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158 Cards in this Set

  • Front
  • Back
Qualified Mortgage was first seen where?
Dodd Frank Wall Street Reform and Consumer Protection Act (CFPB finalized definition in 2013)
Qualified Mortgage:
1. No excessive Upfront Points and Fees (Fees may not exceed 3%) (exceptions made on Bona Fide Discount points on PRIME LOANS)
2. No Toxic Loan Features
2. Limits on Debt-to-Income Ratios (no higher than 43%)
What considered additional costs charged by lender during mortgage applicaion, processing and closing?
Points & Fees.
What are the 4 toxic loan features?
I.O., N.A., B.L., Terms beyond 30 years

(Interest Only, Neg. Amortization, Balloon Loans, terms beyond 30 years)
What is Table Funding?
Loans that are funded at the closing table and not sold through a correspondent program or secondary market, the loans remain as creditor for disclosure purpose; also know as mortgage broker
Objectives of Dodd-Frank Wall Street Reform & Consumer Protections Act of 2010
1. Address compensation (unfair practices of compensation paid by consumers)
2.
Loan Origination is gone over in what Law?
TILA (Reg Z)
Transactions described as open end or closed end consumer loans?
Closed end consumer loans secured by a 1-4
What is one of the most critical points of the Federal Reserve Loan Originator Compensation Rule is the PROHIBITION OF OF THE PRACTICE OF ....
STEERING consumers to lenders to receive greater compensation, unless loan is on consumers interest.
RESPA 1975 promulgated by_______.
HUD
Section 8 of RESPA addresses what?
1. Kickbacks
2.Fee-splitting
3. Unearned Fees
Sec 9 of RESPA addresses what?
Title Insurance
(Prohibits use of particular title insurance company) can sue up to to 3 times all charges made for title insurance
Sec. 10 of RESPA
Limits on Escrow Account
(limits lender to charge borrower the amount put into escrow no more than 1/12 of total of all disbursements payable during the year, plus any shortage amount)

Allows cushion not to exceed 1/6 of total disbursements
Payments from loan proceeds are considered payments made directly from whom?
From Consumer
Disclosed YSP under RESPA is NOT considered what by the borrower?
Payment by the borrower
Are transaction described as closed end or open end consumer loans?
Closed End
What is prohibited when it comes to compensation?
1) Any compensation based on Loan terms or conditions such as interest rate, APR & LTV

2) Any direct compensation from consumer and from any source on the same loan
AfBA
Beneficial owners interest of more than 1%
A "Person" is considered
as an

Individual or corporation
association
partnership
trust
When is it considered a bona fide compensation?
From ownership interest or franchise relationship between entities in an affiliate relationship, as long as it is for ordinary business purposes and is not a fee for the referral of settlement service business or an unearned fee.

(can include dividends, capital or equity distribution, business loans, advances, and capital or equity contributions.)
What regulation defines application?
Reg. X
What information does application (financial information in anticipation of a credit decision in this case) include to fill out?
Borrower's

Name
Monthly Income
SS
Estimate of value of property
Loan amount
What must you provide (within) 3 business days of completed loan application?
1) HUD Settlement Costs Booklet (contains various settlement services)
2) GFE of settlement costs (estimate of each charge buyer is likely to pay)
3)Mortgage Servicing Disclosure Statement (discloses whether lender decides to service loan or transfer loan)
What needs to be delivered (before) settlement occurs?
AfBA
HUD-1 Settlement Statement (Show's all charges; allows borrower to request this (1) day before settlement)
What needs to be delivered (at) settlement?
HUD-1 Settlement Statement
Initial Escrow Statement (itemizes taxes and insurance-must be delivered within 45 days from settlement)
What needs to be delivered (after) settlement occurs?
Annual Escrow Statement (1/ per year)
Servicing Transfer Statement (Required only when lender decides to transfer (sell or assign) service to another company; Notice required 15 days before effective date of transfer)
What shows the dollar amount of settlement services and must be provided no later than (3) 30 days after receipt of a completed application?

and

requires the settlement charges and terms to be available for at least (10) b-days after it has been issued.
GFE
What regulation defines business day?
Reg. X
What does page (1) of the GFE go over?
Dates
Loan Summary
Escrow
Estimated Settlement Charges
What does page (2) of the GFE go over?
Itemized list of origination charges
credits
points for interest rate selected
Charges for other settlement services
LUMP SUM ORIGINATION CHARGE that reflects the lender fee and the mortgage broker fee
What does page (3) of the GFE go over?
Tools that the consumers can use to evaluate the settlement charges associated with the loan under different terms and to compare this loan and its settlement charges to other GFE's

Check if GFE has been updated
What regulation defines Settlement Services?
Reg. X as any service provided in connection with a prospective or actual settlement services

Services Included;

Origination activities
Title
Attourney
Preperation of Doc's
Credit reports
Appraisals
Inspecton
Mortgage Insurance
Hazard Flood insurance
Taxes
Rendering services by Realtor or broker
Any other service that requires borrower or seller to pay
What charges MAY NOT exceed GFE account?
Origination Charges
Credit or interest rate charge
Transfer Taxes
What charges MAY NOT exceed (10%) of GFE?
Settlement Services
Title
Governement recording charges
The terms in the _______________ are binding?
GFE
Changed GFE must be provided within how many days and recorded for how many years?
3 days, 3 years
What are types of changed circumstance seen on the GFE and must be notified within (3) b-days to borrower?
Increases in settlement costs to exceed tolerance
Loan term changes
Borrower changes affecting charges/terms
Charges to the charge or credit for interest rate if I.R. has not been locked by borrower or if locked interest rate has expired.
Other Provisions: When does GFE expire?
on the 10th business day
If charges at settlement exceed the charges listed on GFE by more than permitted tolerance within (10) b-day period, the MLO must cure the discrepancy by reimbursing to borrower the amount of the excess when?
At settlement
within (30) calendar days after settlement
Who completes the HUD-1
Settlement Agent (Closing Agent) realtor
Must clearly itemize all charges imposed on borrower and seller by MLO
HUD-1 is for who?
HUD-1A is for who?
For buyer and seller
For buyer and no seller

Check for updates
What does the HUD-1 Show?
Buyer how much money they will have to bring to settlement

and Seller how much they are going to walk away with
HUD-1 Page one contains what?
Section J (Borrowers Summary; Gross amount due from seller)
Section K (Sellers Summary; Gross amount due to seller)
What page goes over items paid in connection with loan, reserves, title, govt. recording and transfer charges, any additional settlement charges?
Page 2 of HUD-1
Which page of the HUD-1 offers a comparison of the exact amounts from the GFE and the actual settlement charges indicated on the HUD-1 or HUD-1A settlement statement including

Charges that cannot increase
Charges that cannot increase more than 10%
Charges that can change
Loan terms
Last page of GFE (Page 3)
What act is contained in Title 1 of the Consumer Credit Protection Act and implemented by Reg Z?
TILA (Truth In Lending Act)
What act promotes

-informed use of consumer credit,
-inform consumers of the (true cost) of borrowing by requiring the disclosure of the APR
-Disclosure of credit terms and make creditor aware of what options are available to them
TILA
What act does not set limits on interest rate or other finance charges, but regulates disclosure of these items?
TILA
What act establishes (3) b-days right of rescission in certain transactions? and applies to all real estate loans made to consumers (not companies) for personal, family or household purposes if loan is:

-Subject to a finance charge
-Payable by written agreement in more than 4+ installments
TILA
What 2 general areas are disclosures required for TILA?
1. When creditors offer credit but before the transaction is consummated
2. When credit terms are advertised to potential customers.
For TIL, what must be delivered no late than (3) b-days before loan consummation?
TIL Disclosure Statement and a guide on how to read the TIL.
Evidence of Compliance with disclosure requirement must be held for how long?
2 years after disclosures were required to be made
What regulation prohibits mortgage loan originators and services from charging a fee for the preparation of the TIL or other disclosures by TIL and

statements required by RESPA; GFE, HUD-1 Settlement Statement, or Annual Escrow Account Statements.
Regulation Z
The fee can be charges for a _________ _________.
Credit Repot
What are other required disclosures by TIL?
Consumer Handbook on Adjustable Rate Mortgages(CHARM BOOKLET) ARM Disclosure
Balloon Disclosure
Prepayment Disclosure
Notice of Right to Rescind
When your home is on the Lind Booklet
What are the following items the TIL must include in the Data in the "Federal Box?"
Finance charges expresses as APR (the APR is labeles with a phrase such as "The cost of your credit as a yearly rate")
Total Finance Charges
Amount Financed
Total of payments
Mandatory statement - "You are not required to complete this agreement merely because you have received these disclosures or signed a loan application."
The total cost of financing a loan is also known as _______________.
APR
What is know as the " cost of consumer credit as the dollar amount?"
Finance Charge
Finance charge includes fees and amount charge by ______________________________.
Someone other than the creditor; third party.
Finance Charges fall under what regulation?
Regulation Z
According to Reg. Z the APR is considered accurate if it doesn't vary below or above what percentage?
1/8% regular transaction
1/4% irregular transaction
A transaction that is considered to have multiple advances, irregular payment periods, and irregular payment amounts (other than first period or first and final payments)
Irregular transaction
When can you waive the waiting periods and expedite the closing of an irregular transaction?
When there is a BONA FIDE Personal Financial emergency.
Disclosure requirements of TILA can be remembered by what rule?
3/7/3
Define 3/7/3
-Initial disclosure must be given within (3) b-days of completed transaction
-The earliest the loan can be consummated is on the
(7) b-day after disclosures are delivered
-Any corrected disclosures must be provided at least (3) b-days before the loan is consumated
What loans does the right of rescission not apply?
Purchase Loans
Construction Loans
Commercial loans
Loans on vacation or second homes
Transaction in which a state agency is a creditor
Using the same creditor
Home Equity loans
Home improvement loans &
Refinances
Loans where you have the right to rescind
What is the word that defines any "natural person in whose principal dwelling a security interest is or will be retained or acquired, if that person's ownership interest in the dwelling is or will be subject to the security interest?
Consumer
Notice or right to rescind must state what?
Aquisition of property
Consumers right to rescind
how to exercise this right
Effects of rescission
Date when rescission period ends
Money must be returned if a borrower exercises Right of rescission in how many days?
20 days
Borrowers can extend right of rescission for up to (3) years under what circumstances?
Fails to notify right of rescission to consumer
Fails to provide required material disclosures to all parties on title
Right of rescission tolerance include what?
1/2 of 1 percent tolerance (Finance Charge)
<0.5% or $100
1% tolerance with new creditor on a refinance or $100
Right of rescission on FORECLOSURE. When can borrower rescind?
-When a mortgage broker fee that should have been included in the finance charge was not included
-Lender didn't proved proper Notice of rescission
Tolerance - no more than $35 or greater than amount required to disclose
Regulation Z defines ____________ __________ __________ and include closed end home purchase loans where the APR exceed the average prime offer rate by at least ___________ & ___________
Higher Priced loans
1.5 points for 1st
3.5 % for junior lien loans
Section 35 Loans are also known as __________________.
Higher Priced Loans
What is the APR measured against?
The Average Prime Offer Rate
Higher priced loans are not used to finance what type of loans?
Construction loans
Bridge Loan that is <12month
Reverse Mortgage
HELOC
Lenders obligated to verify repayment ability and Prepayment Penalties are prohibited for what type of loans?
High Priced loans
When are escrow not required for loans?
when secured by shares in a cooperative or for condo's if HOA is required to maintain a master policy insuring all units.
What is the threshold for coverage of the escrow requirement for jumbo loans (what percentage)?
2.5%
Regulation Z was implementing TILA specifically for what?
Perceived abuses in the mortgage industry.
What is defined as receiving any schedule period payment from borrower?
Servicing
What is considered violation of TILA in regards to servicing?
Failing to credit a payment
Imposing any late fee or delinquency charge in connection with a payment
Failing to provide (within reasonable time frame), statements showing the payoff amounts as of a specified date in time
Which law amends Reg. Z?
MDIA
For the purposes of rescission, what term is expanded to incude any "natural person in whose principal dwelling a security interest is or will be retained or acquired, if that person's ownership interest in the dwelling is or will be subject to the security interest"
Consumer
What law intends consumers to become better shoppes for settlement service and to eliminate unnecessary increases in the costs of certain settlement services due to kickbacks and referral fees?
RESPA
What Regulation goes over covered transactions?
Reg. X
Covered transactions cover what type of loans?
Residential properties.
Conventional,
FHA, VA, USDA,
Purchase Loans,
Assumptions,
Refinances,
Property Improvement loans,
Equity lines of credit
subordinate lien loans.
What loans are not covered?
Construction Loans
All Cash Sale
A sale where seller takes back mortgage
Temp. construction loans
Business purpose transaction
Property over 25 acres
Vacant or unimproved land (unless dwelling with be constructed or moved onto the property within 2 years
what Act is intended to

1) ensure accuracy of the disclosures used by a consumer to make a decision and to ensure required disclosures are delivered in a time manner.

2) gives consumers right to cancel at any point and not to proceed with transaction.

3) Specifies only fee to be charged is the CREDIT FEE

4) requires added language

5) Requires 7 business day waiting period before closing a home loan to give consumer TIME to Review home loan
MDIA
MDIA stands for
Mortgage Disclosure Improvement Act
When must you re-disclose?
When the APR is off by more than .125% from the initial GFE disclosure
Are higher priced loans closed end or open end mortgages?
Closed end mortgages according to MDIA
Who imposes the following restrictions on loans that meet the definition of a higher-priced mortgage loans?

1) Lenders obligated to verify RE-PAYMENT ability of borrower
2)PRE-PAYMENT
3)Escrow Account must be established
MDIA
Section 32 of is which Act? & what regulation?
HOEPA Regulation Z
Who
1) establishes disclosure requirements and prohibits deceptive and unfair practices by defining RESTRICTIONS on high cost loans
2) Contains requirements for certain loans with high interest
3)Enforced by CFPB
4) mandates additional disclosure that meet one or two defined trigger for high interest or fees.
5) Allows consumers to sue
6) May enable consumer to resign loan for up to 3 years
HOEPA
What are The High Cost Loan Triggers?
1)APR exceeding 8%, 10% on 2nds
2) Total Finance Charge Trigger (exceeds the larger of $611 or 8% of loan amount)
What are High Costs Loan based on?
APR
What is the Dodd-Frank Wall Street Reform and Consumer Protection Act designated as?
Mortgage Reform and Anti-Predatory Lending Act
which amends TILA when implementing via regualtion triggers that define a high cost loan are lowered to:

6.5% on 1st

Total points and fees exceeding 5%
What are prohibited practices of loans that are subject to HOEPA? (Also, may not include the following terms)
1) Balloon Payments
2) Negative Amortization
3)Default interest rates
4) repayment schedule
5) Prepayment (unless first 5 years)
5)Due on demand clauses

(must document as either open end or closed end - can get in trouble if you document wrong)
What act requires lenders to provide PMI disclosures? What disclosures are they?
HPA (Home Ownership Protection Act)

Initial written disclosure and annual reminders
What loans does PMI not apply to?
FHA, VA, and loans with no PMI
Mortgage insurance is automatically canceled at ________%

Borrower can request cancellation of Mortgage insurance at ________%
78%

80%
What regulation is ECOA?
Regulation B
Why was ECOA originally passed?
-original passed to prohibit lending discrimination on the basis of sex or marital status.

(-requires borrowers to receive any appraisal done on property
-keep records for 25 months of application and 12 months for business credit)
-Adverse Action within 60 days
-copy of appraisal may be requested within 90 days
What act was enacted to discover discriminatory practices, including redlining?
HMDA (Home Mortgage Disclosure Act)
What led to the passage of the CRA (Community reinvestment Act?)
HMDA
What was enacted to reduce discriminatory credit practices against low-income neighborhoods and to encourage financial institutions to help meet the credit needs of the communities in which they operate?
CRA
Covered properties under HMDA include;
(RIPS)
Refinancing
Home Improvement
Home Purchase
Subordinate Financing

Does not apply to loans on

vacant land
new construction
loans sold as part of a pool for servicing
LAR (Loan/Application Registrar) includes which of the following data?
Loan originations
Applications
Loan Purchases
Requests under a pre-approval program
What law should you comply with when it comes to marital status?
ECOA
When can you ask about marital status?
Joint Application
Applicant is relying on their spouse's income or alimony or child support from a former spouse
Community Property Estate
When is it acceptable to ask about marital status?
In states that recognize dower or curtesy rights of spouses.
When evaluating a borrower's gross income, a creditor may not discount or refuse to consider?*
Public Assistance
Income b/c of sex or marital status
Income from verifiable and consistent part-time employment, overtime, pension, annuity, retirement benefits program
Regular alimony, child support, or separate maintenance payments (if the applicant chooses to disclose it.)
What is title V of HERA known as?
SAFE ACT

Keep HER(A) SAFE
SAFE ACT is all about ____________________
Licensing
What includes OVERSIGHT of loan originator compensation?
Bureau of Consumer Financial Protection
Who started the NMLS?
CSBS (Conference of State Bank Supervisors) &
AARMR (American Association of Residential Mortgage Regulators
Who maintaints the NMLS?
FINRA (Financial Industry Regulatory Authority)
What act establishes the following

"To promote the financial stability of the US by improving accountability and transparency in the financial system, to end 'too big to fail,' to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial service practices, and for other purposes."
Dodd-Frank Wall Street Reform and Consumer Protection Act
What designations does the Dodd-Frank Wall Street Reform and Consumer Protection Act have?
CFPB (Consumer Financial Protection Act) and
Mortgage Reform Anti-Predatory Lending Act
What title is CFPB?
Title X
What title is Mortgage Reform and Anti-Predatory Lending Act?
Title XIV
Why was the CFPB created?
It was created to ensure that financial products and services that Americans depend on every day ----including credit cards, mortgages, and loans work better for the people who use them.
What must the creditor under ECOA do?
Dislcose customers rights.
What customer rights must you disclose to customer under ECOA?
Commitment letter (if Approved )
Notice of Incomplete Application (Incomplete)
Statement of Adverse Action (if Denied or offered less favorable terms)
Appraisal reports must be ordered withing how many days?
90 days
HMDA is what regulation?
Reg. C
What was one factor that led to the passage of the CRA (Community Reinvestment Act?)
HMDA
What was enacted to reduce discriminatory practices against low-income neighborhoods and to encourage financial institutions to help meet the credit needs of the communities in which they operate?
CRA
FFIEC (Federal Financial Institutions Examination Council) deals with what?
Reports
A federal law dealing with the

granting of credit,
access to credit information,
the rights of debtors, and
the responsibilities of creditors.
Reg. V of FCRA (Fair Credit Reporting Act)
When are consumers entitled to a free copy of their credit report?
Adverse Action in credit report
Identity Theft
Inaccurate information
Consumer is on public assistance or unemployed
Chapter 13 bankruptcies are removed after how long?
7 years
Chapter 7 Bankruptcies are removed after how long?
10 years
FACTA amended what Act?
FCRA
What act is intended to help consumers fight the growing crime of identity theft and to dispute inaccurate credit information.
FACTA
FACTA included provisions related to what?
Accuracy
Privacy
Limits on information sharing
New consumer rights to dislcosure
What does Section 211 go over?
Access to Credit Reports
FACTA Sec 112
Fraud Alerts and Freezes
FACTA Sec 113
Truncation of Credit and Debit Card Numbers (cannot print more than 5 digits of credit card #)
FACTA Sec 216
Security and Disposal
FACTA Sec 114
Red Flags Rule; written; check for validity of change of address; identity verification
The National Do Not Call Registry is managed by who?
FTC
How long can a person with an established business relationship call for if they are on the DO NOT CALL REGISTRY?
18 months (of last purchase, delivery or payment)
How long can a person call if they have submitted an inquiry or submits an application to the company and they are on the DO NOT CALL REGISTRY?
3 months
What is M.A.R.S.?
It's to protect distressed homeowners from mortgage relief scams such as the ones that sprung up during the mortgage crisis.
What is under the FTC's M.A.R.S. Rule?
The Advance Fee Ban.
Under what provision, morgage relief companies may not collect any fees until they have provided consumers with a written offer from their lender or servicer that the consumer decided is acceptable, and a written document from the lender or servicer describing the key changes to the mortgage that would result if the consumer accepts the offer.

Must remind consumer of their right to reject offer without any charge.

This rule not only applies to mod's but to shortsales also.

$11,000 for violation per day
Advance Fee Ban
What is BSA often referred to?
Anti-Money Laundering Act
What act required financial institutions to
1) Keep record of cash purchases of negotiable instruments
2) File reports of cash transactions exceeding $10,000
3)Report suspicious activity that might signify money laundering, tax evasion, or other criminal activities
BSA
The Gramm Leach Bliley Act is also know as
The Financial Services Modernization Act of 1999
What provisions does Gramm Leach Bliley include?
Gramm Title V include to protect and regulate the disclosure of consumers personal financial information
Gramm Leach Bliley Title V goes over 3 things. What are they?
1) Financial Privacy Rule
2) Safeguards Rule
3) Pretexting Provisions

(SPF)
_______________ defines any personally-identifiable financial information that a financial institution collects about an individual in connection with providing a financial product or service such as:

Info on app
Data from credit reporting agency
Transactions such as account balance, debit/credit card purchase info.
whether or not an individual is a consumer or customer of a particular financial institution
Non-Public Personal Information
Name 3 functions of HERA(Housing and Economic Recovery Act)
Modernization of the FHA
Foreclosure Prevention
Enhancement of consumer protections
Reg H
Reg G
State licensing H
Federal Licensing G
Patriot Act:
Identity verification * obstruct terrorism by providing appropriate tools