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Lenders must report detailed information about loan transactions and demographic information concerning borrowers in order to prove they are not discriminating. Which of the following laws creates that reporting requirement?
HMDA. The Home Mortgage Disclosure Act is a reporting law that helps the federal government determines whether lenders are meeting the housing needs of their communities and to identify discriminatory lending practices.
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If an individual submits false information for the purposes of obtaining a federally covered loan, he/she could face:
Up to $1,000,000 fine and prison. The FBI Mortgage Fraud Warning Notice advises all parties to a loan transaction that submission of fraudulent information on the application is a federal crime and can lead to penalties including up to 30 years in prison and fines of up to $1,000,000.
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The Homeowners Protection Act requires servicers to do which of the following?
Automatically discontinue PMI when the borrower reaches 78% LTV. HPA requires that servicers automatically discontinue PMI when a borrower reaches 78% LTV (22% equity). This is contingent upon the loan being in good standing. The borrower may also request PMI discontinuance at 80% LTV (20% equity) but it is at the lender’s discretion to grant the request.
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If a mortgage broker decides to use telemarketing to establish leads for loan origination, which of the following should occur:
The broker should register with the FTC in accordance with the Do-Not-Call Implementation Act. The Do Not Call provisions of the Telemarketing Sales Act require telemarketing and sales professionals to consult the DNC Registry, and update their call lists every 31 days. To ensure compliance with this and other regulations of the Act, a mortgage broker should establish telemarketing policies and procedures.
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The Gramm-Leach-Bliley Act specifies that a consumer must be given _________ to opt out before personal financial information is disclosed to a third party.
A reasonable opportunity. Sec. 6802 (b)(1)(B) of the GLB Act specifies that “a financial institution may not disclose nonpublic personal information to a non-affiliated third party unless the consumer is given the opportunity before the time that such information is initially disclosed to direct that such information not be disclosed…”
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Under the Gramm-Leach-Bliley Act, which of the following is considered nonpublic information?
A borrower’s current loan balances. Information that can be obtained through public sources such as a phone book or courthouse public records is not subject to the GLB Act. Personal financial information such as that which could only be found in account records or on a credit report is subject to the Act’s provisions.
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If a loan applicant chooses not to disclose his or her race on a loan application, what recourse does a mortgage professional have?
Note that the applicant has declined to answer and select a race based on visual observation. HMDA requires that mortgage professionals report loan applicant demographics and ECOA sets up the rules for handling the request of such data. An applicant may decline to provide this information. In this case, the mortgage professional must make a best guess based on visual observation.
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Which federal law requires originators to use their best judgment in determining demographic information on a borrower if the borrower does not provide the information voluntarily?
HMDA. The Home Mortgage Disclosure Act is a reporting law. Its purpose is to determine if depository institutions are meeting housing needs in their communities and to identify discriminatory practices to encourage fair lending. HMDA requires extensive data about mortgage loan applications and origination including an applicant’s ethnicity, race and gender. An originator must make a best guess if the applicant chooses not to provide this information.
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Which of the following is true of PMI disclosure?
It varies based on each type of loan. The Homeowner’s Protection Act establishes different disclosure requirements depending on whether a loan is a fixed rate loan or adjustable rate loan.
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Under the Fair Credit Reporting Act, which of the following entities has the burden of protecting a consumer’s privacy when his/her credit information is being reported?
Credit reporting agency. Under FCRA, credit reporting agencies are obligated to protect consumer privacy when reporting credit information. Mortgage professionals are obligated to protect consumer privacy when using credit information.
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