Truth-In-Lending Act (TILA) - Reg Z Flashcards
What does TILA apply to?
1-4 unit single family dwellings; extensions of credit payable in 5+ payments, 1st/2nd party transaction
According to TILA, listing the numbers for what three things act as trigger terms in advertisements?
- APR
- Down Payment
- Term of Repayment
According to TILA, stating what is not a trigger term in advertisements?
- “APR”
- “VA”
- “LTV”
According to TILA, advertisements must be what?
- clear & conspicuous
- equal prominence
According to TILA, how long must ads be kept on file for?
2 years
Under TILA, what is the MLO Compensation Rule?
The Dodd-Frank Title XIV Amendment to TILA to prevent steering by MLOs
What does the MLO Compensation Rule prevent?
steering by MLOs
Under TILA, The MLO Compensation Rule what can an MLO never be compensated on?
- rate
- term
- program
Under TILA, The MLO Compensation Rule what can an MLO be compensated on?
- volume
- flat fee
- long-term performance
- pull through rate
Under TILA, The MLO Compensation Rule says you may only pay for files that close. (True or False)
True!
Under TILA, what does The MLO Compensation Rule say is the MAX company profit share?
10%
What does MDIA stand for?
Mortgage Disclosure Improvement Act
What is MDIA under?
TILA (or TRID)… Just say Reg Z to be safe?
What regulation is TILA?
Reg Z
What is MDIA?
3/7/3 Rules and Timelines
What are the AIR Laws?
The Appraiser Independent Requirements
AIR Laws say that Appraisers must follow what requirements?
Uniform Residential Appraisal Requirements (1004/70)
What does URAR stand for?
Uniform Residential Appraisal Requirements (1004/70)
What does URAR say?
- appraisals good for 120 days (if longer than 442 Recert)
- compares other sold properties in the recent past
Can an MLO influence the value of appraisal directly or indirectly?
NO! Never!
What two things can an MLO pay an appraiser based on?
timeliness and quality
What can an MLO never pay an appraiser based on?
value
An MLO can only have limited communication with an appraiser. (True or False)
TRUE
What does USPAP stand for?
Uniforms Standards of Professional Appraisal Practice
What is the USPAP?
Appraiser’s “Rulebook”
Subject Property = ______.
BASE
What is the subject property/base used for?
To find comparables similar to base (not same price)
Tolerances:
Line = ____
10%
Tolerances:
Net = ____
15%
Tolerances:
Gross = ____
25%
Tolerances:
Land = ____
30%
For appraisals, when is the market/sales approach used?
existing properties
For appraisals, when is the cost approach used?
construction or unique properties
For appraisals, when is the income approach used?
commercial or rental properties
What was the 1994 Amendment to TILA?
HOEPA
What does HOEPA stand for?
Home Ownership Equity Protection Act
What is a HOPEA loan?
A High-Cost Loan (Section 32)
High-Cost Loans:
1st lien:
APR +6.5% > APOR
High-Cost Loans:
2nd lien:
APR +8.5% > APOR
High-Cost Loans: Points/Fees Cap:
Loan is greater than $21,000 = _________
5% cap
High-Cost Loans: Points/Fees Cap:
Loan is less than $21,000 = _________
lesser of 8% cap or $1,000
Under TILA, under HOEPA, what is Section 35?
HPML
What does HPML stand for?
Higher-Priced Mortgage Loan
Higher-Priced Mortgage Loan:
1st lien:
APR +1.5% > APOR
Higher-Priced Mortgage Loan:
2nd lien:
APR +3.5% > APOR
Higher-Priced Mortgage Loan:
Jumbo:
APR +2.5% > APOR
What are HOEPA/HPML prohibited loan terms?
- no balloons within first 5 years
- no negative amortization
- no prepayment penalties within first 2 years
- no demand clauses
With HOEPA/HPMLs, what must be verified?
ATR… no “collateral-only” loans
What does ATR stand for?
Ability to Repay
A person is not allowed to go from HOEPA to HOEPA within ___ months.
12 months
If a person has a HOEPA/HPML, they must have an escrow account for how long?
At least 5 years
If HOEPA is a person’s first ever loan, what must they have?
HUD Counceling
What must a person have a 2nd appraisal?
If value increases 10% or more within 6 months
What is the HOEPA/HPML late fee max?
4%
HOEPA/HPML have no fees for what?
- payoff statement
- loan modification
What does Dodd-Frank add onto?
TILA
What Regulation is Dodd-Frank
Reg Z
Under Dodd-Frank, what is Title X Consumer Protection Act?
created the CFPB and transferred rule-making authority and enforcement
Under Dodd-Frank, what is Title XIV?
Mortgage Reform and Anti-Predatory Lending Act
What did Title XIV amend?
TILA and RESPA
What are the six Qualified Mortgage features under The Mortgage Reform and Anti-Predatory Lending Act?
- total DTI cap: 43%
- points/fees cap: 3% of loan amount
- no interest-only loans
- no terms greater than 30 years
- no negative amortization
- no “no-doc” loans
What does the Ability-to-Repay rule do?
- provides “safe harbor”
- presumed compliant if creditor uses QM
What is MLO Safe Harbor?
providing:
- lowest rate
- lowest rate without risky features
- lowest total $ for fees/points