RESPA Flashcards
What does RESPA stand for?
Real Estate Settlement Procedures ACT
What regulation is RESPA?
Regulation X
What is the regulatory agency for RESPA?
HUD (The Department of Housing and Urban Development)
Who administers and enforces RESPA?
CFPB (Consumer Financial Protection Bureau)
What is the purpose of RESPA? (Name three things RESPA focuses on…)
- Allows consumers to obtain information about closing costs so they can shop for settlement services
- Protects consumers from excessive costs and unearned fees
- Limits the amount of funds that creditors can require consumers to deposit into escrow accounts
A loan originator is said to have taken an application when they collect what?
P - Property Address A - Address
E - Estimated Value L - Loan Amount
N - Name I - Income
C - Credit (SSN) E - Estimated Value
I - Income N - Name
L - Loan Amount S - SSN
Within how many days does the MLO have to deliver the initial set of disclosures after an application is taken?
3 business days
RESPA applies only to federally related mortgage loans. What loans are not covered by RESPA? Name four…
- Loans for 25 acres or more
- Loans for agricultural, business or commercial purposes
- Loans secured by vacant land
- Temporary financing (bridge loans)
- Loan assumptions
- Loan conversions
- Loans sold in the secondary markets
- All cash sales
- Seller financing (Seller carry)
What three types of transactions use the Good Faith Estimate (GFE)?
- HELOCS
- Reverse mortgages (HECM)
- Closed end loans where the creditor makes 5 or fewer loans annually
What is a Good Faith Estimate (GFE)?
It is an estimate of the charges that are due at the time of closing
When is the Good Faith Estimate (GFE) required?
It is required within 3 business days of application
For how long must the GFE be retained?
3 years
For what types of transactions is a HUD-1 Settlement Statement utilized?
- Reverse mortgages (HECM)
- Closed end loans where the creditor makes 5 or fewer loans annually
What is the HUD-1 Settlement Statement?
It is a document provided at closing that itemizes the actual costs of settling the loan
How long must the HUD-1 Settlement Statement be retained?
5 years
What does section 6 of RESPA cover?
Loan servicing
What does section 8 of RESPA cover?
Kickbacks, fee-splitting, and unearned fees
What does section 10 of RESPA cover?
Escrow accounts
How many days does the lender have to provide the Initial Escrow Statement to the borrower?
45 days
*This is typically delivered to the borrower at closing
What is the penalty for a violation of section 8 of RESPA?
Fines up to $10,000 and/or 1 year in prison
What identifies and communicates if there is a surplus in a borrower’s escrow account?
The Annual Escrow Statement
How many days does the lender have to refund an escrow surplus to the borrower?
What is considered a surplus?
The lender has within 30 days from the escrow analysis to refund a surplus to the borrower.
A surplus is considered to be more than $50 over the 2 month cushion
If the original lender will not be servicing the loan, they must provide what to a borrower within 3 business days of loan application?
- Mortgage Servicing Disclosure Statement (MSDS)
- Initial Servicing Disclosure Statement (ISDS)
- Initial Servicing Transfer Disclosure (ISTD)
When a loan is transferred to another servicer, what must be provided to the borrower?
A servicing transfer statement
How many days does the current lender have to provide a notice to the borrower of a servicing transfer?
15 days
How many days does a new lender have to provide notice to a borrower of a servicing transfer?
15 days
True or False? A new loan servicer can assess late fees during the first 60 days of a servicing transfer?
False
The new loan servicer cannot assess late fees for a period of 60 days after the transfer, as long as the payment is made on time.
How many days does a servicer have to respond to a “qualified written request”?
They must acknowledge receipt of the “qualified written request” within 5 days of receipt.
How many days does a servicer have to investigate and respond to a “qualified written request”?
30-45 days
True or False? Giving or accepting a fee, kickback, or a “thing of value” in exchange for the referral of settlement business is allowed under RESPA?
False
RESPA prohibits all of these things, including fee-splitting and charging unearned fees under section 8
What is an ABA Disclosure? When must it be provided?
Affiliated Business Arrangement Disclosure
It must be provided if you have an affiliate relationship with or a direct or beneficial ownership interest of more than one (1) percent in a provider of settlement services. It is due at time of referral
What is the max cushion a lender can collect for annual tax and insurance payments?
2 months or 1/6th of the annual amount
How many MLOs can there be on each transaction?
You can only have one MLO on a loan transaction
What loans are covered by RESPA?
1st and 2nd mortgage related transactions on residential real property including:
- 1-4 unit family dwellings
- Condo’s
- Manufactured homes (must be attached to the ground)
When is the GFE due?
It is due within 3 business days of application
What is the SCIB? What are other names for the SCIB?
Settlement Cost Information Booklet -AKA- Special Information Booklet -AKA- "Know Before You Owe"
On what type of transaction is the SCIB required?
Purchase transaction of residential property
If you chose NOT to have an escrow account, the lender will charge you what?
A one-time escrow waiver fee of 0.25%
On the GFE, the estimate for all settlement charges must be available for how many days?
10 days
How many days must the interest rate be locked prior to settlement?
7 days
This is required due to disclosing the initial LE (reflecting the lock-in) a minimum of 7 days prior to closing.
Lender charges fall under what tolerance category?
0% Tolerance
In what box are lender charges located on the GFE?
Box A
In what section are lender charges/costs located on the LE/CD?
Under “Loan Costs”, section A
What does LE stand for?
Loan Estimate
What does CD stand for?
Closing Disclosure
In what box are 3rd party fees located on the GFE?
Box B
IN what section are 3rd party charges located on the LE/CD?
*Under “Loan Costs” & “Other Costs” on page 2.
What is the penalty for a RESPA violation?
A fine up to $10,000 and up to one year in prison, or both
What is YSP? What are the two definitions of YSP?
Yield Spread Premium
A fee paid to the loan originator by the lender for originating a loan at an interest rate higher than the par rate.
A lender’s rebate received by the borrower when the loan is originated at an interest rate higher than the par rate.
A disclosure of 10 HUD approved homeownership counseling organizations in the area must be given to the borrower within how many days of application?
3 business days
There is n o requirement for the borrower to attend
