Kickbacks/Markups
Give 3 examples of "things of value"
monies, salaries, commissions, fees, direct payment, discounts, direct trade of services, special terms, tickets to events, special rates/discounts, favors, trips, other opportunities
What section of RESPA deals with escrows?
Section 10
What is the timing requirement for the Affiliated Business Arrangement Disclosure?
before closing - at the time the referral is made
What % of ownership triggers the Affiliated Business Arrangement Disclosure to be provided?
1%
What is RESPA's regulation letter and who is the primary regulator?
Regulation X, CFPB
What section of RESPA deals with Kickbacks/Markups?
Section 8
What is the allowable cushion for escrow accounts?
2 months or 1/6th of total disbursements for the year
What 6 essential data elements make a completed application?
A: Application
L: Loan Amount Sought
I: Income
E: Estimated Property Value
N: Name
S: Social Security Number
The originating entity is required to retain all RESPA-related records on file and make this information available to examiners for how many years?
5
What is covered under RESPA Section 9?
RESPA Section 9 prohibits a seller from requiring the homebuyer to use a particular title insurance company.
What are the penalties for violating RESPA in a criminal case?
In a criminal case, violators may be imprisoned for up to 1 year and fined up to $10,000.
What is the timing requirement for the receipt of the initial escrow statement?
At closing or within 45 days of closing
What are the 4 distinct disclosure periods?
At application
Before closing
At closing
After closing
What section of RESPA covers the servicing disclosure?
6
Explain the Servicing Transfer Timeline and the late-payment grace period
Original lender needs to give the service transfer disclosure 15 days prior to the transfer of servicing. New lender must give the borrower a notification of servicing transfer within 15 days of the effective date of transfer.
Borrowers have a 60 day grace period after the effective date of transfer.
In a private lawsuit, violator may be liable for costs equal to 3x the amount charged for services.
How often are lenders required to perform an escrow account analysis?
What disclosure provides information on how an escrow surplus is handled by the servicer?
Lenders are required to perform an escrow account analysis once per year.
The annual escrow statement provides information on how an escrow surplus is handled by the servicer.
What are the two disclosures provided after closing? (Hint: one is provided each year, and the other only goes out when something specific occurs)
Annual Escrow Statements
Servicing Transfer Statements
When does RESPA require the HUD-1 settlement statement to be given?
If a borrower requests a copy of the HUD-1 settlement statement, when does RESPA require it to be given?
At closing
1 business day before closing
What types of loans are not covered under RESPA?
All cash sales
Rental property transactions
Property of 25 acres or more (agricultural)
Commercial properties
Temporary financing (bridge loans, construction loans)
Vacant land (unless a dwelling will be constructed or moved onto the property within 2 years)
Sally is just getting started in the mortgage business as an MLO. When her friend Cathy became a real estate agent, Sally sent two potential clients her way, and Cathy was excited to return the favor. Cathy refers three clients to Sally. Sally is appreciative and sends Cathy a thank you card.
Is this a violation of RESPA?
No, no conversation took place where they agreed to exchange referrals with each other. Cheap promo material and things of that nature are not considered things of value, so the thank you card is not a thing of value. If there was something inside of the card, it would be a violation.
When does a lender have to return the surplus of an escrow cushion? (hint: $ amount over cushion that triggers the return and how long the lender has to return it)
Any surplus of more than $50 over the cushion must be returned to the borrower within 30 days.
RESPA allows borrowers to send a notice of error demanding that a mortgage servicer cancel or postpone a foreclosure sale under certain circumstances. What are these two circumstances?
1. Initiation before 120 days: If the servicer starts the foreclosure before the 120th day of delinquency
2. Evaluation of loss mitigation: If the servicer is still evaluating the borrower for loss mitigation options
RESPA allows borrowers to send a notice of error demanding that a mortgage servicer cancel or postpone a foreclosure sale under certain circumstances. When a servicer receives a notice of error, what is the timing requirement to:
1. Acknowledge the request
2. Respond to the request
1. The servicer must acknowledge the request within 5 business days
2. The servicer must respond to the request within 30 business days
What is the purpose of RESPA?
The purpose of RESPA is to help consumers become better shoppers for settlement services, eliminate unnecessary increases in costs, and prevent overcharging of escrow accounts. It allows borrowers to receive pertinent and timely disclosures regarding the nature and cost of settlement services.