Chapter 3.2: Affiliated Business Arrangement (ABA) – Flashcards

-Is a situation where a person is in a position to refer settlement services- or an associate of that person -has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1% in a provider of settlement services and who then refers business to that provider or in some way influences the selection of that provider. ALWAYS DISCLOSE INTEREST BEFORE OR AT THE REFERRAL OR PRIOR TO.

-An escrow account holds money (e.g., for purpose of paying taxes, hazard insurance, and other charges related to the property) that some mortgage lenders collect every month along with a mortgage payment. 1/6X2= 2/12 EXTRA 2 extra months for insurance. 2 extra months for property taxes + $50 for each accounts at all time of escrow which is created at closing

-prohibits a lender from charging excessive amounts for the escrow account --> 1/12 of the total of the disbursement payable during a year (1/12= one month) AND pay for shortages. -require a cushion: 1/6 of the total disbursements for the year. - an excess of $50 or more in an account must be returned to borrower

-Must be provided to the primary within 3 days after receipt of a completed application. -Mortgage Servicing Disclosure Statement

-RESPA and TILA mandate additional disclosures before settlements-or closing -occurs: -Affiliated Business Arrangement (AfBA and ABA) Disclosure -The Closing Disclosure- The new TILA-RESPA Integrated Disclosure (TRID) rules require a Closing Disclosure be delivered to the borrower within 3 business days

-The Closing Disclosure should be mailed or delivered to the borrowers within three business days of loan consummation. -Initial Escrow Statement

-Annual Escrow Statement must be delivered to borrowers by loan services once a year. -Servicing Transfer Statement- generally, the loan service must notify 15 days before the effective date of a service transfer. As long the borrower makes a timely payment to the old servicer within 60 days.

P=Principal is the repayment of loan + I = Interest T=Taxes- real property & real estate taxes I=Insurance- homeowners insurance or property