Section 4 Unit 5 Lesson 4 Introduction to Patriot Act

Question 1

Patriot Act requirements

Answer 1

Enacted in 2001.
BSA/AML Bank Secrecy Act/Anti-Money Laundering. The USA Patriot Act affected teh BSA in a big way

Question 2

Anti Money Laundering Programs

Answer 2

Screening and monitoring of financial transactions.

Financial Institutions must have internet anti-money laundering policies and procedures.
Employees must receive regular anti-money laundering training.
Institutions must employ AML compliance officer to oversee program
The program must be regularly audited.

Question 3

What is CIP

Answer 3

Under USA Patriot Act, all lenders and banks are not required to create Customer Identification Programs to verify customer identities.
Names
Date of birth
Residential and work addresses
A tax ID number
Government-issued Certificate of existence

Question 4

CDD Rule

Answer 4

Financial institutions must implement the Customer Due Diligence (CDD) rule which involves monitoring records to facilitate ongoing identification and checking customer information against the list of suspected terrorists.

Question 5

CDD Rule requirements

Answer 5

Verify Customer Identity
Verify the beneficial owners of companies opening accounts
Understand the nature and purposes of customer relationships to develop customer risk profiles

Question 6

Introduction to the E-sign Act

Answer 6

Electronic Signature in Global and National Commerce Act
signed in 2000.

Question 7

Homeowners Protection Act

Answer 7

(HPA) also called PMI cancellation Act, is an important law that you need to understand, because it impacts borrowers who may be required to pay for private mortgage insurance (PMI).

HPA is enforced by CFPB

Question 8

How long PMI is required

Answer 8

HPA allows borrowers with loans created after 1998 to have their PMI cancelled when their equity reaches 22% of the original value of the property. Lender must cancel PMI

Question 9

Automatic vs Requested Termination of PMI

Answer 9

According to HPA, the lenders are required to automatically terminate PMI when the principal balance is scheduled to reach 78% of the original property value or at the midpoint of the loan’s amortization schedule (even if it hasn’t reached the magical 78%)

However, borrowers may also request PMI termination from their lender any time the principal balance goes below 80% of the original value. Request should be in writing. Lenders may require appraisal to verify the property’s value.

Question 10

Returning Unearned Premiums

Answer 10

If the PMI is not cancelled due to the borrower’s request of by the automatic termination method, the lender must terminate by first day of the month that immediately follows the midpoint date of the loan amortization period.

The lender must return all unearned PMI premiums that might have been paid back to the borrower within 45 days of PMI cancellation datte