HUD Exam Prep, latest updated

HUD Exam Prep, latest updated Conventional Loan Front end 28% Back end 36% can go up to 45% to 50%(debt to income), backed by private lenders. AKA prime loans. Good credit, 20% down payment. May have interest only terms FHA Front end 31% Back end 43% Limited funds, bad credit, bankruptcy, high debt to income ratio. EEM (Energy) FHA Front end 33% Back end 45% VA 41% USDA Front End 29% Back End 41%, low-to-moderate income, must live rural area, no down payment, competitive rates. Bellow 115% median income. Loan term 33 to 38 yrs Equal Credit Opportunity Act (ECOA) A federal act, which prohibits discrimination by lenders on the basis of sex or marital status in any aspect of a credit transaction. Front end Ratio PITIA/ Gross Income Within three days of receiving a loan application, lenders are required to supply the client with Loan Estimate How may years at a job to show employment stability? At least 2 years Which factor determines whether the client will have to pay private mortgage insurance versus mortgage insurance premium Type of loan The Fair Housing Act The federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status, and national origin The Housing and Urban Development Act providing government-insured loans to moderate-income people. The Dodd-Frank Act protects borrowers from predatory lending practices Affirmatively Furthering Fair Housing (AFFH) Advocating for lenders to operate in underserved areas After how many days can foreclosure proceedings begin if the client is not being evaluated for loss mitigation, and has missed payments on an FHA loan 120 FHA 203K Loan allows the homeowner to refinance the home loan to perform repair Streamlined 203K Loan minor rehabilitation and/or home improvement projects that will not require the involvement of consultants, engineers, and/or architects key advantage of the client using a real estate agent versus selling her house on her own Real estate agents negotiate on behalf of the client. A means test bankruptcy qualification that considers income and equity in assets to determine if a client has the ability to repay part of the debt Default when a payment has not been made after 60 to 90 days. FHA 30 days Delinquent timely mortgage payments by the end of the grace period (14 day) Which notice must the servicer send the client once the mortgage is delinquent and before 45 days past due? Housing counseling advertisement that guarantees a government-approved loan modification must be reported to...... Report the company to the Federal Trade Commission (FTC) The only mortgage loan product that allows family assistance FHA - USDA and VA do not require down payment, and conventional loans won't allow family funds Consumer Finance Protection Bureau CFPB Easier-to-use mortgage disclosure forms that clearly outline the terms of a mortgage to the borrower Satisfies efforts to Affirmatively Further Fair Housing Reviewing marketing materials of local mortgage lenders satisfies efforts to Affirmatively Further Fair Housing Chapter 7 Bankruptcy Means test, Liquidation of assets, best for client with no assets Chapter 13 bankrupcy retain house/car, Wager earner plan-pay all or part of debts 3-5 yrs, Earned Income Tax Credit (EITC) Low to moderate earned income individuals or family. Net earnings from self employment. Tax credits are based on income, marital status, number of children Child and dependent care tax credit working or looking for work may be eligible if they are paying a service to take care of a dependent (child or adult). Also may claim additional credits for qualifying children under 17 Home Equity Line of Credit (HELOC) multiple expenses over a long period of time. Draw period 10 yrs. Repayment 15yrs. Lower interest rate. Home Equity Loan do not have a lot of funds for closing, a one-time expense, pay off the debt quickly How often is the client updated once Loss Mitigation packet is submited Counselors have access to HLP, a tool which requires updates every 10 days from servicers. Fair Credit Reporting Act (FCRA) Right to know what's in file, Dispute information, limit access to file (employer), seek damages Fair and Accurate Credit transactions Act (FACTA) Right to free CR, Place fraud alert on file, CC nos must be truncated Fair Credit Billing Act (FCBA) Dispute billing errors, billed in timely manner 14 days How to improve credit score by at least 60 points over the next 12 months after bankruptcy Open new accounts within 30 days to re-establish credit To qualify for a mortgage, the client's Chapter 7 bankruptcy must be discharged for at least________years 2 years Income calculation if income is per hour $12/hr x 40 hrs= $480/week x 52 weeks divided by 12 months = $2,080 monthly gross income Groups most likely to be susceptible to predatory lending Seniors, minorities, 1st time home buyers Which is the next step the client should take if she calls her credit card company to dispute a charge, and the company refuses to resolve the issue because the charge was made outside of her state? companies must respond to a written dispute within 30 days of receiving it, so the cleint's next step is to send a letter to the credit card company to dispute the charge within 60 days of receipt of the erroneous credit card statement. If the company does not respond, the client should file a complaint with the Consumer Finance Protection Bureau (CFPB) The client announces that she plans to file for bankruptcy. Which is the first recommendation a counselor should make to the client? Adjust the budget to find residual income, then negotiate settlements with creditors one at a time. Fair housing complaints are only valid if they are filed within how long? 1 Year If the client had filed a complaint 10 months after the incident, and HUD concluded that the landlord violated fair housing laws, which is the most likely result of the complaint? HUD seeks a conciliation agreement with the client and the landlord. What is the maximum number of days after filing a complaint that HUD must conclude an investigation? 100 For an FHA loan what % must be owned of a company to be considered self employed 25% Self employed income documentation 2 yrs tax returns, year to date P&L. S corps may submit a business credit report Formula for self employed income calculation 2013 income+2014 income=...../24_______($25,050+22,950)/24=2,000 Four C's of Credit character (credit history), capacity (income, debts), capital (deposit/down payment), collateral (assets) Sub Prime Mortgage Private lenders, less stringent, bad credit, high interest rate, high financial risk second mortgage piggy back loan, avoid PMI, repairs, education. When does the lender terminate PMI? When loan reaches 78% or loan reaches 15 years/midpoint. PMI ranges from .5% to 1.5% of loan amount. Upfront Mortgage Insurance Premium (UFMIP) Gov backed loans. FHA 1.75%, VA 1.5%-3.3% Mortgage Insurance Premium (MIP) Annual fee. Based on loan balance. FHA .8%-1.05% Down Payment Assistance (DPA) Is typically based on income, family size, and the property purchased. Programs are HOME investment partnership program and Comm. Dev. Block Grant Program. Subsidized Apartment Search Maintained by HUD but privately owned subsidized housing. Public Housing Agency (PHA) Offer public housing and housing vouchers. HUD administers funds. Total Tenant Payment Tenants will pay the highest amount of either 30% (family, disability, elderly) 10%(gross income) welfare rent Federal Housing Choice Voucher Program (Sec. 8) Assists very low-income families, elderly and disabled. Distributed by PHAs for housing in private market. The Civil Rights Act of 1866 all people born in the United States (except for American Indians) were natural citizens. All citizens had the full and equal right to use, purchase, lease, and transfer real estate and property without distinction of race, color, or previous condition of slavery. 1896, Plessy v. Ferguson Separate but equal. providing segregated programs, services, and facilities including public accommodations and housing 1933, Home Owners' Loan Corporation (HOLC) The HOLC was created by Congress to avoid mass foreclosure during the Great Depression. The mission was to refinance mortgages in default to help borrowers avoid foreclosure. Redlining Refusing to make loans or imposing more onerous terms because of race, religion.... Deed Restrictions Clauses in a deed limiting the future uses of the property and terms are transferred with the deed. 1948, Shelly v. Kraemer Deed restrictions and covenants were deemed illegal and unenforceable. Violate the Fair Housing Act 1954, Brown v. Board of Education Overturned the "separate but equal" policy established in Plessy v. Ferguson. 1962, Executive Order 11063 President JFK signed this, prohibiting discrimination in the sale, leasing, rental, or other use of properties and facilities backed by federal funds Civil Rights Act of 1964 Prohibited discrimination on the basis of race, color, or national origin in programs and activites that receive federal funding. Housing and Urban Development Act of 1968 expand the availability of government-secured home loans to moderate-income families 1974 and 1988, Amendments to the Fair Housing Act expanded the law to include sex, disability and familial status total of 7 characteristics A civil action in US District Court or state court can be filed within how many years of a violation? 2 years Civil Rights Act of 1964 after MLK assasination AKA Fair Housing ACT prohibits discrimination in housing sales, rentals, loans Aggrieved person has not been discriminated against, but has been injured in other ways by a discriminatory housing practice Blockbusting To convince or attempt to convince a person that a neighborhood is changing demographic 3 ways to file a fair housing complaint HUD Nonprofit Fair Housing Org. /Fair Housing Initiative Program (FHIP) State or Local Fair Housing Agency /Fair Housing Ass. Program(FHAP) Consolidated Plan A plan designed to help states and local jurisdictions to assess their affordable housing and community development needs and market conditions, and to make data-driven, location-cased investment decisions. Subsidized Housing Privately owned housing whose owners agree to lease their properties to low-or moderate-income families in exchange for a subsidy from the government Unsubsidized Housing Privately owned housing rented at an affordable price Fair Housing Initiative Program (FHIP) Provides funding to fair housing orgs. and non profits that assist ppl who have been discriminated. Identify Gov. agencies that handle complaints. Sends testers. Assists aggrieved individuals Fair Housing Assistance Program (FHAP) Offers annual funding to local and state agencies that enforce Fair Housing Act Protected Characteristics under Fair Housing Race, Color, National Origin, Religion, Sex, Disability, Familial status Formula for Total Tenant Payment 30% monthly adjusted Income 10% monthly gross income Front end Ratio renters Monthly Housing expenses/gross monthly income Renters: rent + insurance FHA upfront premium (UFMIP) 1.75% With whom can someone file aggrievances? Public Housing Authority Maximum Monthly Housing Payment Front end*Gross (Back end*Gross)-debts choose the lowest value Back end Ratio AKA Debt to Income Ratio housing+other debt/gmi Which characteristics remained unprotected after the Housing Act 1964 Sex, Disability and Familial status FHA Energy efficient ratios Front 33%, Back 45% HOME Investment Partnerships Program Down payment assistance (DPA). provides grants to states and localities for building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low income people Community Development Block Grant Program Down payment assistance (DPA) - provides grants to states and localitites to provide decent housing and a suitable living environment and to expand economic opportunities, for low to moderate income persons For housing programs what is the % median income to qualify? Not to exceed 50% Character Credit history, employment history, and housing stability Capacity Ability to pay, consistency of employment/income, recurring debts, frequency and type of wages Capital Cash assets, how much can put down Collateral Assets to secure repayment Renter's ratios Front end 30% Back end 36% Back end Ratio AKA debt to income ratio total monthly debt expenses/gross income Front end Ratio/housing ratio housing expenses/gross monthly income Lender Makes loans for real estate purchases. Loan officer Solicits homebuyers for loans and processes loans Closing agent/settlement agent Oversees that the tittle is transferred and payment is made Assessor Gov. official determines the value of property for tax Escrow account Where funds are held to to carry a mutual transaction. Earnest money Check given from buyer to seller to show interest in purchasing. 1% to 10% of home purchase Disocunt points Pre-paid interest at closing 1% URLA Uniform Residential Loan Application, Loan application and it's reviewed by the underwriter A GSE loan/mortgage refers to A mortgage owned by Fannie or Freddie Real Estate Settlement Procedures Act (RESPA) Prevents abusive practices that increase cost of settlement. Kickbacks. Enforced by CFPB Truth in Lending Act (TILA) Disclose important info to buyers like loan costs info. Enforced by FTC Amendment to TILA FCPB amendment. Ability to repay/Qualified Mortgage or ATR/QM rule. Low to moderate income consumers are exempt. Points and fees don't exceed 3% of loan. TILA-RESPA Integrated Disclosure Rule (TRID) Know before you owe rule. Easier disclosure forms. Enforced by the CFPB Closing disclosure 3 days prior closing. Understand costs of transaction. What costs can increase between the Loan Estimate and Closing Disclosure Up to 10% Services from providers and Gov. recording charges. Increase to any amount Pre-paid interest, insurance, escrow deposits, Services the borrower can shop for, 3rd party services. Home Ownership and Equity Protection Act (HOEPA) Enforces disclosure requirements high-cost loans. Ex. a homebuyer was qualified for a loan with an adjustable rate. After the purchase her payment increased, the lender never disclosed how much they could increase. Enforced by FTC and CFPB. Disclosures for HOEPA Notice that loan will not be effective until consummation. Default consequences that borrower could lose the residence and any money. APR, payment amounts and loan amounts. Home equity loan (2nd mortgage) Lump sum. Large 1 time expense. Want fixed rate. For closing costs FHA 203k Loan Can be an initial loan to purchase a home or for home improvements. Purchase a home for major repairs. Streamiled 203k loan Minor rehab home, no project or engineer. Refinance up to $35k. Title 1 loan Repairs and site improvements on single and multi family home. Can be use din connection with 203K rehab mortgage. up to 25K for single family. Energy Efficient Mortgage Financed through FHA or VA. Desire to buy a better and more efficient home. Home improvements. Refinance qualifications If interest rates are higher, MIP is required and client owes less than 80%. Switch from adjustable rate to fixed. Qualifications for home improvement loan Credit history, Debt to Income ratio, LTV ratio only if less than 80% Benefits of using a real estate agent or broker Advice about pricing. Advertising home. Negotiate the sale. Factor that led to the foreclosure crisis in 2007 Negative amortization, HELOC, Subprime lending, teaser rates Negative Amortization Monthly payments don't cover interest due Subprime lending Loaned to ppl with poor credit charging high interest rates Secondary Mortgage Market Approved loans the borrowers could not afford Consumer Finance Protection Bureau (CFPB) Dodd-Frank Wall street Reform Consumer Protection Act (2010) Dual Tracking Servicer moves forward with foreclosure while working with borrower to avoid foreclosure. Good-Faith determination Lenders need to make sure the borrower can afford the loan Home Affordable Modification Program (HAMP) Adjustment to make payments more affordable. Adjust interest rate after 5 years Hard Hit Fund (HHF) 2010. District of Columbia and18 states hardest hit by the foreclosure crisis. Consolidated Appropriations Act. Extra funds were released from the Hardest Hit Fund (HHF). To help unemployed or underwater borrowers Making Home Affordable Program (MHA) Created by the Treasury and HUD to help avoid foreclosure, stabilize housing market and improve economy. Expired 2016 Joint State-Federal National Mortgage Settlements (NMS) 2012 settlement with 5 banks and and Att. General of 49 states. Due to their deceptive lending. Robo-Signing important document that require careful review were signed automatically Service Members Civil Relief Act Protection for service persons against eviction, foreclosures, default judgements 4506-T Request for Transcript of Tax Return HomeCorps Program Mitigating future impacts of the foreclosure by providing advocacy to borrowers Borrower Representation Initiative Mass. Legal Ass. Corp (MLAC) and National Consumer Law Center (NCLC) staffed by 19 attorneys to offer representation for foreclosure-related cases Loan Modification Initiative Offered direct loan mod advocacy to Mass borrowers Distressed Properties Identification and Revitalization Grant prioritize a list of real estate owned properties and to ensure that individual property owners comply with state and local ordinances to bring properties into a state of good repair FHA contact for borrowers at risk of default servicer must begin contact by day 10. Other FHA borrowers by day 17. Written communications for all borrowers by day 20 Judicial Foreclosure Notice of intent is sent. If contested will go to court. If judgment allowed to go forward, homeowner still has 30 days to cure delinquency in many states. Non-Judicial Foreclosure Servicer issues a Notice of Default (NOD) after 120 days of delinquency. If not cured homeowner receives a Notice of Sale (NOS) usually 90 days after the NOD. Borrower has 5 to 10 days before the sale to cure delinquency (pay all past due amounts, arrearages, fess ad interest) Additional living expense coverage renter's insurance coverage if temporarily cannot live in their rental unit due to damage from a peril Home Affordable Mod Program (HAMP) Lowered mortgage payments. Offered reduced interest rates for 5 years then would increase. Fannie/Freddie Flex Modification 20% payment reduction. Eligibility: be 60 or more days delinquent, primary resident. Submit a Borrower Response Package (BRS) Request Mortgage Assistance (RMA) Complete form for loan modification. Need Dodd-Frank Certification