Transcription
A comprehensive review of the concepts pertaining to real estate finance and residentialmortgage related regulations, consumer protections and responsible lending practices. Page i
Table of ContentsAn Evolving Industry . 1What is a mortgage?. 1What is a Mortgage Broker? . 1What is a Mortgage Lender? . 2Why do people choose a mortgage broker or a mortgage lender? . 2The Loan Cycle and the Players . 6Mortgage Loan Origination. 6The State Licensed Mortgage Loan Originator (MLO) . 6Loan Processing. 6The Loan Processor (LP). 6Underwriting . 7The Underwriter . 7Closing/Funding . 7Secondary Markets . 8Loan Servicing. 8Property Ownership Introduction . 9Definitions, Concepts and Mortgage Principles. 9Security and Debt . 10Sample Note . 11Sample Deed of Trust . 11Lien Theory vs. Title Theory . 13Title Theory vs. Lien Theory States . 13Transferring Title. 14Types of Ownership. 15Concepts and Definitions . 19 Page iii
Types of Loans and Methods of Financing . 27Mortgage Classifications and Products . 27Other Classifications . 28Conventional/Conforming Mortgages . 29Non-Conforming Mortgages. 30ARM Components . 31Introduction to Nontraditional Mortgage Products . 33The Traditional Loan . 33Nontraditional Mortgages . 35Consumer Protection Issues . 35Nontraditional Product Types. 36New HECM Restrictions . 39Nontraditional Balloons . 40Guidance on Nontraditional Mortgage Products - 2006 . 41Other Nontraditional Terms and Underwriting Standards . 42Expanded Mortgage Products . 45Recommended Practices . 46Risk Management Practices . 47Control Systems . 48Interagency Policy Statement on Subprime Lending . 50Consumer Protection Principles . 51Loan Products Review . 53Government Insured or Guaranteed Mortgage Loans . 57FHA Insured Loans. 57FHA Loan Hot Topics . 58FHA Facts . 59 Page iv
FHA Notes. 60USDA’S Rural Development Guaranteed Housing Program. 61RD Special Advantages . 61USDA Facts . 62Required Training . 62VA Loan Guarantees - Products for Our Heroes . 63VA Loan Facts: . 64Funding Fees, Purchase and Construction Loans: . 65Funding Fees, Cash-Out Refinancing Loans: . 65Other Funding Fees: . 65The Loan Package . 67EXAMPLE: Loan Package . 67The Loan Application and Mortgage Math Workshop . 69Purpose of the Loan Application . 69Exercise:. 69Documenting the Application. 70Back to the Future: Documentation Hot List. 71Mortgage Math . 75Formula for Figuring Simple Interest . 77Debt Ratio Calculations . 77Front-End and Back-End Ratios: . 77Sub-Prime Ratios: . 78Pre-Qualifying Debt Ratio - Case Study. 79Processing and the Appraisal . 81Loan Processing and Verification . 81The Role of the Processor . 81. Page v
Home Valuation -The Appraisal . 85Appraisal Basics . 85Appraisal Review and Analysis . 87Valuation. 88Forms, Verifications and Appraisals by Form Number . 89The Underwriting Process. 91Underwriting Basics . 92Contingencies. 92Desktop Underwriter (DU). 92Loan Prospector (LP) . 93Expanded Underwriting Criteria . 93Standard Ratio Requirements . 94Fannie Mae Underwriting Standards . 95The Commitment . 97Closing and Recordation . 99Settlement Service Providers . 100Regulators . 104The Consumer Financial Protection Bureau (CFPB) . 105The Structure of the Consumer Financial Protection Bureau . 106The Department of Housing and Urban Development (HUD) . 109Real Estate Settlement Procedures Act of 1974 . 110Definitions . 111Unearned Fees and Kickback Prohibitions . 114RESPA Disclosures . 115Selecting a Title Insurance Provider . 117Limits on Escrow Accounts . 117 Page vi
Reg X 3500.5 - Coverage of RESPA. 117The Final RESPA Rule . 119Basic Objectives of the 2010 RESPA Reforms . 119GFE Triggers . 119Key Definitions (From 3500.2) . 120Good faith estimate or GFE. 123Violations of section 5 of RESPA (12 U.S.C. 2604) . 127Important dates on GFE . 127Homeowners Protection Act of 1998 (HPA) . 129The Good Faith Estimate . 131Page One of the Good Faith Estimate. 131EXAMPLE:Page One of a completed GFE . 131Page Two of the GFE - Adjusted Origination Charges Page . 132All Other Settlement Service Charges . 132EXAMPLE:Page Two of a completed GFE . 133Page Three of the Good Faith Estimate . 134EXAMPLE:Page Three of a completed GFE . 134Settlement Statement HUD-1 / HUD - 1A . 135Tolerances . 135Average Cost Pricing. 136The Truth in Lending Act . 137Purpose of TIL . 137TIL Disclosures . 138EXAMPLE:ARM Disclosure . 138Four Essential Parts of the TILA Disclosure Statement . 139Timing of the Of the TIL - Early Disclosure . 141 Page vii
EXAMPLE:Completed TIL Disclosure . 141The Truth-In-Lending Act and Advertising Credit . 142Early Disclosure Requirements. 143Essential Truth-In-Lending Act Definitions . 144TIL Disclosures . 145Rescissions -- The Truth-In-Lending Act and Refinancings . 146Rodash . 147Fair Lending Laws . 149The Two Primary Lending Discrimination Statutes . 150Types of Discrimination . 150Equal Credit Opportunity Act (ECOA) . 151ECOA Definitions - Reg. B . 151Rules Concerning Taking Applications. 152Rules and Notifications . 153Fair Housing Act (FHAct) . 159Discrimination in Sale or Rental of Housing . 159Discrimination in Residential Real Estate-Related Transactions. 160Examples of Discrimination . 160Notice and Equal Housing Opportunity . 161Home Mortgage Disclosure Act (HMDA) . 164Revised Reporting Requirements . 165High Cost Loans, Higher Cost Loans, Fair Lending Laws and Protections .167Section 32 The Homeownership and Equity Protection Act (HOEPA) . 167HOEPA Disclosure . 168EXAMPLE: TIL Disclosure for Section 32 loans . 168Section 32 High cost Prohibited Practices. 169 Page viii
Section 35(a) -- Higher Priced Mortgage Loans -- Reg Z . 171The Privacy of Consumer Financial Information Rule of the Gramm-Leach-Bliley Act .173EXAMPLE: Privacy Notice . 173Opt-Out Rights . 174How to Comply . 174Securing Information . 175The Telemarketing Sales Rule (TSR) . 176Calling restrictions of the TSR . 176The Do-Not-Call Registry . 177How it works . 177Established Business Relationships. 178USA PATRIOT Act (USAPA). 179National Flood Insurance Act (NFIA) . 180The Federal Trade Commission . 181The Fair Credit Reporting Act (FCRA) . 182For Users of Credit Reports . 183Consumer Rights Under FCRA / FACTA. 184FACT Act Disposal Rule Section 216 FTC . 185Identity Theft Red Flags and Address Discrepancies Under the FACTA of 2003 . 186The Federal Trade Commission Red Flags Rule Site. 192Section 315 Reconciling Addresses . 193The SAFE Act. 195The New Responsibility Era . 195Title V The Secure and Fair Enforcement for Mortgage Licensing Act SAFE (Title V). 196Purpose of the SAFE Mortgage Licensing Act . 197Key Definitions . 198 Page ix
License or Registration Required . 201Section 1504 . 201State License and Registration . 202Section 1505 . 202Mortgage call reports (MCR). 204Section 5-26 -18 .
Page i A comprehensive review of the concepts pertaining to real estate finance and residential mortgage related regulations, consumer protections and responsible lending practices.
