RESPA Flashcards - DISCLOSURES. RESPA provides consumers with the ...

RESPA Flashcards What is the purpose of RESPA?To protect consumers by regulating COST and business DISCLOSURES. RESPA provides consumers with the opportunity to shop for their best possible mortgage solution. It ensures that consumers obtain information on prearranged business agreements, the cost of closing a mortgage loan, and protects against excessive settlement costs and unearned fees.What are the four objectives of Section 6 of RESPA?1) Timely and Accurate information2) Oversee and ensure compliance of all employees with relation to procedures and laws. (In relation to Escrow accounts and/or hazard insurance policy)3) Properly process and evaluate "loss mitigation" applications4) Ensure that necessary information about probable or actual "transfer of servicing" are disclosed Who regulates Section 8 of RESPAConsumer Financial Protection Bureau (CFPB) What does Section 10 address?It is intended to protect consumers by ensuring that they know about the amount of funds deposited in their escrow account related to their property taxes and home owners insurance.All revised GFEs must be documented with reasons for revisions and retained for how long?At least 3 years after settlement What are the penalties for violations under Section 6 of

RESPA?

Individual Actions: There servicer is liable for actual

damages and additional damages not to exceed

$1,000Class Actions: Penalties are up to $1,000 for each

member in action and total damages are not to exceed $500,000 (or 1% of the net worth of the services), whichever is less.What does Section 9 of RESPA address?It prohibits a SELLER from requiring a buyer to use a specific title insurance company as a condition of the sale and allows a buyer to shop. (this has nothing to do with the lender) What does Section 6 of RESPA address?Policies and procedures within organizations in ordered to meet the four RESPA required objectives.What are the penalties for violations under Section 8 of

RESPA?

Fines up to $10,000Up to 1 year in prison What are the key areas of a GFE?PurposeSummary of LoanSummary of Settlement ChargesUnderstanding Settlement ChargesInstructions Under RESPA, an affiliated business arrangement is only allowed if?

• If the borrower receives the ABA disclosure, is not

required to use the particular provider, and if the only thing of value received in the arrangement (other than the actual costs of services) is a return on ownership interest.

What is a Settlement Cost Booklet?It explains the settlement process and advises borrowers the have the right to negotiate loan terms, reviews RESPA.It also warns borrowers that a borrower's use of false information can lead to loss of home, credit damage, and criminal prosecution for fraud.What loans are covered (regulated) by RESPA? Federally regulated mortgage loans that are secured by a first or subordinate lien on residential property.Residential property includes dwellings design for the occupancy of 1 to 4 families and individual units of condominiums, cooperatives, mobile homes, and trailers.What is RESPA?Real Estate Settlement & Procedures Act When must an ABA disclosure be delivered? Within 3 business days of application (at the same time as the GFE) What are the penalties for violations under Section 9 of

RESPA?

The buy can sue for 3 times the amount charged for the title insurance What is another term for RESPA?Regulation X What are the penalties for violations under Section 10 of

RESPA?

• A servicer's failure to submit an initial or annual escrow

statement results in a $75 civil penalty per violation with a limitation of $130,000 for violations in a 12-month period- An intentional violation by a servicer results in a fine of $110 per violation with no limit for multiple infractions Who is responsible for providing a Homeownership Counseling Organizations List Disclosure?The lender.(In cases where a mortgage BROKER took the loan application and provided the counseling list, it is not necessary for the lender to provide an addition list.However, it is the LENDER'S responsibility to ensure that they RECEIVED the list) When is distributing an ABA necessary?If the lender recommended an "affiliated business" for settlement services.When is the Initial Escrow Statement disclosure of Section 10 of RESPA due?Initial Escrow StatementAnnual Escrow Analysis (Annual Escrow Payment) What records need to be retained by a lender for a 5 year period from the date of settlement under RESPA?

• HUD-1 & HUD-1A Settlement Statement (also must be

retained by all new owners or servicers of a mortgage loan for the remainder of the original 5 years from the date of the transactions- Affiliated Business Arrangement (AfBA)- Mortgage Servicing Disclosure Statement (MSDS) Who is responsible for regulating RESPA? Consumer Financial Protection Bureau (CFPB) What loans are exempt from RESPA? (7 types) -Loans on property 25 acres or more-Business purpose loans including commercial and agricultural-Temporary (interim) financing such as construction or bridge loans-Vacant land, unless structure is there within 2 years of settlement date-Any assumed mortgage loan where the lender did not have the right to approve a successive borrower on existing loan-Any conversion of a mortgage loan in which the existing terms are modified and a new note is not required (i.e. loan modification)Loans sold in the

secondary market to someone other than FNMA, FHLMC, or other non-federally-regulated entities What is the Settlement Cost Booklet also know as? "Shopping for Your Home Loan" What does Section 8 of RESPA address?It prohibits the payment of referral fees in the form of things of value, splitting fees, or kickbacks unless a bona fide service is being performed to receive the fee.What disclosures are required under Section 10 of

RESPA?

Initial Escrow StatementAnnual Escrow Analysis (Annual Escrow Payment) Aside from due date, what other conditions must be met for delivering the Settlement Cost Booklet?It must be delivered as a SEPARATE and DISTINCT document and cannot be apart of a larger document.

What is on an ABA disclosure? (3)- A description of the business arrangement including the percentage of ownership of the interest of the referring party and service provider- A estimate of the costs for the provider- A statement that the borrower is not required to use any particular settlement services What are some Permissible Situations for the Payment of fees under Section 8 of RESPA?

• Payment to an attorney for the Services actually

rendered- Payment to a title company for a title search and/or issuance of a title insurance policy- Payment of a bona fide salary for goods and services- Payment from an employer to an employee for any referral activities What kind of loans are exempt from the Homeownership Counseling Organizations List Disclosure requirement?Reverse mortgage Loans and timeshare plans(or loans that would result in negative amortization) What disclosures/notices are covered under Section 6 of

RESPA?

Notice of ErrorInformation RequestsForced-Placed Insurance NoticeForced-Placed Insurance Reminder NoticeEarly InterventionLoss Mitigation Application/NoticeMortgage Servicing Disclosure StatementNotice of Transfer Statement When is the Annual Escrow Analysis disclosure of Section 10 of RESPA due?Must be completed yearly and provided to the borrower within 30 calendar days of conducting the escrow analysis What disclosures are all the required disclosures with

RESPA?

(H)ome Ownership Counseling Disclosure(F)orce Place Insurance(F)orced Place Reminder(L)oss Mitigation(A)ffiliated Business Arrangement(A)nnual Escrow(I)nitial Escrow(G)FE(H)UD Settlement Cost Booklet(H)UD-1 & HUD-1A(T)ransfer Statements

(MSDS/NTS)

What is an ABA disclosure?Affiliated Business Arrangement (ABA or AfBA) is a disclosure that lets the consumer know that he/she is not required to use the services of affiliated business and can shop for other settlement services.What is a GFE?The initial disclosure of the estimated settlement costs of a mortgage loan, expressed in dollar amounts.When must the Settlement Cost Booklet be delivered?Within 3 business days of loan application for purchase transaction?