Things To Remember! Flashcards
Secondary Market
Fannie Mae (1938)- created to assist the housing sector in the midst of the Great Depression
Federal National Mortgage Association (FNMA)
What does the Closing Disclosure generally contain?
The actual terms and costs of the transaction.
Secondary Market
Secondary market:
Where existing mortgage loans are bought and sold
CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)
Purpose is to promote financial stability through accountability and transparency
If an application for CREDIT is DENIED based on the APPRAISAL
Under ECOA (Reg B) borrower has 90 days to request a copy/Lender has 30 days to deliver
Reg B
ECOA- Equal Credit Opportunity Act
Reg C
HMDA- Home Mortgage Disclosure Act
Reg X
RESPA- Real Estate Settlement Procedures Act
Reg Z
TIL/TILA- Truth in Lending Act
HPA
PMI Homeowners Protection Act
SAFE
Secure and Fair Enforcement Act
HERA
Housing and Economic Recovery Act
FCRA
Fair Credit Reporting Act- Regulation V
FACT ACT
Fair and Accurate Credit Transactions
AfBA/ABA
Affiliated Business Arrangement 1% (not 10%)
Civil Rights Act
Race
Escrow account
Impound account aka reserve account
Dodd-Frank Act and the Consumer Finance Protection Act
Created the CFPB
Dodd-Frank Act and the Consumer Finance Protection Act make rules for the following:
OCC- Office of the Controller of the Currency
OTS- Office of Thrift Supervisor
FDIC- Federal Deposit Insurance Corporation
Federal Reserve
NCUA- National Credit Union Administration
HUD- The Department of Housing and Urban Development
FTC- Federal Trade Commission
Primary Market
Mortgage
A written instrument using real property to secure repayment of a debt
Primary Market
Primary Market is
where borrowers and lenders come together to negotiate terms for mortgages…we, as consumers, obtain mortgages
*Primary Market *
Mortgage Banker:
company, individual, or entity that originates, processes, underwrites, closes/funds, and services mortgage loans
Primary Market
Commercial Banks:
Variety of financial services
Primary Market
Mortgage Broker:
Company or individual who, for a fee, places loans with lenders, but does not service such loans
Primary Market
Savings and Loan Association (Thrifts)
Just know it’s part of the primary market
Primary Market
Credit Unions:
Cooperative financial institutions owned and controlled by their members
Primary Market
Finance companies:
Specialize in making higher-risk loans at higher interest rates
Primary Market
Mutual Savings Banks:
State-chartered banks that are owned by depositors (Thrifts)
Secondary Market
Fannie Mae is…
a Government-Sponsored Enterprise (GSE) that acts as a quasi-governmental agency for the purpose of making a secondary market for mortgages
Secondary Market
Fannie Mae is…
is the nation’s LARGEST mortgage investor
Secondary Market
Freddie Mac (1970) was created by Congress to provide a secondary market for mortgages originated by savings and loan associations
Federal Home Loan Mortgage Corporation (FHLMC)
Secondary Market
Gunnies Mae (1968) was created by Congress…is now part of the Department of Housing and Urban Development (HUD)
It DOES NOT purchase or sell loans on the secondary market
Secondary Market
Ginnie Mae is…
Government National Mortgage Association (GNMA)
Secondary Market
Ginnie Mae…
ISSUES GUARANTEES on bond pools that are comprised exclusively of government-backed (FHA/VA/USDA) loans
RESPA-Regulation X
What is the PURPOSE of RESPA?
To help consumers become better shoppers for settlement services.
RESPA-Regulation X
What does RESPA cover?
It covers 1-4 Residential Property (owner occupied)
RESPA-Regulation X
What does RESPA NOT cover?
It doesn’t cover all cash sales, rental property or more than 4 unit, commercial property, and property of 25 acres or more (agricultural)
RESPA-Regulation X
What happens if you VIOLATE RESPA?
A fine up to $10,000 and/or imprisonment up to one year
RESPA-Regulation X
The SAFE exam will cover which four (4) sections of RESPA?
Section 6; Section 8; Section 9; Section 10
RESPA-Regulation X
Section 6 deals with what?
with MORTGAGE SERVICERS…designed to address servicers’ obligation to correct errors and work with home buyers if payments are not being made.
RESPA-Regulation X
What does section 8 do?
It PROHIBITS kickbacks, fee-splitting, and unearned fees
Cannot accept things of value in exchange for referrals of settlement service business
(Allows minimal value promotional items)
RESPA-Regulation X
What does section 9 deal with?
It deals with Title Insurance
Under REPSA, it is illegal for a property seller to require the buyer to use a particular title insurance company, either directly or indirectly, as a condition of sale unless the seller pays for the title insurance and all other title-related fees
Allows buyers to sue for an amount equal to three (treble damages) all charges made for the title insurance
RESPA-Regulation X
What does section 10 deal with?
It deals with ESCROW ACCOUNTS
It also sets limits on the amounts that a lender may require a borrower to put into an escrow for purposes of paying taxes, hazard insurance, and other related charges.
RESPA-Regulation X
What happens each month?
Lenders may require borrowers to pay into the escrow account no more than 1/12th of annual disbursement.
RESPA-Regulation X
What happens at closing?
Allows cushion of 2 months (1/6th the annual amount)
RESPA-Regulation X
What does section 10 require?
It requires an annual escrow analysis
Also, if there is any overage, return excess over $50 to consumer (if borrower is not delinquent)
A complete application
Initial 6 items of information necessary for creditor to make a credit decision:
- Name (s) of borrower
- SSN for each borrower
- Gross monthly income of borrower(s)
- Loan amount of subject property
- Estimate of property value
- Estimate of property value
Once a complete application is obtained and the borrower has indicated his/her intent to proceed- INITIAL DISCLOSURES must be provided- unless:
The applicant WITHDRAWS the application
The LENDER TURNS DOWN the loan before the 3 business-day period end
TILA-RESPA INTEGRATED DISCLOSURES (TRID)
Which disclosure needs to be disclosed AT OR WITHIN 3 BUSINESS DAYS OF APPLICATION?
Home Loan Toolkit- KNOW BEFORE YOUR OWE BOOKLET- HUD Special Information Booklet (purchase only) (RESPA)
Loan Estimate (TILA ) Mortgage SERVICING Disclosure Statement (lenders intentions) (RESPA) List of HUD Approved Home Counselors (RESPA)
TILA-RESPA INTEGRATED DISCLOSURES (TRID)
What gets disclosed BEFORE SETTLEMENT?
Affiliated Business Arrangement (AfBA) Disclosure (1%-not 10%) (RESPA)
Closing Disclosure: 3 days prior to consummation (TILA)
TILA-RESPA INTEGRATED DISCLOSURES (TRID)
What gets disclosed AT SETTLEMENT?
Finalized Closing Disclosure (TILA)
Initial Escrow Statement (within 45 days of closing (RESPA)
TILA-RESPA INTEGRATED DISCLOSURES (TRID)
What gets disclosed AFTER SETTLEMENT?
Annual Escrow Statement (RESPA Section 10) (RESPA)
Servicing TRANSFER Statement (RESPA)
Goodbye Letter (15 days prior to transfer- no penalty for 1st 60 days)
Loan Estimate Vs. Closing Disclosure
No fee (except report fee) may be charged prior to delivering the Loan Estimate
Availability of terms- must be available 10 business days
What is the UNIQUE IDENTIFIER?
The NMLS number
It’s used instead of the SSN
It will appear on 1003 loan application, promissory notes, mortgages, and trustees
It DOES NOT appear on appraisal reports
How many hours NMLS Prelicense course?
20hr
Each year it’s 8 hours of continuing education
Who do you schedule the exam with?
National exam with UST
One exam for all states
What’s the name of the NMLS application?
MU4- individual application
What are the NMLS steps?
Get Unique Identifier Complete 20hr NMLS Prelicense course Schedule national exam with UST Complete MU4individaul application Live scan Credit report
What’s the passing score ?
75% or higher
If you fail the test how long do you have to wait to retake it?
30-day waiting period
After 3rd failed exam how long do you have to wait to retake it?
6 months or 180 day
To keep license current, how many continuing educations hours per year?
8 hours every year no later than December 31st
Renewal November 1st-December 31
License expires each year on 12/31
What is the Creditor (lender) responsible for?
For providing the statement to the borrower.
What is the settlement agent responsible for?
For providing the statement to the seller.
When must the initial Closing Disclosure be delivered?
Must be delivered to the borrower three (3) business days prior to the loan consummation
When is the final Closing Disclosure dlievered?
It’s delivered at loan consummation
What sources fall under the Secondary Market?
Fannie Mae Freddie Mac Ginnie Mae The Federal Home Loan Bank System Private Investors
Mortgage Banker
Company, individual or entity that originates, processes, underwrites, closes/funds and services mtg. loans (Investor w/ own $- Has BANK)
A loan originator is….
An individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mtg. loan for compensation or gain.
What sources fall under Primary Market?
Mortgage Banker Mortgage Broker Savings and Loan Associations (Thrifts) Credit Unions Finance Companies Mutual Savings Banks
What sources fall under the Secondary Market?
Fannie Mae Freddie Mac Ginnie Mae The Federal Home Loan Bank System Private Investors
What is the role of Mtg. services?
Pay taxes and insurance and inform consumer of late payments.
A loan originator is….
An individual who t
Although the state has the authority to issue penalties, which of the following penalties is the state regulatory authority NOT allowed to administer?
Prison Sentence
If an MLO is applying for a NMLS license he must provide all of the following except..
evidence of completion of the mandatory 8-hour education requirement
In order to renew your license, you must annually complete which of the minimum requirements pertaining to continuing education?
3hrs of Federal Law, 2hrs of Ethics, 2hrs of non-traditional and 1 Elective
Which laws prohibit predatory lending?
SAFE Act
HOEPA
Reg. Z
Which law does not prohibit predatory lending?
Fair Housing
Which fraud schemes involves the seller ‘s signature on the deed being forged and the real homeowner is not even aware the property is being fraudulently transferred?
Deed Scam - The deed is recorded; the thief mortgages the property with cash-out refinancing, and then pockets the money and walks away without making a payment.
Actual Fraud
Occurs when a person actively hides information or makes statements known to be false or misleading
The penalty for Mortg. Fraud is..
$1,000,000 or imprisoned no more than 30 Yrs or both
What agency oversees the credit reports and credit history of consumers?
FCRA
Annual Interest Charge
When the initial loan amount is multiplied by the note rate.
Housing Expense Ratio
When the PITI payment is divided by the gross monthly income:
Ex: If a family earning $6,780/mo is seeking a new mortgage payment of $1,756, and there are no association due or subordinate financing, what is the housing expense ratio?
$1756PITI/6870 Gross monthly income= 0.26
What are the two types of VA Appraisals?
CRV and Nov
Loan-to-Value
When the initial amount is divided by the lesser of the sales price or the current appraised value.
