California: Real Estate Principles - Chapter 16
Recession clause
Informs purchaser of recession rights as provided by law (Does not apply to residential purchase money or first mortgage or deed of trust loans.) A clause in a contract, required by some state subdivided land sales laws, that informs a purchaser of his/her rescission rights as provided by state law.*
Lily, a licensee, has been referring her first-time home buyers to Safe Insurance Company for all of their insurance needs. The insurance company has been providing Lily with "motivation" in the form of cash to keep the referrals coming. Which law or act prohibits this type of violation? Fair Lending Laws RESPA Equal Credit Opportunity Act Both A and C
RESPA RESPA prohibits kickbacks or unearned fees for referring customers to insurance agencies, etc.
Violators of RESPA can face punishments of?
Violators of RESPA can face punishments of up to one year in jail, and/or a $10,000.00 fine.
No charge can exceed the amount customarily charged for the same service in the community in which What article does it fall under?
The services take place Article 7
Brokers must provide both the buyer and seller _____ on first feed loans under $30,009 and junior trust deeds under $20,000 What article does it fall under?
Copies of the appraisal report Article 7
An real estate licensee is considered a _____ if the licensee routinely assists sellers in determining whether a proposed buyer in a land contract or purchase money mortgage is creditworthy
Creditor
What is the true purpose of Truth in Lending Law? Closing Costs Controlling Interest Rates Disclosure APR
Disclosure
Anyone who makes more than 10 collections per year or collects more than $40,000 must be licensed as a California
Real estate broker
On hard money loans of $30,000 over for first trust deed loans and $20,000 over for junior deeds of trust, the broker may charge What article does it fall under?
As much commission as the borrower will agree to pay Article 7
The ______ ensures buyer and seller in a residential real estate transaction involving a new first mortgage loan have knowledge of all settlement costs
Real estate settlement procedures act (RESPA)
Truth in lending law
Requires lenders to disclose to buyers the true cost of obtaining credit so the borrower can compare cost of lenders
Redlining
Redlining, as you may recall, is the illegal loan practice under which a lender refuses to grant a housing loan in a certain geographic area, based on the neighborhood trends, and without regard for any merits of the borrower or the home itself.
Annual Percentage Rate (APR)
Relationship of the total finance charge to the amount being financed An expression of the relationship of the total finance charge to the total amount to be financed. Use of APR permits the consumer to compare rates.
Mortgage loan broker law
Requires loan brokers to give borrowers the mortgage disclosure statement before the borrower becomes obligated to the loan
____ requires annual and quarterly loan activity reporting to the DRE if within the past 12 months, broker has negotiated any combination if 10 or more loans to a subdivision or a total of more than $1,000,000 in loans What article does it fall under?
Threshold reporting Article 7
Mortgage loan broker must present the mortgage disclosure statement within 3 days of completed written loan application or before borrower is obligated to take the loan,
Whichever is earlier
A licensed broker is permitted to act as a ____ if he receives a RPSD endorsement on his broker license What does this endorsement require?
Real property securities dealer This endorsement requires a broker to submit the endorsement fee of $100.00, along with the proof of a $10,000 surety bond.
Advertising - Trigger Terms for sending Disclosures
All terms listed in Column B must be disclosed if ANY ONE of the triggering terms in Column A is advertised. Column A - Trigger Words Column B - Required Disclosure A = B Amount or percentage of down payment = The amount or percentage of down payment Amount of any installment = Terms of repayment Finance charge in dollars or that there is no charge for credit = Annual percentage rate and if increase is possible Number of installments = Total finance charge Period of repayment = Total # of payments and due dates
The ____ is a law for lenders that prohibits them from discriminating against race, color, religion, national origin, sex, family size, handicap, marital status, age, or dependency on public assistance in the granting of credit to customers
Equal credit opportunity act (ECOA) was
Licensees are prohibited from ____: broker must not accept funds unless the funds are meant to be for a specific loan transaction What article does it fall under?
Pooling funds Article 5
What is included in the APR? The total cost of the loan including: the finance charge, all legal fees, survey fees, recording fees, broker's fees, and title insurance premiums. The total finance charge to the total amount to be financed. The total finance charge (including a computation of unearned finance charges) to the total amount to be financed. None of the Above
The total finance charge to the total amount to be financed. The annual percentage rate (APR) is the relationship of the total finance charge to the total amount to be financed, permitting consumers to compare rates and to determine the true annual cost of borrowing.
What are the two major sections of Truth In Lending?
1. Annual Percentage Rate (A.P.R) 2. Advertising
The ______ (Holden Act) prohibits financial institutions from engaging in discriminatory loan practices (redlining)
Housing financial discrimination act
If the home is not occupied by the owner, then the loans are exempt from _____, if the loan is less than 3 years What article does it fall under?
Balloon payment Article 7
Mortgage disclosure statement
A form that clearly and completely states ALL the information and charges associated with a particular loan
A lender must lend funds ____ times a year and/or at least 5 housing loans annually
25
Sam is selling one of his rental homes. His advertisement reads: "For Sale By Owner - Owner Will Finance - No Down Payment!" What are the criteria for being considered a creditor under Truth in Lending? A lender must lend funds 25 times a year and/or must lend the funds for at least five housing loans annually. A lender must lend funds five times a year and/or must lend the funds for at least 25 housing loans annually. A lender must lend funds 20 times a year and/or must lend the funds for at least five housing loans annually. Every lender is considered a Truth in Lending creditor and must follow all of the law's regulations.
A lender must lend funds 25 times a year and/or must lend the funds for at least five housing loans annually.
A ______ is anyone acting as the agent who engages in the business of selling real property securities or who accepts funds to be reinvested in real property securities or to be places in an account
Real property securities dealer
Loans in owner occupied homes that are negotiated by a broker for a term of 6 or more years may not have a What article does it fall under?
Balloon payment Article 7
Mortgage loan broker must keep the mortgage disclosure statement on file for
3 years
Charges made to a borrower cannot exceed ____ of the loan or $390 What article does it fall under?
5% The charges made to a borrower cannot exceed 5% of the loan or $390.00, whichever is greater, to a maximum of $700.00. No charge can exceed the amount customarily charged for the same service in the community in which the services take place. Article 7
RESPA prohibits _____ or unearned fees paid to lender for referring customers to insurance agencies
Kickbacks
Anyone who wishes to sell real estate investment type security must first obtain a What article does it fall under?
Commissioners permit (may not be used in advertising ) In California, anyone who wishes to sell real estate investment type security must FIRST obtain a Commissioner's Permit - cost of $100.00 and valid for one year, and it may NOT be used in advertising unless the permit is shown in FULL. Requires a $10,000.00 surety bond. Article 6
Effective October 3, 2015, the real estate industry has new requirements as specified in the TILA/RESPA Integrated Disclosure (TRID) Rule. According to the TRID rule...?
Lenders must give a copy of the booklet, "Your home loan toolkit" to every person at the time of application for a loan. Lenders must provide a Loan Estimate of settlement costs at the time of loan application or within three business days of application. Loan Estimate Form A Closing Disclosure, a form designed to detail all financial particulars of a transaction, must be delivered to the borrower at least three days before closing. The actual time frame is based on the method of delivery. The settlement agent must also provide the seller with the Closing Disclosure, which may be done at consummation. The form shown for the Loan Estimate and the form for closing should be compared by the borrower to determine if all Loan Estimate Items shown in the estimate match at the closing.
Jim and Kim Scott have been working very hard to rebuild their credit. They are now in good financial shape to buy their first home. The couple has been working with a mortgage broker, Ted, to assist them in finding the best loan. They complete the application, are approved for a loan, complete other paperwork, and are now obligated to complete the loan. A week before they are due to close, they receive the Mortgage Disclosure Statement, outlining all of the costs and terms associated with the loan. The costs and terms are not what they had previously understood. Are they stuck with this loan? Yes, they have had several opportunities to fully question and understand the terms and costs associated with their loan. No, the Mortgage Disclosure Statement should have been presented to them within three days of the broker's receipt of their written loan application, or before the Scotts were obligated to take the loan. No, the Mortgage Disclosure Statement should have been presented to them within seven days of the broker's receipt of their written loan application, or before the Scotts were obligated to take the loan. Yes, unfortunately they are stuck with the loan. It was the Scotts' responsibility to ask for the Mortgage Disclosure Statement so they were clear on the terms and costs associated with the loan.
No, the Mortgage Disclosure Statement should have been presented to them within three days of the broker's receipt of their written loan application, or before the Scotts were obligated to take the loan.
Beverly, an African-American woman, has applied for a mortgage on a new home. She has a reliable job as a court reporter and has been employed for ten years. Her income is substantial enough to pay a mortgage, in her budget, and still have seventy percent of her income remaining. She has, however, been at least ninety days late on several bills one year ago. Beverly has since caught up on her credit card bills, paid them on time, and reduced their balances by half. She has just been turned down for a mortgage by her bank. Has she been discriminated against? Perhaps. She may have been turned down because she is an African -American woman. She has a steady job with a decent income. Her small brush with delinquency should not have led to a refusal. No. Beverly's brush with delinquency is too fresh on her record for the bank to issue a mortgage. Although she has taken the steps to correct the issues, ninety days late on several debts is substantial. She more than likely did not meet the bank's financial requirements. No. Beverly's income must not be substantial enough for the home she is wanting to buy. None of the Above
No. Beverly's brush with delinquency is too fresh on her record for the bank to issue a mortgage. Although she has taken the steps to correct the issues, ninety days late on several debts is substantial. She more than likely did not meet the bank's financial requirements.
What are the steps set forth for a real property securities dealer? Which Article do the regulations fall under? Obtaining a Commissioner's Permit; an RPSD endorsement on a broker license; and proof of a $10,000 surety bond. The regulations fall under Article 6. Obtaining a Commissioner's Permit and proof of a $10,000 surety bond. The regulations fall under Article 5. Obtaining a Commissioner's Permit; an RPSD endorsement on a broker license; and proof of a $10,000 surety bond. The regulations fall under Article 4. None of the Above Obtaining a Commissioner's Permit and proof of a $10,000 surety bond. The regulations fall under Article 5. Obtaining a Commissioner's Permit; an RPSD endorsement on a broker license; and proof of a $10,000 surety bond. The regulations fall under Article 4. None of the Above
Obtaining a Commissioner's Permit; an RPSD endorsement on a broker license; and proof of a $10,000 surety bond. The regulations fall under Article 6.
Before the broker can accept ____ , he must first own or hav an unconditional written contract to buy a specific note What article does it fall under?
The lenders money Article 5
Under Article 7, what is the maximum amount that may be charged to the borrower for loan costs and expenses? Also, under Article 7, if the home is not occupied by the owner, under what circumstance is the loan exempt from a balloon payment? The maximum amount that may be charged to the borrower for loan costs and expenses is 5% of the loan, or $490.00, to a maximum of $800.00. If the loan term is less than three years, and the home is not occupied by the owner, the loan is exempt from balloon payments. The maximum amount that may be charged to the borrower for loan costs and expenses is 3% of the loan, or $390.00, to a maximum of $700.00. If the loan term is less than three years, and the home is not occupied by the owner, the loan is exempt from balloon payments. The maximum amount that may be charged to the borrower for loan costs and expenses is 5% of the loan, or $390.00, to a maximum of $700.00. If the loan term is less than three years, and the home is not occupied by the owner, the loan is exempt from balloon payments. The maximum amount that may be charged to the borrower for loan costs and expenses is 5% of the loan, or $390.00, to a maximum of $700.00. If the loan term is six or more years, and the home is not occupied by the owner, the loan is exempt from balloon payments.
The maximum amount that may be charged to the borrower for loan costs and expenses is 5% of the loan, or $390.00, to a maximum of $700.00. If the loan term is less than three years, and the home is not occupied by the owner, the loan is exempt from balloon payments.
Jacinda makes collections on real estate loans. Last year, she made approximately 20 collections and collected $38,000. Must Jacinda be licensed? Yes, if a collector makes more than ten annual collections, or collects more than $40,000, he/she must be licensed as a California real estate broker. No, if a collector makes more than forty annual collections, or collects more than $10,000, he/she must be licensed as a California real estate broker. Yes, if a collector makes more than fifteen annual collections, or collects more than $40,000, he/she must be licensed as a California real estate broker. Yes, if a collector makes more than twenty annual collections, or collects more than $30,000, he/she must be licensed as a California real estate broker.
Yes, if a collector makes more than ten annual collections, or collects more than $40,000, he/she must be licensed as a California real estate broker.
Deanna is thinking of taking the step from renter to homeowner. She has a very stable position as a surgical nurse and excellent credit. She doesn't, however, have a large sum of cash handy for the down payment. One Sunday morning, she notices advertising for new condos where "no down payment is required." Should she look for any other information in the ad? No, the "no down payment required" gives her the initial information to peak her interest and take a look at the condos. After taking a look at the property, they can fill her in on all the details. Yes, she should make sure the amount or percentage of down payment is there; annual percentage rate and if an increase is possible; total finance charge; and total number of payments and due dates. Yes, she should make sure the amount or percentage of down payment is there; terms of repayment; annual percentage rate and if an increase is possible; total finance charge; and total number of payments and due dates. Yes, she should make sure the amount or percentage of down payment is there; terms of repayment; annual percentage rate and if an increase is possible; and total number of payments and due dates.
Yes, she should make sure the amount or percentage of down payment is there; terms of repayment; annual percentage rate and if an increase is possible; total finance charge; and total number of payments and due dates.
