RESPA REG X Flashcards
1a. What is RESPA?
The Real Estate Settlement Procedures Act (RESPA)
1b. The Real Estate Settlement Procedures Act (RESPA) provides consumer protection for loans on
Residential Property of 1-4 units
2.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.
3.For test purposes RESPA is?
“REXPA” (REG X)
4.What is RESPA (Regulation X) primarily involved with?
- The Disclosure of Closing Costs
- Prevention of Kickbacks
Which may rise the amount of closing costs to the consumer
5.Who enforces RESPA regulations and who was the previous enforcer?
CFPB - Consumer Financial Protection Bureau
HUD
6-9.What RESPA does not apply to?
Vacant land
Agricultural (25+ acres)
Commercial properties
Construction Loans
All cash transactions
Bridge Loans
Investment (4+units)
Non-owner occupied
Temporary financing
VACA BINT
10.RESPA Section 6 deals with
Mortgage Servicer &
Mortgage Servicing Abuses
11.What is a Mortgage Servicer?
is the company that:
- collects monthly mortgage payments
- pays taxes and insurance,
- pay other items as they come due
- notifies the borrower of late payments.
12.What is the Qualified Written Request (QWR) provision of RESPA?
A QWR is a request of information by the borrower relating to the servicing of a loan.
It imposes a duty to respond to the inquiry.
13.When a Qualified Written Request (QWR) is made by the borrower.
1. How many days does the lender has to acknowledge receipt of the request?
2. How many days the lender has to resolve the issue/concern?
5 business days
30 business days (with a 15 day extension if needed)
In connection to notices of error submitted by the borrowera
14.RESPA Section 6 mandates a creditor to provide a __________ to the consumer
Monthly Statement
15.What section of RESPA states that creditors must promptly post a payment the DAY it is received.
Section 6
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 to 45
19.RESPA section 6 states that the lender must attempt to establish live contact within ____ days with a borrower who has missed a mortgage payment.
36 days
20.RESPA SECTION 6 states that a creditor must provide a borrower with mortgage
workout options (loan modification/forbearance options/short sale options, etc.)
to the borrower within how many days of a missed payment?
45 days
21.RESPA section 6 states
A creditor must notify a borrower within how many days after submission of a completed Loan Workout Application if there is an option to save the home?
Within 30 days
22.According to RESPA section 6 a creditor may not seek judicial foreclosure or a trustees sale action for how many days, for a borrower who is delinquent?
For at least120 days
23.What is dual tracking, a prohibition from RESPA Section 6?
Continuing to seek foreclosure actions, while the borrower is being considered for other workout options.
24.RESPA Section 8 prohibits
1.Fee splitting
2.Unearned fees (advance fees or upfront fees)
3.Kickbacks
FUK
25.What are kickbacks?
illegal referral fees
26.RESPA Section 8 prohibits giving or accepting a “thing of value” in exchange for?
the referral of settlement services.
27.Despite prohibiting kickbacks, RESPA does NOT prohibit?
Payment of fair market value for goods or services that were received or performed.
- What is consider 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.
29.Are promotional items (with company logo) permitted?
RESPA Section 8
Yes, they are permitted
30.What RESPA Section 9 prohibits the seller from requiring the buyer?
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.
31.What happens to the seller If RESPA Section 9 is violated?
the seller could be sued for 3x’s the amount paid for the service
3X damages this is called Treble Damages
32.If the account has impounds (escrow account/reserve account), what RESPA Section 10 requires lenders to conduct?
Annual Escrow Analysis
- What is 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.
1/12th
8.333%
- RESPA Section 10 states that to protect itself from escrow shortages, the lender may require a cushion that doesn’t exceed what amount?
1/6th (2 months) of the total disburments for the year
- What happens if overages is discovered in a borrower’s escrow account during the annual audit analysis? How much overage?
RESPA Section 10
$50 or more must be refunded to the borrower (if not delinquent) within 30 days.
37.What are the RESPA Disclosures?
- Mortgage Servicing Disclosure Statement.
- AfBA Disclosure form
- List of HUD Counselors
- Annual Escrow Statement,
- Servicing Transfer Statement.
- Know-Before-You-Owe Booklet (aka Home Loan Toolkit)
- Initial Escrow Statement
(Note: the GFE/HUD are also RESPA disclosures – but only used with mobile homes, reverse mortgages, etc.).
MALASKI
- What does the lender must provide the borrower with?
RESPA
A list of 10 HUD approved counselors
- What is different to the Mortgage Servicing Disclosure Statement?
Servicing Transfer Statement, they are not the same.
- What is the Mortgage Servicing Disclosure and when must be deliver?
It’s 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 3 days of the loan application.
- What is the Initial Escrow Statement? When is it deliver? AKA?
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
- How is the Servicing Transfer Disclosure AKA? How is the welcome letter AKA?
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”)
43.According to RESPA, when is a Servicing Transfer Statement required?
if the loan servicer sells or assigns the servicing rights to a borrower’s loan to another loan servicer.
- When does the Servicing Transfer Disclosure must be provided to the borrower by the servicer?
No later than 15 days BEFORE the servicing rights are transferred to the new servicer.
- What is the grace period during which any payment mistakenly made to the old servicer must be forwarded to the new servicer?
60 days grace period and no late fee can be assessed.
- Per RESPA, what is consider a complete application?
Following 6 items:
* A.L.I.E.N.S.
A. Address (subject property)
L. Loan Amount
I. Income
E. Estimated Value
N. Names for borrower
S. Social Security number
- Per RESPA – What happens if a borrower has submitted a complete application?
The initial disclosures are “triggered” and must be provided to the borrower within 3 business
days
- When are the initial disclosures NOT required?
RESPA
f the application is withdrawn within the first 3 days, or the lender denied the application within the first 3 days
- What do the Initial Disclosures include?
- Home Loan Toolkit/Know Before You Owe booklet (purchases only required by RESPA),
- HUD Special information booklet (non-purchase loans)
- Affiliate Business Arrangement (Afb) Disclosure
- Loan Estimate (or GFE if applicable)
- Mortgage Servicing Disclosure Statement
- List of HUD Counselors.
MALL HK
- What is the Home Loan Toolkit (Know Before You Owe booklet)? When must be delivered?
It’s intended to help persons borrowing money to finance residential real estate better understand the nature and cost of real estate settlement services.
At or within 3 days of the application for consumers looking to purchase a property (for purchases only)
- When does the Affiliated Business Arrangement Disclosure (Afba) must be given to the consumer by the referring party?
**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.
- What forms have replaced the GFE and the HUD for mortgage transactions ocurring after October 3, 2015?
“Loan Estimate” (LE)
“Closing Disclosure” (CD)
GFE and HUD will continue to be provided for HELOCS, reverse mortgages and loans securing mobile homes where the owner won’t also own the land which the mobile home resides
- The GFE and HUD are________ disclosures, however the Loan Estimate and Closing Disclosure are ____________disclosures
RESPA
TILA
- 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
- Within how many days and when a revised Loan Estimate must be provided?
Within 3 business days, when receiving sufficient information to establish a valid change of circumstance Documentation must be retained for 3 years.
- The REVISED Loan Estimate must be receive when?
At least 4 business days prior to consummation of the mortgage loan.
63a. What is the soonest that a loan can close?
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, when the creditor must mail it and why?
7 business days prior consummation, to allow for 3 business days receipt rule.
- 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, what the borrower will receive?
A new revised Closing Disclosure, NOT a revised Loan Estimate
- What is a “valid changed circumstance” as defined under RESPA:
- An Act of God, war, disaster, or other emergency;
- New information regarding the consumer, the loan or the property; or
- 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
Go NiQ
- What is NOT considered “valid changed circumstance” as defined under RESPA:
- Error(s) in disclosing an initial or subsequent LE
- 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, what the lender must deliver?
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 how long after closing
5 years
- Lender must retain the Loan Estimate for how long after closing?
3 years
74 . Who must provide The Escrow Closing Notice and when?
Escrow closing notice must be provided by the creditor prior to canceling an Escrow Account for any consumer who had one established by the creditor
- Regarding the Escrow Closing notice, when it must be received?
if the consumer requests the close -
at least **3 business days **before the consumer escrow account is closed.
If the escrow is closed for any other reason, the creditor is required to provide the notice within 30 business days.
- Lender must retain the Escrow Cancellation Notice for how long?
2 years after loan consummation
- What is the Partial Payment Policy disclosure?
It is found on the CLOSING DISCLOSURE 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.
- How long the Lender must retain the Partial Payment Policy?
for 2 years after loan consummation.
- What is Tolerance?
It’s 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
- What items have a zero tolerance?
- Real estate transfer taxes
- loan origination fees
- interest rate
- appraisal
- credit report
- What 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 LE and the CD.
- What 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)
* fees that are paid per diem (pre-paid mortgage interest).
- How long does the lender have after the closing to refund to 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 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
- Where do you find the Rate Lock information?
Only found on the Loan Estimate form
- Although mortgage brokers may provide the loan estimate to the borrower, who is ultimately responsible for the delivery?
the creditor
- 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.
