The borrower feels more secure having the additional coverage c. The appraiser indicates the property is located in a flood zone d. The previous owner had a history of the property flooding, Why would a mortgage lender analyze a borrowers credit capacity? Similarly, any reduction in origination points paid by the consumer must be a cost borne by the creditor. a. Borrowers race, gender, and ethnicity b. Borrowers name c. Age and years of schooling of the borrower d. Type of mortgage and its term, A couple has qualified for a $245,600 loan. Just because a payment is labeled a, A retention bonus budgeted for in advance, and. directly or indirectly based on the terms of an individual loan originator's transactions. PDF Summary of Mortgage Loan Originator Qualification and Compensation It is required for VA and FHA loans c. It is the same for fixed- and adjustable-rate loans d. Loan servicers must give borrowers an annual disclosure stating that they may have the right to cancel their PMI, This occurs when an individual misrepresents qualifying information in order to improve his or her changes of securing a mortgage loan. If a mortgage broker decides to use telemarketing to establish leads for loan origination, which of the following should occur? Under a leasehold agreement, the consumer may not occupy the property as a renter b. Report underwriting errors b. Any one of the five b. The Equal Credit Opportunity Act c. Regulation X d. The Fair Credit Reporting Act, It is unethical and illegal to use yield spread premiums for any reason other than: a. The complete rule, including the Official Staff Commentary, which is published as Supplement I to Regulation Z, is available on the Government Printing Office web site. There is a ____ accuracy tolerance for amounts stated on the Loan Estimate and the actual closing costs if the consumer is allowed to shop for his/her own settlement service provider. a. PDF 2013 Loan Originator Rule - Consumer Financial Protection Bureau a. The developer E c. Both the mortgage broker and the developer d. Neither the broker nor the developer, RESPA does not apply to: a. For overtime hours, which he has averaged as six hours per week, he receives double pay based on his per-hour wage of $25. The Loan Originator Compensation Rule defines compensation to include all of the following, except, Payments collected by a mortgage company for services other than loan origination services, The mandatory waiting period between issuance of disclosures and consummation may be waived, If the consumer requests a waiver due to a bona fide financial emergency. Sales approach c. Income approach d. Cost approach, On which approach do appraisers place the most weight in reaching a value conclusion for conforming loans? It can be used for HELOC transactions b. Heres an example. The maximum interest rate that may apply during the first five years of the loan term c. The maximum interest rate that may apply during the first year of the loan term d. The maximum interest rate that may apply during the first ten years of the loan term, The VA guarantee covers up to what amount of the of the veterans entitlement? The penalties for paying or accepting an illegal referral fee are: a. A female applicant is four months pregnant and might not continue working once her baby is born b. One b. He asks if he can see the appraisal report that his lender ordered and learns that: a. endobj Accordingly, the rules on originator compensation apply to transactions for which the creditor receives an application on or after April 1, 2011. a. The borrowers Social Security Number, current address, and address of the property he or she wishes to purchase b. Written policies and procedures for the administration of the mortgage loan compensation program(s) must be maintained a. Which of the following pieces of information would not be included on the notice? Mortgage broker b. It contains articles of significant interest to the business lawyer, including case law analysis, developing trends and annotated listings of recent literature. The Loan Originator Compensation Rule is intended to discourage which of the following practices? The applicants income does not meet the required level for repayment of the loan b. Examples of transaction terms include, but arent limited to, interest rate, annual percentage rate (APR), collateral type (e.g., condo, cooperative, detached home, or manufactured housing), lien status, prepayment penalty, origination points or fees paid, and fees for creditor-required title insurance. Market approach b. Seven business days b. Information on the credit reporting agency if the adverse action is based on his credit report b. All five c. A majority of the five d. At least two of the five, A lender is permitted to deny an applicant credit based on which of the following factors? His wife Matilda is paid $680 bi-weekly as a medical technician. A new home purchase b. The mortgage broker c. Both the title company and the mortgage broker d. Neither the title company nor the mortgage broker, A title insurance company provides a computer to a mortgage broker. Not applicable to mortgage loan originators b. Applicable only to depository institutions and their employees who originate mortgage loans c. Not applicable to mortgage loan originators, who are temporarily exempt from the legal obligation to comply with the regulations d. Applicable to residential mortgage loan originators, who became subject to the regulations in February 2012, Money laundering is most accurately described as: a. Dry settlement b. For purposes of these rules, loan originators are defined to include mortgage brokers, who may be natural persons or mortgage broker companies. The applicant is too old to survive the term of the loan c. The applicant is too young to enter into a contract d. The applicant is too young to have accumulated savings and requires a gift from his or her parents in order to make a down payment, A hazard insurance company hosts a dinner for the employees of a mortgage broker. Payment Based on # of Covered Loans Closed. The use of funds illegally obtained from a fraudulent mortgage lending transaction c. Filtering money through a series of transactions in order to prevent the tracing of the funds to their original illegal source d. Paying for financial goods and services with the use of funds deposited in an offshore banking account, Which of the following scenarios would violate Section 8 of RESPA and its prohibition against unearned fees? An agreement a borrower makes with a lender allowing their interest rate to rise or fall with the market is called: Which of the following real estate appraisal approaches considers the value of the property and any improvements made? Possibility of changes in the payment amount over time c. The index used to determine rate adjustments d. Statement that the interest rate will be offered for the duration of the loan, John and Jane Brown are co-owners of a property that is their principal residence, and are entering into a refinance transaction that is subject to rescission. This item is part of a JSTOR Collection. NMLS Training - License Flashcards | Chegg.com a. Repayment Rule c. Qualified Borrower Rule d. Ability to Repay Rule, An attorney and a lender entered into an agreement in which the attorneys car loan payments are paid by the lender in return for the names of potential loan applicants. Provides a safe harbor to facilitate compliance. A loan to purchase 75 acres of land b. a. Branches and Agencies of Note that the applicant has declined to answer and select a race based on visual observation b. significant number of transactions; and (2) the loan originator has the ability, directly or indirectly, to add, drop, or change the factor in originating the transaction. Failure to maintain sufficient records could be viewed as a violation of the Rule. Infrastructures, International Standards for Financial Market To qualify for this bonus, more than $200K must be closed and funded during the month. Mr. Jones's loan application has been denied and he is provided with an Adverse Action Notice as required by ECOA. The applicants age is below the minimum age for executing a contract c. The applicants recent marital status may lead to a change in employment d. The applicants credit history includes defaults on many credit payments, A mortgage broker pays for title services on behalf of a developer. 2 0 obj PDF Loan Originator (LO) Compensation - FDIC Late last week . Loan originator compensation requirements are complicated, and were glad to help! 2014 American Bar Association %PDF-1.7 For purposes of 226.36(d)(1) and (d)(2), affiliates are treated as a single "person." The first mortgage has a 78% LTV. Loan Originator Compensation Rule | JD Supra On January 18, 2013, the Consumer Financial Protection Bureau (the Bureau) issued its final loan originator compensation rule (the Rule). 36% c. 43% d. 46%, The ratio of the total balance of all mortgage liens against a property to the value is called: a. CLTV b. TLTV c. HLTV d. LTV, The process of allowing a broker to originate and close a loan in his or her own name before transferring the loan to the lender providing the funds is called: a. a. The rule provides a safe harbor to facilitate compliance with the prohibition on steering. The rule also prohibits any person from paying compensation to a loan originator for a particular transaction if the consumer pays the loan originator's compensation directly. xks6gQ0A |Iih9%v$E.42%.N/*$iN/*I;cr*N?/n+Yrq|qg ]L)v39>qPiv9d%[Tn>>;}/ZPBpDTqBOsOz4exc9 1 0 obj The Telemarketing Sales Rule b. The real estate licensee b. Reg. (d) Prohibited payments to loan originators. Terms, Statistics Reported by Banks and Other Financial Firms in the To prevent evasion, the final rule generally prohibits loan originator compensation from being reduced to offset the cost of a change in transaction terms (often called a 10% c. 5% d. 15%, In what area of the Loan Estimate would a borrower be able to see if their loan has a balloon payment? Their religion b. When his clients apply for loans and request referrals to a title company, Murphy must: a. The consumer is purchasing a home located in a neighborhood primarily occupied by minorities. Apartment buildings c. Travel trailers d. Vacation homes, Which of the following is not true regarding RESPAs requirement to provide a list of homeownership counselors? a. LTV b. CCPA c. CIP d. DTI, The cost approach to appraisal includes which of the following? Former owners of a particular property b. Negative amortization b. a. Creditors are excluded from the definition of a loan originator when they do not use table funding, whether they are a depository institution or a non-depository mortgage company, but employees of such entities are loan originators. The APR in effect after the introductory rate expires c. The monthly payment for the loan d. No other information is required, All of the following features are prohibited for a qualified mortgage, except: a. Which of the following would be provided in this section of the 1003? a. Fraud for housing b. PDF 2013 Loan originator compensation rule - Consumer Finance Monitor The borrower has alluded to the fact that she is submitting false documents in order to qualify for a larger loan c. The lender does not accept applications from the area where the borrower lives d. The applicant has poor credit and you do not feel there is any way that he will meet lender guidelines for any loan products that are available in the current market, For a fee, a real estate licensee offers a mortgage company the names and telephone numbers of all of the people who attended an open house, but the mortgage company does not accept the offer. To lower the interest rate for the period during which PMI is paid c. To finance a funding fee for a borrower who does not wish to pay upfront d. To cover the risk of lending to a consumer without a sufficient down payment, In which of the following instances would a borrower be required to obtain flood insurance? What types of enhanced periodic payments are permissible? The broker should invest in a state-of-the-art predictive dialer b. You bet. that any person subjectively intended that there be a relationship between the amount of the compensation paid and a transaction term.29 Instead, the deter- Fair and Accurate Credit Transactions Act c. Home Ownership and Equity Protection Act d. Equal Credit Opportunity Act, Advertising an attractive interest rate that a mortgage professional is not at liberty to offer is a major ethical offense and a violation of: a. Providing real estate settlement services c. Engaging in business related to insurance d. Providing check cashing, collecting, or guaranty services, HUD is still responsible for writing rules and implementing which of the following acts? Keep in mind, however, if mortgage-related and non-mortgage-related business profits are not separately calculated, the Bureau tells us all profits are to be regarded as being from mortgage-related business. Who has violated RESPA? Construction loans b. Federally-related mortgage loans c. Secondary mortgage loans d. Commercial mortgage loans, A ________ is a unilateral increase in the cost of a settlement service. a. We get it! A bonus guaranteed in advance to be in a specified amount, in this case a percentage of the base salary, regardless of the terms of transactions of the LO, does not vary with the amount of profits and therefore is not based on them. Comparison of value for three similar, recently sold properties b. The guide summarizes and explains rules adopted by the Board but is not a substitute for any rule itself. Mortgage originator compensation and anti-steering practices are subject to a final rule recently announced by the Board, which already implements some of the provisions set forth by the Act (see section 3.2 below). Title insurance charges c. Document preparation fees d. Credit report fee, Which of the following is not included in calculating the APR? Section 179D Energy Efficient Tax Deduction, Internal Audit Outsourcing & Consulting Services, Outsourced CFO, controller and accounting department, Wealth management and investment advisory services, Complete Solution for Job Shops and Contract Manufacturers, Microsoft Dynamics 365 Project Service Automation, Integrate invoice processing & AP automation with Concur Connectors, Connectors for Dynamics 365 Business Central, Loan Originator Compensation It's Complicated, Overview of OMB's Uniform Guidance (Preconference to the Iowa Community Action Association Annual Conference, New research shows state of credit unions as 2023 starts, Wipfli releases new research on the state of banking. Negative amortization b. For terms and use, please refer to our Terms and Conditions The second broker pays the referring broker a fee for providing the lead. Two mortgage brokers decide to split the mortgage broker fee from a residential loan transaction c. A title company charges a market fee for examination and evaluation of title evidence d. A mortgage broker accepts a fee for sending its customers to a title company, A lender is gathering information on loans for the purposes of HMDA reporting. Collecting and responding to consumer complaints b. A loan originator's compensation can neither be increased nor decreased based on the loan terms or conditions. a. Salaries b. Mr. Cyril Cagney is paid $1,800 semi-monthly. The Telemarketing Consumer Fraud and Abuse Prevention Act c. The Do-Not-Call Registry d. The Telemarketing Protection Registry, This involves conspiratorial involvement of individuals using the mortgage market to benefit financially from criminal behavior. A performance bonus paid out of a bonus pool set aside at the beginning of the companys annual accounting period as part of the companys operating budget. Infrastructures, Payments System Policy Advisory Committee, Finance and Economics Discussion Series (FEDS), International Finance Discussion Papers (IFDP), Estimated Dynamic Optimization (EDO) Model, Aggregate Reserves of Depository Institutions and the A Components of the finance charge b. Those individuals who only occasionally act as a loan originator and have done so for 10 or less covered transactions consummated during the 12-month period preceding the date of the compensation determination are not limited by the 10% cap. This course provides an overview of the Loan Originator Compensation Rule, including permissible and prohibited forms of compensation for . To ensure that third-party service providers do not charge high fees c. To ensure that creditors provide consumers clear disclosure of the terms of credit d. To ensure that applicants have equal opportunity to credit from lenders, Under TILA guidelines, all of the following disclosures are provided for an adjustable-rate loan, except: a. Loan Originator Compensation - Wipfli a. [SS Fed] The Loan Originator Compensation Rule - Catalogs The Fed - Supervision and Regulation: - Federal Reserve Board 4 0 obj A mortgage broker pays a fee to determine if a property is located in a flood zone b. Revise effective dates of Loan Originator rule and ban on financing of credit insurance: Currently, the 2013 Loan Originator Compensation Final Rule is scheduled to take effect on January 10, 2014. Requires, for each transaction subject to the loan originator compensation provisions in 226.36(d)(1), that the creditor maintain records of the compensation it provided to the loan originator for the transaction as well as the compensation agreement in effect on the date the interest rate was set for the transaction. The finance charges for the loan b. a. PDF Billing Code: 4810-am-p Bureau of Consumer Financial Protection 12 Cfr Count the amount paid during the period, regardless of when earned, Contributions to defined contribution deferred tax-advantaged plans, (401(k), 403(b), Simple IRA, employee pension plans, etc. Which of the following is not included in calculating the APR? Effective/Applicability Date. Under the rule, the amount of credit extended is deemed not to be a transaction term or condition of the loan for purposes of the prohibition, provided the compensation payments to loan originators are based on a fixed percentage of the amount of credit extended. a. W-2s for the past two years and a copy of her last pay stub b. Communications, Banking Applications & Legal Developments, Financial Stability Coordination & Actions, Financial Market Utilities & Infrastructures. Effective date for most of the changes to compensation rules is January 1, 2014 (originally scheduled for January 10, 2014). It is the ratio of the borrowers principal loan balance to the appraised value of the property c. It is the ratio of the borrowers monthly loan payment to the principal loan balance d. It is the ratio of the borrowers monthly housing expense to monthly income, Which of the following real estate appraisal approaches considers the value of the property and any improvements made? a. The next business day after the Closing Disclosure is mailed c. The third business day after the Closing Disclosure is mailed d. The day on which the company received a completed, signed loan application, The mandatory waiting period between issuance of disclosures and consummation may be waived: a. To prevent evasion, the final rule generally prohibits loan originator compensation from being reduced to offset the cost of a change in transaction terms (often called a "pricing concession"). a. What is his monthly qualifying income? You bet. $49,500 b. The Bureau of Consumer Financial Protection (Bureau) is issuing a final rule delaying the June 1, 2013, effective date of a prohibition on creditors financing credit insurance premiums in connection with certain consumer credit transactions secured by a dwelling. Example: A creditor may not pay a loan originator 1 percent of the amount of credit extended for amounts greater than $300,000, and 2 percent of the amount of credit extended for amounts that fall between $200,000 and $300,000. $256,650 b. Checks), Regulation II (Debit Card Interchange Fees and Routing), Regulation HH (Financial Market Utilities), Federal Reserve's Key Policies for the Provision of Financial Within one week b. The fee is legal, as long as the brokers do not have a pre-existing agreement in place for payment of referral fees c. The fee is illegal, unless the brokers provide a disclosure to the client d. Payment of the fee is illegal, Even before the adoption of the Dodd-Frank Act and the Ability to Repay Rule, which of the following federal laws created specific requirements for the verification and documentation of a borrowers repayment ability? Fraud for profit c. Identity theft d. Straw buying, MaxMortgage is a lender that is hoping to revive the subprime lending market with the origination of high-cost mortgages. Explain to the loan applicants that he cannot refer them to a particular company c. Immediately provide an affiliated business arrangement disclosure if he refers them to the title company in which he has an ownership interest d. Offer a list of all local title companies without steering loan applicants towards a particular one, A real estate agent receives a $50 restaurant gift certificate from a mortgage broker as a token of appreciation for referring a home buyer to the mortgage broker. Using this example, the creditor would pay a loan originator $3,000 on a $300,000 loan (i.e., 1 percent of the amount of credit extended), $1,000 on a $50,000 loan, and $5,000 on a $900,000 loan. Federal Mortgage-Related Laws Flashcards by Paul Son | Brainscape system. The Rule provides limited exception for certain deferred tax-advantaged plans allowing loan originators to receive compensation that qualifies for tax-advantaged status and is paid in the form of a defined contribution or defined benefit. GSA has adjusted all POV mileage reimbursement rates effective January 1, 2023. Steering There is a ____ accuracy tolerance for amounts stated on the Loan Estimate and the actual closing costs if the consumer is allowed to shop for his/her own settlement service provider. a. ECOA b. RESPA c. FCRA d. Fair Housing Act, Why did Congress enact the Home Mortgage Disclosure Act? a. [4] This fixed percentage CAN be subject to a minimum and/or maximum dollar amount, provided the minimum and maximum do not vary with each credit transaction and the percentage is based on the total amount of credit extended during the relevant time period. VA loans require a funding fee under all of the following conditions except: Which of the following individuals would not be permitted to hold POA for a borrower? What is the dollar amount of the broker fee? Extending credit or servicing loans b. PDF Loan Originator Rule - Consumer Financial Protection Bureau a. The broker should obtain access to the Do-Not-Call Registry. The use of funds illegally procured as a result of identity theft b. The need to revitalize the economy in 2008 c. The terrorist attacks on September 11, 2001 d. The need to make HAMP loans available to more Americans, The federal agency that is responsible for implementation and enforcement of the USA PATRIOT Act is: a. A broker charges $50 for a obtaining a $50 credit report c. An attorney accepts payment for performing a title search d. A title company pays a mortgage broker $100 per client for referral of settlement business, A small servicer may be exempt under the Servicing Rules if it is a nonprofit entity that services: a. Real Estate Settlement Procedures Act b. The safe harbor is met if the consumer is presented with loan offers for each type of transaction in which the consumer expresses an interest (that is, a fixed rate loan, adjustable rate loan, or a reverse mortgage); and the loan options presented to the consumer include: To be within the safe harbor, the loan originator must obtain loan options from a significant number of the creditors with which the originator regularly does business. 72 hours after closing c. Three years after closing d. Three business days after closing, 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. At least three business days prior to consummation c. At the time a referral is made d. Within ten days of making a referral, When calculating finance charges in compliance with TILA, all of the following are included, except: a. In this case, the originator is guaranteed payment of a minimum amount for each loan, regardless of the amount of credit extended to the consumer. Refuse to take the application b. Of course. a. APR b. Practices, Structure and Share Data for the U.S. Offices of Foreign The designated broker encourages the employees to send clients to the insurance company. The Rule provides limited exception for certain deferred tax-advantaged plans allowing loan originators to receive compensation that qualifies for tax-advantaged status and is paid in the form of a defined contribution or defined benefit. When non-deferred profits-based compensation is not included in the calculation, simply take the amount of total compensation and multiply it by 0.10 to identify the 10% limit. To earn an additional commission on a loan origination b. Deletes text that compares and contrasts the Bureau's loan originator rule to the Board's loan originator rule because the Bureau's loan originator rule has been in effect for a significant amount of time (Sections 5.1., 5.3, 5.5, 5.7, 5.9, 5.10, 9 and 9.5 of the prior version). Income approach c. Sales comparison approach d. Assemblage, Appraisals that use the sales comparison approach include which of the following? The Dodd-Frank Act has made it illegal to sell high-cost mortgages in the secondary market b. MaxMortgage may only sell high-cost mortgages if it agrees that the purchaser will not be liable for HOEPA violations c. Before selling high-cost mortgages, MaxMortgage must provide purchasers with a notice that the loans are subject to HOEPA d. MaxMortgage cannot originate high-cost mortgages unless its loan originators provide borrowers with pre-loan counseling, As a result of provisions included in the Dodd-Frank Act, HOEPA was revised to extend its provisions to: a.

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