RMLO Exam Prep: General Study Guide
REAL ESTATE SETTLEMENT PROCEDURES ACT ( RESPA ) Correct Ans-Regulation X
Consumer protection statute
Three (3) Purposes of RESPA Correct 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 Correct 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 Correct 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 Correct 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) Correct 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) Correct 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)
Correct 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) Correct Ans-
Disclosure form used for Reverse Mortgage Transactions
RESPA - Disclosures At The Time of Application (Loan Estimate - LE) Correct Ans-Disclosure
form used for closed-end consumer credit transactions secured by property
REAL ESTATE SETTLEMENT PROCEDURES ACT ( RESPA ) Correct Ans-Regulation X
Consumer protection statute
Three (3) Purposes of RESPA Correct 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 Correct 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 Correct 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 Correct 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) Correct 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) Correct 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)
Correct 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) Correct Ans-
Disclosure form used for Reverse Mortgage Transactions
RESPA - Disclosures At The Time of Application (Loan Estimate - LE) Correct Ans-Disclosure
form used for closed-end consumer credit transactions secured by property
