written notice, but it is not required to be sent more than once per year. If mailing, the notice must be sent by using at least first class mail.

Answer 18

T

Question 19

What are the timing requirements for AA on a loss mit application?

Answer 19

*

Question 20

Which of the following affiliated providers can a bank require a consumer to the use?

A. An attorney
B. An appraiser
C. A credit bureau
D. Any or all of the above

Answer 20

D. Any or all of the above.

These are the only three exceptions.

Question 21

What are the early intervention rules for delinquent borrowers?

Answer 21

Servicer must make a good faith effort to

1. Make live contact with a delinquent borrower by the 36th day of delinquency (inform borrower about availability of loss mit options, if appropriate)
2. Provide a written notice to that delinquent borrower no later than the 45th day (assign personnel for easy access)

Question 22

When must the service provide the Servicing Disclosure Statement for reverse mortgages?

Answer 22

Within 3 days after the applicant applies.

Question 23

For errors relating to foreclosures, a servicer must investigate and respond to a notice of error prior to the date of a foreclosure sale or within __ business days after the servicer receives the notice of error, whichever is earlier.

Answer 23

30

Question 24

This is a person (other than an employee of the lender) that provides origination services as an intermediary between a borrower and a lender in a transaction involving a federally related mortgage loan.

Answer 24

Mortgage broker

Question 25

What notice is required by transferor servicers and transferee servicers for transfers, sales or assignments of mortgage loans?

Answer 25

Notice of Transfer of Servicing

Question 26

Servicers are required to comply with the requirements for only ___ loss mit app(s) of a borrower’s mortgage loan account.

Answer 26

1

Question 27

If a servicer receives a complete loss mitigation application __ or more days before a foreclosure sale or during the pre-foreclosure review period, the servicer must allow the borrower to ____ the servicer’s decision to deny the application.

Answer 27

90

appeal

Question 28

When is the Special Information Booklet provided?

Answer 28

For purchase money transactions secured by a first lien only.

Question 29

ACME Mortgage has filed a foreclosure action on the property securing John Doe’s mortgage. The foreclosure sale will be held in 120 days. If ACME receives an application for a loss mitigation option from Mr. Doe 100 days from the foreclosure date, which of the following action must ACME take?

a. Withdraw the foreclosure action within 30 days of the receipt of the application
b. Notify the borrower of the decision on the completed application within 14 days of the receipt of the application
c. Notify the borrower of any missing information within 10 days of the receipt of application.
d. Acknowledge the application in writing within 5 days of receipt of the application.

Answer 29

d. Acknowledge the application in writing within 5 days of receipt of the application.

Question 30

Can a seller condition the sale of a property that will be purchased on the buyer’s purchase of title insurance from a particular title company?

Answer 30

No

Question 31

This is defined as receiving any scheduled periodic payments from a borrower on a federally related mortgage loan and paying the owner or another third party.

Answer 31

Servicing

Question 32

Are loans secured by vacant land covered under RESPA?

Answer 32

No, unless a home, including a manufactured home, will be constructed or placed on the property using the loan proceeds within 2 years.

Question 33

A servicer must investigate and respond to a notice of error within __ business days after the servicer receives notice of a payoff error.

Answer 33

7

Question 34

If a borrower submits an incomplete loss mitigation application, when must the creditor notify the borrower?

Answer 34

Within 5 weekdays

Question 35

T/F: If the servicer renews one replaced force-placed insurance and ha evidence that the borrower did not have insurance during the time of the notice, the servicer may assess a fee for the insurance during that time period.

Answer 35

True

Question 36

A loan officer is making a first mortgage purchase-money loan to enable an individual borrower to purchase a triplex. The individual will live in the upper unit and plans to rent the lower two units of the triplex. The loan will be for $245,000 for 5 years. Why does RESPA NOT apply to this loan?

a. The loan is covered by Reg Z
b. The loan is primarily for business purposes
c. The loan is for an amount that exceeds $25,000
d. The loan is secured by a first lien on a multifamily dwelling

Answer 36

b. The loan is primarily for business purposes.

Business purpose loans are exempt from RESPA coverage.

Question 37

What is the servicing file?

Answer 37

All info around loans and potential loss mit solutions in one place - either electronic or on paper.

Documents and data must be maintained on each mortgage loan within 5 days. **

Question 38

An appeal must be reviewed by a _____ _____ than the ones responsible for evaluating the application.

Answer 38

different person

Question 39

The servicer must cancel a force placed policy within __ days of receiving evidence that the borrower has sufficient hazard insurance in place, and refund any premium charges or fees for the period of the overlap, if applicable.

Answer 39

15

Question 40

If the same lender is involved, which of the following is considered a refi?

a. A renewal of a single-payment loan with no change in terms
b. A reduction in the PAR with a corresponding payment change
c. An agreement involving a court proceeding
d. A workout agreement resulting from the consumer’s default, unless the rate is increased or the amount financed exceeds the principal, interest, and insurance premiums
e. The renewal of insurance purchased by the consumer, added to the transaction (if disclosures were given at the time of initial purchase)
f. None of the above.

Answer 40

f. None of the above.

Question 41

If a closed-end loan is secured by a second lien, does the Servicing Disclosure Statement need to appear on the LE?

Answer 41

No, because this should only appear if the loan is secured by a first lien.

Question 42

A servicer must investigate and respond to a notice of error not later than __ business days after the receipt of the notice of err for all other errors; this time limit may be extended by __ business days if the servicer notifies the borrower of the extension and the reasons for it in writing.

Answer 42

30

15

Question 43

T/F: RESPA requires that complete loss mitigation applications are evaluated before proceeding with a scheduled foreclosure sale.

Answer 43

True

Question 44

T/F: If a mortgage broker is used, the lender is responsible for delivering the “Your Home Loan Toolkit” booklet.

Answer 44

False, the broker is responsible.

Question 45

What are the timing requirements for the covered escrow accounts?

Answer 45

Initial escrow account statement within 45 days of settlement.
Annual escrow statement - within 30 days of the completion of the escrow account computation year
Short year statement - within 60 days after receiving the payoff funds.

Question 46

If a servicer receives a loss mitigation application __ days or more days before a foreclosure sale, the servicer must promptly review the application if it is complete and acknowledge the receipt of the application within __ business days after its receipt.

Answer 46

45

5

Question 47

What is “dual tracking” and is it permitted?

Answer 47

Simultaneously pursing loss mitigation and foreclosure solutions. Must exhaust all loss mit solutions before commencing foreclosure process.

It is prohibited by RESPA.

Question 48

What are the six points that make an “application” under RESPA?

Answer 48

Submission of:

• Consumer’s name
• Consumer’s income
• Consumer’s SSN to obtain a credit report
• Property address
• Estimate of property value, and
• Mortgage loan amount sought

*There’s no more “catch all” category. The CFPB concluded that creditors can collect other information they deem necessary before obtaining the 6 items above (such as obtaining SSN last), but can’t delay receipt of the 6th item to delay delivery of the LE.

Question 49

Of the following loans, which one would not be considered a federally related mortgage under RESPA?

a. A purchase loan to a consumer secured by a mobile home and lot
b. A purchase loan to a consumer secured by a condo
c. A business loan to a corporation secured by a 1-4 family dwelling
d. A home improvement loan to a consumer

Answer 49

c. A business loan to a corporation secured by a 1-4 family dwelling

Loans made for business purpose that are secured by a 1-4 family dwelling are exempt from the coverage of RESPA

Question 50

T/F: Lenders may charge a late fee for the first 60 days after a servicing transfer if borrower made payments on time to the old servicer.

Answer 50

False. Lenders may NOT charge a late fee during this time.

Question 51

How is the escrow payment amount that’s calculated under the escrow accounting rules put on the final Closing Disclosure as far as the opening balance?

Answer 51

*

Question 52

If a loss mitigation application is received more than __ days before a foreclosure sale, then within __ days of receiving the application, the servicer must evaluate the borrower and determine which loss mit options it will offer the borrower (if any).

Answer 52

37

30

Question 53

Title Co., Inc. has a business relationship with First National Bank in that Title Co keeps a large certificate of deposit at the bank at an interest rate substantially below the market rate. In return, the bank refers to Title Co its mortgage loan borrowers for settlement services and to purchase required title insurance. Title Co’s rates are very competitive. if the bank discloses the relationship to the borrower, is this arrangement legal under RESPA?

a. Yes. Borrowers would pay the same price for title insurance and settlement at another title company anyway
b. No. The bank is receiving value in the blow-market-rate CD, essentially a referral fee for settlement services
c. Yes. The bank discloses the relationship on the GFE
d. No. The bank can’t require title insurance on mortgage loans.

Answer 53

b. No. The bank is receiving value in the blow-market-rate CD, essentially a referral fee for settlement services

Question 54

How are escrow payments calculated under the escrow accounting rules?

Answer 54

*

Question 55

Transferor notice must be delivered not __ than __ days __ the effective date of the servicing transfer.

Answer 55

less
15
before

Question 56

Are there any disclosure requirements with an AfBA?

Answer 56

Yes, the Bank must give the proper AfBA disclosure and it MUST be acknowledged by the borrower (signed or initialed).

Question 57

What explanation should a bank’s AfBA disclosure statement include?

a. A consumer’s rights to file a complaint with HUD against the lender
b. The mortgage services dispute resolution procedures under RESPA
c. The Computer Loan Origination (CLO) System
d. The nature of the relationship between the referring party and the service provider

Answer 57

d. The nature of the relationship between the referring party and the service provider

Question 58

Does a referral occur if the lender requires the borrower to use a particular provider of settlement service when the borrower will pay for the service?

Answer 58

Yes

Question 59

Which of the following practices is NOT prohibited by RESPA?

a. A lender requiring the borrower to pay a fee for the preparation of a HUD-1 Settlement Statement
b. A seller conditioning a property sale (that involves a federally related mortgage loan) on the buyer’s purchase of title insurance from a certain title company
c. A lender requiring a consumer to pay for the preparation of documents by a certain attorney
d. A bank paying a referral fee to an independent real estate agent who has generated new mortgage loan customers

Answer 59

c. A lender requiring a consumer to pay for the preparation of documents by a certain attorney

A lender may require the borrower to use and pay for a certain attorney to prepare or review the loan documents. However, if the bank receives a thing of value from the attorney in exchange for the business generated by this arrangement, the transaction is a violation of RESPA.

Question 60

The servicer must allow the borrower to have __ days to make a decision after an offer of a loan modification is extended.

Answer 60

14

Question 61

What is RESPA Section 8?

Answer 61

Anti-kickback provision. It is illegal to give or receive any thing of value in return for referral of a settlement service.

Question 62

A force-placed insurance notice reminder must be delivered or mailed to the borrower at least __ days before the fee is assessed and at least __ days after the initial notice is sent.

Answer 62

15

30

Question 63

Can I pay a fee for work that is done after the loan closes (i.e. secondary market fees, etc)?

Answer 63

Yes. RESPA is all about SETTLEMENT service. Work done post closing is not covered here.

Question 64

An AfBA disclosure is required if referrals are made by the lender to a service provider that is an affiliate or in which the lender has an ownership interest of more than __% in connection with a federally related mortgage loan.

Answer 64

1

Question 65

What is a settlement service?

Answer 65

Any service provided in connection with a real estate settlement including, but not limited to, the following: title searches, title examinations, services rendered by an attorney, the preparation of documents, and property surveys.

Question 66

Within __ days of a borrower making an appeal, the servicer must provide a notice to the borrower stating the servicer will offer the borrower a loss mit option based upon the appeal and how long the borrower has to accept or reject such offer or prior offer. The servicer may require that the borrower accept or reject an offer of a loss mit option after an appeal no earlier than __ days after the servicer provides the notice to a borrower.

Answer 66

30

14

Question 67

If a loan has exhausted all loss mitigation efforts and solutions, can a Bank commence foreclosure?

Answer 67

Yes, but only as long as all loss mit options are exhausted and it has been at least 120 days.

Question 68

What is an AfBA?

Answer 68

Where a person (the lender/the Bank) refers a service to an affiliated provider.

Cross ownership or cross control, whereby the bank has effective control over the service provider or vice versa.

Question 69

Is “loan program” an element of an application?

Answer 69

No, hard to prep an LE without the program, but the CFPB has instructed creditors to “structure” or “sequence” the 6 data elements for application so that you have this information before preparing a LE.

Question 70

What are the servicer’s responsibilities if a borrower’s complete loss mit application is denied for any trial or permanent loan modification option?

Answer 70

The servicer must send a notice to the borrower that states

• the specific reasons for the determination and
• that the borrower wasn’t evaluated on any other criteria.

Question 71

A bank proposes to pay a $50 referral fee to bank employees for referring home mortgage loan applicants to an affiliated mortgage company by providing a mortgage application and an AfBA disclosure. What does RESPA permit that makes this practice acceptable?

a. A mortgage affiliate can reimburse the bank for referral fees paid to bank employees for an originated loan
b. A mortgage affiliate can reimburse the bank for referral fees paid to bank employees if an AfBA disclosure is approved
c. A bank can pay nominal referral fees to its own employees because a bona fide service is being performed based on an application being provided
d. A bank can pay referral fees to its own employees when an AfBA disclosure is provided.

Answer 71

d. A bank can pay referral fees to its own employees when an AfBA disclosure is provided.

An institution may pay referral fees to its own employees

Question 72

T/F: Both the transferor servicer and transferee servicer must deliver the Notice of Transfer of Servicing disclosure to the borrower.

Answer 72

T

Question 73

What does AfBA stand for?

Answer 73

Affiliated Business Arrangement

Question 74

When can a loan commence foreclosure?

Answer 74

After at least 120 days of delinquency.

Question 75

What is the earned fee exception?

Answer 75

You can pay for work that is actually done. HUD created a list of 14 compensable services.

• Do 5 of the 14 and take an application
• Fee is related to the amount of work done (FMV)

Question 76

Other than the notice requirements, can any other information be included on the force-placed insurance notice?

Answer 76

No

Question 77

What loans are not covered under RESPA?

Answer 77

Business purpose loans and loan modifications (same as Reg Z). You will never have a loan that’s covered by RESPA, but not Reg Z (but the opposite is true - you may have a Reg Z loan that’s not covered by RESPA).

Question 78

The lender must submit an initial escrow account statement to the borrower at settlement or within __ days of settlement.

Answer 78

45