Laws & Regulations
What federal statute primarily serves to control the settlement costs of residential mortgage loans?
RESPA (Real Estate Settlement Procedures Act)
What does the acronym APR mean?
Annual Percentage Rate
What is a basis point?
a percentage of the loan amount
An annual escrow analysis is used to accomplish what?
Prevent Escrow Overages
How many days do you have to send a borrower an updated Loan Estimate or Closing Disclosure after a changed circumstance (i.e. loan amount change)
3 days
What is the penalty for paying or accepting an illegal referral fee?
$10,000 or up to one year in prison.
Federal Housing Administration (An agency of the U.S. department of Housing and Urban Development HUD. Its main activity is the insuring of residential mortgage loans made by private lenders)
A loan that is not underwritten to Fannie Mae and Freddie Mac's guidelines is considered to be
A non conforming loan
Why are FHA loans beneficial to lenders?
They are insured by the Federal Government
At least 3 days prior to closing, unless an Appraisal Waiver is obtained.
Mr. Jones's loan application has been denied and he is provided with an Adverse Action notice as required by ECOA. What piece of information would not be included on the notice?
Credit Score
What does HOA stand for?
Homeowner's Association
A disclosure form that went into effect on October 3, 2015, which provides a borrower with the estimated interest rate, monthly payment, and total closing costs for the loan. Lenders must provide this disclosure to applicants for loans within 3 business days of receiving the loan application
Loan Estimate
This refinance transaction is one in which the funds that the borrower receives from the new loan exceeds the funds needed to repay the existing first mortgage.
Cash-Out Refinance
What is the max percentage of fees that can be applied to a qualified mortgage (QM)?
3%
Credit Reporting Agency
What does HELOC stand for?
Home Equity Line of Credit
A loan for an amount that exceeds the conforming loan limits established by Fannie Mae and Freddie Mac
A Jumbo Loan
When does PMI automatically cancel on a conventional loan?
78%
What is a ___ accuracy tolerance for amounts stated on the Loan Estimate and the actual closing cost if the consumer is allowed to shop for her own settlement service provider.
10%
This federal law governs how consumer reporting agencies (CRAs) use an individual's credit information and requires CRAs to follow reasonable procedures to protect the confidentiality, accuracy, and use of credit information.
Fair Credit Reporting Act (FCRA)
The acronym "PFC" stands for
Prepaid Finance Charge
Negative Amortization
A ___ is a loan with an interest rate that is adjustable and also offers a borrower a number of payment choices, such as a 30 or 15 year P&I, interest-only, or a 1% minimum payment, which may result in negative amortization.
Adjustable Rate Mortgage (ARM)
If the APR increases by more than .125% in the loan file, what must occur?
A new disclosure must be sent to the borrower within 3 days. There will also be a 3 day waiting period before closing can occur.