Term
| Who has oversight of ECOA and what regulation is ECOA? |
|
Definition
| The CFPB has oversight over ECOA, which is otherwise known as Regulation B. (B Equal) |
|
|
Term
| Which law/act is Regulation B? |
|
Definition
| Regulation B is ECOA (Equal Credit Opportunity Act) and is regulated by the CFPB. |
|
|
Term
| What is the main purpose of regulation B? |
|
Definition
| Regulation B (ECOA) was put in place to keep lenders and brokers from discriminatory practices and to ensure that all applicants have equal rights of opportunity when being considered for a loan. This law also outlines rules for the adverse action notice and requests for a copy of the appraisal. |
|
|
Term
| Which factors are lenders prohibited from basing their decision on under ECOA (regulation B)? (9) |
|
Definition
| Lenders are prohibited under regulation B (ECOA) from basing their decision on age, race, religion, sex, marital status, color, national origin, if they receive public assistance income, or if they have exercised any rights previously under this law. |
|
|
Term
| Is handicap a protected class under regulation B (ECOA)? |
|
Definition
| Handicap is covered under fair housing/lending laws, NOT ECOA. |
|
|
Term
| What are the two situations where you CAN use age as a factor in the decision? |
|
Definition
| They have to be able to legally enter into a contract (at least 18) and for HECM loans you must be at least 62. |
|
|
Term
| When is it ok to ask someone their religion? (ECOA - Regulation B) |
|
Definition
| It is never ok to ask someone their religion. |
|
|
Term
| If a potential borrower receives public income assistance but it is not enough to meet the qualifying ratios, does Regulation B prohibit a lender from turning them down? |
|
Definition
| If a borrower receives public income assistance, ECOA (Reg B) does NOT prohibit a lender from turning them down if this income is not enough, the borrower cannot show continuity if the income, or if the income does not meet the qualifying ratios. Lenders are only prohibited from turning someone down when it is only based on the fact that they do receive income from this source. |
|
|
Term
| What are lenders and brokers prohibited from doing under ECOA based on a protected class? |
|
Definition
Under regulation B (ECOA)Lenders/Brokers/Appraisers are prohibited from:
>discouraging a borrower from applying
>refusing a loan application to someone who qualifies
>lending with different terms than someone with the same credit/income criteria
>closing an account
>appraisers/lenders are prohibited from discrimination in home valuation based on a prohibited factor |
|
|
Term
| What is a notice of adverse action and which regulation requires it? |
|
Definition
| Regulation B (ECOA) requires a notice of adverse action to be sent within 30 days of receipt of a complete application or within 30 days of taking an adverse action on an existing account. |
|
|
Term
| What should a lender do when they have not received a complete application? |
|
Definition
| Notices of incomplete applications are required by regulation B (ECOA) to be sent to borrowers to inform the borrower's of any additional information need and provide a reasonable amount of time to provide the additional information. |
|
|
Term
| If there are two borrowers applying for a loan, how many adverse action letters must be sent? |
|
Definition
| ECOA (regulation B) only requires the notice of adverse action letters to be sent to one borrower when there are two or more borrowers applying for loan. |
|
|
Term
| If the adverse action letter is sent because of credit, what information is required under regulation B? |
|
Definition
| Under regulation B (ECOA) lenders are required to provide the name and contact info of the CRA used to obtain the credit score, as well as alternative credit agencies. Credit score is NOT required to be included in the adverse action letter, as this is supplied during the application process. |
|
|
Term
| When is the adverse action letter required if the borrower requests a credit line increase on an already established loan? |
|
Definition
| It's a trick question you stupid SOB! No adverse action letter is required when declining to increase someone's credit line on an already established account. |
|
|
Term
| Under ______________ a lender has __ days from __________________ to notify the borrower of their right to a copy of their appraisal and lenders must provide promptly upon completion or at least 3 days prior to close, whichever is earlier. Borrower's can waive the timing requirement and receive the appraisal at closing. If it does not close and the borrower waived the timing, you have __ days to provide the applicant with the appraisal. |
|
Definition
| Under ECOA (Regulation B) a lender has 3 days from the date of application to notify the borrower of their right to a copy of the appraisal and lenders must provide promptly upon completion or at least 3 days prior to close, whichever comes first. Borrowers can waive the timing requirement and receive a copy at closing. If the borrower waives the timing requirement and the loan does not close, you have 30 days to provide a copy of the appraisal. |
|
|
Term
| How long must a lender keep their records for ECOA (regulation B)? |
|
Definition
| Lenders must keep their ECOA/Regulation B records for 25 months. (B Equal --> B=2nd letter of alphabet and E=5th letter of alphabet) |
|
|
Term
|
Definition
| HMDA - The Home Mortgage Disclosure Act (Regulation C) --> Main purpose is to stop redlining and reverse redlining. |
|
|
Term
|
Definition
| Regulation C is also known as HMDA (Home Mortgage Disclosure Act) and was put in place to prevent redlining and reverse redlining. |
|
|
Term
| Which regulation is HMDA? |
|
Definition
| HMDA is regulation C (C you at Home) |
|
|
Term
| Which regulation/law was put into place to find lenders who are redlining or reverse redlining? |
|
Definition
| Regulation C/HMDA was put into place to find lenders who are redlining or reverse redlining. Redlining is failing to lend to certain geographic areas or segments of the population. |
|
|
Term
| What is redlining and which regulation was put in place to stop it? |
|
Definition
| Redlining is when a lender fails to lend to a certain geographic area or segment of the population. Regulation C (HMDA) was put in place to stop redlining. |
|
|
Term
| What is reverse redlining? |
|
Definition
| Reverse redlining is a predatory term that refers to someone targeting an underserved group. |
|
|
Term
| What is LAR and how often must a lender turn this in? |
|
Definition
| LAR - Loan Application Registrar - Is the compilation of data required by HMDA (regulation C) to be sent annually to track information related to redlining and reverse redlining. |
|
|
Term
| How long must the documentation for HMDA/Regulation C be kept? |
|
Definition
| HMDA/Regulation C documentation has to be retained for 3 years. This data is turned in annually on the LAR (Loan Application Registrar) (LAR is 3 letters so it must be kept for 3 years) |
|
|
Term
| Which law requires lenders to publish information at their branches to advise borrowers that GMI (Government Monitoring Information) is taken? |
|
Definition
| Regulation C/HMDA requires lenders to publish information at their branches that GMI is collected. |
|
|
Term
|
Definition
| FCRA - is the Fair Credit Reporting Act - Has significant responsibilities for consumer reporting agencies and lesser for those that are not. |
|
|
Term
| What are the main requirements under FCRA for CRAs and creditors? |
|
Definition
| FCRA requires creditors to provide accurate information to the CRAs. The CRAs have ultimate responsibility for protecting a borrower's credit information. |
|
|
Term
| Should lenders provide a copy of the credit report to the borrower when it is received? |
|
Definition
| Under FCRA, a lender should NOT provide a copy of the credit report to borrowers. However, under FACTA the credit score is provided to the borrowers during the application process. |
|
|
Term
| Which law gives lenders permission to pull a consumers credit report? |
|
Definition
| Lenders are allowed to pull a consumer's credit report ONLY when they have a permissible purpose (i.e. application or employment). |
|
|
Term
| How many years does it last when a consumer opts out of pre-screened credit offers under FCRA? |
|
Definition
| When a consumer opts out of pre-screened credit offers they remain off the list for 5 years. At the end of this period, the consumer is given the chance to extend the period for another 5 years. This is covered under FCRA. |
|
|
Term
|
Definition
| FACTA - Fair and Accurate Credit Transactions Act - Amended the FCRA. Its purpose is to curb identity theft, improve customer dispute resolution, improve accuracy of consumer records. (MAIN PURPOSE IS ID THEFT) |
|
|
Term
| Which law covers identity theft? |
|
Definition
| The Fair and Accurate Credit Transactions Act covers the rules relating to identity theft. |
|
|
Term
| Disclosing the credit score to the borrower during the application process is required under _______, which amended _______. |
|
Definition
| Disclosing the credit score to the borrower during the application process is required under FACTA, which amended FCRA. |
|
|
Term
| Which law amended FCRA and what are the 3 main revisions we need to know under the new law? |
|
Definition
FACTA (Fair and Accurate Credit Transactions Act) amended the FCRA and provided the following 3 additional provisions:
1. We are required to provide the range of possible credit scores along with the borrower's actual score, factors that adversely affected the score, and the company who provided the score.
2. We are required to notify the borrower within 30 days when we report negative information (borrowers cannot dispute accurate info)
3. FACTA requires risk-based notices when a borrower receives a loan offer that is less favorable than most consumers get. |
|
|
Term
| Which entity oversees the red flags rule? |
|
Definition
| The FTC (Federal Trade Commission) created, maintains, and monitors compliance with the Red Flags rule. |
|
|
Term
| What is a Red Flag and who monitors/regulates it? |
|
Definition
| A Red Flag is suspicious activity, potential pattern or practice or a danger to a borrower's credit information being used for identity theft. |
|
|
Term
| The FTC expanded the definition of "creditor" (as it relates to the Red Flags rule) to not just include financial institutions but also anyone who ____________________. |
|
Definition
| The FTC expanded the definition of "creditor" (as it relates to the red flags rule) to not only include financial institutions but also anyone who offers a service that is paid for later (utilities, mobile phone, etc.) |
|
|
Term
| What does the FTC require lenders to have under the Red Flags rule? |
|
Definition
| The FTC requires lenders to have a written plan in place to identify red flags and prevent identity theft. This plan will vary based on the size, complexity, and scope of the organization. |
|
|
Term
| When you see 30/15 or 180/360 what does this mean. |
|
Definition
| 30/15 or 180/360 is a loan with a balloon payment. Loans with balloon payments have payments based on a longer term than the actual term of the loan and one large payment become due at the end of the loan (i.e. lower payment based on if the loan term was 30 years but the actual term is 15 years so the last payment at the end of the 15 yr period would be one large payment for the remaining balance) |
|
|
Term
| Privacy laws are covered under which act? |
|
Definition
| The Gramm Leach Bliley Act (GLB) puts restrictions on the use of borrowers "non public personal information" and requires certain disclosures before sharing or selling. |
|
|
Term
| What is the main purpose of GLB (Gramm Leach Bliley Act)? |
|
Definition
| The Gramm Leach Bliley Act was put in place to protect borrowers non-public personal information |
|
|
Term
| The notice of whether or not you will share non-public personal information (NPI)is required under ___________ and should be provided ________________(when). |
|
Definition
| The notice of whether or no you will share non-public personal information (NPI) is required under Gramm Leach Bliley (GLB) and should be provided up front at the time of application. If you do sell NPI, the client will be given a notice with the opportunity to opt out. |
|
|
Term
|
Definition
| Pretexting is the use of false pretenses to obtain a persons personal financial information (i.e. impersonating them over the phone). |
|
|
Term
| What is it called when you use false pretenses to obtain someone's personal financial information and what law is this covered under? |
|
Definition
| When you use false pretenses to obtain someone's personal financial information over the phone it is called pretexted. This is prohibited under the Gramm Leach Bliley Act. |
|
|
Term
| If someone called a lender pretending to be someone else to obtain that persons personal financial information, this would be called __________and is prohibited under __________. |
|
Definition
| If someone called a lender pretending to be someone else in order to obtain their financial information, this is called pretexted and is prohibited under the Gramm Leach Bliley Act. |
|
|
Term
| What are the two main things that the FTC oversees? What does FinCEN oversee? What entity oversees pretty much everything else? |
|
Definition
| The FTC monitors red flags and advertising. FinCEN enforces the Patriot Act. The CFPB oversees pretty much everything else. |
|
|
Term
| What is the main purpose of the USA PATRIOT ACT? |
|
Definition
| The main purpose of the Patriot Act is to stop the use of money laundering for terrorist funding. The Patriot Act opened up communication between financial institutions to stop this from happening. |
|
|
Term
| Who enforces the Patriot Act? |
|
Definition
| FinCEN (Financial Crimes Enforcement Network) enforces/oversees the Patriot Act. |
|
|
Term
| Which act requires you to know who your customers are through the use of a CIP (Customer Identification Program) and who enforces this act? |
|
Definition
| The Patriot Act requires you to know who your customers are through the use of a CIP (Customer Identification Program) and this is enforced by FinCEN (Financial Crimes Enforcement Network). |
|
|
Term
| Which 4 things are required under the Patriot Act (enforced by FinCEN) to determine someone's identity? |
|
Definition
The following is required to determine someone's identity:
1. Name
2. Date of Birth
3. Address
4. Identification number (SSN, passport #, alien ID card) |
|
|
Term
| Under the _________ Act, once your client is ID'd you must determine if they are on a known terrorist list. This is done through _________. Failure to comply results I a $________ fine. Records must be retained for __ years. |
|
Definition
| Under the Patriot Act, once your client is ID'd you must determine if they are on a known terrorist list. This is done through OFAC (Office of Foreign Assets Control). Failure to comply results in a $1M fine. You must keep your records for 5 years (terrorists attacked pentagon -> Pent=5) |
|
|
Term
| The ____ requires us to store or dispose of borrower's NPI in an appropriate manner. |
|
Definition
| The FTC requires us to store or dispose of borrower's NPI in an appropriate manner. |
|
|
Term
| What is TCPA and what is its main purpose? |
|
Definition
| TCPA - Telephone Consumer Protection Act created the Do Not Call Registry to give customers the opportunity to place themselves on this list to stop telemarketing calls from non-exempt entities. |
|
|
Term
| How long does someone stay on the Do Not Call Registry and which law enforces this? |
|
Definition
| When customer goes on the Do Not Call Registry, they will remain on it permanently (if the number is republished under someone else's name it will be removed) or until the consumer requests to be removed from the list. This is enforced by the TCPA (Telephone Consumer Protection Act). |
|
|
Term
| What is the fine for calling someone on the Do Not Call List and which law is this? |
|
Definition
| The fine for calling someone on the Do Not Call List is $16,000. This is part of the TCPA (Telephone Consumer Protection Act). |
|
|
Term
| What are the 2 exceptions under the established business relationship rule under TCPA? |
|
Definition
Under TCPA a company is considered to have an established business relationship with a consumer (exempt from do not call) if:
1. The call is within 90 days after an application is taken or;
2. The call is within 18 months from a transaction. |
|
|
Term
| If a customer asks to be placed on your internal Do Not Call List, how long do you have to comply and which law covers this? |
|
Definition
| Under TCPA (Telephone Consumer Protection Act) when consumer requests to be placed on your internal Do Not Call List you have 30 days to comply. |
|
|
Term
| How often are companies required to update their Do Not Call List with the national registry? (TEST WORTHY - MEMORIZE THIS) |
|
Definition
| A company is required under the TCPA (Telephone Consumer Protection Act) to update/synchronize their Do Not Call List with the national registry every 31 days. |
|
|
Term
| How long must Telemarketers keep records? What law covers this? |
|
Definition
| Under TCPA (Telephone Consumer Protection Act) Telemarketers are required to keep records (call scripts, advertising, call records) for 2 years. |
|
|
Term
| What is MARS and who oversees it? |
|
Definition
| MARS - Mortgage Assistance Relief Services - Overseen by FTC - Laws regarding for-profit 3rd party companies charging for assistance in obtaining a modification or avoiding foreclosure. |
|
|
Term
| Under ________ a fee can only be charged for a modification when __________. |
|
Definition
| Under Mortgage Assistance Relief Act (MARS) a fee can only be charged for a modification when the modification is complete. (Licensed attorneys can charge fees for preparing or filing documents in bankruptcy, court or administrative proceedings) |
|
|
Term
Timelines for document retention:
TILA/TCPA:
RESPA and Patriot Act:
ECOA:
ATR/HMDA: |
|
Definition
Timelines for document retention:
TILA/TCPA: 2 years (Tila, Tcpa -> hard "T" sound for "Two")
RESPA and Patriot Act: 5 years (RESPA has 5 letters and Patriot Act-Pentagon)
ECOA: 25 months (B Equal - B is 2nd letter E is 5th letter)
ATR/HMDA: 3 years (ATR is 3 letters, HMDA is Reg C and C is the 3rd letter of alph) |
|
|
Term
| What is a non-traditional mortgage product? |
|
Definition
| The SAFE Act defines non-traditional mortgage products as anything other than a 30 year fixed rate loan. |
|
|
Term
| What does CSBS stand for? |
|
Definition
| CSBS - Conference of State Bank Supervisors |
|
|
Term
| What does AARMR stand for? |
|
Definition
| AARMR - American Association of Residential Mortgage Regulators |
|
|
Term
|
Definition
| Steering is pushing a client into a transaction that makes more sense for your wallet than the clients long term interest (they probably qualify for a better deal). |
|
|
Term
|
Definition
| Packing is placing unrelated and unwanted insurance on the loan and causing the borrower to pay for it from proceeds. |
|
|
Term
|
Definition
| Targeting is reverse redlining. |
|
|
Term
| Who should fraud be reported to? |
|
Definition
| Fraud on government loans should be reported to the HUD Inspector General. Fraud on all other loans should be reported to the FBI. The FBI uses SARs (Suspicious Activity Reports), which are compiled reports on mortgage fraud. |
|
|
Term
| What are the two types of fraud? |
|
Definition
Fraud for profit - think insider
Fraud for housing - think consumer |
|
|
Term
| Describe the fraud scheme known as "Straw Buyer". |
|
Definition
| A straw buyer is a fraud scheme where a person who is used as a cover to hide the true identity of the buyer. |
|
|
Term
| Describe the fraud scheme known as "Loan Flipping". |
|
Definition
| Loan Flipping is a fraud scheme that causes a borrower to repeatedly refinance a loan in order to charge high points and fees each time. |
|
|
Term
| Describe the fraud scheme known as "Property Flipping". |
|
Definition
| Property Flipping is a fraud scheme that usually involves and appraiser and a group of people who repeatedly buy and resell (to each other)a property at an inflated price and eventually sell to someone else. |
|
|
Term
|
Definition
| Chunking is another name for property flipping (fraud scheme). |
|
|
Term
|
Definition
| An air loan is a fraud scheme where the borrower gets a loan on a fictitious home that does not exist on the land. |
|
|
