federal laws 2.txt

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federal laws 2.txt
2010-06-09 21:31:36
federal laws

federal mortgage laws
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  1. What are the 3 purposes of the TILA?
    • 1. promote the informed use of credit by clearly disclosing terms & costs of credit
    • 2. help consumers better compare the terms of loans offered by various creditors through early disclosures
    • 3. provide consumers with the right to cancel (rescind) certain loans that involve liens on primary dwellings.
  2. What loan types of loan isn't covered in "high cost loan" definitiation?
    1)rules not cover loans to buy or build a home, reverse mortgages or revolving home equity lines of credit
    2)refinancing and home equity installment loans
    1)rules not cover loans to buy or build a home, reverse mortgages or revolving home equity lines of credit
  3. What act is "High Cost Loans" under?
    The homeownership and Equity Protection Act (HOEPA)
  4. What is "cost trigger"?
    When the total points and fees payable by the consumer at or before closing, exceed larger of $579 or 8% of the total loan amount.
  5. Under HOEPA disclosures if loan high cost trigger the borrowers need to receive the following 3 disclosures at least 3 busn day before closing:
    • 1. A written notice stating that the loan need not be completed (3 busn days cooling period to decide whether to sign the Section 32 disclosure)
    • 2. The notice must warn the borrower the creditor will have a mortgage on the home
    • 3. lender must disclosure the APR
  6. High cost prohibited practices?
    • 1. All ballon payment
    • 2. negative amortization
    • 3. default interest rate higher than pre-default rates
    • 4. most prepayment penalties
    • 5. a due on demand clause
    • 6. refinance into another HOEPA loan within 12 months unless new loan is in the best interest of borrower
    • 7. open-end loan (home equity line of credit)
  7. What is a Higher-priced mortgage loan?
    Any mortgage (purchased or non-purchase money) secured by a consumer's principal dwelling with an APR exceeding the "Average Prime Offer Rate" (APOR), on prime loans by at lest 1.5% points on 1st lien loans & 3.5% points on subordinate-lien loans.
  8. What does a "higher-priced mortgage loan" prohibited from?
    • 1. engaging in a pattern & practice of relying on the collateral securing the loan without regard to the consumer's ability to repay the loan
    • 2. relying on a consumer's income & assets without verifying such amounts through reasonable reliable third-party documents
    • 3. imposing any pre-payment penalty if the consumer's payment can change in the 1st 4 years of the loan term.
    • 4 originating 1st lien, higher priced loans, without establishing an escrow acount for property taxes & homeowners insurance.
  9. Who regulated the Homeowner Protection Act of 1998 (HPA)?
    Federal Reserve Board
  10. What loans aren't covered under the HPA?
    VA or FHA loans
  11. What 2 options do HPA provided on which PMI may be cancelled?
    • 1. automatic termination: once 78% of original value of property is reach; borrower must be current in payment and lender must cancel coverage within 30 calendar days of automatic termination date
    • 2. By Request: homeowner request cancellation of PMI once home reaches 80% ltv. lener is not required to honor request by law. will consider based upon pay history, timeline or subordinate financing.
  12. When must servicer required by HPA to notify a cosumer of their rights? (3)
    • 1. at closing closing & 2. on an annual basis, servicer must disclose to the consumer their rights to request cancellation of PMI coverage
    • 3. upon cancellation, service must notice consumer in writing that PMI has been terminated & no further premiums are due
  13. Who regulated Truth in Lending (Reg Z)?
    • Agency: board of governors of the Federal Reserve System (FRB)
    • Enforecement Agency: Federal Trade Commission (FTC)
  14. What are Reg Z prohibited for ALL closed-end mortgage loans that are secured by the borrower's primary dwelling (2)?
    • 1. creditors & mortgage brokers from, coercing, influencing, or encourgaging an appraiser to misrepresent the value of the property.
    • 2. servicers from, failing to credit a payment to the consumer's account as of date of its receipt; or failing to provide a payoff statement within a reasonable amount of time after a request. Frobids the "pyramiding" of late fees.
  15. What are prohibited under Reg Z for all closed-end mortgage loans secured by a dwelling, not just principal residence?
    • prohibit against misleading & deceptive advertising practices.
    • 1. representing that an interest rate or payment is fixed when in fact , it can change
    • 2. advertisers provide accurate & balanced information in a "clear & conspicuous" manner, about rates, payments and other loan features
    • 3. specific requirements that advertisements state all applicable rates or payments with equal prominence and in close proximity to any "promotional", "teaser" or introductory rate or payment
  16. The Equal Credit Opportunity Act (ECOA) is Regulation___, established in ___, regulated by___?
    Regulation B, in 1974, regulated by FTC (Federal Trade Comission) & Federal Reserve
  17. The Fair Housing Act Act is Regulation___, established in ___, regulated by___?
    FHA is Title VIII, 1968 Civil Rights Act, enforced by HUD
  18. The Home Mortgage Disclosure Act is Regulation___, established in ___, regulated by___?
    Regulation C,
  19. The Community Reinvestment Act is Regulation___, established in ___, regulated by___?
    regulation BB
  20. What is purpose of ECOA?
    provide the availability of credit to all without regard to color, national origin, sex, marital status or age (provided applicant has capacity to cntract); to the fact that all or part of applicant's income derives from public assistance program
  21. Under ECOA, creditors to notify applicants of action taken on thier application within ___ calendar days? (adverse action, withdrawal, approval, counteroffer, incomplete file, turn-down, etc): Adverse Notice must be provided in writing
    30 days
  22. What are required under ECOA?
    • 1. notice of actions..adverse, etc
    • 2. reporting credit history in the names of both spouses on an account
    • 3. retention of records of credit applications (records must be retaind for a minimum of 24 months period; 25 can destroy)
    • 4. collection of info about applicant's race & other personal characteristics
    • 5. providing applicants with copies of appraisal reports used in connection with credit transactions
  23. Can FHA discriminated against AGE? ECOA?
    yes, FHA can discriminated. ECOA can't discriminated against age.
  24. Can a creditor discourage application?
    No, can't discourage people from applying for loan
  25. What can a creditor ask an application about & NOT ask about?
    Can ask: Martial Status;

    can't ask about alimony , child support, or separation maintenance income (but can use those incomes if applicant wants to); SEX, childbearing, childrearing, race, color, religion, national origin

    But is required to ask about the liabilities of alimony, child support or separation maintenance; ask about applicant's permanent residence & immigration status