NMLS Flash Cards

A telemarketer can be fined how much per incident for calling someone registered on the National Do Not Call Registry?

$16K

How many business days before closing must you give the HUD-1 to the borrower per settlement if requested?

1 day. Even at settlement you will receive another HUD-1

What is the debt to income ratio guideline for FNMA/FHLMC, FHA, USDA, VA?

1) 28/36 2) 31/43 3) 29/41 4) 41/41

What are the HOEPA high cost loan definitions?

1) 5% of the total loan amount for $20K plus 2) 8% of the total loan amount or $1K in points for a transaction of <$20K 3) Apr exceeds APOR by 6.5% 4) Apr exceeds APOR by 8.5% for a 2nd mortgage

Advertising Provisions: Per TILA, triggering terms in advertisements require additional disclosures. What are the five triggering terms?

1) Amount of the down payment 2) Amount of any payment 3) Number of payments 4) Period of repayment 5) Amount of any finance charge

What are the two disclosures that need to be given to the borrower after settlement?

1) Annual escrow statement 2) Servicing Transfer Statement

What is the objective of the SAFE Act

1) Enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state license MLOs 2) Facilitate the collection and disbursement of consumer complaints

What are the four disclosures that need to be given to the borrower at or within 3 business days of the application?

1) GFE 2) AFBA disclosures 3) special information booklet 3) mortgage servicing disclosure statement

What does the SAFE Act stand for and what Act is it the key component of?

1) Secure and Fair Enforcement For Mortgage Licensing Act of 2008 2) HERA: Housing and Economic Recovery Act of 2008

When are the three times the lender is required to give notice to the borrower per HPA?

1) at the close of the loan that they have PMI 2) at 80% for potential removal 3) at 78% when when removed OR to notify them their removal has been granted

What are the two disclosures that need to be given to the borrower at settlement?

1) finalized HUD-1 settlement statement 2) Initial escrow statement

The Dodd-frank act states that QMs (qualified mortgages) meet what criteria?

1) loan satisfies the ability to repay requirements 2) must meet requirements prohibiting or limiting the risky features that harmed consumers in the mortgage crisis

What are the two options the lender has in order to notify the borrower their application has been denied?

1) the lender has to give the specific reason why or 2) the lender lets the borrower know they need to request in writing the reason within 60 days of notice

Per ECOA, what are the two ages a lender can deny a borrower for being?

1) under 18 2) under 62 for reverse mortgages

What are the consequences of violating section 8 of RESPA?

1) up to a $10k fine 2) up to one year in prison 3) and/or up to 3X the liability of the fee

What are the two disclosures that need to be given to the borrower before settlement?

1)AFBA disclosure: mist be given at or before time of referral 2) HUD-1 settlement statement if borrower requests

How much APR variance do you need in order to redisclose?

1/8th (.125 of a point) on a regular transaction or 1/4th (.25 of a point) on an irregular transaction. Must redisclose the GFE and wait 3 business days

How many days must the fees on the GFE remain available to the borrower?

10 days. This does not include the the interest rate

If you quoted $100 for title insurance and didn't redisclose when the tolerance increased over 10% to $125, how much do you owe the borrower and within how many days?

100 x .10 = 10 + 100 = 110 125 - 110 = $15 credit back to he borrower paid within 30 days

Land over how many acres would be a rural loan NOT covered by RESPA?

25 acres

How many months must ECOA disclosures be retained for?

25 months

Regulation Z under TILA gives the borrower how many days to the right of recission?

3 days

The lender has how many days to notify the borrower of whether their application has been approved, denied, or is incomplete

30 days

What ratio do we need in order to calculate maximum payments for FHA?

31/43

How many years must the HUD-1 be retained after settlement?

5 years

How many days does a borrower have before being counted late on a payment when their loan is transferred to a new servicer?

60 days in case they didnt receive their servicing transfer statement or their Hello letter from their new servicer

The borrower has the right to see their appraisal. How many days after closing do they have to request their appraisal?

90 days after the adverse. Must be delivered in 30 days.

Per TILA, what are the four boxes that make up the federal box?

APR, Finance charge, amount financed, total of payments

What are the three main focuses of TILA?

Advertising, APR, rescission

When the loan amount is multiplied by the note rate, the result is known as the

Annual interest charge Loan amount x note rate

What is the formula for bi-weekly pay?

Bi-weekly pay x 26 (number of payments a year) / 12

What three boxes on the GFE are 0 tolerance and must be redisclosed if they even go up a penny?

Boxes 1, 2, and 8.

What 5 boxes have a 10% tolerance on the GFE before needing to disclose?

Boxes 3 (flood certs, appraisals, credit report) 4 (title insurance and lenders insurance), 5 (owners title insurance), 6 (services you can shop for), and 7 (government recording charges)

What 3 boxes do not have a limit on Increasing charges and does not require redisclosure?

Boxes 9 - 11

What is the financial privacy rule Per GLB?

Consumer can opt out, and restricts when information is disclosed to nonaffiliated third parties. Governs nonpublic info like what a consumer puts on an application and transactions like purchases

What are the minimum down payment requirements for conventional, FHA, and VA/USDA?

Conventiona: 5% from borrowers own funds FHA: 3.5% 580 Credit Score with funds that can be a gift VA/USDA: no downpayment required

What type of loans does PMI apply to?

Conventional loans

PITI Payment + Other Required Debt Payments / Gross Monthly Income =

DTI

What federal legislation allows the borrower to challenge the value stated on an appraisal report?

ECOA

Section X is government monitoring. What are the three categories that need to be filled out in order to comply with equal credit/housing laws?

Ethnicity, race, and sex

True or false: on a 2% commission, if a friend helped you close the deal, you can split the profit by 1%?

F: section 8 of RESPA prohibits fee splitting. The only person to be paid on the loan should be the MLO with the name on the loan. You can only split profit with your company

Why is the FHA not implemented by the CFPB?

FHA has nothing to do with lending or credit so it falls under HUD

What are the 7 protective classes of FHA?

FRRNDSC familial status, race, religion, national origin, disability/handicap, sex, color

What is the difference between the FACT Act and FCRA?

Fact act is to prevent fraud, while FCRA gives borrowers rights to credit reports

What does the FACT act stand for?

Fair and Accurate Credit Transaction Act

Contact AMC to appraise a property. They communicate appraisal firms and place orders for property appraisals. Who is AMC mandated by for enforces it?

Federal Deposit Insurance Corporation

A Uniform Residential Loan Application includes what two forms?

Form 1003 (Fannie) and Form 65 (Freddie)

The legislation that restricts the circumstances under which a financial institution may disclose a consumer's personal financial information to NON-AFFILIATED third parties is the

GLB Act

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

Gives agencies and states the authority to enforce privacy for financial institutions/banks and companies that provide products and services to consumers

Financial Services Modernization Act of 1999 is also know as?

Gramm-Leach-Bliley Act

The SAFE Act is Title V of which federal law?

HERA: Housing and Economic Recovery Act of 2008

What Act requires lenders to provide a list of homeownership counseling organizations to the consumer?

HOEPA and Reg Z! Homeownership and equity protection act

What is the purpose of the Fair Housing Act?

Handles discrimination of property and residential issues and is part of the Civil rights act title 8

What is the 3/7/3 rule (mortgage disclosure improvement act)?

Have to give initial disclosures within 3 days of taking the application Must give the borrower 7 days of shopping around before being able to close the loan Must redisclose changes to borrower fees within 3 days of finding the changes and must be done before 3 days of closing

What does HOEPA stand for?

Home ownership and equity protection Act

Per the Fair Housing Act, when is it ok the deny a loan in a particular neighborhood?

If the property is in a declining market and no race is being singled out

What is a LAR (Loan Application Registrar) and why is it important?

Information is reported on this and submitted by March 1st every year. It includes all data from the app and why it was denied.

What are the consequences of violating HOEPA?

Lender may be sued by consumer of consumer may rescind loan up to 3 years

What is the equation for the monthly private mortgage insurance?

Loan Amount x PMI factor/12

When the initial loan amount is divided by the lesser of the sale price or the current appraised value, the result is known as the

Loan to Value

What is the reason for the AFBA disclosure?

Making the borrower aware that you have something to gain from the transaction

Patriot Act prevents and detects immigrants suspected of terrorism and Money laundering. What are the four things needed in order to identify the customer?

NADS: Name, Address, DOB, and SSN or TIN

Companies must update their do not call registries how often?

National list: 3 months Internal list: ever 30 days

How much can the servicer collect per month per section 10 of RESPA on an Escrow/Impound account?

No more that 1/12th of the annual disbursement per month. Can not have over $50 overage in the escrow account

How long is the waiting period for a person who seeks to license as an MLO if a prior felony was pardoned?

No waiting period! The SAFE Act requires a background check with no felonies in the last 7 years and no financial felonies ever

Is a house paid in full with Cash covered by RESPA transactions?

No, if there is no loan there is no RESPA protection

Is title insurance included in the APR?

No, no finance charges ate included in the APR because regardless of whether or not theres a loan you have to pay the charge

The borrower is entitles to a free credit report how many times a year per FCRA?

Once a year. The MLO is never supposed to provide the credit report. If there is derogatory information that denies the borrower, they are entitled to another copy

What does it mean to truncate?

Only exposing the last 4 or 5 numbers on a receipt. FACT requires that businesses burn their shredded papers

What is block busting?

People discriminating by telling people in a neighborhood the value of their house will decline because of a minority that moved in. Minority is referring to Frrndsc

What is the charge the lender makes for the use of the asset (ML) from the day of funding to the beginning of the next month expressed as dollar per diem?

Periodic Interest/Prepaid Interest Loan Amount x note rate = PMI

What is the purpose of the Civil Rights Act of 1866?

Prohibits public and private discrimination in the US. If you are illegally discriminated against you can sue the federal court

What are the 6 things that make up a loan application (PENCIL)

Property Address, estimate value, name, credit, income, loan amount. If you receive any of these you must give tila and respa disclosures within 3 business days

What is the purpose of implementing safeguards per the GLB act?

Protect and control consumer data. Ensures security and confidentiality and protects against threats and unauthorized access to consumer information

What is the purpose of pretexting provisions per the GLB act?

Protecting consumers from individuals obtaining their information under false/fictitious pretenses

Homeowner's Protection Act (HPA) deals with PMI. How does HPA protect the lender while protecting the borrower?

Protects the lender by insuring the loan against default Protects the borrower by allowing them to request the PMI be taken off at 80% (the point where they wouldn't have had PMI in the first place) and automatically removing it at 78%.

Equal Credit Opportunity Act (ECOA) has what regulation implemented by the CFPB?

Regulation B

Equal Credit Opportunity Act has what regulation enforced by the CFPB?

Regulation B

Home Mortgage Disclosure Act is what Regulation?

Regulation C

What is the purpose of the FCRA (fair credit reporting act)?

Regulation V: gets borrowers access to their credit information. Gives the borrower the right to receive a credit report one time free every year. If a borrower is denied for credit due to an issue on their credit report, the borrower is entitled to another free report

What two regulation amendments were made to reduce bad practice by mortgage servicers?

Regulation X and Z

What is the purpose of HOEPA (High Cost or Section 32 loans)

Requires disclosure requirements, prohibits deceptive lending practices, and establishes requirements for loans with high interest rates

What are the 9 protected classes of ECOA?

SAMNECRRR Sex, age, marital status, national origin, exercised rights under the consumer protection act (right to non disclosure), color, race, religion, receipt of public assitance

In RESPA, what are the functions of Section 6, 8, 9, & 10?

Section 6: protects homeowners against loan servicing abuses Section 8: can not give kickback fees, referrals, etc Section 9: seller cannot require use of a particular title company Section 10: identifies amounts that can be charged to maintain escrow accounts

What section of RESPA prohibits the giving or receiving fees or kickbacks such as a pack of gum or Ipad to every servicer that closes a loan with you?

Section 8

What type of ad does TILA say must not be misleading and it is best not to give them in an advertisement?

Tax implication ads

RESPA (Real Estate Settlement Procedures Act) contains Regulation X which is regulated by

The CFPB (Consumer Financial Protection Bureau

What agency is responsible for the enforcement of the SAFE Act?

The CFPB: Consumer Financual Protection Bureau

All mortgage laws except for what fall under the CFPB?

The Fair Housing Act

Under section 8 of RESPA what is the AFBA?

The affiliated business arrangement: If you own 1% or more of a company you have to disclose! Or if you have a personal interest in the person you are referring the borrower to i.e your child, parent, or spouse

How long is the rescission period for an owner occupied home refinancing?

The borrower has three days to rescind their loan without penalties. The bar only receives refunds if they cancel within the three-day rescission period. Not before or after. This does not apply to purchases.

Per TILA, residential mortgages need disclosure of the APR. what is the APR?

The interest rate plus all the fees to do the loan added together and spread out over the life of the loan. Any fees required by the lender or charged by the lender are in the APR

The combined loan to value (CLTV) is expressed as the combined total of all lie. Balances of a property divided by what

The lesser of the sale price or appraised value

What is the purpose of the ability to repay regulation of QMs?

To allow the presumption that the lender followed the ability to repay guidelines if certain requirements are made and protect the borrower from a loan they may not be able to afford

What is the purpose of RESPA?

To help consumers become better shoppers for settlement services due to kickbacks and referral fees

What is the purpose of the Red Flag Rules Section 114 under the FACT Act?

To identify "red flag" warnings that could signify identity theft. If a credit company gets a change in address request they must verify that the person requesting the change is actually the borrower.

What is the purpose of Community reinvestment act (CRA) Created in 1977?

To lend in an area where they have a physical location. Must be able to give loans or reinvest in the communities where you have a physical location

True or False: if the seller pays for a service the seller chooses who completes the service

True: this is true as long as the seller does not require the borrower to pay for it. If the seller is caught then the borrower will be paid 3X the amount of the title service they paid for

What is block steering?

a borrower asks a lender where they should buy a house and they say to live in a neighborhood with their same race or - showing products such as mortgages that are easier for you to deal with but not beneficial for the bwr

What is redlining?

having a map of an area and saying they dont lend in an area even though the borrower is qualified. Does not protect against a declining area