TRID, RESPA, TILA, and Mortgage Lending Practice Review

Comprehensive practice flashcards covering TRID, RESPA, TILA, SAFE Act, mortgage terminology, and lending regulations.

TRID

A rule created to help borrowers understand the terms of their home financing transaction by combining previous disclosure forms.

Loan Estimate (LE)

The disclosure created by combining the Good Faith Estimate (GFE) and the INITIAL Truth in Lending (TIL) disclosure.

Closing Disclosure (CD)

The disclosure created by combining the HUD-1 and the FINAL Truth in Lending (TIL) disclosure.

Credit Report Fee

The only fee a lender or mortgage broker may charge a borrower before they have received the Loan Estimate and expressed intent to proceed.

TRID Violation Penalty

$$1,000,000$$

Zero Tolerance Fees

Fees that cannot change between the LE and CD, including Real Estate Transfer Taxes, Credit Report charges, Appraisal, Interest Rate, and Loan Origination Fees.

$10\%$ Tolerance

An accumulative bucket of fees that cannot exceed a $10\%$ total increase, including Government Recording Fees and services chosen from the lender's list.

Complete Loan Application (The Six Items)

1. Address of subject property, 2. Loan Amount, 3. Income, 4. Estimated Value, 5. Name of borrower, 6. Social Security Number.

LE Timing Requirement

Must be provided to the borrower within $3$ business days of receiving a complete application.

Rate Lock

A feature found on the Loan Estimate that makes terms valid and binding for a period of $10$ days from issuance.

RESPA

Real Estate Settlement Procedures Act, which provides protection on loans for owner-occupied residential properties containing 1-4 units; enforced by the CFPB.

RESPA Section 6

The section of RESPA dealing with Mortgage Servicing and Mortgage Servicing Abuses.

Qualified Written Request (QWR)

A request for information or assertion of error regarding mortgage servicing; requires acknowledgment within $5$ business days and a response within $30$ business days.

RESPA Section 8

The section of RESPA prohibiting kickbacks, fee splitting, and unearned fees.

RESPA Section 9

The section of RESPA prohibiting sellers from requiring buyers to purchase title insurance from a specific company as a condition of sale.

RESPA Section 10

The section of RESPA governing Escrow accounts.

Escrow Cushion

A reserve limited to no more than $1/6$ (or $2$ months) of the total annual disbursements.

Home Loan Toolkit

Also known as the 'Know Before You Owe' booklet, it helps borrowers calculate affordability and provide process worksheets.

Affiliated Business Arrangement (AFBA)

An arrangement where a person referring business has an ownership interest of $1\%$ or more in a provider of settlement services.

Servicing Transfer Disclosure (Goodbye Letter)

Must be sent by the transferring servicer no later than $15$ days prior to the transfer to the new servicer.

TILA

Truth in Lending Act, implemented by the Federal Reserve Board and enforced by the CFPB, or Reg Z.

Annual Percentage Rate (APR)

The cost of getting a mortgage expressed as a yearly rate, calculating the interest rate plus finance charges; also known as the Effective Rate.

Finance Charge

The cost of consumer credit as a dollar amount, representing charges that would not be paid in a cash transaction.

Right to Rescind

A $3$-day period (allowing cancelation) for primary residence refinances, reverse mortgages, HELOCs, and second mortgages.

Loan Steering

When a loan originator persuades a borrower toward a specific product to gain higher compensation when it is not in the borrower's best interest.

Qualified Mortgage (QM)

A loan with less risky features (no balloon payments, interest-only, or negative amortization) that grants the lender safe harbor.

The Ability-To-Repay (ATR) Rule

Requires lenders to document $8$ specific pieces of information to ensure a borrower can repay the loan.

HOEPA

The Home Ownership and Equity Protection Act, also known as Section $32$ of the Truth in Lending Act, created to prevent predatory lending.

High-Priced Mortgage Loan (HPML)

Also known as Section $35$ of TILA, characterized by an APR exceeding the APOR by specific thresholds ($1.5\%$ for first liens).

Equal Credit Opportunity Act (ECOA/Reg B)

An act ensuring equality when applying for credit; identifies $9$ protected classes and is enforced by the CFPB.

Disparate Treatment

A type of discrimination where a lender treats applicants differently based on a protected class.

Disparate Impact

A form of discrimination where a creditor's policies have an adverse impact on a protected class, even if not directly seen.

Fair Housing Act

Title VIII of the Civil Rights Act of 1968, protecting people from discrimination when renting or buying a home.

Redlining

The illegal practice where a lender denies an applicant a loan based on the neighborhood, regardless of eligibility.

Blockbusting

The illegal practice of persuading owners to sell property cheaply based on fears of a certain class moving into the neighborhood.

HMDA (Reg C)

The Home Mortgage Disclosure Act, requiring institutions to maintain a Loan Application Register (LAR) to report lending data.

FCRA

Fair Credit Reporting Act, which ensures information on credit reports is fair, accurate, and kept private.

FACTA (Reg V)

Fair and Accurate Credit Transaction Act, primarily created to protect consumers from identity theft.

Red Flag Rules

Defined under Section $114$ of FACTA, requiring financial institutions to establish procedures for identifying identity theft.

Gramm-Leach-Bliley Act (GLBA)

Also known as the Financial Services Modernization Act of 1999, requiring institutions to safeguard nonpublic personal information (NPI).

MARS Rule

Mortgage Assistance Relief Services rule, created to protect homeowners facing foreclosure from deceptive relief practices.

Homeowners Protection Act (HPA)

The act establishing provisions for the cancellation and termination of Private Mortgage Insurance (PMI).

Bank Secrecy Act/Anti Money Laundering (BSA/AML)

Requires institutions to establish compliance programs to fight money laundering and report cash transactions over $10,000$ via CTRs.

SAFE Act

Created by HERA, it establishes minimum standards for MLO licensing through the NMLS.

Unique Identifier

The NMLS number that permanently identifies an MLO and must be disclosed on all advertisements, disclosures, and loan applications.

Fannie Mae (FNMA)

Federal National Mortgage Association, a government-sponsored entity that purchases mortgages on the secondary market.

Freddie Mac (FHLMC)

Federal Home Loan Mortgage Corporation, a government-sponsored entity that uses the Loan Product Advisor (LPA) automated system.

Ginnie Mae (GNMA)

Government National Mortgage Association, which insures FHA and guarantees VA/USDA loans.

Sales Comparison Approach

The appraisal method comparing the subject property to $3$ similar properties sold within the last $6$ months within a $1$-$3$ mile radius.

Cost Approach

The appraisal method that estimates the price a buyer should pay based on the cost to build an equivalent building.

Amortization

The length of time it takes to pay off a mortgage in full through regular principal and interest payments.

Lien

A legal claim or right against assets used as collateral to satisfy a debt.

Tenancy in Common

A form of concurrent ownership where individuals hold separate titles to their portion and can transfer or will their part.

Joint Tenancy

A form of ownership where two or more individuals hold equal rights to a property; they cannot transfer or will their individual part.

Deed

A legal document that transfers ownership rights of a property from the grantor (seller) to the grantee (buyer).

Promissory Note

A financial instrument containing a written promise by the borrower to pay a definite sum of money to the lender.

Acceleration Clause

A provision allowing a lender to demand the full remaining balance of the loan if the borrower defaults.

LTV (Loan-to-Value Ratio)

Calculation: $Loan Amount / \min(Appraisal Value, Purchase Price)$.

Basis Point

An amount equal to $1/100$th of a percentage point ($0.01\%$).

Fraud for Profit

Mortgage fraud categories involving appraisal fraud, flipping, and straw buyers aiming to steal money or equity.

Equitable Right of Redemption

The right of a borrower to save their home from foreclosure by paying the entire balance plus fees before the sale occurs.