Section 4: Additional Government Influence in Texas

The FCS doesn't work in a vacuum, nor is it funded by federal money. Following are entities that provide assistance and/or oversight to the FCS.

-The Farm Credit Administration -The Farm Credit System Insurance Corporation -The Federal Farm Credit Banks Funding Corporation

Which two answers show how much of a tax credit a homeowner may qualify for under the Mortgage Credit Certificate Program?

-Up to $2,000 -40% of the annual mortgage interest paid

Which of these situations would require the lender to provide a revised Loan Estimate?

-When the loan changes from a fixed-rate to an adjustable-rate product -When there's a change in the amount the borrower will pay as down payment -When the interest rate on the loan changes -When the lender can't verify the borrower's income

Bill the Borrower has been plowing through his Closing Disclosure, dutifully comparing it against the Loan Estimate. Then he turns to page three and says, "Well, hallelujah! Here's what I've been looking for!" What did Bill see?

"Use this table to see what has changed from your Loan Estimate."

Your buyer client, Sue's, offer for a cute beach cottage has been accepted. Now Sue is in the process of working with a lender to finalize a loan. She received the proper disclosures from her lender, but she has a couple of questions when she compares the forms. She asks you for advice. Which of these responses to Sue's questions would you use?

"I can't advise you about those forms, other than to say you should ask your lender if you have questions."

My First Texas Home Characteristics

-Competitive interest rates -Down payment assistance -Closing cost assistance

When RESPA Applies

-Craig is applying for a federally related loan from his bank to buy a large ranch house on five acres. -RESPA doesn't apply to transactions for land tracts of 25 or more acres. -Letitia and Marla have purchased a fixer-upper. They borrowed enough on an FHA loan to pay for the property and the renovation costs. -

The Housing and Economic Recovery Act of 2008 (HERA)

-Dawn was "under water" on her mortgage, but her lender allowed her to refinance using the HOPE for Homeowners program. -Tracey navigates to the FHFA website to review recent audits of Fannie Mae and Freddie Mac. -Included the SAFE Mortgage Licensing Act -Included the Mortgage Disclosure Improvement Act

Which products and services does the USDA Rural Development Program offer to its rural customers?

-Direct loans -Grants -Loan guarantees -Advisory services

Which of these factors contributed to the economic crisis?

-Easier credit increased the number of subprime mortgages. -Fannie Mae's efforts increased homeownership rates. -People generally believed that housing prices would continue to rise. -The SEC relaxed capital requirements on investment firms.

Goal #3: Use housing as a platform for improving quality of life

-End homelessness -Promote health and housing stability for vulnerable populations

Goal #2: Meet the need for quality, affordable rental homes

-Ensure sustainable investments in affordable rental housing -Simplify the delivery of rental housing programs

Are These HUD Programs?

-FHA -GNMA

In addition to reducing settlement costs, RESPA helps protect the consumer by requiring clarity around settlement fees. The borrower in a real estate transaction must receive certain disclosures. Which two of these are the names of the disclosure forms related to RESPA?

-Loan Estimate -Closing Disclosure

How the USDA Farm Service Agency Works

-Loans can be used to purchase a farm, such as the one that Rita has her eye on. -The maximum amount Rita could receive from a direct FSA loan to purchase a property is $300,000. -Rita could apply for a loan from an FCS bank, and the lender could receive an FSA guarantee on the loan. -With a direct loan from the FSA, a down payment isn't required.

Recognizing Discriminatory Practices

-Marketing more expensive loan products to a minority community, and more affordable products to a majority community -Denying a minority applicant a loan for a home in a white community, but approving a similar loan to the same applicant for a home in a minority community

Goal #4: Build strong, resilient, and inclusive communities

-Reduce housing discrimination -Support the community's ability to recover from disasters

The statewide homebuyer education program offers education and assistance through the Help for Texans website (linked in your resources). What four types of assistance are available?

-Rent help -Homeless services -Buying a home -Home repairs

The Administrative Procedure Act (1946)

-Requires agencies to keep the public informed of their organization, procedures, and rules -Provides for public participation in the rule making process -Establishes uniform standards for the conduct of formal rule making and adjudication -Defines the scope of judicial review -It balances the powers of regulating agencies.

RESPA (Real Estate Settlement Procedures Act) Prohibitions

-Ron can give his client the name and contact number for at least three mortgage brokers. -Ron can explain that the choice of mortgage broker is completely up to the client.

HUD's strategic plan outlines the ______ that support its mission.

4 goals

What's the acronym for the legislation that established processes and procedures for how federal agencies propose and enforce regulations?

APA

HMDA (Home Mortgage Disclosure Act)

Allows review of lending data to evaluate where mortgages are given and where they are not -A bank publicly discloses information about the mortgages it granted.

The Farm Credit Administration

An agency of the federal government, provides oversight.

1974 II

As a response to discriminatory practices by lenders, the Equal Credit Opportunity Act (ECOA) requires credit to be granted according to creditworthiness, not protected class status.

Robert is a rancher. He was told about the USDA Farm Service Agency offerings. What can he use an approved loan for?

Building a new hay barn

The USDA Rural Development Program focuses on all residents of rural areas rather than on agricultural producers. How does this program provide support for rural Americans?

By providing financing that allows rural Americans to buy safe, affordable housing

When George is working with buyers who can't afford a large down payment, he recommends that they look into ______.

FHA financing

Jerome is developing an ad for three properties he has listed in an upscale community. He wants to keep it short and simple. Which of these would NOT trigger full disclosure under TILA?

Get a low 4.925% APR

Ginnie Mae

Guarantees the timely payment of principal and interest on MBSs that are secured by pools of government home loans

2008-2009

HERA and ARRA were both enacted in part to help the nation recover from an economic crisis.

The Morgans are about to close on their home. They're meeting with the lender to complete all the necessary paperwork. They've requested that none of their demographic information be shared with anyone. Which act would they need to be made aware of?

Home Mortgage Disclosure Act

Federal Housing Administration

Insures mortgages on single-family and multi-family homes

Farmer Mac

It may sound like shorthand for "Old McDonald," but Farmer Mac stands for the Federal Agricultural Mortgage Corporation, and it's actually a player in the secondary mortgage market, specifically for agricultural property loans, rural utility loans, and certain loans guaranteed by the U.S. Department of Agriculture.

ECOA (Equal Credit Opportunity Act)

Lists protected classes against whom lenders may not discriminate when making credit unavailable -A lender extends credit to a Muslim applicant and to an equally creditworthy Protestant applicant. -A lender sends a mortgage applicant a copy of the appraisal for the property being purchased.

This HUD program is responsible for developing and enforcing federal fair housing policies and laws.

Office of Fair Housing and Equal Opportunity

ECOA Equal Credit Opportunity Act

Prohibits lenders from denying credit to applicants on the basis of protected class status

My first Texas home

Provides down payment and closing cost assistance to low- to moderate-income buyers

Which of these describes the My First Texas Home program?

Provides down payment and closing cost assistance to low-to moderate income buyers

Mortgage credit cert program

Provides eligible homeowners the opportunity to reduce their federal tax liability

Homebuyer education program

Provides information and counseling resources to those planning to purchase a home

HERA Housing and Economic Recovery Act

Recovery act that includes SAFE and MDIA

The Texas Secure and Fair Enforcement for Mortgage Licensing Act (also known as the Texas SAFE Act or T-SAFE for short) was passed in 2009 in response to the federal SAFE Act. The federal act required

States to enact licensing and registration requirements related to loan originators, and it created the Nationwide Mortgage Licensing System and Registry through which mortgage loan originators must register. Both the federal act and T-SAFE aim to prevent mortgage loan fraud, while also protecting borrowers.

Rules and regulations that protect consumers of financial services are now the responsibility of ______, which was created by the Dodd-Frank Act.

The CFPB

1974

The Real Estate Settlement Procedures Act (RESPA) eliminates kickbacks and referral fees among settlement service providers to make settlement more affordable for consumers.

Which act establishes general requirements that state agencies must follow when adopting rules or conducting contested cases?

The Texas Administrative Procedures Act

1977

The practice of redlining was the impetus for the creation of the Community Reinvestment Act (CRA)

2010

The purpose of the Dodd-Frank Wall Street Reform and Consumer Protection Act is to create stricter regulation of the financial services industry.

Closing Disclosure

This form discloses final loan terms, the borrower's projected monthly payments, and total costs to complete the transaction. -This includes all of the costs of the borrower's transaction. -The lender is required to provide this to the borrower at least three days before the loan closes.

The ______ was enacted in 1968 as part of the Consumer Credit Protection Act.

Truth in Lending Act

USDA Loan Programs in the Farm Service Agency

USDA loan programs are offered through the Farm Service Agency, which provides direct farm ownership loans to allow farmers to buy farmland, construct buildings, and make improvements on their farms. The program requires no minimum loan amount and offers loans of up to $300,000. To be eligible, applicants must have participated in the day-to-day management of a farm or ranch for at least three years.

When HUD pursues actions that are designed to end homelessness and promote the health and housing stability of vulnerable populations, which of its goals is it supporting?

Use housing as a platform for improving quality of life.

FHEO (HUD's Office of Fair Housing and Equal Opportunity)

Works to eliminate housing discrimination, promote economic opportunity, and achieve diverse, inclusive communities

The CFPB was established

with the aim of protecting consumers from unscrupulous credit practices.

T-Safe Facts

-A person who negotiates loan terms, for compensation, is a loan originator. -An exception to the Act is a seller selling their own homestead and/or selling the property to a family member. -A license is required for those making more than five "owner-financed" loans.

What's the acronym for the legislation that requires financial institutions to invest in the communities they serve?

CRA

Tyler is a developer who renovates a long-abandoned warehouse in a low-income neighborhood into a community center, complete with space for after-school programs, a daycare, and a gym. Tyler is able to complete the renovation with a loan funded by a local bank. Which act requires financial institutions to make credit available for this type of development?

Community Reinvestment Act

Which of these individuals may benefit from USDA Rural Development program offerings?

Community-managed lenders

One of the most important aspects of the Dodd-Frank Act was the establishment of the

Consumer Financial Protection Bureau (CFPB)

RESPA (Real Estate Settlement Procedures Act)

Eliminates illegal referral fees among settlement service providers

The Farm Credit System Insurance Corporation

Established by the Agricultural Credit Act of 1987, ensures the timely payment of principal and interest on insured notes, bonds, and other obligations issued by FCS banks. ?

______ creates a secondary market for agricultural loans by buying the loans, pooling them, and selling them as securities.

Farmer Mac

The Federal Farm Credit Banks Funding Corporation

Is the fiscal agent for the Farm Credit System Banks. Because FCS institutions don't accept deposits, they rely on the Funding Corporation to raise money for loans and leases through the sale of FCS debt securities in the U.S. and international money markets. It also provides disclosures and public information about the financial condition of the FCS, and assists FCS banks with managing their interest rate risk.

HUD's second goal in support of its mission is to ______.

Meet the need for quality affordable rental homes

Tilly is a high school teacher who's decided to purchase a home nearer to the school where she works. She looks through a "Homes for Sale" magazine to see if there are any homes she can afford, and she sees a listing for a cute two-bedroom with a fenced yard big enough for both of her dogs! The price is a little high, but the ad excitedly proclaims, "Financing available!" Does TILA require that Tilly see additional terms of credit with this ad?

No

Which of these describes the Texas Statewide Homebuyer Education Program?

Provides information and counseling resources to those purchasing a home

Ralph Expands His Ranch

Ralph needs more pasture to increase his herd, and he needs a loan to pay for it. Most banks won't loan money for 150 acres of empty land that only looks good to a cow. But Ralph finds an agricultural lender that offers Farm Service Agency Guaranteed Farm Loans. He can now use those funds to purchase the agricultural land that he needs to expand his business.

Tilly's lender explains to her that ____________ requires that she be provided with a disclosure statement within three days of receiving her loan application.

Regulation Z

CRA Community Reinvestment Act

Requires financial institutions to invest in the communities they serve

HMDA Home Mortgage Disclosure Act

Requires financial institutions to report their mortgage data

CRA (Community Reinvestment Act)

Requires lenders to invest in the development and rehabilitation of the communities they serve -A bank makes public the results of a federal agency review.

TILA (Truth in Lending Act)

Requires lenders to make full disclosure of the terms and conditions of credit

Tilly is applying for a loan so she can buy the home of her dreams. She protects herself by making sure she understands the facts and her responsibilities regarding a mortgage. Meanwhile, TILA protects Tilly by ___________.

Requiring lenders to make full disclosure of the terms and conditions in any offers of credit

The CFPB promotes consumer protection in the credit market through a number of strategies, including ______.

Responding to and investigating consumer complaints regarding financial services

CFPB Protections

Sebastian needs a mortgage loan. On the CFPB website, he finds consumer-focused educational content that clearly describes the phases and choices he will encounter when obtaining a mortgage loan. Claire believes she has been unfairly treated by her bank. She submits a complaint through the CFPB, and it works with the bank and Claire to find a resolution. Linda, a mortgage loan originator, reviews rules lenders must follow in clearly written guidebooks published by the CFPB, which make it easier for her to comply with the law while performing her job. The CFPB gathers consumer and industry comments as it researches new rules related to payday loans.

Farm Credit System

The Farm Credit System is a government-sponsored enterprise that provides financing to purchase rural homes through a network of financial cooperatives. The loans are extended from locally owned banks that belong to the Farm Credit System. The money for the loans comes not from deposits, but from the sale of debt securities in the U.S. and international money markets.

The federal SAFE Act required states to enact licensing and registration requirements related to loan originators, and created the Nationwide Mortgage Licensing System and Registry. Which act was Texas' response to the federal act?

The Texas SAFE Act

1968

The Truth in Lending Act (TILA) requires full disclosure to a borrower of the terms and conditions of credit.

USDA Rural Development Program

The USDA Rural Development Program offers loans, grants, and loan guarantees for housing and other rural financing needs. Its single family housing program provides direct loans or loan guarantees to low-, very low-, and moderate-income rural Americans.

Monthly principal and interest

The form states whether or not this amount is adjustable. If it's adjustable, additional information is included with the amount shown.

Loan Estimate

This form discloses key features, costs, and risks related to the loan for which the consumer has applied. -The lender is required to provide this within three business days after receiving a consumer's application. -This expires after 10 business days if the consumer doesn't act to move forward.

When Stacy's clients ask her if she can recommend a mortgage broker, she promptly gives them the name of the best mortgage broker she knows, Gary Jones. Later, she always receives a check from Gary as payment for the referral. Is this legal or illegal under the Real Estate Settlement Procedures Act?

This is illegal under RESPA because it's considered a kickback between settlement service providers.

The ______ can offer direct loans to farmers and ranchers. The loans are funded by congressional appropriation.

USDA Farm Service Agency

In addition to itemizing all borrower-paid and seller-paid closing costs, page two of the Closing Disclosure also tells the borrower when each amount is paid by listing it under ______.

"At closing" or "before closing"

Your client, Jim, is headed to closing on a nice condo that meets all of his needs: close to work, close to Mom, speedy Internet service. He's been a bit high-strung through the whole process, so you aren't surprised when he calls you and says, "My lender just gave me ANOTHER form! Will it never end?" After you establish he's received the Closing Disclosure, what two things do you tell him?

-"If you have any questions about what you see on the form, contact your lender right away and have them explain it to you." -"All you need to do with that form is to check for accuracy and for agreement with your Loan Estimate. Check every detail, and do it now, not later."

Consumer cannot shop for

-Appraisal fee -Credit report fee -Tax status research fee

What's on Page Two?

-Calculating cash to close -Loan costs -Other costs

Purpose of the FCS

-FCS is a government-sponsored enterprise, like Fannie Mae. -It provides financing for buyers of agricultural properties, such as farms and ranches, and housing in rural communities. -The FCS institutions that provide the loans don't accept deposits. -The FCS is a network of financial cooperatives that are owned and operated by the customers it serves.

Is This an Agricultural Lending Program?

-Farmer Mac -Farm Service Agency -USDA Rural Development Program -Farm Credit System

What information will the consumer find on page one of the Loan Estimate?

-Interest rate on the loan -Estimated cash to close -Property address -Loan amount -Sale price of property -Loan product and term

Kendra has applied for a mortgage from Best Bank. When is Best Bank required to provide Kendra with a Loan Estimate?

3 business days

Lender credits

A rebate from the lender to the borrower that offsets some closing costs, usually in exchange for a higher interest rate

Calculating cash to close

All itemized amounts from this page are totaled to determine the estimated amount the buyer will need to bring to closing.

Lender licensing

Allows consumers to research the lender and loan officer using the Nationwide Mortgage Licensing System.

Comparisons

Allows the borrower to determine if loans from different lenders or different interest rates are preferable.

Under the "Summaries of Transaction" section on page three of the Closing Disclosure, amounts listed for the borrower's transaction are calculated to result in ______.

An amount due from the borrower, which will match the cash to close amount

Ed is a homebuyer reviewing the Loan Estimate he received from a lender. He notices the loan terms include a prepayment penalty. Because he's a savvy consumer, he _______.

Asks the lender if there are other options available that would not involve a prepayment penalty

Kendra and her real estate agent are preparing to close on the property she's purchasing on Thursday. Kendra will sign the paperwork with her lender to close on the loan at the same time. When does the lender need to provide Kendra with the Closing Disclosure form?

At least three business days prior to closing on the loan

Under which section will you find any credits provided by the seller?

Calculated cash to close

Which of the following is NOT part of the assumptions section of the Loan Estimate?

Comparisons

Victor is a buyer reviewing the Closing Disclosure he received from his lender. On the last page of the form, he sees a signature line. By signing the form, Victor has _______.

Confirmed receipt of the Closing Disclosure

Cassie is helping her buyer client, Gus. As they discuss preparations for closing, she cautions Gus, "Make sure you review the Closing Disclosure as soon as you receive it and _______."

Contact your lender immediately if you find errors or have any questions

There's more excitement to come on page three of our Closing Disclosure. Can you guess what it is?

Drum roll, please. Here are the amounts that everyone is really interested in: cash to close from the borrower, and cash to seller. Both of these are found under the Calculation section.

The final page of the Closing Disclosure provides loan calculations that tell the consumer _______,

How much the loan costs, including total payments, finance charge, and TIP

Which of the following could be different from the amount on Loan Estimate that was initially received and can impact the monthly payment?

Interest rate

Which of the following may cause the Loan Estimate to be revised?

Interest rate change, switch to fixed-rate loan, down payment amount change, and property appraisal reveals increase in value

Other costs

Itemized amounts for taxes, prepaid items, and lender credits.

Prepaids

Items included with the borrower's monthly payment that are due before the first scheduled payment of the loan

Lewis is reviewing his Loan Estimate and notices under "Other Costs" that there are items listed that don't include an amount. What does this mean?

Lewis should ask his lender about it.

Natalie and Sam are reviewing the Loan Estimate form to ensure the date, their names, the property address, and sale price is listed accurately. Additionally, the information provided about their loan term, purpose, product, type, and rate lock should _______.

Match what the lender discussed with both of them

Under the "Projected Payments" section of the Loan Estimate, the consumer can view what is included in the monthly payment. Which of the following may be part of the total payment other than the principal and interest?

Mortgage insurance

When the CFPB designed the Loan Estimate, it included space for the ______ of the lender and loan officer, which the consumer can use to confirm that the institution and individual are reputable.

Nationwide Mortgage Licensing System IDs

Maria is a borrower reviewing her Closing Disclosure. She notices a section under "Other Costs" with a number of fees that were not shown on her Loan Estimate, such as the commissions to the real estate brokers and the home inspection fee. Should Maria contact her lender about this issue?

No, these are costs that are part of the total cost to close but aren't part of obtaining the loan, so they weren't required to be on the Loan Estimate.

Although the Closing Disclosure lists all amounts as accurately as possible, some costs must be estimated. Why?

Property taxes and insurance may change over the life of the loan, resulting in changes to the required escrow amounts.

The ______ table discloses the amounts associated with the transaction that the seller will pay and receive, usually resulting in a total cash to seller.

Seller's Transaction

The section on the Loan Estimate called "Services You Cannot Shop For" includes fees for ______.

Services performed by a third party that the lender selects

Loan costs

Shows the consumer how much they will pay for the lender to make the loan, including third-party services.

When HUD pursues actions that are designed to restore the financial health of the Federal Housing Administration, which of its goals is it supporting?

Strengthen the housing market to bolster the economy and protect consumers.

Kendra has applied for a loan from Acme Savings and Loan, but when she compares the Loan Estimate the loan officer gave her with the one from Best Bank, where she also applied for a loan, she decides she'd rather go with the loan from Best Bank. Which of the following is a true statement about this situation?

The Loan Estimate expires in 10 business days if Kendra doesn't tell Acme Savings and Loan that she wants to move forward with it.

Prepayment penalty

The Loan Estimate warns the client if the loan includes this potentially risky feature.

Borrower Max is reviewing his Closing Disclosure to check the amount of prepaid mortgage insurance, taxes, and interest. In addition to itemizing what his borrower-paid closing costs are, the prepaid section includes _______ for each item.

The applicable time period

Borrowers Ava and Liam are expecting their first child and want to be sure they're both comfortable with the monthly payments they'll be responsible for in the new house. Under the "Projected Payments" section of their Loan Estimate, Ava and Liam can review ______.

The estimated breakdown of each monthly mortgage payment, including any items that will be included in escrow

The loan amount plus the down payment should equal _______.

The sale price of the home

Margot reviewed page three of her Closing Disclosure to see the amounts she'll pay and receive, and the total cash amount. She located this information under the "Summaries of Transaction" in the "Seller's Transaction" table, which is completed by ______.

The settlement agent

Page four of the Closing Disclosure includes consumer education about _______.

The use of an escrow account

Page four of the Closing Disclosure lists specific disclosures about the loan, such as the penalty for late payments, whether a demand feature applies, whether the loan can be assumed, and _______.

The use of an escrow account

Buyers Romy and Steven are looking over closing documents and don't know if the Loan Estimate matches everything on the Closing Disclosure. Usually, amounts shown on the Closing Disclosure that don't exactly match the figures on the Loan Estimate will be due to _______.

Updates to reflect the terms of the borrower's legal obligation when the loan closes

Origination charges

Upfront fees the lender charges for making the loan

Page four of the Closing Disclosure lists specific disclosures about the loan, such as the penalty for late payments, whether a demand feature applies, whether the loan can be assumed, and _______.

Whether partial payments are accepted

Gus has applied for a home equity line of credit from his federally insured bank so that he can make some renovations to his kitchen. The same bank is his lender for his home mortgage. Will this loan be subject to Real Estate Settlement Procedures Act requirements?

Yes, because RESPA applies to any residential loan transaction from a federally insured financial institution, including equity lines of credit.

Consumer can shop for

-Title search -Survey fee -Pest inspection fee

Maria is a borrower reviewing her Closing Disclosure. She notices that the appraisal fee is listed under "Paid by Others" and has an L listed with the amount. What does this mean?

The L indicates that the creditor pays the item at consummation.

The _______ section contains the seller's existing mortgage loan payoff amount that must be paid to complete the transaction.

"Due from Seller at Closing"

What's Happening on Page Three?

-Comparisons -Other considerations -Lender licensing

Which of the following is part of the Other Disclosures section?

Liability After Foreclosure

Closing costs are itemized on page two of the Closing Disclosure, and all amounts are _______.

Listed according to who paid them: the borrower, seller, or other

Other considerations

Lists certain borrower rights related to obtaining a loan and how it may be handled in the future.

Kendra is purchasing a home and is ready to find a lender who will give her terms that she can afford. She has done her homework and knows that she can use ______ to compare loans and find the one that will best meet her needs.

The Loan Estimate

Texas Administrative Procedures Act

The government is supposed to be of the people, by the people, and for the people, right? Toward that end, transparency and a voice in the rule-making process at the state level is crucial. The Texas Administrative Procedures Act aims to provide that transparency, and give interested parties that voice. -The Administrative Procedures Act sets requirements for state agencies. -Decisions by state agencies must be available for public inspection. -Individuals can petition state agencies to adopt rules. -Any parties to a contested case must be given an opportunity for hearing and to respond to or present evidence or arguments.

Goal #1 Strengthen the housing market to bolster the economy and protect consumers

-Establish a sustainable housing finance system -Restore the financial health of the FHA

Select the four goals that HUD has defined to accomplish its mission.

-Strengthen the housing market to bolster the economy and protect consumers. -Meet the need for quality affordable rental homes. -Utilize housing as a platform for improving quality of life. -Build inclusive and sustainable communities free from discrimination.

What does this last page of the Closing Disclosure tell the borrower?

-Total interest percentage amount -Consumer's right to a copy of the appraisal from the lender

Zara is reviewing the "Calculating Cash to Close" table on page three of the Closing Disclosure to see what has changed from her Loan Estimate. She found this extremely helpful and easy to understand because the table explicitly lists _______.

Loan estimate and final amounts side-by-side

Borrower Bill is able to gaze into the future of his loan, courtesy of page four of the Closing Disclosure. What information does this page tell Bill?

Page four discloses features of the loan that would affect Bill's monthly payment, such as an adjustable interest rate. If Bill should sell the property on which he has granted a security interest, this page states if the loan can be assumed. It also specifies how much Bill will be putting into his escrow account on a monthly basis, and why that amount may change.

What's the Point of Page Two?

Page two of the Closing Disclosure itemizes the charges that contribute to the closing costs on page one. It also shows whether the charge is paid by the buyer, the seller, or "other."

Estimated cash to close

This is the amount the borrower is expected to bring to closing.

Chapter 5 Facts

-Chapter 5 of the Texas Property Code sets requirements and penalties related to executory contracts. -This is a penalty for violating the Deceptive Trade Practices - Consumer Protection Act. Chapter 5 penalties may include requiring the seller to pay back all money received from the buyer.

Which of these charges should you expect to see itemized on page two of the Closing Disclosure?

-Loan application fee -Recording fees -Real estate broker commission

If there's a change that requires the lender to give Jim a new Closing Disclosure, it has the potential to delay closing. Which items on page one of the Closing Disclosure may change without issue, and which items must be exactly as they were on Jim's Loan Estimate?

-May change: Interest rate, if it weren't locked and projected payments -Shouldn't change: Loan term, purpose, and product

Secure and Fair Enforcement for Mortgage Licensing Act (SAFE)

-This act sets minimum standards for licensing of mortgage loan originators. -SAFE helps consumers make an informed choice about the lending professionals they use. -SAFE should help drive dishonest mortgage loan originators out of business. -Although SAFE created the Nationwide Mortgage Licensing System Registry, each state has its own licensing requirements. -The SAFE Act provides consumers with information that they can use to protect themselves, but not insurance.

HUD works in a lot of different ways to make housing affordable and available. Some of what HUD does also creates opportunity for investors. That's how real estate licensee Jeffrey is finding himself trotting out his knowledge of HUD programs.

Jeffrey is reviewing a new listing when his phone rings. It's a client who's interested in real estate investing, but isn't sure where to start. "Well," Jeffrey says, "There are often good deals on HUD repossessed homes. Those might work for you either as rental income or to flip. In fact, if you want to be a landlord, you should consider accepting Housing Choice Vouchers, which would ensure that you receive at least a portion of every rental payment, and also allow you to help low-income families. On the other hand, if you simply want to buy and sell a property, you might focus on homes that appeal to first-time buyers. Any potential buyers have the option of using FHA financing, which allows lower down payments, making financing the purchase more likely."

On the Loan Estimate under "Loan Costs," the points, application fee, and underwriting fee are considered ______.

Origination charges

Points

Paid by the borrower to the lender in exchange for a lower interest rate

Cassie is helping her buyer client, Gus, prepare for closing. What should she encourage him to verify as soon as he receives the form?

That the borrower and seller names, the property address, and the sales price are accurate and spelled correctly

Estimated total monthly payment

This section shows the total amount the client should expect to pay each month on the mortgage.

American Recovery and Reinvestment Act of 2009 (ARRA)

-Brittany and Mac received a credit of $8,000 for the home they purchased in June 2009. -Lt. Derek Lee was wounded in Iraq, and the fallout from that event made it hard for his family to make mortgage payments. He received mortgage assistance that prevented a foreclosure. -Created tax credits for financing low-income housing construction -Provided rental assistance to prevent homelessness

When consumers receive the Loan Estimate from a lender, what four main tasks they should perform on page one?

-Check personal information for accuracy -Make sure they understand loan terms -Ensure closing costs are affordable -Ensure projected payments are affordable

The Dodd-Frank Act created the CFPB to support its mission of providing stricter regulation of the financial services industry. Which of these statements correctly describe the role of the CFPB?

-Consolidates consumer financial protection into one agency. -Regulates the actions of large banks as well as non-bank financial institutions. -Works to educate consumers about how credit works. -Enforces federal consumer financial protection laws. -Monitors financial markets for risks to consumers.

How Does Farmer Mac Work?

-Farmer Mac isn't an agency, but a government-sponsored enterprise that's overseen by the Farm Credit Administration, which is a government agency. -Farmer Mac doesn't make direct loans. -It buys agricultural loans from lenders to pool and sell in the secondary market as securities. -It helps agricultural lenders and borrowers by providing capital for making new loans. -Without Farmer Mac, fewer lenders would be able or willing to make agricultural and rural loans.

HUD Mission and Strategic Plan

-Strengthen the housing market to bolster the economy and protect consumers. -Meet the need for quality, affordable rental homes. -Use housing as a platform to improve quality of life -Build strong, resilient, and inclusive communities.

The actions that HUD takes have a big impact on anyone who works in the housing industry. Which of the following are components of HUD's stated mission?

-Strong, sustainable, inclusive communities -Quality, affordable homes for all

Mortgage Disclosure Improvement Act (MDIA)

-The act amends the timing of TILA disclosures. -It prohibits lenders from charging anything other than a credit report fee prior to disclosing the terms of the loan. -The borrower is given a review window of three business days from receipt of the Closing Disclosure form to review the loan and closing costs. -Changes to the disclosed fees or APR on the Closing Disclosure retrigger a three-day window for a borrower to evaluate the loan. -Following MDIA rules for disclosure could put a scheduled closing in jeopardy.