TILA

Question 1

What does TILA stand for?

Answer 1

Truth in Lending Act

Question 2

TILA = Regulation

Answer 2

Regulation Z

ZILA

Question 3

Purpose of TILA

Answer 3

Complete Cost of Credit

• established the required use of the Loan Estimate and Closing Disclosure
• Requires lenders to disclose the complete cost of credit to the consumer loan applicants.

Question 4

Loans Covered under TILA

Answer 4

Applies to all credit transactions which meet the following conditions:
-The credit is offered to consumers
-The offer or extension of credit is made regularly
-The credit includes a finance charge or a written agreement stating that the loan may be repaid in MORE THAN 4 installments
-The credit is primarily for personal, family or household purposes
Both closed-end and open-end loans are covered.

Question 5

Define APR

Answer 5

Annual Percentage Rate
True yearly cost of borrowing.
-Measure of the cost to the borrower that includes interest rate and finance charges expressed as a percentage.

Question 6

Define “Finance Charge”

Answer 6

The cost of credit as a dollar amount. (A fee the buyer wouldn’t pay if it were a cash deal).

Question 7

Define “Dwelling”

Answer 7

A residential structure or mobile home which contains 1-4 family housing units.

Question 8

Define “Residential Mortgage Loan”

Answer 8

Security instrument created to finance the purchase or construction of a dwelling.

Question 9

Right of Recession

Answer 9

-Provides 3 business day “cooling-off period” for consumers who use their primary residence as security for a refinance, home improvement or 2nd mortgage loan.(HELOC/REFIS ONLY)

HOME PURCHASES HAVE ZERO RIGHT OF RECESSION

-Each borrower must receive 2 copies of a Notice of Right to Rescind.

Question 10

Refinancing scenarios with rights to rescind certain types of transactions:

Answer 10

Refinances on primary residences, including reverse mortgages.
-All borrowers receive 2 copies of the right to rescind notice, or they can have 3 years to rescind.

Question 11

“seller contributions”

Answer 11

Sellers are typically allowed to contribute anywhere from 3% to 6% of the home’s purchase price towards the buyer’s closing costs.
CANNOT BE USED FOR DOWN PAYMENT

Question 12

HOEPA stands for

Answer 12

Home ownership and Equity Protection Act

Question 13

Purpose of HOEPA

Answer 13

HOEPA, or the Home Ownership and Equity Protection Act,
protects homeowners when they refinance or get home equity loans. The law attempts to prevent unfair practices from lenders who offer home equity loans.

Question 14

Loans subject to HOEPA

Answer 14

• primary residence
• purchase (money mortgages)
• refinances
• second mortgages (aka home equity loans both open and closed)

Question 15

Loans Exempt from HOEPA

Answer 15

-Reverse Mortgages
-Construction Loans
-Loans originated and directly financed by a Housing Finance Agency
•Loans originated under the U.S. Department of Agriculture’s (USDA’s) Rural Development Section 502 Direct Loan Program
•Mortgages secured by second homes, investment property

Question 16

Three Separate High Cost HOEPA Coverage Tests/Triggers

Answer 16

The transaction’s annual percentage rate (APR)
• The amount of points and fees paid in connection with the transaction
• Prepayment penalties in the loan agreement

Question 17

Higher Priced Mortgage Loan

Answer 17

In general, a higher-priced mortgage loan is one with an annual percentage rate, or APR, higher than a benchmark rate called the Average Prime Offer Rate.

First Lien Mortgage is higher priced if the APR is 1.5 percentage points more than the APOR

A subordinate-lien mortgage is generally “higher-priced” if the APR of this mortgage is 3.5 percentage points or more higher than the APOR.

Question 18

Entity that enforces HOEPA

Answer 18

CFPB - Consumer Financial Protection Bureau

Question 19

High Cost Mortgage

Answer 19

1. The APR exceeds the APOR by more than 6.5 percent.
2. The total lender/broker points and fees exceed 5 percent of the total loan amount. This 5 percent tolerance includes but is not limited to the following: origination fee, broker fee, processing fee, underwriting fee, document-preparation fee, wire fee and loan-servicing set-up fee.
3. The loan has a prepayment penalty beyond 36 months from closing or the prepayment penalty exceeds 2 percent of the amount prepaid.

Question 20

MLO Compensation

TILA Loan Originator Rule:

Answer 20

TILA Loan Originator Rule:
Prohibits a loan originator’s compensation from being based on the terms of a transaction (with limited exceptions) or a proxy for a transaction term

Question 21

MLO Compensation

SAFE HARBOR

Answer 21

SAFE HARBOR
 Provide a safe harbor to facilitate compliance with the anti-steering rule. The safe harbor is met if:
o The consumer is presented with loan offers for each type of transaction in which the consumer expresses an interest (that is, a fixed rate loan, adjustable rate loan, or a reverse mortgage); and
o The loan options presented to the consumer include the following: (1) the lowest interest rate for which the consumer qualifies;
(2) the lowest points and origination fees, and
(3) the lowest rate for which the consumer qualifies for a loan with no risky features, such as a prepayment penalty, negative amort

Question 22

TILA deal with ______, _______, and _________ consumer loans.

Answer 22

TILA deals with CREDIT, APR and ADVERTISING of consumer loans.

Question 23

How many days does escrow have to refund money if they utilize “right to resend”?

Answer 23

20 days

Question 24

In general, how long should TILA disclosures be kept?
Loan Estimate?
Closing Disclosure?

Answer 24

2 years
Loan Estimate- 3 years
Closing Disclosures- 5 years

Question 25

What are the TILA Disclosures?

Answer 25

1. Loan Estimate and Closing Disclosure
2. Consumer handbook on adjustable rate mortgage (CHARM booklet)
3. When your Home is on the Line disclosure (HELOC/ REFI)

Question 26

Penalties for violating TILA

Answer 26

• $5000 per day for a single violation
• $25,000 per day for a reckless violation
• $1,000,000 per day for knowingly violating TRID

Question 27

APR can also be referred as an

Answer 27

Effective rate

Question 28

2 other words use for interest rate?

Answer 28

Note Rate and Nominal Rate

Question 29

HOEPA = Section

Answer 29

Section 32

Question 30

High Cost Mortgage Loans = Section 32

Answer 30

Section 32

Question 31

Higher Priced Mortgage Loan = Section

Answer 31

Section 35