Chapt 4 part 2 programs and processing

MLO's Must disclose the following info

-Credit score -range of possible credit scores any factors that adversely affect the score (4) -date the credit score was created - name of company that provided the credit report

Examples of tangible benefits

-Lower interest rates -reduction of monthly principle and interest payments -shortening of loan term -converting ARM to Fixed rate mortgages -removing mortgage insurance by lowering LTV -avoiding short sale/foreclosures -eliminating negative amortization features

RESPA doesn't cover:

-Vacant land -large tracts of land (25 acres or more) -commercial/business loans -the government, its agencies, or instrumentalities -temporary financing (bridge loans or swing loans)

4 basic elements for Red Flags:

-include policies and procedures to identity Ted flags of identity theft that may occur in day-to-day operations -fake IDS -spell out appropriate actions that need to be taken -keep the program current for new threats

Adverse Action Disclosure must include :

-which credit agency provider the credit info -disclose that the credit reporting agency is not responsible for the denial of the loan - will provide 1 free copy of the exact report used * must be given within 30 days

If a borrower request a credit freeze , the bureaus must comply within how many business days ?

1

Bankruptcy remains for how many year from date of satisfaction, discharge

10

Parents can freeze their child's credit at what age

16

Can put a credit freeze (security freeze) on how many credit bureaus for free ?

3 (experience, transunion, equifax)

All files can be disposed within how many years?

3 , 5 for CD

AfBA

Affiliated business disclosure when referred to business with ownership/ mortgage loan and has a affiliated relationship or direct beneficial ownership of more than 1% in the provider of the settlement.

The AfBA disclosure must be delivered to the borrower

At the time of referral ex: a relationship must be disclosed between the CEO of the mortgage company and the title insurance company at the Rhine the MLO refers them.

Tangible net benefits, underwriting process

Benefit to the borrower outweighs any possible negative or costs associated with the loan, generally is used with REFINANCING

Creditor

Business or organization that defers payments for goods or services, or provides good or services, and bills consumers later. (mortgage brokers/lenders, healthcare providers)

What entity enforces the FCRA and FACTA?

CFPB, the Federal Trade Commission (FTC)

FCRA applies to loan applications for a

Closed -end or open-end Lon that's secured by a 1-4 family unit dwelling

Acceptable circumstances for FCRA, with written permission

Court order or Federal Grand Jury subpoena per written instructions of the consumer

Real Estate Settlement Procedures Act (RESPA , X), 1974

Covers 1-4 family homes -created to help educate borrowers about the costs associated with the loans -eliminate kickbacks and referrals

Special Flood Hazard Area (SFHA)

Defined by FEMA as the area that will be inundated by the flood event having a 1% chance of being equaled or exceeded in any given year. The 1% annual chance flood is also called the base flood or 100-year flood.

FCRA requires credit- reporting agencies to

Delete obsolete information and make sure information that they have is reported accurately

When is Risk-Based Pricing disclosures and credit scores given to consumers?

Denied application or receives less favorable offers of credit

Transaction account

Deposit account or Lon account where the owner may make payments or deposits/ transfers to 3rd parties. (Checking, savings, share draft)

The Disposal Rule is apart of FACTA and ....

Dictates how institutions should dispose of consumer documents. Designed to reduce the risk of fraud. ( shredding, erasing electronic media)

Allows consumers to purchase, for a reasonable fee , a credit score along with info about how the credit score was calculated

FACTA

The Fair Credit Reporting Act (FCRA), or Reg V, 1970

Federal law that regulates access to credit reports and the information contained in them, and is used for Permissible Purposes (employment, intent to purchase insurance, estimate business) *allows consumers to dispute incorrect items on credit report

A Red flag includes patterns, practices, or specific activities that indicate the possible of identity theft. Some common red flags are :

Files stolen, computers, hacked alerts, notifications, warnings Suspicious documents personal info that's inconsistent Suspicious account activity

Section 8 of RESPA you can't :

Give or receive fee, kickback, or any other form of valuable compensation (a thing of value) or arrange to do so for referring a borrower to a certain lender. 10k fine

The Fair and Accurate Credit Transaction Act, FACTA, 2003

Helps to prevent and detect identity theft and adds provisions to improve accuracy of consumers credit-related records. *gives 1 free credit report each year from each credit reporting agency

Tangible benefits within reason includes

Home improvement debt consolidation cash out

When are Adverse Actions given ?

If their credit is the reasoning for All or part of the decision to deny the Lon application.

Section 8, RESPA kickback and referral fees

Inflated the cost of loans and limits deposit in escrow accounts - Affiliated BUSINESS ARRANGEMENT (AfBA)

If a borrow has a credit freeze they'll need to

Lift it to allow credit be pulled for a transaction

Cant provide the credit report, but can give scores

Mlo

Is it legal to pull credit reports under FCRA just because, such as a friends to see their score ?

No, there's no permissible purpose

Fraud alert

Notes on a credit report that require a a creditor to check the borrowers credit to confirm their identity before opening a new account * free through all credit bureaus, only good for 1 yr

Disclosures of FACTA

Notice to Home Loan Applicant

Credit freezes must be done directly by the borrower how?

Online or by phone, and must contact all 3 bureaus

Economic Growth, Regulatory Relief and Consumer Protection Act. 2008

Provide national security freezes free to consumers

Was established to help prevent identity theft and required risk assessments to determine if it has a " covered account" and are safeguarding those accounts properly.

Red Flags. Part of FACTA

Churning

Repeatedly refinancing a loan to exact more fees from the borrower

National security freeze

Restricts lender form obtaining access to credit reports, which makes it harder for identity thieves to open account in consumers names.

Disclosures for FCRA

Risk-based Pricing , Adverse action

Should be in place to protect the consumer report so that all concerns about potential identity theft have been considered and that report is only used for Allowable Purposes

Safeguards

Notice to the Home Loan Applicant Must be Provided:

When a creditor disclosed negative information about a consumer credit reporting agency. Must be disclosed within 30 days.

credit bureaus are required to lift the freeze when?

Within 1 hour of request, or 3 business days by mail

Financial institution

businesses that provide banking services to consumers and businesses (transaction account)

Federal Emergency Management Agency (FEMA)

created 100-yr flood plains maps and provided flood insurance to home owners in identified flood zones.

The National Flood Insurance Act

passed to address the fact that reg homeowners insurance didn't cover losses caused by flooding. -identify flood maps,