CHAPTER 3 TRID, MDIA, MAP, UDAAP

Question 1

TILA - Integrated Disclosure Rule (TRID)

Answer 1

-Created 2015
-Simplifies the disclosure process
-Disclosures include the Loan Estimate (LE), and Closing Disclosure
-Related to TILA and RESPA

Question 2

TRID does not apply to;

Answer 2

-Reverse Mortgages
-HELOC’s

Question 3

Disclosures discontinued by TRID

Answer 3

-Good Faith Estimate (GFE)
-Truth-in- Lending Disclosure (TIL)
-HUD-1 Settlement

(Since TRID does not cover Reverse Mortgages or HELOCs, these still must use these disclosures.)

Question 4

TRID Limits on Lenders

Answer 4

-Lenders cannot require or condition that the consumer submit any verification documents before providing the Loan Estimate (LE)
-Lenders are not allowed to impose any fee for a mortgage transaction until the borrower receives the LE and indicates intent to proceed.

Question 5

Intent to proceed (TRID)

Answer 5

Borrower indicates an intent to proceed when they communicate that they are continuing with the loan once the LE has gone out.

(Can be verbal or written. Silence is not indicative of an intent to proceed. The lender is required to document communication indicating intent.)

Question 6

Mortgage Disclosure Improvement Act (MDIA)

Answer 6

Introduced the 3/7/3 rule. Disclosures must go out 3 business days after application, the loan could not close for 7 business days, and it required a re-disclosure of an inaccurate APR at least 3 business days prior to closing.

Part of TILA

Enacted in 2009 to ensure that consumers receive GFE disclosures and to provide sufficient time for consumers to review disclosures before closing.

Question 7

Mortgage Acts and Practice Rule (MAP Rule/ Reg N)

Answer 7

Created in 2009 to regulate advertising. Prohibits misrepresentation in a commercial communication about any terms of a mortgage credit product.

Enforcement transferred from Federal Trade Commission to the CFPB in 2011.

Question 8

Terms

Answer 8

Any fees, costs, obligations, or characteristics of the product. Also includes any conditions on or related to the availability of the product

Question 9

Mortgage Credit Product

Answer 9

Any form of credit that is secured by real property or a dwelling that is offered or extended to a consumer.

Question 10

Commercial communication

Answer 10

Any written or oral statement, illustration, or depiction, whether in English or any other language, that is designed to affect a sale or credit interest in purchasing goods or services. Doesn’t matter the medium.

Question 11

Prohibited Acts under the MAP Rule

Answer 11

It is prohibited to make any misrepresentation regarding the terms of any mortgage or credit product. This includes but is not limited to;

-Interest charged for the mortgage credit product.
-APR, simple annual rate, periodic rate, or any other rate.
-The existence, nature, or amount of fees or costs associated with the mortgage
-The existence, cost, payment terms, or other terms associated with the product or feather sold with it.
-The terms, amounts, payments, or other requirements relating to taxes.
-Any prepayment penalty associated with the mortgage or credit product
-The variability of interest, payments, or other terms of the mortgage credit product including but not limited to misrepresentations of the word “fixed”.
-The type of mortgage credit product
-The amount of the obligation or amount of credit/cash available to the consumer
-The existence, number, amount, or timing, of payments
-The potential for default
-The association of the product with any other person or program.
-The source of any commercial communication
-The right of the consumer to reside in the dwelling subject to the mortgage
-The consumer’s ability or likelihood to obtain any mortgage credit product or term
-The consumer’s ability or likelihood to obtain a refinancing or modification of any mortgage credit product or term
-The availability, nature, or substance of counseling services or any other expert advice offered to the consumer regarding any mortgage credit product or term.

Question 12

How long must commercial communications be kept?

Answer 12

A minimum of 2 years

Question 13

Unfair, Deceptive, Abusive Acts and Practices Rule (UDAAP)

Answer 13

Established by Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank)

UDAAPs can cause significant financial injury to consumers, erode confidence, and undermine fair competition in the financial marketplace

Question 14

Dodd-Frank defines an unfair act or practice as

Answer 14

-Something that causes or is likely to cause substantial injury to consumers.
-An injury that is not reasonably avoidable by consumers.
-An injury that is not outweighed by countervailing benefits to the consumers or competition.

Question 15

According to Dodd-Frank a deceptive act or practice is when

Answer 15

-The act or practice misleads or is likely to mislead the consumer.
-The consumer’s interpretation is reasonable under the circumstances.
-The misleading act or practice is material.

(A deceptive act or practice can take the form of omission.)

Question 16

Dodd-Frank defines an abusive act or practice when

Answer 16

-The act materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product