RESPA

Question 1

If a seller requires the borrower to use the services of a particular title company, what regulation is being violated?

Answer 1

RESPA, section 9

Question 2

The lender can require how much to be put into an escrow account every month? How much at closing? What regulation sets these limits?

Answer 2

1/12 of the annual property tax and insurance premium monthly

1/6 (two months’ worth) at closing

RESPA section 10

Question 3

What does section 8 of RESPA prohibit?

Answer 3

• Giving or accepting fees, kickbacks, or anything of value for referrals of settlement service business.
• Fee-splitting
• Receiving unearned fees

Question 4

What does section 9 of RESPA prohibit?

Answer 4

The seller requiring the borrower to use a particular title insurance agency, and requiring the borrower to purchase the services. The interests of the seller on the one hand, and the buyer and lender on the other, don’t necessarily intersect here. Whoever chooses the title company pays for the services.

Question 5

What does section 10 of RESPA regulate?

Answer 5

It limits the payments the creditor is allowed to require for escrow accounts.

At closing, they can require no more than 1/6 of the annual insurance premium and property taxes. In effect, they can require the payment of a two month cushion.

After closing, the creditor can require monthly escrow payments of no more than 1/12 annual insurance and property taxes.

Question 6

Under what circumstances and in what time frame must a lender deliver an Escrow Closing Notice?

Answer 6

When a consumer requests the cancellation of their escrow account, the lender must deliver an Escrow Closing Notice no later than 3 business days before closure. If the account is closed for some other reason (except for default or termination caused by refinancing, repayment or rescission), the notice must be sent 30 business days prior to closure.

Question 7

Creditors may not revise an estimate because of technical issues, incorrect calculations or low estimates. They can revise the estimate if changing circumstances:

Answer 7

• Increase the closing costs (interest rate increase on an unlocked loan).
• Affect the value of a property (storm damage or lien recorded).
• Negatively affects a borrower’s ability to qualify for the loan (fired, documents prove less income).
• Consumer waits more than 10 business days to indicate an Intent to Proceed.
• Settlement is delayed more than 60 calendar days for a new construction loan if the original Loan Estimate includes the statement that the estimate can be revised for this reason.

Question 8

According to section 8 of RESPA, in order for two loan originators to receive compensation for one transaction, how many duties must each have performed? How many distinct duties does RESPA list? What’s the maximum penalty for criminal cases involving a violation?

Answer 8

5 each

There are 14 in total, so no more than two LOs can be paid from one closing.

Up to $10,000 and 1 year in prison

Question 9

Section 6 of RESPA states that loan servicers have _ days to acknowledge the receipt of a borrower complaint and _ days to resolve it.

Answer 9

5 days

45 days

Question 10

According to section 6 of RESPA, a lender cannot file for foreclosure until a payment is how many days late?

Answer 10

120 days

Question 11

The loan originator must retain documentation relating to a loan for how long?

Answer 11

3 years

Question 12

For how long must a creditor retain the Loan Estimate? The Closing Disclosure? The Escrow Cancellation Notice (if applicable)?

Answer 12

3 years
5 years
2 years