ECOA and TILA Mortgage Regulations Flashcards

Vocabulary flashcards covering disclosure rules, prohibited practices, penalties, loan types, tolerances, and rescission rights under ECOA, HMDA, and TILA.

HMDA Monitoring Program Disclosures

Disclosures required by the Home Mortgage Disclosure Act (HMDA) regarding monitoring programs that must be communicated verbally and not in written form.

ECOA Record Retention Requirement

ECOA mandates record retention for $25$ months, covering applications, disclosures, copies of the notice of action taken, and any other information used.

Redlining

An unlawful practice prohibited by ECOA defined as intentional overt discrimination.

Disparate Treatment

A prohibited practice under ECOA in which a creditor treats a member of a protected class differently than similar others.

Disparate Impact

A practice prohibited by ECOA that occurs if a creditor chooses to not take applications under a certain amount.

Community Property State Cosigner Rule

In a community property state where income and property acquired during marriage belongs to both spouses, a cosigner MAY BE REQUIRED.

ECOA Penalties for Violations

Penalties including actual damages, punitive damages up to $\$10,000$ for individual actions or the lesser of $\\text{Lesser of } \$500,000$ or $1\%$ of creditor's net worth in class actions, and enforcement actions filed by the Attorney General.

Truth In Lending Act (TILA)

The law (implemented by Regulation Z and enforced primarily by the CFPB) designed to protect consumers by disclosing costs, creating uniform standards, ensuring truthful advertising, and providing borrowers with a right to rescind/cancel within $3$ business days.

Closed-End Loans

Loans where all money is dispersed at closing.

Open-End Loans

Loans with a limit on the amount of funds borrowers can withdraw, where the borrower can request a cash advance in ANY amount.

APR Tolerance

The allowable variance for APR disclosures under TILA, set at $\frac{1}{8}\%$ for regular loans and $\frac{1}{4}\%$ for irregular loans.

CHARM Booklet

Consumer Handbook on Adjustable-Rate Mortgages booklet required by TILA for closed-end ARMs, due $3$ days after an application.

Right to Rescind

A borrower's right under TILA to walk away from a loan for a principal dwelling within $3$ days, or up to $3$ years for borrowers who did not receive notice of the right to rescind.

Exercising the Right to Rescind

Any person on the loan has the right to rescind by providing written notice. Creditors must provide $2$ copies of the right to rescind to all parties on the loan and have $20$ days to return any money paid. Consumers can request to waive this right in a bonafide emergency.

Finance Charge Tolerance

Under TILA, normal closed-end tolerance is $0.5\%$ or \\text{\\$100}, whichever is greater, while refinance tolerance is $1\%$ OF \\text{\\$100}, whichever is greater (overstating is acceptable).

Trigger Terms for Closed-End Loans

Advertising terms under TILA that necessitate full disclosures, specifically down payment, payment amount, number of payments, and repayment period.

Trigger Terms for Open-End Loans (HELOC)

Advertising terms under TILA for home equity lines of credit that necessitate full disclosures, specifically rates, finance charges, and payments.