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1
Q

RESPA establishes rules to

A

Protect consumers from excessive settlement costs and unearned fees

Limit the amount of funds that creditors can require consumers to deposit into escrow accounts

Establish disclosures, policies, and procedures to facilitate timely communications between loan servicers and consumers

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2
Q

Who enforces RESPA regs

A

CFPB

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3
Q

what is a federally-related mortgage loan

A

a first or subordinate lien on a residential property which is:
Made with funds insured by the federal government (e.g., FHA loans)

Made with collateral insured by the federal government (e.g., flood insurance)

Made with funds from a lender regulated by the federal government or that has deposits insured by the federal government (e.g., depository institutions regulated by the FDIC or NCUA)

Intended for sale to Fannie Mae or Freddie Mac
Made by a creditor regulated under the Truth-in-Lending Act

Made by a mortgage broker and assigned to a creditor

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4
Q

RESPA applies to all CMH loans (T or F)

A

True

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5
Q

How long does a lender have to deliver the initial escrow account statement?

A

45 days from settlement, although it’s usually given at settlement

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6
Q

what is the maximum amount of cushion permitted in an escrow account?

A

1/6 of estimated total annual disbursements

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7
Q

on time payments made to a transferor servicer within ___ days of effective date of transfer must not be considered late for any reason

A

60 days

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8
Q

Annual escrow account statement disclosure is due within ___ days of the completion of the escrow account computation year

A

30 days

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9
Q

If a loan’s servicing is transferred to a new servicer, the new servicer must provide an initial escrow account statement within ___ days of the date on which the transfer occurs.

A

60 days

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10
Q

GFE and HUD-1 are still required for what type(s) of transaction(s)?

A

Reverse mortgages

Home equity lines of credit (HELOCs)

Mortgages secured by a mobile home or other dwelling that is not attached to land

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11
Q

within what timeframe must the GFE be provided?

A

within three business days of receipt of an application

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12
Q

What elements are required to meet the definition of a complete loan application for the purposes of the GFE?

A

Name

Monthly income

Social Security Number

Address of the home that will secure the loan

Estimated value of the home that will secure the loan

Loan amount

Other information deemed necessary by the loan originator

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13
Q

Are lenders permitted to require applicants to submit supporting documents as a condition to providing a GFE?

A

No.

Additional information may be requested after providing a GFE.

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14
Q

What is the max tolerance for differences between estimated and actual costs for certain third party charges on a GFE?

A

10%
Lender-required settlement services performed by a provider chosen by the lender

Lender-required services and title and insurance services if the loan applicant uses a provider recommended by the lender, and

Recording fees

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15
Q

Changes are prohibited between the GFE’s estimated and actual charges for what three items?

A

Origination charges
Charges for locking an interest rate, and
Transfer taxes

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16
Q

What is the expiration period for a GFE?

A

10 days, unless the parties agree to a longer period for the loan applicant to indicate an intent to proceed.

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17
Q

If a transaction involves more than one mortgage loan, is a separate GFE required for each loan?

A

yes

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18
Q

The settlement agent must provide the HUD-1 to the borrower at least ___ business day(s) prior to settlement

A

1 day

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19
Q

RESPA section 8(a) prohibits

A

giving or accepting unearned fees

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20
Q

RESPA section 8(b) prohibits

A

fee splitting for services not actually performed. This includes duplicative and nominal fees.

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21
Q

If a servicer fails to credit periodic payments to a borrower’s account or to provide an accurate payoff balance, a borrower may submit a qualified written request which contains what information?

A

the name of the borrower

information allowing the servicer to identify the borrower’s loan

a description of the error

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22
Q

servicers must acknowledge receipt of a qualified written request within what time frame?

A

5 business days

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23
Q

ECOAs implementation regulations are collectively known as

A

regulation B

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24
Q

Who is primarily responsible for enforcing ECOA?

A

the CFPB, specifically, the Office of Fair Lending and Equal Opportunity

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25
ECOA defines elderly as
age 62 or older
26
ECOA is prohibits refusal to extend credit to creditworthy applicants on the basis of
Race Color Religion National origin Sex Marital status Age, as long as the loan applicant is old enough to enter a contract Receipt of income from a public assistance program Exercise of rights under the Consumer Credit Protection Act, which includes the Truth-in-Lending Act
27
What is redlining?
refusing to make loans in specific areas based on race, ethnicity or other personal characteristics of the residents
28
The Home Mortgage Disclosure Act (HMDA) is a federal fair lending law that was enacted with the goal of
discouraging redlining
29
What is the difference between disparate treatment and disparate impact?
``` disparate treatment occurs when a member of a protected class is treated differently than a similarly situated borrower who is not a member of a protected class. Disparate impact occurs when the adoption of a seemingly neutral policy disproportionately impacts a protected class, whether intentional or not ```
30
What is the statute of limitations for an individual (or class action) to file a claim for a violation of ECOA?
5 years from the date of the alleged violation
31
What is Reg Z?
the regulations issued pursuant to TILA
32
What are the primary goals of TILA?
protect consumers by disclosing costs and terms of credit create uniform standards for stating the cost of credit so consumers can readily compare loan costs from different creditors Ensure that advertising for credit is truthful and not misleading Provide borrowers with the right to rescind certain types of mortgage transactions
33
Reg Z defines an application as having which six pieces of information?
The consumer’s name Social Security Number, which is used to obtain a credit report Income The address of the property to secure the loan An estimate of the value of the property securing the loan The loan amount sought
34
What is the TILA definition of a dwelling?
a residential structure with one to four units. Does not have to be attached to real property and may include an individual condominium unit, cooperative unit, mobile home, or trailer, if used as a residence
35
what is the Reg Z definition of a finance charge?
the cost of credit as a dollar amount. Includes fees paid to third parties.
36
what is the Reg Z definition of the Annual Percentage Rate?
``` a measure of the cost of credit, expressed as a yearly rate. includes: mortgage insurance premium (MIP) Discount points and mortgage broker fees Origination fees Processing fees, and Underwriting fees ```
37
What is the CHARM booklet?
Consumer Handbook on Adjustable-Rate Mortgages Due no later than three business days after a consumer submits an application for a loan that will be secured by his/her principal dwelling
38
What are the penalties for accepting an illegal referral fee?
up to $10,000 and up to one year in prison
39
When was HOEPA established and why?
1994 as an amendment to TILA, intended to curb abuses in the subprime lending market.
40
What is a subprime lender?
A lender that offers home loans to borrowers with blemished or unestablished credit. Typically offers loans with high fees and high interest rates.
41
What is the threshold for a high-cost APR for a first-lien mortgage?
6.5 percentage points above the average prime rate for a comparable transaction
42
What is the threshold for a high-cost APR for a second-lien mortgage?
8.5 percentage points above the average prime rate for a comparable transaction
43
as of 2022, what is the high-cost threshold for points and fees for a loan of $22969 or more?
5% of the total loan amount
44
as of 2022, what is the high-cost threshold for points and fees for a loan of $22969 or less?
the lesser of 8% of the total loan amount or $1,148
45
What are the prepayment thresholds for high-cost mortgages?
A prepayment penalty provision that is in force for more than 36 months after consummation, or Prepayment penalties that can exceed more than 2% of the amount prepaid
46
What types of transactions are exempt from HOEPA?
Reverse mortgage loans Bridge loans used to finance the initial construction of a dwelling Loans originated by a housing finance agency and for which the agency is the creditor Loans originated by the USDA (RHS loans)
47
what is a High Priced Mortgage Loan?
exceeds the average prime offer rate by: 1.5 percentage points for first-lien loans with a principal amount that does not exceed the conforming loan limit of $647,200, or up to $970,800 in high-cost areas 2. 5 percentage points for first-lien loans with a principal amount that exceeds the conforming loan limit (i.e., jumbo loans) 3. 5 percentage points or more for loans secured by a subordinate lien
48
Who publishes publishes average prime offer rates on the Internet?
FFEIC
49
What are the 7 comp methods for the payment of salary, commission or other compensation according to the LO Compensation Rule?
The LO's overall dollar volume The long-term performance of the originator’s loans An hourly rate that is based on the actual number of hours worked Loans that are made to new customers versus existing customers A payment fixed in advance for each loan that the originator arranges for the creditor The percentage of the loan originator’s applications that close The quality of the loan originator’s loan files (i.e., accuracy and completeness) that are submitted to the creditor
50
If an MLO receives compensation from a consumer, are they permitted to receive compensation from the creditor in that transaction as well?
no
51
Is it permissible to compensate an LO based on the terms of a transaction?
no. Transaction terms include: interest rate annual percentage rate prepayment penalties points or fees paid to the creditor or originator fees for creditor-required title insurance
52
What changes changes would require a new Closing Disclosure and three day waiting period?
change in APR change in loan product addition of a prepayment penalty
53
When is the loan estimate due?
at least three business days after creditor receives an application and at least seven business days prior to consummation
54
When was the HPA introduced?
1998, effective July 29, 1999
55
What is the intended purpose of the HPA?
to facilitate the cancellation of PMI
56
The HPA applies to what type of loans?
residential mortgages on single-family homes used as the borrower’s principal dwelling.
57
What are the exceptions for which HPA does not apply?
Government-insured FHA or VA loans Loans protected by PMI paid for by the lender high-risk loans. For these loans, PMI is in place for a longer period of time but will terminate automatically following the date that is the midpoint of the amortization period if the borrower is current on his/her payments.
58
HPA defines "good payment history" as
No late 60+ late mortgage payment tduring the 12-month period beginning 24 months before the date on which the mortgage reaches the cancellation date and No 30+ late mortgage payment during the 12-month period preceding the date on which the mortgage reaches the cancellation date.
59
What is the cancellation date for PMI?
the date that the principal balance reaches 80% of the original value of the home, either according to the amortization schedule, or due to actual payments
60
What is the termination date for PMI?
the date that the principal balance reaches 78% of the original value of the home, according to the amortization schedule, NOT due to actual payments
61
When is PMI no longer required for high-risk loans?
at the midpoint of the amortization of the loan. Termination is automatic at that time if the borrower is current on payments.
62
What is the max statutory damages for violation of HPA?
$2000
63
When was HERA enacted?
2008
64
What is Reg C?
the implementation regulations of HMDA. Intended to: Determine if depository institutions are meeting the housing needs of their communities (particularly in urban neighborhoods) Identify discriminatory lending practices and patterns, which can result in enforcement actions to ensure compliance with fair lending laws Determine how to distribute public-sector investments where they are needed
65
What is an MSA?
metropolitan statistical areas, which are urbanized areas with a population of at least 50,000. HMDA focuses on distribution of mortgage credit in these areas
66
Under what condition is a depository institution in an MSA subject to HMDA?
assets in excess of $48mm originated at leas one home purchase loan in the the preceding calendar year Act as an FDIC or make FHA or VA loans originate at least 100 closed end loans in the preceding two calendar years or originate at least 200 open end loans in the preceding two calendar years
67
What are the five categories of info on the FICO score and how are they weighted?
``` Payment history: 35% Amounts owed: 30% Length of credit history: 15% Types of credit used: 10% New credit: 10% ```
68
What are the "big three" CRAs?
Equifax, Experian, and TransUnion
69
To what does Title XIV refer?
the Mortgage Reform and Anti-Predatory Lending Act
70
Regulation Z refers to
TILA
71
Regulation X refers to
RESPA
72
Regulation B refers to
ECOA
73
Regulation C refers to
HMDA
74
The Qualified Mortgage Rule is found in Regulation ___
Z
75
What are the prerequisites for a QM loan?
no negative amortization no interest only loans no balloon payments term < 30yrs points and fees < 3% (some exceptions apply) borrower's DTI is < 43% (until Oct 1, 2022, after which an APR threshold will apply)
76
QM underwriting standards must include
``` ATR rule compliance calculation of monthly payments using maximum interest rate that applies during the first five years Verification of assets Verification of debts calculation of DTI (max 43%) ```
77
What are the max points and fees for a QM loan amount greater than or equal to $114,847
3% of the total loan amount
78
What are the max points and fees for a QM loan amount greater than or equal to $68,908 but less than $114,847
$3445
79
What are the max points and fees for a QM loan amount greater than or equal to $22,969 but less than $68,908
5% of the total loan amount
80
What are the max points and fees for a QM loan amount greater than or equal to $14,356 but less than $22,969
$1148
81
What are the max points and fees for a QM loan amount less than $14356
8% of the total loan amount
82
a rebuttable presumption of compliance applies to
transactions that involve higher-priced mortgage loans
83
A conclusive presumption of compliance applies to
to transactions that do not involve higher-priced mortgage loans
84
Does the QM rule apply to second homes or investment properties?
yes, for closed end loans
85
Do QM rules apply to ARMs?
yes
86
What are the changes that apply to the general QM rule which goes into effect Oct 1, 2022?
43% max DTI no longer applies. Instead, APR cannot exceed APOR by more 2. 25%, for a first-lien loan greater than or equal to $114,847 3. 5%, for a first-lien loan greater than or equal to $68,908 but less than $114,847 6. 5%, for a first-lien loan less than $68,908
87
What is the max APR for general QM loan for subordinate liens?
3. 5%, for a loan amount greater than or equal to $68,908 | 6. 5%, for a loan amount less than $68,908
88
What is the max APR for general QM loan for a manufactured home?
6. 5%, for a loan amount less than $114,847 | 2. 25%, for a loan amount greater than or equal to $114,847
89
What loans can qualify for seasoned QM?
loans that meet the general QM req'ts AND The loan must be a first lien The loan must have a fixed interest rate- ARMs are not permitted The loan has regular, substantially equal, fully amortizing payments that repay the loan over its term The loan is not a high-cost mortgage as defined by HOEPA Higher-priced mortgage loans may be seasoned QMs if they meet all other prerequisites described here
90
what is the seasoning period to qualify as a seasoned QM?
36 months
91
What is the conforming limit for a one family property as of Jan 1, 2022?
$647,200 in most locations, but as high as $970,800 in high-cost areas
92
What is the conforming limit for a two family property as of Jan 1, 2022?
$828,700, but as high as $1,243,050 in high-cost areas
93
What is the conforming limit for a three family property as of Jan 1, 2022?
$1,001,650, but as high as $1,502,475 in high-cost areas
94
What is the conforming limit for a four family property as of Jan 1, 2022?
$1,244,850, but as high as $1,867,275 in high-cost areas
95
What is used to calculate income as required by regulation Z for QM loans?
Appendix Q
96
What is a carry back?
Seller-provided financing (must be in a second position in conforming loan transactions)
97
What is the maximum seller concession for borrowers making 10%-24.9% down payment?
6% of the sale price
98
What is the maximum seller concession for borrowers making less than 10% down payment?
3% of the sale price
99
What is the maximum seller concession for borrowers making down payment greater than 25%?
9% of the sale price
100
What is a LLPA?
Loan Level Price Adjustment- makes up for the increased risk associated with borrowers that do not meet Fannie or Freddie guidelines by charging an additional fee. This cost is passed along to the borrower in the form of higher interest rates.
101
Where are the Freddie Mac conventional guidelines listed?
Single-Family Seller/Service Guide
102
Where are the Fannie Mae conventional guidelines listed?
Selling Guide
103
What are the general factors that influence whether an LLPA may apply?
``` Loan term Loan balance Property type (investment property, manufactured home, condominium, etc.) Transaction type Borrower credit score ```
104
What is the max seller concession for an FHA loan?
6% of the sale price
105
What is an HECM?
Home Equity Conversion Mortgage - the FHA’s version of a reverse mortgage. Available only to borrowers 62 or older and with no or low mortgage balance on their principal residence.
106
Regulation N governs___
MAP- Mortgage Acts and Practices, regulations around sales and marketing of mortgage products with respect to TILA
107
What is the FIRREA?
Financial Institutions Reform, Recovery and Enforcement Act of 1989 -established the Uniform Standards of Professional Appraisal Practice (USPAP) as the generally-accepted appraisal standards in the United States.
108
RESPA
Real Estate Settlement Procedures Act
109
ATR
Ability to Repay
110
BSA
Bank Secrecy Act
111
CFPB
Consumer Financial Protection Bureau
112
ECOA
Equal Credit Opportunity Act
113
FACTA
Fair and Accurate Credit Transactions Act
114
FCA
Fair Credit Reporting Act
115
FFEIC
Federal Financial Institutions Examination Council 
116
GLB
Gramm-Leach-Bliley
117
HMDA
Home Mortgage Disclosure Act
118
HOEPA
Home Ownership and Equity Protection Act
119
HPA
Homeowners Protection Act
120
HPML
High Priced Mortgage Loan
121
HUD
Department of Housing and Urban Development
122
MAP
Mortgage Acts and Practices
123
QM
Qualified Mortgage
124
SAFE
Secure and Fair Enforcement
125
TILA
Truth-in-Lending Act
126
TRID
TILA-RESPA Integrated Disclosure
127
YSP
Yield Spread Premium
128
HERA
Housing and Economic Recovery Act
129
CSBS
Conference of State Bank Supervisors
130
RMLO
Residential Mortgage Loan Originators

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