RESPA: REAL ESTATE SETTLEMENT PROCEDURES ACT Flashcards

RESPA: REAL ESTATE SETTLEMENT PROCEDURES ACT Flashcards

RESPA and Regulation X Prohibitions: Sham Affiliated

Business Arrangements HUD reported numerous complaints about the creation of sham affiliated business arrangements that facilitated illegal fee sharing by settlement service providers. it responded by publicizing the "Policy Statement on Sham Controlled Business Arrangements." disclosure.According to RESPA, if the lender requires use of a

particular settlement service provider, a disclosure is due:

At the time of the loan application.

RESPA and Regulation X Prohibitions: Referrals and

Fee-Splitting: Agreement or Understanding

can exist even if established by practice or a pattern of conduct. receipt of things of value.What loans are covered by RESPA?Federally-related mortgage loans.RESPA is enforced/regulated by what agency? Prior: (HUD) Housing and Urban DevelopmentCurrent: (CFPB) Consumer Financial Protection Bureau Illegal acts and practices under RESPA result from violations of?Section 8 TILA-RESPA Integrated Disclosure (TRID) Rule - established 2015- requires use of the Loan Estimate (LE) and Closing Disclosure (CD) According to RESPA, when must a settlement service provider who refers a loan applicant to an affiliated business for settlement services, disclose the affiliated business arrangement?at the time of making the referral.RESPA's Regulation are known?Regulation X RESPA prohibits?referral fees, splitting fees, or giving "things of value" in exchange for referrals.

Mortgage Loan Servicing: General Servicing Policies and

Objectives

must:- provide accurate and timely disclosures to

borrowers- Investigate and correct borrower complaints and respond to request for info.- etc.

RESPA Disclosures related to Escrow Accounts: Initial

Escrow Account Statement

• mandatory. to ensure the borrower is aware of amounts

being deposited into and disbursed from escrow accounts.- typically given at settlement but lender has 45 days from

settlement to deliver.- statement shows: amount of

mortgage payments and portion deposited into escrow accts.Subpart C of Regulation X: Mortgage Loan Servicing: Subservicer refers to a servicer who doesn't own the servicing rights for a mortgage but performs servicing for the Master Servicer.What loans are Exempt from RESPA?1.) Loans for business, commercial, or agricultural purposes.2.) Temporary financing, such as construction loans.3.) Loans secured by vacant land.4.) Loan assumptions which are permissible without lender approval.The purpose/goal of RESPA is?2 purposes: to ensure that consumers have accurate info about the cost of closing, and to protect loan applicants

from paying unearned fees.- to ensure that referrals are made without driving up settlement costs.- rules are intended to help borrowers with loan servicing issues or with financial challenges that may lead to a default.

RESPA Disclosure: Good Faith Estimate (GFE) - documents outlined the estimated and actual settlement costs for a given transaction.- for reverse mortgages, HELOCs, dwelling not attached to land, it must be given to borrower no later than 3 business days after receiving an application.- provided by either the mortgage broker or mortgage lender.- prohibitions by Regulation X- GFEs have a 10-day expiration period, unless parties come into accordance to extend.- Appendix C to Regulation X provides a model form for disclosure.RESPA and Regulation X Prohibitions with Referrals and

Fee-Splitting: Exchange of "things of value" for business

referrals

• broadly defined to include any payment, advance, loan, or

service, including money, discounts, sports tickets, theatre.RESPA Disclosure: HUD-1 Settlement Statement - includes actual charges paid by borrower and seller-- must be given to borrower by settlement agent at least 1 business day prior to settlement.

RESPA Disclosures related to Escrow Accounts: Annual

Escrow Account Statement

• mandatory. due within 30 days of completion of the

escrow account computation year and must state:1. acct

history and projections of payments for coming year.What types of loans are covered by RESPA? 1.) FHA Loans: loans made with funds insured by the

federal government.2.) Flood insurance: made with

collateral insured by the federal government.3.) Intended for sale to Fannie Mae or Freddie Mac.4.) made by a creditor regulated under the Truth-in-Lending Act When was RESPA enacted?in 1974 RESPA and Regulation X Prohibitions with Referrals and

Fee-Splitting: Referral Fees

Any referral of a settlement service is not a compensable service.HUD: Housing and Urban DevelopmentIn 1996, HUD was responsible for implementing and enforcing RESPA, agency publicized the "Policy Statement on Sham Controlled Business Arrangements." // published in the federal register.Name RESPA disclosures that provide consumers with information they need to shop for settlement services?

1.) Your Home Loan Toolkit: A Step-by-Step Guide (for

purchases)2.) What You Should Know about Home Equity

Lines of Credit (for open-end loans: HELOC)3.) Affiliated

Business Arrangement Disclosure (when there is ownership interest) RESPA stands for?Real Estate Settlement Procedures Act RESPA Prohibitions to Lending PracticesRESPA and Regulation X are intended to keep consumers informed of settlement costs and to prevent mortgage lenders from obtaining unearned fees.- prohibited acts may lead to criminal penalties of up to $10K for each, and/or prison.- CFPB will review files with personnel and check for evidence of prohibited acts.RESPA and Regulation X Prohibitions with Referrals and

Fee-Splitting: Fee-Splitting

Any portion, split, or percentage of any charge made for the rendering of a settlement service...other than for services actually performed. also states duplicate fees and fees for

nominal services are unearned fees.