Mortgage Loan Disclosures Chapter 9

Study Notes

Purpose of RESPA Disclosures

Aims to empower buyers with information for informed decision-making about settlement services.
Does not focus on setting maximum or minimum settlement costs or increasing broker profits.

Settlement Procedures Act Objectives

Enacted to eliminate kickbacks in real estate transactions.
Ensures advance notice of costs for borrowers.
Addresses the reduction of impound account requirements.

Coverage of RESPA Disclosures

Applies to federally related loans.
Includes transactions involving one-to-four residential units.
Covers purchase loans as well as other types of federally related loans.

Exempt Transactions from RESPA

Home improvement loans are not subject to RESPA requirements.
Refinancing loans without a change in title are exempt.
Sale transactions involving 50 acres of land qualify for RESPA exemptions.

RESPA Non-Applicability

Loan assumptions are excluded from RESPA.
Nonresidential properties do not fall under RESPA regulations.
Residential units with five or more units are not subject to RESPA.

Right to Uniform Settlement Statement

Buyers can access the Uniform Settlement Statement the business day before settlement.
The statement is not available at the time of loan application or within the first seven days after settlement.

Section of RESPA on Kickbacks

Kickbacks are prohibited under Section 8 of RESPA.
Regulation Z and Section 32 are related to other consumer protection laws but not specifically kickbacks.

California Attorney General's Opinion

Brokers prohibited from compensating salespersons for referrals related to broker-controlled services.
Referral fees from brokers to other brokers are restricted.
Controlled business arrangements do not allow brokers to employ salespersons.

Adjustable Rate Loans Comparison

Challenge in comparing adjustable-rate loans due to variations in margins, caps, and adjustment periods.
These factors influence overall interest rates and payment structures.

Calculating Interest Rates for Adjustable Rate Loans

Given an index of 7.25% and a margin of 2.25%, the resulting interest rate is 9.5%.

Description

This quiz covers the important concepts and regulations related to additional mortgage loan disclosures, particularly under the Real Estate Settlement Procedures Act. Participants will test their understanding of the purposes of the disclosures and the aims of the Settlement Procedures Act.