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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.
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
What act is "High Cost Loans" under?
The homeownership and Equity Protection Act (HOEPA)
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.
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
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)
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.
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.
Who regulated the Homeowner Protection Act of 1998 (HPA)?
Federal Reserve Board
What loans aren't covered under the HPA?
VA or FHA loans
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.
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
Who regulated Truth in Lending (Reg Z)?
- Agency: board of governors of the Federal Reserve System (FRB)
- Enforecement Agency: Federal Trade Commission (FTC)
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.
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
The Equal Credit Opportunity Act (ECOA) is Regulation___, established in ___, regulated by___?
Regulation B, in 1974, regulated by FTC (Federal Trade Comission) & Federal Reserve
The Fair Housing Act Act is Regulation___, established in ___, regulated by___?
FHA is Title VIII, 1968 Civil Rights Act, enforced by HUD
The Home Mortgage Disclosure Act is Regulation___, established in ___, regulated by___?
Regulation C, 1975, Federal Reserve Board
The Community Reinvestment Act is Regulation___, established in ___, regulated by___?
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
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
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
Can FHA discriminated against AGE? ECOA?
yes, FHA can discriminated. ECOA can't discriminated against age.
Can a creditor discourage application?
No, can't discourage people from applying for loan
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
What is the purpose of Home Mortgage Disclosure Act (HMDA)?
To help determine if lenders are serving the housing needs of communities, assist public officials with identifying possible discrimination patterns & enforce anti-discrimination practices.
Lenders are required to publicly report their lending services available to the community
Are certain mortgage brokers & mortgage bankers included in the HMDA reporting provisions?
yes, if mortgagee take more than 100 loan applications and make credit decisions on it.
What is the purpose of the "Gramm-Leach-Bliley Act" (GLBA)?
To protection consumer's personal financial information held by financial institutions including mortgage bankers, mortgage brokers, finance companies, and other settlement service providers.
What are the 2 regulations under the GLBA act?
The Financial Privacy Rule & Safeguards Rule
What is the Financial Privacy Rule?
It governs the collection & disclosure of a customer's personal financial information by financial institutions. Rule requires companies to give consumers & customers a privacy notice that explains the institution's information sharing practices.
Who enforced the GLBA?
The Federal Trade Commission (FTC)
What is the Safeguards Rule of GLBA?
It requires financial institutions to ensure the security & confidentiality of personal information collected (names, addresses, phone #, acct #, bank & credit card #), income & credit histories, ss#,)
What is pretext calling?
The illegal practice of attempting to gain private information using false pretences, normally over the telephone.
What 4 types of businesses are not covered the Telemarketing Sales Rule (TSR)?
- 1. banks, federal credit unions &federal savings & loans
- 2. long distance telephone companies & airlines
- 3. non-profit organizations & their #
- 4. insurance to the extent the business is regulated by state law
Who governed the Telemarketing Sales Rule (TSR)??
Federal Trade Comission & the Federal Consumer Commission (FCC)
How many month after established business relationship can you can someone under the TSR rule?
What is the amount for violation of the TSR?
Who governed the National Flood Insurance Act (NFIA)?
The Federal Emergency Management Association (FEMA) prepared the map and shows areas that are subject to 100 years floods.
What does flood insurance claims cover?
The material repairs on what the water actually touches, not all the damages casued as a result of the flooding.
what is the purpose of the Secure & Fair Enforcement (SAFE) Mortgage Licensing Act of 2008?
- To establish a nationwide system for licensing & registering Mortgage loan originators in order to:
- 1. increase uniformity of licensing nationwide
- 2. reduce the regulatory burden for multi-state lenders
- 3. enhance consumer protections by raising standards
- 4. reduce fraud through better tracking of MLO activity
What agencies established the Nationwide Mortgage Licensing System & REgistry (NMLS&R)?
Conference of State Bank Supervisors (CSBS) & the American Association of Residential Mortgage Regulators (AARMR)
What are the intended of the Nationwide Mortgage Licensing System & Registry (NMLS&R)?
- 1.provide a comprehensive licensing & supervisory database
- 2. streamline the licensing process
- 3. provide for increased accountability
- 4. Enhance consumer protections & support anti-fraud measures
What does loan originator do?
- 1. takes residential mortgage loan application
- 2. offers or negotiates the terms of a residential mortgage loan for compensation or gain or with the expectation of compensation or gain
Note: sell timeshare plans (not have to be a loan originator)
what does Administrative or clerical tasks mean?
The receipt, collection, and distribution of information common for the processing or underwriting of a loan in the mortgage industry & communication with a consumer to obtain information
What is the purpose of the Fair Credit Reporting Act (FCRA)?
The FCRA requires that credit records be accurate & kept confidential, and establises the procedures for the correction of any mistakes on a person's credit report.
How long can a suits, judgments, lien or other adverse credit actions be on a credit report according to FCRA?
How long is a bankruptcies be on a credit report?
How many days within denial can a borrower who has been denied for credit request for a report?