RESPA REG X Flashcards
- The Real Estate Settlement Procedures Act (RESPA) provides consumer protection for loans on
Residential Property of 1-4 units
- Nothing of value can be given in exchange for the referral of business with the exception of
Real Estate Brokerage Firms that are allowed to exchange referrals between themselves.
- For test purposes RESPA is
RE X PA (REG X)
- RESPA (REG X) is primarily involved with ______ and prevention of ______, witch may raise the amount of closing costs to the consumer.
The Disclosure of Closing Costs
Kickbacks
- The _____ enforces RESPA regulations , ____ was the previous enforcer.
CFPB
HUD
- RESPA does not apply to loans secured by _______________.
Commercial Properties
- RESPA does not apply to __________
Vacant Land, unless within two years a dwelling is made on it.
8.RESPA does not apply to properties containing ______ acres or more
25 acres (25+ is considered agricultural property)
- RESPA does not apply to temporary financing , such as __________ and __________.
Bridge Loans and Construction Loans
- RESPA Section 6 deals with
Mortgage Servicer and Mortgage Servicing Abuses
11.A Mortgage Servicer is the company that collects ________ , pays taxes insurance, and other items as they come due l, and notifies the borrower of late payments.
Monthly Mortgage Payments
12.Qualified Written Requests (QWR)
A QWR is a request for information relating to the servicing of a loan, It imposes a duty to respond to the inquiry.
- A QWR requires the lender to acknowledge the request within __ business days, and seek to resolve it within ___ business days with a 15 day extension if necessary.
5 business days
30 business days
14.RESPA Section 6 mandates a creditor to provide a ________ statement to the consumer
Monthly
15.RESPA SECTION 6 states that creditors must promptly post a payment the _____ it is received.
Day
16.RESPA section 6 requires creditors to respond to a payoff request within ___ business days
7
17.RESPA section 6 requires creditors to make a disclosure to the consumer ___ and ___ days prior to billing for forced placed insurance.
30
45
18.RESPA section 6 states that creditors must resolve written consumer complaints within ___ - ____ days of a written receipt.
30-45
19.RESPA section 6 states that the lender must attempt to establish ________ within 36 days with a borrower who has missed a mortgage payment.
Live Contact
20.RESPA SECTION 6 States that within 45 days of a missed payment the creditor must provide the borrower with _____ .
Mortgage Workout Options ( Loan Mod, Forbearance options,Short Sale options etc.)
21.RESPA section 6
A creditor must notify a borrower within 30 days after submission of a completed Loan Application if their is an option to
Save the Home
- According to RESPA section 6 a creditor may not seek judicial foreclosure or a trustees sale action for at least ____ days for a borrower who is delinquent.
120
- RESPA Section 6 prohibits _______ ______ , which is continuing to seekforeclosure actions while the borrower is being considered for other workout options.
Dual Tracking
- RESPA Section 8 prohibits
kickbacks, fee splitting and unearned fees. Unearned fees are also known as advance fees or upfront fees.
- Illegal referral fees are known as
Kickbacks
- RESPA Section 8 prohibits giving or accepting a “thing of value” in exchange for the
referral of settlement services.
- Despite prohibiting kickbacks, RESPA does NOT prohibit payment of fair market value
for goods or services that were received or performed.
- A “thing of value” may include gift cards, sports ticket, advertising space, marketing.
material bearing a real estate agent’s information to give to his/her client, etc.
- Promotional items (with company logo) are permitted. (This is not a thing of value)
- RESPA Section 9 prohibits the seller from requiring the buyer to use a particular title company, as a condition of the sale, unless the seller pays for the title insurance and all other title-related fees.
- If RESPA Section 9 is violated, the seller could be sued for
3X damages this is called Treble Damages
- RESPA Section 10 requires lenders to conduct an ______ _______ _______ if the account has impounds (escrow account/reserve account).
Annual Escrow Analysis
- The annual escrow analysis summarizes the activity in the
Impound Account / Escrow Account
Same thing
- RESPA Section 10 states that the lender can take no more than _____ of the annual amount of the property taxes and insurance premium for the purpose of the escrow account.
1/12
- RESPA Section 10 states that to protect itself from escrow shortages, the lender may require a cushion that doesn’t exceed an amount equal to 1/6th (2 months) of the total disbursements for the year.
- Overages of $___ or more discovered in a borrower’s escrow account during the annual audit analysis must be refunded to the borrower (if the borrower is not delinquent). The refund must be made within 30 days.
$50
- RESPA Disclosures include the following: Know-Before-You-Owe Booklet (aka Home Loan Toolkit), Mortgage Servicing Disclosure Statement, List of HUD Counse lors, AfBA Disclosure form, Initial Escrow Statement, Annual Escrow Statement, and the Servicing Transfer Statement. (Note: the GFE/HUD are also RESPA disclosures – but only used with mobile homes, reverse mortgages, etc.).
- The lender must provide the borrower with a list of then (10) HUD approved counselors.
- Please remember that the Mortgage Servicing Disclosure statement IS NOT the same document as the Servicing Transfer Statement.
- The Mortgage Servicing Disclosure is the standard form used to disclose to the borrower whether 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.
- Initial Escrow Statement - Itemizes the estimated taxes, insurance premiums and escrow account charges “anticipated to be paid” from the Escrow Account during the loan’s first 12 months. Usually given at settlement, but lender has 45 days from settlement to deliver. Sometimes referred to as the ______ _______
Hello Letter
- This Servicing Transfer Disclosure is often referred to as a “goodbye letter” in the industry. The new servicer is also required to send the borrower a notice known as a “welcome” letter (aka “hello letter”)
- RESPA states that a Servicing Transfer Statement is required if the loan servicer -
sells or assigns the servicing rights to a borrower’s loan to another loan servicer.
- The Servicing Transfer Disclosure is required to be provided to the borrower by the servicer no later than ___ ____ BEFORE the servicing rights are transferred to the new servicer
15 days
- According to the servicing transfer disclosure, there is a statutory __ _____ ___ ____ 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 days grace period
- Per RESPA, a complete application consists of the following six (6) items: borrower name, Social Security Number, subject property address, borrower’s monthly income , estimated value amount, and the loan amount
Acronym is A.L.I.E.N.S. A. Address L. Loan Amount I. Income Level E. Estimated Value N. Names for borrower S. Social Security nums of borrowers
- Per RESPA – if a borrower has submitted a complete application, the initial disclosures are “triggered” and must be provided to the borrower within ____ ___ ____
3 business days
- If the application is withdrawn within the first ___ days, or the lender denied the application within the first ___ days, the initial disclosures are NOT required.
3 days
3 days
- Initial Disclosures include
Home Loan Toolkit/Know Before You Owebooklet (purchases only required by RESPA), HUD Special information booklet(non-purchase loans), Affiliate Business Arrangement Disclosure, LoanEstimate (or GFE if applicable), Mortgage Servicing DisclosureStatement, and a list of HUD Counselors.
- The Home Loan Toolkit (Know Before You Owe booklet) – is intended to _____________________________________ It must be delivered at or within three days of the applications for consumers looking to purchase a property (for purchases only!!)
help persons borrowing money to finance residential real estate better understand the nature and cost of real estate settlement services.
- A referring party must give the Affiliated Business Arrangement Disclosure to the
_________ (immediately) at the time of referral, or prior to loan consummation – if referring business where he/she has more than 1% interest in the referring business/service.
consumer
- For mortgage transactions occurring after October 3, 2015, the GFE and the HUD have been replaced by two new forms called the _________and the ___________– however, the GFE and HUD will continue to be provided for HELOCS, reverse mortgages and loans securing mobile homes where the owner will not also own the land which the mobile home resides
“Loan Estimate” (LE)
“Closing Disclosure” (CD)
- The GFE and HUD are_____ disclosures, however the Loan Estimate and Closing Disclosure are TILA disclosures
RESPA
- The_______ _______ must be delivered three (3) business days before loan consummation (doc signing) and a _____ ______ ______ at the loan consummation(doc signing).
CLOSING DISCLOSURE
FINAL CLOSING DISCLOSURE
- RESPA requires two disclosures that must be given at settlement: The ____ _____ , and the ____ _____ _____ , which may be given within 45days of closing
Closing Disclosure (CD)
Initial Escrow Statement
56._______ ______ is NOT required when there is no federally related loan or no closing costs to the borrower or for most closed-end loans.
Closing Disclosure
- Force-placed insurance occurs if the lender chooses the _______ ______ ______ when the borrower allows his policy to lapse
hazard insurance company
- The TRID Loan Estimate (LE) combines the _____ ______ and the ___
initial TILA disclosure and the GFE.
- The TRID Closing Disclosure (CD) combines the final _____ disclosure and the ____
final TILA disclosure and the HUD.
- The Loan Estimate must be delivered or mailed no later than ___ _____ after a loan application is submitted.
(3) three business days
- The terms on the loan estimate must be available for ____ business days (this does not include the interest rate).
10
- When it is necessary to provide a revised Loan Estimate, it must be provided within three (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 three (3) years.
- The creditor must make sure that the revised Loan Estimate is received at least four(4) business days prior to consummation of the mortgage loan. (Remember, thesoonest that a loan can close is seven (7) days – so 3 days + 4 days = 7 days).
- If the creditor places the revised loan estimate in the mail as a method of delivery ,the creditor must mail the disclosure ___ business days prior to consummation of the loan, to allow for the three (3) business day receipt rule
7 business days before consummation
- Once a borrower receives the Closing Disclosure – a new Loan Estimate CANNOT be issued. If there is a valid change of circumstances that occur after the Closing Disclosure is delivered – the borrower is to receive a ___ ____ _____ –NOT a revised loan estimate.
new revised closing disclosure
- A “valid changed circumstance” is defined under RESPA as: (1) An Act of God, war ,disaster, or other emergency; (2) New information regarding the consumer, the loan or the property; or (3) Information regarding the consumer’s qualification for the loan on which the originator relied in providing the LE those changes or is later found to be inaccurate
- The following are NOT considered “valid changed circumstance” as defined under RESPA: Error(s) in disclosing an initial or subsequent LE or delays in underwriting/checking in conditions, leading to lock extension fees
- Examples of Changed Circumstances could include any of the following: (1) Interest rate lock; (2) Appraised value comes in lower than expected, creating a pricing adjustment for higher LTV; (3) Loan program is flipped from Conventional to FHA adding UFMIP; (4) Consumer’s credit score drops, resulting in a pricing increase; (5)Consumer requests a change in loan amount, interest rate, loan program or terms, leading to in an increase in settlement costs; (6) Seller delay in short sale approval
- Changes in the APR, loan product or the addition of a prepayment penalty trigger a _________ _ ________ 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 an Escrow Closing Notice no later than 3 business days before closure.
- 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 ________
30 business days prior to closure.
- Lenders must retain the Closing Disclosure and related documents for ___ years after closing
5 years
- Lender must retain the Loan Estimate for __ years after closing
3 years
74 . The Escrow Closing Notice must be provided by the creditor prior to canceling an ____ _____ for any consumer who had one established by the creditor
Escrow Account
- Regarding the Escrow Closing notice, if the consumer requests the close - this notice must be received at least ______ 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 __ business days
three
thirty
- Lender must retain the Escrow Cancellation Notice for _ years after loan
consummation.
2
- A partial payment policy disclosure is found on the CLOSING DISCLOSURE regarding the acceptance of partial mortgage payments by the loan services. The disclosure informs the consumer about the policy and the acceptance of payment less than the full amount due under the note
- Lender must retain the Partial Payment Policy for __ years after loan consummation.
2
- A Tolerance is how much of a change a particular item can “tolerate” between the Loan Estimate (LE) and the Closing Disclosure (CD) before it’s in violation of the law. Some items have a zero tolerance, others may have a 10% tolerance level and some items no limit on how much they can vary
- The following items have a zero tolerance:
Real estate transfer taxes, loan origination fees and interest rate. Others zero tolerance items include the appraisal and credit report
- The following items have a 10% tolerance: Fees that the lender chooses or identifies, such as government recording fees, title insurance. These items cannot vary by more than 10% between the Loan Estimate and the Closing Disclosure.
- The following items have a NO tolerance limit: Fees for services that the owners choose for themselves, such as hazard insurance, title insurance (if the homeowners doesn’t choose one of the lender-identified selections) and fees that are paid per diem(pre-paid mortgage interest).
- The lender has __ business days after the closing to refund to the borrower any portion of the charges that exceeded the acceptable amount of a stated tolerance level.
60
- Non-numeric clerical errors and tolerance violations trigger a new Closing Disclosure that must be delivered within 60 calendar days following loan consumption. Likewise, Closing Disclosure tolerance refunds must also be sent within 60 days.
- Closing costs greater than Loan Estimate =
not made in good faith
- Closing costs less than Loan Estimate =
acted in good faith
- TRID rules do not apply to
HELOCS, reverse mortgages, mortgages for mobile homes not secured by real estate
- The Rate Lock information is ONLY
found on the Loan Estimate form
- Although mortgage brokers may provide the loan estimate to the borrower, the creditor is
ultimately responsible for the delivery
- As it relates to the Loan Estimate, a business day is any day in which the creditor is open to the public for
the purpose of conducting regular business activities. (Note this difference from the definition of a business day for the Closing Disclosure)
- 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 the Loan Estimate.
- Penalty for violating RESPA is
$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 settlement services: 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 settling mortgages.
