Applying Mortgage Knowledge to Exam Prep 2
Department of Veteran Affairs (VA) Loans
(VA loans) are made by approved lenders and guaranteed (not insured) by the VA. Borrowers must be either current or former members of the military.
Under the FCRA, a consumer report may be requested or used:
*By the consumer *To assist in the evaluation of an application for credit *By a potential investor, servicer, or current insurer to determine the value of the credit or the prepayment risk associated with an existing credit obligation *By a creditor or insurer in the solicitation of credit or insurance offers
As of January 1, 2018, depository institutions with a home or branch office in an MSA are subject to HMDA when they:
*Meet an annually-adjusted asset-size threshold established by the CFPB. For 2019, banks, credit unions, and other depository institutions with assets of $46 million or less as of December 31, 2018 are exempt. *Originate at least one home purchase loan or the refinance of a home purchase loan in the preceding calendar year *Conduct business as a federally-insured or -regulated institution (e.g. it is an FDIC bank or a Federal Reserve bank), or make federally-insured or -guaranteed loans (e.g. FHA loans or VA loans), or originate loans intended for sale to Fannie Mae or Freddie Mac, and *Meet a loan-volume threshold. The uniform loan-volume threshold for depository and non-depository institutions is: *The origination of at least 25 closed-end mortgage loans in either of the two preceding calendar years, or *The origination of at least 500 open-end lines of credit in either of the two preceding calendar years
Under FCRA, info on an ADVERSE ACTION NOTICE:
*That the adverse action was taken based in whole or in part on information received from a credit reporting agency *The name, address, and telephone number of the credit reporting agency providing the information *Notice that the credit reporting agency does not know particular information regarding the adverse action *A statement advising that the consumer may request a free copy of the credit report within 60 days of a request
FHA MIP Payment Requirements:
11 years for all loans, regardless of term, with an original principal loan balance that results in an LTV of less than or equal to 90% (*10% gets you 11) The term of the mortgage or 30 years, whichever is less, for all loans with an original principal loan balance that results in an LTV of more than 90%
Maximum Seller Contributions
2% of the lesser of the appraised value or sales price for investment properties 3% of the lesser of the appraised value or sales price for a principal residence or second home if the LTV is greater than 90% 6% of the lesser of the appraised value or sales price for a principal residence or second home if the LTV is between 76% and 90% 9% of the lesser of the appraised value or sales price for a principal residence or second home if the LTV is 75% or less
Convention Loan DTI requirements
28% percent for the primary ratio and 36% for the secondary or back-end ratio. 28/36
FHA DTI Ratios
31/43
(GLB) Telemarketing Sales Call Hours
8:00 a.m. - 9:00 p.m. If a telemarketer uses a recorded message, the consumer must be connected with a live sales representative within two seconds of the completion of the consumer's initial greeting.
maximum FHA loan
96.5% LTV loan (i.e., a minimum 3.5% down payment is required for an FHA loan).
Under the GLB Act, PRIVACY NOTICE:
>All consumers must receive a privacy notice if the institution intends to share the consumer's NPI with non-affiliated third parties; if the institution does not intend to share this information with non-affiliated entities, a privacy notice to consumers is not required >All customers must be provided with a privacy notice that clearly discloses the institution's practices for sharing NPI with affiliates and with third parties and specifies what information will be shared and with whom; this notice is due at the time a customer relationship is established >A financial institution must provide consumers and customers with an opportunity to "opt out" of information sharing with non-affiliates (i.e., direct the institution to refrain from sharing NPI) and instruction on how to do so. A company's policy should include a convenient method to opt out and a reasonable time to opt out before information is shared. >In addition to the initial notice, customers must receive an annual privacy notice as long as they are customers; the GLB Act provides that this may be delivered electronically via a webpage, provided that the institution complies with all requirements and restrictions for doing so >Privacy notices must be delivered in writing by mail, in person, or by posting on the institution's website, unless the consumer consents to electronic delivery; posting a privacy notice at an office does not satisfy the delivery requirements
Two kinds of mortgage load fraud:
>Fraud for property >Fraud for profit
Fraud Red Flags:
>Long or unrealistic commute from work to home >Buyer is downgrading from a larger to a smaller home, unless empty-nesters >The new home is too small to accommodate all the intended occupants >Down payment is in a form other than cash >Borrower claims they are going to resell the current home but have not put it on the market >Deposit is a promissory note >Stocks and bonds shown as assets are not from a publicly-traded company >Face value of a life insurance policy is shown as a liquid asset >Borrower is buying an investment property but currently renting his or her own home >Price and date of the original purchase are not shown on a refinance application >Borrower and co-borrower work for the same employer or hold stock in the employer >Practice tip: discern whether they might be self-employed >Same phone number is used for home and business Value of personal property is greater than one year's salary >New housing expenses are more than 150% of current housing expenses >A high-income borrower discloses little or no personal property >Debt obligations are too high with respect to declared salary >Significant differences between the handwritten and typed loan application >Invalid Social Security Number >Years of schooling are not consistent with stated job or profession >Discrepancies between dates on application and verification forms >Sales price is far below the property's market value >Deposit check dates are inconsistent >Name and/or address on the deposit/down payment check are different from the borrower's >More than one purchase contract are used >Large, recent deposits >Earnest money/binder check are not cashed >Borrower is not the purchaser shown on the contract (i.e., a straw buyer) >Borrower is purchasing a home near the previous home to use as a primary residence
If a loan goes into default and it is determined that fraud occurred in the origination of the loan, the lender will:
>often require the originating broker/lender to repurchase the loan. >may also require an originating broker/lender to repurchase a loan in the event of early default, even if the loan did not result from mortgage fraud.
Currency Transaction Report
A financial institution must report to FinCEN any single or structured currency transactions which exceed $10,000 in a single day. This is reported on a Currency Transaction Report (CTR). A currency transaction is any deposit, withdrawal, exchange, or other payment or transfer that involves currency. A CTR must be filed within 15 days of a reportable transaction and a copy retained in its records for at least five years.
RED FLAG (FACTA)
A pattern, practice, or specific activity that indicates the possible existence of identity theft.
(BSA) Suspicious Activity Report (SAR)
A report filed when a financial institution, res mortgage lender, originator or any other covered entity believes there is a possibility that a violation of the law is occurring or has occurred.
FHA loans MIP requirements:
An upfront mortgage insurance premium (UFMIP) of 1.75% of the base loan amount, paid at closing. An annual mortgage insurance premium (MIP), paid monthly
mortgage credit product (MAP)
Any form of credit that is secured by real property or a dwelling and that is offered or extended to a consumer primarily for personal, family, or household purposes
Jumbo Loans
Any loan with a loan amount in excess of Freddie Mac or Fannie Mae loan limits
(GLB) How often must companies covered under the DO NOT CALL rules update their call lists?
At least once every 31 days
The S.A.F.E. Act License Requirements
Background checks Criminal history - a license applicant may not have: >A felony conviction in the seven years prior to application, or >A financial- or fraud-related felony at any time; such a felony might include fraud, dishonesty, breach of trust, or money laundering Financial responsibility Pre-licensing education - a license applicant must complete at least 20 hours of pre-licensing education, which must include: (3/3/2) >Three hours of federal law >Three hours of ethics coursework, and >Two hours of coursework related to nontraditional mortgage products Testing - a license applicant must pass the licensing examination with a score of 75% or better. If he or she fails the test, a waiting period of at least 30 days is required before retaking the exam. After failing three consecutive times, an applicant must wait six months before taking the exam again. Continuing education - a licensee is required to take a minimum of eight hours of continuing education each year, which must include: (3/2/2) >Three hours of federal law >Two hours of ethics instruction, and >Two hours of coursework on nontraditional mortgage products
BSA applies to financial institutions which include, among other entities:
Banks Securities brokers or dealers Entities engaged in money services Casinos Loans or finance companies, which include mortgage entity licensees and individual loan originators
FHA Credit Score Requirements
Borrowers with a minimum score of 580 or above are eligible for maximum financing Borrowers with a minimum score of 500 to 579 will be eligible for a loan with up to 90% LTV Borrowers with a minimum score under 500 are not eligible for FHA financing
The GLB Act - The Gramm-Leach-Bliley Act (Regulation P) is enforced by:
CFPB
Under the GLB Act, PRIVACY NOTICE requirements include:
Categories of NPI collected and disclosed Categories of affiliates and non-affiliated third parties to which the information is disclosed Categories of information about former customers disclosed and to whom under the joint marketing/service provider exception (with the customer's permission) If NPI is disclosed to non-affiliated third parties, the categories of information disclosed and the categories of third parties to which such information is disclosed An explanation of the consumer's right to opt out of the disclosure of NPI to non-affiliated third parties Disclosures required by the Fair Credit Reporting Act The policies and practices used to protect the confidentiality and security of NPI
Prepayment Penalties
Conforming loans typically do not provide for prepayment penalties. However, if the loan does contain a prepayment penalty, it must be disclosed in the note (or on an attachment to the note) and must be clearly disclosed on the Loan Estimate and Closing Disclosure. Under federal law, prepayment penalties are now restricted solely to fixed-rate qualified mortgages and may not be charged after the first three years of the loan term.
How often can consumers obtain free credit reports?
Consumers may obtain free credit reports annually from www.annualcreditreport.com.
(GLB) The SAFEGUARDS RULE puts in place the document security requirements relating to NPI. Under the Rule, a financial institution must:
Designate one or more employees to oversee the information security program Identify and assess the risks to customer information in each relevant area of the company's operation and evaluate the effectiveness of the current safeguards for controlling these risks Design and implement a safeguard program and regularly monitor and test it Select appropriate service providers and require them to safeguard consumers' personal information Evaluate and regularly update the program based on changing factors, including changes in the firm's business arrangements or operations or as a result of its monitoring of the program
The GLB Act - The Gramm-Leach-Bliley Act (Regulation P)
Enacted to protect the privacy of consumer personal information
Dodd-Frank effects upon the mortgage industry include the following:
Establishment of the Consumer Financial Protection Bureau (CFPB) Authorization of the Qualified Mortgage Rule Requiring an assessment of the borrower's ability to repay a mortgage (i.e., establishment of the Ability to Repay Rule) Restricts loan originator compensation (i.e., authorizing the Loan Originator Compensation Rule) Requires new borrower disclosures to replace GFE and TILA disclosures (i.e., TILA-RESPA Integrated Disclosure Rule) Limits loan terms such as prepayment penalties, negative amortization, balloons, etc.
Fannie Mae and Freddie Mac
Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are government-sponsored enterprises (GSEs), created to facilitate homeownership and mortgage financing in the United States. They are major participants in the secondary mortgage market and are considered to be quasi-governmental entities. Neither entity makes loans directly to borrowers; instead, they provide a source of funds for lenders.
BSA is enforced by:
FinCEN (Financial Crimes Enforcement Network)
Red Flags on a credit report include:
Fraud alerts on a credit report Active duty alerts on a credit report Address discrepancies on a credit report Inconsistencies in a credit report Documents that appear to be altered or forged Suspicious identification documents, such as: >Photos which do not match the person presenting the I.D., or >Identification documents which contradict other identification documents presented An application that is incomplete or looks altered, forged, or reassembled after destruction Inconsistencies with Social Security Number Multiple uses of the same phone number, address, or Social Security Number Invalid addresses or P.O. boxes Inconsistent information presented by the borrower Notification that the borrower is not receiving mail or that there have been unauthorized transactions on the account
Ginnie Mae
Government National Mortgage Association (Ginnie Mae) plays a similar role in the industry, but is only involved with FHA or VA loans. It is part of the Department of Housing and Urban Development (HUD). Ginnie Mae is a wholly-owned government association.
If a lender has an insured loan go into default:
HUD will reimburse up to the loan amount plus some expenses associated with the default.
How long can a CRA report negative information?
In general, a reporting agency may report negative information about an individual for up to seven years. Bankruptcies can be reported for up to ten years. There is no limitation on reporting information related to criminal convictions, a response to a job application with a salary of more than $75,000, or a response to an application for credit or life insurance in an amount exceeding $150,000.
Fraud for Profit
Inside job where the loan originator, real estate agents or appraisers do it for their benefit of making profit May involve a number of individuals (e.g., the seller, the mortgage licensee, an appraiser) and can take many forms: >Occupancy fraud (i.e., a representation that the buyer will reside in the property when that is not the case) >Documentation fraud >Appraisal fraud (i.e., the use of an inflated appraisal to secure a larger loan or to flip a property)
An AML program must:
Institute policies and procedures, based on its risk assessment, to detect money laundering and possible terrorist financing Designate a compliance officer to ensure the AML program is implemented effectively and updated regularly or as necessary Provide for education and training related to the AML program for the entity's employees Provide for ongoing training of staff with regards to their responsibilities under the program Ensure independent testing to monitor and maintain the program, the frequency of which should be based on the entity's risk assessment
private mortgage insurance (PMI)
Insurance provided by a private carrier that protects a lender against a loss in the event of a foreclosure and deficiency. PMI is often required by a lender when the LTV on a conventional loan exceeds 80%.
Factors affecting Mortgage insurance rates:
Issues such as: loan program, LTV ratio, the borrower's credit score affect mortgage insurance rates.
Under HMDA (C), what info must be reported for each covered transaction?
Loan number Date of application Type and purpose of loan Owner occupancy status Loan amount Type of action taken Location, by MSA (metropolitan statistical area), state, county, and census tract Race, ethnicity, and sex of applicant(s) and gross annual income Type of entity purchasing the loan, if sold on the secondary market within a year of consummation
SAR restrictions
Other than to FinCEN, a loan or finance company may not disclose a SAR or reveal that one has been filed
Benefits of PMI
PMI benefits borrowers by allowing them to purchase homes with less than 20% down and protects lenders from borrower default. In the event that a property is foreclosed or sold through short sale, the PMI may reimburse the lender for its losses up to a certain amount
GLB, Do Not Call rules DO NOT APPLY to:
Political calls, such as those from or on behalf of candidates running for political office Charities calling on their own behalf to solicit charitable contributions Calls to persons with whom a seller or telemarketer has an established business relationship Calls to persons who have provided prior written consent for receipt of telemarketing calls >"Prior written consent" may include providing an electronic signature on the website of a seller or telemarketer
The Goals of BSA include:
Preventing and detecting money laundering and the financing of criminal activity Documenting large currency transactions Improving the reporting requirements to aid in the investigation of financial crimes
The maximum loan amount guaranteed by the VA is determined by:
Property location The veteran's entitlement, found on the Certificate of Eligibility
(GLB) Telemarketing Sales Calls EXCEPTIONS:
Purely informational pre-recorded calls (e.g., a call from an airline, an appointment reminder) are exempt from the Rule. However, if any solicitation is part of the message, such a call would be prohibited unless the consumer has provided permission in advance.
To discourage flipping (and the potential for loan fraud), the FHA limits transactions as follows:
Resales occurring 90 days or less following acquisition will not be eligible for an FHA mortgage Resales occurring 91 to 180 days following acquisition will be eligible for an FHA loan provided an additional independent appraisal is obtained Resales occurring 90 days to one year following acquisition will be subject to additional review to establish value
The S.A.F.E. Act
Secure and Fair Enforcement for Mortgage Licensing Act, passed in 2008 in response to the mortgage lending crisis and the abuses which led to it. The Act is an effort to regulate the mortgage industry on a national level. The S.A.F.E. Act established minimum standards for licensure, requiring mortgage loan originators be either state-licensed or federally registered.
BSA Requirements
The BSA requires a financial institution to develop and implement a written anti-money laundering program that is reasonably designed to prevent the institution from being used to facilitate money laundering or the financing of terrorist activities
(GLB) Telemarketing Sales Rule (Do-Not-Call Rules)
The Do-Not-Call Implementation Act authorized the creation of the Do-Not-Call Registry and establishment of do-not-call restrictions under the Telemarketing Sales Rule. A consumer who does not want to receive phone calls from telemarketers, may submit his or her number to the national registry. A phone number remains on the Registry until it is removed or its service is discontinued.
The Dodd-Frank Act
The Dodd-Frank Act was passed in 2010 in response to the financial crisis. It contains sweeping reforms of many financial industries.
E-Sign Act
The Electronic Records in Global and National Commerce Act (E-Sign Act) governs the circumstances under which electronic signatures may be accepted on certain disclosures and documents.
(FHA) BASE LOAN AMOUNT
The FHA set, maximum loan amount by county. UFMIP can be financed in addition to the base loan amount.
FCRA - The Fair Credit Reporting Act (Regulation V)
The Fair Credit Reporting Act (FCRA), amended in 2003 by the Fair and Accurate Credit Transactions Act (FACTA), regulates consumer credit reporting agencies.
HMDA - The Home Mortgage Disclosure Act (Regulation C)
The Home Mortgage Disclosure Act (HMDA), implemented by Regulation C, requires certain lenders, based on asset size, location, and housing-related lending activity, to report data regarding its mortgage lending activity.
The MAP Rule - Mortgage Acts and Practices Advertising Rule (Regulation N)
The Mortgage Acts and Practices Rule (MAP Rule), also known as Regulation N, is a federal rule governing the advertising of mortgage products.
The Bank Secrecy Act/ Anti Money Laundering Act (BSA/AML)
The act establishing the US Treasury Department as the lead agency for developing regulation in connection with anti-money laundering programs, which require broker/dealers to establish internal compliance procedures to detect abuses. Designed to prevent the U.S. financial services industry from being used to launder money.
Under the E-Sign Act, If a mortgage company is utilizing electronic signatures, the following requirements must be met:
The consumer must: >Affirmatively consent to electronic delivery and may not have withdrawn the consent >Be provided with a statement informing him or her of the right to have the information in paper form, to what transaction(s) the consent applies, and the right to withdraw the consent >Be provided with information on how to withdraw the consent >Be provided with information on how to obtain paper copies, and >Prior to consent, be provided with information regarding the hardware and software requirements for access to electronic records >The consent process must reasonably demonstrate consumer's ability to access the information
Debt-to-Income Ratios
The debt-to-income ratio (DTI) is used when underwriting a loan to determine if the borrower is able to afford the mortgage.
The VA considers the following in determining eligibility for a VA loan:
The debt-to-income ratio (generally, 41% is the standard) Residual income (i.e., a determination as to whether the borrower has sufficient income, after paying fixed debts, to cover daily living expenses as set forth in VA underwriting guidelines)
Conforming Loan Limit
The maximum loan amount permitted by Fannie Mae on a single family residence. Loan limits may vary by county. Other than in high-cost areas, the loan limit for 2019 is $484,350.
Loan-to-value (LTV) ratio
The relationship between the loan amount and the appraised value or purchase price of the property securing the loan. The ratio is calculated using the lesser of the appraised value or purchase price. LOAN AMOUNT/PURCHASE PRICE LTV = BAL. 1ST / APPRAISED VALUE (AV)
Under FCRA, if a consumer disputes the contents of a consumer credit report:
The reporting agency must, in general, investigate and make a determination within 30 days of its receipt of the dispute
Appraisal fraud
The use of an inflated appraisal to secure a larger loan or to flip a property
ADVERSE ACTION
Under the Fair Credit Reporting Act, the term "adverse action" is defined very broadly to include all business, credit and employment actions affecting consumers that can be considered to have a negative impact, such as denying or canceling credit or insurance, or denying employment or promotion. No adverse action occurs in a credit transaction where the creditor makes a counteroffer that is accepted by the consumer. Such an action requires that the decision maker furnish the recipient of the adverse action with a copy of the credit report leading to the adverse action.
Certificates of Reasonable Value (CRV)
VA appraisal reports If a borrower wishes to purchase a property at a price higher than the value set forth in the CRV, he or she may do so by paying the difference in cash.
VA Funding Fee:
VA loans require an upfront nonrefundable funding fee, which is similar to the FHA's UFMIP. The funding fee is typically financed into the loan amount. Funding fees vary depending on whether the borrower: Is a first-time or repeat borrower Served in the military or in the Reserves or National Guard Makes a down payment of at least 5% or makes no down payment Examples of funding fees follow: Initial loan, active duty 2.15% Initial loan, reserve 2.4% Subsequent loan, active and reserve 3.3% Disabled 0.0%
Dwellings subject to HMDA reporting requirements include:
Vacation or second homes. Rental properties Individual condominiums or cooperative units Manufactured homes and mobile homes
According to the Homeowner's Protection Act (HPA), a lender must cancel PMI:
When a borrower pays the mortgage down to 78% of the original value, if current on payments and in good standing, or When the mortgage loan reaches its midpoint (e.g., if a 30-year loan, after 180 payments)
A borrower may submit a written request for the cancellation of the PMI:
When the borrower pays the loan amount down to 80% LTV, or If the borrower has not made a payment that was more than 30 days late in the past year or 60 days late in the past two years
Under the GLB Act, Privacy Notice:
a "clear and conspicuous" written notice describing a financial institution's privacy policies and practices.
According to the GLB Act, a CUSTOMER is:
a consumer with whom the institution has a continuing relationship.
To avoid mortgage insurance:
a lender may offer programs that include a first mortgage at 80% combined with a second mortgage to provide the required 20% down payment. If the borrower is able to qualify for both loans (simultaneous loans) under the Ability to Repay Rule, mortgage insurance may be avoided.
Straw Buyer
a person who purchases the property or applies for the loan in his or her own name for the actual borrower
(GLB) ESTABLISHED BUSINESS RELATIONSHIP
a relationship between a company and a consumer in which the consumer: Purchased, rented, or leased goods and/or services from the seller or participated in a financial transaction with the seller within the 18 months preceding a telemarketing call, or Made an inquiry into the business of the seller within three months preceding a telemarketing call
Occupancy fraud
a representation that the buyer will reside in the property when that is not the case
Red Flags Rule Requirements (FACTA)
all covered financial institutions and creditors must implement a written identity theft prevention plan, which must be approved by the entity's board of directors or senior-level management. The plan must include policies and procedures to: Identify red flags and incorporate them into the plan Detect red flags as identified in the plan Respond once a red flag is identified in relation to a covered account Update the plan periodically
The Gramm-Leach-Bliley Act (GLB Act) applies to:
all financial institutions over which the Federal Trade Commission has regulatory authority and "sets standards for developing, implementing and maintaining reasonable administrative, technical and physical safeguards to protect the security, confidentiality and integrity of customer information."
Secondary/back-end debt ratio
all monthly debt obligations (e.g., housing expense and other monthly obligations) divided by the gross monthly income. Does not include utility payments (though utility payments are included when calculating ratios for a VA loan), car insurance payments, phone bills, cable TV bills, etc. Include anything showing on the credit report, as well as obligations such as alimony and child support.
According to the GLB Act, a CONSUMER is :
an individual who has obtained an isolated financial product or service from a financial institution for personal, family, or household reasons, but does not have an ongoing relationship with the institution (e.g., arranged for a wire transfer, cashed a check, etc.)
CREDITOR (FACTA)
any business that: >Obtains and/or uses a consumer report in connection with a credit transaction >Furnishes information to consumer reporting agencies, or >Advances funds to or on behalf of a person that promises to repay the funds or to repay them from specific property pledges by or on behalf of the person >This definition includes mortgage brokers and mortgage lenders.
Under the GLB Act, Nonpublic personal information (NPI):
any personally-identifiable financial information that a financial institution obtains in connection with providing a financial product or service, unless that information is otherwise publicly available.
Identity Theft
assuming the identify of another person
The Red Flags Rule (FACTA)
authorized under the Fair and Accurate Credit Transaction Act of 2003 (FACTA), a measure to address identity theft.
(GLB) When may a company contact someone the DO NOT CALL registry?
if it has an established business relationship with the consumer. Even if a consumer's phone number is on the Registry, a seller or telemarketer may market to them via the telephone with the clear, conspicuous written consent of the consumer.
Under the GLB Act, Personally-identifiable financial information:
information provided to a financial institution by a consumer in connection with a credit transaction, or information secured by the financial institution in connection with such a transaction.
Under the GLB Act, NPI does NOT include:
information which is publicly available (e.g., government records, information in a telephone directory, information dispensed by the government). If an individual has directed the information to remain private, such as an unlisted telephone number, that information is also NPI.
Fraud for Property
involves a borrower lying about his or her income and/or assets in order to qualify for a mortgage loan. Fraud for property may also include using a straw buyer (i.e., a person who purchases the property or applies for the loan in his or her own name for the actual borrower), assuming the identify of another person (identity theft) or contract kiting (using a double contract to conceal the true price of the property from the creditor).
Guidance on Nontraditional Mortgage Product Risks
issued by the federal government in 2006. applies to all residential mortgage loan products that allow the borrower to defer repayment of the loan's principal or interest. Examples include interest-only products and negative amortization mortgages (except HELOCs and reverse mortgage loans).
Federal Housing Administration (FHA) loans
loans made by approved lenders and insured by the federal government through the FHA. FHA loans are only offered for owner-occupied primary residences.
(GLB) Telemarketing Sales Rule Violations:
may be fined up to $42,530 per violation, and each phone call is treated as a separate violation.
Primary/front-end debt ratio
monthly housing expense (e.g., principal, interest, taxes, insurance, and mortgage insurance) divided by gross monthly income.
BSA/AML Anti Money Laundering Programs:
must be approved by senior management and a copy made available to FinCEN.
Under the GLB act, NPI includes:
name, address, Social Security Number, or other information on a loan application. NPI also includes any information derived from the loan origination process, such as: >Account numbers, payment history, loan balances, deposit balances, or credit card purchases >A credit report
GLB, Do Not Call rules apply to:
telemarketers and third-party sellers
high loan-to-value (HLTV) ratio
the first lien plus the maximum amount available on the line of credit or second lien (not only the amount disbursed or drawn), divided by the property value. HLTV and TLTV (Total Loan to Value) are interchangeable. HLTV (TLTV) = (BAL 1ST + LIMIT on HELOC) / AV
On VA Loans, The VA will guarantee:
the lesser of 25% of the loan balance or 25% of the conforming loan limit ( for 2019, $484,350 in most areas).
combined loan-to-value (CLTV) ratio
the sum of first and second mortgage divided by lower of the appraised value or purchase price. This ratio uses only the disbursed balance of the second lien (if the second lien is a line of credit). CLTV = (BAL 1ST + BAL 2ND) / AV
If an FHA borrower wishes to have their FHA file transferred while it is in process
they will need to request the transfer in writing and pay any fees due to the original lender.
For submission of a false mortgage loan application, conspiracy to commit fraud, or bank fraud, Mortgage loan fraud is punishable by:
up to 30 years in jail and/or a $1 million fine
For making a fraudulent or false statement, Mortgage loan fraud is punishable by:
up to five years in jail and/or a $100,000 fine
Contract Kiting
using a double contract to conceal the true price of the property from the creditor
As of January 1, 2018, non-depository institutions with a home or branch office in an MSA are subject to HMDA:
when meeting the same uniform loan-volume threshold that applies to depository institutions.
Loan Fraud occurs when:
with intent to defraud, a person makes a deliberate misstatement or omits a material piece of information which would affect the person's decision regarding the loan transaction. Such an act may be committed by a borrower or a lender.
(BSA) When must a SAR must be filed:
within 30 days of detection of a possible violation if the covered institution detects: Criminal violations that: Involve insider abuse in any amount Total $5,000 or more if a suspect can be identified, or Total $25,000 or more, whether a suspect is identified or not Transactions that total $5,000 or more if the bank knows or suspects that the transaction: May involve money laundering or other criminal activity Attempts to evade the BSA Has no legitimate purpose, or Is not typical for the customer
