The initial application - Chapter 3 Flashcards
What is the difference between a pre-qualification and a pre-approval?
A pre-qual is the first step that gives the borrower an idea of how much they would likely qualify. A pre-approval is the second step and a conditional commitment to grant the mortgage.
What is the main purpose of TILA - Reg Z?
To protect consumers from predatory lending practices.
what year was TILA created?
1968
True/False - Reg Z does not apply to business, commercial, agriculture loans
TRUE
Name some of the rules that fall under the TILA umbrella
Dodd-Frank HOEPA (sec 32) HPML (sec 35 QM ATR LO compensation
What are the penalties for someone who gives false or inaccurate disclosure information, consistently understates the APR, or otherwise fails to comply with Reg Z?
fine up to $5000 and or up to 1 year of imprisonment.
True/False - if a rate is advertised, the APR must also be disclosed.
TRUE
True/False - If a lender is advertising an adjustable rate credit plan, there does not need to be a mention of the APR.
FALSE - the advertisement must say that the APR may increase or is subject to change.
What regulation is the MAP rule? (mortgage acts and practice rule_
Regulation N
What is the main purpose of Regulation N?
regulate advertising
What year was Reg N established?
2011
True/False - it is a violation of the map rule to make any material misrepresentations expressly or by implication in any commercial communication.
TRUE
How long must commercial communication be kept to comply with the MAP rules?
minimum of 2 years from the date the communication was made to the consumer.
What are the six pieces of information that triggers an application
Property address Estimated property value Name of borrower Social security number to pull credit Income Loan amount requested
memory tool - use the acronym “PENCIL”
Which Regulation is HMDA?
Regulation C
what is the main purpose of HMDA?
To track information and prevent discrimination
Who enforces HMDA?
CFPB
What regulation is ECOA?
Reg B
What is the main purpose of ECOA?
To prevent discrimination on specified protected classes.
Who enforces ECOA?
CFPB
What are the two comprehensive prohibitions against discriminatory lending practices in ECOA
A lender must not discriminate on a prohibited bases
A lender must not make any oral or written statements that would discourage on a prohibited basis a person from making an application
True/False - a lender can always inquire about an applicant’s spouse or former spouse
FALSE - can only inquire in certain scenarios (relying on spouse’s income, community property state, alimony/child support)
How many days must the lender notify the applicant of any action taken on the applicant’s request for credit?
30 days
ECOA requires that the lender provide an applicant a copy of their appraisal within how many days of consummation?
3 days
What are the two differences between the Fair Housing Act and ECOA?
Fair Housing adds disability to the list of protected classes.
Fair housing applies to all types of housing.
What does TRID stand for?
Tila Respa Integrated Disclosure.
What is the main purpose of TRID?
To simplify the disclosure process
When was TRID created?
2015
TRID does not apply to which mortgage transaction?
HELOCs
Reverse Mortgages
What did the Mortgage Disclosure Improvement Act (MDIA) of 2009 introduce?
3/7/3 rule - Disclosures within 3 days of application, can’t close for 7 days business days after app, redicslosure of an inaccurate APR at least 3 days prior to closing.
True/False - the LE must be provided to the borrower within 3 business days following the receipt of the application.
TRUE
TRUE/FALSE - the LE must be delivered no later than 5th business day before consummation of the transaction.
FALSE - 7 days before consummation
TRUE/FALSE - the final LE must be received by the borrower no less than 4 business days before closing.
TRUE
What is a zero tolerance Fee?
Charges that cannot increase at all between the original disclosure on the LE and the final charge on the CD.
What are some examples of zero tolerance fees?
Fees paid to the lender
fees paid to a third party if the lender did not permit the consumer to shop for the service
transfer taxes
What are some fees that are considered a 10% tolerance fee?
recording fees
third party services where the borrower shopped
a service provider on the lender’s written list of service providers.
What are some examples of no tolerance fees?
prepaid interest
insurance premiums
escrows
services required by the lender, if the borrower shops and picks someone not on the written list of service providers.
True/False - The home loan tool kit is another disclosure required by TRID.
TRUE - must be provided within 3 business days of application.
What is the main purpose of the Electronic Signatures in Global and National Commerce Act?
Allows for e-signatures on a mortgage loan document.
How often must HMDA data be reported?
Quarterly starting in 2020
How long must a CD be kept?
5 years
What is the purpose of the 4506T?
Sent to the IRS to confirm the numbers on the tax returns are accurate.
Can help determine if fraud exists.
