MyMortgage Trainer Flashcards Review 1

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Questions and Answers

How long should you keep mortgage loan records under ECOA?

25 months

How long is the Do Not Call Registry good?

When the number is disconnected, reassigned or when the consumer chooses to remove it

How many months cushion are allowed under the escrow account rules?

2 months cushion

When are escrow accounts reviewed and what amount of overage could cause a refund to the borrower?

Reviewed annually and if the account has more than $50 in overage it will be refunded Signup and view all the answers

What properties are covered under RESPA?

Single, 1-4 family dwellings, condos and manufactured homes placed on a lot Signup and view all the answers

RESPA imposes restriction on what?

Amount collected for escrow accounts Signup and view all the answers

When advertising, when must the APR be present?

A rate is quoted or present Signup and view all the answers

What was RESPA put in place to accomplish?

Limit amounts in escrow, eliminate kickbacks and educate borrowers on closing costs; it does not regulate interest rates Signup and view all the answers

According to RESPA guidelines, failure to comply with Section 8 could result in a penalty of what?

$10,000 and/or 1 year prison terms for each incident Signup and view all the answers

Redlining is best defined as?

Failing to lend to certain geographic areas Signup and view all the answers

Who created and monitors a company's Red Flag Rules?

Federal Trade Commission (FTC Red Flag Rules) Signup and view all the answers

At what point in a conventional loan will the PMI be removed?

When the principal balance reaches 78% of the original value of the purchase price Signup and view all the answers

When does a referring party have to provide the ABA form to the borrower?

At the time of the referral Signup and view all the answers

Advertising a mortgage loan product that a lender is not able to offer is a violation of what federal law?

TILA Regulation Z Signup and view all the answers

What Act requires financial entities to provide customers with a privacy note and an 'Opt Out Notice' regarding their Personal Information?

Gramm-Leach Bliley Act (GLBA) Signup and view all the answers

Under the GLB Act, nonpublic information can only be shared with affiliates of the financial institution or affiliates of related third parties, even if the customer does not opt out.

True Signup and view all the answers

What information must be provided to the borrower when referrals take place between affiliated businesses?

An Affiliated Business Disclosure Statement as mandated in RESPA Signup and view all the answers

What is the primary purpose of the Gramm-Leach Bliley Act?

Notice of right to financial privacy and right to opt out of sharing personal information Signup and view all the answers

Along with the Fair and Accurate Credit Transactions Act Disposal Rule, what provision of the GLB Act ensures customers' information is handled properly?

GLB Act's Safeguards Rule Signup and view all the answers

What is the difference between the GLB Act Safeguards Rule and the FACT Act Disposal Rule?

GLB Act's Safeguards Rule requires all companies to design, implement and maintain safeguards to protect customer information from theft; FACT Act requires businesses to make appropriate measures to safeguard against theft in the disposal of consumer report Signup and view all the answers

What is a 'Federally Related Loan'?

Loans secured by a first or subordinate lien on residential property that meets stated RESPA criteria. The definition is so broad it covers virtually every home loan secured by a mortgage Signup and view all the answers

Most of HUD's enforcement actions result due to section 8 of RESPA. What is addressed in Section 8?

Prohibited against giving or receiving a fee, kickback, or anything of value pursuant to an agreement or understanding for the referral of settlement business Signup and view all the answers

What is an affiliated business arrangement?

An arrangement in which one person refers applications to a settlement service provider with whom the referring person has an ownership interest of 1% or more Signup and view all the answers

What customer protection does Section 10 of RESPA provide?

Protect consumers by ensuring borrowers know the amount they are to deposit into escrow by preventing lenders from overcharging borrowers for escrow deposits Signup and view all the answers

What are the consequences for violating Section 8 of RESPA?

Up to $10,000 and/or 1 year in prison terms Signup and view all the answers

Study Notes

Mortgage Loan Record Keeping

ECOA requires mortgage loan records to be kept for 25 months.

Do Not Call Registry

The Do Not Call Registry remains effective until the number is disconnected, reassigned, or the consumer opts out.

Escrow Account Rules

A 2-month cushion is permitted under escrow account regulations.
Escrow accounts are reviewed annually; refunds occur if overage exceeds $50.

Properties Covered Under RESPA

RESPA covers single-family homes, 1-4 family dwellings, condominiums, and manufactured homes placed on a lot.

RESPA Restrictions

RESPA limits the amount that can be collected in escrow accounts.

Advertising Regulations

Annual Percentage Rate (APR) must be included in any advertisement quoting a rate.

Purpose of RESPA

RESPA aims to limit escrow amounts, eliminate kickbacks, and educate borrowers on closing costs; it does not regulate interest rates.

Penalties for Violation of RESPA

Noncompliance with Section 8 can result in a $10,000 fine and/or a maximum of 1 year imprisonment per incident.

Redlining Definition

Redlining refers to the practice of denying loans based on geographic areas.

Red Flag Rules Oversight

The Federal Trade Commission (FTC) created and monitors the Red Flag Rules.

PMI Removal in Conventional Loans

Private Mortgage Insurance (PMI) is removed when the principal balance reaches 78% of the original purchase price.

Affiliated Business Arrangement Disclosure

The Affiliated Business Disclosure Statement must be provided at the time of referral between affiliated businesses.

TILA Regulation Z

Advertising a mortgage loan product that a lender cannot offer violates TILA Regulation Z.

Gramm-Leach Bliley Act (GLBA) Requirements

GLBA mandates financial entities to deliver a privacy notice and an "Opt Out Notice" concerning customers' personal information.

Under the GLB Act, nonpublic information can only be shared with affiliated entities or third parties if customers do not opt out.

Borrower Information During Referrals

An Affiliated Business Disclosure Statement must be provided to borrowers during referrals per RESPA guidelines.

GLBA Primary Purpose

The GLBA is focused on notifying customers of their financial privacy rights and opting out options regarding personal information sharing.

Safeguards Rule Under GLBA

The GLB Act's Safeguards Rule requires companies to implement measures to protect consumer information from theft and ensure proper disposal.

Safeguards Rule vs. FACT Act Disposal Rule

The Safeguards Rule obligates companies to maintain robust customer information protection, while the FACT Act focuses on safeguarding information during disposal.

A Federally Related Loan is secured by residential property and meets specific RESPA criteria; it covers most home loans.

Section 8 of RESPA

Section 8 prohibits giving or receiving fees, kickbacks, or anything of value related to the referral of settlement services.

Affiliated Business Arrangement

An affiliated business arrangement occurs when a person refers applications to a settlement service provider in which they have a 1% or more ownership interest.

Section 10 of RESPA Consumer Protection

Section 10 protects consumers by ensuring they are informed about escrow deposit amounts, preventing lenders from excessive charges.

Consequences for RESPA Section 8 Violations

Violating Section 8 can lead to penalties of up to $10,000 and/or incarceration for 1 year.

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Description

Test your knowledge on mortgage regulations and key terms with this flashcard review. Learn about ECOA record retention, the Do Not Call Registry, and escrow account rules effectively. Perfect for mortgage professionals or students preparing for industry exams.