TILA

Question 1

What does TILA stand for?

Answer 1

Truth in Lending Act

Question 2

What Regulation does TILA fall under?

Answer 2

Z

Question 3

Purpose of TILA

Answer 3

Protects consumers against inaccurate and unfair practices by lenders and creditors

Question 4

What year was TILA enacted?

Answer 4

1968

Question 5

Loans covered under TILA

Answer 5

Closed-end credit (such as car loans and mortgages) and open-end credit (such as credit cards and lines of credit)

Question 6

APR definition

Answer 6

The cost to borrow money as a yearly percentage

Question 7

Finance charge definition

Answer 7

The total amount of interest and loan charges a borrower will pay over the entire life of the mortgage loan (includes pre-paid charges)

Question 8

Dwelling definition

Answer 8

A residential structure that contains 1-4 units, whether or not that structure is attached to a real property

Question 9

Residential mortgage loan definition

Answer 9

Any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling

Question 10

Notice of right to rescind

Answer 10

ONLY APPLIES TO REFINANCING!

Creditor should deliver 2 copies to each consumer clearly disclosing the following:
1. The retention or acquisition of a security interest in the consumer’s principal dwelling
2. The consumer’s right to rescind
3. How to exercise the right to rescind, with a form
4. The effect of recission
5. The date the recission period expires

Question 11

How long does the borrower have to rescind?

Answer 11

By midnight of the third day after the last of these 3 events has happened:
1. Borrower signed contract
2. TILA disclosure received
3. Borrower received 2 copies of the notice of their right to rescind

Question 12

Seller contributions/concessions

Answer 12

A strategic arrangement where the seller covers certain costs or fees associated with the sale of their home

Question 13

What does HOEPA stand for

Answer 13

Home Ownership and Equity Protection Act

Question 14

When was HOEPA enacted?

Answer 14

1994

Question 15

What is HOEPA?

Answer 15

An amendment to TILA to address abusive practices in refinances and closed-end home equity loans with high interest rates or fees

Question 16

How to determine if a transaction is a high-cost mortgage

Answer 16

3 tests:
1. APR (if it exceeds the APOR (Average Prime Offer Rate) for a comparable transaction on the same day by 6.5 percentage points for a first-lien transaction, 8.5 for first-lien transactions that are for less than $50,000 and secured by personal property, or 8.5 for junior-lien transactions)
2. Points and fees (if they exceed 5% of the total loan amount for a loan greater than or equal to $20,000, or 8% of the total loan amount or $1,000 (whichever is less) for a loan less than $20,000)
3. Prepayment penalties (if you charge it more than 36 months after consumption or in an amount more than 2% of the amount prepaid - *prepayment penalties are banned for high-cost mortgages)

Question 17

Difference between high-cost and higher-priced mortgages

Answer 17

High-cost:
1. APR
2. Points and fees
3. Prepayment penalties

Higher-priced - only the APR criteria

Question 18

What does APOR stand for?

Answer 18

Average prime offer rate

Question 19

Prohibited MLO compensation

Answer 19

MLOs are prohibited from receiving any payments that are based on the terms of the loan, such as interest rates or fees. This rule is intended to prevent conflicts of interest and ensure that loan originators act in the best interest of the borrower rather than for their own financial gain.