Chapter 19 Flashcards
Annual Percentage Rate (APR)
The effective annual cost of credit calculated on the basis of procedures specified by Regulation Z (Truth-in-Lending)
Equal Credit Opportunity Act
An act preventing discrimination in lending procedures.
Truth-in-Lending
A federal law that lets borrows know the exact cost of obtaining credit; a disclosure device.
TRID
Truth-in-Lending Integrated Disclosures. New law requiring disclosures when applying for mortgage financing.
Regulation Z (Truth in lending)
Federal law 1969 part of Consumer Credit Protection Act.
Borrowers are given meaningful info with respect to cost of credit.
Disclosure device.
Personal credit up to $25,000.
All real estate loans any amount.
Not for more than 4 family home units or construction loan.
Creditor
Banks, insurance companies, mortgage bakers, savings banks etc.
Also pmm or agreement of sal seller if more than 5 such sales/year.
Arranger
Someone who is pod valuable consideration for arranging a consumer loan.
Probably not a broker unless it’s a pmm and he assisted the seller in preparation of the loan document.
Right of rescission
Borrowers Right to cancel any business loan transaction, or a second mortgage transaction (if not for purchasing) if secured by the borrowers home. In writing by midnight of the 3rd business day (Saturday included).
First or second mortgage, pmm or agreement of sale has no right of rescission.
Total of Payments
The amount a person will have paid when paid off.
Must include:
Total dollar amount
Apr
Number, amounts, timing of payments
Total of payments
Lots more…
Finance charge
Total cost the customer must pay.
Interest, loan fee, loan finders fee, time-price differential, discount points, service fee, premium for credit life insurance.
Not included: purchase costs such as legal fees, appraisals, surveys, title evidence, taxes not included in the cash price, recording fees, title insurance premiums…
Respa
1974
Provides consumers with improved disclosures of settlement costs and to reduce the costs of closing by the elimination of referral fees and kickbacks.
