Nmls- Federal Law

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.

Loan Estimate

Your Home Loan Toolkit: A Step-by-Step Guide

CHARM Booklet

Variable-rate program disclosures

Home equity plan disclosures

Notice of Right to Receive an Appraisal Report

Acts of mortgage fraud

The Equal Credit Opportunity Act (ECOA), the Fair Credit Reporting Act (FCRA), and the Fair and Accurate Credit Transactions Act (FACTA) define creditor as any person who regularly extends, renews, or continues credit. Loan originators, lenders, and other mortgage professionals are included in this definition.

Purchases

Refinances

Home improvement loans

Pre-qualifications must also be reported, along with their disposition

Permitted to request discontinuation of PMI

Requirements set by Homeowners Protection Act (HPA)

Discontinuation at lender's discretion

Borrower must be current on payments

When customer relationship is established

Required by GLB Act

Should be accompanied by opt-out notice

Request information on applicant's race, ethnicity, and sex for federal reporting

If applicant decline to answer, guess based on visual observation

When obtaining a credit report

Required by FCRA

Publicly available information

(govmt real estate records, info in phonebook, info on public, unrestricted website)

3 bd after receiving completed application

7 bd prior to consummation

3 bd prior to consummation

Race, ethnicity, and sex for compliance with govmt monitoring programs

Info about protected characteristics used to determine eligibility for special-purpose credit

To facilitate the cancellation of PMI

Borrowers can request at 80% LTV

Automatic at 78% LTV

Down payment

Period of repayment

Payment

Finance charge

Disclosure of:

Amount and percentage of down payment

Terms of repayment (inclusion of balloon)

Annual percentage rate

HELOCs

Reverse mortgages

Mortgages secured by a mobile home or dwelling not attached to real property

One or both settlement service providers fail to perform enough work to earn the fee

Advertising trigger term

TILA- Regulation Z

Issues rules for the Equal Credit Opportunity Act (ECOA)

Business or agricultural

Excess of $25,000, unless secured by dwelling/real property

Public utility credit

Student loans

Home fuel budget plans

Can request discontinuation of PMI

Homeowners Protection Act (HPA) sets requirements

Lender's discretion

Must be current on payments

Financial institutions to:

Verify identity of person applying for loan

Maintain record of information used for verification

Determine whether a potential borrower appears on known terrorist lists

Information from credit report or provided with respect to loan application (loan balances, account numbers, unlisted phone numbers, etc)

Protected by Gramm-Leach-Bliley Act (GLB)

Loan Estimate and Closing Disclosure

To prevent escrow overages

RESPA Section X

Cannot exceed 1/6 (2 months) of annual cost of taxes and insurance

Issues rules for the Real Estate Settlement Procedures Act (RESPA)

CFPB

3 bd of application

7 bd after disclosure

Fees paid to:

Creditor

Mortgage broker

Affiliates

Unaffiliated third-party service providers

Transfer taxes

Marital status

Sex

Bearing/rearing of children

Race

Color

Religion

National origin

Age

Helps federal government identify discriminatory lending practices

Ensures that depository institutions are meeting needs of their communities

Requires reporting about loan transactions and demographics (race, sex, etc.) of applicants

Any one may exercise

Does not have to be party in the loan transaction so long as they have ownership interest

TILA- Regulation Z

If the interest rate changes

Every day except Sunday and federal holidays

Advises borrower when loan has been transferred to another servicer

15 days prior to transfer

15 days after transfer

May not assess late fee for 60 days

RESPA- Section 6

Changed circumstances:

Change in eligibility

Consumer-requested revisions

Delays caused by the consumer

Delays related to construction loans

Within 3 bd of receiving information prompting change

4 bd prior to consummation

Borrower's dwelling secures mortgage debt

Homeowner uses proceeds for personal, family, or household purposes

Protected characteristics inquiries

Steering- discouraging applicants from applying for a loan

Refusing to consider public assistance, alimony/child support, or pension/retirement benefits as income

Assuming a woman will stop work to raise children

Private mortgage insurance

Required by conventional lenders for down payments <20%

Governed by Homeowners Protection Act (HPA)

Discontinued at 78% LTV

USA PATRIOT Act

For counter-terrorism

Issues rules for the Truth-in-Lending Act (TILA)

Disclosure providing notice of right to rescind

Due at closing

For refis, HELOCs, etc.

2 copies required for each person with ownership interest

3 bd after application

At application if face-to-face

Only one copy for multiple borrowers

Can be reproduced in any form

Can be translated into other languages

Can be stamped with business/mortgage professional's name

Cannot be made part of other, larger document

Annual percentage rate

Cost of credit expressed as percentage

Includes loan interest and finance charges

Disclosed 3 bd of loan application along with finance charge

Accurate within 1/8 of 1%

Business, commercial, or agricultural

Temporary financing (bridge loans)

Vacant land

Loan conversions

3 bd prior to consummation

Civil:

$5,000/day

$25,000 for pattern of misconduct

Class action:

$10,000 individual

Lesser of $500,000 or 1% net worth

Ensuring accuracy, fairness, and privacy of consumers' personal information

When customer relationship is established

Same time as initial privacy notice

Required by Gramm-Leach-Bliley Act

PMI automatically discontinued

Required by Homeowners Protection Act (HPA)

Indefinitely

Telemarketing Sales Act in 2007

Creditor

At or before consummation

The new servicer cannot assess late fees for a period of 60 days.

The cost of credit expressed as a dollar amount

Includes interest and other fees paid in conjunction with the loan transaction, such as broker fees and points

Must be disclosed within 3 bd of application, along with APR

Must not be understated by more than $100

Anyone with an ownership interest in the property

Must be taken by consumers within 5 years of a violation

Exception if Attorney General initiates action, consumer may take action within 1 year of initiation of proceedings

Amendment to FCRA

Includes provisions to:

Address identity theft

Facilitate consumers' access to information retained by CRAs

Improve accuracy of consumer reports

Loan Estimate

Change in APR

Change in loan product

Addition of prepayment penalty

Are prohibited

Promoting availability of credit to all creditworthy applicants regardless of race, color, religion, national origin, sex, marital status, or age

Prohibits discrimination based on receipt of public assistance or participation in credit counseling (exercise of rights under Consumer Credit Protection Act)

Charges to record the mortgage

Transfer tax

Other charges established by the state or municipality

Under RESPA

Any payment, advance, loan, or service, including: money, discounts, commissions, salaries, stock, opportunities to participate in a money-making program, special banking terms, tickets to theatre or sporting events, services at special rates, and trips at another's expense

Illegal when provided in exchange for referrals

Violation of RESPA/Regulation X

Considered unearned fees under RESPA

Any "thing of value" (money, gifts, discounts, etc.) given in exchange for a business referral is illegal under Section 8 of RESPA

For refinances and other home equity loans such as HELOCs

Loan must be secured by principal residence

Right to Rescind must be exercised within 3 bd of closing

Violation of the Federal Trade Commission Act

$16,000 per violation

Continued violations count each day as separate

Loan Estimate and Closing Disclosure

Under ECOA, loan applicants must be advised of status of application within 30 days of application. If turned down, Notice of Adverse Action is required

Advises of reason for denial and other rights

To protect consumers from excessive settlement costs and unearned fees

To provide consumers with information on closing costs so they can shop for settlement services

Yield spread premium was a fee paid by a lender to a 3rd-party loan originator for originating a loan at a higher rate than the par rate

Was intended to provide a resource for originators to subsidize borrower closing costs

Lender must return any money or property paid by the borrower in connection with the loan

Might include broker fees, application fees, and 3rd-party settlement fees

Total of payments

Finance charge

Amount financed

APR

Total interest percentage

Other disclosures (appraisal, contract details, liability after foreclosure, refinance, tax deductions)

Questions? box

Contact information

Confirm receipt box (signature of borrowers)

Fines of up to $10,000 and 1 year in prison

Accepting a fee in exchange for a referral is a violation of RESPA/Regulation X

Providing consumers with disclosure of the cost and terms of credit

Ensures that advertisements are truthful and allows borrowers to rescind (cancel) certain types of transactions

Passed under the Telemarketing Consumer Fraud and Abuse Prevention Act/Telemarketing Sales Rule

Consumer protection law that permits consumers to restrict unwanted sales calls to their homes

Provides information on the settlement process

Explains consumer rights under RESPA

Warns against use of false information on the loan application

Applies to purchase transactions only and is due within 3 bd of application

Created by Federal Trade Commission (FTC) under the Fair and Accurate Credit Transactions Act (FACTA)

To address identity theft by focusing on methods of detecting a security breach

"Calculating Cash to Close" table

Summaries of transactions

Good Faith Estimate

HUD-1/HUD-1A

TIL Disclosures

No specific penalties, but authorizes regulating agencies to bring enforcement actions and impose penalties

FTC can bring action against mortgage brokers under the Federal Trade Commission Act (FTCA)

FTCA provides for penalties of up to $10,000

Loan Costs table

Other Costs table

Calculating Cash to Close table

Adjustable Payment table

Adjustable Interest Rate table

CFPB

A transaction has occurred within the past 18 months

Provisions of the Telemarketing Sales Rule allows contact with consumers on the Do-Not-Call Registry if established customer relationship

Affiliated Business Arrangement Disclosure

Required by RESPA

Advises applicants that an affiliated business arrangement exists and lets them know that they are not required to use the referred entity

Creditors to create a policy to identify and mitigate the risks of identity theft

Created by the FTC pursuant to FACTA

Open-end mortgages- does not address penalty amounts

Closed-end loans secured by a dwelling- at least $400 and up to $4,000

Federally-regulated mortgage loans

Includes 1st and 2nd liens

Virtually all residential mortgages secured by real property

Title insurance and title examination fees

Doc prep fees

Notary fees

Seller's points

Appraisal/credit report fees (if charged to all applicants as part of loan application)

Under ECOA

Loan applicants who have been turned down have the right to receive a copy of their appraisal report

Must provide disclosure no later than 3 bd after application on first lien dwelling

TILA-RESPA Integrated Disclosure Rule (TRID Rule)

At time of referral

Required only if referred to a settlement service provider that is an affiliated business

Interest

Loan origination fees and points

Mortgage broker fees

Credit life insurance fees (when insurance is required)

Premiums for property and liability insurance

(Appraisal/credit report fees not included)

Each party to the transaction is restored to their previous position

Transaction is canceled

Funds and property must be returned

Borrowers who did not receive a notice of the right to rescind or accurate disclosures as required by law

APR threshold

Points and fess threshold

Prepayment penalty threshold