CHAPTER 1

Ability to Repay and Qualified Mortgage Rule

AFTER THE MELTDOWN OF 2007, BORROWERS WERE ALLOWED TO OBTAIN MORTGAGE LOANS W/O SHOWING PROOF OF INCOME. AKA NO-DOC RO STATED INCOME LOANS; IN ESSENCE IF APPLICANT HAD DECENT CREDIT SCORE HE WAS APPROVED FOR A LOAN W/O MUCH INFO TO PROVIDE. LENDERS MUST REQUIRE PROOF OF A BORROWER'S ABILITY TO REPAY A MORTGAGE LOAN. A QUALIFIED MORTGAGE IS ONE THAT FOLLOWS STATED GUIDELINES INTENDED TO REDUCE A LENDER'S POTENTIAL LIABILITY. THESE LOANS HAVE NO BALLOON OR INTEREST-ONLY MORTGAGES, POSITIVE AMORTIZATION, MAX 30 YR TERM, MAX 3% POINTS AND FEES, AND A MAX 43% DEBT-TO-INCOME (FHA, VA, AND USDA LOANS DONT HAVE TO CONFORM TO THIS RATIO UNTIL 2021.

Electronic Signatures in Global and National Commerce Act (e-sign act)

ALLOWS ELECTRONIC RECORDS AND SIGNATURES TO BE VALID WHENEVER A REGULATION REQUIRES A DOC TO BE IN WRITING AS LONG AS THE CONSUMER HAS CONSENTED TO ITS USE.

ESCROW

ANNUAL ESCROW STATEMENT: MUST BE SENT TO THE BORROWER YEARLY; SUMMARIZES THE ACTIVITY IN ESCROW ACCOUNT LENDERS MAY REQUIRE A CUSHION THAT DOESN'T EXCEED AN AMOUNT EQUAL TO 1/6 OF THE TOTAL DISBURSEMENTS FOR THE YEAR IN ORDER TO PROTECT THEMSELVES FROM ESCROW SHORTAGES. WHEN CONSUMER REQUEST S CANCELLATION OF THEIR ESCROW ACCOUNT, LENDER MUST DELIVERY ESCROW CLOSING DISCLOSURE NO LATER THAN 3 BUSINESS DAYS BEFORE CLOSING. IF ESCROW ACCOUNT IS CLOSED FOR SOME OTHER REASON (EXCEPT DEFAULT OR TERMINATION CAUSED BY REFINANCING, REPAYMENT, OR RESCISSION), THE NOTICE MUST BE SENT 30 BUSINESS DAYS PRIOR TO CLOSURE. LENDERS MUST RETAIN THE CLOSING DISCLOSURE AND RELATED DOCS FOR 5 YRS, THE LOAN ESTIMATE FOR 3 YRS, AND THE ESCROW CANCELLATION NOTICE AND PARTIAL PAYMENT POLICY FOR 2 YRS AFTER LOAN CONSUMMATION.

Mortgage Assistance Relief Services (MARS)

APPLIES TO NEGOTIATORS ASSISTING BORROWERS W/ MORTGAGE LOAN MODIFICATION. HELPS TO PROTECT DISTRESSED HOMEOWNERS FROM FORECLOSURE-PREVENTION SCAMS THEY AREN'T ALLOWED TO COLLECT UPFRONT FEES, AND THE BORROWER MAY CANCEL THE AGREEMENT W/ NEGOTIATOR AT ANY TIME W/O PENALTY.

Annual Percentage Rate (APR)

APR REFLECTS TOTAL FINANCING RATE. APR=INTEREST RATE + OTHER LOAN FINANCING COSTS. APR=TRUE YEARLY COST OF BORROWING. THIS IS A FINANCE FEE THE BUYER WOULD NOT PAY IF IT WERE A CASH DEAL. EX: WIRE TRANSFERS AND MORTGAGE INTEREST PAYMENTS CONTRIBUTE TO THE CALCULATION OF THE APR WHILE HAZARD INSURANCE AND HOME INSPECTIONS DO NOT. APR DISCLOSURE MUST OCCUR W/IN 3 BUSINESS DAYS OF RCVING ADJUSTABLE SIGNED LOAN APPLICATION OR AT LEAST 7 DAYS BEFORE CLOSING. APR IS FINALIZED AT LEAST 3 BUSINESS DAYS BEFORE CLOSING. IF APR QUOTED INCORRECTLY BY MORE THAN 1/8% ON A FIXED-RATE LOAN, IT MUST WE RE-DISCLOSED BEFORE SETTLEMENT IF APR QUOTED INCORRECTLY BY MORE THAN 1/4% FOR AN ADJUSTABLE-RATE LOAN, IT MUST BE RE-DISCLOSED BEFORE SETTLEMENT. TILA STATES THAT IF ANY TRIGGERING TERM IS SPECIFIED, THEN APR, THE AMOUNT, AND TERMS OF REPAYMENT MUST BE DISCLOSED.

Equal Credit Opportunity Act (ECOA=REG B)

ENFORCED BY CFPB PROHIBITS DISCRIMINATION BY LENDERS IN ANY PART OF CREDIT TRANSACTION ON THE BASIS OF RACE, COLOR, RELIGION, NATION ORIGIN, SEX, MARITAL STATUS, AGE(AS LONG AS THEY ARE MINIMUM LEGAL AGE), RECEIPT OF INCOME FROM A PUBLIC ASSISTANCE PROGRAM OR HAVING EXERCISED ANY RIGHTS UNDER THE CONSUMER CREDIT PROTECTION ACT. SPECIFIES THAT BORROWER IS ENTITLED TO COPY OF RESIDENTIAL PROPERTY APPRAISAL REPORT AT LEASE 3 BUSINESS DAYS BEFORE CLOSING. BECAUSE OF THIS ACT... LENDERS CANNOT ASK IF BORROWER IS WIDOWED OR DIVORCED. THEY CAN ONLY ASK MARRIED, UNMARRIED, OR SEPARATED. ECOA DICTATES THE COLLECTION OF DEMO INFO IN ORDER TO MONITOR THE LENDERS' COMPLIANCE W/ THE LAW. ON THE BOTTOM OF 3RD PG OF 1003 LOAN APPLICATION THE INTERVIEWER MUST SPECIFY APPLICANT'S RACE, ETHNICITY, AND SEX WHEN LOAN APPLICATION IS FACE TO FACE. EVEN IF APPLICANT DECLINES THE LOAN ORIGINATOR MUST GUESS BASED ON APPEARANCE OR LAST NAME. LENDER HAS 30 DAYS AFTER RECEIPT OF APPLICATION, TO NOTIFY APPLICATION OF ITS ACTION ON APPLICATION. APPLICANT CAN REQUEST STATEMENT OF REASONS W/IN 60 DAYS OF RECEIVING ORIGINAL ADVERSE NOTICE. NOTIFICATION OF ADVERSE ACTION MUST BE IN WRITING... PHONE CALL IS NOT SUFFICIENT. LENDER HAS 30 DAYS AFTER APPLICANT'S REQUEST FOR AN ADVERSE STATEMENT, TO PROVIDE THE INFO. IF THERE ARE MULTIPLE CO-SIGNERS, THE ECOA ADVERSE ACTION NOTION NEEDS TO BE ONLY SENT TO THE PRIMARY BORROWER. THE LOAN ORIGINATOR MUST GUESS THE ETHNICITY, RACE AND SEX OF AN APPLICANT IF THE DECLINE TO PROVIDE INFO ON THE 1003 FORM. ECOA REQUIRES AN APPLICATION MUST BE RETAINED FOR 25 MONTHS FROM THE DATE A LOAN ACCEPTANCE OR DENIAL NOTIFICATION IS SENT TO THE APPLICANT.

Fair Credit Reporting Act (FCRA)

ENFORCED BY FEDERAL TRADE COMMISSION. TO PROTECT AN INDIVIDUAL'S PRIVACY RIGHTS AND TO ENSURE ACCURATE AND FAIR CREDIT REPORTING. MUCH OF THE LAW REGULATES THE ACTIONS OF CREDIT REPORTING AGENCIES (CRA) THAT COMPILE DATABASES OF INFO RCVD FROM CREDITORS AND THE RIGHT OF CONSUMERS TO DISPUTE INCORRECT INFO. 3 NATIONAL CREDIT REPORTING AGENCIES: EXPERIAN, TRANSUNION, AND EQUIFAX. LENDERS MUST NOTIFY AN APPLICANT WHEN LOAN IS DENIED (ADVERSE ACTION) BECAUSE OF INFO CONTAINED ON CREDIT REPORT AND PROVIDE APPLICANT W/ CONTACT INFO OF THE CRA. BANKRUPTCIES CAN BE KEPT IN CREDIT REPORT FOR 10 YEARS TAX LIENS CAN BE KEPT IN CREDIT REPORT FOR 7 YEARS FROM THE TIME THEY WERE PAID. EX OF CREDITORS: CREDIT CARD COMPANIES, AUTO FINANCING COMPANIES, AND MORTGAGE LENDER. WHO CAN USE CREDIT INFO: CREDITORS, INSURERS, EMPLOYERS, AND OTHER BUSINESS THAT USE THE REPORT TO EVALUATE APPLICATIONS IF LENDER TAKES ADVERSE ACTION THE BORROWER CAN ASK FOR REPORT W/IN 60 DAYS OF RCVING NOTICE OF ACTION. NATION CREDIT SCORE DISCLOSURE WILL GIVE APPLICANT NAME, ADDRESS, AND PHONE NUMBER OF CRA. CONSUMERS SHOULD CONTACT LENDER IF THEY HAVE QUESTIONS ABOUT THEIR APPLICATION, AND THEY SHOULD CONTACT CRA IF THEY HAVE QUESTIONS REGARDING CREDIT SCORES. POSSIBLE FICO SCORES 300-850

Fair Housing Act

ENFORCED BY HUD AND CREATES THE FOLLOWING 7 PROTECTED CLASSES OF INDIVIDUALS WHO CANNOT BE LEGALLY DISCRIMINATED AGAINST RESIDENTIAL HOUSING TRANSACTIONS: RACE, COLOR, RELIGION, SEX, NATION ORIGIN, DISABILITIES (HIV/AIDS), FAMILIAL STATUS.

Do-Not-Call Registry

ESTABLISHED BY FEDERAL COMMUNICATION COMMISSION (FCC) AND THE FEDERAL TRADE COMMISSION (FTC) TELEMARKETERS AND SELLERS ARE REQUIRED TO SEARCH THE REGISTRY AT LEAST ONCE EVERY 31 DAYS AND DROP CALLS FROM THEIR LIST OF CONSUMERS WHO HAVE REGISTERED. VIOLATORS OF TELEMARKETING MAY BE SUBJECT TO FINES UP TO $42,530 PER VIOLATION. THE NATIONAL REGISTRY DOES NOT LIMIT CALLS BY POLITICAL ORGANIZATIONS, CHARITIES, OR TELEPHONE SURVEYORS. A COMPANY W/ A CONSUMER THAT HAS AN ESTABLISHED BUSINESS RELATIONSHIP MAY CALL FOR UP TO 18 MONTHS AFTER LAST PURCHASE, LAST DELIVERY, OR LAST PAYMENT UNLESS CONSUMER REQUESTS NOT TO CALL AGAIN. IF CONSUMER MAKES AN INQUIRY OR SUBMITS APPLICATION TO A COMPANY, THE COMPANY CAN CALL FOR 3 MONTHS. A SELLER OR TELEMARKETER COULD BE LIABLE FOR PLACING ANY TELEMARKETING CALLS (EVEN IF NOT ON LIST) UNLESS THE SELLER HAS ACCESSED REGISTRY AND PAID THE FEE, IF REQUIRED. REGISTRATION FOR AN INDIVIDUAL IS FREE AND THEY CAN ENTER 3 PHONE NUMBERS MAX. SAFE HARBOR: IF A MISTAKE WAS MADE A COMPANY WONT BE LIABLE IF THEY HAVE A WRITTEN DO-NOT-CALL POLICY, TRAIN EMPLOYEES, MAINTAINED INTERNAL LIST OF CUSTOMERS WHO REQUESTED NOT TO BE CALLED, AND REVIEW REGISTRY EVERY 31 DAYS. MUST PROVE THAT CALL WA MADE IN ERROR. TELEMARKETERS VIOLATIONS: CALLING BEFORE 8AM OR AFTER 9PM, LEAVING MESSAGE W/O PHONE NUMBER, COMPANY DOES NOT IDENTIFY ITSELF, LEAVING PRE-RECORDED COMMERICAL MESSAGE W/O ESTABLISHED BUSINESS RELATIONSHIP OR PERMISSION TO CALL, OFFERING DEBT-REFIEF SERVICES W/O DETAILS DO-NOT-FAX UNLESS BUSINESS RELATIONSHIP ESTABLISHED, FAX NUMBER IS PUBLIC INFO, ADVERTISEMENT HAS CLEAR OPT-OUT INSTRUCTIONS ON 1ST PAGE.

The Fair and Accurate Credit Transaction Act (FACT Act) of 2003

EXTENSION OF THE FAIR CREDIT REPORTING ACT. THE INCREASE IN IDENTITY THEFT WAS ONE OF THE DRIVING FORCES OF THIS LAW THEREFORE, IT ALLOWS EVERY INDIVIDUAL TO HAVE A FREE COPY OF THEIR CREDIT REPORT ONCE A YR FROM EACH CRA. IF SOMEBODY FEELS THAT THEY HAVE BECOME A VICTIM OF IDENTITY THEFT , THEY CAN CALL ANY ONE OF THE CRA AND AN ALERT WILL BE PLACED ON ALL 3 CRA FOR LENDER TO TAKE ADDITIONAL STEPS TO VERIFY IDENTITY OF CONSUMER. INITAL ALERT IS GOOD FOR 90 DAYS AND ALLOWS 1 FREE CREDIT REPORT DURING THAT TIME. IF CONSUMER FILES A REPORT W/ LAW ENFORCEMENT AGENCY THE REQUEST CAN STAY FOR 7 YEARS ALLOWING THEM TO HAVE 2 FREE CREDIT REPORTS ANNUALLY. RED FLAGS RULE: REQUIRES FINANCIAL INSTITUTIONS AND CREDITORS TO DEVELOP AND IMPLEMENT WRITTEN IDENTITY THEFT PREVENTION PROGRAMS. THIS PROVIDES FOR THE IDENTIFICATION, DETECTION, AND RESPONSE TO PATTERNS, PRACTICES, OR SPECIFIC ACTIVITIES--KNOWN AS "RED FLAGS"--THAT COULD INDICATION IDENTITY THEFT. FINANCIAL INSTITUTIONS AND CREDITORS MUST DEVELOP A WRITTEN PROGRAM FOR THIS. PROGRAM MUST DESCRIBE APPROPRIATE RESPONSES THAT WOULD PREVENT AND MITIGATE THE CRIME AND DETAIL A PLAN TO UPDATE THE PROGRAM. THIS PROGRAM MUST BE MANAGED BY THE BOARD OF DIRECTORS OR SENIOR EMPLOYEES OF THE FINANCIAL INSTITUTION OR CREDITOR AND INCLUDE APPROPRIATE STAFF TRAINING AND OVERSIGHT OF ANY SERVICE PROVIDERS. EQUIPMENT FOR RECEIPTS TO PRINT ONLY LAST 5 DIGITS OF CC#. CRA WILL PRINT LAST 4 DIGITS OF SSN. IF CONSUMER MISSES OR MAKES PARTIAL PAYMENTS THE CREDITOR MUST NOTIFY INDIVIDUAL W/IN 30 DAYS AFTER REPORTING INFO TO CREDIT BUREAU.

The Gramm-Leach-Bliley Act (GLB ACT)

FEDERAL TRADE COMMISSIONS ENFORCES LAW INCLUDES PROVISIONS TO PROTECT CONSUMER PERSONAL FINANCIAL INFORMATION HELD BY FINANCIAL INSTITUTIONS REQUIRES COMPANIES TO GIVE CONSUMERS PRIVACY NOTICES THAT EXPLAIN THE INSTITUTIONS' INFORMATION-SHARING PRACTICES. CONSUMERS HAVE THE RIGHT TO LIMIT SOME OF THE SHARING OF THEIR INFORMATION. REQUIRES ALL FINANCIAL INSTITUTIONS TO DESIGN, IMPLEMENT AND MAINTAIN SAFEGUARDS TO PROTECT CONSUMER INFO

Home Ownership and Equity Protection Act of 1994 (HOEPA)

HOEPA AMENDS THE TRUTH IN LENDING ACT AND ESTABLISHES REQUIREMENTS OF CERTAIN LOANS W/ HIGH RATES AND/OR HIGH FEES FOR CERTAIN LOANS ON PRIMARY RESIDENCES. "SECTION 32 MORTGAGES" THESE LOANS ARE ENFORCED BY THE CFPB. COVERED LOANS: PURCHASE MONEY MORTGAGES, HOME EQUITY LOANS, AND REFINANCES. EXEMPT LOANS: REVERSE MORTGAGES, FHA, VA, AND USDA LOANS, INVESTMENT PROPERTIES, AND NEW CONSTRUCTION LOANS. A HIGH-COST HOME LOAN IS ONE THAT CHARGES THE BORROWER 5%+ OF THE TOTAL LOAN AMOUNT FOR POINTS AND FEES. 10 HOUSING COUNSELING AGENCIES MUST BE LISTED ON THE HOUSING COUNSELING DISCLOSURES. 12 MONTHS IS MAX TERM FOR HOEPA BALLOON LOANS.

The Home Mortgage Disclosure Act (HMDA=REG C)

IMPLEMENTED BY THE FEDERAL RESERVE BOARD. THIS LAW REQUIRES MORTGAGE LENDERS TO REPORT VARIETY OF DEMOGRAPHIC INFO ABOUT THEIR BORROWERS. HMDA REQUIRES LENDING INSTITUTIONS TO REPORT PUBLIC LOAN DATA. ACT AS A WATCHDOG FOR UNCOVERING PATTERNS OF DISCRIMINATION IN LOCAL AND REGIONAL LENDING. OPPORTUNITY FOR THE IDENTIFICATION OF UNDERFUNDED COMMUNITIES THAT MIGHT BENEFIT FROM ALT TYPES OF LENDING. HDMA DOES NOT SET LENDING QUOTAS FOR PROTECTED CLASSES OF BORROWERS LENDING COMPANIES NEED TO CREATE LOAN APPLICATION REGISTER (LAR) AND ENTER INFO FOR EVERY APPLICATION RCVD. THIS REGISTRY GETS SUBMITTED TO THE FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL (FFIEC) EVERY YR WHO CHECK ALL DATA FOR ERRORS AND THEN PUBLISHES INFO ON INTERNET AND MAKES IT AVAILABLE ON CDS. ANY POSSIBLE DISCRIMINATION DETECTED MAY HAVE VIOLATED THE ECOA.

Mortgage Acts and Practices - Advertising (REG N)

IT IS ILLEGAL TO MISREPRESENT ANY LOAN TERMS IN A COMMERCIAL ADVERTISEMENT COPIES OF ALL COMMERCIAL COMMUNICATIONS AND SUPPORTING DOCUMENTS MUST BE KEPT FOR 2 YRS.

HUD-1 SETTLEMENT STATEMENT/CLOSING DISCLOSURE

ITEMIZES COSTS AND DISBURSEMENTS TO THE BUYER AND SELLER AND MUST BE MADE AVAILABLE UPON REQUEST BY THE BORROWER (FOR RESERVE MORTGAGES) 1 BUSINESS DAY BEFORE CLOSING. THE CLOSING DISCLOSURE MUST BE DELIVERED 3 BUSINESS DAYS BEFORE CLOSING. HUD-1/CLOSING DISCLOSURE IS NOT REQUIRED WHEN THERE IS NO FEDERALLY-RELATED LOAN OR NO CLOSING COSTS TO THE BORROWER OR FOR MOST CLOSED-ENDED LOANS. LENDERS HAVE 30 DAYS AFTER SETTLEMENT TO REFUND ANY PORTION OF CHANGES ON THE HUD-1/GFE THAT EXCEEDED ACCEPTABLE VARIANCES. THE REFUND TIMEFRAME IS 60 DAYS FOR LOAN ESTIMATE/CLOSING DISCLOSURE

The Bank Secrecy Act and Anti-Money Laundering Laws (BSA/AML)

LAWS PROTECT THE FINANCIAL STABILITY OF THE U.S. THE FINANCIAL CRIMES ENFORCEMENT NETWORK (FinCEN), WHICH IS PART OF THE U.S. DEPARTMENT OF TREASURY, ANALYZES SUBMITTED REPORTS AND USES THE INFORMATION TO INVESTIGATE POSSIBLE CRIMINAL ACTIVITY. LAW REQUIRES COMPANIES TO FILE A CURRENCY TRANSACTION REPORT W/ THE IRS FOR CASH PURCHASES EXCEEDING $10,000 IN 1 DAY. IT ALSO REQUIRES INDIVIDUALS TRANSPORTING MORE THAT $10,000 IN CASH IN OR OUT OF THE COUNTRY MUST FILE A REPORT W/ U.S. GOVERNMENT. SAR: BANK SECRECY ACT MUST ELECTRONICALLY FILE SAR IF IT DETECTS SUSPICIOUS OR ILLEGAL BEHAVIOR ON THE PART OF A CUSTOMER OR EMPLOYEE. MUST BE FILED W/IN 30 DAYS AFTER INITIAL DETECTION. IF NO SUSPECT IS IDENTIFIED THEY MAY DELAY FILING A SAR FOR AN ADDITIONAL 30 DAYS TO IDENTIFY A SUSPECT. HOWEVER, IT CANNOT BE DELAYED AFTER 60 DAYS. A SUSPICIOUS ACTIVITY REPORT (SARS) MUST BE KEPT STRICTLY CONFIDENTIAL AND EXISTENCE OR CONTENTS NOT DISCLOSED EVEN IF SUBPOENAED

Truth in Lending Act (TILA=REG Z)

PASSED BY CONGRESS IN 1968 AS PART OF CONSUMER CREDIT PROTECTION ACT. IMPLEMENTED BY FEDERAL RESERVE BOARD TO PROTECT CONSUMERS DURING CREDIT TRANSACTIONS. ADMINISTERED BY THE CONSUMER FINANCIAL PROTECTION BUREAU THIS REGULATION APPLIES TO RESIDENTIAL MORTGAGES (1-4 UNITS) AND DOES NOT INCLUDE COMMERCIAL OR OTHER NONRESIDENTIAL LOANS. THIS REGULATION COVERS 3 AREAS: DISCLOSURE OF FINANCING CHARGES (REVERSE MORTGAGES, EQUITY LINES OF CREDIT, MORTGAGES SECURED BY A MOBILE HOME AND DWELLINGS NOT ATTACHED TO LAND.. IT IS NOT USED IN MOST CLOSED-END TRANSACTIONS) DISTRIBUTION OF THE CONSUMER HANDBOOK ON ADJUSTABLE-RATE MORTGAGES BOOKLET AND THE RIGHT OF RESCISSION. TILA MAKES CONSUMERS INFORMED OF ALL EXTRA CHARGES SO THEY CAN COMPARE OFFERS BASED ON TOTAL CHARGES INSTEAD OF JUST LOOKING AT INTEREST RATE. (APR, FINANCE CHARGE, AMOUNT FINANCED, TOTAL AMOUNT PAID OVER LIFE OF THE LOAN) THE RIGHT OF RESCISSION: PROVIDES 3 BUSINESS DAY COOLING-OFF PERIOD FOR A CONSUMER WHO USES HIS PRIMARY RESIDENCE AS A SECURITY FOR A REFINANCE, HOME IMPROVEMENT, OR SECOND MORTGAGE LOAN... THE CONSUMER IS REQUIRED TO RCV NOTICE OF RIGHT TO RECIND WHICH STATES CONSUMER MUST NOTIFY LENDER IN WRITING THEIR DESIRE TO CANCEL AND ENSURE IT IS DELIVERED BEFORE MIDNIGHT OF 3RD BUSINESS DAY AFTER SIGNING LOAN APPLICATION. RESCISSION PERIOD DOES NOT APPLY TO 1ST MORTGAGE ON A PURCHASE PROPERTY. REFINANCE=APPLIES TO THE SATISFACTION OF AN EXISTING OBLIGATION AND ITS REPLACEMENT BY A NEW OBLIGATION. HIGH COST HOME LOANS HAVE THE FOLLOWING RESTRICTIONS: MOST BALLOON MORTGAGES ARE PROHIBITED; THE BORROWER MUST PROVE AN ABILITY TO REPAY LOAN, AND THE BORROWER MUST SPEAK TO A HUD-APPROVED COUNSELOR. LENDERS MIST REQUIRE A PROPERTY TAX AND HAZARD INSURANCE ESCROW ACCOUNT TO BE MAINTAINED FOR A MIN OF 5 YRS IF THERE IS A FIRST-LIEN HIGH-PRICED HOME LOAN. THE ACCOUNT CAN BE CANCELED AFTER 5 YRS IF THE LTV IS 80% OR LESS AND BORROW IS CURRENT ON PAYMENTS. HIGHER-PRICED LOANS ARE ONES IN WHICH THE APR EXCEEDS THE AVERAGE PRIME RATE BY AT LEAST 1.5% FOR FIRST-LIEN LOANS OR 2.5% FOR JUMBO LOAN OR 3.5% FOR SUBORDINATE LIEN AN ADDITIONAL APPRAISAL MAY BE REQUIRED IF A PROSPECTIVE PURCHASE IS A "FLIPPED" HOME WITH A HIGHER-PRICED MORTGAGE LOAN. FLIPS ARE DEFINED AS RESELLS W/IN 90 DAYS W. SELLER PAYING A MIN OF 10% PRICE INCREASE, OR RESELLS W/IN THE PASTED 91-180 DAYS W/ SELLER PAYING A MIN 20% PRICE INCREASE. HIGH COST HOME LOANS REQUIRE THE BORROWER TO OBTAIN HOUSING COUNSELING. TIL DISCLOSURE INCLUDES APR, FINANCE CHARGE, AMOUNT FINANCED, AND TOTAL AMOUNT TRUTH IN LENDING DISCLOSURE MUST BE DELIVERED AT LEAST 7 BUSINESS DAYS PRIOR TO FUNDING. THE TILA-RESPA INTERGRATED DISCLOSURE (TRID) RULE WENT INTO EFFECT AND MODIFIED DISCLOSURE REQUIREMENTS FOR MOST CLOSED-END LOANS, BUT NOT FOR REVERSE MORTGAGES. TRID LOAN ESTIMATE COMBINES INITAL TILA DISCLOSURE AND THE GFE TRID CLOSING DISCLOSURE COMBINES THE FINAL TILA DISCLOSURE AND THE HUD-1 THE LOAN ESTIMATE MUST BE DELIVERED OR MAILED NO LATER THAN THREE BUSINESS DAYS AFTER A LOAN APPLICATION IS SUBMITTED THE LOAN ESTIMATE MUST BE DELIVERED OR MAILED NO LATER THAN 7 BUSINESS DAYS PRIOR TO LOAN CONSUMMATION. THIS CAN BE WAIVED IF THE BORROWER HAS AN EMERGENCY LIKE IMPENDING FORECLOSURE AUCTION. CREDITORS MAY NOT REVISE LOAN ESTIMATE DUE TO TECH ISSUES, INCORRECT CALCULATIONS, OR LOW ESTIMATES. LENDER MUST ENSURE THAT THE REVISED LOAN ESTIMATE IS RCVD AT LEAST 4 BUSINESS DAYS PRIOR TO LOAN CONSUMMATION (MAILED AT LEAST 7 DAYS PRIOR) BORROWER MUST RCV CLOSING DISCLOSURE AT LEAST 3 BUSINESS DAYS BEFORE CONSUMMATION. THIS IS DIFF FROM THE HUD-1 REQUIREMENT. CHANGES IN APR, LOAN PRODUCT, OR THE ADDITION OF REPAYMENT PENALTY TRIGGER A REVISED CLOSING DISCLOSURE AND AN ADDITIONAL 3 BUSINESS DAY WAITING PERIOD. LENDERS OR CLOSING AGENTS PREPARE CLOSING DISCLOSURE. IF CHANGES TO BUYER OR SELLER PAYMENT OCCURS AFTER CLOSING, THE LENDER HAS 30 CALENDAR DAYS TO SEND A REVISED CLOSING DISCLOSURE. NON-NUMERIC CLERICAL ERRORS AND TOLERANCE VIOLATIONS TRIGGER A NEW CLOSING DISCLOSURE THAT MUST BE DELIVERED W/IN 60 CALENDAR DAYS FOLLOWING LOAN CONSUMPTION. LIKEWISE, CLOSING DISCLOSURE TOLERANCE REFUNDS MUST ALSO BE SENT W/IN 60 DAYS. LOAN ORIGINATORS SHOULD ENTER ZIP CODE(S) ON THE GFE/LOAN ESTIMATE IF UNKNOWN PROPERTY ADDRESS, AS MAY BE THE CASE WHEN REQUESTING LENDER'S PRE-APPROVAL. ACCORDING TO TILA, BUSINESS DAY IS EVERY DAY EXCEPT SUNDAY AND FEDERAL HOLIDAYS FOR DELIVERY OF 3 DOCS: CLOSING DISCLOSURE, ESCROW CLOSING DISCLOSURE, AND THE RIGHT OF RESCISSION.

U.S. Department of Housing and Urban Development (HUD)

PRIMARY FEDERAL AGENCY TASKED W/ CREATING AND MANAGING PROGRAMS TO PROVIDE QUALITY AFFORDABLE HOUSING, PREVENT HOUSING DISCRIMINATION, AND HELP BUILD SUSTAINABLE COMMUNITIES. HUD OVERSEES THE FEDERAL HOUSING ADMINISTRATION (FHA) AGENCY.

Real Estate Settlement Procedures Act (RESPA=REG X)

PROVIDES CONSUMER PROTECTION FOR LOANS ON RESIDENTIAL PROPERTIES (1-4 UNITS). PRIMARILY INVOLVED W/ THE DISCLOSURE OF CLOSING COSTS AND THE PREVENTION OF KICKBACKS, WHICH MAY ARISE THE AMOUNT OF CLOSING COSTS TO THE CONSUMER. CONSUMER FINANCIAL PROTECTION BUREAU ENFORCES RESPA REGULATIONS. HUD DID PREVIOUSLY. 4 PRE-SETTLEMENT DISCLOSURES: SPECIAL INFORMATION BOOKLET, GOOD FAITH ESTIMATE (GFE) OF SETTLEMENT COSTS FOR REVERSE MORTGAGES OR THE LOAN ESTIMATE FOR MOST CLOSED-ENDED LOANS, MORTGAGE SERVICING DISCLOSURE STATEMENT AND LIST OF HOUSING COUNSELING AGENCIES. THESE MUST BE SENT TO THE BORROWER W/IN 3 BUSINESS DAYS OF RECEIPT OF THE SIGNED APPLICATION. RESPA STATES THAT A SERVICING TRANSFER STATEMENT IS REQUIRED IF THE LOAN SERVICER SELLS OR ASSIGNS THE SERVICING RIGHTS TO A BORROWER'S LOAN TO ANOTHER LOAN SERVICER. PER RESPA, LOAN SERVICER MUST NOTIFY THE BORROWER W/IN 15 DAYS BEFORE THE EFFECTIVE DATE OF TRANSFER. AS LONG AS BORROWER MAKES TIMELY PAYMENT TO OLD SERVICER W/IN 60 DAYS OF TRANSFER, BORROWER CANNOT BE PENALIZED. OVERAGES OF $50+ DISCOVERED IN BORROWER'S ESCROW ACCOUNT DURING ANNUAL AUDIT ANALYSIS MUST BE REFUNDED TO BORROWER. RESPA REQUIRES 2 DISCLOSURES AT SETTLEMENT: THE HUD-1 SETTLEMENT STATEMENT (IF BORROWER HAS CLOSING COSTS FOR REVERSE MORTGAGE) OR THE CLOSING DISCLOSURE, AND THE INITIAL ESCROW STATEMENT, WHICH MAY BE GIVEN W/IN 45 DAYS PROHIBITS: A PERSON FROM GIVING OR ACCEPTING ANYTHING OF VALUE FOR REFERRALS OF SETTLEMENT SERVICE BUSINESS RELATED TO A FEDERALLY RELATED MORTGAGE LOAN OR ANY PART OF A CHARGE FOR SERVICES NOT PERFORMED. KICKBACKS=ILLEGAL REFERRAL FEES (SECTION 8) THIS IS ONLY ACCEPTABLE BETWEEN TWO REAL ESTATE COMPANIES IN ORDER FOR 2 LOAN ORIGINATORS TO RCV PAYMENT EACH MUCH COMPLETE 5 DISTINCT DUTIES. (14 TOTAL DUTIES) LOSS MITIGATION OPTIONS INCLUDE REFINANCING, LOAN MODIFICATION, SHORT SALE, AND DEED-IN-LIEU. IF SERVICER RCVS MITIGATION APPLICATION 37 DAYS BEFORE A FORECLOSURE SALE, THE BORROWER'S SITUATION MUST BE EVALUATED FOR ALL APPLICABLE OPTIONS W/IN 30 DAYS. THE BORROWER MAY APPEAL A DECISION IF THE COMPLETE APPLICATION PACKAGE WAS SUBMITTED AT LEAST 90 DAYS BEFORE A SCHEDULED SALE. A FORECLOSURE SALE IS DELAYED UNTIL A LOAN MODIFICATION IS DENIED, APPEALED, OR CANCELED DUE TO NON PERFORMANCE. BORROWER MUST INDICATE AN INTENT TO PROCEED W/IN 10 BUSINESS DAYS AFTER RCVING LOAN ESTIMATE. SERVICERS MUST ATTEMPT TO SPEAK W/ DELINQUENT W/ IN 36 DAYS AFTER MISSED PAYMENT AND MAIL LOSS MITIGATION INFO W/IN 45 DAYS.

Closing Costs Estimates Tolerance Levels

REAL ESTATE TRANSFER TAXES, LOAN ORIGINATOR FEES, AND INTEREST RATE HAVE 0 VARIANCE. THEY MUST BE IDENTICAL ON GFE AND HUD-1 AND BETWEEN THE LOAN ESTIMATE AND THE CLOSING DISCLOSURE. THE APPRAISAL AND CREDIT REPORT FEES HAVE 0 VARIANCE BETWEEN THE LOAN ESTIMATE AND THE CLOSING DISCLOSURE, BUT CAN HAVE 10% VARIANCE BETWEEN GFE AND HUD-1. FEES THAT THE LENDER CHOOSES OR IDENTIFIES (GOV. RECORDING FEES, TITLE INSURANCE IF SELECTED "RECOMMENDED" BY THE LENDER) CANT VARY BETWEEN THE GFE AND HUD-1 AND BETWEEN THE LOAN ESTIMATE AND THE CLOSING DISCLOSURE BY MORE THAN 10%. FEES FOR SERVICES THAT THE OWNERS CHOOSE FOR THEMSELVES (HAZARD INSURANCE OR TITLE INSURANCE IF THE HOMEOWNERS DON'T CHOOSE ONE OF THE LENDER-IDENTIFIED SECTIONS) AND FEES THAT ARE PAID PER DIEM (PRE-PAID MORTGAGE INTEREST) HAVE NO LIMIT ON THE ACCEPTABLE AMOUNT OF VARIANCE BETWEEN THE GFE AND THE HUD-1 SETTLEMENT STATEMENT AND BETWEEN THE LOAN ESTIMATE AND THE CLOSING DISCLOSURE. THE LENDER HAS 30 BUSINESS DAYS AFTER THE CLOSING FOR REVERSE MORTGAGES TO REFUND THE BORROWER ANY PORTION OF CHARGES THAT EXCEEDED ACCEPTABLE AMOUNT OF VARIANCE. THE REFUND DEADLINE IS 60 DAYS FOR TRID-COMPLIANT LOANS. WHEN THE LOAN SERVICER BELIEVES THAT THE POLICY HAS BEEN CANCELED OR NOT RENEWED, THE SERVICER MAY CHOOSE AN ALT INS COMPANY AND CHARGE THE BORROWER FOR THE COST OF THE CONTINUED COVERAGE (FORCED-PLACED INS). BORROW MUST BE AWARE OF THIS 45 DAYS BEFORE CHARGING THE BORROWER AND AGAIN 30 DAYS AFTER THE INITIAL NOTIFICATION.

AFFILIATED BUSINESS ARRANGEMENT DISCLOSURE

REFERRING PARTY MUST GIVE TO THE CONSUMER AT OR PRIOR TO THE TIME OF REFERRAL. THIS DISCLOSURE STATES RELATIONSHIP BETWEEN THE TWO COMPANIES AND THE CHARGES FOR THE SECOND COMPANY. A.K.A. ONE-STOP-SHOP

Homeowners Protection Act

REQUIRES LENDERS TO CANCEL PMI WHEN THE LTV REACHES 78% OF ORIGINAL PURCHASE PRICE. BORROWS CAN REQUEST CANCELLATION WHEN IT REACHES 80% WHICH IS USUALLY GRANTED W/ GOOD PAYMENT HX.

Dodd-Frank Wall Street Reform and Consumer Act (2010)

REQUIRES MORE REGULATIONS AND OVERSIGHT OF LENDERS AND NON-HEALTH INSURANCE COMPANIES. IN ORDER TO IMPLEMENT THE NEW REGULATION, THE CFPB, THE FINANCIAL STABILITY OVERSIGHT COUNCIL, THE ORDERLY LIQUIDATION AUTHORITY AND THE FEDERAL INSURANCE OFFICE WERE CREATED.

USA Patriot Act

REQUIRES MORTGAGE APPLICANTS TO PROVIDE THEIR NAME, ADDRESS, SSN OR EMPLOYEE ID NUMBER AND A GOV ISSUED PHOTO ID REQUIRES FINANCIAL INSTITUTES TO VERIFY THE IDENTITY OF ACCOUNT HOLDERS, COMPARE THE NAMES TO THE FEDERAL DATEBASE OF FUGITIVES AND SUSPECTED TERRORISTS, ESTABLISH ANTI-MONEY LAUNDRY POLICY AND TRAIN EMPLOYEES ON POLICY