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Federal Mortgage Related Laws > TILA-RESPA > Flashcards

TILA-RESPA Flashcards

1
Q

In General, the TILA requires the creditor to:

A

make certain written disclosures before consummation of the credit transaction.

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2
Q

A Federally Related Loan is:

A

any loan, other than temporary financing, that is secured by a first or subordinate lien on residential real property:
upon which is constructed, or will be constructed:

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3
Q

Loans exempt from the requirements of the TILA-RESPA Rule are:

A
  • HELOC’s
  • Reverse Mortgages
  • Mortgages secured by a mobile home or dwelling not attached to Real Property
  • loans made by a person that does not make more than five mortgage loans in a year
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4
Q

Record keeping requirements for documents must be maintained as follows:

A
  • 3 years for LE
  • 5 years for CD
  • 2 years for other disclosures required under the rule
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5
Q

List the 3 tolerances:

A
  • Zero tolerance
  • 10 percent tolerance
  • no tolerance restriction
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6
Q

Define zero tolerance:

A

For the fees in this category, the actual charges at settlement may not exceed the amounts included on the Loan Estimate unless there is a change in circumstance

Including:

  • Transfer taxes
  • The lender’s or mortgage broker’s origination charge
  • Fees paid to an unaffiliated third party service provider if the creditor did not permit the consumer to shop for the third-party service provider
  • While the borrower’s interest rate is locked:
  • the credit or charge for the interest rate chosen; and
  • the adjusted origination charge
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7
Q

Define 10 percent tolerance:

A

Fees related to third-party service providers and recording fees are grouped together and subject to a 10 percent tolerance.

Including:

  • recording fees.
  • charges for third-party provider services if:
  • the charge is not paid to the creditor or its affiliate; and
  • the consumer is permitted to shop for a service provider and chooses a provider from the creditor’s written list.
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8
Q

Define No Tolerance Restriction:

A

Certain charges disclosed have no tolerance limitation.

Including:

  • prepaid interest.
  • property insurance premiums.
  • amounts placed into an escrow, impound or reserve account.
  • fees charged by a third-party service provider chosen by the consumer and not found on the creditor’s written list of service providers.
  • charges paid to third-party service providers for services not required by the creditor.
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9
Q

In the event the consumer pays more at consummation than that which is listed on the LE, then:

A

the creditor must refund the excess to the consumer within 60 calendar days of consummation. For those charges subject to zero tolerance, the full amount in excess of the amount disclosed must be refunded.

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10
Q

When and how must a creditor provide the LE to the borrower?

A

A creditor must provide the Loan Estimate either in person or by placing it in the mail or delivering it no more than three business days after receipt of the consumer’s application AND no later than seven business days prior to consummation.

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11
Q

The estimate of the charges and terms set forth in the Loan Estimate must be available for at least how long?

A

10 business days

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12
Q

Depending on the type of loan, the interest rate could be described as:

A
  • an adjustable rate
  • step up rate
  • fixed rate
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13
Q

The Projected Payments table on Page 1 of the LE include:

A
  • principal and interest;
  • mortgage insurance premiums; and
  • escrow to pay some or all designated mortgage-related expenses with a statement indicating that this amount may increase.
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14
Q

Estimated Closing costs on the LE are:

A
  • Loan costs
  • loan origination charges to be paid to the creditor
  • lender credits
  • are payments from the creditor to the consumer that do not pay for a particular fee set forth on the disclosures.
  • other costs
  • taxes and other government fees.
  • prepaid items.
  • the initial escrow payment due at closing.
  • if the creditor has knowledge of them at the time of issuing the disclosure, other amounts the consumer is likely to pay to a person other than the creditor at closing (e.g., a real estate commission).
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15
Q

Define Services borrower can shop for

A

settlement services provided by a person other than the creditor or mortgage licensee and chosen by the borrower

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16
Q

Define Services borrower can’t shop for

A

settlement services provided by a person other than the creditor or loan originator, the provider chosen by the creditor

17
Q

For transactions that do not involve a seller (e.g., a refinance) the creditor may disclose with what document?

A

alternative Costs at Closing Table,

18
Q

Page 2 of LE includes what?

A
  • Loan Costs
  • Other Costs
  • Calculating Cash to Close
19
Q

Loan Costs on Page 2 of the LE include:

A
  • Origination Charges
  • Services You Cannot Shop For
  • Services You Can Shop For
  • Total Loan Costs (A+B+C)
20
Q

Origination Charges under the Loan Costs sections include:

A

Any charges being paid to creditor or LO including buyers points to lower the interest rate. Must be expressed as a percentage as well as a dollar amount.

21
Q

Specific Services you CANNOT shop for:

A
  • appraisals.
  • securing a credit report.
  • flood determination.
  • government funding (e.g., payment of a guarantee fee or fee related to a government loan program).
  • homeowners’ association certification.
  • services rendered by the lender’s attorney.
  • securing from a title company a closing protection letter or title insurance policy.
22
Q

Specific Services you CAN shop for:

A
  • pest inspections.
  • surveys.
  • as related to title insurance:
  • the closing agent; or
  • the closing protection letter.
23
Q

For a transaction that does not include a seller (e.g., a refinance) the document used to show cash to close is the:

A

alternative Cash to Close Table

24
Q

Grounds for a revised LE in regard to changed circumstances in “settlement charges” are:

A
  • a natural disaster (e.g., damage to the subject property by hurricane or earthquake).
  • the title insurer whose fees for title insurance are disclosed goes out of business.
  • new information arises that reveals a pending property boundary dispute.
25
Q

Grounds for a revised LE in regard to changed circumstances in “borrower eligibility” are:

A
  • affect the loan applicant’s creditworthiness or the value of the collateral that will secure the loan; and
  • make the borrower ineligible in terms of qualifying for the loan offered.
26
Q

If a consumer locks in his interest rate subsequent to receipt of the disclosure and the lock results in changes to points or lender credits, does the creditor have to provide a new Loan Estimate?

A

Yes

27
Q

A revised LE may also be provided if:

A
  • the applicant requests revisions to the credit terms that cause an estimated charge to increase.
  • the applicant expresses a desire to proceed with the transaction more than 10 business days after issuance of the original Loan Estimate.
  • there is a delay in settlement of a construction loan.
28
Q

If multiple applicants are involved in the transaction, the Closing Disclosure must be provided to:

A
  • in a rescindable transaction (e.g., a refinance), to each party who has a right to rescind.
  • in a transaction that is not rescindable, to any party to the transaction.
29
Q

A new three-business-day waiting period applies to a corrected disclosure if there are changes or corrections that relate to:

A
  • the annual percentage rate.
  • the loan product.
  • the addition of a prepayment penalty.
30
Q

An escrow account analysis allows a servicer to:

A
  • compute the amount of the borrower’s monthly payments based on costs for, and deposits needed to establish or maintain, the account; and
  • determine whether shortages, surpluses or deficiencies exist in the account.
31
Q

On the CD, the Total Closing Costs includes the combination of:

A
  • Loan costs table and

- Other costs table

32
Q

Page 5 of the CD includes:

A
  • Loan Calculations
  • Other Disclosures
  • Contact Information
  • Confirm Receipt
33
Q

Finance Charge on page 5 of the CD is defined as and includes:

A

Defined as the “cost of credit to the borrower, expressed in dollars”

includes:

  • prepaid finance charges; and
  • charges paid over the term of the loan (e.g., total interest and mortgage insurance premiums).
34
Q

Annual Percentage Rate (APR) is:

A

the cost of credit to the borrower, expressed as a rate

35
Q

Total Interest Percentage (TIP) is:

A

the total amount of interest the borrower will pay over the term of the loan, expressed as a percentage of the loan amount.

36
Q

Whatever method is used, the creditor must maintain records, evidencing both its delivery of the Loan Estimate and the applicant’s intent to proceed, for three years after the later of:

A
  • the date of consummation;
  • the date disclosures are required to be made; or
  • the date action is required to be taken.

Federal Mortgage Related Laws (9 decks)

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