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NC Fundamentals of Residential Mortgage Loan Origination - Federal Law


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A Federal law requiring written disclosure of the terms of a mortgage
(TILA) Truth in lending act
RESPA stands for
Real Estate Settlement Proceedures Act
RESPA is also known as Regulation ______.
Regulation X -- RESPA
Enacted by Congress in 1974 further the goal of encouraging home ownership and to "regulate the underlying business relationships and procedures of which COSTS are a function".
Prohibits or regulates "abusive" practices such as unearned fees, escessive excrow accounts and kickbacks.
The Purpose of RESPA is to further the Goal of home ownership and Prohibits or regulates abusive practices including:
"a. Kickbacks and unearned referral fees
b. Split of a fee except for bona fide services performed.
C. Excessive Escrow accounts."
RESPA establishes that Escrow Accounts may not hold more than ________ of total annual disbursements
1/6th of annual disbursements
RESPA requires lenders to provide an account analysis of escrow accounts how often?
Section ___ of RESPA prohibits kickbacks in return for referrals.
Section 8 -- Remember kickbacks are Crazy (Remember this by: Crazy folks in the Army were separated under "section 8" conditions.)
RESPA requires brokers/bankers to provide the consumer with what three items at the time of application OR WITHIN 3 DAYS OF APPLICATION:
"1. A special information booklet prepared by HUD
2. A good Faith Estimate (GFE)
3. A Mortgage Servicing Disclosure Statement."
The HUD Special Information Booklet is only required for:
Purchase Transactions⬦. NOT REFINANCES.
RESPA requires brokers/bankers to provide the consumer with an __________ ________ __________ (___) BEFORE SETTLEMENT/CLOSING?
Affiliated Business Arrangement (ABA)
RESPA requires broker/bankers to provide the consumer with what two items AT CLOSING.
"1. HUD-1 Settlement Statement
2. Initial Escrow Statement."
The Acronym "POC" stands for what?
Paid Outside of Closing
POC items although are not additional fees to the borrower for the purposes of closing, ARE included in the calculation of:
Annual Percentage Rate
RESPA requries lenders to provide the consumer with _________________________ annually AFTER CLOSING?
Annual Escrow Statement.
_________ is the COST OF CREDIT expressed as a percentage of the net amount borrowed, calculated as required by Regulation Z, implementing the Truth in Lending Act.
APR (Annual Percentage Rate)
The acronym "TILA" stands for:
Truth in Lending Act.
The Truth in Lending Act is also known as Regulation ______.
Regulation Z - TILA
The "Truth in Lending Act" (TILA) was designed to foster informed use of consumer credit. Truth in Lending is the name of the part of ________ ________ _______ Act of 1968.
Consumer Credit Protection Act of 1968.
The Truth in Lending Act is regulated by the ________ _________.
Federal Reserve
The ________ ________ on the Truth in Lending is the dollar-and-cents total of all charges a borrower must pay directly or indirectly for obtaining the loan. These costs include the Interest, Points, Mortgage Insurance, Origination Fees, etc.
Finance Charge
The _____ __________ _____ (___) is a calculation that represents the relationship between the total finance charge and the amount to be finance in annual percentage terms.
Annual Percentage Rate (APR)
Credit advertising policy is also included in Regulation _____.
Regulation Z - TILA
Regarding Triggering: When an advertisement provides certain credit information in a message, then REGULATION Z mandates that additional information be provided to consumers also. Name the 4 Triggers.
"1. Number of Payments
2. Amount of Payment
3. Amount or percentage of downpayment.
4. Amount of interest rate or finance charge."
According to Regulation Z, if an advertiser supplies ANY triggering information, what must also be given?
"1. Amount or percentage of down payment.
2. Terms of repayment.
3. The annual percentage rate (APR)"
HOEPA is an acronym for:
Home Owner Equity Protection Act (HOEPA)
(HOEPA) Home Owner Equity Protection Act is also known as Section _____.
Section 32
HOEPA is the 1994 amendment of:
Regulation Z - TILA
HOEPA the Home Owner Equity Protection Act addresses deceptive and unfair practices and establishes procedures for "____ ____" loans.
High Cost
The Cost Test triggers a _____ ____ loan when the total of fees and points paid by the borrower exceeds 8% of the total loan amount.
Section 32
The Maximum amount of fees and points paid by a borrower without triggering a "High Cost" or Section 32 Loan is:
The Rate Test triggers a _____ _____ loan when the APR on the loan being offered exceeds, by more than 8 points, the rates on the comparable treasure securities.
Section 32 HOEPA High Cost Loan
If a Section 32 loan is triggered, that additional disclosure is required?
Disclosure that it is a "High Cost Loan", Special Section 32 Discloures, and an additional 3-day cooling off period.
On Any loans deemed to be "Section 32" or "High Cost Loans", what practices are prohibited?
"1. Pre-Payment Penalties
2. Balloon Payments
3. Advance Payments
4. Default Interest Rates
5. Rebates of Interest on Default."
HOEPA the Home Owner Equity Protection Act ammends ______________.
Regulation Z - TILA
Generally, the Home Owner Equity Protection Act (HOEPA) regulates what types of loans?
High Cost
The Acronym FCRA refers to the ____ ______ _________ Act
Fair Credit Reporting Act (FCRA)
The ____ ______ _______ ____ (_____) Requires that credit records be kept confidential.
Fair Credit Reporting Act (FCRA)
The ____ ______ _______ ____ (_____) establishes the procedures for the correction of any mistakes on a person's credit report.
Fair Credit Reporting Act (FCRA)
The Fair Credit Reporting Act (FCRA) requires that credit records be retained for ______years on suits, judgements, liens, and other adverse credit actions.
7 Years.
The Fair Credit Reporting Act (FCRA) establishes that any borrower, who has been denied credit, may request a credit report, free of charge, within _____ days of denial.
60 Days
FACTA is an acronym that represents:
Fair and Acurate Credit Transaction Act (FACTA)
The Fair and Acurate Credit Transactions Act (FACTA) is an ammendment to _______.
FCRA Fair Credit Reporting Act
FACTA allows you to receive a free credit report from each of the three Credit Reporting Agencies how often?
once a year.
The Fair Credit Reporting Act was passed in December of _____.
FACTA enacted December of 2003.
What is the purpose of FACTA?
"The purpose of the Fair and Acurate Credit Transactions Act (FACTA) was to amend FCRA in order to:
1. Enhance the ability of consumers to combat identity theft.
2. Allow consumers to exercise greater control regarding the type and amount of marketing solicitations they recieve.
3. Increase the accuracy of consumer reports."
What are the loan originator's obligations under FACTA (the Fair and Acurate Credit Transactions Act?)
"1. Must have permissable purpose of credit information.
2. Defines adverse action.
3. Fraud alert policies must be in place.
4. Must properly dispose of consumer credit information in compliance with ""GLBA"".
5. Must provide disclosure if credit terms are less favorable.
6. Notice to Home Applicant Disclosure."
What consumer changes were brought on by FACTA?
"1. Consumer can request credit score from a Credit Reporting Agency (CRA).
2. Consumer will receive credit score as part of the mortgage process.
3. Consumer can get one free Credit Report from each of the CRAs each year."
FACTA was signed into law on what date?
December 4, 2003 by President Bush.
Changes to FACTA Effective December 1, 2004, requires that if a credit report has a Fraud Alert on it (including an identity theft or an active duty military alert) you must:
have policies in place to identify the consumer.
Changes to FACTA Effective June 1, 2005, requires users of consumer credit information to:
Take reasonable measures to protect against unauthorized access to or use of the information in connection with its disposal.
Under FACTA, if a consumer requests a free credit report by telephone or mail, the credit report must be mailed no later than ___ days from the date of request.
15 Days.
The 4 Fair Lending Laws include:
"(ECOA) Equal Credit Opportunity Act - Regulation B
(FHA) Fair Housing Act
(HMDA) Home Mortgage Disclousre Act - Regulation C
(CRA) Community Reinvestment Act - Regulation BB"
ECOA is an acronym for:
Equal Credit Opportunity Act (ECOA)
ECOA (the Equal Credit Opportunity Act) is also known as Regulation ____.
Regulation B -- ECOA
ECOA is regulated by:
Federal Reserve
Title VII of the Consumer Credit Protection Act refers to:
ECOA Equal Credit Opportunity Act.
ECOA (the Equal Credit Opportunity Act) primarily addresses ____-_____________.
The Purpose of ECOA (Equal Credit Opportunity Act) is to:
"1. Provide availability of credit to all creditworth applicants regard to protect class (race, color, religion, national origin, sex, marital status, or age.
2. Provide availability of credit without regard to the fact that all or part of the applicant's income is derived from public assistance.
3. Provide availability of credit without regard to the fact that the applicant has exercised any rights under the Consumer Credit Protection Act."
According to ___________________ a lender may not discourage a person from making or persuing a loan application through oral or written statements.
ECOA Equal Credit Opportunity Act.
According to ECOA (The Equal Credit Opportunity Act), within 30 days of receiving a completed application, the creditor must notify the applicant (orally or in writing):
"a. Of any action taken on the file.
b. If adverse action was taken
1. Creditor has 30 days to provide statement of reasons for adverse action if applicant requests it within 60 days.
2. Must provide credit bureau report used in the credit decision and the contact infomation to obtain a free report.
c. If the file was incomplete.
d. If a counter-offer was made.
Provide a copy of appraisal."
Under ECOA, a creditor cannot ask an applicant if they are divorced. They must be given one of three choices:
1. Married
2. Unmarried
3. Separated.
Under ECOA, a Creditor cannot inquire whether income stated in an application is derived from:
"1. Alimony
2. Child Support
3. Separation Maintenance Payments"
Under ECOA (Equal Credit Opportunity Act) is it permissible to ask someone if they are paying Alimony, Child Support, or Separation Maintainence Payments?
Enforcement of ECOA and its various provisions is overseen by:
Seven Different Federal Agencies
Liability on Individual actions under ECOA is limited to _________.
Liability on class actions under ECOA is limited to ____________.
$500,000 or 1% of the creditor's net worth.
Title VIII of the Consumer Credit Protection Act of 1968, refers to:
The Fair Housing Act (FHA)
The purpose of the Fair Housing Act (FHA) is to:
Provide fair housing throughout the U.S.
__________ Prohibits the imposition of different requirements and use of standards that have a disparate effect on different borrowers (redlinging, racial steering, etc.)
Fair Housing Act (FHA)
The Fair Housing Act (FHA) requires the display of ____________.
The Equal Housing Opportunity Logo.
The _____ _____ _____ (___) prohibits lenders from discriminating against any person because of race, color, religion, national origin, sex, handicap, familial status, or other protected class.
Fair Housing Act (FHA)
Regulation "C" refers to:
"The Home Mortgage Disclosure Act (HMDA)
Remember by the Public being able to see ""C"" their annual report."
Home Mortgage Disclosure Act (HMDA) was established to help determine if:
To determine if lenders are serving the housing needs of communities; to assist public officials with identifying possible discrimination patterns; and to enforce anti-discrimination practices.
The Act that was put in place in 1977 and revised in May 1995 that was intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with
The Community Reinvestment Act (CRA)
The acronym (CRA) refers to:
The Community Reinvestment Act (CRA)
The Community Reinvestment Act (CRA) requires that each insured depository institution's record of meeting the credit needs of the entire community be evaluated by:
"1. The Federal Reserve Board (FRB)
2. The Federal Deposit Insurance Corporation (FDIC)
3. The Office of the Comptroller of Currency (OCC)
4. The Office of Thrift Supervision (OTS)"
The Financial Modernization Act of 1999 is also known as:
The Gramm-Leach-Bliley Act or GLBA
Which Act includes provisions to protect consumer's personal financial information held by financial institutions including Mortgage Bankers, Mortage Brokers, Finance Companies, and the settlement service providers?
The Gramm-Leach-Bliley Act or GLBA
The GLBA covers two main regulations:
"1. The Financial Privacy Rule
2. Safeguards Rule."
The GLBA's Financial Privacy Rule requires companies to give consumers a _____________.
Privacy Notice.
The GLBA (Gramm-Leach-Bliley Act) is enforced by:
The Federal Trade Commission (FTC)
The GLBA requires rules for securing information like:
"1. Employee Training of your information security policy.
2. Physical Safeguards like locking rooms and file cabinets.
3. Managing System Failures including detection, prevention and response to attacks and intrusions (Firewalls, etc)"
The GLBA prohibits pre-text calling. What is pre-text calling?
Pretext calling is the illegal practice of attempting to gain private information using false pretences, normally done over the telephone.
The Gramm-Leach-Bliley Act is generally related to:
Protecting Non-Public Personal Information
The acronym "TSR" stands for:
Telemarketing Sales Rule (TSR)
The Telemarketing Sales Rule was established by the:
"Federal Communications Commission (FCC)
Federal Trade Commission (FTC)"
The TSR requires that telemarketers "scrub" their call lists against the DNC registry a minimum of:
Once every 30 days.
Violators of the TSR's Do Not Call legislation will be subject to fines up to ____________ per violation.
According to the TSR (Telemarketing Sales Rule), a seller (marketer) may contact a consumer with whom they have an established business relationship for up to _______ months after their last purchase, delivery, or payment.
18 Months
According to the TSR (Telemarketing Sales Rule), a seller (marketer) may contact a consumer that has made an inquiry or submitted an application for up to _______ months.
3 Months
The USA PATRIOT Act requires:
"1. Financial instututions institute a Customer Identification Program (CIP)
2. Verify Customers are who they say they are.
3. Maintain records and methods of verification.
4. Determine if applicants appear on the terrorist hit list."

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