NMLS – Flashcards

Allows lenders to demand payment in full if the borrower defaults on the loan (can be construed as predatory lending)

Says you must repay your mortgage if you sell your home to a new owner (loan is not assumable)

home valuation code of conduct

(Considered a predatory practice) The lender can demand repayment of the loan in full at anytime for any reason

Home Ownership and Equity Protection Act (Reg Z Sec 32) Amends TILA

Loan agreement under which the collateral securing a loan is the unltimate source of repayment, and the lender cannot hold the borrower personably liable in the event of default. Lender can seize (and sell) the collateral but cannot seize non-pledged asset or property.

Method in which a lein is removed from a property when payment is made in full.

Purpose is to promote the financial stability of US by improving accountability and transparency in the financial system. Created the Consumer Financial Protection Bureau. Changed MLO compensation rules

Signed by GW Bush. Est. national minimum standards for mortgage training, including prelicensing and annual continuing education. Also, under the SAFE Act, all MLO's must beither state-licensed or federally registered.

Requires all states to implement a MLO licensing process that meets standards through the Nationwide Mortgage Lending System & Registry (NMLS) In CA that compliance act is called SB - 36.

*Provide uniform license applications and reporting requirements *Provide licensing database *Improve flow of info to and between regulators *Provide increased accountability and tracking of MLO's *Streamline the licensing process *Enhance consumer protection and support anti-fraud measures *Provide consumers info about MLO's *Require MLO's to act in "the best interest of the client" *Facilitate responsible behavior in the subprime mkt *Facilitate the collection and disbursement of consumer complaints

Started in 2004 by the Conference of State Bank Supervisors (CSBS) and the American Assoc. of Residential Mortgage Regulators (AARMR) They wrote model legislation reviewed by HUD for states to follow

Someone who for compensation or gain or expectation thereof: takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan

May not engage in residential mortgage loan activities as a loan processor or underwriter unless state licensed

*Required by the SAFE Act for all state licensed MLO's or federally registered MLO's employed by a depository institution regulated by a federal banking agency or regulated by the Farm Credit Admin. *Required on all mktg materials, applications, required disclosures & business cards

Built and maintains the online NMLS system

*Enforced by HUD *Intended to help consumers become better shoppers for settlement services and eliminate unnecessary increases in the costs of certain settlement services

*Purely administrative or clerical tasks for a licensee *Only performing real estate brokerage work *Time share credit work *Loan processor or underwriter who does not represent to the public that they perform MLO work

The Board of Gov.'s of the Fed. Reserve System, Comptroller of the Currency, Dir. of the Office of Thrift Supervision, National Credit Union Administration and the FDIC.

Any bank or savings assoc. including credit union

Any mortgage product other than a 30 yr fixed rate

Any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling or residential real estate upon which a dwelling is constructed or is intended to be constructed a dwelling

* Submit to a background check *Provide personal history *Provide authorization for a credit report *Never had MLO license revoked *No conviction or pled nolo contendere for a felony during past 7 yrs preceeding date of application *No fraud, breach of trust, or money laundering ever *A pardon is not a conviction

No: *Current outstanding judgments *Current outstanding tax liens *Foreclosures in the past 3 years *Pattern of seriously delinquent accounts in past 3 yrs

Federal Law & regulation (3 hours) Ethics (3 hours) Nontraditional mortgage products (2 hours) Electives (12 hours)

Federal Mortgage related laws 35% General Mortgage knowledge 25% MLO activities 25% Ethics 15% Fail 3 times then must wait 6 months

Federal Law & regulation (3 hours) Ethics (2 hours) Nontraditional mortgage products (2 hours) Electives (1 hours)

Dodd-Frank Compensation Changes: *Compensation can't be based different cause it is a different kind of loan *Comp. can't be based on loan terms such as interest rate, apr or LTV *Can't get comp. directly from consumer and another source on the same loan *no pricing concessions *no "point banks" *MLO can't be penalized for GFE violations *Can't base comp on terms of previous transaction

If the consumer is presented with loan options for each type loan, including: *Lowest interest rate *Lowest total for origination *Lowest interest rate without certain risky features The MLO: *Obtains options from creditors regularly worked with *Believes in good faith the consumer qualifies

*Salary, commission, bonuses, awards or prizes *Payments from loan proceeds are considered payments directly from consumer. *Yield spread premium (YSP) according to RESPA is not considered payment from the borrower *Transactions are described as all closed-end consumer loans secured by 1 to 4 unit residential dwelling, closed end mortgages or reverse mortgages.

*Any comp. that is based on loan terms or conditions such as interest rate, APR, loan-to-value LTV *Comp. received directly from the consumer and any other source for the same loan

*Overall loan volume *Long-term loan performance *Hourly basis *Existing/new customer *Flat fee *Pull-through rate ie. quality of loan files *Legitimate business expenses *Long-term loan performance *Different arrangement for each MLO

*Loans secured with a mortgage placed on 1 to 4 family residential property *Includes most purchase loans, assumptions, refinances, property improvement loans and equity lines of credit *Amended in 1994 to include subordinate lien loans

*All cash sale *Sale where the individual seller takes back the mortgage *Rental property transaction *Property of 25 acres or more *Vacant or unimproved property (unless a dwelling will be constructed or moved on within 2 yrs.

*Prohibits giving or accepting a fee, kickback or anything of value in exchange for referrals of settlement service business involving a federally-related mortgage loan. *Prohibits fee-splitting and receiving unearned fees or a percentage of any charge made for services not done *Prohibits "required use" of specific settlement service providers, except in cases where a lender refers a borrower to an attorney, credit reporting agency, or real estate appraiser to represent the lende's interest in the transaction.

*Monies, things, discounts, salaries, commissions, fees, duplicate payments of a charge, stock, dividends, distributions of partnership profits, franchise royalties, credits representing monies that may be paid in future, opportunity to participate in a money-making program, retained or increased earnings, free or special rates or lease or rental payments based on the amount of business referred, trips and payments of another person's expenses or reduction in credit against an existing obligation.

*Allows things of minimal value used for promo purposes such as pens, mementos, coffee cups, hats, etc. *Allows legitimate discounts on services to consumers if a combination of settlement services is offered at a total price lower than the sum of the individual settlement services, as long as: **the use of any such combo is optional to the buyer **the lower price is not made up by higher costs elsewhere in the settlement process

Criminal and civil penalties include: *fines up to $10,000 *Imprisonment up to 1 year *Liability of up to 3 times the amount of the charge

*Prohibits seller from requiring the home buyer to use a particular title insurance company, either directly or indirectly, as a condition of sale *Buyers can sue for 3 times charges for the title insur.

*Limits amount lender can require borrower to put into escrow for purposes of paying taxes, hazard insur. and other charges related to the property to more than 1/12th (1 mos.) of the total of all due payable during the year, plus amount to pay for any shortage in acct. *Allows a cushion not to exceed 1/6th or 2 mos. due for a year *Requires the lender to perform escrow analysis 1/year and notify borrower of shortages and return excess of $50 or more, if borrower is not delinquent. *Does not require lender to impose an escrow acct, but: *Mortgage w/ mortgage insur. must have escrow acct *"Higher Priced" loan must have escrow acct.

A situation where a person in a position to refer settlement services - or an associate of that person, has an affiliated relationship or interest of MORE than 1% in a provider of settlement services.

Six items: *Borrower's name *Borrower's monthly income *Borrower's SSN to obtain a credit report *Property address *Estimate of value of the property *Loan amount

*HUD Settlement Cost Booklet - contains consumer info regarding various real estate settlement services *Good Faith Estimate (GFE) of Settlement Costs - provides an estimate of each charge the buyer is likely to pay at settlement *Mortgage Servicing Disclosure Statement - discloses to the borrower whether the lender intends to servicer the loan or transfer servicing to another lender and provides info about complaint resolution *If the lender turns down the loan within 3 days, MLO doesn't have to provide the documents

*AfBA Disclosure - requires a settlement service provider to give an AfBA disclosure to the consumer at or prior to the time of referral to another provider with whom the referring party has ownership or interest. must describe the relationship and give the borrower an estimate of the second provider's charges *HUD-1 Settlement Statement: a standard form that clearly show all charges imposed on borrowers and sellers in connection with the settlement; *Borrower's may request HUD-1 1 business day before the actual settlement.

*HUD-1 Settlement statement- shows the actual settlement costs for both buyer and seller *Initial Escrow Stmt: Itemizes the estimated taxes, insurance premiums, and other charges anticipated to be paid from escrow acct. in first 12 mos., including any cushion though usually given at settlement, the lender has 45 days from settlement to deliver

*Annual Escrow Statement - required from loan servicer's once a yr. *Servicing Transfer Stmt: required if loan servicer sells or assigns the servicing rights to another servicer. Usually required 15 days before the effective date of the loan transfer. Include name, address, toll-free # and the date the new servicer will accept payment

Serves as a clear and concise form showing the dollar amount of the settlement charges

Within 3 days after receipt of completed application

For at least ten (10) business days after it is issued

If based on the period of time (between 30 days and 6 months), the type of loan, and the geographic area (not size of loan or property value). if used must be used for all loans in a specific loan classification

Page 1: Dates, loan summary, escrow amount info, estimated settlement charges Page2: Itemized list of origination charges, credits or points for interest rate selection, and charges for other settlement services; new form requires a lump sum origination charge that reflects the lender fee and the mortgage broker fee. Page 3: Tools that consumers can use to evaluate the settlement charges associated with the loan under different terms and to compare this loan and its settlement charges to other GFE's

1. Our origination charge 2.Your points for the interest rate (after lock) 3.Your adjusted origination charge (after lock) 4.Transfer Taxes

1.Required services that we select 2.Title servies and lenders title insurance (if ours) 3.Owner's title insurance (if our company) 4.Required services, you can shop for (if you use ours) 5.Govt. recording charges

1.Required services you can shop for (& don't use ours) 2.Title servies and lenders title insurance (if not ours) 3.Owner's title insurance (if not our company) 4.Initial deposit for your escrow account 5.Daily interest rate charges 6.Homeowner's insurance

A new GFE is provided and an updated GFE is required within 3 business days of learning of changes

At least 3 years

1.Changes that increase the settlement costs to exceed tolerances 2.Changes affecting eligibility for the specific loan terms in the GFE 3.Borrower requested changes affecting terms 4.Changes to the charge or for the interest rate chosen, the adjusted origination charges per diem interest, and loan terms related to the interest rate if the interest rate has not been locked by the borrower or if it has expired

1.Acts of God, war, disaster or emergency 2.Information particular to the borrower or transaction that was relied upon for the GFE, like: credit quality of the borrower, amount of the loan, value of the property or other info that's found to be inaccurate 3.New information particular to borrower or transaction not used for GFE 4.Other circumstances particular to borrower or transaction, such as boundary dispute, need for flood insurance, or environmental problems

The borrower's name, monthly income, property address, estimate of the value of the property, loan amount sought and any info in any credit report obtained by the MLO prior to issuing the GFE, unless the info is found to be changed or inaccurate after the GFE is issued

10 Business Days (or longer if specified by MLO) if the borrower does not intend to continue the application

At settlement or within 30 calendar days after settlement

A settlement statement, required under RESPA, that details all costs associated with closing a loan, showing how much was paid, to what companies or parties, and for what purpose.

Used for loans with no seller, ie. refinancing and subordinate lien loans

For open-end home equity plans subjet to TILA and Regulation Z

Contains borrower's id. info, property address, lender's loan number, settlement date and id. info for lender. Also has charges paid outside of closing (POC)

Itemizes settlement charges paid by borrower and seller 1.Items paid in connection with the loan 2.Items required by the lender to be paid in advance 3.Reserves deposited with the lender 4.Title charges 5.Govermnent recording and transfer fees 6.Any additional settlement charges

Comparison of GFE and HUD-1 including: 1.Charges that can't increase 2.Charges that can't increase more than 10% 3.Charges that can change 4.Loan terms

Administered by the Board of Governors of the Federal Reserve System. Implemented by Regulation Z, from Title 1 of the Consumer Credit Protection Act

1.Enhance economic stabilization 2.Strengthen competition among financial institutions 3.Assure meaningful disclosure of credit terms to allow consumers to compare 4.Does not set limits on interest rates or finance charges, but regulates the disclosure of these items 5. Establishes a 3 business day right of rescission in certain transactions

Amendment to TILA reg z in 2002 Enforced by FTC and Federal Reserve Board FTB Mostly covers "High Cost Loans" Allows consumers to sue lenders who violate HOEPA for recovery of statutory and actual damages, court costs and attorney's fees May enable a consumer to rescind the loan for up to 3 years if the lender is in violation.

When the APR exceeds the rates in Treasury securities of comparable maturity - based on the 15th of the month before the month in which the application is received by: More than 8 percentage points for a 1st Mortgage More than 10 percentage points for a 2nd mortgage or if: The total points and fees paid by the consumer exceed the higher of 8% of the loan amount or $611 in 2012 example fees = 3800 on 50000 loan 3800/(50000-3800) = 8.23%

All normal costs plus: Closing costs paid to the lender or an affiliated 3rd party Any optional credit, life, accident, or loss of income insurance, even if the cost of insurance may have been disclosed. This may even occur at closing and then triggers the disclosure and rescission requirements

Total points and fees exceeding 5% on mortgage loans of at least $20,000 or 8% or a certain dollar amount for loans below $20,000 APR exceeds average prime offer rate by 6.5% on first lien loans for $50,000 or more or 8.5% on smaller and 2nd lien loans Prepayment penalty applies for more than 3 yrs after closing or that exceed 2% of the prepayment

1.Balloon payments on HOEPA loans with terms less than 5 years. HOEPA loans must have regular payments to pay down the principal or at least pay interest 2.Negative amortization 3. Default interest rates - higher than pre-default rates 4.A repayment schedule that consolidates more than two periodic payments that are to paid in advance from the proceeds of the loan 5.Prepayment penalties unless limited to the first 5 years of the loan or the consumers total monthly debt including the HOEPA loan is more than 50% of gross monthly income 6.Due on demand clauses

Creditors may not: 1.Grant loans without regard to the borrower's ability to repay the loan 2.Disburse home improvement loan proceeds to anyone but the borrower, or jointly the borrower and contractor 3.Refinance a HOEPA loan to another HOEPA loan with in the first 12 months of origination 4.Wrongfully document a closed-end high cost loan as an open-end loan, ie. home equity line of credit

All real estate loans for personal, family or household purposes, (not business or commercial) if the loan is: Subject to finance charges Payable by a written agreement in more than four installments

When creditors offer credit but before the transaction is consummated When credit terms are advertised to potential customers

Truth in lending disclosure statement When your home is on the line Consumer handbook on adjustable rate mortgages CHARM and ARM loan program details

If there are any estimated figure changes

To be kept for at least 2 years after the disclosures were required to be made

Fee for the credit report

Required for mortgages subject to RESPA secured by consumer's dwelling (other than HELOC's) Must be given NLT 3 business days after completed application for mortgage loan Must be delivered NLT 7th business day prior to loan consumation

1.Finance charge expressed as an annual percentage rate 2.Total finance charges including: total interest over the life of the loan, upfront fees, e.g., origination fee, loan fee, commitment fee, assumption fee, prepaid interest, prepaid PMI, prepaid credit life insurance, etc. 3.Amount financed - total amount of credit extended 4.Total of payments paid at the end of the loan 5. Mandatory statement: "you are not required to complete this agreement merely because you have received these disclosures or signed a loan application"

1.Name of the lender 2.Notice of a right to receive an itemization of the amount financed, including principal, all finance charges detailed, and any discounts, points, fee, MIP, etc. that are financed 3.Number, amount and timing of payments 4.New payment, late payment and prepayment provisions 5.Description and identification of the security 6.Whether the loan may be assumed 7.Notice that the consumers may not be able to refinance to a lower rate in the future. 8.Payment summary table indicating initial interest rate and corresponding monthly payment 9.Additionally, for an ARM the payment schedule must include the max. interest rate and payment that can occur during the first 5 years and a worst case example showing the max. rate and payment possible over the life of the loan.

Annual Percentage Rate tells a borrower the total cost of financing a loan in percentage terms, as a relationship of the total finance charges to the total amount financed. APR includes not just the interest rate, but the total cost of the loan, including all other finance charges spread out over the life of the loan

The cost of consumer credit as a dollar amount. Includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as a condition of credit. Includes fees and and amounts charged by someone other than the creditor if the creditor: Requires the use of a 3rd party or retains a portion of the 3rd party charge

Are considered finance charges only if the creditor: 1.requires the particular services for which the consumer is charged; 2.Requires the imposition of the charge; or 3.Retains a portion of the 3rd party charge

Interest, time price differential, any add-on or discount system of additional charges Service, transaction, activity, carrying charges Points, loan fees, assumption fees, finder's fees. Appraisal review, investigation and credit report investigation fees, MLO fees from consumer or creditor Premiums for insurance protecting the creditor Credit life, accident, health or loss of income insurance written in connection with a credit transaction

Application fee charged to all applicants, whether or not credit is actually extended Seller's points Fees for title examination, abstract of title, title insurance, property survey Fees for preparing loan-related documents, such as deeds, mortgages, and reconveyance or settlement documents Notary and credit report fees Property appraisal fees or fees for inspections if the service is performed prior to the closing

APR cannot vary above or below the APR initially disclosed by more than 1/8% or .125 for a regular transaction or 1/4% .25 for an irregular transaction

TILA defined: Multiple advances Irregular payment schedule Irregular payment amounts, other than first and final

TILA requires the borrower be given corrected disclosure of all terms. This triggers an additional waiting period of 3 business days after they are received. If the disclosures are mailed they are considered received after 3 business days making the additional time 6 business days Waiting period can be waived for a bona fide personal financial emergency, documented in writing and dated by the borrower

Initial disclosure must be given (or placed in the mail) with in 3 business days of a receipt of a completed application The earliest a loan may be consummated is on the 7th day after disclosures are delivered/mailed Any corrected disclosures must by received at least 3 business days before the loan is consummated Sunday and 10 legal holidays are not business days

Credit transactions for existing homes i.e.: Home equity loans Home improvement loans Refinances

Purchase loans Construction loans Commercial loans Loans on vacation or second homes Refinancing by the same creditor A transaction in which a state agency is a creditor

Consumers may exercise the right to rescind until midnight of the 3rd business day following loan consummation, delivery of the required rescission notice, or delivery of all material disclosures, whichever occurs last. Must provide 2 copies of a Notice of Right to Rescind to to each borrower Rescinded by one is effective for all

The retention or acquisition of a security interest in the borrower's dwelling The consumer's right to rescind How to exercise the right with a form to use with the creditor's address The effects of rescission The date on which the rescission period ends All funds must be returned within 20 calendar days

Up to 3 years if the creditor fails to properly notify consumers of the right to rescind The creditor does not provide all parties on the title with required disclosures

Acceptable tolerances for accuracy of the finance charge include: Understated by no more than 1/2% of the face amount of the loan or $100, whichever is greater; or Is greater than the amount required to be disclosed The tolerance is 1% for refinancing with a new creditor if there is no new advance and no consolidation of existing loans.

3 years after the occurrence giving rise to the right of rescission

After in initiation of foreclosure a consumer has the right to rescind if: The MLO fee should have been included in the finance fee and was not The creditor didn't provide completed Notice of Rescission

Accuracy is defined as being understated by no more than $35; or Greater than the amount required to be disclosed

Closed end home purchase loan where the APR exceeds the average prime offer rate by at least 1.5% f or the first lien loan; and 3.5% for a junior lien loan

The initial construction of a dwelling A bridge loan with a term of 12 months or less A reverse mortgage transaction A home equity line of credit

For loans meeting the definition: Repayment Ability must be verified Prepayment Penalties are prohibited unless limited to the first 2 years f the loan. Escrow account must be established for property taxes and MIP

The threshold for requiring escrow goes to 2.5% above average prime vs. 1.5% above

Failing to credit a payment as of the date of receipt Imposing any late fee, when the only delinquency is attributable to late fees. Failing to provide, within a reasonable time, statements showing the payoff amounts as of a specific date in time.

Relates to requirements about providing disclosures and notifications about Private Mortgage Insurance

To mortgages on single-family, primary residences Does not apply to VA loans, FHA loans, or loans with no PMI

Borrower may request cancellation of PMI when the loan is 80% of original value Mortgage insurance may be automatically canceled when LTV is 78% of original value Borrower may accelerate cancellation date with additional payments

Ensures that all consumers are given an equal chance to obtain credit. Originally passed in 1974 to prohibit lending discrimination on the basis of sex or marital status Requires credit bureaus to maintain separate credit files on married spouses, if requested Implemented by FTC and applies to any creditor Allows credit applicants to file discrimination complaints or file civil lawsuits Requires maintenance records of application for 25 months after notifying applicant of action taken

Sex, Age, Marital status, Race, Color, Religion, National origin, Receipt of public assistance, exercised rights under the Consumer Credit Protection Act.

MLO should not ask about marital status or a spouse unless: It is a joint application The applicant is relying on their spouse's income or alimony or child support from former spouse to qualify It is in a community property state, and the loan is secured by property When asking only use the terms: Married, Unmarried, Separarted

A creditor may not discount or refuse to consider: Public assistance income Income because of sex or marital status Income from verifiable and consistent part time employment, overtime, pension, annuity or retirement benefits programs Regular alimony, child support or separate maintenance payments, if the applicant chooses to disclose it

Creditors must notify applicants within 30 calendar days of a completed application Notices are: Approved - Commitment Letter Incomplete - Notice of Incomplete Application Denied or offered less favorable terms - Statement of Adverse Action, in writing Borrowers have a right to request a copy of the appraisal report used in the decision within 90 calendar days of credit decision

Enacted in 1975 to discover discriminatory practices including redlining, by analyzing where an institution turns down a disproportionate % of applications by race gender or ethnicity

Home purchase Home improvement Refinancing and Subordinate financing

Loans on vacant land, new construction or on loans that are sold as part of a pool for servicing

Financial Institutions must submit a Loan/Application Register (LAR) on a loan-by loan and application-by application basis every March.

MLO must collect: Age, credit score, total points and fees, loan term and pricing, prepayment penalty info, loan-to-value, period of any intro interest rate, interest-only or negative amortization information, channel of origination.

Must by asked for by the MLO, If application taken by phone, mail, or internet and the applicant declines to provide the information, it need not be included. If application is taken in person, it must be noted by the MLO that the applicant declined and not the ethnicity, race and sex based on visual observation and surname, to the extent possible

Federal Financial INstitutions Examination Council (FFIEC)

Gives consumers access to the same information about themselves that lenders use when making credit decisions Entitles consumers to free credit report upon adverse action or identity theft (Not Credit Score) allows consumers to dispute credit report Provides additional rights for identity theft victims and active duty military personnel

May not report outdated negative info: Bad info more than 7 years old Bankruptcies more than 10 years old Chapter 13 removed afte 7 years Chapter 7 removed after 10 years No time limit on reporting criminal convictions Must limit access to people with a valid need Cannot give info to employer without written consent by the consumer

A one-time written notice of derogatory information separate from TIL disclosures

Amends FCRA to help fight identity theft Mandates limits on information sharing Entitles consumers to annual free credit report Allows one to place fraud alerts, credit freezes requires businesses to truncate credit/debit card numbers on receipts Mandates businesses to secure and properly dispose of sensitive personal information in a consumer's credit report Red Flag Rules requires financial institutions and creditors to implement a written identity theft prevention program

When applying for credit: Home Loan Applicant Credit Score Information Disclosure

No more than 5 digits of credit card on a receipt

Requires businesses to take measures to secure and dispose of sensitive personal info. Including: Burning or shredding Destroying or erasing electronic files Placing all pending loan documents in locked desks, cabinets, or storage rooms at the end of the work day

Written identity theft prevention program Card issuers validate change of address requests Users of consumer reports to verify identity of subject in the event of address discrepancy According to the FTC, red flags fall into these categories:

Alerts, notifications, or warnings from a consumer reporting agency Suspicious documents Suspicious personally identifying information, such as suspicious address Unusual use of-or suspicious activity relating to-a covered account Notices from customers, victims of identity theft, law enforcement authorities, or other businesses about possible identity theft in connection to covered accts.

The FTC and enforced by the FTC, FCC and state law enforcement officials

Any plan, program or campaign to sell goods or services through interstate phone calles.

Political organizations, charities, or telephone surveyors

Companies to maintain national and internal lists of customers and prospects and keep them updated regularly national list: 90 days Internal list: 30 days Companies not call NLT 31 days after consumer asks to be on the DNC registry allows consumers who receive telemarketing calls despite being on the registry to file a complaint Fine is up to $16,000 per incident

A telemarketer or seller may call a consumer with whom it has an established business relationship (EBR) for up to 18 months after the consumers last purchase, delivery or payment, even if the consumer is on the DNC registry. A company may call for up to 3 months after the consumer makes an inquiry or submits an application to the company. Written consent includes: Name phone number and signature. If the consumer asks to be put on a company's internal DNC list, even if there is an EBR the company may not call for sales or business solicitation purposes.

Anything other than a 30-year fixed rate mortgage

One that is usually made by a bank and not insured or guaranteed by a government entity like FHA, VA or USDA Most conventional loans are bought in the secondary market by Freddie Mac and Fannie Mae

Long Term - 30 years or longer Fully Amortizing or self-liquidating Fixed Rate Conforming Loans - meet Fannie Mae/Freddie Mac standards

Do not meet the standards necessary to be sold on the secondary market Size of Loan - Jumbo loans - in 2011 over $417,000 Credit Quality of Buyer - B or C borrower - credit problems, such as bankruptcy in past 7 to 10 yrs, low credit scores cause of too much investment property or self-employed for too short a time

Have more risk because they are provided to borrowers with less than perfect credit Not for sale to secondary market

One way to get a conventional loan without 20% down - borrow money from another source (other than the primary lender) to pay part of the purchase price or closing costs

The seller 80-20 loans, same lender does 2 loans - one for 80% and one for 20% which can be sold to the secondary market if the loan meets all standards Simple second mortgage or additional junior liens

Is the percentage of the property value borrowed through a combination of more than one loan Secondary lender may require: 5% down No prepayment penalty Regularly scheduled payments and No negative amortization

Mortgages may be classified based on how the borrower repays principal and interest: Fixed Rate Adjustable Rate ARMs Hybrid Mortgages/Interest Only Graduated Payment Mortgages GPM Growth Equity Mortgage GEM

have an interest rate that may periodically adjust to reflect cost of money Can be sold on the secondary market

Combination of fixed, adjustable and/or interest only

Borrower pays smaller payments in the early years, with the payment increasing yearly until they are sufficient to fully amortize the loan The early years cause a period of negative amortization

Fixed rate mortgage set up like a 30 year conventional loan, but payments increase regularly, like an ARM. Helps payoff the loan sooner. Also like building equity mortgages (BEMs) , rapidly amortizing mortgages (RAMs)

Issued by federal financial regulatory agencies Primarily concerns payment shock, competitive pressures and ceding underwriting standards to third party originations.

1.Collateral-Dependent Loans - says borrowers should be able to repay the loan from sources other than the sale of the collateral or refinancing 2.Risk Layering - says low or no-documrnt loans should be compensated with risk mitigating features such as high credit scores, lower LTV, lower debt-to-income rations, MIP 3.Reduced Documentation - should be governed by clear guidelines and accepted only if ther are other risk mitigating factors 4.Simultaneous Second Lien Loans - Loans with minimum owner equity should not have negative amortization periods 5.Introductory Interest Rates - when setting these lower initial rates, lenders should consider ways to minimize payment shock

Interest only: borrower's repayment capacity to repay by full maturity should be evaluated based on fully indexed rate Negative Amortization: repayment analysis should be based upon the initial loan amount and any balance increase caused by the negative amortization

Adjusted periodically to reflect the cost of money determined by the selected index plus the agreed to margin. Margins remain constant throughout the term of the loan

1.Index - most common are: Average One-Year Treasury Constant Maturity Index (TCM), Cost of Funds Index (CODI), London, Interbank Offering Rate (LIBOR) 2.Margin - difference between index value and the interest rate. added by the lender to cover expenses and profit 3.Rate Adjustment Period - length of time between interest rate changes with ARMs. Most common 6 mos. to 1 yr. 4.Mortgage Payment Adjustment Period - length of time between mortgage payment changes with ARMs 5.Interest Rate Caps - Used to limit the number of % points an interest rate can be in increased or decreased 6.Mortgage Payment Caps - Limits large payment increases 7.Negative Amortization Cap - requires loans with negative amortization to be adjusted or recast when the cap is reached so that larger payments again retire a portion of the debt

1.ARM Caps: keeps interest rates and payments from growing out of control. i.e. 2/6 - there is a 2% max increase at any adjustment and a 6% max total lifetime cap above the initial rate 2.Periodic Re-Amortization: Generally, at every interest rate adjustment, ARMS provide for periodic re-amortization of the loan 3.Convertible ARMs: A conversion option in an ARM allows the borrower to convert from an ARM to a fixed rate loan.

1.CHARM - Consumer Handbook on ARMs. 2.APR in the federal box on the TIL be based on the lender's margin and the composite annual percentage rate, which is based on the initial payment rate and the fully indexed rate that would exist for the remaining years on the loan 3.Advance notice of any change in payment or interest rate must be given at least 25 days, but not more than 120 days before the new payment level takes effect, as well as an example as to how the payments and loan balance will be affected.

Fixed rate for first 3 years and then adjusts for the next 27 years

Additional funds in the form of points paid to a lender at the beginning of a loan to lower the interest rate and monthly payments

When points are paid to a lender to reduce the interest rate and loan payments for the entire life of the loan

When points are paid to a lender to reduce the interest rate and loan payments early in the loan, with interest rates and payments rising later

Lower the monthly payment May make it easier for the borrower to qualify based on the reduced monthly payment after the buydown A buydown shows as a charge to the borrower on GFE

A graduated payment buydown where the payments are subsidized for only two years. For example 2% below the interest rate the first year and 1.5% the second year

A graduated payment buydown where the payments are subsidized for three years For example 2.5% below the interest rate the first year 2% below the interest rate the second year and 1.5% the third year

A loan used by qualified homeowners age 62 or older to convert equity in the home into a lump sum, a monthly stream, and/or a line of credit; generally repaid when the last surviving borrower dies, sells the home or ceases to live in the home for 12 consecutive months.

No income requirements Age: 62 or older of the all owners, if one is younger then they have to relinquish ownership to qualify Home is either paid off or alot of equity. Lender will require homeowner's insurance and may require separate flood insurance Applicants must meet with a HUD counselor and receive a certificate to be used with the application

Depends on home value, interest rate, where the home is located, equity in home, payment options, program costs and age of borrower's

1.Fixed monthly payments either for a predetermined period or for as long as the homeowner remains in the home 2.A lump sum payment up front 3.A line of credit that allows access to funds on an "as needed" basis 4.A combination of the options

Money can be used for any purpose

Mortgage comes due when the borrower: Dies Sells the home, or Ceases to live in the home for 12 consecutive months Proceeds from the sale pay the debt, any remaining equity goes to homeowner or estate

A lender cannot force a borrower out of their home during the life of the loan. Nor can they sell the home when the loan comes due. Lenders usually allow 12 months for payment in the event of death. If the home is not sold or deeded to the lender, then a formal foreclosure process will be started **The borrower nor their estate may owe more than the fair market sale price of the home minus reasonable sales expenses The lender has no claim on any other assets held by the borrower or heirs

Homeowner fails to make necessary repairs Property is condemned Homeowner fails to pay property taxes Homeowner fails to pay homeowners insurance A government entity claims eminent domain Borrower ceases to live in the property or it is no longer their principal residence.

Notice Total annual loan cost rates Itemization of pertinent info: itemization of loan terms, charges, age of youngest borrower, appraised value Explanation of table of total annual loan cost rates

Costs to consumer Payments to consumer Additional creditor compensation Limitations on consumer liability Assumed annual appreciation rates Assume loan period

Disclosures required at least 3 business days prior to: consummation of a closed end credit transaction or The first transaction under an open-end credit plan

From HUD and is federally insured private loan, making it safe for both the senior borrower and lender

Age 62 Must own the property and be primary residence Must have small mortgage balance or none at all Must participate in a counseling session by an approved HECM counselor No income or credit qualifications No repayment required as long as it is primary home Closing costs can be financed in the mortgage

Single family home 4 unit homes with one unit occupied by the borrower Condo' or PUD's that are HUD_FHA approved Mobile homes meeting HUD guidelines (on perm. foundation)

Lesser of the appraised value Sales price of the property, or National max loan limit

Tenure: provides equal monthly payments as long as borrower lives and continues to occupy the home as a primary residence Term: equal monthly payments for a fixed time Line of Credit: cash available when needed Modified tenure: Combo of line of credit and tenure Modified term: Combo of line of credit and term

If the home's appraised value is: less than $125,000, the HECM origination fee is capped at $2,500 More than $125,000, lenders can charge 2% of the first $200,000 plus 1% of the amount over $200,000 up to cap of $6,000

HECM borrowers must pay an upfront nonrefundable MIP: 2% of the lesser of the home's value or the FHA HECM mortgage limit for the area for the HECM standard .01% for the lesser of the homes value or the FHA HECM limit for the HECM Saver The annual premium is equal to 1.25% of the outstanding mortgage balance and is collected monthly HECM Saver provides 10% to 18% less money available to the borrower, lowering risk & and cost of MIP

Partially amortized loan Last payment is known as a balloon payment

26 annual payments - every two weeks Effectively on extra monthly payment (13)

covers more than one parcel of land or lot, usually to finance a subdivision development Allows for partial release clause allowing for release of some lots while continuing to cover the remaining lots

Occurs between the termination of one loan and the beginning of the next Used for construction

Allows borrower to get cash for equity that has built up, such as a home equity loan

Temp. Loan for construction of improvements and buildings on land

Stated-income No ratio Low-doc NINA - no income/no asset verification

Permits the lender to share part of the earnings, income, or profits from a real estate project Usually in addition to collecting principal and interest Mostly for commercial real estate projects

Home Equity Loan usually is a one time loan for a specific amount of money HELOC is money available to be borrowed as needs arise; an open end loan

One with scheduled payments that pay only accrued interest and not any portion of principal Loan amount never decreases Balloon payment is the original amount borrowed

A loan containing a clause which allows the mortgagor to borrow additional money without rewriting the mortgage.

A mortgage, used in the purchase of new residential property which, in addition to real property, covers certain personal property items and equipment. (Washer, dryer, drapes, refrigerator, stove)

a note secured by a mortgage or deed of trust given by a buyer as a borrower, to a seller, as lender, as part of the purchase price of the real estate.

A fixed-rate mortgage that gives the borrower a limited opportunity to reduce the interest rate one time during the course of the loan, provided certain conditions are met.

A mortgage that a borrower gives to a lender to redo or expand the loan on the property, usually to get a better interest rate or pay off other debts.

A loan with an adjustable interest rate, but with payments that never change, instead, as the rate increases or decreases, the balance due changes

a mortgage that includes a first and second mortgage instead of having two difference ones; a creative way to allow to purchase property without having to qualify for a loan or to pay closing costs.

Honesty and Integrity Professional Conduct Honesty in Advertising Confidentiality Compliance with the Law Disclosure of Financial Interests

1) amt of down payment 2) amt of any payment 3) number of payments 4) the period of repayment 5) amount of any finance charge

If any triggering terms are used in an ad, all of these disclosures must be made: 1) Amount or percentage of down payment 2) terms of repayment, e.g., payment schedule, including balloon payment 3) APR 4) If the rate may increase (e.g., for an ARM) that fact must be stated If an ad discloses only the APR, the added disclosures are not required

1) No Down Payment 2) 5% APR loan available here 3) Easy monthly payments 4) FHA financing available or 100% VA financing available 5) Terms to fit your budget

Rate: if more than one rate will apply then the ad must include the following information: * Each simple annual rate of interest that will apply; if a variable rate, a reasonably current index and margin * The period of time during which each simple annual rate of interest will apply * The APR for the loan Payment Amount: If the Ad states the amount of any payment, it must also include this information: * The amount of each payment, including balloon payments and if variable rate, current index and margin * the period of time during which each payment will apply

If any of the triggering terms are used then the ad must also state the following: * Any loan fee that is a percentage of the credit limit and an estimate for any other fees * Any periodic rate used to compute the finance charge expressed as an APR * the maximum APR that may be imposed in a variable rate plan Also the length of time an initial rate will be in effect

If it is possible for a balloon payment, it must be stated *If a HELOC ad states a promotional rate or payment the ad must disclose these facts: * the period of time of the promo rate or payment *If a promo rate, any APR that will apply *If a promo payment, the amounts and time periods that will apply

Real Estate Settlement Procedures Act- Required for mortgages on purchase of real estate. Prohibits kickbacks or unearned fees. Ensures consumers get important, accurate, and timely information about actual costs of settlement or closing transaction

Real Estate Settlement Procedures Act - Regulation X require the disclosure of fees and costs involved when closing home mortgages and prohibit abusive settlement practices, including payment of anything of value for a referral. Related Disclosures / Administrator Good Faith Estimate (GFE) Special Information Booklet Affiliated Business Arrangements (AfBA) HUD-1 Settlement Statement Mortgage Servicing/Transfer of Service Department of Housing and Urban Development (HUD) Timeframes for Compliance • Disclosures required at time of loan application / within 3 business days of receiving a loan application (mortgage servicing disclosure statement, estimate of all settlement services binding for at least 10 business days from when GFE is provided • Revised GFE must be provided within 3 business days of receiving info to establish changed circumstances • A referring party must give AfBA disclosure to borrower at or prior to the time of a referral. • Borrower has right to inspect HUD-1 one business day before settlement • Fully completed HUD-1 must be delivered or mailed to borrower at or before settlement • Borrower must be given initial escrow account statement showing following year's deposits and disbursements at settlement, or within 45 days • Borrower must receive annual escrow statement from servicer within 30 calendar days of end of escrow year • Borrower must receive servicing transfer statement at least 15 days before effective date of loan transfer • Borrower cannot be penalized for making a timely payment to prior servicer within 60 days of loan transfer • Records must be retained for 3 years for revised GFE; for 5 years for HUD-1s, escrow accounts, and AfBAs

Criminal and civil penalties include: *fines up to $10,000 per incident of paying or receiving a kickback *Imprisonment up to 1 year *Liability of up to 3 times the amount of the charge

Also known as the Financial Services Modernization Act of 1999 Requires financial institutions to develop privacy notices and to notify customers that they are entitled to privacy. It allows consumers to opt out of having private info shared. It prohibits banks from releasing info to nonaffiliated third parties without permission. Employees have to be trained on info security, and security measures need to be put in place and tested... also financial offers and the board of directors can be held liable for violations. Prohibits Pretexting

Equal Credit Opportunity Act Prohibits lenders and other who grant or arrange ecredit to consumers from discriminating on the basis of race, religion, color, national origin, sex, marital status, age, or dependence on public assitance. Lenders must provide applicants written notice within 30 days with reasons for the denial or termination of credit.

1) sex 2) age 3) marital status 4) race 5) color 6) religion 7) national origin 8) receipt of public assistance 9) exercised rights under the Consumer Credit Protection Act

A law which prohibits discrimination in all real estate transactions based on race and ancestry - commercial and residential.

The federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status, and national origin

* Refusing to make a mortgage loan * Refusing to provide information regarding loans *Imposing different terms or conditions on a loan *Discriminating in the appraisal of property *Refusing to purchase a loan * Blockbusting - try to induce owners to sell by saying the ethnic or racial composition is changing * Steering - Channeling consumers to a particular neighborhood based on race, religion, or ethnicity

Include "equal housing lender" in any broadcast ad Display the Equal Housing Opportunity poster in every branch Display the Equal Housing Opportunity logo on all printed promo material

Requires banks to demonstrate their commitment to local communities through low-income lending programs and to provide annual reports to the public.

Requires banks and other financial institutions to record and report data on home lending in order to identify possible discriminatory patterns

An act intended to deceive another, e.g., making a false statement, making a promise without intending to perform it, suppressing the truth.

Comprises all acts or omissions or concealments involving breach of equitable or legal duty or trust or confidence

The seller must be the owner of record There must be a second appraisal that matches a resale threshold percentage est. by HUD

Interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions

Steering Buyers to Specific Lenders State Income Loans No money due at closing Sale Subject to Seller Acquiring Title Difference in Sale Price Sale Price Changes to fit appraisal Related Parties Involved Funds Paid to Undisclosed 3rd Parties Cash Paid to Seller Outside of Excrow Cash Paid to Borrower

The FBI compiles data on mortgage fraud through Suspicious Activity Reports (SARS)

Any of a number of fraudulent, deceptive, discriminatory, or unfavorable lending practices. Many of these practices are illegal, while others are legal but not in the best interest of the borrowers.

Excessive Fees Excessive Prepayment Penalties Extreme Lending- targeting borrowers with extremely high debt in relationship to income Equity Skimming Loan Flipping

*Steering borrowers to high-rate programs *Falsely identifying loans as lines of credit *Structuring high-cost loans with unaffordable payments *Falsifying loan documents *Forging signatures on loan documents *Changing loan terms at closing *Requiring credit insurance *Increasing interest rates for late payments *Charging excessive prepayment penalties *Failing to report good payment history on a borrower's credit report *Failing to provide the accurate loan balance and payoff information

• Disclosures to borrower three business days prior to settlement of Section 32 loan, in addition to others required under TILA • Notice must show that loan need not be completed and home can be lost. Section 32 loans (They are usually refinances or home equity loans with high interest rates or high up-front costs.) • the APR is more than 8% for a first lien loan, or 10% for a subordinate lien loan, above the yield on Treasury securities having comparable maturity periods; or • the total fees and/or points exceed the greater of 8% of the total loan amount or minimum threshold ($592 for 2011) set by the Federal Reserve Board annually. In general, a Section 32 loan cannot include a prepayment penalty - However, a prepayment penalty is allowed if: • the penalty will not apply: o beyond two years following consummation; or o to prepayment from funds resulting from refinancing by the creditor or its affiliate;

Balloon Payments none if terms are less than 5 yrs Negative Amortization - not allowed Pressure Tactics - must state that it's not required to complete the loan Loan Pricing - can't include more than 2 advance payments from the loan proceeds Acceleration Clauses - can't increase rates if the borrower is in default Prepayment Penalties - limits on them Loan Flipping - can't refinance within 1 yr unless good for borrower Demand Clauses - can't call the loan before maturity except for fraud, default, or damage to the property

Bans mortgage foreclosure rescue and loan modification services from collecting fees until the homeowner has an offer they accept Key information must be disclosed Can't make false or misleading claims about their services Can't advise consumers to discontinue communicating with their lenders