Federal Mortgage related laws Flashcards Preview

mortgage loan originator > Federal Mortgage related laws > Flashcards

Flashcards in Federal Mortgage related laws Deck (46)
Loading flashcards...



ECOA ensures that all consumers are given an equal chance to obtain and maintain credit.

ECOA is implemented through Regulation B and enforced by the Consumer Financial Protection Bureau.


Federal Housing Administration

FHA is a federal agency established in 1943

to increase home ownership by providing an insurance program to safeguard the lender against the risk of non-payment.

The FHA is currently part of the Department of Housing and Urban Development (HUD).


Home Mortgage Disclosure Act

HMDA of 1975

requires many depository and non-depository lenders to collect and

publicly disclose information about housing-related loans and applications for such loans,

including several applicant/borrower demographic characteristics.

The HMDA is implemented by the Consumer Financial Protection Bureau's Regulation C


Private Mortgage Insurance

PMI offered by private companies to insure a lender against default on a loan by a borrower.


Cost of Funds Index

An index that reflects the cost of borrowing money as per the 11th District Federal Home Loan Bank.

This index is used by Fannie Mae when purchasing ARM loans.

Also called COFI.


Annual Percentage Rate

The total cost of financing a loan in percentage terms, as a relationship of the total finance charges to the total amount financed.
Also called APR.


Federal Reserve Board

(the Fed) The body responsible for U.S. monetary policy, maintaining economic stability, and regulating commercial banks.
Also referred to as Board of Governors, but most commonly called the Fed.


Uniform Standards of Professional Appraisal Practice

(USPAP) Professional appraisal standards promulgated by The Appraisal Foundation and

recognized throughout the United States as the accepted standards of appraisal practice.


Graduated Payment Mortgage

which makes payments lower in the early years of the loan.

Also referred to as a 2/1 Buydown or Temporary Buydown.

See also Section 245 Loans (FHA Loan Program).


Mortgage Insurance Premium

The fee charged for FHA mortgage insurance coverage.
The initial premium can be financed, and there may be a renewal premium.


Certificate of Reasonable Value

A document issued by the VA which states the value of the subject property based on an approved appraisal. The VA loan amount cannot exceed the CRV.


Community Reinvestment Act

Federal law emphasizing that regulated financial institutions have a continuing obligation to help meet the credit needs of the local communities in which they operate, especially in low-income neighborhoods.


Federal National Mortgage Association

(FNMA) is commonly known as Fannie Mae.

This government-sponsored entity regulated by the Federal Housing Finance Agency is the largest buyer of existing mortgages in the secondary mortgage market.


Fair and Accurate Credit Transaction Act

2003, sometimes referred to as either the FACT Act or simply FACTA, amended the federal Fair Credit Reporting Act and is intended primarily to help consumers fight the growing crime of identity theft. The FACTA contains seven major titles: Identity Theft Prevention and Credit History Restoration; Improvements in Use of and Consumer Access to Credit Information; Enhancing the Accuracy of Consumer Report Information; Limiting the Use and Sharing of Medical Information in the Financial System; Financial Literacy and Education Improvement; Protecting Employee Misconduct Investigations, and Relation to State Laws.



A federal law passed in 1990 in response to the crisis in the savings and loan industry. It revised the regulation of thrifts (S & Ls) and created several new agencies, such as Office of Thrift Supervision (OTS) and Resolution Trust Corporation (RTC.


Government-Sponsored Enterprise

A group of financial services corporations created by the United States Congress to enhance the flow of credit to targeted sectors of the economy and to make those segments more efficient and transparent.


Federal Home Loan Mortgage Corporation

(FHLMC) is commonly known as Freddie Mac. It is a government-sponsored entity regulated by the Federal Housing Finance Agency that operates in the secondary mortgage market to purchase mortgage loans from lenders.


Federal Open Market Committee

A body that controls the Fed's sale and purchase of government securities.

The FOMC consists of the seven members of the Federal Reserve Board, plus the President of the Federal Reserve Bank of New York, and four other Federal Reserve Bank presidents.


Home Ownership Equity Protection Act

Part of Regulation Z Truth in Lending Act establishing disclosure requirements and prohibiting equity stripping and other abusive practices associated with high-cost loans.


Housing and Economic Recovery Act of 2008

This is a major federal law designed to assist with the revitalization of the U.S. housing market that includes provisions related to foreclosure prevention and consumer protections, as well as establishing minimum standards for licensing and registration of mortgage loan originators.


Home Equity Line of Credit

Available money that can be borrowed by a homeowner, secured by a second mortgage on the principal residence. Home equity lines of credit can be accessed at any time up to a predetermined borrowing limit and are often used for non-housing expenditures. Compare to Home Equity Loan.


Office of Thrift Supervision

The government entity that regulates Savings and Loans in the same manner the Federal Reserve regulates commercial banks.



The likelihood or probability that a person's source of income will continue into the future.


Homeowners Protection Act

1998 (HPA or PMI Cancellation Act) was signed into law on July 29, 1998, became effective on July 29, 1999, and was later amended on Dec. 27, 2000. This act establishes provisions for canceling and terminating PMI, sets disclosure and notification requirements, and requires the return of unearned premiums.

The Dodd-Frank Act granted authority to the Consumer Financial Protection Bureau (CFPB) to supervise for and enforce compliance with the Homeowners Protection Act with respect to entities within its jurisdiction.


Rapidly Amortizing Mortgage

A fixed-rate mortgage set up like a 30-year conventional loan, but payments increase regularly like an ARM.


Planned Unit Development

A special type of subdivision that may combine nonresidential uses with residential uses, or otherwise depart from ordinary zoning and subdivision regulations;
some PUDs have lot owners co-own recreational facilities or open spaces as tenants in common.


Real Estate Settlement Procedures Act

of 1974 (RESPA) became effective June 20, 1975. The U.S. Department of Housing and Urban Development (HUD) promulgated Regulation X, which is now enforced and interpreted by the Consumer Financial Protection Bureau.

The purpose of RESPA is to help consumers become better shoppers for settlement services and to eliminate unnecessary increases in the costs of certain settlement services due to kickbacks and referral fees. RESPA also promotes transparency in the servicing of mortgage loans.


Uniform Commercial Code

This is a body of law that governs transactions involving personal property and sets requirements for negotiable instruments.


Uniform Residential Appraisal Report

Standard appraisal report form used by lenders and appraisers.
The URAR was developed and approved by Fannie Mae (Form 1004) and Freddie Mac (Form 70).


Simple Interest

Interest calculated as a percentage of the principal only.
COMPARE: Compound Interest.


Adjustable Rate Mortgage

A mortgage that permits the lender to periodically adjust the interest rate to reflect fluctuations in the cost of money.


Per Diem

The per diem is the prorated amount of interest that the borrower pays to the lender for borrowing the money from the closing to the end of the month.


Consumer Financial Protection Bureau

(CFPB) is an independent government agency within the Federal Reserve System with rulemaking and enforcement authority over many consumer financial laws.
The Bureau was established under Title X of the Dodd-Frank Act.


Real Estate Investment Trust

(REIT) A real estate investment business with at least 100 investors, organized as a trust.


Resolution Trust Corporation

(RTC) An agency formed to manage the disposition of bankrupt savings and loans.


Environmental Impact Statement

Study required for all federal and federally related projects by the National Environmental Policy Act, which details a development project's impact on energy use, sewage systems, drainage, water facilities, schools, and other environmental, economic, and social areas.


Federal Deposit Insurance Corporation

A public corporation, established in 1933, that insures up to $250,000 for each depositor for most member commercial banks and S & Ls.

FDIC has its own reserves and can also borrow from the U.S. Treasury.


Farmer's Home Administration

Former name of the program now called Rural Economic Community Development (RECD).


Growth Equity Mortgage

A fixed-rate mortgage set up like a conventional loan, but payments increase regularly.


Federal Deposit Insurance Corporation

A public corporation, established in 1933, that insures up to $250,000 for each depositor for most member commercial banks and S & Ls.

FDIC has its own reserves and can also borrow from the U.S. Treasury.


Ginnie Mae

Government-owned corporation that guarantees payment of principal and interest to investors who buy its mortgage backed securities on the secondary market.


Gross Living Area

Residential space that's finished, heated, and above grade. Garages, finished basements, and storage areas don't count in GLA.


Shared Appreciation Mortgage

A mortgage where the lender charges below-market interest rates in exchange for a share of the borrower's equity.


Secure and Fair Enforcement for Mortgage Licensing Act

A key element of the Housing and Economic Recovery Act of 2008 (HERA) designed to enhance consumer protection and reduce fraud by requiring states to establish minimum standards for the licensing and registration of mortgage loan originators.


Real Estate Owned

Property acquired by a lending institution through foreclosure and held in inventory.


Right of Way

An easement that grants access.