Proschool Respa I

Front 1

Prequalification

Back 1

An estimate made by a mortgage loan originator of the amount of a loan for which the buyer can qualify based on his STATEMENTS, regarding his financial condition.

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Preapproval

Back 2

-Generally consists of a letter from the mortgage lender showing an estimate of the amount of a loan for which the buyer can qualify,
-Based on VERIFICATION of his income and assets. It is more substantial than prequalification, but it is still not loan approval

Front 3

Final approval of a loan is subject to...

Back 3

Property:
-Having a value to support the loan (evidenced by appraisal)
-Having a marketable title (evidenced by title report)
-Being in suitable condition (in some cases, evidenced by an inspection)
Buyer:
-Being and staying creditworthy (i.e. willing and able to pay the loan) until closing

Front 4

RESPA stans for?

What date enacted?

Back 4

- Real Estate Settlement Procedures Act

-1974

Front 5

Who has enforcement and rule making authority over RESPA?

Back 5

-Consumer Financial Protection Bureau (CFPB)

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RESPA is associated with what Regulation?

Back 6

Regulation X

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The purpose of RESPA and Regulation X are to:

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-help consumers become better shoppers for settlement (closing) services.
-eliminate kickbacks and referral fees that unnecessarily increase the costs of
certain settlement services. (RESPA Section 2)

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RESPA covers loans:

Back 8

-made by federally related lenders; and
-secured with a mortgage on a one- to four-family residential property, including a
condominium unit, a cooperative share, a timeshare or a manufactured home (mobile home) located on the real property securing the lender’s interest.

Front 9

Types of loans covered by RESPA include:

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FHA, VA or other government-sponsored loans and most conventional loans.
􏰀 purchase loans, assumptions, refinances and reverse mortgages.
􏰀 subordinate lien loans, such as:
o homeequityopen-endlinesofcredit(forwhichthedisclosuresrequiredby Regulation Z satisfy RESPA’s disclosure requirements).
o propertyimprovementloans.
o homeequityloansandhomeequityopen-endlinesofcredit.Thesearemortgage
loans that are in addition to a first mortgage and are secured by the owner’s equity in the property. The equity is the difference between the amount owed on the first mortgage and the value of the property. The home equity line of credit allows the borrower to borrow over and over, as he would using a credit card, while the home equity loan is a one-time loan of a fixed amount.

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Home equity loans and home equity open-end lines of credit are secured by?

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The borrowers equity in the first mortgage on the property

Front 11

Transactions not covered under RESPA include:

Back 11

-*** temporary construction loan.
-Assumptions on existing federal related loans, where the lender does not have the right to approve a subsequent borrower
-Conversion of federal related loan to new terms consistent with the ld, not requiring new note
-a bona fide transfer of a loan obligation in the secondary market.
-All-cash sales
-a sale where an individual home seller takes back the mortgage (i.e., a purchase
money mortgage or seller/owner financing ).
-an extension of credit primarily for a business, a commercial or an agricultural
purpose.
-a loan secured by vacant or unimproved property (unless structure/manufactured home will be made w/in 2 years from loan proceeds)
-For a property 25 acres or more

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Definition of GFE

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An estimate of settlement charges a borrower is likely to incure..
- As a dollar amount
-Includes related loan information provided w/the estimate
-Based upon common practice & experience in locality of mortgaged property
-Use form required by Reg. X
-Prepared in accordance w/instructions from Appendix C of Reg X

Front 13

According to Reg X, This term refers to either a lender or a mortgage broker or the individual representing them in originating the loan.

Back 13

Loan originator

Front 14

In Regulation X, this term applies to the secured creditor(s) named in the debt obligation (i.e., the note) and the document creating a lien (i.e., the mortgage or trust deed).

Back 14

Lender

Front 15

In Regulation X, For a loan originated by a mortgage broker that closes a federally related mortgage loan in its own name in a table-funding transaction, the lender would be...

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The person to whom the obligation is INITIALLY assigned at or after settlement.

Front 16

In Regulation X, a person (who is not an employee of a lender) or entity that renders origination services and serves as an intermediary between a borrower and a lender in a transaction involving a federally related mortgage loan.

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Mortgage broker

Front 17

In Reg X, The party who closes the loan in its own name in a table-funding transaction would be considered a...

Back 17

Mortgage broker

Front 18

In Reg X, what is required if a transaction will involved more than one mortgage loan?

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the loan originator must provide the applicant with a separate GFE for each loan.

Front 19

The ___ is responsible for determining whether the GFE has been provided, regardless if ___.

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-The lender is responsible for determining whether the GFE has been provided.
- Even if the the GFE was provided by a broker or a representative of the broker/lender.

Front 20

If a mortgage broker provides a GFE, does the lender have to provide an additional GFE?

Back 20

No

Front 21

The loan originator is not required to provide an applicant with a GFE if,

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Within three BUSINESS days after receipt of the application, the loan originator denies the application or the applicant withdraws the application

Front 22

Current definition of an application (RESPA)

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- The submission of a borrower’s financial information in anticipation of a credit decision relating to a federally related mortgage loan,
- Shall include ALIENS*

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How may an application be submitted?

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In writing or electronically submitted, including a written record of an oral application.

Front 24

HUD urges loan originators to develop _____ concerning what information they will require to minimize delays in issuing GFEs.

Back 24

Consistent policies or procedures

Front 25

Regulation X prohibits a loan originator from requiring _____ as a condition for getting a GFE, to facilitate _____ for the borrower.

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- Prohibits requiring verification documents to support the information on the application, as a condition to issue the GFE.
-Made it easer for an applicant to shop for financing.

Front 26

When may a loan originator require or obtain supplemental documentation to verify the information the application.

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- To verify the information the applicant had provided on the application, the loan originator may at any time collect from the applicant any information that the loan originator requires in addition to the required application information and use his own sources to independently verify the information provided by the applicant before or after issuing a GFE, but they can never be collected as a condition for issuing the GFE.

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Guidelines for how the GFE can be delivered...

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-Hand delivery
-Placing it in the mail
- fax, e-mail or other electronic means, if the applicant agrees. (The prior regulation
had no provision for any sort of electronic delivery.)

Front 28

In the case of a federally related mortgage loan involving an open-end line of credit (home-equity plan) covered under the Truth in Lending Act and Regulation Z, what counts as satisfying Regulation X?

Back 28

When the loan originator provides the borrower with the disclosures required for open-end home equity plans by Regulation Z at the time the borrower applies for the loan is deemed to satisfy the requirements of Regulation X.

Front 29

Required Regulation X Disclosures at/before/after referral?

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- Mortgage Servicing Disclosure
-Special Information Booklet
-GFE
-AfBA Disclosure Statement

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Delivery of Mortgage Servicing Disclosure: When and how to be delivered?

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When: At application or within 3 business days (days entity open to public)

How: Any form.
May add to model wording.

Front 31

Delivery of Special Information Booklet: When and how to be delivered?

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When: At application for home purchase loan or within 3 business days (days entity open to public)

How:
-Any form.
-Can be translated into other languages; stamped with loan originator company name
-Cannot be part of other larger documents, nor merely provided on Internet

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Delivery of GFE: When and how to be delivered?

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When: At application or within 3 business days (days entity open to public)

How:
-HUD-GFE developed by HUD.'
-Hand delivery; mail; if applicant agrees, fax, e- mail, other electronic means

Front 33

Delivery of AfBA Disclosure Statement: When and how to be delivered?

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When: At or prior to time of referral.

How:
-Any form.
-May include referrals to more than one affiliate

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Regulation X: An additional disclosure that must also be given to the borrower:

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Clear and conspicuous written list of homeownership counseling organizations that provide relevant counseling services in the loan applicant’s location, not later than three days after receipt of an application.

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If a mortgage broker provides the disclosures, the ___ is responsible for ascertaining that the GFE has been provided.

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Lender

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What constitutes a business day

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A day on which the offices of the business entity are open to the public for carrying on substantially all of the entity’s business functions. The three business days do not include a day the business is not open to the public for carrying on its full range of functions, and for initial disclosures the three days start the first business day after receipt of the application.

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Mortgage Servicing Disclosure Statement

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A mortgage servicing disclosure statement discloses whether the servicing of the loan (i.e., collection of payments) may be assigned, sold or transferred to any other person at any time while the loan is outstanding.

Front 38

What is the name of the Special Information Booklet?

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-Shopping for Your Home Loan: HUD’s Settlement Cost Booklet
-provided if the loan is intended to finance a home purchase.

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Who prepares the special information booklet?

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The HUD

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What does the special information booklet contain?

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-general information about shopping for a home, a loan and settlement services.
-an explanation of the GFE and the HUD-1 Settlement Statement.
-a warning to the consumer about providing false information with regard to the
loan application.

Front 41

In what form(s) is the special information booklet allowed to be reproduced?

Back 41

The booklet can be reproduced in any form, faxed or e-mailed, translated into other languages, and even stamped with the loan originator company name. However, it cannot be part of other larger documents or merely provided on the Internet

Front 42

When two applicants jointly apply for a loan, who does the loan originator have to send the special information booklet to?

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-He only has to send the booklet to one of the borrowers, and it does not matter which one.

Front 43

What changes can an originator make to the special information booklet?

Back 43

-No changes, other than:

-Substituting “The Bureau of Consumer Financial Protection” for “HUD’s Office of RESPA” and “the RESPA office” in the Complaints section of the booklet

-Substituting “the RESPA office” in the Complaints section of the booklet and for the reference to the “Board of Governors of the Federal Reserve System” in the Appendix of the booklet.
-It is also permissible in the Avoiding Foreclosure section to add that homeowners may find information on and assistance in avoiding foreclosure at http://www.consumerfinance.gov.

Front 44

Settlement services include:

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-Originating the loan (i.e., taking the loan application, loan processing, and
underwriting and funding)
-Rendering of services by an attorney; a real estate agent or broker; a loan originator
-Rendering inspections, whether required by law or by the sales contract or mortgage
documents prior to transfer of title
-Rendering credit reports/appraisals
-Preparing documents, including notarization, delivery and recordation
-Conducting settlement by a settlement agent (e.g., the originating lender, an attorney,
a licensed escrow agent) and any related services
-Providing services involving: Mortgage insurance; hazard/flood/or other insurance & warranties; mortgage life, disability or similar insurance (only if such insurance is required; real proprety taxes and other assessments/charges on the real property
-Providing any services related to the origination, processing or funding of the loan
- Providing title services
-Other services the borrower/seller is required to pay

Front 45

Affiliated business arrangement

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For when a person in a real estate settlement service business for a federally related mortgage refers someone to a mortgage related service provider who:
-Has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1 percent in a provider of settlement services; and
-Refers business to, or influences the selection of, that provider.

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An associate:

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Someone who has one or more of the following relationships with a person in a position to refer settlement business:
-Spouse/parent/child of the person
-A business entity controlling, controlled by, or under same control with the person
-An employer/officer/director/partner/franchiser/franchisee of the person
-Anyone who has an agreement with the person that will enable the person in a
position to refer settlement business to benefit financially from the referrals of such business

Front 47

AfBA Disclosure Statement must be given on a separate piece of paper to the borrower when:

Back 47

-At or before the time of a face-to-face referral or one made in writing/electronic media
-within three business days after a referral made by telephone (during the call, give an abbreviated disclosure of the existence of the arrangement and the fact that a written disclosure will be provided in 3 days).
-at the time the GFE is provided, in the case of a referral by a lender (including one to an affiliated lender).

Front 48

An AfBA must specify:

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-The nature of the relationship (ownerships and financial interests)
-Estimate or range of charges made by the service provider
-Inform the borrower he is not required to use the affiliate and is free to shop around.
-However, a lender can require a buyer, borrower or seller to pay for the services of a particular attorney, credit-reporting agency or real estate appraiser chosen by the lender to represent the lender’s interest in a real estate transaction.

Front 49

How many referrals can be covered by a single AfBA disclosure?

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-Any amount

Front 50

What circumstance can a lender make a referral, without needing an AfBA Disclosure Statement?

Back 50

-When the referral is not to a lender's affiliate.