Title Five of the Housing and Economic Recovery Act establishes the SAFE Act. One of the components of SAFE is to establish the Nationwide Mortgage Licensing System and Registry (NMLSR), a national system for regulating and monitoring mortgage professionals.

The HPA requires mortgage servicers to automatically remove PMI on any loan designated as “high-risk” once the loan’s LTV reaches 77% and assuming that the borrower’s loan is current.

Payment shock concerns itself with the borrower’s current housing expense and their proposed housing expense. If an individual’s housing expense increases significantly beyond what they’re currently paying, they might ultimately experience difficulty making their payments.

The Statement on Subprime Lending defines an individual as a credit risk if their credit history reflects two or more 30-day delinquencies within the prior 12-month period, one or more 60-day delinquencies within the prior 24 months, foreclosure, repossession, or charge-off within the prior 24 months, bankruptcy within the previous five years, credit score representing a high risk of default, or a debt-to-income ratio of 50% or higher.

State income tax returns are never used to determine an applicant’s income. Bank statements reflecting pay deposits, pay stubs, W-2 forms, 1099 forms, and federal income tax returns are some of the documents used to substantiate an applicant’s income.

Piggyback financing involves an applicant applying for a first mortgage at 80% LTV as well as a secondary loan for the difference between the 80% first mortgage and their down payment. By limiting the first mortgage to 80%, the lender would not require PMI. A common example is an 80/10/10 which involves an 80% first mortgage, a 10% second mortgage, and a 10% down payment.

The Realtor violated RESPA the moment that she offered the attorney referrals for something of value (the waiver of the attorney’s fee). The attorney violated RESPA the moment he accepted the offer.

Since nothing of value was exchanged between the referral sources, no violation occurred. The thank-you note did not constitute a thing of value because it did not possess a tangible use.

The SAFE Act does not impose a specific fine for regulatory violations. Different violations carry different sanctions.

In having oversight and supervisory authority over loan originators, a state licensing agency must participate in the NMLS, conduct background checks, and write rules and regulations.

In conducting an examination or investigation, a state licensing agency may, among other things, administer oaths and affirmations, subpoena witnesses, as well as books and records, require the production of relevant documents, and control access to any documents and records of the person under investigation. The state licensing agency is not authorized to close the business for any period of time.

Even though the computer may be intended for business purposes, it is still a thing of value.

Multiplying her bi-weekly income of $1,153.85 by 26 results in an annual income of $30,000. Dividing $30,000 by 12 results in a monthly income of $2,500.

If the broker fee costs two points, that cost represents 2% of the loan amount. Multiplying the loan amount of $245,600 by 2% results in a broker fee cost of $4,912.

Caps on ARMs limit the amount an interest rate or payment can adjust during any one adjustment period or even over the lifetime of the loan.

An FHA borrower is required to pay annual MIP through monthly payments for a minimum of eleven years or the life-of-loan based on the loan’s original LTV.

As long as all applicants are charged the application fee regardless of whether or not they close on a loan, a lender does not have to include its application fee in the APR.

The HPA applies to residential mortgages used for primary residences and applicable to lenders, loan servicers, and PMI insurers.

ECOA prohibits discouraging anyone from applying for a mortgage. Refusing to take an application from someone under legal age is permitted. Asking an applicant about their race, national origin, and sex is required under HMDA and therefore allowable under ECOA and establishing an across-the-board policy whereby a lender refuses to lend to anyone at or below a certain credit score threshold is also permitted. Discouraging someone from applying due to the quality of their credit and not their score based on an across-the-board policy, however, is a violation of ECOA.

A general business day is any of the week, aside from Sunday and federal holidays, on which the entity conducting business is fully operational. As components to the business must be operational on Saturday, for example, in order for Saturday to be counted as a business day under this definition.

The Model State Law is a document created by the CSBS and the AARMR to guide states in implementing the legislation required by the SAFE Act. The SAFE Act encourages the CSBS and AARMR to establish the NMLS which would satisfy the SAFE Act mandates. Model State Law is not considered a form, model, or book, and it applies to states rather than banks or mortgage companies.

Exempt from the act that requires a mortgage loan originator business license are: registered mortgage loan originators when acting for an entity described in the MSL, any individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual, or who offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individual’s residence, or a licensed attorney negotiating for a client as an ancillary matter. First-time mortgage loan originators working for a non-depository institution certainly have to license as do attorneys receiving compensation for negotiating loan terms.

In the FHA loan program, qualification is not credit-score driven and as little as 12 months of clean credit history may qualify a borrower. FHA down payment requirements are as low as 3.5%. FHA’s maximum loan amount is set for each county in the U.S. The MIP must be paid for a minimum of 11 years on loans having an initial LTV less than 90% . Both FHA and conventional loan programs require mortgage insurance under certain conditions.

Any time an affiliate or associate relationship exists between two entities, a borrower referred between those entities must be issued an Affiliated Business Arrangement Disclosure (ABAD) by the referring individual. Even though there was no ownership interest between the mortgage company and the insurance agency, Emily’s husband working for the insurance agency created an associate relationship for which Emily, not the insurance company, was required to issue an ABAD.

Lenders require an extensive examination of public records and often a current survey before they issue a loan. Therefore, lenders consider a lender’s or mortgagee’s title policy the ideal evidence and protection of title because insurance companies thoroughly examine public records before issuing a policy. A lender’s title policy is issued for the amount of the loan.