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24 Cards in this Set
- Front
- Back
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Finance charge
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The cost of credit in the form of an exact dollar amount Anything the lender/broker charges affects the finance charge (processing fee, loan origination fee) Credit, appraisals, inspections do not affect the finance charge |
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How can you tell if an LE was made in good faith?
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between the estimated charges originally provided in the LE and the actual charges paid by or imposed on the consumer in the Closing Disclosure |
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What must be disclosed for variable or ARM loans? |
CHARM booklet-Consumer Handbook on Adjustable Rate Mortgages Program disclosure for whatever ARM they show interest in accepting Must disclose worst rate and payment borrower will see on an ARM in first 5 years. They must also supply borrowers an initial interest rate adjustment notice the first time the interest rate adjusts between 210 and 240 days before first payment at the new rate is due and ongoing interest rate adjustment notices must be sent. |
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Closing Disclosure
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Borrower must be provided with it 3 days prior to close. If disclosure is wrong, you must give a new disclosure and wait 3 days to close |
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What is the difference between the Loan Estimate and the Closing Disclosure? |
The Loan Estimate is the estimated cost to close and the Closing Disclosure is the actual cost at closing
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What does consummation mean?
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obligated to the creditor |
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Right of Rescission
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3 day right to rescission is given to any borrower that wants to refinance their primary residence and may only have one residence. Each owner gets 2 copies of the right to rescind notice and 1 copy of disclosure. If borrower is not given the forms or the APR disclosed was off by max variance which is 1/8th the rescission period extends from 3 days to 3 years. Only takes one borrower to rescind |
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What must be done to waive right of rescission?
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Borrower must notify lender in writing to waive right to rescission and explain a bona fide financial emergency |
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Reg Z Advertising Rules |
1. Only advertise the terms available in the credit plan being offered 2. The ad must state the APR (if triggers are used) 3. If the APR can increase-you must state this in the ad "may increase or subject to change: 4. A note can be in the ad but NOT MORE CONSPICUOUS than the APR |
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What is a trigger term? |
A phrase that represents the most attractive features of a credit plan in the context of an add. Ex: 10% down, Up to 4 years to pay, $1000 down, etc |
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What happens if you willfully give false info or consistently understate your APR or fail to comply with TILA? |
Fine is $5000, prison for 1 year, or both $500,000 for class action suits or 1% of net worth of servicer, whichever is less. |
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POC PFC |
Paid Outside of Closing (third party fees) Prepaid Finance Charge (lender/broker fees) |
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Dodd-Frank |
Put in place to promote financial stability and end abusive practices in Financial Services Created the CFPB (Consumer Financial Protection Bureau) to enforce the laws Repealed the HVCC (Home Valuation Code of Conduct) and imposed Appraisal Independence |
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Qualified Mortgage |
May not have negative-amortization, interest-onl, or balloon-payment features or terms that exceed 30 years. They also may not have points and fees that exceed specified limits (max points and fees of 3%) Ex: 30 year fixed or standard fully-amortized ARMS are acceptable |
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What loans may have a prepayment penalty that cannot exceed 3 years or 2%, with a 2% max for first two years and 1% for 3rd year? |
Fixed rate loan |
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What must lenders use to calculate ability to repay on an ARM? |
The fully indexed rate or introductory rate, whichever is higher |
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HOEPA |
Homeownership Equity Protection Act aka Section 32 Law that tells you how much is too much |
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High Cost Mortgage |
When you originate a High Cost Mortgage, you must give the borrower additional disclosures 3 days prior to closing, avoid certain loan terms, and ensure the borrower receives additional protections, including homeownership counseling |
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What are the 3 reasons your loan becomes High Cost? |
1. Points and Fees Trigger (excluding mortgage insurance)-if the total points and fees not including 3rd party fees are 5% on loans of $20k and 8% or $1000, whichever is less on loans of $20k 2. APR Trigger-if your APR is 6.5% over the APOR-"Average Prime Offer Rate" for the comparable 1st mortgages and 8.5% over APOR on 2nds or 1st liens under $50k (add APOR to APR trigger to find benchmark rate 3. Prepayment penalty of longer than 3 years or more than 2% of the loan amount |
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If you create a high cost mortgage you must comply with the following rules |
1. 3 days prior to close you must send a written High Cost Mortgage Disclosure 2. Homeownership Counseling is required prior to making the loan from a HUD approved counselor 3. No balloon payment loans, negative amortization, prepayment penatlies, acceleration clauses (unless borrower commits fraud or default), paying a contractor directly from funds. |
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What are the two loans that require counseling? |
High Cost Mortgages and Reverse Mortgages |
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Three levels of mortgages |
Qualified Mortgage High Cost Mortgage Higher Priced |
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Higher Priced Mortgages Loan |
A loan that has an APR that exceeds the APOR by 1.5% on a 1st mortgage, 2.5% on jumbos, and 3.5% on 2nd mortgages No additional disclosures but have to escrow, must have appraisal and interior inspection. Under TILA HPM escrow rule, lenders have to establish/maintain an escrow account for borrowers who accept a first lien HPM for a min of 5 years (or until loan is paid off) |
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RESPA |
Real Estate Settlement Procedures Act |
