Chapter 3 RESPA

Question 1

Real Estate Settlement Procedures Act (RESPA/reg X)

Answer 1

Protect borrowers in mortgage loans. Covers properties of 1 to 4 family dwellings, condominiums, or manufactured homes.

Question 2

RESPA does not cover

Answer 2

-vacant land
-Large tracts of land (25 acres or more - even if there is a dwelling on it.
-Commercial or business loans
-The government
-Temporary financing (bridge loans)

Question 3

Good Faith Estimate (GFE)

Answer 3

Used to be required under RESPA. GFE outlined the costs associated with each loan and was required to be disclosed in 3 business days after receiving the application

No longer used due to TRID

Question 4

TILA - RESPA Integrated Disclosure Rule (TRID)

Answer 4

Rendered GFE and HUD-1 obsolete and created Loan Estimate and the Closing Disclosure.

Question 5

RESPA Escrow Accounts Regulations

Answer 5

-Regulates the amount of money that is in an escrow account at any given time.
-Max lender can collect at closing is 14 months of escrow payments.
-Services is required to disclose an initial escrow account statement within 45 calender days of settlement for escrow accounts that are established as a condition for the loan.

Question 6

RESPA Escrow Disclosure

Answer 6

A servicer is required to disclose an initial escrow account statement within 45 calendar days of settlement for escrow accounts that are established as a condition of the loan.
Must include:
-Monthly mortgage payment
-The portion going to escrow
-An itemization of estimated taxes and insurance premiums
-Other charges along with the anticipated disbursement dates of the charges
-The amount of any cushion and a trial running balance

Question 7

RESPA Escrow Annual Statement

Answer 7

Required to be submitted within 30 days of completion of the computation year.
Services required to conduct account analysis before submitting.

Question 8

Section 8 of RESPA

Answer 8

Prohibits kickbacks and referral fees. and establishes the guidelines for Affiliated Business Arrangements

Question 9

Affiliated Business Arrangements (AFBA)

Answer 9

-A person who may refer business to a settlement service for a federally related mortgage or an associate of such person, and has either an affiliate relationship with or a direct beneficial ownership interest of more than 1% in the provider of the settlement.
-Either person directly or indirectly who refers business to that provider or influences the selection of that provider.

AFBA disclosure must be given to the borrower at the time of the referral and must disclose the relationship the referer has with the referred business.

Question 10

RESPA Section 8 Violation Consequence

Answer 10

Fined up to $10,000, up to 1 year in prison, or both. May also be required to make payment to damaged parties up to 3X the original fee that violated the rule.

Question 11

RESPA Section 8 Permits

Answer 11

-Payments to attorneys for services rendered
-Payment by a title company to its duly appointed agent for services performed.
-Payment by a lender
-Payment by a lender to its duly appointed agent or contractor for services actually performed at the origination.
-Payment to any salaried person for goods or facilities furnished.
-Normal promotion or educational activities that are not conditioned on the referral of business
-An employee’s payment to its own employees.

Question 12

Exceptions to RESPA sect.8

Answer 12

-Educational Activities
-Payment for goods or services actually provided. (Cannot be in excess of market value)
-Affiliated Business Arrangements (If certain conditions are met.