Term
| What are the penalties for violation of RESPA / Section 8? |
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Definition
| a. Section 8 of RESPA prohibits referral fees and other forms of kickbacks/fee splitting. Penalties include fines of up to $10,000 and up to one year in prison. |
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Term
| Which disclosures are due within three days of the loan application? |
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Definition
| a. GFE, Settlement Cost Bklet (RESPA), Mtg Servicing Disclosures Stmt(RESPA), TIL Disclosure Stmt, Charm Booklet(TILA), Variable rate program disclosure (TILA), Home equity plan disclosures (TILA), and Notice of Right to Receive an AP Report (ECOA). |
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Term
| What can result in a 1million dollar fine and 30 years in prison? |
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Definition
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Term
| What is the definition of a “creditor” |
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Definition
| A creditor is any person who regularly extends, renews, or continues credit. LO’s, lenders, and other mtg professionals are included in this definition. |
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Term
| Transactions reported under HMDA? |
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Definition
| Purchases, Refinances, Home improvement loans, Pre-quals must also be reported, along with their disposition. |
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Term
| When is an initial privacy notice due? |
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Definition
| At the time that a customer relationship is established. The Gramm-Leach Act requires financial institutions to provide an initial privacy notice. |
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Term
| What does HMDA require loan originators to do? |
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Definition
| Request info on the applicant’s race, ethnicity, and sex. The info is necessary to meet the reporting requirements of HMDA. |
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Term
| A permissible purpose is required… |
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Definition
| When obtaining a credit report. Under FCRA, lenders/mtg professionals must provide the consumer reporting agency with a certification of permissible purpose in order to pull credit. Loan qualification is considered a permissible purpose. |
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Term
| What does the Gramm-Leach Act not protect? |
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Definition
| Publicly- available information. |
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Term
| What is the statute of limitations for bank fraud? |
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Definition
| 10 yrs / Penalties can include fines of up to 1 million and prison or 30 yrs |
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Term
| Information on the cost of credit results in… |
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Definition
| The informed use of the credit by consumers. The Consumer Credit Protection Act states “Congress finds that economic stabilization would be enhanced by the informed used of credit. The informed use of credit results from an awareness of the costs thereof by consumers. |
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Term
| Information on the cost of credit results… |
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Definition
| The informed use of the credit by consumers. The Consumer Credit Protection Act states “Congress finds that economic stabilization would be enhanced by the informed used of credit. The informed use of credit results from an awareness of the costs thereof by consumers. |
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Term
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Definition
| Mtg professionals are permitted to ask about race, ect for the purpose of compliance with the govn. Inquiries about protected characteristics may also be used to determine eligibility for special-purpose credit, such as non profits. |
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Term
| What is the purpose of the Homeowner’s Protection Act? |
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Definition
| To facilitate the cancellation of PMI. |
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Term
| Advertising trigger terms under TILA include… |
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Definition
| Amount/percentage of any down payment number of payments or period of repayments, amt of any payment, and amt of any finance charge |
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Term
| Use of trigger terms in advertisement requires… |
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Definition
Disclosures of : amt/percentage of the down payment, terms of repayment, apr.
Fee splitting is illegal when… |
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Term
| Fee splitting is illegal when… |
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Definition
| One or both settlement service providers fail to perform enough work to earn the fee |
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Term
| Credit not covered by TILA… |
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Definition
| Business or agricultural credit, credit in excess of $25, public utility credit, student loans, home fuel budget plans |
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Term
| The Patriot Act requires… |
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Definition
| Identify a person applying for a loan, maintain a record of the information used for verification, and determine whether a potential borrower appears on known terrorist list |
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Term
| Where is the borrower credit disclosed? |
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Definition
| It is the amt paid to a 3rd party originator by a lender for locking a loan in at an int rate above the par rate. It must be disclosed on the GFE and HUD1 |
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Term
| Following initial disclosure of APR, when can the transaction proceed to closing? |
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Definition
| After 7 business days have elapsed from disclosures |
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Term
| A 3 year right of recession may occur when… |
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Definition
| A loan originator/lender fails to correctly provide a Notice of the Right to Cancel or fails to provide the borrower with proper material notices required under TILA. This includes the APR, finance charge, amt financed, number of payments and payment schedule |
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Term
| The title charges (on the GFE) include… |
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Definition
| Cost of the title search, title insurance premiums, notary fees |
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Term
| TILA covers loans when... |
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Definition
| The borrower’s dwelling secured the mtg debt, the homeowner uses the proceeds of the loan for personal, family or household purposes |
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Term
| Prohibits under ECOA include.. |
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Definition
| Inquiries about protected characteristics, discouraging applicants from applying for a loan, refusing to consider asst, alimony/child support and pension, and lastly assuming that a woman sill stop work to raise children. |
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Term
| What is the Notice of Right to Cancel? |
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Definition
| It is due at the closing for refi’s and other types of home equity loans, such as HELOCS |
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Term
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Definition
| It includes the interest on the loan as well as any finance charges. |
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Term
| What are the loans not covered by RESPA? |
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Definition
| 25 acres or more, business/commercial, temporary financing, vacant land, and loan conversions |
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Term
| What are the prepaid items on the GFE? |
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Definition
| Cost due at closing(funds are placed in escrow), pro-rated real estate taxes, HOI, flood, PMI, and interim interest (per diem interest) |
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Term
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Definition
| $5k per day. Pattern of conduct will result in $25k. |
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Term
| An Opt-Out Noice is due…. |
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Definition
| At the same time as the Initial Privacy Notice: when a customer relationship is established. |
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Term
| Prepayment penalties appear on what documents? |
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Definition
| GFE, HUD1, the TIL Disclosure Stmt, and the promissory note. |
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Term
| What is the TIL Disclosure |
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Definition
| Provides loan applicants with the cost of credit expressed as a percentage (APR) and as a dollar amt (finance charge). |
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Term
| What is the finance charge? |
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Definition
| Cost of credit expressed as a dollar amount. Finance charges include interest and other fees paid in conjection with the loan transaction, such as broker fees and points. It must not be understated by more than $100. |
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Term
| The disclosure due at least 7 business days prior to closing? |
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Definition
| Final TIL disclosure stmt |
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Term
| Government charges on the GFE include… |
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Definition
| Charges to record the mtg, transfer taxes, and other charges est by the state/municipality |
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Term
| The Notice of Right to Rescind is required… |
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Definition
| For refi’s and other HELOC’s. It must be exercised within 3 business days of closing. |
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Term
| The APR and finance charge must appear on … |
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Definition
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Term
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Definition
| Yield Spread Premium was a fee paid by a lender to a 3rd party LO for originating a loan at a rate higher than the par rate. |
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Term
| What must occur within 20 days of rescission? |
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Definition
| The lender must return any money or property paid by the borrower in connection with the loan. (ie: broker fees, application fees, and 3rd party fees) |
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Term
| The purpose of the Red Flags Rule… |
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Definition
| It was created by the FTC under FACTA. The purpose is to address identity theft by focusing on methods of detecting a security breach. |
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Term
| What are the penalties for violation of the GLB? |
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Definition
| No specific penalties, but agencies can provide penalties up to $10k |
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Term
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Definition
| An est. of closing costs, expressed in dollar amounts. |
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Term
| What are the penalties for violation of TILA? |
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Definition
| TILA doesn’t address penalty amounts for open-ended mtg loans, but for closed-ended, the penalty is at least $400 and up to $4k |
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Term
| What fees are never included in finance charges? |
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Definition
| Title insurance and title examination fees, doc prep, notary, seller’s points, and AP/credit report (if they are charged to all applicants as part of loan application) |
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Term
| What fees are included in finance charges? |
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Definition
| Interest, loan origination fees/points, mtg broker fees, credit life insurance fees, and premiums for HOI. AP/Credit report fees aren’t included if they are part of the application fees which are charged to all applicants |
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Term
| HOEPA high cost home loan thresholds… |
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Definition
| APR, Points/Fees, and Prepayment Penalty |
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