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Flashcards in RESPA Deck (49):

What are the penalties for violation of RESPA/Section 8?

Fines of up to $10,000 and up to one year in prison


What disclosures replaced the Good Faith Estimate and the Truth-in-Lending disclosures after the implementation of the Dodd Frank Act?

Loan Estimate
Closing Disclosures


At what point is the Affiliated Business Arrangement Disclosure required?

At the time of making the referral.


The transferor servicer must provide notice to the consumer no less than ___ days before the effective date of the transfer.



The transferee servicer must provide notice to the consumer no less than ___ days after the transfer.



RESPA requires a ___ year record retention for Affiliated Business Arrangement Disclosures.



Initial escrow account statement is provided _________________.

at settlement or
before 45 days after


Initial escrow account statement must include:

1. the amount of the borrowers payment and the portion that is deposited into the escrow account
2. Itemized taxes, insurance, and other payments
3. the amount the servicer has selected as a cushion
4. a trial running balance


If the loan has been transferred to a new servicer, the new servicer must provide an initial escrow account statement within ___ days from the transfer date.



What regulation and section governs Mortgage Loan Servicing?

Regulation X, Subpart C


Includes facilitation of error resolution, ensuring timely disbursements from escrow accounts, providing guidelines for force-placed insurance, and facilitation of loss mitigation options and continuity of contact for delinquent borrowers.

Mortgage Loan Servicing Rules


Regulation X defines servicing as:

the receipt of mortgage payments from a borrower, including taxes and insurance deposited to escrow, and forwarding payments to the owner of the loan and to third parties


After a loan is paid in full, servicers have 20 days to ________.

return funds left in the escrow account to the borrower.


Servicing rules require live contact with the borrower by the ___ day of delinquency.



Servicing rules require written notice to the borrower no later than ___ days after a delinquency.



Written notice of delinquency must include:

1. A statement urging borrower to contact the servicer
2. A telephone number to reach personnel assigned to work with the borrower
3. a description of loss mitigation options that may be available
4. information on obtaining HUD approved Home Ownership Counseling


Adoption and implementation of delinquency and foreclosure prevention efforts are mandated by __________.

Dodd Frank Act


CFPB made an addition to Regulation X, effective January 10, 2014 to include __________.

mortgage servicing


RESPA applies to ___________.

federally-related mortgage loans


Regulation X defines a 'servicer' as:

an entity or individual that is responsible for servicing a federally-regulated mortgage loan.


Subpart C of Regulation X introduces the term "____________" as the owner of the right to perform servicing.

master servicer


A servicer that does not own the servicing rights for a mortgage but performs servicing for the master servicer.



Loan servicing section of RESPA allows consumers to file ________ or __________ lawsuits against loan servicers.

class action


Penalties of a pattern or practice of noncompliance for loan servicers.

up to $2,000 per violation


In class action laswuits, damages may not exceed _________ for each member of the class and total damages may not exceed ______________.

$1 million or 1% of the net worth of the servicer


RESPA required disclosures:

1. Loan Estimate
2. Closing Disclosure
3. Affiliated Business Arrangement
4. Transfer of Servicing
5. Initial Escrow Account Statement
6. Annual Escrow Account Statement


The Loan Estimate must be provided:

no later than three business days after receiving a completed application, and,
no later than seven business days prior to consummation.


Fee splitting is illegal when:

one or both settlement service providers fail to perform enough work to earn the fee


What purpose does escrow analysis serve?

to prevent escrow overages


Which Act and Section governs escrow?

RESPA, Section 10


The regulation that issues the rules for the Real Estate Settlement Procedures Act.

Regulation X


What is the Servicing Transfer Statement?

A statement that advises borrowers when their loan has been transferred to another servicer.


What information must be included on a Servicing Transfer Statement?

1. Effective date
2. transferee servicer contact information
3. date transferor servicer will no longer accept payment
4. indication of whether the transfer will impact the continued availability of optional insurance
5. a statement that the transfer does not change the terms or conditions of the loan


Loans not covered by RESPA include:

Loans for:
1. business, commercial, or agricultural use
2. temporary financing (bridge loans or construction loans)
3. vacant land
4. loan conversions
5. loan assumptions permissible without lender approval
6. transactions between lender and investor to sell a closed loan on the secondary market


After loan servicing is transferred, the new servicer cannot:

assess late fees for a period of 60 days.


"Things of Value"

are illegal when they are provided in exchange for referrals.


What year was RESPA initially enacted?



RESPA enactment purposes:

1. To allow consumers to obtain information on the costs of closing
2. To protect consumers from excessive settlement costs and unearned fees


RESPA changes implemented on October 15, 2016:

1. Protect consumers from unearned settlement costs and unearned fees
2. limit the amount of funds that creditors can require consumers to deposit into escrow accounts
3. establish disclosures, policies, and procedures to facilitate timely communications between loan servicers and consumers.


On July 21, 2011, who replaced HUD as the agency responsible for enforcing RESPA?

Consumer Financial Protection Bureau (CFPB)


An action, either written or oral, that influences the selection of a provider of a settlement service.



Provided by appraisers, inspectors, credit reporting agencies, title insurers, and loan processors. Services include any service provided in connection with a Real Estate Settlement.

Settlement Service


An upcharge in the actual cost of a settlement service and retention of the additional fee.

mark up


Business relationship with an ownership interest in other settlement providers.

Affiliated Business Arrangement


A partnership or joint venture created between settlement service providers for the purpose of splitting fees under the guise of a bona fide business arrangement.

Sham Affiliated Business Arrangement


A fee paid to the borrower by the lender when a loan is originated at a higher interest rate than the borrower qualifies.

Borrower Credit or Lender Paid Credit


The Affiliated Business Arrangement Disclosure must contain:

1. a description of the business arrangement, including percentage of ownership
2. indicate that the referral may result in a financial benefit for the referring party
3. estimate of charges by the provide to whom the loan applicant is referred
4. advise the borrower that he or she is not required to use the service provider to whom he/she was referred and that other providers are available


The entity that is making the transfer.

Transferor Servicer


The entity that receives servicing rights after a transfer of service.

Transferee Servicer