TILA Flashcards
What law deals with credit, advertising and APR of consumer loans?
TILA
What law requires lenders to disclose the complete cost of credit?
TILA
What law established the 3 day right of recession rule for HELOCs and REFIs?
TILA
How many days does the creditor have to return all monies related to the loan after receipt of the notice of rescission from the borrower?
The creditor has 20 calendar days to return all monies collected related to the loan
How any days does the consumer have to rescind for HELOCs and REFIs?
until midnight of the 3rd business day after signing
For HELOCs and REFIs, How any copies of the notice of right to rescind must the borrower receive?
2 copies
For TILA to apply, the transaction is payable by written agreement with more than how many installments?
TILA applies to transactions that are payable by written agreement with more than 4 installments.
How long must TILA disclosures be kept?
TILA disclosures must be kept for 2 years
Under TILA, how long must the Loan Estimate be kept?
-Loan Estimate - 3 years
Under TILA, how long must the closing disclosure be kept?
-Closing Disclosure - 5 years
Under TILA, what disclosures must be provided?
- Loan Estimate
- Closing Disclosure
- CHARM booklet (consumer handbook on adjustable rate mortgages)
- When your home is on the line disclosure (HELOC REFIs)
Which law requires the disclosure of the ARP?. Another word for APR is effective rate. Other words for interest rate is note rate or nominal rate.
TILA
What is another term for APR?
effective rate
What is another term for interest rate?
Other terms for interest rate are note rate or nominal rate.
What are the penalties for violating TILA?
$5k/day single violation, $25k for reckless, $1million ay
Under what law is MDIA?
TILA
What is MDIA also referred to as?
3-7-3 Rule
According to TILA what is a business day?
Business day = all calendar days except Sundays and legal holidays according to TILA
What is the exception to the TILA business day?
For the initial loan application a business day is any day the lender is open for business
What is the 3-7-3 Rule?
Initial disclosure within 3 days of receipt of complete application; the earliest consummation 7th business day from mailing or delivery of disclosures
-redisclose, customer must receive the corrected disclosure 3 business days prior to consummation if significant change to APR
The APR is accurate if:
no variance above or below the initial disclosure by more than 1/8% (.125) for regular transaction 30 year fixed or 1/4% (.25) for irregular transaction that is not 30 year fixed
Under what exception can the 3-7-3 rule be waived?
Can be waived with a bona fide financial emergency - to be determined by the lender
In general if its ____ its a business day, if its ____ its a calendar day.
If it’s 0-9 it is a business day, if its 10+ is a calendar day.
If ad contains only the APR, are additional disclosures required?
No
Under TILA, If an ad contains triggering terms the about the loan, the advertisement must include
- Amount or percentage of down payment
- Terms of repayment
- APR
Under TILA, what are triggering terms in an advertising?
Using a number to describe credit terms and the number is not the APR
What does the Ability to Repay / Qualified Mortgage enable the lender to qualify for?
Safe Harbor
What 8 factors must a lender verify to determine the ability to repay?
- Current income
- Employment history
- Current debt (DTI cannot exceed 43%)
- Mortgage payments on the dwelling considering the fully indexed rate
- Simultaneous loans on the dwelling
- Fully amortized payments (payments to pay off the loan)
- Credit history
- Monthly payment for taxes insurance and HOA
What does HOEPA stand for? Section 32 - High Cost Loans & Section 35 Loans - High Priced Loans
Average Prime Offer Rates (APOR) - based on prime borrowers for previous week
Section 32 - High Cost Mortgage Loans (HCML) is triggered when:
the Annual Percentage Rate (APR) exceeds the average prime offer rate (APOR) by more than:
6.5% for first liens of 50K or more
8.5% for first liens less than $50,000
8.5% for junior or second liens
And, if total fees exceed 5% of the total loan amount
Homeownership & Equity Protection Act (HOEPA)
What does HOEPA stand for?
Homeownership & Equity Protection Act (HOEPA)
HPMLA is triggered on loans that exceed the APOR by?
- 5% for first mortgage lien
- 5% for first lien jumbo loan
- 5% for subordinate or second lien mortgage lien
HPMLA is triggered on loans that exceed the APOR by?
- 5% for first mortgage lien
- 5% for first lien jumbo loan
- 5% for subordinate or second lien mortgage lien
What is APOR and how is it determined?
average prime mortgage rate; based on prime borrowers for previous week
What does section 32 of HOEPA deal with?
High Cost Mortgage Loans (HCML)
High Cost Loan is triggered on loans that exceed the APOR by?
More Than: 6.5% for first liens of 50K or more 8.5% for first liens less than $50,000 8.5% for junior or second liens And, if total fees exceed 5% of the total loan amount
