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57 Cards in this Set

  • Front
  • Back
Advertising a mortgage loan product that a lender is not able to offer is a violation of what federal law?
TILA - Regulation Z
What is the Act that requires fiancial entities to provide customers with a privacy notice, as well as an "Opt-Out-Notice," regarding the customer's personal information?
Gramm-Leach-Bliley Act (GLB Act)
Under the GLB Act, nonpublic information can only be shared with affiliates of the financial institution or affiliates of related third parties, even if the customer does not opt-out.

True or False?
True
What information must be provided to the borrower when referrals take place between affiliated businesses?
An Affiliated Business Disclosure Statement as mandated by RESPA
What is the primary purpose of the Gramm-Leach-Bliley Act (GLBA)?
Notice of Right to Financial Privacy and Right to Opt-out of the Sharing of Personal Information
Along with the Fair and Accurate Credit Transactions Act Disposal Rule, what GLB Act provision ensures that customer's information is not handled or maintained carelessly and is disposed of properly?
GLB Act's Safegurads Rule
What is the difference between the GLBA Safeguards Rule and the FACT Act Disposal Rule?
The GLBA Safeguards Rule requires all financial institutions to design, implement, and maintain safeguards to protect customer information from theft.

The FACT Act Disposal Rule requires businesses to take appropriate measures to safeguard sensitive information from theft in the method of disposal of consumer reports and the information derived from consumer reports.
What is a "federally related loan"?
Loans secured by a first or subordinate lien on a residential property that meet stated RESPA criteria. The criterion is so broad that it covers virtually every home loan secured by a mortgage.
Most of HUD's enforcement actions result due to Section 8 of RESPA. What is addressed in Section 8?
Prohibition against giving or receiving a fee, kickback, or "anything of value" pursuant to an "agreement or understanding" for the referral of settlement business.
What is an affiliated business arrangement?
An affiliated business arrangement (AfBA) is an arrangement in which one person refers loan applicants to a settlement service provider with whom the referring person has an ownership interest of more than 1%.
What customer protection does Section 10 of RESPA provide?
Section 10 protects consumers by ensuring that borrowers know the amount of funds deposited in escrow accounts and by preventing lenders from overcharging borrowers for escrow deposits.
What are the consequences for violating Section 8 of RESPA?
Up to $10,000 and 1 year in prison.
What is the primary aim of Regulation B?
Regulation B is ECOA.

It is intended to promote the availability of credit to all creditworthy applicants and prohibit discrimination.
A copy of the HUD-1 may be requested by the borrower how many days prior to the settlement (closing)?
1 day
Under ECOA, is it lawful to turn down an applicant because part of his/her income is from public assistance?
No
What is the letter of the regulation by which ECOA is also referred?
Regulation B
To whom does the Truth in Lending Act apply?
All businesses and individuals that regularly extend consumer credit that is primarily for family or household purposes.
What is the RESPA prohibition on "mark ups" designed to prevent?
A lender or service provider marking up costs over the actual for the purpose of retaining the additional funds.
TILA requires that mortgage brokers fees are _____ included in the finance charge.

Always or Never?
Always
Under ECOA, you must notify an applicant of Notice of Action Taken within what time period?
30 days from receipt of a loan application
Which lending law provides that consumers get a free credit bureau report annually?
The FACT Act (FACTA) that is part of the Fair Credit Reporting Act.
Which law has the primary aim of prohibiting discrimination, specifically in residential real estate transactions?
Fair Housing Act
Which law requires institutions, that are covered by the law, to collect extensive data about each mortgage loan application or origination?
Home Mortgage Disclosure Act (HMDA)
Which law applies to transactions involving the information that is used and assembled by credit reporting agencies (CRAs)?
Fair Credit Reporting Act (FCRA)
What is the exception to the Telemarketing Sales Rule (TSR) that allows sales or telemarketing employees to call customers whose numbers are on the Do-Not-Call Registry?
TSR does not apply if the consumer has an established relationship with the business, unless the consumer specifically requests not to be called.
What does the acronym TSR represent?
Telemarketing Sales Rule
Red Flag Rules make what requirement on creditors and financial institutions?
To establish an identity theft prevention program, outlining methods to prevent security breaches at a company-wide level.
A mortgage broker is not in violation of Section 8 of RESPA if he/she gives or accepts a gift of nominal value ($25 or less).

True or False?
False. Any gift for a referral can call into question ethical and legal liabilities, regardless of the amount.
When would it not be a violation of the Truth in Lending Act to use the term "low monthly payment" in an advertisement?
When it is accompanied by the APR.
Is a mortgage lender operating within the guidelines of TILA, if they advertise a particular home equity loan product as "tax deductible"?
No. Regulation Z (TILA), specifically, prohibits the use of advertisements that include any misleading statements, regarding the tax benefits of a home equity plan.
Define "property flipping"
A property is bought and resold within a very short period of time, within the same week or even the same day. The resale potentially includes an inflated appraisal value.
What are "straw buyers" and "straw sellers"?
A straw buyer is an individual who accepts a fee to provide his/her name, social security number, and other personal information for use on a mortgage application.

A straw seller is an individual who accepts a fee to falsely claim ownership to a property. Falsified documents (title documents, warranty deeds, etc.) are normally used to complete the transaction.
What is an "Air Loan"?
A loan where a fictitious borrower obtains a mortgage loan and "secures" it with fictitious property.

Fraudsters use fictitious employers, appraisers, and credit agencies to obtain verifications necessary to process the loan application.
Define "Equity Theft"
Equity theft occurs when a mortgage industry employee forges a deed transfer and obtains a new lien on a property without the homeowner's knowledge.
Under what circumstances would a sale or assignment of a sales contract be considered fraud?
When fraudulent real estate investors obtain a contract on a property with an inflated value and offer to sell the contract to an underwriting buyer for a fee.

The "investor" receives the fee and the profit from the inflated value. The buyer's value in the property is a fraction of the the sale price.
What is the most common type of mortgage fraud involving borrowers?
Fraudulent information on loan applications is the most common type of mortgage fraud involving borrowers.
What is the primary step in detecting mortgage fraud?
A thorough "common sense" analysis of the application information and documents relating to the mortgage transaction.
A loan application is received from a 23 year old. When the credit bureau is pulled, the residence history shows a residence length of 17 years and a work history of 21 years.

Should this be considered a potential fraud? Why?
Yes. It should be considered a potential fraud until investigated and a determination can be made to the contrary.
Why is it important to check the back of pay stubs, bank statements, and W-2 forms?
To detect watermarks and printed fraud prevention patterns. Technology allows fraudsters to produce high quality fraudulent documents.

Most organizations have incorporated fraud-prevention techniques, like the watermark, to reduce the practice.
What does the phrase "Caveat Emptor" mean?
"Buyer Beware"; If the borrower is provided all of the information and disclosures, then they are ultimately responsible for understanding the terms of a lending agreement and deciding whether the loan is one that they can afford.
What is a "buy-back provision" in reference to table-funding?
If any form of unethical conduct or fraud related activity takes place around a particular loan, the originator is responsible for buying the loan back; which means, the originator would be responsible for the cost of the loan.
What is "equity-based lending"?
Equity-based lending occurs when loans are made to homeowners based solely on the equity in their home with no regard to other credit qualifications.

This is an unethical practice because it can "strip" homeowners of their equity & leave them with larger loans than they can pay for.
What is the difference between the practices of "redlining" and "reverse redlining"?
Redlining is the practice of denying, or increasing the cost of services, such as banking, mortgage lending, insurance, access to jobs, access to health care, or even supermarkets, to residents in certain, often racially determined areas.

Reverse redlining is a term used to describe situations where a lender or insurer, particularly, targets minority consumers, not to deny those loans or insurance, but rather to charge them more than would be charged to a similarly situated majority consumer.
What federal agency is responsible for issuing and implementing regulations for TILA?
The Federal Reserve
What is the difference between the Notice of Action required by the ECOA and the Adverse Action Notice required by the FCRA?
Notice of Action is part of the ECOA and is due 30 days after a consumer's submission of a loan application to notify the consumer of what action has been taken on his/her request for credit. (i.e. incomplete application, approval, counteroffer, or adverse action)

Adverse Action Notice is required by the FCRA and states that mortgage lenders must provide a notification of adverse action any time adverse action is taken as a result of information contained in a credit report. It would also provide them with contact information for the Credit Bureau and advise them of their right to obtain a free credit bureau report.
When a consumer registers on the National Do Not Call Registry, when does the request expire?
Never. Telephone numbers placed on the National Do Not Call Registry remain on it permanently due to the Do-Not-Call Improvement Act of 2007.
What is the acceptable variance of the APR per TILA?
1/8th of 1% or 0.125%
The FACT Act's red flag rule provides indicators of potential fraud. What credit bureau information is most likely to indicate fraud?
"Suspicious identification information" such as an address that does not match the address in the credit bureau, or a SS# identified in the credit bureau report as being invalid.
How long does a borrower have to request a copy of an appraisal, once receiving a Notice of Action Taken?
90 days
Once a lender is notified that a customer is on the National Do Not Call (DNC) Registry, how long does the lender have to add the consumer to its own DNC list?
31 days. Per the National Do Not Call Registry Guidelines, lenders are required to update their own DNC list every 31 days.
The total of payments for the loan is found on the TIL.

True or False?
True. The TIL includes: APR, finance charge, amount financed, and the total of payments.
When must the TIL (Truth in Lending) Disclosure Statement be provided to borrowers in a purchase money mortgage transaction?
The initial TIL must be provided within 3 days of receiving an application.
When is the Notice of Right to Receive Appraisal given to the borrower?
The Notice of Right to Receive Appraisal is required by the ECOA and is due at the same time as the Notice of Action Taken.
The GLBA Privacy Notice may be delivered to customers via fax, mail, or email.

True or False?
True. The Privacy Notice may be delivered in writing or in electronic form. The notice must clearly describe the financial institution's practice of sharing nonpublic information with affiliates and third parties.
Which federal law regulates settlement costs?
RESPA
Define "Trigger Term"
Terms used in advertising that trigger specific information required by TILA, namely the APR. Examples of trigger terms for closed-end loans include, but are not limited to:
- Finance charges
- Payment terms
- Down payment requirements
- Low monthly payment
Explain the advertising requirement around the term "annual percentage rate" outlined in Regulation Z.
Regulation Z requires the clear and conspicuous presentation of other relevant terms when a trigger term is used in an advertisement

The presentation of the other relevant terms must have equal prominence so that consumers will not have to read the fine print to gain an accurate description of the loans that the advertisement is promoting.