RMLO Exam Prep: General Study Guide – Q’s And A’s
REAL ESTATE SETTLEMENT PROCEDURES ACT ( RESPA ) Right Ans -
Regulation X
Consumer protection statute
Three (3) Purposes of RESPA Right Ans - 1. To protect consumers by
assisting them in becoming better educated and requiring lenders to provide
borrowers with pertinent and timely disclosures regarding the nature and
costs of the settlement process
2. To protect consumers from excessive settlement costs and unearned fees
3. To protect consumers by limiting the amounts that homebuyers are
required to put into escrow accounts
Loans Covered By RESPA Right Ans - Applicable to all federally related
mortgage loans that satisfy the following two criteria:
1. The loan is secured by a first or subordinate lien on residential property, on
which either:
- A one to four family structure is located or is to be constructed
- A manufactured home is located or is to be placed.
2. The loan falls within one of the following catagories:
- Loans made by a lender, creditor, or dealer
- Loans made with collateral insured by an agency of the federal government
- Loans made in connection with a HUD program administered by a federal
agency (FHA, ect)
- Loans made and intended to be sold by the originating lender to: FNMA,
GNMA, FHLMC
- Loans that are the subject of a Home-Equity Conversion Mortgage (HECM)
or reverse mortgage issued by a lender
Loans Exempt From RESPA Right Ans - 1. Secured by Parcels of 25 acres or
more, whether or not the property is improved
2. Used primarily for business , commercial , or agricultural
,3. Temporary loans, such as construction loans
(The exemption DOES NOT apply if the loan is used as, or may be converted to,
permanent financing by the same financial institution)
4. Secured by vacant or unimproved property when none of the loan proceeds
will be used to construct a one to four family residential structure
5. Assumptions of existing mortgages in which the lender has no right to
approve subsequent persons as borrowers
6. Conversions of federally related mortgage loans to different terms with the
original mortgage instrument, as long as a new note is not required
7. Bona fide transfers of loan obligations in the secondary market
Application As Defined Under RESPA Right Ans - (P E N C I L)
1. Property address
2. Estimated value of the property
3. Name of borrower
4. Credit report, need social security number
5. Income of borrower, monthly
6. Loan amount
RESPA - Disclosures At The Time of Application (General Rule) Right Ans -
Disclosures a creditor must mail to the borrower, if not given at the time of
application, within three (3) business days of receipt of the loan application
the following:
1. Special Information Booklet
2 . Good Faith Estimate / Loan Estimate
3. Mortgage Servicing Disclosure Statement
4. List of Homeownership Counseling Organizations
,If the documents are mailed to the applicant , the applicant is considered to
have received them 3 calendar days after they are mailed.
RESPA - Disclosures At The Time of Application (Special Information Booklet)
Right Ans - Titled: Your Home Loan Toolkit: A Step by Step Guide
Designed to be used in connection with the Loan Estimate and Closing
Disclosure forms
RESPA - Disclosures At The Time of Application (Special Information Booklet -
HELOC Only) Right Ans - Booklet to provide INSTEAD of the Special
Information Booklet: "When Your Home Is On The Line: What You Should
Know About Home Equity Lines of Credit"
RESPA - Disclosures At The Time of Application (Good Faith Estimate - GFE)
Right Ans - Disclosure form used for Reverse Mortgage Transactions
RESPA - Disclosures At The Time of Application (Loan Estimate - LE) Right
Ans - Disclosure form used for closed-end consumer credit transactions
secured by property
RESPA - Disclosures At The Time of Application (Truth In Lending - TIL)
Right Ans - If consumer is applying for the following transactions, they DO
NOT recieve a GFE or an LE, but recieve this instead:
1. Home Equity Line of Credit (HELOC)
2. A manufactured housing loan that is not secured by real estate
3. A loan through certain types of homebuyer assistance programs
RESPA - Disclosures At The Time of Application (Mortgage Servicing
Disclosure Statement) Right Ans - A (RESPA) Section 6 disclosure wherein
the lender indicates whether or not the servicing of the loan may be assigned ,
sold , or transferred to any other person at any time while the loan is
outstanding
RESPA - Required List of Homeownership Counseling Organizations Right
Ans - Regulation X requires mortgage lenders to provide the borrower with a
written list of local HUD approved homeownership counseling organizations
, not later than 3 business days after receiving an application. The list should
include at least 10 counseling organizations.
Mortgage loans requiring HUD counseling includes:
1. Home Ownership and Equity Protection Act Loans (HOEPA)
2. Home Equity Conversion Mortgages (HECM)
3. FNMA Home Ready Purchase Mortgage Loans
4. FHLMC Home Possible Mortgage Loans
RESPA - Disclosures Before Settlement Occurs (Affiliated Business
Arrangement) Right Ans - If the lender has either an affiliate relationship
or a direct or beneficial ownership , interest of more than 1 percent in a
provider of settlement services , and the lender directly or indirectly refers
busi ness to the provider , it is an Affiliated Business Arrangement.
RESPA - Disclosures Before Settlement Occurs (ABA: No Violation) Right
Ans - 1. The referring party gives the ABA disclosure to the consumer at or
prior to the time of referral
2. The nature of the relationship ( explaining the ownership and financial
interest ) between the provider and the lender is disclosed
3. The estimated charge or range of charges generally made by such provider
is disclosed
4. The lender does not require the use of such a provider
5. The lender receives only a return on ownership or franchise interest or
payment otherwise permitted by RESPA
RESPA - Disclosures Before Settlement Occurs (Uniform Settlement
Statement) Right Ans - The HUD - 1 is a statement that shows the actual
costs of settlement in certain mortgage lending transactions. The HUD - 1 is
utilized for the following transactions:
1. Home Equity Line of Credit ( HELOC )
2. Reverse Mortgages
3. Mortgages secured by a mobile home or by a dwelling that is not attached to
real property
4. Purchase of property for a commercial , agricultural or business purpose
5. Cash Sale
REAL ESTATE SETTLEMENT PROCEDURES ACT ( RESPA ) Right Ans -
Regulation X
Consumer protection statute
Three (3) Purposes of RESPA Right Ans - 1. To protect consumers by
assisting them in becoming better educated and requiring lenders to provide
borrowers with pertinent and timely disclosures regarding the nature and
costs of the settlement process
2. To protect consumers from excessive settlement costs and unearned fees
3. To protect consumers by limiting the amounts that homebuyers are
required to put into escrow accounts
Loans Covered By RESPA Right Ans - Applicable to all federally related
mortgage loans that satisfy the following two criteria:
1. The loan is secured by a first or subordinate lien on residential property, on
which either:
- A one to four family structure is located or is to be constructed
- A manufactured home is located or is to be placed.
2. The loan falls within one of the following catagories:
- Loans made by a lender, creditor, or dealer
- Loans made with collateral insured by an agency of the federal government
- Loans made in connection with a HUD program administered by a federal
agency (FHA, ect)
- Loans made and intended to be sold by the originating lender to: FNMA,
GNMA, FHLMC
- Loans that are the subject of a Home-Equity Conversion Mortgage (HECM)
or reverse mortgage issued by a lender
Loans Exempt From RESPA Right Ans - 1. Secured by Parcels of 25 acres or
more, whether or not the property is improved
2. Used primarily for business , commercial , or agricultural
,3. Temporary loans, such as construction loans
(The exemption DOES NOT apply if the loan is used as, or may be converted to,
permanent financing by the same financial institution)
4. Secured by vacant or unimproved property when none of the loan proceeds
will be used to construct a one to four family residential structure
5. Assumptions of existing mortgages in which the lender has no right to
approve subsequent persons as borrowers
6. Conversions of federally related mortgage loans to different terms with the
original mortgage instrument, as long as a new note is not required
7. Bona fide transfers of loan obligations in the secondary market
Application As Defined Under RESPA Right Ans - (P E N C I L)
1. Property address
2. Estimated value of the property
3. Name of borrower
4. Credit report, need social security number
5. Income of borrower, monthly
6. Loan amount
RESPA - Disclosures At The Time of Application (General Rule) Right Ans -
Disclosures a creditor must mail to the borrower, if not given at the time of
application, within three (3) business days of receipt of the loan application
the following:
1. Special Information Booklet
2 . Good Faith Estimate / Loan Estimate
3. Mortgage Servicing Disclosure Statement
4. List of Homeownership Counseling Organizations
,If the documents are mailed to the applicant , the applicant is considered to
have received them 3 calendar days after they are mailed.
RESPA - Disclosures At The Time of Application (Special Information Booklet)
Right Ans - Titled: Your Home Loan Toolkit: A Step by Step Guide
Designed to be used in connection with the Loan Estimate and Closing
Disclosure forms
RESPA - Disclosures At The Time of Application (Special Information Booklet -
HELOC Only) Right Ans - Booklet to provide INSTEAD of the Special
Information Booklet: "When Your Home Is On The Line: What You Should
Know About Home Equity Lines of Credit"
RESPA - Disclosures At The Time of Application (Good Faith Estimate - GFE)
Right Ans - Disclosure form used for Reverse Mortgage Transactions
RESPA - Disclosures At The Time of Application (Loan Estimate - LE) Right
Ans - Disclosure form used for closed-end consumer credit transactions
secured by property
RESPA - Disclosures At The Time of Application (Truth In Lending - TIL)
Right Ans - If consumer is applying for the following transactions, they DO
NOT recieve a GFE or an LE, but recieve this instead:
1. Home Equity Line of Credit (HELOC)
2. A manufactured housing loan that is not secured by real estate
3. A loan through certain types of homebuyer assistance programs
RESPA - Disclosures At The Time of Application (Mortgage Servicing
Disclosure Statement) Right Ans - A (RESPA) Section 6 disclosure wherein
the lender indicates whether or not the servicing of the loan may be assigned ,
sold , or transferred to any other person at any time while the loan is
outstanding
RESPA - Required List of Homeownership Counseling Organizations Right
Ans - Regulation X requires mortgage lenders to provide the borrower with a
written list of local HUD approved homeownership counseling organizations
, not later than 3 business days after receiving an application. The list should
include at least 10 counseling organizations.
Mortgage loans requiring HUD counseling includes:
1. Home Ownership and Equity Protection Act Loans (HOEPA)
2. Home Equity Conversion Mortgages (HECM)
3. FNMA Home Ready Purchase Mortgage Loans
4. FHLMC Home Possible Mortgage Loans
RESPA - Disclosures Before Settlement Occurs (Affiliated Business
Arrangement) Right Ans - If the lender has either an affiliate relationship
or a direct or beneficial ownership , interest of more than 1 percent in a
provider of settlement services , and the lender directly or indirectly refers
busi ness to the provider , it is an Affiliated Business Arrangement.
RESPA - Disclosures Before Settlement Occurs (ABA: No Violation) Right
Ans - 1. The referring party gives the ABA disclosure to the consumer at or
prior to the time of referral
2. The nature of the relationship ( explaining the ownership and financial
interest ) between the provider and the lender is disclosed
3. The estimated charge or range of charges generally made by such provider
is disclosed
4. The lender does not require the use of such a provider
5. The lender receives only a return on ownership or franchise interest or
payment otherwise permitted by RESPA
RESPA - Disclosures Before Settlement Occurs (Uniform Settlement
Statement) Right Ans - The HUD - 1 is a statement that shows the actual
costs of settlement in certain mortgage lending transactions. The HUD - 1 is
utilized for the following transactions:
1. Home Equity Line of Credit ( HELOC )
2. Reverse Mortgages
3. Mortgages secured by a mobile home or by a dwelling that is not attached to
real property
4. Purchase of property for a commercial , agricultural or business purpose
5. Cash Sale
