Real Estate Finance ch.3

The Community Reinvestment Act, enacted in __________, ensures that banks serve the needs of the community in which they were chartered.

1977

Fair credit Reporting Act (FCRA)

A federal law designed to protect consumers against unfair credit reporting practices and protect credit privacy. The general purpose is to assure the consumer that these agencies are fair, accurate, and exhibit confidentiality in their credit reporting methods

Closed-end credit

A loan that is funded in its entirety up front, with no additional advances that vary over time

Federal Housing Administration (FHA)

A primary program administered by HUD, it began in 1934. It provides mortgage insurance on loans the program's approved lenders throught the U.S. and its territories. It insures mortgages on single-family and multifamily homes, including manufactured homes, and hospitals. It also operates entirely from its self-generated income, and costs tax payers nothing

Community Development Block Grant (CDBG)

A primary program administered by HUD, was created in 1974. It is administered by the Office of Community Planning and Development (CPD). The program funds are used to renovate housing; construct or improve public facilities, such as water, sewer, streets, and neighborhood centers; purchase real property; and assist private business in economic development activities

Regulation Z applies to:

A provision from the Truth in Lending Act (TILA) that involves lenders and how they should advertise credit. The Act requires a level of disclosure after using "trigger terms" involving •the amount of down payment •the number of payments •the amount of a payment •total cost of finance charges. In general, the more specific the statement, the more likely it is to trigger additional disclosure

Texas Department of Savings and Mortgage Lending (SML)

A texas agency, subject to the oversight and under the jurisdiction of the Finance Commission of Texas. Responsible for •the chartering, regulation, and supervision of the state's thrift industry. •license/regulation of the state's mortgage indusrtry.

Consumer Financial Protection Bureau (CFPB)

Administers the Interstate Land Sales Full Disclosure Act. It was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The purpose is to promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services

Fair and Accurate Credit Transaction Act (FACTA)

Amemds the federal Fair Credit Reporting Act (FCRA). It is intended to primarily help consumers fight the growing crime of Identity theft. The act provides consumers, companies, consumer reporting agencies, And regulators with important tools to expand access to credit and other financial services for all Americans, and enhance the accuracy of consumers' financial info, to help fight identity theft. The act provides uniform national standards for credit markets, and strong consumer protection.

Farm Service Agency (FSA)

An agency of the U.S. Department of Agriculture (USDA), its farm loan programs are for farmers, or ranchers, who are unable to obtain credit to start, purchase, sustain, or expand a family farm. These loans are temporary in nature, and the goal is to help the farmer/rancher graduate to commercial credit. Once he/she is able to obtain commercial credit, the agencies mission to provide temporary, supervised credit is complete. These loans include: •Farm ownership loans •Operating loans •Emergency loans •conservation loans

Residential Mortgage Loan Originator (RMLO)

An industry term for residential (loan originators), as mandated by the SAFE Act. Can be a mortgage banker, broker, and corresponding lender. Recent legislation has made it possible to easily research the background of a loan originator. Knowing how to check the background will help license holders provide buyers with a list of competent and reliable lenders. A good rule of thumb, always provide buyer with at least 3 loan originators. A buyer is free to use any loan originator they choose

The Dodd-Frank Wall street Reform and Consumer Protection Act, signed into law in 2010, established the ______________.

Consumer Financial Protection Bureau (CFPB)

SAFE Act (Secure And Fair Enforcement for Mortgage Licensing Act)

Designed to enhance consumer protection and reduce fraud by establishing minimum standards for the licensing and registration of state-licensed (mortgage loan originators), and for the establishment of a nationwide mortgage licensing system and registry (NMLSR) for the residential mortgage industry. Also a key component of the Housing and Economic Recovery Act of 2008 (HERA)

Truth in Lending Act (TILA)

Enables the consumer to compare the cost of cash vs credit, and provides consumer with substantive rights, including the right to cancel certain real estate loan transactions. It requires transparency in lending, and establishes disclosure standards for advertisement that refer to certain credit terms through "trigger terms"

Community Reinvestment Act (CRA)

Enacted by Congress in 1977, and substantially revised in 1995, it is a significant federal law that affects lenders to ensure that banks serve the credit needs of the community. The law's examinations are conducted by federal agencies including the Federal Reserve, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and the Office of Thrift Supervision

Home Mortgage Disclosure Act (HMDA)

Enacted by congress in 1975, the act grew out of public concern over credit shortages in certain urban neighborhoods. It is a disclosure law, financial institutions must report data regarding loan originations, applications, and loan purchases. It requires lenders to report ethnicity, race, gender, and gross income of mortgage applicants and borrowers. Lenders must also report info regarding the pricing of loan

Administrative Procedures Act (APA)

Enacted in 1946, it was put into place standardized methods for the proposal of legislation from both executive departments, and independent agencies under federal control. As it relates to real estate finance, the act establishes procedural rules for many government agencies. These procedural rules control the methods by which these agencies may enact and impliements new legislation, ensuring that their activities do not infringe on the rights of those persons and/or organizations that fall under the scope of those agencies. Congress, federal courts, and government of territories, or possessions of the U.S. are not governed by the Act, nor the President, as these are not considered agencies as defined within the regulation

Equal Credit Opportunity Act (ECOA)

Ensures all consumers are given an equal chance to obtain credit. It prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age or because a person receives public assistance in whole or in part. ... When determining a consumer's creditworthiness, financial institutions must instead consider income, expenses, debts and credit history. It also requires mortgage loan originators apply credit standards in a fair manner. It does not require all mortgage loan originators to have the same standards, simply that they apply their existing standards equally

Regulation X

Ensures that consumers are provided with helpful information about the cost of mortgage settlement and protected from high settlement charges caused by abusive practices by implementing RESPA

Consumer Financial Protection Bureau (CFPB)

Established under Dodd-Frank, the Bureau is responsible for enforcing federal consumer financial law (like TILA, FCRA, RESPA, and ECOA), and has the authority to examine and enforce consumer protection regulations for all mortgage-related businesses. They have the authority to oversee non-bank businesses, regardless of size, in certain markets: Mortgage companies (originators, brokers, servicers, and loan modification or foreclosure relief services.) Payday lenders, and private education lenders

Office of Public and Indian Housing (PIH)

HUD assists low-income households with rental subsidies through project based Section 8 certificates and vouchers, through the office of Public and Indian Housing.

Public Housing

HUD provides financial assistance through public housing programs that, provide direct payment to Public Housing Agencies (PHAs) and Indian Housing Authorities (IHAs) to develop and operate housing for low income families. The Office of Public and Indian Housing (PIH) administers HUD's public housing programs

Open-end credit

Has payments and advances that vary over time. (A credit card is an example)

Real estate transactions regulated by the Office of Consumer Credit Commissioner, (OCCC) includes which of the following?

Home equity loans, home improvement loans, secondary mortgages, and property tax lien loans

TILA/RESPA Integrated Disclosures (TRID)

Indicates to lenders that buyer/seller has signed an exclusive agreement. The forms also disclose to borrowers about settlement costs associated with mortgage transaction, outlines lender servicing and escrow account responsibilities

U.S. Department of Agriculture (USDA)

Insures Rural Development Guarantee Housing Loan Program, or Section 502 loans, with 100% financing for qualified buyers. First-time and repeat buyers qualify. The program is for primary residence only, no second homes, or investor financing is available under this program. It is for purchases and refinance only. (Cash-out refinances not allowed). It has only 1 loan repayment plan •offering 30-yr fixed-rate mortgages only. •2.00% fee for purchase, paid at closing •Annual fee: .5% of loan balance •credit score of 640 is cutoff point •debt-to-ratio: 29/41

The Office of Fair Housing and Equal Opportunity (FHEO)

Is an agency within the United States Department of Housing and Urban Development. It is responsible for administering and enforcing federal fair housing laws and establishing policies that make sure all Americans have equal access to the housing of their choice.

Fair Housing Initiative Program (FHIP)

Is managed by the Office of Fair Housing and Equal Opportunity (FHEO) at the U.S. Department of Housing and Urban Development (HUD). The program provides funding to fair housing organizations and other non-profits who assist people who believe they have been victims of housing discrimination. As well as fund public education

Housing and Urban Development (HUD)

Its mission is to create strong, sustainable, inclusive communities, and quality affordable homes. It works to strengthen the housing market, to bolster the economy, and protect consumers; meet the needs for quality, affordable rental homes; utilize housing as a platform for improving quality of life, and build inclusive and sustainable communities free from discrimination

Which of the following verbiage is considered a trigger word as specified by truth-in-lending that a license holder and a loan originator should avoid adding to their flyers?

Monthly Payments $300

RESPA Section 9

Prohibits a seller from requiring a purchaser to buy title insurance from a specific company

RESPA Section 8

Prohibits kick backs, unearned fees, referral fees, splitting of charges except for actual services preformed

Interstate Land Sales Full disclosure Act of 1968

Protects consumers from fraud in the sale or lease of land. The Act requires developers to register subdivisions of lots or condominium units sold in interstate commerce. The Statement of Record discloses and documents current information about the ownership of the land; the state of title; physical characteristics; planned availability of roads, services, and utilities; and other matters

office of Consumer Credit Commissioner (OCCC)

Regulates the credit industry and educates consumers and creditors. It helps produce fair, lawful, and healthy credit environment for social and economical prosperity in Texas. It's regulated real estate transactions include: •Home Equity Loans (allow borrowers to use the market value of a home as collateral for loan) •Secondary Mortgages (also known as second lien or junior lien mortgages) •Home Improvement Loans (can hold first lien, or second lien positions) •Property Tax Lien Lenders (used to pay delinquent taxes on real property)

Regulation C

Requires lending institutions to report public loan data. It is to provide the public with information that helps show if financial institutions are serving the housing credit needs of the neighborhoods and communities. It also helps aid public officials in targeting public investments from the private sector, to areas where they are needed

Real Estate Settlement Procedures Act (RESPA)

Requires mortgage loan originators and servicers of residential loans to provide borrowers with timely disclosures on the nature and cost of real estate settlement process

Texas Department of Housing and Community Affairs (TDHCA)

Responsible for affordable housing. Their mission is to serve the state's extremely low to moderate-income population. They do so by acting as a conduit for federal grant funds for housing and community services. They also operate as a housing finance agency

RESPA Section 10

Sets limits on the amounts that a lender may require a borrower to put into an escrow account

Redlining

The practice of refusing to provide finance in a particular area because of location

How can a lisence holder ensure that a loan originator is properly licensed as an RMLO

They can look them up in the NMLSR

Wall street reform and consumer financial protection Act of 2010 (Dodd-Frank)

Transferred the authority to develop and maintain the Federal Registry from various agencies, to the Consumer Financial Protection Bureau (CFPB). Signed by Pres. Obama, this landmark legislation represented a sweeping restructuring of U.S. financial regulation in response to the worse financial crisis since the Great Depression. Its purpose is to promote the financial stability of the U.S. by improving accountability and transparency in the financial system, and to protect consumers from abusive financial service practices

Nationwide Mortgage Licensing System and Registry (NMLSR)

With the enforcement of the Federal SAFE Act, all residential mortgage loan originators must now be registered to this licensing system and registry

Can a license holder work with a loan originator, giving the originators name to their buyers?

Yes. The license holder can distribute fliyers with the loan originator, but the license holder should provide their buyers with the names of at least 3 RMLOs to consider

Fair Housing Assistance Program (FHAP)

is a federal program that is administered by the Office of Fair Housing and Equal Opportunity (FHEO) at the U.S. Department of Housing and Urban Development. (HUD)

Texas Veteran Land Board (VLB)

was established to administer benefits exclusively for Texas Veterans