federal_laws_1.txt

What are the 3 purposes of the TILA?

1. promote the informed use of credit by clearly disclosing terms & costs of credit

2. help consumers better compare the terms of loans offered by various creditors through early disclosures

3. provide consumers with the right to cancel (rescind) certain loans that involve liens on primary dwellings.

What loan types of loan isn't covered in "high cost loan" definitiation?


1)rules not cover loans to buy or build a home
reverse mortgages or revolving home equity lines of credit

2)refinancing and home equity installment loans

1)rules not cover loans to buy or build a home

What act is "High Cost Loans" under?

The homeownership and Equity Protection Act (HOEPA)

What is "cost trigger"?

When the total points and fees payable by the consumer at or before closing

Under HOEPA disclosures if loan high cost trigger the borrowers need to receive the following 3 disclosures at least 3 busn day before closing:

1. A written notice stating that the loan need not be completed (3 busn days cooling period to decide whether to sign the Section 32 disclosure)

2. The notice must warn the borrower the creditor will have a mortgage on the home

3. lender must disclosure the APR

High cost prohibited practices?

1. All ballon payment

2. negative amortization

3. default interest rate higher than pre-default rates

4. most prepayment penalties

5. a due on demand clause

6. refinance into another HOEPA loan within 12 months unless new loan is in the best interest of borrower

7. open-end loan (home equity line of credit)

What is a Higher-priced mortgage loan?

Any mortgage (purchased or non-purchase money) secured by a consumer's principal dwelling with an APR exceeding the "Average Prime Offer Rate" (APOR)

What does a "higher-priced mortgage loan" prohibited from?

1. engaging in a pattern & practice of relying on the collateral securing the loan without regard to the consumer's ability to repay the loan

2. relying on a consumer's income & assets without verifying such amounts through reasonable reliable third-party documents

3. imposing any pre-payment penalty if the consumer's payment can change in the 1st 4 years of the loan term.

4 originating 1st lien

Who regulated the Homeowner Protection Act of 1998 (HPA)?

Federal Reserve Board

What loans aren't covered under the HPA?

VA or FHA loans

What 2 options do HPA provided on which PMI may be cancelled?

1. automatic termination: once 78% of original value of property is reach; borrower must be current in payment and lender must cancel coverage within 30 calendar days of automatic termination date

2. By Request: homeowner request cancellation of PMI once home reaches 80% ltv. lener is not required to honor request by law. will consider based upon pay history

When must servicer required by HPA to notify a cosumer of their rights? (3)

1. at closing closing & 2. on an annual basis

3. upon cancellation

Who regulated Truth in Lending (Reg Z)?

Agency: board of governors of the Federal Reserve System (FRB)

Enforecement Agency: Federal Trade Commission (FTC)

What are Reg Z prohibited for ALL closed-end mortgage loans that are secured by the borrower's primary dwelling (2)?

1. creditors & mortgage brokers from

2. servicers from

What are prohibited under Reg Z for all closed-end mortgage loans secured by a dwelling

prohibit against misleading & deceptive advertising practices.

1. representing that an interest rate or payment is fixed when in fact

2. advertisers provide accurate & balanced information in a "clear & conspicuous" manner

3. specific requirements that advertisements state all applicable rates or payments with equal prominence and in close proximity to any "promotional"

The Equal Credit Opportunity Act (ECOA) is Regulation___

Regulation B

The Fair Housing Act Act is Regulation___

FHA is Title VIII

The Home Mortgage Disclosure Act is Regulation___

Regulation C

The Community Reinvestment Act is Regulation___

regulation BB

What is purpose of ECOA?

provide the availability of credit to all without regard to color

Under ECOA

30 days

What are required under ECOA?

1. notice of actions..adverse

2. reporting credit history in the names of both spouses on an account

3. retention of records of credit applications (records must be retaind for a minimum of 24 months period; 25 can destroy)

4. collection of info about applicant's race & other personal characteristics

5. providing applicants with copies of appraisal reports used in connection with credit transactions

Can FHA discriminated against AGE? ECOA?

yes

Can a creditor discourage application?

No

What can a creditor ask an application about & NOT ask about?

Can ask: Martial Status;

can't ask about alimony

But is required to ask about the liabilities of alimony