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Real Estate Settlement Procedures Act (RESPA)

• RESPA protects consumers from excessive mortgage transaction costs
• The CFPB enforces RESPA, ensuring disclosures and prohibiting kickbacks that raise costs or limit consumer choice
• Mortgage brokers are intermediaries between borrowers and lenders, providing origination services, excluding lender employees
• RESPA applies to one- to four-family residential properties for assumptions, refinances, improvements, and HELOCs
• RESPA prohibits fees/kickbacks for settlement service referrals
• Commercial/business loans, vacant land, large land tracts (25+ acres), certain loan assumptions, construction-only loans, and government loans are exempt

Settlement Services under RESPA

• RESPA bars accepting fees/kickbacks for settlement service referrals related to mortgage loans
• Service providers cannot have agreements with real estate pros/MLOs for referrals
• Kickbacks involve any valuable item given to a professional for referrals
• Settlement services cover loan origination, mortgage brokerage, title services, etc
• A referral occurs when someone influences another's settlement service provider choice
• "Required use" under RESPA refers to mandated use of a specific settlement service for access to a service/property
• Offering package discounts is allowed, if it saves consumers money and doesn't inflate other costs
• RESPA violators face criminal and civil fines up to $10,000, civil lawsuits (3x the kickback amount), and prison (up to 1 year)

Required Borrower Information on Application (Regulation X)

• Regulation X requires loan applications to include borrower's name, monthly income, Social Security number for credit reports, property address, estimated property value, and mortgage loan amount sought

Foreclosure Process Overview

• Short sales occur when the property value is less than the owed amount
• Sellers must request permission from lenders to repay less than the total owed
• Short sales typically happen with financially distressed homeowners who are delinquent/in default
• Borrowers facing payment difficulties can request assistance via a loss mitigation application (loan workout)
• Mortgage servicers must wait 120 days before filing for foreclosure, if loss mitigation is not submitted
• Lenders must acknowledge loss mitigation applications within five days and request additional info
• Lenders must inform the borrower of foreclosure prevention options within 30 days of receiving a completed application, and at least 37 days before a sale
• Borrowers can appeal the mortgage servicer's decision if a loss mitigation application is submitted at least 90 days before the sale

Initial Escrow Statements and RESPA Limits

• RESPA limits how much lenders can charge for escrow accounts
• Lenders can charge at settlement an amount for mortgaged property charges, plus a cushion of 1/6 of estimated total annual
• Lenders can charge monthly equal to 1/12 of total annual escrow, plus a cushion of 1/6 of the estimated total annual payments
• Initial escrow statements estimate taxes, insurance premiums, and other charges expected in the first 12 months
• Typically provided at closing, but it is legally allowed within 45 days from settlement

Equal Credit Opportunity Act (ECOA) and Regulation B

• ECOA prohibits credit decisions based on factors other than creditworthiness (e.g., income, net worth, job stability)
• ECOA bars financial institutions from discriminating during credit application evaluations based on sex, race, color, religion, national origin, age, marital status, and/or receipt of public assistance
• Discrimination is unlawful based on previous complaints, lawsuits, or actions related to equal treatment under the Consumer Credit Protection Act (CCPA)

Loan Denials and ECOA

• Lenders can ask age-related questions to determine contract capacity or income stability
• Lenders can ask about citizenship status to determine residency
• The CFPB enforces ECOA through Regulation B
• All credit grantors must follow ECOA rules, affecting loan originators who arrange financing

Borrower Notification and Required Disclosures

• If a credit application is declined notification must be sent to applicant within 30 days
• The communication must feature a written statement specifying the reasons for denial
• ECOA mandates specific notification and disclosure requirements, including appraisal copies, to borrowers, whether credit is granted/denied

Adverse Actions, Definitions, Notifications and Timing

• Creditors must inform applicants of decisions within 30 days of a completed application, or sooner for incomplete ones
• Adverse actions include credit refusal, account termination, unfavorable changes, or credit increase refusals

Notice Requirements for Adverse Actions

• Adverse action must be provided within 30 days of an incomplete application or action on an existing account and disclosure
• The creditor must state the action, contact information, and the reason for the action
• If a lender is providing an applicant with a counter-offer, written notice is required in 90 days
• Counter-offers do not have to be held open for 90 days
• When credit applications are denied, lenders must provide written adverse action notices with specific reasons and applicant's rights
• ECOA applies to all loan application stages, Regulation B allows lenders to require any transaction information except race, color, religion, national origin, or sex
• Regulation B defines "elderly" as anyone over 62

MLO Actions and Co-Signer Requirements

• If borrowers refuse HMDA data, financial institutions must enter ethnicity, race, and sex based on visual observation/surname assumptions
• Lenders can't require co-signers, but if present, they can inquire about valid information for both applicants
• Lenders can't dismiss income types as discriminatory, but they can inquire about an applicant's income source
• Income from public assistance, part-time employment, pensions, retirement, alimony, or child support cannot be dismissed/refused
• They can also ask the applicant's spouse if the applicant is relying on the spouse's income for repayment of the loan

Creditworthiness Factors and TILA

• Credit history, income, expenses, and debts, are used to evaluate creditworthiness
• TILA, enforced by Regulation Z, sets definitions for common industry terminology, improves transparency about costs of credit/financing, and allows comparison between credit and cash purchases.
• TILA applies to lenders offering closed-end credit (car/home loans) and open-end credit (credit cards/HELOCs) for consumers with finance charges/installment plans for personal/family/household purposes
• TILA applies to home, reverse, student, credit card, HELOCs, and installment loans, while exempting commercial, business, agricultural loans/credits and rental properties.

APR, Finance Charge, Dwelling, Residential Mortgage Terms

• APR reflects the true cost of financing, including fees, and is higher than the actual interest rate
• Finance charges cover loan-related fees like transaction, or late fees
• Dwellings include residential structures with 1-4 units, attached/unattached, like condos, co-ops, mobile homes, or trailers
• If financing acquisition or initial construction is taking place, a residential mortgage transaction creates/retains security interest in borrower's principal dwelling, per TILA

Right, Recission, Refinance, and Contributor terms

• Borrowers can rescind within three business days of loan consummation, notice delivery, or disclosure statement delivery
• Loans to purchase a primary residence are exempt from the right of rescission
• the right is applicable to refinances, HELOCs, and home equity loans
• If lenders do not provide rescission notices can extend for three years with missing APR, payment schedule, finance charges, etc discloseure
• The FTC addresses HOEPA loan regulations with high interest rates/excessive fees, also known as Section 32 mortgages
• HOEPA sets guidelines and requires disclosures and housing counseling
• High-cost mortgages must include: Purchase-money mortgages, Refinances, Closed-end home equity loans, Open-end credit plans

High-cost/higher-priced loans

• The APR for homeowner mortgages that exceed the AOPR depending on their lien type
• 1.5% or more for first-lien mortgages
• 2.5% or more for jumbo loan mortgages.
• 3.5% or more for subordinate-lien mortgages
• Those with HOEPA have an APR that exceeds the APOR by:
• 6.5% for first-lien transactions
• 8.5% if the first lien is less than $50k
• Also, transactions that rate at 8.5% for junior transactions
• High rate HOEPA can not include:
• Balloon payments for loans less than five years,
• Default or negative amortization rates higher than normal, and calculated interest rebate

Compensation and Integrated Disclosure Rules

• Regulation Z sets rules for MLO compensation when originating mortgage loans
• Compensation from borrowers and other parties from any trasaction is prohibited
• Compensation that gives MLOs incentives to steer borrowers into a certain type of loan with the purpose of profit is prohibited
• The purpose of the Integrated disclosure rule is to make desclosues uniform and easy for consumer access

TILA-RESPA Intergrated Diclosure Rule

• Dodd-Frank Act established TRID in 2015 to ensure that all desclosures are open, accessible, and easy to understand
• The TILA and RESPA were changed to combine all information into a streamlined set of forms that consist of Loan Estimates (LE) and Closing Disclosures (CD)
• Transaction loans that are excempt from TRID rules include Reverse mortgages, Home Equity Lines of Credit (HELOCs), Loans secured by non real propery mobile home, or dwelling that is NOT attached to real property
• Loan estimates facts consists of containing The loan amount, The locked rate, Projected payments, Mortgage loan specifics, Total interest percentage (TIP)
• Estimated closing costs that exceed LE charges are typically not in good faith
• Fees include include fees paid to the creditor, mortgage broker, or an affiliate of the creditor or mortgage broker, as well as transfer taxes and fees paid to a third party if the creditor didn't allow the borrower to shop for a provide
• Consummation is defined by when a consumer becomes contractually obligated to the lender for the loan term

Guidelines

• LEs are not mandatory, but still required for consumers applying for a mortgage
• Closing Disclosures(CD) will provide disclousres about the actual transaction costs which feature borrower paid fees versus seller paid fess
• Consumers are guaranteed a right to a copy of any loan application, within three business days
• Lenders must provide a CD that is three business days before the conclusion date, or earlier

MLO Action Guidelines

• The N/A cannot be applied to mortage estimates for a loan, there are circumstances where spaces have to be left blank such as lack of knowledge of a wholesale lender
• Most common violations are incomplete disclosures so MLOs need to create a program that actively trains, and monitors information for employees
• Revised estimates charges can made when under "change of circumstances" which include
• An event occurs, was changed or has been innacurate
• Ineligible consumers are denied an estimated rate/changes to the borrower's credit
• A rise in interest rates can affect estimated changes as well, and requires discloser of changes within three days
• The following include escrow, servicing and payment notices, which are mandatory disclosure agreements to the consumer

Borower Right of RECISSISON

• For both refinance and new borrowing applications a consumer has to be given the right to withdraw the the agreement without question
• Under regulation Z, business days include satury, and the right of rescission.
• Annual Escrow statments must be provided annuall to consumers with information involving deficits or surplas.

Other federal Laaws And guildlines

• HMDA states institutions meeting community and houseing needs by providing voluntary data on race, gender, ethnicity, sex, and location
• regulation C applies to any institution that provides mortgage laons
• All public HMDA data is public

FCRA , FACTA, and Red Flag Rules

• The fair credit act protects consumers by protecting all personal information collected by creditors
• Both the FCRA and FACTA provide and regulate the CFPB
• The FCRA requires employers to notify a creditor of any credit, job denial and insurence
• The FACTA provides no cost credit reports for a borrower, and consumers are aloud to place an alert on a file if something comes into question

Federal Trade Commission

• The federal commission protects consumes by defining what constitutes as theft
• theft covers stealing consumers personal infomation to be used as fraudulenty
• rules apply to creditors/leenders who open accounts for them
• These institutions and crditors are resposible for implemtning a program to ensure warnings on the file are handled properly

Bank and Secrecy Act and MLO protection

• money laundering, or generating illigitimte money creates issues within mortgage lending
• the MLO must report the federal governement to fight fraud with the BSA
• The BSA ensures that if financial institiions report crimes with the FinCEN system , government activity will reduce, and prevent money laudnering from terroristic and criminal acts

GrammLeach-Bliley Act (GLBA)

• The financial services modernisation protects customers who use limited and used data which enables and assists customers
• the GLBA defines customers by their data

There are three rules for consumer Financial Privacy under GLBA

• the saffegaurds , or security of consumer/financial information
• the privacy rule whic requires institutions to give noticaes to consumers that allow for opt outs
• the pretexing rule that protects user info attacks

Federal Commission Act

• Federal communications allow users access to automatic messages which is part of the national dnc registry
• telemarketer are illegal under rule, which permit certain businesses to contact consumers while following through with the rules and codes for business conduct
• a fine for violations of telecalling , can be up to $46,517

Avertising Acts

• Advertising and marketing must follow regulations that the CFPB will apply while explicicily promoting the code of conduct, within the marketing sector
• All persons are subjected to these rules, agencies that act within the sphere
• Examples Include :Intreset, APR, products, prices, fees and prepayments

Comerce Act

• Electronic signatures are subject to consumer rights with access to electronic doccuments
• States cannot require users and customers to implement this act until the user has been granted access
• Consumers are guaranteed a right to information and access

USA PATRIOT Act

• All names for actions that prevent terrorism within the uniter States have the code name Patriot
• To ensure action, a barrow's identity has to be verified to ensure no activities or fraud happens
• The BSA follows the actions of the Patriot Act
• Lenders are subject to identifing programs to verigy user securitys such as name , Bday, adress and ID
• instiutions are meant to facilitate ongoing activity and records to ensure protection from threats

Borrowers Right

• The home owner act that requires the cancellation of an insurance premium is required of every agent

Frank and Regulatory Action

• Acts are made in response to the issues that happen in the market as a byproduct of actions, loans and events
• New enforcements ensure that actions are in the sphere for smaller institutions that are in compliance with existing code

Fair Pricing

• Ensures that both lenders and borrowers operate and are protected with fair lending processes

CFPB

• Agencies, enforce fairness with financial and lending products to consumers
• This extends to maintaining a database with compliance for enforcing code

HOUSING

The United Housing Program ensures fair hosing with acts in place