Chapter 16
Sam is selling one of his rental homes. His advertisement reads: "For Sale By Owner - Owner Will Finance - No Down Payment!" What are the criteria for being considered a creditor under Truth in Lending?
A lender must lend funds 25 times a year and/or must lend the funds for at least five housing loans annually.
What is the true purpose of Truth in Lending Law?
Disclosure
What is included in the APR?
The total finance charge to the total amount to be financed.
What are the steps set forth for a real property securities dealer? Which Article do the regulations fall under?
Obtaining a Commissioner's Permit; an RPSD endorsement on a broker license; and proof of a $10,000 surety bond. The regulations fall under Article 6.
Under Article 7, what is the maximum amount that may be charged to the borrower for loan costs and expenses? Also, under Article 7, if the home is not occupied by the owner, under what circumstance is the loan exempt from a balloon payment?
The maximum amount that may be charged to the borrower for loan costs and expenses is 5% of the loan, or $390.00, to a maximum of $700.00. If the loan term is less than three years, and the home is not occupied by the owner, the loan is exempt from balloon payments.
Lily, a licensee, has been referring her first-time home buyers to Safe Insurance Company for all of their insurance needs. The insurance company has been providing Lily with "motivation" in the form of cash to keep the referrals coming. Which law or act prohibits this type of violation?
Respa
Beverly, an African-American woman, has applied for a mortgage on a new home. She has a reliable job as a court reporter and has been employed for ten years. Her income is substantial enough to pay a mortgage, in her budget, and still have seventy percent of her income remaining. She has, however, been at least ninety days late on several bills one year ago. Beverly has since caught up on her credit card bills, paid them on time, and reduced their balances by half. She has just been turned down for a mortgage by her bank. Has she been discriminated against?
No. Beverly's brush with delinquency is too fresh on her record for the bank to issue a mortgage. Although she has taken the steps to correct the issues, ninety days late on several debts is substantial. She more than likely did not meet the bank's financial requirements
Deanna is thinking of taking the step from renter to homeowner. She has a very stable position as a surgical nurse and excellent credit. She doesn't, however, have a large sum of cash handy for the down payment. One Sunday morning, she notices advertising for new condos where "no down payment is required." Should she look for any other information in the ad?
Yes, she should make sure the amount or percentage of down payment is there; terms of repayment; annual percentage rate and if an increase is possible; total finance charge; and total number of payments and due dates.
Jacinda makes collections on real estate loans. Last year, she made approximately 20 collections and collected $38,000. Must Jacinda be licensed?
Yes, if a collector makes more than ten annual collections, or collects more than $40,000, he/she must be licensed as a California real estate broker.
Jim and Kim Scott have been working very hard to rebuild their credit. They are now in good financial shape to buy their first home. The couple has been working with a mortgage broker, Ted, to assist them in finding the best loan. They complete the application, are approved for a loan, complete other paperwork, and are now obligated to complete the loan. A week before they are due to close, they receive the Mortgage Disclosure Statement, outlining all of the costs and terms associated with the loan. The costs and terms are not what they had previously understood. Are they stuck with this loan?
No, the Mortgage Disclosure Statement should have been presented to them within three days of the broker's receipt of their written loan application, or before the Scotts were obligated to take the loan.
