NMLS Test Outline Questions and Answers Already Passed

NMLS Test Outline Questions and Answers Already Passed RESPA disclosures? due dates? ✔✔3 days after application: Home loan tool kit Loan estimate List of HUD counselors Mortgage Servicing Disclosure Statement Kno ...

NMLS Test Outline Questions and Answers Already Passed RESPA disclosures? due dates? ✔✔3 days after application: Home loan tool kit Loan estimate List of HUD counselors Mortgage Servicing Disclosure Statement Know before you owe booklet Special Info Booklet 3 days before consummation: Initial Closing Disclosure AfBA disclosure At consummation: Final Closing Disclosure Initial Escrow Statement (45 days after closing) After closing: Annual Escrow Statement Servicing Transfer Statement (sent 15 days before transfer) RESPA covers which loan types? exempt loan types? ✔✔FHA,VA,conventional, USDA,purchase loans, REFI, HELOC all cash salesRESPA 4 sections ✔✔Section 6: Mortgage Servicing Disclosure Statement: mortgage servicers are required to correct errors and work with home buyers if payments aren't being made. Section 8: No kickbacks/referral fees Section 9: Seller cannot require borrower use a specific title insurance company Section 10: limits amounts a lender can require a borrower to put into escrow account to 1/12 disbursement and 2 reserves. Requires annual escrow analysis. RESPA properties types? exempt? ✔✔owner occupied 1-4 unit residential property Agricultural 25+ acres Businesses Commercial Temporary Financing Vacant Land Assumes existing 1st lien The Loan Estimate combines which old disclosures? ✔✔GFE and Initial TIL Statement How long are Loan Estimate terms available? ✔✔10 business days What if the changed circumstance causes third party charges subject to a cumulative 10% tolerance to increase? ✔✔creditor must send a revised Loan Estimate and refund excess money within 60 days Are there any restrictions on how many days before consummation a revised Loan Estimate may be provided? ✔✔- receives revised LE at least 4 business days before consummation - cannot provide revised LE after providing closing disclosure What is a "changed circumstance"? ✔✔Event beyond the controlInaccurate info used in Loan Estimate New info that creditor didn't know when providing Loan Estimate Mailbox Rule ✔✔creditor needs to place Loan Estimate in mail 3 days after application and 7 days before consummation The Closing Disclosure combines which old disclosures? ✔✔HUD-1 and Final TIL Statement Who is responsible for providing the closing disclosure to the: borrower? when? seller? when? ✔✔creditor to borrower settlement/title agent to seller Name some valid change in circumstances that require you to revise the Closing Disclosures? ✔✔changes before consummation that require 3 day waiting period - change in APR - change loan product - add prepayment penalty changes before consummation that do not require 3 day waiting period - consumer requests revised CD - at consummation - any other changes changes after consummation - event causes inaccurate info for consumer or seller - 30 days after consummation - non numerical clerical errors - 60 days after consummation - creditors refund money to cure tolerance violations - 60 days after consummation Which law requires an adverse action notice? How long do they have to deliver it? ✔✔ECOA30 days after application ECOA definition ✔✔ensures all consumers have an equal chance to obtain credit. What is the correct way to ask about marital status? under which law? ✔✔Are you married, unmarried or separated? ECOA How long do you have to retain ECOA disclosures? why? ✔✔25 months because consumers can take you to court for ECOA violations Penalties for: RESPA TILA ECOA Red Flag Rules State Regulatory Authorities Fraud DNC ✔✔RESPA - $10,000/1 year imprisonment for each violation TILA - $10,000 per day of noncompliance ECOA - $10,000 for each violation Red Flag - $3,500 per incident State Reg. - $25,000 each act or ommission Fraud - $1,000,000/30 years imprisonment for each violation DNC - $16,000 each The borrower has how long to request a copy of his appraisal report? How long does the creditor have to deliver the appraisal report? This is under which law? ✔✔90 days30 days ECOA Which law allows the borrower to challenge the value? Where is this stated? ✔✔ECOA appraisal While looking at your customer's pay check stubs, you see that child support is being paid, what is the correct way to ask? according to which act? ✔✔Do you pay child support, alimony or separate maintenance? ECOA TILA definition things to remember? ✔✔requires lenders to disclose the cost of credit to consumers. 1. established 3 day right of rescission: 2. HOEPA section 32 & 35 3. Loan Originator Compensation 4. Mortgage Disclosure Improvement Act - 3/7/3 Rule TILA applies to transactions with how many intallments? ✔✔more than 4 aka 5+ installments = TILA TILA disclosures ✔✔loan estimate closing disclosure if applicable: - ARM disclosure- Right to Rescind dislcosure - CHARM booklet - Section 32 and 35 (HOEPA) - When your Home is on the Line booklet (HELOC/REFI) TILA Advertising Trigger Terms ✔✔down payment terms of repayment APR 3 day Right of Rescission applies to which transactions? how many copies does the borrower need? how many days does the creditor have to refund monies? ✔✔- Home Equity loans - HELOC - REFI - Home Improvement loans - secured by principal residence 2 copies 20 calendar days MDIA things to remember ✔✔Mortgage Disclosure Improvement Act - 3/7/3 Rule - Initial disclosures must be sent 3 days after application - Earliest consummation: 7 days after disclosures delivered - Revised disclosures must be received 3 days before consummation Which items are required to appear on the TIL Statement? ✔✔APR amount financed (loan amount) finance charges APR definitionincludes: generally not included? ✔✔relationship between total cost of borrowing and actual amount borrowed loan costs (lender/broker fees) interest rate mortgage insurance - appraisal fee, hazard insurance, property taxes, credit report, title insurance Qualified Mortgage definition year started? things to remember? characteristics? ✔✔creates new categories of mortgages and imposes underwriting standards. 2014 ATR requirements, safe harbor Max DTI = 43% Max points/fees = 3% Max term = 30 years ARMs underwritten to max interest rate first 5 years NO negative amortization, prepayment penalties, interest only loans, NINA loans, No doc loans, teaser rates Safe harbor under which law? ✔✔protect lenders against lawsuits by borrowers who claim they received credit without verifying they had met ATR requirements. Qualified Mortgage RulesAbility to Repay info: ✔✔1. current income/assets 2. current employment status 3. credit history 4. current monthly mortgage payment 5. other monthly mortgages payments 6. monthly payments for mortgage expenses 7. other debts 8. max DTI = 43% HOEPA restrictions ✔✔Prohibits: 1. negative amortization 2. prepayment penalties after 2 years 3. balloon payment 4. increasing interest rate after default 5. REFI high cost loan into another high cost loan within 1 year unless in consumer's best interest 6. financing points and fees 7. modification fees 8. due on demand features 9. Late fees >4% 10. payment schedule with more than 2 periodic payments 11. selling in secondary market without high cost mortgage notice HOEPA triggers ✔✔1. APR > APOR 6.5% 1st lien >$50,000 8.5% 1st lien <$50,000 8.5% 2nd lien 2. Points and Fees >5% loan amount for loans > $20,000>8% loan amount or >$1,000 for loans <$20,000 3. Charge Prepayment Penalties >36 months after consummation >2% prepaid amount Which type of properties are subject to HOEPA? Exempt? Which type of transactions are subject to HOEPA? ? ✔✔Properties - principal dwelling - 1st and 2nd lien - manufactured housing and personal property if principal dwelling - Exempt: non-onwer occupied, 2nd home Transactions - Purchase money mortgages - REFI close end home equity loan - Home Equity Loan closed end - HELOC - bridge loans - Home improvement - Temporary loans Exempt: - New construction loans - Reverse Mortgage Reverse Mortgage Purchase MortgageHELOC business loans Which law prohibits making a loan to a customer without verifying the customer's ability to repay the loan? ✔✔HOEPA Section 35 stands for? triggers? things to remember? ✔✔Higher Priced Loan APR > APOR - 1.5% 1st lien - 2.5% jumbo oan - 3.5% subordinate lien requires escrow account for minimum of 5 years Loan Originator Compensation Rule Purpose? month/year started? things to know? ✔✔Prohibits: - upselling - steering - compensation based on terms - dual compensation - only receive from lender or consumer April 2011 Regulates affiliated party fees - (No unaffiliated 3rd parties) What is considered consumer's money? What is not considered consumer's money?Under which law? ✔✔- seller paid closing costs - cash back from equity in the home - consumer money before closing YSP Loan Originator Compensation Rules Acronyms: BPO LPO SRP YSP ✔✔BPO - borrower paid origination - all compensation paid by borrower LPO - lender paid origination - all compensation is paid by lender. SRP - servicing released premium - paid to creditor as secondary transaction YSP - yield spread premium - lender pays 3rd party originator to lock borrower's rate higher than par. overage credited to consumer Tolerances ✔✔0% tolerances - points, application fee, underwriting fee, processing fee, - Services you CANNOT shop for - transfer taxes 10% tolerances - gov. recording fees - Services you CAN shop for - on list No tolerances - prepaid interest - property taxes - homeowner's insurance- owner's title - escrow reserves - Services you CAN shop for - not on list TRID Loan Estimate combines: Closing disclosure combines: ✔✔GFE Truth in Lending Statement Truth in Lending Statement HUD-1 Loan Application consists of? things to know? ✔✔- name - address - SSN - income - estimated property value - loan amount - Form 1003 - Fannie Mae or - Form 65 - Freddie Mac What are the record retention requirements for the TILA-RESPA rule? ✔✔Escrow Cancellation Notice - 2 years Partial Payment Policy - 2 years loan estimate - 3 years closing disclosure - 5 years Important Dates: TRID Dodd Frank ActHPA ✔✔Aug 1, 2015 2010 1998 Which transactions are subject to TRID? exempt? ✔✔home equity loan closed end secured by real property HELOC reverse mortgages chattel dwelling - not attached to real property (mobile home) Which type of loans are subject to TILA but not RESPA under TRID? ✔✔construction only vacant land agriculture 25+ acres Credit extended for taxes/estate planning TRID delivery method and timing: Loan Application Revised Loan Application Loan Estimate Revised LE Closing Disclosure Revised CD ✔✔LA - mail,email, over phone, in person. No timing LE- hand deliver or put in mail 3 days after application and 7 days before consummation Revised LE - hand deliver or put in mail 3 days after changed circumstance and 4 days before consummation. CD - mail,email (electronic signatures of global and national commerce), in person. Consumer receives 3 days before consummationRevised CD - mail, email, in person. Consumer receives 30 days after consummation. Bona Fide personal financial emergency ✔✔emergency that requires the credit transaction before the end of the waiting period. All Business day definitions ✔✔Loan Estimate - any day a creditor is open Revised Loan Estimate 3 business days - any day a creditor is open Revised Loan Estimate 4 business days - any day except Sunday and legal holidays Closing Disclosure - any day except Sunday and legal holidays What is the general accuracy requirement for the Loan Estimate disclosures? ✔✔As long as actual costs are less than Loan Estimate, it is made in good faith. What if the creditor estimates a charge for a service that is not actually performed? ✔✔the estimate for the charge should be removed What if a consumer pays more for a particular charge for a third-party service or recording fee than estimated, but the total charges paid are still within 10% of the estimate? ✔✔it's ok as long as sum of all charges is 10% or less What if the creditor does not provide an estimate of a particular charge that is later charged? ✔✔it's ok as long as sum of all charges is 10% or less When are revisions or corrections permitted for Loan Estimates? ✔✔Event affects eligibility for loan or value of collateral consumer gives intent to proceed > 10 days after LEinterest rate is NOT locked consumer requests change in terms increase settlement charges expired loan estimate new construction loan delays settlement > 60 days The rule requires creditors to provide the Closing Disclosure three business days before consummation. Is "consummation" the same thing as closing or settlement? ✔✔No, Consummation is when the consumer becomes contractually obligated to the creditor on the loan. Who is responsible for providing the Closing Disclosure to a _________in a purchase transaction? ✔✔settlement agent seller Name some valid change in circumstances that require you to revise the Closing Disclosures? ✔✔changes before consummation w/ 3 day waiting period - change in APR - change loan product - add prepayment penalty changes before consummation w/o waiting period - consumer requests revised CD - at consummation - any other changes changes after consummation - event causes inaccurate info for consumer or seller - 30 days after consummation - non numerical clerical errors - 60 days after consummation - creditors refund money to cure tolerance violations - 60 days after consummationAre there exceptions to the disclosure requirements for loans secured by a timeshare transactions? ✔✔yes - earliest consummation is 3 days after application - only requires closing disclosure at consummation (not Loan Estimate) Can creditors provide estimates of costs and terms to consumers before the Loan Estimate is provided? ✔✔yes, but the estimate must state, "Your actual rate, payment and costs could be higher. Get an official Loan Estimate before choosing the loan." What is the special info booklet? When must creditors deliver the special information booklet? ✔✔helps consumers understand settlement costs 3 day after application Which disclosures does TILA-RESPA require? ✔✔Loan Estimate Closing Disclosure Special Info Booklet Escrow Closing Notice Servicing Transfer Notice Partial Payment Notice What transactions are subject to the Escrow Closing Notice requirement? When must the Escrow Closing Notice be provided? ✔✔home equity loan (closed end) secured by 1st lien real property 3 days before cancellation if requested by consumer. Otherwise 30 days before cancellation.If you are required to provide ____________________, you must also provide the partial payment policy ✔✔mortgage transfer notice Can the consumer be charged an appraisal review fee? ✔✔Only if the review fee is disclosed on the Loan Estimate When are Home Owner Association (HOA) dues disclosed? ✔✔only after the fee is known HMDA definition? reg? found where? things to know? ✔✔home mortgage disclosure act - identify discriminatory lending patterns by collecting consumer ethnicity, sex, race. Reg. C section X of 1003. - collect LARs - Lenders must document how they are serving the lending needs within their communities. LAR under which act? ✔✔Loan Application Register - companies under HMDA are required to keep a LAR each time someone applies. HMDA FCRA Reg? things to know? ✔✔Fair Credit Reporting Act - credit reporting agencies/credit reports Reg. V- 5 rights: 1. Adverse Action Notice 2. Free copy of credit report 3. Paid credit score 4. dispute inaccurate info 5. limit prescreened offers - Entitled to a Free Credit Report if: 1. info resulted in adverse action 2. victim of identity theft 3. inaccurate info due to fraud 4. public assistance or unemployed If denied credit, the borrow must be provided with? according to what law? ✔✔name, address and phone of agency providing credit report FCRA According to which law, how many days does a credit information provider usually have to respond to the consumer after receiving a notice of a dispute? ✔✔FCRA 30 days Under which law, how long does the creditor have to send an applicant an adverse action disclosure? ✔✔FCRA 30 days after application FACTA stands for? things to know? ✔✔Fair and Accurate Credit Transaction Act - Section 114/ Red Flag Rules/ Ide