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Flashcards in RESPA Deck (78)
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If a servicer receives insurance information, but not proof that the coverage is continuous, what are the servicer's responsibilities?

The servicer must send a notice that requests proof of continuous coverage.


Can fees be charged for completion of any RESPA or TILA disclosures?



Does the AfBA disclosure have to be retained in the loan file if a customer doesn't get a settlement service from the affiliated party?

Yes, it must be retained regardless.


First National's mortgage department has a large escrow operation for taxes and insurance. At closing what may the bank require of the borrowers?

a. Pay all taxes due plus one full year of taxes in advance
b. Pay only the taxes due on the date of the closing
c. Pay the taxes due plus 1/12 of the amount owing for next year
d. Pay all taxes plus 1/6 of the amount owing for the next year

d. Pay all taxes plus 1/6 of the amount owing for the next year


This is hazard insurance obtained by a servicer on behalf of the owner or assignee of a mortgage loan that insures the property securing the loan.

Force placed insurance


What are the escrow accounting rules and disclosure requirements under RESPA?

Rules regarding how to calculate payment amounts (aggregate accounting) and statements.

Kicks in when you have a RESPA covered escrow account (account that the servicer controls on the borrowers behalf). There are a number of disclosures required, such as the initial escrow statement, annual statements and short-year statements (when the loan is sold or paid off).


I have collected 5 pieces of information, but am waiting on the 6th and final piece of the application. Should I prepare the LE now?

No, wait for all 6 pieces of customer information. Must have all six elements to prepare the LE.


For what loans is the servicing disclosure statement provided to consumers? What disclosure is this now a part of?

This was only provided to applicants if the loan is closed-end and secured be a first lien. (This has been incorporated into the Loan Estimate.)


For error resolution, a servicer must provide copies of documentation to the borrower, at no charge, within __ business days of the borrower's request.



T/F: No error resolution extensions are allowed for errors related to payoffs or foreclosures.



"Your Home Loan Toolkit" must be mailed or delivered to the applicant within __ business days of receiving the application for first lien _____ _____ loan applications.

purchase money


Transferee notice must be delivered not __ than __ days __ the effective date of the servicing transfer.



First National Bank has a mortgage lending department that finances conventional mortgage loans and construction loans for individuals.
- Loan A is a loan to Mr. Jones for temporary construction financing for his home. The term of Loan A is 9 months. Once the home is build, Loan A will be paid by the funding of a new permanent mortgage to Mr. Jones. First national has no commitment to Mr. Jones to fund the permanent loan.
- Loan B is made to Mr. and Mrs. Williams, also for the construction of a home. Loan B is structured so advances will be made on the loan for 9 months, the expected construction period. At the end of that time, Loan B will automatically convert to a permanent mortgage.
- Loan C is a loan to Mr. and Mrs. Danvers for the purchase of a home that will be used as a rental property. The loan will be secured by the home.

Which of these loans is covered by RESPA?

Loan B

An interim construction loan is not covered by RESPA unless the lender has committed to provide permanent financing or unless it is for a term of 2 years or more. Therefore, Loan A is not covered. Loan B will convert to a permanent loan and is a RESPA transaction. Loan C is made to individuals for the purpose of acquiring rental property ( a business purpose loan) and therefore is not covered by RESPA.


A _______ occurs when an existing obligation is satisfied and replaced by a new obligation with the same borrower.



Is temporary financing, such as interim construction loans or bridge loans, with a term of less than two years covered under RESPA?

No, unless the loan is used as or converted to a permanent loan with the same lender.


ACME Mortgage Company owns and services a mortgage loan for John Smith. The company received a statement from Mr. Smith's insurance company indicating that the premium on the hazard insurance has not been paid and that it will be cancelled soon if not paid. Mr. Smith's escrow account has insufficient funds to make the insurance payment. Under what circumstances may ACME Mortgage Company force place hazard insurance on Mr. Smith's property and charge him for the premium?

a. Once they notify Mr. Smith and give him an opportunity to make the payment, ACME can force place a policy.
b. ACME may not force place a policy in this case, it must advance funds to the escrow amount to make the payment so the insurance will continue
c. ACME does not have to give advance notice; once the policy is finally cancelled, they can force place a policy
d. ACME can force place a policy as it is not more expensive than the original premium.

b. ACME may not force place a policy in this case, it must advance funds to the escrow amount to make the payment so the insurance will continue.


What loans are covered under Reg Z?

Borrower: individual or personal purpose trust
Purpose of funds: consumer
Collateral: secured by residential real property (meaning land) *RESPA = "Dirt" (residential means 1-4 family residence sits or will sit on it).

Almost the same as Reg Z, but RESPA has the collateral requirement


T/F: Before each anniversary of the force placed policy, the servicer must mail a written notice, but it is not required to be sent more than once per year. If mailing, the notice must be sent by using at least first class mail.



What are the timing requirements for AA on a loss mit application?



Which of the following affiliated providers can a bank require a consumer to the use?

a. An attorney
b. An appraiser
c. A credit bureau
d. Any or all of the above

d. Any or all of the above. These are the only three exceptions. Know them well.


What are the early intervention rules for delinquent borrowers?

Servicer must make a good faith effort to
1. Make live contact with a delinquent borrower by the 36th day of delinquency (inform borrower about availability of loss mit options, if appropriate)
2. Provide a written notice to that delinquent borrower no later than the 45th day (assign personnel for easy access)


When must the service provide the Servicing Disclosure Statement for reverse mortgages?

Within 3 days after the applicant applies.


For errors relating to foreclosures, a servicer must investigate and respond to a notice of error prior to the date of a foreclosure sale or within __ business days after the servicer receives the notice of error, whichever is earlier.



This is a person (other than an employee of the lender) that provides origination services as an intermediary between a borrower and a lender in a transaction involving a federally related mortgage loan.

Mortgage broker


What notice is required by transferor servicers and transferee servicers for transfers, sales or assignments of mortgage loans?

Notice of Transfer of Servicing


Servicers are required to comply with the requirements for only ___ loss mit app(s) of a borrower's mortgage loan account.



If a servicer receives a complete loss mit application __ or more days before a foreclosure sale or during the pre-foreclosure review period, the servicer must allow the borrower to ____ the servicer's decision to deny the application.



What is the Special Information Booklet?

Disclosure provided to customers for purchase money transactions secured by a first lien only.


ACME Mortgage has filed a foreclosure action on the property securing John Doe's mortgage. The foreclosure sale will be held in 120 days. If ACME receives an application for a loss mitigation option from Mr. Doe 100 days from the foreclosure date, which of the following action must ACME take?

a. Withdraw the foreclosure action within 30 days of the receipt of the application
b. Notify the borrower of the decision on the completed application within 14 days of the receipt of the application
c. Notify the borrower of any missing information within 10 days of the receipt of application.
d. Acknowledge the application in writing within 5 days of receipt of the application.

d. Acknowledge the application in writing within 5 days of receipt of the application.


Can a seller condition the sale of a property that will be purchased on the buyer's purchase of title insurance from a particular title company?