RESPA (Real Estate Settlement Procedures Act) - Regulation X Flashcards
The Real Estate Settlement Procedures Act (RESPA) provides protection for loans on what kind of properties?
Residential Properties (1-4 units)
Nothing of value can be given in exchange for ________ with the exception of real estate brokerage firms that are allowed to exchange referrals between themselves.
in exchange for the referral of business
RESPA is what regulation?
Regulation X or Reg X
What regulation is primary involved with the disclosure of closing costs and the prevention of kicks backs, which may raise the amount of closing costs to the consumer?
RESPA - Regulation X
Who enforces the RESPA regulations? Hint: HUD was the previous enforcer.
CFPB - Consumer Financial Protection Bureau
RESPA does not apply to loans secured by what kind of properties?
Commercial properties
RESPA does not apply to ______ (unless a dwelling is intended to be constructed on the land within two years).
vacant land aka “raw land”
RESPA does not apply to properties containing ____ or more acres (know as agricultural property).
25 or more acres
RESPA does not apply to temporary financing. What are two examples of temporary financing?
- Bridge loans
2. Construction loans
What regulation deals with the mortgage servicer and mortgager servicing abuses?
RESPA - Section 6
A ______ is the company that collects monthly mortgage payments, pays taxes, insurance, and other items as they come due, and notified the borrower of late payments.
A mortgage servicer
Homeowners who are having issues with their mortgage servicers may take advantage of a provision of RESPA whereby a borrower many request information relating to the servicing of a loan. It is called a __________ and imposes a duty to respond to borrowers’ inquiries.
Qualified Written Request or QWR
A Qualified Written Request (QWR) requires that the lender acknowledge receipt of the request within how many business days?
And seeks to resolve the issue/concern within how many days?
5 business days
within 30 days (with a 15 day extension if needed)
What regulation mandates a creditor to provide a monthly statement to a consumer?
RESPA - Section 6 (Regulation X)
What regulation states that creditors must promptly post a payment the DAY it is received?
RESPA - Section 6 (Regulation X)
What regulation requires creditors to respond to a payoff request within seven (7) business days?
RESPA - Section 6 (Regulation X)
What regulation requires creditors to make a disclosure to the consumer 30 and 45 days prior to billing for force-placed insurance?
RESPA - Section 6 (Regulation X)
What regulation states that creditors must resolve written consumer complaints within 30 to 45 days of written receipt?
RESPA - Section 6 (Regulation X)
RESPA Section 6 states that the lender must attempt to establish live contact within _____ days with a borrower who has missed a mortgage payment.
within 36 days
RESPA Section 6 states that a creditor must provide a borrower with mortgage workout options to the borrower within _____ days of a missed payment
within 45 days
What are examples of mortgage workout options?
Loan Modification
Forbearance
Short Sale
RESPA Section 6 states a creditor must notify a borrower within _____ days after submission of a complete loan workout application if there is an option to save the home.
within 30 days
According to RESPA Section 6 a creditor may not seek judicial foreclosure or a trustee’s sale action for at least how many days for a borrower who is delinquent
120 days
What is dual tracking? Hint: it is prohibited under RESPA Section 6.
Dual tracking is continuing to seek foreclosure actions while the borrower is being considered for other workout options.
What regulation prohibits kickbacks, face splitting and unearned fees? Unearned fees are also known as advanced fees or upfront fees.
RESPA - Section 8 (Regulation X)
Illegal referral fees are also known as what?
Kickbacks
RESPA Section 8 prohibits giving or accepting a _______ in exchange for the referral of settlement services.
a thing of value
Despite prohibiting kickbacks, what regulation does NOT prohibit payment of Fair market value for goods or services that were actually received or performed.
RESPA Section 8 (Regulation X)
A ________ may include gift cards, sports ticket, advertising space or marketing material bearing a real estate agent information to give to his or her client.
thing of value
Promotional items with what ARE permitted under REPSA?
promotional items with a company’s logo
RESPA Section 9 prohibits the seller from requiring the buyer to use a ___________ as a condition of the sale, unless the seller pays for the title insurance and all other title related fees.
a particular title company
If RESPA Section 9 is violated, the seller could be sued for ___________ , the amount paid for the service.
3 times and/or treble damages
What regulation requires lenders to conduct an annual escrow analysis if the account has impounds? (escrow account/reserve account)
RESPA Section 10 (Regulation X)
The ______ ______ analysis summarizes the activity in the impound account.
annual escrow analysis
What regulation states that the lender can take no more than 1/12th of the annual amount of the property taxes and insurance premium for the purpose of the escrow account?
RESPA Section 10 (Regulation X)
Overages of ______ or more discovered in a borrower’s escrow account during the annual audit analysis must be refunded to the borrower (as long as the borrower is not delinquent). This refund must be made within how many days?
Overages of $50 or more
within 30 days
RESPA disclosures include what?
- Know-Before—You-Owe (aka Home Loan Toolkit)
- Mortgage Servicing Disclosure Statement
- List of HUD counselors
- AfBA Disclosure form
- Initial Escrow Statement
- Annual Escrow Statement
- Servicing Transfer Statement
What RESPA disclosures are used with mobile homes and reverse mortgages specifically?
The GFE/HUD
How many HUD approved counselors must the lender list and provide to the borrower?
10 (ten)
The Mortgage Servicing Disclosure statement is not the same document as the STS. What does STS stand for?
STS is Servicing Transfer Statement
What disclosure is the standard form used to disclose to the borrower when the lender intends to retain the mortgage servicing of the loan (handling the monthly payments and paying the taxes and insurance obligations). this must be delivered to the borrower at or within three days of the loan application.
Mortgage Servicing Disclosure
This itemizes the estimated taxes, insurance premiums and escrow account charges “anticipated to bbe paid” from the escrow account during the loans first 12 months. Usually given at settlement but the lender has 45 days from settlement to deliver. This is sometimes referred to as the “Hello Letter”. What is the document called?
The Initial Escrow Statement
The Servicing Transfer Disclosure is often referred to as a what? The new servicer is also required to send the borrower a notice known as the “welcome” letter AKA a hello letter.
Goodbye Letter
RESPA states that a Servicing Transfer Statement is required if the loan servicer sells or assigns the _______ to a borrowers loan to another loan servicer.
assigns the servicing rights
The Servicing Transfer Disclosure is required to be provided to the borrower by the servicer no later than how many days BEFORE the servicing rights are transferred to the new servicer?
15 days
According to the Servicing Transfer Disclosure, there is a statutory grace period of _______ during which any payment mistakenly made to the old servicer must be forwarded to the new servicer, and no late fee can be assessed.
60-day “grace period”
Per RESPA, a complete application consists of what six (6) items?
- Borrower Name
- Social Security Number
- Subject Property Address
- Borrower’s monthly income
- Estimate value you amount (of the home)
- The loan amount
Per RESPA - if a borrower has submitted a complete application, the initial disclosures are triggered and must be provided to the borrower within how many days?
3 days
If the application is withdrawn in the first three days, or the lender denied the application within the first three day, what is not required to be issued to the borrower?
Initial Disclosures are not required.
The Home Loan Toolkit / Know Before You Owe booklet (purchases only required by RESPA), HUD Special Information booklet (non-purchase loans), Affiliate Business Arrangement Disclosure, Loan Estimate and/or GFE if applicable, Mortgage Servicing Disclosure Statement and a list of HUD Counselors are included in what?
These are the Initial Disclosures
This is intended to help persons borrowing money to finance residential real estate to better understand the nature and cost of real estate settlement services. It must be delivered at or within three days of the loan application for consumers looking to purchase a property. This is for purchase transactions only. What am I referring to?
The Home Loan Toolkit aka Know Before You Owe booklet
A referring party must give what disclosure to the consumer immediately at the time of referral, or prior to loan consummation - if referring business where he or she has more than 1% interest in the referring business or service.
the Affiliated Business Arrangement Disclosure
For mortgage transactions, the GFE and the HUD have been replaced by two forms called the ________ and ________.
Loan Estimate
Closing Disclosure
Although the GFE and the HUD were replaced with the Loan Estimate and the Closing Disclosure for mortgage transactions, the GFE and the HUD will continue to be provided for __________, ____________, __________________________.
HELOCS (Home Equity Line of Credit)
Reverse Mortgages
Loans securing mobile homes where the owner will not also own the land which the mobile home resides.
Although the GFE and the HUD were replaced with the Loan Estimate and the Closing Disclosure for mortgage transactions, the GFE and the HUD will continue to be provided for mobile homes under a certain circumstance. What is the circumstance?
Loans securing mobile homes where the owner will not also own the land which the mobile home resides.
The GFE and the HUD are what kind of disclosures?
RESPA disclosures
What two disclosures are referred to as RESPA disclosures?
The GFE and the HUD.
The Loan Estimate and Closing Disclosure are what type of disclosures?
TILA disclosures
What two documents are considered TILA disclosures?
The Loan Estimate and Closing Disclosure
Who created TILA
The Federal Reserve
Who enforces the Gram Leech Bliley Act
FCC
What is another way of saying loan consummation?
loan signing
When must the Closing Disclosure be delivered?
3 business days before the loan consummation/loan signing
When is the final Closing Disclosure delivered?
At loan signing/loan consummation
RESPA requires that two disclosures be given at settlement. What are they?
The Closing Disclosure (CD) and the Initial Escrow Statement
RESPA requires the Closing Disclosure (CD) and the Initial Escrow Statement be given at settlement. Which of the two disclosures can be given within 45 days of closing?
Initial Escrow Statement
When there is no federally-related loan or no closing costs to the borrower or for most close-end loans, what disclosure is NOT required?
Closing Disclosure (CD)
Forced-placed insurance occurs when?
If the lender chooses the hazard insurance company when the borrower allows his policy to lapse.
If the lender chooses the hazard insurance company when the borrower allows his policy to lapse, what is this called?
Force-placed insurance
The TRID Loan Estimate (LE) combines what two disclosures?
The initial TILA disclosure and the GFE
The initial TILA disclosure and the GFE are combined to make what?
The TRID Loan Estimate (LE)
The TRID Closing Disclosure (CD) combines what two disclosures?
The final TILA disclosure and the HUD
The final TILA disclosure and the HUD are combined to make what disclosure?
The TRID Closing Disclosure
The Loan Estimate must be delivered OR mailed no less than how many business days AFTER a loan application is submitted?
3 business days
The terms on the Loan Estimate (LE) must be available for how many business days?
10 business days
The terms on the Loan Estimate must be available for 10 business days. What is not included?
The interest rate is not included
When it is necessary to provide a revised Loan Estimate, it must be provided within how many business days of receiving information sufficient to establish a valid change in circumstance?
3 business days
When it is necessary to provide a revised Loan Estimate, it must be provided within 3 business days of receiving information sufficient to establish a valid change in circumstance. Documentation must be retained regarding the reason for the revision for how long?
three (3) years
The creditor must make sure that the revised Loan Estimate is received at least how many business days prior to consummation of the mortgage loan? Remember consummation also stands for closing.
At least four (4) business days
What is the soonest that a loan can close?
seven (7) days
3 days + 4 days = 7 days
Once a borrower receives the Closing Disclosure, a new Loan Estimate cannot be issued. If there is a valid change of circumstance that occurs after the Closing Disclosure has been delivered, the borrower is to receive a revised what?
A revised Closing Disclosure
A “valid changed circumstance” is defined under RESPA as: __________ ______________ and ____________.
- An Act of God, war, disaster or other emergency
- New information regarding the consumer, the loan or the property
- Information regarding the consumers qualification for the loan on which the originator relied in providing the LE that changes or is later found to be inaccurate
What are not considered “valid changed circumstance” as defined under RESPA?
Errors in disclosing and initial or subsequent LE or delays in underwriting/checking in conditions, leading to lock extension fees.
Examples of Change Circumstances could include:
- Interest rate lock
- appraised value comes in lower than expected, creating a pricing adjustment for higher LTV
- Loan program is flipped from Conventional to FHA, adding UFMIP
- Consumer’s credit score drops, resulting in a pricing increase
- Consumer requests a change in loan amount, interest rate, loan program or terms, leading to an increase in settlement costs.
- Seller delay in short sale approval
What is UFMIP?
Up Front Mortgage Insurance Premium
what loan program requires UFMIP?
FHA
Changes in the APR, loan product or the addition of a prepayment penalty, trigger a revised __________ and an additional 3 business day waiting period?
revised Closing Disclosure
When a consumer requests the cancellation of their escrow account, the lender must deliver what kind of notice no later than three business days before closure?
An Escrow Closing Notice
When is an Escrow Closing Notice supplied to a consumer?
No later than 3 business days after the consumer requests the cancellation of their escrow account.
If the escrow account is closed for some other reason except for default or termination caused by refinancing, repayment or rescission, the notice must be sent how many business days prior to the closure/consummation?
The notice must be sent 30 business days prior to closure of the escrow account.
How long must lenders retain the Closing Disclosure and related documents after closing?
5 years
How long must lenders retain the Loan Estimate after closing?
3 years
When must the Escrow Closing Notice be provided?
It must be provided by the creditor prior to cancelling an escrow account for any consumer who had one established by the creditor.
Regarding the Escrow Closing Notice, if the consumer requests the closure, the notice must be received at least how many business days before the consumers escrow account is closed?
at least three (3) business days before the consumers escrow account is closed
Regarding the Escrow Closing Notice, if the consumer requests the closure, the notice must be received at least three (3) business days before the consumers escrow account is closed. IF the escrow is closed for any other reason, the creditor is required to provide the notice within how many business days?
within 30 business days
How long must a lender retain the Escrow Cancellation Notice after loan consummation / closing?
2 years
A Partial Payment Policy disclosure is found on the ______ ________ regarding the acceptance of partial mortgage payments by the loan servicer. The disclosure informs the consumer about the policy and the acceptance of payment less than the full amount due under the note.
Closing Disclosure
How long must a lender retain the Partial Payment Policy after loan consummation / closing?
2 years
A Tolerance is how much of a change a particular item can “tolerate” between the ______ and the ______, before it’s in violation of the law.
the Loan Estimate (LE) and the Closing Disclosure (CD)
When referring to Tolerance there are three different types and or levels, what are they?
Zero Tolerance
10% Tolerance
No Limit
Real estate transfer taxes, loan origination fees and interest rate have what type of tolerance? Note: Other items subject to this tolerance may also include the appraisal and credit report.
Zero Tolerance
Fees that the lender chooses or identifies, such as government recording fees, and title insurance are subject to what tolerance? Additionally, these items cannot vary by more than what percentage between the loan estimate and the closing disclosure?
10% Tolerance
10%
Fees for services that the owners choose for themselves, such as hazard insurance, title insurance, and fees that are paid per diem (pre-paid mortgage interest) are subject to what tolerance limit?
NO tolerance limit
The lender has how many business days after the closing to refund the borrower any portion of the charges that exceeded the acceptable amount of a stated tolerance level?
60 business days
Non-numeric clerical errors and tolerance violations trigger a new Closing Disclosure that must be delivered within how many calendar days following loan consummation / closing?
60 calendar days
A Closing Disclosure tolerance refund must be sent within how many days?
60 days
Closing costs greater than the loan estimate were or were not made in good faith?
Not made in good faith
Closing costs less than the loan estimate were or were not acted in good faith?
Were acted in good faith
TRID rules do NOT apply to what types of loans?
Reverse mortgages
Mortgages for mobile homes not secured by real estate
HELOC’s
There is only one document that reflects the rate lock information. What am I referring to?
Loan Estimate (LE)
Although mortgage brokers may provide the Loan Estimate to the borrower, who is ultimately responsible for the delivery?
The creditor (the lender who is providing the financing)
As it relates to the Loan Estimate (LE) a business day is what?
A business day is any day in which the creditor is open to the public for the purpose of conducting regular business activities.
No fee with the exception of a bona fide and reasonable credit report fee, may be received by the MLO or creditor until the borrower has received what?
The Loan Estimate (LE)
What is the penalty for violating RESPA?
$10,000 and/or up to 1 year in jail
The main purpose of RESPA is to help consumers become better shoppers for _________ ?
Settlement Services
RESPA considers the following as _____________: title searches, title examinations, title insurance, attorney services, preparation of documents, surveys, credit reports, appraisals, pest inspections, real estate services, loan origination, processing mortgages and closing or settlement charges.
Settlement Services
RESPA considers settlement services as:
Title searches, title examinations, title insurance, attorney services, preparation of documents, surveys, credit reports, appraisals, pest inspections, real estate services, loan origination, processing mortgages and closing or settlement charges.
