2REF/ FHA/ HERA/NSP/FHFA/ARRA/SAFE/MDIA/CFPB/APA/TILA/RESPA/HMDA/CRA/HOLDEN/USURY/CRMLA/FARMER MAC/FARMER CREDIT SYSTEM/USDA/FARMER CREDIT SYSTEM/FSA

Housing Financial Discrimination Act

(Holden Act)

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

APA

Establishes processes and procedures for how federal agencies propose and establish regulations.

VA Loan

Guarantees the home loan Home buyer pays on a mortgage

"What is significant about the Unruh Act of 1959

List of protected classes is not restrictive Covers lending services Covers service from hotels and motels Licensee actions included

components of the FSA program.

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.

The CFPB website

Where would you recommend they go for clear, consumer-oriented education on this topic?

HERA

address the subprime mortgage crisis. Recovery act that includes SAFE and MDIA

SAFE

create uniform licensing standards nationwide for mortgage loan originators. Hugh works as a loan officer at a bank. Because of the ______, he must be registered with the Nationwide Mortgage Licensing System.

Secure and Fair Enforcement for Mortgage Licensing Act (SAFE)

sets a minimum standard for licensing and registering mortgage loan originators (MLOs). Specific state licensing requirements can be found in the Nationwide Mortgage Licensing System Registry (NMLSR). SAFE should allow consumers to conduct research, obtain unbiased professional information, and make informed decisions when choosing lending professionals. Widespread consumer use of the registry is intended to drive dishonest or incompetent MLOs out of business.

ARRA

stimulus package"

Purpose of the FCS

1.FCS is a government-sponsored enterprise, like Fannie Mae. 2. It provides financing for buyers of agricultural properties, such as farms and ranches, and housing in rural communities. 3. It is not funded through the federal government. 4. The FCS institutions that provide the loans don't accept deposits. 5.The FCS is a network of financial cooperatives that are owned and operated by the customers it serves.

other specifics about the Seller Financing Disclosure Law:

AKA Residential Purchase Money Loan Disclosure Law. Transactions that are already covered by similar disclosure laws (such as TILA or RESPA) are exempt. The disclosures under this law are required when the seller is extending credit to the buyer and anyone other than the buyer or seller (for example, the real estate broker) negotiates the credit agreement, prepares paperwork for the loan, or is paid in any way to arrange financing. Exemptions are made for attorneys representing either party and for escrow agents. Disclosure is required when the seller finances any part of the purchase on behalf of the buyer for properties with four units or fewer, when credit arrangements have a finance charge and include three or more payments, and when a credit arranger serves the parties in the transaction. Items required to be disclosed include the terms of the note, security instrument used, encumbrances that apply and their terms, balloon payment information, and documentation showing that the buyer's creditworthiness has been verified.

The CFPB uses education to accomplish its mission, such as the ______ publications.

Know Before You Owe

MDIA

Specifies timing of required loan disclosures and limits the fees a creditor can charge a borrower prior to disclosing the terms (lender may only charge a credit report fee).

Direct farm ownership loans from the ______ may be used to buy farmland, construct and repair buildings, and make farm improvements.

USDA Farm Service Agency

Which of these circumstances must be in place for the Seller Financing Disclosure Law to be in effect?

When the seller is extending credit to the buyer in a seller carry-back When credit is arranged by the real estate licensee acting as a mortgage broker When the transaction involves a residential property of one to four units When credit arrangements have a finance charge

California Residential Mortgage Lending Act (CRMLA)

provide mortgage bankers with their own licensing law. mortgage bankers were left out of those licensing requirements. regulate the mortgage banker's primary functions of making and servicing residential mortgage loans. CRMLA licensing applies to those that make federally related mortgage loans, -- those that make loans to finance the construction of a home, ---those that sell the loans to institutional investors, and those that service loans. Licensing authorizes them to buy and sell federally related mortgage loans and to provide contract underwriting services for institutional lenders. Licensees may service any federally related mortgage loan, regardless of whether they make the loan or buy the loan through a servicing portfolio. A licensed CRMLA lender is also authorized to provide brokerage services to a borrower, by attempting to obtain a mortgage loan on behalf of the borrower from an institutional lender. Employees who engage in brokering activities on behalf of the CRMLA licensee must be licensed mortgage loan originators. 1,A mortgage banker is a primary lender that funds residential loans and may also service residential loans. 2. The mortgage loan broker (MLB) and mortgage loan originator (MLO) have become synonymous since passage of the SAFE Act, which requires loan originators to be licensed. The MLB/MLO matches consumers with loans, takes loan applications, and processes them to the funding stage. A real estate licensee in California can apply for an MLO endorsement, allowing that licensee to function as a licensed MLO.

CFPB

Agency created by the Dodd-Frank Act.

Holden Act/Housing Financial Discrimination Act of 1977

Also known as Housing Financial Discrimination Act it illegal for lenders to consider "the racial, ethnic, religious, or national origin composition of a neighborhood" when making credit-granting decisions. making more money available to urban applicants. prohibit "redlining," all loans for residential dwellings of one to four units are covered by this legislation, and licensees should ensure that any buyers they work with receive a "Fair Lending Notice" disclosure. The form RE867 from DRE meets the requirements of this disclosure.

California's Seller Financing Disclosure Law requires the arranger of credit to provide both the buyer and seller with disclosures. What's the timing requirement for this disclosure?

As soon as possible before the execution of any note or security document

A mortgage banker licensed under the ______ may make, sell, and service residential mortgage loans.

California Residential Mortgage Lending Act

American Recovery and Reinvestment Act (ARRA)

Called the "stimulus package," its goals were to create and save jobs, spur economic activity, and increase accountability and transparency in government spending. Billions of dollars were budgeted to provide tax cuts for millions of families and businesses, as well as funding for entitlement programs, including unemployment benefits. Housing was only one of the many areas that were targeted to stimulate the economy. Some of the efforts that the act created or supported included

USDA Rural Development Program offer

Direct loans Grants Loan guarantees Advisory services

CFPB Protects Consumers

Dodd-Frank Act was created in response to the subprime mortgage crisis, provide stricter regulation and oversight of the financial services industry. creation of the Consumer Financial Protection Bureau (CFPB). The purpose of the CFPB is to promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services. The CFPB consolidated several authorities scattered throughout the federal government. CFPB oversight privately owned "non-bank financial institutions" that hadn't previously been well regulated. debt-and-fee downward spiral.

actual program.

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

Randall needs some new equipment for his ranching operation, and he needs a loan to purchase the equipment. When he approaches his local bank and applies for a Farm Credit System loan, how is the loan funded?

From the sale of Farm Credit System debt securities

CalVet Loan

Funds the loan to the veteran Home buyer holds equitable title

American Recovery and Reinvestment Act (ARRA)

Homebuyer credit of $8,000 for all homes purchased between January 1, 2009 and December 1, 2009 Repairing and modernizing public housing, including increasing the energy efficiency of units Tax credits for financing low-income housing construction Rental assistance through the Housing Choice Voucher program An increase of funding for the Neighborhood Stabilization program and CDBG Rental assistance to prevent homelessness Mortgage assistance to wounded service members

California Mortgage Loan Broker Law-of-Many-Names

If you have a real estate broker license in California, you can also earn an endorsement that licenses you to act as a mortgage loan originator (MLO). Licensing requirements fall within the federal SAFE Act. The California law that regulates the activities of real estate brokers acting as mortgage loan brokers/MLOs is called the Mortgage Loan Broker Law, or the Real Property Loan Law. The licensee must have the borrower sign the Mortgage Loan Disclosure Statement prior to becoming obligated for the loan. The commission that a licensed MLO may charge is limited. The law was enacted to curb abuses, such as exorbitant commissions and inflated costs charged to borrowers by unscrupulous mortgage brokers. In California, two agencies regulate the activities of mortgage loan originators: 1. California Department of Corporations: MLOs licensed under this agency can negotiate loans only with lenders licensed by the California Finance Lenders Law. 2.California Department of Real Estate: MLOs licensed under DRE can work with all banks, credit unions, and lenders in general.

Farmer Mac

It doesn't offer direct loans with flexible terms to rural borrowers. 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.

ARRA

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. Brittany and Mac received a credit of $8,000 for the home they purchased in June 2009. Created tax credits for financing low-income housing construction Provided rental assistance to prevent homelessness

synonymous with the California Real Property Loan Law?

Mortgage Loan Broker Law Necessitous Borrower Act Article VII of the Real Estate Law

RESPA

Regulates closing costs and settlement procedures; outlaws kickbacks that increase the cost of settlement.

HMDA

Requires financial institutions to report their mortgage data Requires financial institutions to document and publicly disclose information about their lending practices in order to reveal lending practices that could be discriminatory.

TILA

Requires lenders to make disclosures that allow consumers to understand and compare the costs of making a purchase using credit

CRA

Requires lenders to meet the needs of their community by investing in development efforts that enable low- and moderate-income members to afford to buy a home.

Zack and April are purchasing a home. They apply to three different lenders and review the loan estimates they receive. Each form includes a field identifying the National Mortgage Licensing System ID number for the lender. What is the act that requires this licensing identification to be available to consumers?

SAFE Act

The Mortgage Disclosure Improvement Act amends ______ in terms of the timing of lender disclosures.

TILA

Mortgage Disclosure Improvement Act (MDIA)

TILA to require specific timing related to disclosures that give consumers time to think about the loan they're about to obtain. It also stipulates that the only advance fee that a creditor can charge a borrower (before disclosing the terms of the loan) is a credit report fee. Closing may be delayed if the proper disclosures aren't provided in a timely manner. Lenders must allow applicants at least seven business days to review the Loan Estimate, and a minimum of three business days to review the Closing Disclosure form. The loan can't be closed or signed off before this waiting period is complete. Additionally, certain changes to fees and APR triggers a new three-day window for the borrower to evaluate and determine whether the change is acceptable. Following MDIA rules for disclosure could put a scheduled closing in jeopardy. This can impact closings if disclosures are delivered too close to the final closing date and the three-day rule is triggered. To prevent this, plan for plenty of time for closing, and make sure that any changes get prompt review.

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. Example Steve and Minerva are retiring and selling their five-acre "gentleman's farm." Chet, a young buyer, thinks Steve and Minerva's place is just right for a community-based agriculture business, but he's having trouble finding a loan through standard sources. You tell him about the Farm Credit System; he applies for a loan through FCS, and a month later, he can tell his friends and family, "I bought the farm." (They worried at first, until he explained.)

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. Example The Wokalski family is looking for a place to live after their landlord sold the rural home they were renting. They can't afford to buy, but they want to stay in the area because their child goes to the local school. Both Mr. and Mrs. Wokalski work, but their combined income still puts them in the low-income range. A neighboring property is for sale, but they don't qualify for a conventional loan based on their income. Fortunately, they learn about and apply for a single family direct home loan from the USDA rural development program. They're in like Flynn! Or rather, like Wokalski.

Consumer Financial Protection Bureau (CFPB).

The purpose of the CFPB is to promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services

USDA Rural Development Program

USDA Rural Development program assists rural Americans by offering loans, grants, and loan guarantees for housing (as well as economic development, health care, first responder services and equipment, and water, electric, and communications infrastructure). The program supports loans to businesses through banks, credit unions, and community-managed lending pools. It also provides advisory services to help agricultural producers and cooperatives launch and improve their operations. Unlike Farmer Mac, USDA's Single Family Housing Programs will make direct loans (as well as loan guarantees) to help low- and moderate-income rural Americans buy safe, affordable housing in rural areas. It also offers loans and grants to help rural residents make health and safety repairs to their homes.

Farmer Mac

e 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.

California's Seller Financing Disclosure Law

mirrors the spirit of the federal Truth in Lending Act, but at the state level. residential transaction ensure that all parties are appropriately educated about loan terms, and who is being compensated; create disclosure requirements when other disclosure laws don't apply to the loan in a residential transaction. BROKER ALSO A MLO are responsible for ensuring that the proper disclosures are provided to the buyer from the seller, and to the seller from the buyer. These disclosures must be provided as soon as possible before the execution of any note or security document. it's always the responsibility of the "arranger of credit." What is "an arranger of credit"? If you help the parties with the finance paperwork, and receive a fee for doing so, it's you!

Housing and Economic Recovery Act of 2008 (HERA)

was created to address the subprime mortgage crisis. The HOPE for Homeowners program, which aimed to stabilize the housing market by preventing foreclosures and helping subprime borrowers refinance into more affordable fixed-rate mortgages. The program encouraged lenders to write down principal loan balances to a maximum of 96.5% of the home's new appraised value (since home values had fallen for many of these properties). The Federal Housing Administration (FHA) was authorized to insure up to $300 billion in new 30-year fixed rate mortgages for this purpose. The Neighborhood Stabilization Program (NSP), which gave emergency assistance grants to states to purchase and redevelop foreclosed and abandoned homes and residential properties. NSP is a component of the Community Development Block Grant (CDBG) program. Creation of the Federal Housing Finance Agency (FHFA), which regulates and manages the finances of the government-sponsored entities Fannie Mae and Freddie Mac. The SAFE Mortgage Licensing Act and the Mortgage Disclosure Improvement Act

Creation of the Federal Housing Finance Agency (FHFA),

which regulates and manages the finances of the government-sponsored entities Fannie Mae and Freddie Mac.

CRMLA applies to mortgage banks,

which work only with residential mortgage loans. Lenders that work with other types of loans are regulated by other laws.

CalVET and CalHFA Mortgage Assistance Programs

CalVET program and the CalHFA program. 1.CalVet CalVet home loan products offer below-market interest rates with low or no down payment requirements. The federal VA loan is funded by a lender that receives a guarantee of payment from the VA should the borrower default on the loan. In contrast, CalVet actually acts as the lender and the seller. Sound weird? With a CalVet loan, CalVet holds legal title to the purchased property. In effect, the payments the veteran makes are to CalVet as the owner/seller of the property, rather than mortgage payments to a lender. The veteran holds equitable title to the property until the loan is paid off. The CalVet Home Loan program offers: Low interest rates - A 3.75% fixed rate is available for eligible veterans. Low costs - Other than a 1% origination fee, there are no other lender fees (no underwriting, processing, or document fees). Manual underwriting - Each file is reviewed by a live underwriter, who approves "make sense" loans. 2.California Home Financing Agency (CalHFA) finances mortgage loans to low- and moderate-income homebuyers. The agency, formerly known as CHFA, doesn't offer loan products directly to consumers, but instead through approved, private lenders. CalHFA loan products are typically priced at reduced, fixed interest rates and often include down payment assistance. Eligibility requirements apply for both the property and the borrower. The property must be located in California, be the buyer's primary residence, be a detached single-family residence, condo or attached unit in a planned unit development, be five acres or smaller, and be priced at or less than the allowable price limit, which varies by county. The borrower must: Have an income within designated limits Be a U.S. citizen, permanent resident, or qualified alien Reside in the home for the length of the loan (e.g., until refinanced or sold) Complete a CalHFA home buying education course Satisfy underwriting requirements Borrowers who use the CalHFA down payment program must also be first-time home buyers.

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.

The Protection Trifecta

Education, through plain-English notices such as "Know Before You Owe" publications for mortgagors, credit borrowers, and consumers obtaining student loans. Enforcement, through rule-making, supervision, and enforcement of federal consumer financial protection laws, and restricting unfair, deceptive, or abusive acts or practices against consumers. Research, through response and investigation of consumer complaints, researching consumer behavior, and monitoring financial markets for new risks to consumers.

Farmer Mac

Farmer Mac operates as a buyer in the secondary market, focusing on agricultural loans, such as mortgages for agricultural properties, and rural housing. As a secondary market player, Farmer Mac doesn't make loans like Mackie, but merely purchases these loans from agricultural lenders, and sells financial instruments backed by these loans. Farmer Mac is one government-sponsored enterprise that's regulated and supervised by the Farm Credit Administration (the Farm Credit System is another). It was created by the Agricultural Credit Act of 1987. Farmer Mac's role is the guarantee of timely repayment of principal and interest to investors in the secondary market This available market is what allows primary lenders to make agricultural loans. When Farmer Mac buys the loans, the lenders have capital available to make new loans. The loans are packaged, or "pooled," and sold to investors as securities backed by the loans. Farmer Mac also may serve as a loan pooler. So our loan, Mackie, wasn't created by Farmer Mac, but the little feller is possible because of the secondary market created by Farmer Mac's presence.

Unruh Civil Rights Act 1959

In 1959, civil rights activists helped pass the Fair Employment Practices Act (FEPA). FEPA banned employment discrimination on the basis of race, religious creed, color, national origin, and ancestry. Because most fair housing laws have been based on fair employment law, prohibits arbitrary discrimination by businesses that offer services to the public. This includes housing, public accommodations, and, of course, lending. Licensees are bound by this act, as are any settlement service providers assisting their clients. sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, or sexual orientation

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.

Usury Laws

Usury is lending money at an excessively high rate Usury laws are enacted to prevent this practice and protect consumers. California has usury laws in place, prohibiting interest rates above 10%, but federal law effectively limits these laws to private lenders. Exemptions also apply to loans that are secured by real property and arranged for by a real estate broker. although the interest rate charged was excessive (15%), and above California's usury law limit, it did not violate usury law. (The broker who arranged the loan was the sole shareholder of California Capital Loans, Inc., at the time the loan was made.)

The Farm Credit System

a government-sponsored enterprise. It provides financing for agricultural producers, for farm- or ranch-related improvements, and for housing in rural communities. Agricultural producers include farmers, ranchers, producers and harvesters of aquatic products, their cooperatives, and certain farm-related businesses. The FCS is comprised of a network of financial cooperatives that are owned and operated by the same customers it serves. 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, an agency of the federal government, provides oversight. -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. -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.

USDA Farm Service Agency

available through the Farm Service Agency (FSA), allowed them to obtain flexible financing—with no down payment—to purchase the adjacent property. The FSA provides both direct farm ownership loans and guaranteed loans to lenders. Their direct farm ownership loans may be used by farmers and ranchers to: Buy farmland Construct and repair buildings Make farm improvements With a direct farm ownership loan, FSA loan officers handle every aspect of the loan application process, and funding is provided through congressional appropriation. The maximum loan amount for a direct farm ownership loan is $300,000. Although there's no down payment requirement, qualifications do apply. All applicants for direct farm ownership loans must have participated in the day-to-day management of a farm or ranch for at least three years. FSA guaranteed loans provide lenders (e.g., banks, Farm Credit System institutions, credit unions) with a guarantee of up to 95% of the loss of principal and interest on a loan. Farmers and ranchers apply to an agricultural lender, which then arranges for the guarantee. The FSA guarantee permits lenders to make agricultural credit available to farmers who may not meet the lender's normal underwriting criteria. FSA guaranteed loans are available for both farm ownership and operating purposes. As with the direct loan program, a percentage of guaranteed loan funds are targeted to beginning farmers and ranchers, and to minority applicants

The Neighborhood Stabilization Program (NSP),

gave emergency assistance grants to states to purchase and redevelop foreclosed and abandoned homes and residential properties. NSP is a component of the Community Development Block Grant (CDBG) program.

Housing and Economic Recovery Act of 2008 (HERA)

stabilize the housing market by preventing foreclosures and helping subprime borrowers refinance into more affordable fixed-rate mortgages. The Federal Housing Administration (FHA) was authorized to insure up to $300 billion in new 30-year fixed rate mortgages for this purpose.