TreatiseAnswer Book

Mortgage Finance Regulation Answer Book (2011-12 Edition)

 by Richard J. Andreano, Jr., John D. Socknat, Michael S. Waldron
 
 Copyright: 2011

 Product Details >> 

Product Details

  • ISBN Number: 9781402415944
  • Page Count: 1588
  • Number of Volumes: 1
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Mortgage finance has always been heavily regulated. In the past year, new requirements mandated by Dodd-Frank and other reform initiatives have made it even more complex.  PLI’s new Mortgage Finance Regulation Answer Book 2011-12 unravels the complexity and walks you through each element of the current regulatory requirements.

Using an easy Q&A format, Mortgage Finance Regulation Answer Book 2011-12:

  • Helps you understand the regulations applicable to every step of the mortgage application and issuance process
  • Describes all of the federal requirements, and their implications, under each of the relevant statutes, including the Real Estate Settlement Procedures Act (RESPA), the Home Mortgage Disclosure Act (HMDA), the Truth in Lending Act (TILA), the Fair Credit Reporting Act (FCRA) and many others
  • Compares the differences in privacy, disclosure and other requirements between the different federal statutes
  • Contains an introductory chapter  on residential mortgage loan basics, written in plain English with the non-expert in mind

Written by seasoned practitioners who have successfully represented a wide range of clients in both the residential and commercial mortgage banking industries, Mortgage Finance Regulation Answer Book 2011-12 is filled with compliance suggestions that can help you avoid or minimize client problems. 

Mortgage Finance Regulation Answer Book 2011-12 will quickly become your “go to” guide when it comes to understanding the current federal requirements and how they inter-relate with each other.

  Foreword
  Table of Contents
  Introduction and Acknowledgments
Chapter 1: Dodd-Frank Wall Street Reform and Consumer Protection Act Richard J. Andreano ~ Ballard Spahr LLP
Chapter 2: Repurchase Demands and Mortgage Insurance Claims Michael S Waldron ~ Ballard Spahr LLP
  • Q 2.1 : How are mortgage loans sold?50
    • Q 2.1.1 : What is a repurchase demand?51
    • Q 2.1.2 : How do investors determine what loans need to be included in a repurchase demand?51
    • Q 2.1.3 : Who conducts loan file reviews for purposes of determining whether a repurchase demand should be made?52
    • Q 2.1.4 : What is reviewed in the loan file for purposes of determining whether a repurchase demand should be made?52
    • Q 2.1.5 : What are the common reasons upon which investors base their repurchase demand?52
    • Q 2.1.6 : How do early payment defaults differ from other reasons for repurchase demands?53
    • Q 2.1.7 : What are common defenses to repurchase demands?53
    • Q 2.1.8 : When must notification be given of a repurchase demand?54
    • Q 2.1.9 : What is the effect of aggregating notices and delaying responses to repurchase demands?54
    • Q 2.1.10 : What are the standard provisions of a mortgage loan purchase agreement that govern repurchase demands?55
  • Q 2.2 : What is mortgage insurance?55
    • Q 2.2.1 : How does mortgage insurance work?56
    • Q 2.2.2 : What role does mortgage insurance play in repurchase demands?56
  • Q 2.3 : What is the Government Sponsored Enterprises’ (GSEs) role in the secondary market?57
    • Q 2.3.1 : How do GSEs handle repurchase demands?58
    • Q 2.3.2 : What impact can repurchase demands have on the mortgage industry?59
    • Q 2.3.3 : How do companies account for the risk associated with repurchase demands?60
    • Q 2.3.4 : How can a company assess its risk for repurchase demands?61
    • Q 2.3.5 : In addition to the lender and the purchaser or investor, do other parties get involved in repurchase demands?62
    • Q 2.3.6 : How do parties resolve repurchase demands?62
  • Q 2.4 : What is the state of case law on the issues involved in repurchase demands?63
  • Q 2.5 : What breaches are commonly alleged in a repurchase demand?63
  • Q 2.6 : What notice must be given before litigation may be brought?64
  • Q 2.7 : What constitutes “materiality” in a repurchase demand case?66
  • Q 2.8 : What constitutes “failure to mitigate” in a repurchase demand case?68
  • Q 2.9 : What other legal issues affect the success of the repurchase demand case?69
Chapter 3: Residential Mortgage Loan Basics Phillip Blackmon ~ Patton Boggs LLP
Michael S Waldron ~ Ballard Spahr LLP
  • Q 3.1 : What is a residential mortgage?76
    • Q 3.1.1 : How do residential mortgages differ from other mortgages?76
  • Q 3.2 : What are the interests that may be mortgaged?76
  • Q 3.3 : What is the institutional framework for residential mortgage lending?76
    • Q 3.3.1 : What are Fannie Mae and Freddie Mac?77
    • Q 3.3.2 : What are “uniform mortgage instruments”?77
  • Q 3.4 : What are open-end transactions and closed-end transactions?78
  • Q 3.5 : What are the common types of residential mortgage loans?78
    • Q 3.5.1 : What are purchase money mortgage loans?78
    • Q 3.5.2 : What are refinance mortgage loans?79
    • Q 3.5.3 : What are construction loans?79
    • Q 3.5.4 : What are home-equity loans?79
    • Q 3.5.5 : What are home-equity lines of credit?79
    • Q 3.5.6 : What are reverse mortgage loans?79
  • Q 3.6 : What are other major features of loans that can differ?80
    • Q 3.6.1 : What is lien status?80
    • Q 3.6.2 : What is a fixed rate loan and an adjustable rate loan?80
    • Q 3.6.3 : What different types of amortization may exist with mortgage loans?81
    • Q 3.6.4 : What are graduated or step payment mortgage loans?82
    • Q 3.6.5 : What are shared appreciation mortgage loans?82
  • Q 3.7 : What are the main types of instruments that secure residential mortgage loans?82
    • Q 3.7.1 : What are the differences between mortgages and deeds of trust?82
  • Q 3.8 : What are the major terms included in mortgage instruments?83
    • Q 3.8.1 : How are payments applied?83
    • Q 3.8.2 : Is there an escrow or impound account?83
    • Q 3.8.3 : Is there a requirement for the borrower to pay taxes and similar charges on the security property?84
    • Q 3.8.4 : Is there a requirement for the borrower to maintain insurance to protect against damage to the security property?84
    • Q 3.8.5 : Is there a requirement for the borrower to maintain required mortgage insurance?84
    • Q 3.8.6 : Is there a requirement for the borrower to occupy the security property?84
    • Q 3.8.7 : Is there a requirement for the borrower to appropriately maintain the security property?85
    • Q 3.8.8 : Does the lender have the right to take certain actions to protect its interests in the security property?85
    • Q 3.8.9 : Is there any requirement regarding the information provided by the borrower to obtain the loan?85
    • Q 3.8.10 : Can the lender impose charges for services in connection with the borrower’s default?86
    • Q 3.8.11 : Can the lender require the borrower to pay the full amount owed in the event of a default?86
    • Q 3.8.12 : Can a borrower take actions to cure a default?86
    • Q 3.8.13 : Can the borrower transfer the property?86
  • Q 3.9 : What are potential issues with the description of mortgaged property in the security instrument?87
    • Q 3.9.1 : What can be done if the security property is not correctly described in a security instrument?87
    • Q 3.9.2 : What are issues regarding buildings and fixtures?87
  • Q 3.10 : What are the common issues associated with signatures by the borrower or agent of the borrower?88
    • Q 3.10.1 : What are common issues associated with powers of attorney?88
    • Q 3.10.2 : What are the differences between acknowledgments, proofs and jurats?88
  • Q 3.11 : What is priority?91
    • Q 3.11.1 : What are statutory recording acts and how do they affect the priority of recording instruments?91
    • Q 3.11.2 : What constitutes “recording”?92
    • Q 3.11.3 : What is a statute of frauds and how does it affect priority?92
    • Q 3.11.4 : What is “record notice”?92
    • Q 3.11.5 : What are the issues with after acquired property?92
    • Q 3.11.6 : What is the effect of subordination agreements on priority?93
    • Q 3.11.7 : What is the effect of a loan modification on priority?93
  • Q 3.12 : How does the borrower know where to submit payments?93
    • Q 3.12.1 : What are the requirements regarding when a security instrument must be released following a loan payoff?94
  • Q 3.13 : What are default and acceleration generally?94
    • Q 3.13.1 : What actions can be taken in the absence of an acceleration clause?94
    • Q 3.13.2 : What is a common approach under an acceleration clause?95
    • Q 3.13.3 : Can a lender both foreclose on the security property and pursue the borrower personally?95
  • Q 3.14 : What is the right of redemption?95
    • Q 3.14.1 : Must the right of redemption be exercised within a certain time frame?96
    • Q 3.14.2 : Can redemption occur pending a foreclosure sale?96
    • Q 3.14.3 : Can redemption occur after a foreclosure sale?96
Chapter 4: Truth in Lending Act (TILA) Richard J. Andreano ~ Ballard Spahr LLP
Heather Hutchings ~ Dykema Gossett PLLC
  • Q 4.1 : What is the purpose of TILA?102
  • Q 4.2 : What is the scope of TILA?102
  • Q 4.3 : What is an “advertisement”?102
  • Q 4.4 : What is the “annual percentage rate” or “APR”?104
  • Q 4.5 : What is the “Board”?104
  • Q 4.6 : What is a “business day”?104
    • Q 4.6.1 : What is the specific definition of “business day”?104
    • Q 4.6.2 : In which cases is the specific definition of “business day” applicable?105
  • Q 4.7 : What is “cash price”?105
  • Q 4.8 : What is “consummation”?105
  • Q 4.9 : What is “consumer credit”?106
    • Q 4.9.1 : What is a “consumer”?106
  • Q 4.10 : What is “credit”?106
    • Q 4.10.1 : What is “open-end credit”?106
    • Q 4.10.2 : What is “closed-end credit”?106
  • Q 4.11 : What is a “creditor”?107
    • Q 4.11.1 : What does “regularly extend consumer credit” mean?107
  • Q 4.12 : What is a “finance charge”?108
    • Q 4.12.1 : What is a “prepaid finance charge”?108
  • Q 4.13 : What is a “downpayment”?108
  • Q 4.14 : What is “ESIGN”?108
  • Q 4.15 : What is a “home-equity plan”?108
  • Q 4.16 : What are “HOEPA” or “Section 32” mortgage loans?108
    • Q 4.16.1 : What transactions are excluded from being “HOEPA” or “Section 32” mortgage loans?109
  • Q 4.17 : What are “higher-priced mortgage loans”?109
    • Q 4.17.1 : What transactions are excluded from being “higher-priced mortgage loans”?109
  • Q 4.18 : What is a “periodic rate”?110
  • Q 4.19 : What is a “person”?110
  • Q 4.20 : What is a “residential mortgage transaction”?110
    • Q 4.20.1 : What is a “dwelling”?110
    • Q 4.20.2 : What is a “security interest”?110
  • Q 4.21 : What is “RESPA”?111
  • Q 4.22 : What is a “reverse mortgage transaction”?111
  • Q 4.23 : What are the sources for guidance and interpretations of TILA?111
    • Q 4.23.1 : What is Regulation Z?111
    • Q 4.23.2 : What is the Official Staff Commentary on Regulation Z?112
  • Q 4.24 : Does TILA preempt state law?112
  • Q 4.25 : Can transactions in a state be exempted from TILA?113
  • Q 4.26 : What mortgage transactions are exempt from TILA?114
  • Q 4.27 : What is a business or commercial purpose?115
    • Q 4.27.1 : What are the factors that a creditor should consider to determine if credit is for a business purpose or consumer purpose?115
    • Q 4.27.2 : What are examples of business-purpose credit?116
    • Q 4.27.3 : What are examples of consumer-purpose credit?116
    • Q 4.27.4 : What is the special rule to assess whether credit to acquire, improve or maintain non-owner-occupied rental property is primarily for a business or commercial purpose?116
    • Q 4.27.5 : What are the special rules to assess whether credit to acquire, improve or maintain owner-occupied rental property is primarily for a business or commercial purpose?116
  • Q 4.28 : What is an agricultural purpose?117
  • Q 4.29 : How is a loan secured by a mobile home treated for purposes of the exemption for certain credit transactions over $25,000?117
  • Q 4.30 : What is the finance charge?117
  • Q 4.31 : When are charges by third parties included in the finance charge?118
    • Q 4.31.1 : What is the special rule for whether closing agent charges are included in the finance charge?118
    • Q 4.31.2 : What is the special rule for whether mortgage broker charges are included in the finance charge?119
  • Q 4.32 : Are there examples of charges that are included in the finance charge?119
  • Q 4.33 : Are insurance premiums included in the finance charge?120
    • Q 4.33.1 : Under what conditions may premiums for credit life, accident, health of loss-of-income insurance written in connection with the credit transaction be excluded from the finance charge?120
    • Q 4.33.2 : Under what conditions may a premium for hazard insurance written in connection with the credit transaction be excluded from the finance charge?121
    • Q 4.33.3 : Under what conditions may voluntary debt-cancellation fees be excluded from the finance charge?121
  • Q 4.34 : Under what conditions may security-interest charges be excluded from the finance charge?122
    • Q 4.34.1 : Under what conditions may recording-related charges be excluded from the finance charge?122
    • Q 4.34.2 : Under what conditions may taxes on security instruments be excluded from the finance charge?123
  • Q 4.35 : What items are specifically excluded from the finance charge?123
    • Q 4.35.1 : What items in a real estate secured transaction are specifically excluded from the finance charge?124
  • Q 4.36 : May a creditor offset the finance charge by deducting interest, dividends or other income to be received by the consumer on deposits or investments?125
  • Q 4.37 : What constitutes the accurate disclosure of the finance charge for a closed-end mortgage loan (that is, what are the tolerances)?125
  • Q 4.38 : How is the APR calculated?126
    • Q 4.38.1 : What are the basic aspects of computing the APR for home-equity plans?126
    • Q 4.38.2 : Is there a tolerance for the calculation of the APR with a home-equity plan?127
    • Q 4.38.3 : Is there a safe harbor if the APR for a home-equity plan is inaccurate due to a calculation tool error?127
    • Q 4.38.4 : What are the basics of computing the APR for a closed-end mortgage loan?128
    • Q 4.38.5 : Are there tolerances for the calculation of the APR with a closed-end mortgage transaction?128
    • Q 4.38.6 : What are the statutory tolerances for the APR with a closed-end mortgage transaction?129
    • Q 4.38.7 : What are the regulatory tolerances for the APR with a closed-end mortgage transaction?129
    • Q 4.38.8 : What are the finance charge tolerances under Regulation Z section 226.18(d)(1) for closed-end mortgage transactions?129
    • Q 4.38.9 : What are the APR tolerances for closed-end mortgage transactions based on a finance charge that is accurate under Regulation Z section 226.18(d)(1)?130
    • Q 4.38.10 : For purposes of the right to rescind, are there additional tolerances for the calculation of the APR with a closed-end mortgage transaction?130
    • Q 4.38.11 : What are the finance charge tolerances for rescission right purposes under Regulation Z section 226.23(g)?131
    • Q 4.38.12 : What are the finance charge tolerances for rescission right purposes under Regulation Z section 226.23(h)?131
    • Q 4.38.13 : For purposes of the right to rescind, what are the APR tolerances for closed-end mortgage transactions based on a finance charge that is accurate under Regulation Z section 226.23(g) or (h)?132
    • Q 4.38.14 : Is a creditor protected from liability if the APR for a closed-end mortgage transaction is inaccurate due to a calculation tool error?132
  • Q 4.39 : What types of open-end credit do TILA and Regulation Z cover?133
    • Q 4.39.1 : Does the chapter address any types of open-end credit other than home-equity plans?133
  • Q 4.40 : Do the home-equity plan requirements apply only to a plan secured by a consumer’s principal dwelling?133
  • Q 4.41 : Are there requirements for home-equity plan advertisements?134
  • Q 4.42 : What is the general requirement that any credit terms being advertised must be generally available?134
  • Q 4.43 : If an advertisement states a rate or finance charge, how must the rate of that charge be expressed?134
  • Q 4.44 : What are the “trigger terms” that if used in an advertisement for a home-equity plan require additional disclosures?134
  • Q 4.45 : What additional information must be provided if a trigger term is used?135
    • Q 4.45.1 : What alternatives may be used to disclose the additional information for advertisements on television or radio?136
  • Q 4.46 : What additional disclosures are required for advertisements of home-equity plans with a discounted or premium rate?136
  • Q 4.47 : What additional disclosures are required for advertisements of home-equity plans with a promotional rate?137
    • Q 4.47.1 : What is the difference between a “promotional rate” and “discounted rate”?137
    • Q 4.47.2 : What is the exception for envelopes and pop-up or banner ads with regard to the additional required information for promotional rates?137
  • Q 4.48 : What additional disclosures are required for advertisements of home-equity plans with promotional payments?138
    • Q 4.48.1 : What is a “promotional payment”?138
  • Q 4.49 : What additional disclosures are required for advertisements of home-equity plans with balloon payments?139
    • Q 4.49.1 : What constitutes a “balloon payment” for purposes of this requirement?139
  • Q 4.50 : What are the requirements related to advertising that interest expenses incurred with respect to the plan are or may be tax deductible?140
    • Q 4.50.1 : Are there additional disclosures if the extension of credit under a home-equity plan may exceed the fair market value of the dwelling securing the plan?140
    • Q 4.50.2 : Does the disclosure requirement for situations in which the extension of credit under a home-equity plan may exceed the fair market value of the dwelling securing the plan apply to advertisements on radio or television?140
  • Q 4.51 : Are there particular phrases that are prohibited in advertisements for a home-equity plan?141
  • Q 4.52 : In responding orally to an inquiry about the cost of credit, must the creditor state rates in terms of an annual percentage rate?141
  • Q 4.53 : Is a catalog or other multipage advertisement, or an electronic advertisement, considered a single advertisement?141
    • Q 4.53.1 : What is a multipage advertisement?142
    • Q 4.53.2 : Is there guidance on the required content of the table or schedule?142
  • Q 4.54 : What are a reasonably current index and margin?142
  • Q 4.55 : What constitutes “clear and conspicuous,” “equal prominence” and “close proximity”?143
  • Q 4.56 : Where are the disclosure requirements for home-equity plans set forth?144
  • Q 4.57 : On what basis must disclosures be made?144
    • Q 4.57.1 : May estimates be used in completing the disclosure information?144
  • Q 4.58 : In transactions involving more than one consumer, must a creditor provide disclosures to all consumers in the transaction?145
    • Q 4.58.1 : Are there cases in which disclosures must be provided to consumers other than the consumer who is primarily liable on the account?145
  • Q 4.59 : If more than one creditor is involved in the transaction, must each creditor provide a set of disclosures?145
  • Q 4.60 : Does TILA have requirements for the form of disclosures?146
    • Q 4.60.1 : What does “clearly and conspicuously” mean?146
    • Q 4.60.2 : Must the disclosures for a home-equity plan be given in writing?146
    • Q 4.60.3 : Must disclosures for a home-equity plan be given in a form the consumer may keep?147
  • Q 4.61 : May disclosures for a home-equity plan be provided in electronic format?147
    • Q 4.61.1 : Must the creditor comply with ESIGN if providing disclosures for a home-equity plan electronically?147
  • Q 4.62 : If the terms “finance charge” or “annual percentage rate” are required to be disclosed with a corresponding amount or percentage rate, must such terms be more conspicuous than any other required disclosure?148
    • Q 4.62.1 : Are there examples of how to make the terms “finance charge” or “annual percentage rate” more conspicuous?148
    • Q 4.62.2 : Are there exceptions to the requirement to disclose the terms “finance charge” or “annual percentage rate” more conspicuously?148
  • Q 4.63 : If a disclosure becomes inaccurate because of an event that occurs after the creditor mails or delivers the disclosures, is the inaccurate disclosure a violation?149
    • Q 4.63.1 : Must the creditor redisclose?149
  • Q 4.64 : May a creditor supply additional information or explanations with a disclosure provided under TILA?149
  • Q 4.65 : May disclosures be made in a language other than English?149
  • Q 4.66 : Must a maximum interest rate be disclosed?149
  • Q 4.67 : Are there disclosure requirements in connection with the application for a home-equity plan?150
    • Q 4.67.1 : What are the application disclosures required for home-equity plans?150
    • Q 4.67.2 : Are the home-equity plan disclosures and brochure provided prior to the account opening disclosures?150
    • Q 4.67.3 : When must the home-equity plan disclosures and brochure be provided if an application is taken over the phone or received from an intermediary agent or broker?151
    • Q 4.67.4 : Is there any requirement for a person other than the creditor to provide the home-equity plan disclosures or brochure to a consumer?151
    • Q 4.67.5 : May the home-equity plan disclosures be provided on the application form?151
  • Q 4.68 : What information must the home-equity plan disclosures provided with application disclosures contain?151
    • Q 4.68.1 : Must any of the disclosures appear before other disclosures?154
  • Q 4.69 : What additional disclosures must be included in the home-equity plan disclosures when the plan is a variable rate plan?154
  • Q 4.70 : Are there format requirements for the home-equity plan disclosures?155
  • Q 4.71 : Can the home-equity plan disclosures that must be provided with an application be provided in electronic form?156
    • Q 4.71.1 : Are there cases in which the home-equity plan disclosures that must be provided with an application must be given electronically?157
  • Q 4.72 : What is the home-equity plan brochure that must be provided?157
  • Q 4.73 : When may nonrefundable fees be imposed by a creditor in connection with an application for a home-equity plan?158
    • Q 4.73.1 : When will a consumer be deemed to have received disclosures that are mailed?158
  • Q 4.74 : If the consumer elects not to enter into the home-equity plan agreement due to a change in a term or condition before the account is opened, what fees must the creditor refund?158
  • Q 4.75 : Are there disclosure requirements in connection with the opening of a home-equity plan account?159
  • Q 4.76 : When must the account opening disclosures be given?159
  • Q 4.77 : What information must the account opening disclosures include?159
  • Q 4.78 : Are there disclosures that must be provided during the life of a home-equity plan?163
  • Q 4.79 : Must a creditor provide an annual statement of billing rights?163
    • Q 4.79.1 : Is there an alternative to this requirement?163
  • Q 4.80 : If a term that is required to be included in the account opening disclosures changes or the required minimum periodic payment is increased, must the creditor provide notice to the consumer?164
    • Q 4.80.1 : Must the creditor provide the notice to each consumer who may be affected?164
    • Q 4.80.2 : How far in advance of the change must the notice be mailed or delivered?164
    • Q 4.80.3 : Does the fifteen-day advance notice requirement apply if the consumer agrees to the change?164
    • Q 4.80.4 : Does the fifteen-day advance notice requirement apply if the change is due to the consumer’s delinquency or default?165
    • Q 4.80.5 : Are there circumstances in which a notice of a change in terms is not required?165
  • Q 4.81 : If a creditor prohibits additional extensions of credit or reduces the credit limit for a home-equity plan, must the creditor notify each consumer who will be affected?166
    • Q 4.81.1 : What information must the notice contain?166
    • Q 4.81.2 : When must the notice be provided?166
  • Q 4.82 : Who must notify the borrower when a home-equity plan is sold or otherwise transferred or assigned to a third party?166
  • Q 4.83 : Are there requirements regarding the crediting of payments on home-equity plans?167
  • Q 4.84 : When must a creditor credit a payment to a consumer’s home-equity plan account?167
    • Q 4.84.1 : Must a creditor post a payment on the date of receipt?167
    • Q 4.84.2 : What is the date of receipt?167
  • Q 4.85 : When must a creditor credit a payment to a consumer’s account if the payment is not made according to the creditor’s requirements but the creditor accepts the payment anyway?167
    • Q 4.85.1 : Must a creditor specify requirements for payments?168
    • Q 4.85.2 : Are there limits on requirements that a creditor may specify for payments?168
  • Q 4.86 : What if on the due date for a payment the creditor does not receive or accept payments by mail on such date?169
  • Q 4.87 : Must the creditor adjust the consumer’s account if it fails to credit payments in accordance with Regulation Z?169
  • Q 4.88 : How must a creditor handle a credit balance on an account?169
  • Q 4.89 : Are there requirements applicable to billing errors with home-equity plans?170
  • Q 4.90 : What constitutes a billing error?170
  • Q 4.91 : What are the requirements for a billing error notice provided by a consumer to a creditor?171
  • Q 4.92 : What are the creditor’s obligations in response to the notice?171
  • Q 4.93 : Is a consumer obligated to pay a disputed amount until the billing error is resolved?171
  • Q 4.94 : May a creditor report a consumer’s failure to pay a disputed amount to a consumer reporting agency after receipt of notice of a billing error from the consumer?172
  • Q 4.95 : Do consumers have a right to rescind certain home-equity plans?172
  • Q 4.96 : On which transactions do consumers have a right to rescind a home-equity plan?172
    • Q 4.96.1 : What are exceptions to the right to rescind?173
    • Q 4.96.2 : What is a “residential mortgage transaction”?173
  • Q 4.97 : If there is more than one consumer, does each consumer have the right to rescind?173
    • Q 4.97.1 : Are there circumstances in which a consumer who is not obligated on the credit transaction has a right to rescind?173
    • Q 4.97.2 : Must all consumers exercise the rescission right in order for rescission to be valid?174
  • Q 4.98 : If all material disclosures are properly provided and other requirements are satisfied, during what period may a consumer exercise the right to rescind?174
    • Q 4.98.1 : What are the “material disclosures” for purposes of the rescission right?174
  • Q 4.99 : How long is the rescission period extended if the creditor fails to provide all material disclosures or otherwise comply with the rescission requirements?175
  • Q 4.100 : How may a consumer exercise the right to rescind?175
    • Q 4.100.1 : When is notice considered given?175
  • Q 4.101 : What disclosures are required in connection with the right of rescission?176
    • Q 4.101.1 : Are the model forms of the notice of the right to rescind?176
  • Q 4.102 : How many copies of the notice of right to rescind must be provided to each consumer?176
    • Q 4.102.1 : What if the notice is provided electronically?177
  • Q 4.103 : May a creditor disburse funds prior to the expiration of the rescission period?177
    • Q 4.103.1 : May a creditor take any action during the rescission period?177
  • Q 4.104 : May a creditor delay disbursement after the rescission period has expired?177
  • Q 4.105 : What is the effect of a consumer exercising the right to rescind?178
    • Q 4.105.1 : To what extent is the security interest void?178
    • Q 4.105.2 : Is the consumer liable for any finance charge or other charge?178
    • Q 4.105.3 : How long does the creditor have to return any money or property given after receipt of notice that the consumer is exercising the right to rescind?178
    • Q 4.105.4 : What are the consumer’s obligations once the creditor returns the money or property?178
    • Q 4.105.5 : How long does the creditor have to take possession of the property after tender by the consumer?179
    • Q 4.105.6 : Is there any ability to have any of the rescission procedures modified?179
  • Q 4.106 : May a consumer waive the right to rescind?179
    • Q 4.106.1 : How may a consumer waive the right to rescind?179
    • Q 4.106.2 : What is a bona fide personal financial emergency?179
    • Q 4.106.3 : Are there situations in which a consumer is deemed to have a bona fide personal financial emergency?180
  • Q 4.107 : Are there tolerances related to the accuracy of calculations for purposes of the rescission right?180
  • Q 4.108 : Other than the existence of a delayed or extended right to rescind, are there other remedies available to the consumer for a creditor’s failure to comply with the rescission requirements?181
  • Q 4.109 : Does the consumer have additional rescission rights after the initiation of foreclosure?181
  • Q 4.110 : Must periodic statements be provided in connection with home-equity plans?181
  • Q 4.111 : When must periodic statements be provided?181
  • Q 4.112 : What information must the periodic statement provide?182
  • Q 4.113 : Is there a minimum balance that must be on the account to trigger the periodic statement requirement?183
  • Q 4.114 : How must the creditor identify the transaction on or with the first periodic statement?183
  • Q 4.115 : Are there requirements regarding changes in the terms of home-equity plans?184
  • Q 4.116 : May a creditor change the annual percentage rate on a home-equity plan?184
  • Q 4.117 : If a home-equity plan is subject to a variable rate, what index must the adjustments to the annual percentage rate be based on?184
  • Q 4.118 : Are there any circumstances under which a creditor may unilaterally terminate a home-equity plan and demand repayment of the entire balance?184
    • Q 4.118.1 : Does the restriction apply to reverse mortgage transactions?185
  • Q 4.119 : May a creditor unilaterally change any term required in the open-end application disclosure?185
    • Q 4.119.1 : Are there changes the creditor may make on a home-equity plan?185
    • Q 4.119.2 : When will a change be deemed to unequivocally benefit the consumer?186
  • Q 4.120 : May a creditor contract to prohibit additional extensions of credit or reduce the credit limit?186
  • Q 4.121 : May a creditor contract for changes to occur if specified events take place?186
  • Q 4.122 : When may a creditor change the index and margin used under the plan?186
  • Q 4.123 : When may a creditor prohibit additional extensions of credit or reduce the credit limit under a home-equity plan?187
    • Q 4.123.1 : May the creditor specify what would constitute a default of a material obligation under the agreement?187
  • Q 4.124 : Are there requirements in connection with suspending a home-equity plan or taking related actions with respect to a home-equity plan?188
  • Q 4.125 : If a creditor prohibits additional extensions of credit or reduces the credit limit for a home-equity plan, must the creditor notify each consumer who will be affected?188
    • Q 4.125.1 : What information must the notice contain?188
    • Q 4.125.2 : When must the notice be provided?188
  • Q 4.126 : May a consumer request suspension of credit privileges?189
  • Q 4.127 : When must creditors restore credit privileges?189
  • Q 4.128 : How can a creditor meet the responsibility to reinstate credit as soon as reasonably possible after the condition that permitted the suspension ceases to exist?189
  • Q 4.129 : May the creditor shift the duty to the consumer to request reinstatement of privileges?189
  • Q 4.130 : Are there appraiser independence requirements for home-equity plans secured by a consumer’s principal dwelling?190
  • Q 4.131 : What types of closed-end credit do TILA and Regulation Z cover?190
    • Q 4.131.1 : Does the chapter address any types of closed-end credit other than loans secured by real estate or dwellings?190
  • Q 4.132 : For the closed-end credit requirements that apply to credit secured by a dwelling, are the requirements applicable only when the dwelling is a consumer’s principal dwelling?191
  • Q 4.133 : Are there requirements for closed-end credit transaction advertisements?191
  • Q 4.134 : What is the general requirement that any credit terms being advertised must be generally available?191
  • Q 4.135 : If an advertisement states a rate of finance charge, how must the rate of that charge be expressed?191
  • Q 4.136 : What are the “trigger terms” that if used in an advertisement require additional disclosures?192
    • Q 4.136.1 : Why is downpayment not a trigger term for an advertisement of a loan secured by residential real property?192
    • Q 4.136.2 : What additional information must be provided if a trigger term is used in an advertisement?192
    • Q 4.136.3 : What alternative may be used to disclose the additional information for advertisements on television or the radio?193
  • Q 4.137 : What interest rate and payment disclosure requirements apply to an advertisement for credit secured by a dwelling?193
    • Q 4.137.1 : Do the rate and payment disclosure requirements apply to advertisements on television or the radio?194
    • Q 4.137.2 : What does “clear and conspicuous” mean for these purposes?194
    • Q 4.137.3 : Do the rate and payment disclosure requirements apply to envelopes, banner advertisements or pop-up advertisements?194
  • Q 4.138 : What disclosures must be provided in advertisements for consumer credit transactions secured by the consumer’s principal dwelling when the extension of credit may exceed the fair market value of the dwelling?194
    • Q 4.138.1 : Does the disclosure requirement for situations in which a closed-end credit transaction secured by the consumer’s principal dwelling may exceed the fair market value of the dwelling securing the plan apply to advertisements on radio or television?195
  • Q 4.139 : What practices or representations may not be used in advertisements for closed-credit secured by a dwelling?195
    • Q 4.139.1 : What additional disclosure requirements apply if in an advertisement the word “fixed” is used to refer to rates, payments or the credit transaction if the advertised transaction is a variable-rate transaction or the payment will increase?196
  • Q 4.140 : In responding orally to an inquiry about the cost of credit, must the creditor state rates in terms of the annual percentage rate?198
  • Q 4.141 : Is a catalog or other multipage advertisement, or an electronic advertisement, considered a single advertisement?198
    • Q 4.141.1 : What is a multipage advertisement?198
    • Q 4.141.2 : Is there guidance on the required content of the table or schedule?199
  • Q 4.142 : Where are the disclosure requirements for closed-end credit transactions secured by a dwelling set forth?199
  • Q 4.143 : Does TILA refer to “closed-end” credit transactions?199
  • Q 4.144 : On what basis must disclosures be made?200
    • Q 4.144.1 : May estimates be used in completing the disclosure information?200
    • Q 4.144.2 : How may a creditor indicate items that are estimates?200
  • Q 4.145 : In transactions involving more than one consumer, must a creditor provide disclosures to all consumers in the transaction?200
    • Q 4.145.1 : Are there cases in which disclosures must be provided to consumers other than the consumer who is primarily liable on the obligation?201
  • Q 4.146 : If more than one creditor is involved in the transaction, must each creditor provide a set of disclosures?201
  • Q 4.147 : Does TILA have requirements for the form of disclosures?201
    • Q 4.147.1 : What does “clearly and conspicuously” mean?201
    • Q 4.147.2 : Must the disclosures for a closed-end credit transaction secured by a dwelling be given in writing?202
    • Q 4.147.3 : Must disclosures for a closed-end credit transaction secured by a dwelling be given in a form the consumer may keep?202
  • Q 4.148 : May disclosures for a closed-end credit transaction secured by a dwelling be provided in electronic format?202
    • Q 4.148.1 : Must the creditor comply with ESIGN if providing variable-rate loan program disclosures electronically?202
  • Q 4.149 : Must the terms “finance charge” and “annual percentage rate” be disclosed more conspicuously than the other information in the disclosure for a closed-end credit transaction secured by a dwelling?203
    • Q 4.149.1 : Are there examples of how to make the terms “finance charge” or “annual percentage rate” more conspicuous?203
    • Q 4.149.2 : Are there exceptions to the requirement to disclose the terms “finance charge” or “annual percentage rate” more conspicuously?203
  • Q 4.150 : If a disclosure becomes inaccurate because of an event that occurs after the creditor mails or delivers the disclosures, is the inaccurate disclosure a violation?204
    • Q 4.150.1 : Must the creditor redisclose?204
  • Q 4.151 : May a creditor supply additional information or explanation with a disclosure provided under TILA?204
  • Q 4.152 : May disclosures be made in a language other than English?204
  • Q 4.153 : Must a maximum interest rate be disclosed?205
  • Q 4.154 : Are there up-front disclosure requirements for variable-rate, closed-end credit transactions secured by a dwelling?205
  • Q 4.155 : Must certain variable-rate disclosures be provided prior to the application disclosures?205
    • Q 4.155.1 : What is the CHARM Booklet?205
    • Q 4.155.2 : What information must be included in a loan program disclosure for a variable-rate program?205
    • Q 4.155.3 : Can the CHARM booklet and variable-rate program disclosures be provided electronically?207
    • Q 4.155.4 : Are there model forms of variable-rate program disclosures?207
  • Q 4.156 : Are there disclosure requirements in connection with the application for a closed-end credit transaction secured by a dwelling?207
  • Q 4.157 : What initial disclosures must be provided for closed-end credit transactions that that are secured by a dwelling and subject to the RESPA?208
    • Q 4.157.1 : When does a creditor receive a consumer’s written application?208
    • Q 4.157.2 : Must the initial TILA disclosures be provided if the application is denied or withdrawn during the three-business-day period?208
  • Q 4.158 : What is the content of the initial TILA disclosures for a closed-end credit transaction secured by a dwelling?208
    • Q 4.158.1 : May the disclosures contain information not directly related to the required disclosure?211
    • Q 4.158.2 : What is the amount financed?211
    • Q 4.158.3 : What is the itemization of amount financed?211
    • Q 4.158.4 : What disclosures may be used to satisfy the itemization of amount financed requirement in a transaction subject to the RESPA?212
  • Q 4.159 : For a transaction secured by real property or a dwelling (other than a timeshare plan), what are the interest rate and payment summary and related disclosures that must be included in the initial TILA disclosures?212
    • Q 4.159.1 : What is the required format of the interest rate and payment summary table?212
    • Q 4.159.2 : What information must be contained in the interest rate and payment summary table?213
  • Q 4.160 : What required notice must be included with the initial TILA disclosures?214
  • Q 4.161 : What is the minimum waiting period that applies between the time the initial disclosures are provided and consummation?215
    • Q 4.161.1 : What definition of “business day” applies to the seven-business-day waiting period?215
    • Q 4.161.2 : May the waiting period be waived or modified by the consumer?215
    • Q 4.161.3 : What is a bona fide personal financial emergency?215
    • Q 4.161.4 : How may a consumer waive the seven-business-day waiting period?216
  • Q 4.162 : Are there model forms for the initial TILA disclosures?216
  • Q 4.163 : Are TILA disclosures required for “refinancings”?217
  • Q 4.164 : Are TILA disclosures required for “assumptions”?218
  • Q 4.165 : For a closed-end credit transaction that is secured by the consumer’s dwelling and subject to RESPA (other than a transaction secured by a timeshare plan), may a creditor or other person charge the consumer any fee before the receipt of the initial disclosures by the consumer?219
    • Q 4.165.1 : Are mortgage brokers subject to the fee restriction?220
    • Q 4.165.2 : When may a fee beyond a credit history fee be imposed on the consumer?220
    • Q 4.165.3 : What is a “business day” for purposes of the mailing rule?220
  • Q 4.166 : What are the alternative initial TILA disclosure requirements for credit secured by timeshare plans?220
  • Q 4.167 : Are the disclosure requirements in connection with the consummation of a closed-end credit transaction secured by a consumer’s dwelling?221
    • Q 4.167.1 : If before consummation of a closed-end credit transaction that is secured by a consumer’s dwelling and subject to RESPA (other than a transaction secured by a timeshare plan) the APR in the initial TILA disclosures becomes inaccurate, what is required?221
    • Q 4.167.2 : What standard is used to determine if the APR becomes inaccurate?222
    • Q 4.167.3 : What definition of “business day” applies to the three-business-day waiting period?222
    • Q 4.167.4 : What methods may be used to determine that a consumer has received the corrected TILA disclosures?222
    • Q 4.167.5 : May the waiting period be waived or modified by the consumer?223
    • Q 4.167.6 : What is a bona fide personal financial emergency?223
    • Q 4.167.7 : How may a consumer waive the three-business-day waiting period?224
  • Q 4.168 : What are the requirements if after corrected disclosures are provided there are additional changes?224
    • Q 4.168.1 : What are the finance charge and APR tolerances?224
    • Q 4.168.2 : Is there a separate tolerance for the amount financed?225
    • Q 4.168.3 : What is the special rule applicable to the per diem interest for purposes of determining the accuracy of the TILA disclosures?225
  • Q 4.169 : What are the alternative final TILA disclosure requirements for credit secured by timeshare plans?225
  • Q 4.170 : Are there disclosures that must be provided during the life of a closed-end credit transaction secured by a dwelling?226
  • Q 4.171 : Are there disclosures that must be provided in connection with interest rate adjustments on variable-rate loans?226
    • Q 4.171.1 : Are rate adjustment notices required in any cases in which there is not a payment adjustment as well?227
  • Q 4.172 : Do consumers have a right to rescind certain closed-end credit transactions secured by a dwelling?227
  • Q 4.173 : On which transactions do consumers have a right of rescission?227
    • Q 4.173.1 : What is a “residential mortgage transaction”?228
  • Q 4.174 : If there are multiple consumers, does each consumer have the right to rescind?228
    • Q 4.174.1 : Are there circumstances in which a consumer who is not obligated on the credit transaction has a right to rescind?228
    • Q 4.174.2 : Must all consumers exercise the rescission right in order for rescission to be valid?228
  • Q 4.175 : If all material disclosures are properly provided and other requirements are satisfied, during what period may a consumer exercise the right to rescind?228
    • Q 4.175.1 : What are the “material disclosures” for purposes of the rescission right?229
  • Q 4.176 : How long is the rescission period extended if the creditor fails to provide all material disclosures or otherwise comply with the rescission requirements?229
  • Q 4.177 : How may a consumer exercise the right to rescind?230
    • Q 4.177.1 : When is notice considered given?230
  • Q 4.178 : What disclosures are required in connection with the right of rescission?230
    • Q 4.178.1 : Are the model forms of the notice of the right to rescind?231
  • Q 4.179 : How many copies of the notice of right to rescind must be provided to each consumer?231
    • Q 4.179.1 : What if the notice is provided electronically?231
  • Q 4.180 : May a creditor disburse funds prior to the expiration of the rescission period?231
    • Q 4.180.1 : May a creditor take any action during the rescission period?231
  • Q 4.181 : May a creditor delay disbursement after the rescission period has expired?232
  • Q 4.182 : What is the effect of a consumer exercising the right of rescission?232
    • Q 4.182.1 : Is the consumer liable for any finance charge or other charge?232
    • Q 4.182.2 : How long does the creditor have to return any money or property given after receipt of notice that the consumer is exercising the right to rescind?232
    • Q 4.182.3 : What are the consumer’s obligations once the creditor returns the money or property?233
    • Q 4.182.4 : How long does the creditor have to take possession of the property after tender by the consumer?233
    • Q 4.182.5 : Is there any ability to have any of the rescission procedures modified?233
  • Q 4.183 : May a consumer waive the right to rescind?233
    • Q 4.183.1 : How may a consumer waive the right to rescind?233
    • Q 4.183.2 : What is a bona fide personal financial emergency?233
    • Q 4.183.3 : Are there situations in which a consumer is deemed to have a bona fide personal emergency?234
  • Q 4.184 : For purposes of the right to rescind, are there additional tolerances for the calculation of the finance charge and APR with a closed-end mortgage transaction?234
    • Q 4.184.1 : What are the finance charge tolerances for rescission right purposes under Regulation Z section 226.23(g)?235
    • Q 4.184.2 : What are the finance charge tolerances for rescission right purposes under Regulation Z section 226.23(h)?236
    • Q 4.184.3 : For purposes of the right to rescind, what are the APR tolerances for closed-end mortgage transactions based on a finance charge that is accurate under Regulation Z section 226.23(g) or (h)?236
  • Q 4.185 : Are there additional remedies available to the consumer beyond a delay or extended rescission if there is a failure to comply with the rescission requirements?237
  • Q 4.186 : How must a creditor handle a credit balance on an account?237
  • Q 4.187 : Are there certain requirements that apply to only a closed-end credit transaction secured by a consumer’s principal dwelling?237
  • Q 4.188 : What is a “servicer” for purposes of a servicer’s obligations with regard to the imposition of late fees, the provision of payoff statements and the crediting of payments?238
  • Q 4.189 : What are the requirements for the imposition of late charges by a servicer?238
  • Q 4.190 : What are the requirements for a servicer to provide payoff statements?238
    • Q 4.190.1 : What is a reasonable time to provide a payoff statement?239
    • Q 4.190.2 : Is the period of time to provide a payoff statement affected if the servicer first seeks to confirm the party requesting the information is authorized by the consumer?239
  • Q 4.191 : What are the requirements for the crediting of payments by a servicer?239
    • Q 4.191.1 : Must a servicer post a payment on the date of receipt?239
    • Q 4.191.2 : What is the date of receipt?240
  • Q 4.192 : When must a servicer credit a payment to a consumer’s account if the payment is not made according to the creditor’s requirements but the servicer accepts the payment anyway?240
    • Q 4.192.1 : Must a servicer specify requirements for payments?240
    • Q 4.192.2 : Are there limits on requirements that a servicer may specify for payments?240
  • Q 4.193 : What are the requirements related to appraiser independence?241
  • Q 4.194 : What are the requirements related to appraiser independence applicable to applications received by a creditor before April 1, 2011?241
    • Q 4.194.1 : What is a “mortgage broker” for purposes of the prohibition against the coercion of appraisers?242
    • Q 4.194.2 : What is an “affiliate” for purposes of the prohibition against the coercion of appraisers?242
    • Q 4.194.3 : What is an “appraiser” for purposes of the prohibition against the coercion of appraisers?242
    • Q 4.194.4 : What are examples of conduct that would violate the prohibition against the coercion of appraisers?242
    • Q 4.194.5 : What are examples of conduct that would not violate the prohibition against the coercion of appraisers?243
    • Q 4.194.6 : If the creditor knows there has been a violation of the prohibition against appraiser coercion, may the creditor extend credit?243
  • Q 4.195 : What are the requirements related to appraiser independence applicable to applications received by a creditor on or after April 1, 2011?244
    • Q 4.195.1 : What is a “covered person” for purposes of the appraiser independence requirements?244
    • Q 4.195.2 : What is a “valuation” for purposes of the appraiser independence requirements?244
    • Q 4.195.3 : What are “valuation management functions” for purposes of the appraiser independence requirements?245
    • Q 4.195.4 : What are examples of conduct that would violate the prohibition against the coercion of appraisers and related actions?245
    • Q 4.195.5 : In addition to the prohibitions on coercion of appraisers and related actions, are there other prohibitions under the appraiser independence requirements?246
    • Q 4.195.6 : What are examples of conduct that would not violate the prohibition against coercion of appraisers and related actions or the prohibition against falsifying or materially altering a valuation?246
    • Q 4.195.7 : If the creditor knows there has been a violation of the appraiser independence requirements, may the creditor extend credit?247
    • Q 4.195.8 : Under the appraiser independence requirements, may a person preparing a valuation or performing valuation management services have an interest in the transaction?247
  • Q 4.196 : Who must notify the borrower when a mortgage loan is sold or otherwise transferred or assigned to a third party?248
  • Q 4.197 : Are there special requirements for HOEPA loans?248
  • Q 4.198 : What is a HOEPA loan?248
    • Q 4.198.1 : What are points and fees?249
    • Q 4.198.2 : Are there specific tolerances that apply to the determination of whether a transaction is a HOEPA loan?249
    • Q 4.198.3 : What types of loans are exempt from being considered a HOEPA loan?250
  • Q 4.199 : What are the additional disclosure requirements in connection with HOEPA loans?250
    • Q 4.199.1 : Are there any tolerances applicable to the accuracy of the required additional disclosures?251
    • Q 4.199.2 : When must the additional disclosures be provided?251
    • Q 4.199.3 : What if a change in terms after the disclosure is provided renders the disclosure inaccurate?251
    • Q 4.199.4 : May a creditor provide the updated disclosures by telephone?251
    • Q 4.199.5 : May a consumer waive the three-business-day waiting period?251
    • Q 4.199.6 : What is a bona fide personal financial emergency?252
    • Q 4.199.7 : How may a consumer waive the three-business-day waiting period?252
    • Q 4.199.8 : May the disclosures be provided electronically?252
    • Q 4.199.9 : In transactions involving more than one consumer, must a creditor provide disclosures to all consumers in the transaction?252
    • Q 4.199.10 : Are there cases in which disclosures must be provided to consumers other than the consumer who is primarily liable on the obligation?253
    • Q 4.199.11 : If a transaction involves more than one creditor, must each creditor provide the disclosures?253
  • Q 4.200 : May a creditor charge a prepayment penalty on a HOEPA loan?253
    • Q 4.200.1 : What constitutes a prepayment penalty?253
    • Q 4.200.2 : Are there circumstances when a prepayment penalty may be imposed?253
  • Q 4.201 : May a creditor increase the interest rate after default on a HOEPA loan?254
  • Q 4.202 : May a HOEPA loan provide for a balloon payment?254
  • Q 4.203 : May a HOEPA loan provide for negative amortization?254
  • Q 4.204 : May a creditor provide for advance payments in connection with a HOEPA loan?254
  • Q 4.205 : May a creditor make a HOEPA loan to a consumer without regard to the consumer’s repayment ability?255
    • Q 4.205.1 : How must a creditor verify a consumer’s repayment ability?255
    • Q 4.205.2 : Under what conditions will a creditor be presumed to have complied with the limitations on making HOEPA loans without regard to the consumer’s repayment ability?256
    • Q 4.205.3 : Can the presumption be rebutted?256
    • Q 4.205.4 : Are there situations in which the presumption is not available?256
    • Q 4.205.5 : Are any transactions excepted from the repayment ability determination requirements?257
  • Q 4.206 : May a creditor make a payment to a contractor under a home-improvement contract from HOEPA loan proceeds?257
  • Q 4.207 : Are there disclosures that must be provided to assignees of HOEPA loans?257
  • Q 4.208 : Are there restrictions related to the refinancing of a HOEPA loan?257
    • Q 4.208.1 : Is there any guidance for how to determine if a refinancing is in the borrower’s interest?258
  • Q 4.209 : May a creditor structure a transaction as open-end credit to evade the HOEPA loan requirements?258
  • Q 4.210 : What are the consequences for failure to comply with the restrictions on HOEPA loans?258
  • Q 4.211 : Are there special requirements for higher-priced mortgage loans?258
  • Q 4.212 : What is a higher-priced mortgage loan?259
    • Q 4.212.1 : What is the average prime offer rate?259
    • Q 4.212.2 : What loans are excluded from the definition of higher-priced mortgage loan?259
  • Q 4.213 : Are any additional disclosures required in connection with a higher-priced mortgage loan?260
  • Q 4.214 : May a creditor extend credit based on the value of the consumer’s collateral without regard to the consumer’s repayment ability on a higher-priced mortgage loan?260
  • Q 4.215 : May a creditor charge a prepayment penalty on a higher-priced mortgage loan?260
  • Q 4.216 : Must creditors create an escrow account for property taxes and insurance on higher-priced mortgage loans?261
    • Q 4.216.1 : Does the escrow requirement apply to loans secured by shares in a cooperative or to condominium units?261
    • Q 4.216.2 : May a creditor or servicer cancel an escrow account?261
    • Q 4.216.3 : What is an escrow account?262
  • Q 4.217 : May a creditor structure a loan as an open-end credit transaction to evade the higher-priced mortgage loan requirements?262
  • Q 4.218 : What special additional damages apply to violations of the higher-priced mortgage loan requirements?262
  • Q 4.219 : Are there special requirements for reverse mortgage transactions?262
  • Q 4.220 : What is a reverse mortgage transaction?262
  • Q 4.221 : Are there additional disclosure requirements related to reverse mortgages?263
  • Q 4.222 : When must the additional reverse mortgage disclosures be provided?263
  • Q 4.223 : What information must the creditor take into account in determining the projected total cost for the reverse mortgage disclosure?264
  • Q 4.224 : Does TILA address servicer liability with regard to loss mitigation?265
  • Q 4.225 : What is a qualified loss mitigation plan?265
  • Q 4.226 : What is the general rule regarding any duty of a servicer with regard to a qualified loss mitigation plan?265
    • Q 4.226.1 : What is a “servicer” for purposes of the qualified loss mitigation provisions?266
    • Q 4.226.2 : What is a “securitization vehicle”?266
  • Q 4.227 : What is the liability standard for a servicer?266
  • Q 4.228 : Does Regulation Z impose restrictions on the compensation of loan originators?267
  • Q 4.229 : What is a “loan originator”?268
    • Q 4.229.1 : What is a “mortgage broker” for purposes of the loan originator rules?268
    • Q 4.229.2 : Is a creditor a loan originator?268
    • Q 4.229.3 : Does the reference to “particular transaction” mean that the determination of whether a party is a “loan originator” is based on the functions of the party in each particular transaction and not the typical functions of the party for the majority of transactions?269
  • Q 4.230 : What is the scope of the loan originator rules?269
  • Q 4.231 : May a loan originator receive compensation based on the terms or conditions of a credit transaction?269
    • Q 4.231.1 : Does the prohibition apply to compensation received by a loan originator directly from the consumer?269
    • Q 4.231.2 : What compensation is considered to be paid directly by the consumer?270
    • Q 4.231.3 : Does compensation include third party charges that a loan originator receives?270
    • Q 4.231.4 : What is the limited exception to the prohibition against compensation of a loan originator based on loan terms by anyone other than the consumer?270
    • Q 4.231.5 : Are there examples of what type of compensation arrangements using a percentage of the transaction amount would and would not be permitted?271
  • Q 4.232 : Are there any factors identified as being permissible to consider in determining the compensation of a loan originator?271
  • Q 4.233 : Can a loan originator agree to accept a lower than standard compensation amount from a creditor to lower the cost of the loan to the consumer?272
  • Q 4.234 : Can a creditor pay compensation to a loan originator based on a factor that is not a loan term or condition but is tied to a loan term or condition?272
  • Q 4.235 : Do the loan originator compensation rules restrict how a creditor establishes the loan terms for a consumer?273
  • Q 4.236 : How are affiliates treated for purposes of the loan originator compensation rules?273
  • Q 4.237 : May a loan originator receive compensation from the consumer and from creditor or another party the same transaction?273
  • Q 4.238 : May a loan originator steer a consumer to a particular transaction based on the receipt of greater compensation?274
    • Q 4.238.1 : Does the steering prohibition apply to a loan originator who is an employee of a creditor?274
    • Q 4.238.2 : Is there a safe harbor available for the steering prohibition?275
    • Q 4.238.3 : What might be considered a transaction that is in the interest of the consumer?275
    • Q 4.238.4 : What are the elements of the safe harbor?276
  • Q 4.239 : Are there specific record retention requirements for the loan originator compensation rules?277
  • Q 4.240 : Who must notify the borrower when a home-equity plan or mortgage loan is sold or otherwise transferred or assigned to a third party?277
    • Q 4.240.1 : What is a “covered person” for purposes of the mortgage transfer disclosure?277
    • Q 4.240.2 : Is a servicer treated as a “covered person” if the servicer holds legal title to a loan?278
    • Q 4.240.3 : What is a “mortgage loan” for purposes of the mortgage transfer disclosure?278
  • Q 4.241 : When must a covered person provide the mortgage transfer disclosure?278
    • Q 4.241.1 : What is the “date of transfer” for purposes of the mortgage transfer disclosure?278
  • Q 4.242 : What information must a mortgage transfer disclosure include?278
    • Q 4.242.1 : May a mortgage transfer disclosure be provided electronically?279
  • Q 4.243 : In transactions involving more than one borrower, must a covered person provide the mortgage transfer disclosure to all borrowers in the transaction?279
  • Q 4.244 : If there is more than one covered person, must each covered person provide a mortgage transfer disclosure to the borrower?280
  • Q 4.245 : What are the exceptions to the requirement to provide a mortgage transfer disclosure?280
  • Q 4.246 : How long must creditors retain evidence of compliance with Regulation Z?280
    • Q 4.246.1 : Must paper copies of records be retained?281
    • Q 4.246.2 : Must a copy of each variable-rate loan program disclosure actually provided be retained?281
    • Q 4.246.3 : What records must be retained with regard to home-equity plan disclosures?281
  • Q 4.247 : What is the potential liability of a creditor under TILA for failing to comply with TILA requirements?281
    • Q 4.247.1 : Which government agencies may enforce TILA administratively?282
    • Q 4.247.2 : Is a violation of TILA deemed a violation of any other laws enforced by the government agencies with authority to enforce TILA administratively?282
    • Q 4.247.3 : What powers are available to government agencies with authority to enforce TILA administratively?283
    • Q 4.247.4 : Do states have any authority under federal law to enforce TILA?283
  • Q 4.248 : What adjustments must be made if the appropriate agency notifies the creditor of an inaccurate disclosure of the APR or finance charge?283
  • Q 4.249 : Are there circumstances in which the inaccurate disclosure of the APR or finance charge need not result in an adjustment?283
  • Q 4.250 : Can the creditor self-correct a disclosure error?284
  • Q 4.251 : Are there criminal provisions of TILA?285
  • Q 4.252 : What potential civil liability does a creditor face for a TILA violation?285
  • Q 4.253 : Is a creditor liable in a civil case if the creditor corrects a violation within sixty days of discovering the error?286
  • Q 4.254 : Is a creditor liable for violations that were not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid such errors?287
  • Q 4.255 : Is there multiple liability if the credit transaction has more than one borrower?287
  • Q 4.256 : What is the statute of limitations?287
  • Q 4.257 : Does TILA provide for assignee liability?287
    • Q 4.257.1 : What does “apparent on the face of the disclosure statement” mean?288
  • Q 4.258 : Is there a different standard for assignee liability for HOEPA loans?288
    • Q 4.258.1 : Must a creditor who sells or assigns a HOEPA loan provide any disclosure to the investor?288
  • Q 4.259 : Is a servicer an assignee?288
  • Appendix 4A : Regulation Z, Appendix F311
  • Appendix 4B : Regulation Z, Appendix J313
  • Appendix 4C : Regulation Z, Appendix G–4325
  • Appendix 4D : Regulation Z, Appendix G–3327
  • Appendix 4E : Regulation Z, Appendix G–3(A)329
  • Appendix 4F : Regulation Z, Appendix G–5331
  • Appendix 4G : Regulation Z, Appendix H–4(C)337
  • Appendix 4H : Regulation Z, Appendix H–4(E)341
  • Appendix 4I : Regulation Z, Appendix H–4(F)343
  • Appendix 4J : Regulation Z, Appendix H–4(G)345
  • Appendix 4K : Regulation Z, Appendix H–4(H)347
  • Appendix 4L : Regulation Z, Appendix H–4(I)349
  • Appendix 4M : Regulation Z, Appendix H–4(J)351
  • Appendix 4N : Regulation Z, Appendix H–2353
  • Appendix 4O : Regulation Z, Appendix H–3355
  • Appendix 4P : Regulation Z, Appendix H–4(A) & Appendix H–4(B)357
  • Appendix 4Q : Regulation Z, Appendix H–4(K)359
  • Appendix 4R : Regulation Z, Appendix H–8 & Appendix H–9361
  • Appendix 4S : Regulation Z, Appendix K363
  • Appendix 4T : Regulation Z, Appendix L369
Chapter 5: Real Estate Settlement Procedures Act (RESPA) Richard J. Andreano ~ Ballard Spahr LLP
  • Q 5.1 : What is the purpose of RESPA?373
  • Q 5.2 : What is the scope of RESPA?373
  • Q 5.3 : What is a “federally related mortgage loan”?374
    • Q 5.3.1 : What is a “creditor”?375
    • Q 5.3.2 : What is a “dealer”?376
    • Q 5.3.3 : What is a “dealer loan”?376
    • Q 5.3.4 : What is a “manufactured home”?376
    • Q 5.3.5 : What is a “state”?376
  • Q 5.4 : What is a “business day”?377
  • Q 5.5 : What is “ESIGN”?377
  • Q 5.6 : What is a “lender”?377
  • Q 5.7 : What is a “loan originator”?377
  • Q 5.8 : What is a “mortgage broker”?377
  • Q 5.9 : What is a “person”?377
  • Q 5.10 : What is “Regulation X”?378
  • Q 5.11 : What is “Regulation Z”?378
  • Q 5.12 : What is “table funding”?378
  • Q 5.13 : What is “TILA”?378
  • Q 5.14 : What are the sources for guidance and interpretations of RESPA?378
    • Q 5.14.1 : What is Regulation X?378
    • Q 5.14.2 : What is a statement of policy or interpretive rule?378
    • Q 5.14.3 : What is an unofficial interpretation?380
    • Q 5.14.4 : What are the FAQs?380
    • Q 5.14.5 : What is a public guidance document?380
    • Q 5.14.6 : What is the effect of complying with a rule, regulation or interpretation of the HUD Secretary?381
  • Q 5.15 : Does RESPA preempt state law?381
  • Q 5.16 : What loans and transactions are exempt from RESPA?382
  • Q 5.17 : What are “settlement services” covered by RESPA?383
    • Q 5.17.1 : What is an “origination service”?384
    • Q 5.17.2 : What is a “title service”?385
  • Q 5.18 : How are document delivery requirements satisfied when a document is mailed?385
  • Q 5.19 : What disclosures are required in connection with a mortgage loan application?386
    • Q 5.19.1 : What is an “application”?386
  • Q 5.20 : What is a Good-Faith Estimate?387
    • Q 5.20.1 : What is the format of a Good-Faith Estimate?387
    • Q 5.20.2 : May additional pages be added to the Good-Faith Estimate?388
  • Q 5.21 : When must a Good-Faith Estimate be provided?388
    • Q 5.21.1 : Who must provide a Good-Faith Estimate?388
  • Q 5.22 : What transactions are excluded from the requirement to provide a Good-Faith Estimate?388
  • Q 5.23 : May an applicant be required to provide verification documents before receiving a Good-Faith Estimate?389
  • Q 5.24 : May a fee be imposed on an applicant in connection with the issuance of a Good-Faith Estimate?389
  • Q 5.25 : What information is set forth in a Good-Faith Estimate?390
    • Q 5.25.1 : What important dates must appear in a Good-Faith Estimate?390
    • Q 5.25.2 : What estimated loan terms must appear in a Good-Faith Estimate?391
    • Q 5.25.3 : Are there specific requirements for disclosing the terms of a reverse mortgage loan?393
  • Q 5.26 : What information must appear in a Good-Faith Estimate regarding whether or not an escrow account will be required?394
  • Q 5.27 : What estimated costs must appear in a Good-Faith Estimate?394
    • Q 5.27.1 : What items are included in the adjusted origination charges?394
    • Q 5.27.2 : How is the credit or charge for the specific interest rate chosen disclosed in Block 2?396
    • Q 5.27.3 : What items are included in the charges for all other settlement services?397
  • Q 5.28 : What additional information must be provided with a Good-Faith Estimate?401
    • Q 5.28.1 : What information must appear in the written list of providers?401
  • Q 5.29 : How long are the terms of a Good-Faith Estimate available for acceptance by a consumer?402
    • Q 5.29.1 : What is the shopping period?402
    • Q 5.29.2 : How is the shopping period determined when a Good-Faith Estimate is mailed?402
    • Q 5.29.3 : Can a Good-Faith Estimate be provided by facsimile, email or other electronic means?403
  • Q 5.30 : What is the result if the consumer does not indicate an intention to proceed with the loan application within the shopping period?403
  • Q 5.31 : What is the result if the consumer indicates an intention to proceed with the loan application within the shopping period?403
  • Q 5.32 : What are the “tolerances”?404
    • Q 5.32.1 : What items are subject to the 0% tolerance?404
    • Q 5.32.2 : What items are subject to the 10% bucket tolerance?405
    • Q 5.32.3 : What items are not subject to any tolerance?405
  • Q 5.33 : How can a loan originator revise items in a Good-Faith Estimate that are subject to a tolerance based on a changed circumstance or borrower-requested change?405
    • Q 5.33.1 : What is a “changed circumstance”?406
  • Q 5.34 : What is the new home exception?407
  • Q 5.35 : Is a Good-Faith Estimate a loan commitment?408
  • Q 5.36 : What are the record retention requirements for the Good-Faith Estimate?408
  • Q 5.37 : What damages, etc. are provided for under RESPA if there is a failure to comply with the Good-Faith Estimate requirements?408
  • Q 5.38 : What is the Special Information Booklet?409
    • Q 5.38.1 : What is the format of the Special Information Booklet?409
  • Q 5.39 : When must the Special Information Booklet be provided?409
  • Q 5.40 : Who must provide the Special Information Booklet?409
  • Q 5.41 : What transactions are excluded from the requirement to provide the Special Information Booklet?409
  • Q 5.42 : What information is set forth in the Special Information Booklet?410
  • Q 5.43 : What damages, etc. are provided for under RESPA if there is a failure to comply with the requirement to provide a Special Information Booklet?410
  • Q 5.44 : What is a Servicing Disclosure Statement?411
    • Q 5.44.1 : What is the format of the Servicing Disclosure Statement?411
  • Q 5.45 : When must the Servicing Disclosure Statement be provided?411
  • Q 5.46 : Who must provide the Servicing Disclosure Statement?412
  • Q 5.47 : What transactions are excluded from the requirement to provide the Servicing Disclosure Statement?412
  • Q 5.48 : What information is set forth in the Servicing Disclosure Statement?412
  • Q 5.49 : Are state laws that conflict with the Servicing Disclosure Statement requirements preempted?413
  • Q 5.50 : Can a Servicing Disclosure Statement be provided by facsimile, email or other electronic means?413
  • Q 5.51 : What damages, etc. are provided for under RESPA if there is a failure to comply with the Servicing Disclosure Statement requirements?413
  • Q 5.52 : What disclosures are required in connection with the settlement of a mortgage loan?415
    • Q 5.52.1 : What is “settlement”?415
  • Q 5.53 : What is a HUD-1?415
    • Q 5.53.1 : When must a HUD-1 be used and not a HUD-1A?415
    • Q 5.53.2 : What is the format of the HUD-1?415
    • Q 5.53.3 : May additional pages be added to the HUD-1?416
    • Q 5.53.4 : When must a HUD-1 be provided?416
    • Q 5.53.5 : Who may inspect a copy of the HUD-1 before settlement?417
    • Q 5.53.6 : Who must prepare a HUD-1?417
    • Q 5.53.7 : Who is the settlement agent?417
    • Q 5.53.8 : What information is set forth in a HUD-1?417
    • Q 5.53.9 : Are there specific requirements for disclosing the terms of a mortgage loan?418
    • Q 5.53.10 : Are there specific requirements for disclosing the terms of a reverse mortgage loan?418
    • Q 5.53.11 : What information must a lender provide to the settlement agent for the preparation of the HUD-1?418
    • Q 5.53.12 : What transactions are excluded from the requirement to provide a HUD-1?418
    • Q 5.53.13 : Can a HUD-1 include a charge for a service that exceeds the actual charge?419
    • Q 5.53.14 : Can a HUD-1 be provided by facsimile, email or other electronic means?419
    • Q 5.53.15 : May a lender charge a fee for the preparation of a HUD-1?420
    • Q 5.53.16 : What are the record retention requirements for a HUD-1?420
    • Q 5.53.17 : What damages, etc. are provided for under RESPA if there is a failure to comply with the HUD-1 requirements?420
  • Q 5.54 : What is a HUD-1A?421
    • Q 5.54.1 : When may a HUD-1A be used?421
    • Q 5.54.2 : What is the format of the HUD-1A?421
    • Q 5.54.3 : When must a HUD-1A be provided?421
    • Q 5.54.4 : Who may inspect a copy of the HUD-1A before settlement?422
    • Q 5.54.5 : Who must prepare a HUD-1A?422
    • Q 5.54.6 : Who is the settlement agent?422
    • Q 5.54.7 : What information is set forth in a HUD-1A?423
    • Q 5.54.8 : Are there specific requirements for disclosing the terms of a mortgage loan?423
    • Q 5.54.9 : Are there specific requirements for disclosing the terms of a reverse mortgage loan?423
    • Q 5.54.10 : What information must a lender provide to the settlement agent for the preparation of the HUD-1A?423
    • Q 5.54.11 : What transactions are excluded from the requirement to provide a HUD-1A?423
    • Q 5.54.12 : Can a HUD-1A include a charge for a service that exceeds the actual charge?424
    • Q 5.54.13 : Can a HUD-1A be provided by facsimile, email or other electronic means?424
    • Q 5.54.14 : May a lender charge a fee for the preparation of a HUD-1A?425
    • Q 5.54.15 : What are the record retention requirements for a HUD-1A?425
    • Q 5.54.16 : What damages, etc. are provided for under RESPA if there is a failure to comply with the HUD-1A requirements?425
  • Q 5.55 : What is an “initial escrow account statement”?426
  • Q 5.56 : What disclosures are required during the life of a mortgage loan?426
  • Q 5.57 : What is a notice of servicing transfer?427
    • Q 5.57.1 : What is a “mortgage servicing loan”?427
    • Q 5.57.2 : When must a notice of servicing transfer be provided?427
  • Q 5.58 : Who must provide a notice of servicing transfer and in what time frame?427
    • Q 5.58.1 : Who is a “transferor servicer”?428
    • Q 5.58.2 : Who is a “transferee servicer”?428
    • Q 5.58.3 : What is the “effective date of transfer”?428
  • Q 5.59 : What information must be included in a notice of servicing transfer?428
  • Q 5.60 : What is the format of a notice of servicing transfer?429
  • Q 5.61 : Are there exceptions to the timing requirements for a notice of servicing transfer?429
  • Q 5.62 : What transactions are excluded from the requirement to provide a notice of servicing transfer?430
    • Q 5.62.1 : Who is a “master servicer”?430
    • Q 5.62.2 : Who is a “subservicer”?430
  • Q 5.63 : Can a notice of servicing transfer be provided by facsimile, email or other electronic means?430
  • Q 5.64 : What restrictions apply to loan payments made after a servicing transfer?431
  • Q 5.65 : Are state laws that conflict with the servicing transfer notice requirements preempted?431
  • Q 5.66 : What damages, etc. are provided for under RESPA if there is a failure to comply with the notice of servicing transfer requirements?431
  • Q 5.67 : What is an “annual escrow account statement”?432
  • Q 5.68 : Can an annual escrow account notice be provided by facsimile, email or other electronic means?433
  • Q 5.69 : What is a payment shock notice?433
    • Q 5.69.1 : What is the format of a payment shock notice?434
    • Q 5.69.2 : When would it be appropriate to provide a payment shock notice?434
    • Q 5.69.3 : Can a payment shock notice be provided by facsimile, email or other electronic means?434
    • Q 5.69.4 : Who would provide a payment shock notice?435
    • Q 5.69.5 : What information would be set forth in a payment shock notice?435
  • Q 5.70 : How does RESPA regulate escrow or impound accounts?435
    • Q 5.70.1 : What is an “escrow account”?435
    • Q 5.70.2 : What is an “escrow account analysis”?436
    • Q 5.70.3 : What is the “aggregate or composite analysis” accounting method?436
    • Q 5.70.4 : What is an “annual escrow account statement”?436
    • Q 5.70.5 : What is a short-year annual escrow account statement?437
    • Q 5.70.6 : What is a “cushion”?437
    • Q 5.70.7 : What is a “deficiency”?437
    • Q 5.70.8 : What is a “disbursement date”?437
    • Q 5.70.9 : What is an “escrow account computation year”?437
    • Q 5.70.10 : What is an “escrow account item” or a “separate item”?438
    • Q 5.70.11 : What is an “initial escrow account statement”?438
    • Q 5.70.12 : What is an “installment payment”?438
    • Q 5.70.13 : What is a “payment due date”?438
    • Q 5.70.14 : What is a “penalty”?438
    • Q 5.70.15 : What is “pre-accrual”?439
    • Q 5.70.16 : What is a “shortage”?439
    • Q 5.70.17 : What is a “surplus”?439
    • Q 5.70.18 : What is a “target balance”?439
    • Q 5.70.19 : What is a “trial running balance”?439
    • Q 5.70.20 : What are the maximum payments and deposits that may be required for an escrow account?440
    • Q 5.70.21 : When must an initial escrow account analysis be performed?441
    • Q 5.70.22 : How are the payment amounts for escrow account items determined?441
    • Q 5.70.23 : What if an escrow item can be paid in installments?442
    • Q 5.70.24 : What if an escrow item is billed for a period greater than one year?442
    • Q 5.70.25 : What is an “initial escrow account statement”?443
    • Q 5.70.26 : What is the format of an initial escrow account statement?443
    • Q 5.70.27 : When must an initial escrow account statement be provided?443
    • Q 5.70.28 : What is “delivery”?443
    • Q 5.70.29 : Can an initial escrow statement be provided by facsimile, email or other electronic means?444
    • Q 5.70.30 : Who must provide an initial escrow account statement?444
    • Q 5.70.31 : What information is set forth in an initial escrow account statement?444
    • Q 5.70.32 : When must an annual escrow account analysis be performed?445
    • Q 5.70.33 : What is an “annual escrow account statement”?445
    • Q 5.70.34 : What is the format of an annual escrow account statement?445
    • Q 5.70.35 : When must an annual escrow account statement be provided?446
    • Q 5.70.36 : What is “delivery”?446
    • Q 5.70.37 : Can an annual escrow account statement be provided by facsimile, email or other electronic means?446
    • Q 5.70.38 : Who must provide an annual escrow account statement?447
    • Q 5.70.39 : What information is set forth in an annual escrow account statement?447
    • Q 5.70.40 : How may a surplus, shortage or deficiency be handled?448
    • Q 5.70.41 : In what situations is an annual escrow account statement not required?450
    • Q 5.70.42 : What is a short-year annual escrow account statement?450
    • Q 5.70.43 : When must a short-year annual escrow statement be provided?451
    • Q 5.70.44 : May a servicer be required to advance funds to pay escrow account items if there are not sufficient funds in the escrow account?451
    • Q 5.70.45 : When must any remaining funds in an escrow account be refunded when a loan is paid off?451
    • Q 5.70.46 : What are the requirements for an escrow account if the loan servicing is transferred to a new servicer?452
    • Q 5.70.47 : May a lender or servicer charge a fee for the preparation of an escrow account statement?452
    • Q 5.70.48 : Do the RESPA requirements override the loan documents or state law?452
    • Q 5.70.49 : What are the record retention requirements for escrow accounts?453
    • Q 5.70.50 : What is a “system of recordkeeping”?454
    • Q 5.70.51 : What information may HUD request regarding an escrow account?454
    • Q 5.70.52 : What information may a borrower request regarding an escrow account?454
    • Q 5.70.53 : What damages, etc. are provided for under RESPA if there is a failure to comply with the escrow account requirements?454
  • Q 5.71 : How does RESPA regulate the servicing of mortgage loans?455
    • Q 5.71.1 : What is “servicing”?455
    • Q 5.71.2 : Who is a “servicer”?455
    • Q 5.71.3 : Which parties are excluded from the definition of “servicer”?456
    • Q 5.71.4 : What is a “mortgage servicing loan”?456
    • Q 5.71.5 : What restrictions apply to loan payments made after a servicing transfer?456
    • Q 5.71.6 : What is a “qualified written request”?457
    • Q 5.71.7 : May a servicer designate a specific address for the receipt of qualified written requests?457
    • Q 5.71.8 : When must a response be provided to a qualified written request?457
    • Q 5.71.9 : Who must respond to a qualified written request?458
    • Q 5.71.10 : What restrictions apply to a servicer regarding the reporting to a credit bureau in connection with a qualified written request?459
    • Q 5.71.11 : What transactions are excluded from the requirement to respond to a qualified written request?459
    • Q 5.71.12 : What are the record retention requirements for servicers?459
    • Q 5.71.13 : What damages, etc. are provided for under RESPA if there is a failure to comply with the servicing requirements?460
  • Q 5.72 : What are the RESPA referral fee and fee splitting prohibitions?461
    • Q 5.72.1 : What is an agreement or understanding?461
    • Q 5.72.2 : What is a referral?461
    • Q 5.72.3 : What is a “required use” of a settlement service provider?462
    • Q 5.72.4 : What is a “thing of value”?462
    • Q 5.72.5 : If there is no increase in cost, can a violation of the referral fee or fee splitting prohibitions be established?463
    • Q 5.72.6 : What restriction applies to persons who perform more than one settlement service in the same transaction?463
    • Q 5.72.7 : Who qualifies as a person who is in a position to refer settlement-service business?464
    • Q 5.72.8 : What are the exemptions to the referral fee and fee splitting prohibitions?464
    • Q 5.72.9 : Why do there appear to be different versions of exemptions for payments to employees?465
    • Q 5.72.10 : Does HUD interpret the fee splitting prohibition to apply to situations that do not involve an actual split of a settlement service fee between two persons?465
    • Q 5.72.11 : Does HUD provide examples of situations that may violate the referral fee or fee splitting prohibitions?466
    • Q 5.72.12 : What is HUD’s position regarding the compensation of mortgage brokers by lenders?466
    • Q 5.72.13 : What is HUD’s position regarding the compensation of title agents by title companies?466
    • Q 5.72.14 : What are “core title services”?466
    • Q 5.72.15 : What are the recordkeeping requirements regarding the referral fee and fee splitting prohibitions?467
    • Q 5.72.16 : What damages, etc. are provided for under RESPA if there is a violation of the referral fee or fee splitting prohibitions?468
  • Q 5.73 : How does RESPA regulate affiliated business arrangements?468
    • Q 5.73.1 : What is an “affiliated business arrangement”?469
    • Q 5.73.2 : What is an “associate”?469
    • Q 5.73.3 : What is an “affiliate relationship”?469
    • Q 5.73.4 : What is “beneficial ownership”?470
    • Q 5.73.5 : What is “control”?470
    • Q 5.73.6 : What is “direct ownership”?470
    • Q 5.73.7 : What is a “franchise”?470
    • Q 5.73.8 : What is a “franchisor”?471
    • Q 5.73.9 : What is a “franchisee”?471
    • Q 5.73.10 : Who qualifies as a “person who is in a position to refer settlement-service business”?471
    • Q 5.73.11 : What are common examples of an affiliated business arrangement?472
    • Q 5.73.12 : What is the difference between a controlled business arrangement and an affiliated business arrangement?472
    • Q 5.73.13 : What is the affiliated business arrangement exemption?472
    • Q 5.73.14 : What are the three conditions of the affiliated business arrangement exemption?472
    • Q 5.73.15 : What are the requirements of the disclosure condition?473
    • Q 5.73.16 : What is the specific form of disclosure?473
    • Q 5.73.17 : When must an Affiliated Business Arrangement Disclosure Statement be provided?473
    • Q 5.73.18 : What are the special timing requirements for an Affiliated Business Arrangement Disclosure Statement?474
    • Q 5.73.19 : How must an Affiliated Business Arrangement Disclosure Statement be provided?474
    • Q 5.73.20 : Can an Affiliated Business Arrangement Disclosure Statement be provided by facsimile, email or other electronic means?475
    • Q 5.73.21 : Who must provide an Affiliated Business Arrangement Disclosure Statement?476
    • Q 5.73.22 : What information must be set forth in an Affiliated Business Arrangement Disclosure Statement?476
    • Q 5.73.23 : What information must be stated in the initial, abbreviated affiliated business arrangement notice given by telephone?476
    • Q 5.73.24 : What are the requirements to obtain an acknowledgment of receipt of an Affiliated Business Arrangement Disclosure Statement?476
    • Q 5.73.25 : What are the record retention requirements for an Affiliated Business Arrangement Disclosure Statement?477
    • Q 5.73.26 : Is there an ability to overcome a failure to comply with the disclosure condition?477
    • Q 5.73.27 : For the condition prohibiting the required use of a settlement service provider, what constitutes a “required use” of a settlement service provider?477
    • Q 5.73.28 : What are the exceptions to the prohibition on the required use of a settlement service provider?478
    • Q 5.73.29 : For the condition limiting any thing of value to a return on an ownership interest or franchise relationship, what qualifies as a return on an ownership interest or franchise relationship?478
    • Q 5.73.30 : What is HUD’s sham affiliated business arrangement position?479
    • Q 5.73.31 : Does HUD provide examples of situations that may or may not satisfy the affiliated business arrangement exemption?482
    • Q 5.73.32 : What damages, etc. are provided for under RESPA for failure to comply with the affiliated business arrangement exemption?482
  • Q 5.74 : What restriction does RESPA impose on a seller of property?483
    • Q 5.74.1 : What constitutes a required use of a title insurance provider?483
    • Q 5.74.2 : What damages, etc. are provided for under RESPA if there is a violation of the restriction?484
  • Q 5.75 : What fees are a lender and servicer prohibited from imposing under RESPA?484
    • Q 5.75.1 : What damages, etc. are provided for under RESPA if there is a violation of the fee prohibition?484
  • Q 5.76 : Does a RESPA violation affect the validity of a mortgage loan?485
  • Q 5.77 : What is the authority of HUD under RESPA to investigate potential violations?485
  • Q 5.78 : Who can enforce RESPA?485
  • Appendix 5A : Good Faith Estimate Form (GFE)499
  • Appendix 5B : Exemptions From Coverage Under Sections 4 and 5 of RESPA503
  • Appendix 5C : Regulation X, Appendix MS–1507
  • Appendix 5D : HUD-1509
  • Appendix 5E : HUD-1A513
  • Appendix 5F : Regulation X, Appendix MS-2515
  • Appendix 5G : Sample Payment Shock Notice519
  • Appendix 5H : Regulation X, Appendix E521
  • Appendix 5I : Initial Escrow Account Disclosure Statement— Format525
  • Appendix 5J : Initial Escrow Account Disclosure Statement— Example527
  • Appendix 5K : Annual Escrow Account Disclosure Statement— Format529
  • Appendix 5L : Annual Escrow Account Disclosure Statement— Example531
  • Appendix 5M : Non-Implemented Regulation X, § 3500.14(g)(3)533
  • Appendix 5N : Regulation X, Appendix B535
  • Appendix 5O : HUD Statement of Policy 1999-1539
  • Appendix 5P : HUD Statement of Policy 2001-1549
  • Appendix 5Q : HUD Statement of Policy 1996-4559
  • Appendix 5R : Regulation X, Appendix D563
  • Appendix 5S : HUD Statement of Policy 1996-2565
Chapter 6: Fair Credit Reporting Act (FCRA) Haydn Richards ~ Dykema Gossett PLLC
  • Q 6.1 : What is “adverse action”?575
  • Q 6.2 : What is a “consumer”?575
  • Q 6.3 : What is a “consumer report”?575
    • Q 6.3.1 : How does a “credit report” differ from a consumer report?576
  • Q 6.4 : What is a “consumer reporting agency”?576
    • Q 6.4.1 : What is a “consumer reporting agency that compiles and maintains files on consumers on a nationwide basis”?577
  • Q 6.5 : What is a “firm offer of credit or insurance”?577
  • Q 6.6 : What is a “person”?578
  • Q 6.7 : What is a “reseller”?579
  • Q 6.8 : What are sources for guidance and interpretations of FCRA?579
  • Q 6.9 : Does FCRA preempt state law?580
  • Q 6.10 : What are the permissible purposes to obtain a consumer report on a consumer?583
  • Q 6.11 : Must a person that obtains a consumer report on a consumer provide a copy of the report to the consumer?585
  • Q 6.12 : Must a person who makes or arranges mortgage loans provide the consumer with a credit score obtained by the person?585
    • Q 6.12.1 : What is a “credit score” for purposes of the credit score disclosure requirement?586
    • Q 6.12.2 : When must any required disclosure of a credit score to a consumer occur?586
    • Q 6.12.3 : Must a person who makes or arranges a loan explain the credit score information to the consumer or provide other information to the consumer?587
    • Q 6.12.4 : When a transaction involves both a person who arranges a loan and a person who makes a loan (e.g., a mortgage broker and mortgage lender), must each person provide the credit score disclosure?587
    • Q 6.12.5 : What if a contract with a consumer reporting agency prohibits a person from disclosing a credit score to the consumer?587
  • Q 6.13 : What are the obligations of a person that takes adverse action in connection with a credit transaction based in whole or in part on consumer report information obtained from a consumer reporting agency?588
  • Q 6.14 : What are the obligations of a party that denies or increases the cost of credit in connection with a credit transaction initiated by the consumer based in whole or in part on certain information from a party that is not a consumer reporting agency?589
  • Q 6.15 : What are the obligations of a party that takes adverse action in connection with a credit transaction initiated by the consumer based in whole or in part on certain information from an affiliated party that is not a consumer reporting agency?589
  • Q 6.16 : What is a fraud alert?590
  • Q 6.17 : What is an active duty alert?591
  • Q 6.18 : What are the obligations of a consumer reporting agency with regard to fraud and active duty alerts?591
  • Q 6.19 : What procedures must a prospective user of a consumer report take to establish a new credit transaction when the consumer report reflects that there is an existing fraud or active duty alert?591
  • Q 6.20 : Under what conditions must a consumer reporting agency block the reporting of information that results from identity theft?592
  • Q 6.21 : Under what conditions may a consumer reporting agency furnish a consumer report that contains medical information on a consumer?593
  • Q 6.22 : Under what conditions may a creditor obtain and use medical information pertaining to a consumer in connection with any determination of the consumer’s eligibility for credit?594
    • Q 6.22.1 : Are there examples of information that is information routinely used in making credit eligibility determinations?595
  • Q 6.23 : Are there examples of how a creditor may and may not use medical information?596
  • Q 6.24 : What information must a consumer reporting agency disclose to a consumer upon a request as part of a consumer report?596
    • Q 6.24.1 : What information must accompany a consumer report when such report is provided to a consumer?597
    • Q 6.24.2 : What information must a consumer reporting agency provide if a consumer requests a credit score?598
    • Q 6.24.3 : What is a credit score for purposes of the credit score disclosure requirement?599
    • Q 6.24.4 : What are the “key factors” that adversely affect a credit score?599
    • Q 6.24.5 : What obligations do consumer reporting agencies have with respect to providing free annual disclosures of consumer report information?599
    • Q 6.24.6 : What obligations do consumer reporting agencies have with respect to providing free disclosures of consumer report information in the case of fraud alerts?600
    • Q 6.24.7 : What obligations do consumer reporting agencies have with respect to providing free disclosures of consumer report information in connection with an adverse action?600
    • Q 6.24.8 : Are there other cases in which a consumer reporting agency must provide free disclosures of consumer reporting information?601
  • Q 6.25 : What information must a consumer reporting agency exclude from consumer reports?601
  • Q 6.26 : Does the FCRA limit the ability of a person to share consumer report type information with other parties?602
    • Q 6.26.1 : May affiliates share transaction or experience information?602
    • Q 6.26.2 : May affiliates share information beyond transaction or experience information?603
    • Q 6.26.3 : May affiliates share medical information?603
  • Q 6.27 : Are there requirements for persons that furnish information to consumer reporting agencies?604
  • Q 6.28 : Are persons obligated to furnish information to consumer reporting agencies?604
  • Q 6.29 : If a person furnishes information to a consumer reporting agency regarding credit accounts, are there additional reporting responsibilities?605
  • Q 6.30 : What responsibilities does a person have as a furnisher of information to a consumer reporting agency with regard to information that is not accurate?605
    • Q 6.30.1 : What are the responsibilities of a person to not furnish information regarding a consumer to a consumer reporting agency that the person knows or has reasonable cause to believe is inaccurate?605
    • Q 6.30.2 : What are the responsibilities of a person who determines that information the person reported to a consumer reporting agency is inaccurate?606
  • Q 6.31 : What notice must a person who furnishes information to consumer reporting agencies provide if a consumer disputes the completeness or accuracy of the information?606
  • Q 6.32 : What are the responsibilities of a person upon receiving a notice from a consumer reporting agency that a consumer disputes the accuracy or integrity of information furnished by the person?607
  • Q 6.33 : What are the obligations of a furnisher of information upon receiving notice that information resulted from identity theft?608
  • Q 6.34 : What notice must a financial institution provide to a consumer if the person may furnish or has furnished negative information on a consumer to a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis?608
    • Q 6.34.1 : What is “negative information” for purposes of the negative information notice requirement?609
    • Q 6.34.2 : What are a “financial institution” and a “customer” for purposes of the negative information reporting requirement?609
    • Q 6.34.3 : Must a negative information notice be provided each time the financial institution furnishes negative information?609
    • Q 6.34.4 : When must a negative information notice be provided?609
    • Q 6.34.5 : What is the format of a negative information notice?610
  • Q 6.35 : Are there requirements regarding the accuracy and integrity of information furnished to consumer reporting agencies?610
  • Q 6.36 : What are the responsibilities of a person that furnishes information to a consumer reporting agency to have policies and procedures regarding the accuracy and integrity of furnished information?611
    • Q 6.36.1 : What is a “furnisher”?611
    • Q 6.36.2 : What does the term “accuracy” mean in the context of information?612
    • Q 6.36.3 : What does the term “integrity” mean in the context of information?612
  • Q 6.37 : What steps must a furnisher undertake in order to be in compliance with the requirement for policies and procedures regarding the accuracy and integrity of furnished information?613
  • Q 6.38 : What must a furnisher consider in developing the required policies and procedures regarding the accuracy and integrity of consumer information furnished to consumer reporting agencies?613
  • Q 6.39 : May a consumer dispute information furnished to a consumer reporting agency directly with the furnisher of the information?614
  • Q 6.40 : What is a “direct dispute”?614
  • Q 6.41 : When must a furnisher conduct a reasonable investigation in connection with a direct dispute over any information contained in a consumer report?614
  • Q 6.42 : What are the exceptions to the requirements to conduct a reasonable investigation?615
  • Q 6.43 : How must a consumer submit a direct dispute notice to a furnisher?616
  • Q 6.44 : What information must a consumer provide in a direct dispute notice?616
  • Q 6.45 : What are the duties of a furnisher after it receives a direct dispute notice?617
  • Q 6.46 : What are the obligations of a furnisher when a dispute is reasonably determined to be frivolous or irrelevant?617
  • Q 6.47 : What are “prescreened” credit solicitations or transactions and firm offers of credit?618
  • Q 6.48 : When may consumer report information regarding a consumer be furnished to a person in connection with a credit transaction that is not initiated by the consumer?620
  • Q 6.49 : What is a “firm offer of credit or insurance”?620
  • Q 6.50 : When a consumer reporting agency identifies the consumers who meet the criteria specified by a person for a planned firm offer of credit or insurance, what information regarding the consumers may the consumer reporting agency provide?621
  • Q 6.51 : When a person makes a firm offer of credit or insurance to a consumer in a prescreening situation, what must the person disclose to the consumer?622
  • Q 6.52 : Can a consumer elect to have his or her file excluded from prescreening by a consumer reporting agency?622
  • Q 6.53 : Must a consumer be advised of the right to opt out of prescreening by a person who is making a firm offer of credit or insurance?623
    • Q 6.53.1 : What are the requirements for the short notice?624
    • Q 6.53.2 : What are the requirements for the long notice?624
  • Q 6.54 : When a person makes a firm offer of credit or insurance, for how long must the person retain the criteria used to select the consumers who received the offer?625
  • Q 6.55 : Are there restrictions on the use of an affiliate’s FCRA-covered information for marketing purposes?626
  • Q 6.56 : What information is subject to the affiliate marketing provisions?627
  • Q 6.57 : What solicitations are subject to the affiliate marketing provisions?627
  • Q 6.58 : Under what circumstances may a person use eligibility information from an affiliate to make a solicitation for marketing purposes to a consumer?628
    • Q 6.58.1 : What is the notice and opt out procedure for using eligibility information from an affiliate to make a solicitation for marketing purposes to a consumer?628
  • Q 6.59 : If a person does not use eligibility information from an affiliate, but the affiliate uses its own eligibility information to market on behalf of the person, is the marketing that the affiliate conducts on behalf of the person covered by the affiliate marketing provisions?629
  • Q 6.60 : What are the exceptions to the use by a person of eligibility information from an affiliate?630
    • Q 6.60.1 : What is a “pre-existing business relationship” with a consumer for purposes of the pre-existing business relationship exception?631
    • Q 6.60.2 : What is the nature of the pre-existing business relationship exception?631
    • Q 6.60.3 : What is the nature of the consumer-initiated communication exception?632
    • Q 6.60.4 : What is the nature of the consumer authorization or request exception?633
  • Q 6.61 : Is there a notice requirement for creditors that bases the terms of a credit transaction in whole or in part on information in a consumer report?633
  • Q 6.62 : What types of credit are covered by the risk-based pricing notice requirement?634
  • Q 6.63 : What is the basic risk-based pricing notice requirement?634
  • Q 6.64 : What information must be included in a risk-based pricing notice?635
  • Q 6.65 : Is there a required format for the risk-based pricing notice?636
  • Q 6.66 : When must the risk-based pricing notice be provided?636
  • Q 6.67 : Must a risk-based pricing notice be provided when a person does not grant, extend, or otherwise provide credit?637
  • Q 6.68 : How does a person determine if a consumer receives credit on material terms that are materially less favorable than the most favorable material terms available to a substantial proportion of consumers from or through that person?637
    • Q 6.68.1 : What is the direct comparison method?638
    • Q 6.68.2 : What is the credit score proxy method?638
    • Q 6.68.3 : What is the tiered pricing method?639
  • Q 6.69 : What are the exceptions to the risk-based pricing notice requirement?640
    • Q 6.69.1 : What is the specific terms exception?640
    • Q 6.69.2 : What is the adverse action notice exception?641
    • Q 6.69.3 : What is the prescreened solicitation exception?641
    • Q 6.69.4 : What is the credit score disclosure exception for residential mortgage loans?641
    • Q 6.69.5 : Is there a required format for the credit score disclosure notice?643
    • Q 6.69.6 : When must the credit score disclosure notice be provided?643
    • Q 6.69.7 : What are the requirements if a person obtains more than one credit score?643
    • Q 6.69.8 : What is the exception for cases in which a person regularly provides a credit score disclosure pursuant to the exception for residential mortgage loans, but a credit score is not available?644
    • Q 6.69.9 : What information must be contained in the notice provided when no credit score is available?644
    • Q 6.69.10 : Is there a required format for the notice when no credit score is available?645
    • Q 6.69.11 : When must the notice that no credit score is available be provided?645
  • Q 6.70 : Are there requirements for users of consumer reports regarding address discrepancies and the implementation of an identity theft program?646
  • Q 6.71 : In what cases must a consumer reporting agency notify a user of a consumer report of an address discrepancy?646
  • Q 6.72 : What is a “notice of address discrepancy”?646
  • Q 6.73 : What policies and procedures must a user of consumer reports implement with regard to notices of address discrepancy?647
  • Q 6.74 : What policies and procedures must a user of consumer reports implement with regard to furnishing consumer addresses to consumer reporting agencies?648
  • Q 6.75 : Is there other guidance available regarding address discrepancies?648
  • Q 6.76 : Who must maintain an Identity Theft Protection Program?649
  • Q 6.77 : What is the basic requirement for an Identity Theft Protection Program?649
    • Q 6.77.1 : What is a “covered account”?650
    • Q 6.77.2 : What is an “account”?650
  • Q 6.78 : What elements must be included in an Identity Theft Protection Program?650
    • Q 6.78.1 : What is a Red Flag?651
    • Q 6.78.2 : Who is a “customer”?651
  • Q 6.79 : What are the requirements for the approval, implementation and administration of the Identity Theft Protection Program?651
    • Q 6.79.1 : What is addressed by the Interagency Guidelines on Identity Theft Detection, Prevention and Mitigation?652
    • Q 6.79.2 : Is there other guidance available for developing and maintaining an Identity Theft Program?652
  • Q 6.80 : What are the restrictions regarding sale or transfer of a debt resulting from identity theft?653
    • Q 6.80.1 : Are there exceptions to the prohibition on the sale or transfer of a debt that resulted from identity theft?653
  • Q 6.81 : Are there requirements for persons who maintain or otherwise process consumer report information regarding the disposal of the information?654
  • Q 6.82 : What are the requirements regarding the disposal of consumer report information?654
  • Q 6.83 : Who can enforce FCRA?655
  • Appendix 6A : Notice to the Home Loan Applicant667
  • Appendix 6B : Summary of Consumer Rights669
  • Appendix 6C : Model Notices of Furnishing Negative Information673
  • Appendix 6D : Guidelines—Accuracy and Integrity of Furnished Information675
  • Appendix 6E : Model Prescreen Opt-Out Notices681
  • Appendix 6F : FTC Affiliate Marketing Rules685
  • Appendix 6G : Model Affiliate Marketing Opt-Out Notices695
  • Appendix 6H : Model Risk-Based Pricing Notices699
  • Appendix 6I : FTC Risk-Based Pricing Rules705
  • Appendix 6J : FAQs: Identity Theft Red Flags713
  • Appendix 6K : Guidelines—Identity Theft Detection, Protection and Mitigation727
Chapter 7: Equal Credit Opportunity Act (ECOA) Richard J. Andreano ~ Ballard Spahr LLP
Jaynacia L Abraham ~ Patton Boggs LLP
  • Q 7.1 : What is the purpose of ECOA?733
  • Q 7.2 : What is the scope of ECOA?733
  • Q 7.3 : What is the “Board”?733
  • Q 7.4 : Who is a “creditor”?734
    • Q 7.4.1 : Who is a “person”?734
    • Q 7.4.2 : Can a mortgage broker be a “creditor”?734
    • Q 7.4.3 : Can a purchaser of a credit obligation be a “creditor”?734
  • Q 7.5 : What is “credit”?734
    • Q 7.5.1 : What is “business credit”?734
    • Q 7.5.2 : What is “consumer credit”?735
  • Q 7.6 : What is “open-end credit”?735
  • Q 7.7 : What is a “credit transaction”?735
  • Q 7.8 : Who is an “applicant”?735
    • Q 7.8.1 : Is a guarantor, surety, endorser or similar party an applicant?735
  • Q 7.9 : What is an “application”?735
    • Q 7.9.1 : Can an inquiry or prequalification request from a consumer to a creditor become an application?736
    • Q 7.9.2 : Is what the consumer states or how the creditor responds the basis for determining whether an inquiry or prequalification request is treated as an application by the creditor?736
    • Q 7.9.3 : Does ECOA define a “prequalification” or “preapproval” request?736
    • Q 7.9.4 : What are examples of inquiries that are not applications?736
    • Q 7.9.5 : What are examples of inquiries that become applications?737
  • Q 7.10 : What is a “completed application”?738
  • Q 7.11 : What is meant by “extend credit” and “extension of credit”?738
  • Q 7.12 : What is meant by “discriminate against an applicant”?738
  • Q 7.13 : What is a “prohibited basis”?739
    • Q 7.13.1 : What is “age”?739
    • Q 7.13.2 : What is “elderly”?739
    • Q 7.13.3 : What is “marital status”?739
    • Q 7.13.4 : What is “unmarried”?739
    • Q 7.13.5 : What is a “public assistance program”?739
    • Q 7.13.6 : Does “prohibited basis” refer only to the applicant?740
  • Q 7.14 : What are “overt discrimination,” “disparate treatment” and “disparate impact”?740
    • Q 7.14.1 : Does ECOA or Regulation B address “disparate treatment”?741
  • Q 7.15 : What is a “state”?742
  • Q 7.16 : What are the sources for guidance and interpretations of ECOA?742
    • Q 7.16.1 : What is Regulation B?742
    • Q 7.16.2 : What is the Regulation B Commentary?742
    • Q 7.16.3 : What is the Policy Statement on Discrimination in Lending?742
    • Q 7.16.4 : What other information sources are available?743
  • Q 7.17 : Does ECOA preempt state law?743
    • Q 7.17.1 : What is the general rule regarding preemption of state laws?743
    • Q 7.17.2 : What state laws are deemed to be inconsistent with ECOA and, thus, are preempted?743
    • Q 7.17.3 : Have any state laws been deemed preempted by ECOA?744
    • Q 7.17.4 : Is there a procedure to request a determination of whether a state law is inconsistent with ECOA?744
  • Q 7.18 : What state and federal laws are specifically not affected by ECOA?744
    • Q 7.18.1 : What is the application of state or federal laws regarding permissible finance charges or loan ceilings to married applicants who voluntarily apply for and obtain individual accounts?745
    • Q 7.18.2 : May a state apply for an exemption from ECOA for credit transactions?745
  • Q 7.19 : What are the limited exceptions to ECOA for certain transactions?745
  • Q 7.20 : What is “public utilities credit”?745
    • Q 7.20.1 : What are the exceptions for public utilities credit?746
  • Q 7.21 : What is “securities credit”?746
    • Q 7.21.1 : What are the exceptions for securities credit?746
  • Q 7.22 : What is “incidental credit”?746
    • Q 7.22.1 : What are the exceptions for incidental credit?747
  • Q 7.23 : What is “government credit”?747
    • Q 7.23.1 : What is the exception for government credit?747
  • Q 7.24 : What are the different methods of evaluating applicants for ECOA purposes?747
    • Q 7.24.1 : What are “empirically derived and other credit scoring systems”?748
    • Q 7.24.2 : What is a “judgmental system of evaluating applicants”?748
  • Q 7.25 : If a creditor wants to use an empirically derived, demonstrably and statistically sound, credit scoring system, must the creditor develop its own system?749
  • Q 7.26 : How does the treatment of an applicant’s age differ between an empirically derived, demonstrably and statistically sound, credit scoring system and a judgmental system?749
    • Q 7.26.1 : What is a “negative factor or value”?749
    • Q 7.26.2 : What is a “pertinent element of creditworthiness”?750
  • Q 7.27 : What is the general anti-discrimination rule under ECOA?750
  • Q 7.28 : May a creditor discourage a person from making or pursuing an application?750
  • Q 7.29 : Must mortgage loan applications be in writing?751
    • Q 7.29.1 : What is a “dwelling”?751
    • Q 7.29.2 : How are applications taken over the telephone treated?751
    • Q 7.29.3 : How are computer-based applications treated?751
    • Q 7.29.4 : Are there model application forms that creditors may use for written applications?751
  • Q 7.30 : What are the general requirements for the form of disclosures under ECOA?751
    • Q 7.30.1 : Are there general type size or similar requirements related to the method of production for disclosures?752
    • Q 7.30.2 : May disclosures be provided in electronic form?752
    • Q 7.30.3 : Are there situations in which disclosures must be provided in electronic form?753
    • Q 7.30.4 : May disclosures be provided in a foreign language?753
  • Q 7.31 : What is the general rule concerning requests for information under ECOA?753
  • Q 7.32 : What is the general restriction on requesting information about race, color, religion, national origin or sex?754
    • Q 7.32.1 : What is the exception for a self-test?754
    • Q 7.32.2 : What is the exception for designation of a title?755
  • Q 7.33 : What is the general rule concerning requests for information about a spouse or former spouse?755
    • Q 7.33.1 : In what situations may a creditor request information about a spouse or former spouse of an applicant?755
    • Q 7.33.2 : Can a creditor request existing account information, which might reveal an account involving a spouse or former spouse or a prior name of the applicant?755
  • Q 7.34 : What is the general rule concerning requests for information about marital status?756
    • Q 7.34.1 : In what transactions may a creditor request marital status information and how may the information be requested?756
    • Q 7.34.2 : May a creditor request information that could indirectly disclose marital status?756
    • Q 7.34.3 : What restriction applies to requesting information about whether income is from alimony, child support, or separate maintenance?757
    • Q 7.34.4 : May a creditor make a general inquiry about the source of income?757
    • Q 7.34.5 : Must the disclosure regarding income from alimony, child support, or separate maintenance be made for all requests for income?757
  • Q 7.35 : What is the general rule concerning requests for information about childbearing or childrearing?758
    • Q 7.35.1 : What information related to children may a creditor request?758
  • Q 7.36 : What is the general rule concerning requests for information about permanent residency and immigration status?758
  • Q 7.37 : Are there model forms of applications that creditors can use to help promote compliance with the rules concerning requests for information?758
    • Q 7.37.1 : Is the use of model application forms required for ECOA purposes?759
    • Q 7.37.2 : What is the effect of using a model application form, or using a model application form that was revised consistent with ECOA?759
  • Q 7.38 : Must a creditor exercise diligence in attempting to compile a completed application?759
  • Q 7.39 : What is the general rule concerning the evaluation of applications?759
  • Q 7.40 : What are the specific rules regarding prohibited bases in the evaluation of applications?760
    • Q 7.40.1 : What are the specific rules concerning the consideration of age in the evaluation of an applicant?760
    • Q 7.40.2 : What is a “negative factor or value”?760
    • Q 7.40.3 : What is a “pertinent element of creditworthiness”?761
    • Q 7.40.4 : May any other prohibited basis be used as a predictive factor in an empirically derived, demonstrably and statistically sound, credit scoring system?761
  • Q 7.41 : What is the specific rule concerning the consideration income from public assistance in the evaluation of an applicant?761
  • Q 7.42 : What is the specific rule concerning the consideration of childbearing or childrearing in the evaluation of an applicant?762
  • Q 7.43 : What is the specific rule concerning the consideration of a telephone listing in the evaluation of an applicant?762
  • Q 7.44 : What are the specific rules concerning the consideration of income in the evaluation of an applicant?762
    • Q 7.44.1 : How must a creditor evaluate income from part-time employment, alimony, child support, or separate maintenance, retirement benefits or public assistance?762
  • Q 7.45 : What are the specific rules concerning the consideration of credit history in the evaluation of an applicant?763
  • Q 7.46 : What are the specific rules concerning the consideration of immigration status in the evaluation of an applicant?764
  • Q 7.47 : What are the specific rules concerning the consideration of marital status in the evaluation of an applicant?764
    • Q 7.47.1 : In what manner may the marital status of an applicant be considered?764
  • Q 7.48 : What are the specific rules concerning the consideration of race, color, religion, national origin or sex in the evaluation of an applicant?765
  • Q 7.49 : What is the rule concerning consideration of state property laws in the evaluation of an application?765
  • Q 7.50 : What are the rules concerning extensions of credit?765
  • Q 7.51 : What is the rule concerning the granting of an individual account?765
    • Q 7.51.1 : What are the rules concerning authorized users of an open-end account?766
  • Q 7.52 : What is the rule concerning opening or maintaining an account in a certain name?766
  • Q 7.53 : What are the rules concerning actions taken on existing open-end accounts?766
  • Q 7.54 : What are the rules concerning requiring the signature of another person or spouse for an extension of credit?767
    • Q 7.54.1 : If an applicant for a loan submits joint financial information, may the creditor assume the application is for joint credit?767
    • Q 7.54.2 : Who is a joint applicant?767
    • Q 7.54.3 : What is sufficient evidence of the intent to apply for joint credit?767
  • Q 7.55 : In what cases may a signature of an additional party be required?768
    • Q 7.55.1 : In what cases may a signature of an additional party be required with secured credit if the applicant is qualified?768
    • Q 7.55.2 : May the creditor require that the spouse sign the note and any applicable security instrument?768
    • Q 7.55.3 : What must support a creditor’s reasonable belief that the signature of the applicant’s spouse or another person is required for the security interest?769
    • Q 7.55.4 : What if a creditor uses an integrated instrument that includes the note and security agreement?769
    • Q 7.55.5 : In what cases may a signature of an additional party be required with unsecured credit?769
    • Q 7.55.6 : When an applicant is not qualified, what are the rules regarding a creditor requiring a cosigner, guarantor, endorser or similar party?770
    • Q 7.55.7 : May the creditor require that the additional party who is a cosigner, guarantor, endorser or similar party be the applicant’s spouse?770
    • Q 7.55.8 : What are the rights of an additional party who is a cosigner, guarantor, endorser or similar party when the signature of the party is required?771
  • Q 7.56 : What is the rule concerning availability of credit life, health, accident, disability or other credit-related insurance?771
    • Q 7.56.1 : May prohibited bases information be obtained for insurance purposes?771
  • Q 7.57 : What are the rules for special-purpose credit programs?771
    • Q 7.57.1 : What types of special-purpose credit programs are permitted?772
    • Q 7.57.2 : What is the general rule regarding applicability of ECOA requirements to a special-purpose credit program?772
    • Q 7.57.3 : May a special-purpose credit program that is for the benefit of an economically disadvantaged class of persons or offered to meet special social needs require that participants share one or more common characteristics?773
    • Q 7.57.4 : What is the special rule concerning requests and use of information for a special-purpose credit program?773
    • Q 7.57.5 : What is the special rule concerning requests and use of information for a special-purpose credit program that includes financial need as one of its criteria?773
  • Q 7.58 : What are the requirements to notify applicants of action taken?774
  • Q 7.59 : What are the notification requirements for consumer credit?774
    • Q 7.59.1 : What is a “counteroffer”?774
    • Q 7.59.2 : Must a counteroffer be held open for any specific time period?775
    • Q 7.59.3 : What is an “adverse action”?775
  • Q 7.60 : When does notification occur?775
  • Q 7.61 : What are the requirements for an adverse action notice?776
    • Q 7.61.1 : What is the form of the ECOA notice?776
    • Q 7.61.2 : What is the appropriate agency listed in Appendix A of Regulation B?777
    • Q 7.61.3 : What are the requirements for the statement of specific reasons for an adverse action?777
    • Q 7.61.4 : What reasons for adverse action should be identified when a credit scoring system is used?778
    • Q 7.61.5 : What reasons for adverse action should be identified when a judgmental system is used?778
    • Q 7.61.6 : What reasons for adverse action should be identified when a combined credit scoring and judgmental system is used?778
    • Q 7.61.7 : What are the requirements if an adverse action occurs in connection with an application by telephone?778
    • Q 7.61.8 : May a creditor combine a counteroffer with an adverse action notice?778
    • Q 7.61.9 : May a creditor combine an ECOA adverse action notice with a required notification under the Fair Credit Reporting Act when a decision is based on information not from the applicant or the creditor’s files?779
  • Q 7.62 : What is the notice obligation for expressly withdrawn applications?779
    • Q 7.62.1 : When may a creditor treat an application as withdrawn and not provide a notice of action taken?779
  • Q 7.63 : Who must receive a notice of action taken when there are multiple applicants?780
  • Q 7.64 : What are the notice of action taken requirements when a third party, such as a mortgage broker, submits an application to more than one creditor?780
    • Q 7.64.1 : Is there liability if the creditor provides the third party with the information necessary to satisfy the notice requirements?780
  • Q 7.65 : What are the notification requirements for incomplete applications?780
  • Q 7.66 : Must an actual notice of action taken be provided when an applicant enters into a credit transaction?781
  • Q 7.67 : What is the special notification rule for small-volume creditors?781
  • Q 7.68 : Are there sample forms of notices that creditors can use to help promote compliance with the requirements to notify applicants of action taken?782
    • Q 7.68.1 : Is the use of a sample notification form required for ECOA purposes?782
    • Q 7.68.2 : What is the effect of using a sample notification form, or using a sample notification form that was revised consistent with ECOA?782
  • Q 7.69 : What are the notice requirements for business credit?782
  • Q 7.70 : What are the requirements for creditors that opt to furnish information on consumer credit transactions involving spouses to consumer reporting agencies or other creditors?783
    • Q 7.70.1 : What are the requirements for routine furnishing of information to consumer reporting agencies?784
    • Q 7.70.2 : What are the requirements for furnishing information in response to an inquiry?784
    • Q 7.70.3 : Does ECOA require that a creditor maintain files in a certain manner?784
    • Q 7.70.4 : Must a creditor maintain separate files in the name of each participant on a joint account?784
    • Q 7.70.5 : May a creditor designate joint accounts not involving spouses to reflect the participation of both parties?785
    • Q 7.70.6 : When designating accounts and reporting credit information, must a creditor distinguish between accounts for which a spouse is an authorized user or a contractually liable party?785
    • Q 7.70.7 : What are the requirements for furnishing information when spouses undertake a legal obligation on an existing account, such as the assumption of a mortgage loan?785
  • Q 7.71 : What transactions are subject to special information collection requirements for government monitoring purposes?785
    • Q 7.71.1 : Do the special information collection requirements apply to the same transactions that are covered by the data collection requirements under the Home Mortgage Disclosure Act?786
    • Q 7.71.2 : Are the special information collection requirements the same as the data collection requirements under the Home Mortgage Disclosure Act?786
    • Q 7.71.3 : What information must be requested from an applicant under the ECOA special information collection requirements?787
    • Q 7.71.4 : What must be disclosed to an applicant in connection with the special information collection requirements?787
    • Q 7.71.5 : Is there a specific format to request the applicable information under the special information collection requirements?787
    • Q 7.71.6 : What are the information collection requirements for applications received by mail or over the telephone?788
    • Q 7.71.7 : What are the information collection requirements for applications received through an electronic medium that allows the creditor to see the applicant?788
    • Q 7.71.8 : What are the information collection requirements for applications received through an electronic medium that does not have video capability?788
    • Q 7.71.9 : May a creditor comply with a substitute monitoring program to comply with the special information collection requirements?789
  • Q 7.72 : What are the requirements to provide a copy of an appraisal report to an applicant?789
    • Q 7.72.1 : What transactions are subject to the requirement to provide a copy of the appraisal report?789
    • Q 7.72.2 : What is a “dwelling” for purposes of the requirement to provide a copy of the appraisal report?789
    • Q 7.72.3 : What is an “appraisal report”?789
    • Q 7.72.4 : What are examples of appraisal reports?790
    • Q 7.72.5 : What are examples of items that are not appraisal reports?790
  • Q 7.73 : What are the requirements if a creditor routinely delivers a copy of the appraisal report to an applicant?790
  • Q 7.74 : What are the requirements if a creditor delivers a copy of the appraisal report to an applicant upon request?791
    • Q 7.74.1 : When must the notice of the right to receive a copy of the appraisal report be provided?791
    • Q 7.74.2 : When there are multiple applicants, who must receive the notice of the right to receive a copy of the appraisal report?791
    • Q 7.74.3 : May a creditor impose any charges on an applicant in connection with providing a copy of the appraisal report?792
  • Q 7.75 : What is the special rule for credit unions regarding the requirements to provide a copy of the appraisal report?792
  • Q 7.76 : What is the privilege for information related to a self-test?792
    • Q 7.76.1 : What is a self-test for purposes of the privilege?793
    • Q 7.76.2 : What information is covered by the privilege?793
    • Q 7.76.3 : What information is not covered by the self-test privilege?793
  • Q 7.77 : What is the scope of the privilege?794
    • Q 7.77.1 : To what extent may an applicant or the government use information covered by the privilege?794
    • Q 7.77.2 : How can the self-test privilege be lost?794
  • Q 7.78 : What are the corrective action requirements of the privilege?795
    • Q 7.78.1 : What type of corrective action is required?795
    • Q 7.78.2 : What type of relief is required?795
    • Q 7.78.3 : What type of relief is not required?795
    • Q 7.78.4 : Is taking corrective action an admission of a violation?796
  • Q 7.79 : Are other privileges still available if a creditor claims the self-test privilege?796
    • Q 7.79.1 : Is there a similar self-test privilege under the Fair Housing Act?796
  • Q 7.80 : What are the requirements regarding the retention of records?796
    • Q 7.80.1 : To what extent may prohibited information be retained?796
    • Q 7.80.2 : What records must be retained and for how long?797
  • Q 7.81 : What are the record retention requirements for consumer credit applications?797
    • Q 7.81.1 : What are the requirements for consumer credit applications that are subject to the notice of action taken requirements?797
    • Q 7.81.2 : What are the requirements for consumer credit applications that are not subject to the notice of action taken requirements?798
    • Q 7.81.3 : What are the requirements for a creditor that uses a computerized or mechanized system and makes credit decisions mechanically?798
    • Q 7.81.4 : What are the requirements if the application is subject to the special information collection requirements for government monitoring purposes?799
  • Q 7.82 : What are the record retention requirements for business credit applications?799
  • Q 7.83 : What are the record retention requirements for existing consumer credit accounts?800
  • Q 7.84 : What are the record retention requirements for existing business credit accounts?800
  • Q 7.85 : What are the record retention requirements for a self-test?801
  • Q 7.86 : What are the record retention requirements for a prescreened credit solicitation?801
  • Q 7.87 : In what situations can the period to retain records under ECOA be extended?802
  • Q 7.88 : In what form may a copy of an original record be retained?802
  • Q 7.89 : What is the potential liability of a creditor under ECOA for failing to comply with ECOA requirements?803
  • Q 7.90 : Which government agencies may enforce ECOA administratively?803
    • Q 7.90.1 : Is a violation of ECOA deemed a violation of any other laws enforced by the government agencies with authority to enforce ECOA administratively?803
    • Q 7.90.2 : What powers are available to government agencies with authority to enforce ECOA administratively?804
    • Q 7.90.3 : What matters may a government agency with authority to enforce ECOA administratively refer to the Attorney General of the United States?804
    • Q 7.90.4 : What matters must certain government agencies with authority to enforce ECOA administratively refer to the Attorney General of the United States?804
    • Q 7.90.5 : What action may the Attorney General of the United States take on matters referred by a government agency with authority to enforce ECOA administratively?804
    • Q 7.90.6 : May the Attorney General of the United States institute a civil action without a referral from another government agency?805
    • Q 7.90.7 : In what cases must certain government agencies with authority to enforce ECOA administratively provide a notice to the U.S. Department of Housing and Urban Development and to an applicant?805
  • Q 7.91 : What damages may be imposed on a creditor for a violation of ECOA?805
    • Q 7.91.1 : To what extent may punitive damages be imposed?805
  • Q 7.92 : What other relief may an aggrieved applicant obtain against a creditor for a violation of ECOA?806
  • Q 7.93 : In what courts may a civil action be brought against a creditor for a violation of ECOA?806
  • Q 7.94 : In what time period must a civil action be brought against a creditor for a violation of ECOA?806
  • Q 7.95 : Is there liability under ECOA for an act done or omitted in conformity with Regulation B or any other official interpretation of ECOA?806
  • Q 7.96 : Is there liability under ECOA for a failure to comply with an ECOA requirement that results from an inadvertent error?807
  • Q 7.97 : Can a person be considered a creditor in connection with a violation of ECOA by another creditor?808
  • Appendix 7A : Policy Statement on Discrimination in Lending819
  • Appendix 7B : Regulation B, Appendix B (Model Applications)829
  • Appendix 7C : Regulation B, Appendix C (Sample Notifications)843
  • Appendix 7D : Regulation B, Appendix A (Enforcement Agencies)849
Chapter 8: Fair Housing Act (FairHA) Jaynacia L Abraham ~ Patton Boggs LLP
  • Q 8.1 : What is the purpose of FairHA?852
    • Q 8.1.1 : What is the scope of FairHA?852
    • Q 8.1.2 : What aspect of FairHA is the focus of the chapter?853
  • Q 8.2 : What is an “aggrieved person”?853
  • Q 8.3 : What is a “dwelling”?853
  • Q 8.4 : What is “familial status”?853
  • Q 8.5 : Does a “family” include a single individual?854
  • Q 8.6 : What does “handicap” mean with respect to a person?854
  • Q 8.7 : What is “HUD”?854
  • Q 8.8 : What is a “person”?854
  • Q 8.9 : What are sources for guidance and interpretations of FairHA?854
    • Q 8.9.1 : What is the Policy Statement on Discrimination in Lending?855
  • Q 8.10 : Does FairHA preempt state law?855
  • Q 8.11 : What are the categories of protected classes?855
  • Q 8.12 : Does the inclusion of race as a protected class permit claims by white individuals?855
  • Q 8.13 : Does the inclusion of sex as a protected class also include sexual orientation?856
  • Q 8.14 : Who is covered by the inclusion of handicap as a protected class?856
    • Q 8.14.1 : What is a “physical or mental impairment”?856
    • Q 8.14.2 : What are “major life activities”?857
    • Q 8.14.3 : What is “a record of such an impairment”?857
    • Q 8.14.4 : What is “regarded as having an impairment”?857
    • Q 8.14.5 : What is a “substantial limitation”?857
    • Q 8.14.6 : Does “handicap” include persons currently addicted to illegal drugs?858
  • Q 8.15 : Does the prohibition against discrimination based on “familial status” prohibit application of maximum occupancy standards?858
  • Q 8.16 : What are “overt discrimination,” “disparate treatment” and “disparate impact”?858
  • Q 8.17 : Are any dwellings exempt from FairHA?859
    • Q 8.17.1 : What is the exemption for single-family homes sold by the owner?860
    • Q 8.17.2 : What is the exemption for owner-occupied multi-family dwellings, or the so-called “Mrs. Murphy” exemption?860
    • Q 8.17.3 : What is the occupancy standard exemption?861
    • Q 8.17.4 : What is the “housing for older persons” exemption?861
  • Q 8.18 : What are the general prohibited real estate practices under FairHA?861
  • Q 8.19 : What is the general prohibition against discrimination in residential real estate-related transactions?862
    • Q 8.19.1 : What is a “residential real estate-related transaction”?862
  • Q 8.20 : What are the specific prohibited practices for residential real estate-related transactions under FairHA?863
    • Q 8.20.1 : What is the prohibition relating to the making of loans or the provision of other financial assistance?863
    • Q 8.20.2 : What is the prohibition relating to the purchasing of loans?864
    • Q 8.20.3 : What is the prohibition relating to the terms and conditions for making available loans or other financial assistance?865
    • Q 8.20.4 : What is the prohibition relating to the selling, brokering, or appraising of residential real property?865
    • Q 8.20.5 : What is an “appraisal” for purposes of the prohibition?866
  • Q 8.21 : What is the FairHA general advertising rule with respect to the sale or rental of a dwelling?866
  • Q 8.22 : What type of advertising is subject to the FairHA general advertising rule with respect to the sale or rental of a dwelling?866
    • Q 8.22.1 : What discriminatory notices, statements and advertisements are covered by the FairHA general advertising rule with respect to the sale or rental of a dwelling?867
  • Q 8.23 : What persons are subject to the advertising prohibitions?868
    • Q 8.23.1 : What topics were addressed by the HUD advertising guidance?868
    • Q 8.23.2 : What did the HUD advertising guidance provide regarding the use of human models?868
    • Q 8.23.3 : What did the HUD advertising guidance provide regarding the Equal Housing Opportunity logo, statement or slogan?869
  • Q 8.24 : What persons are required to post and maintain a fair housing poster under FairHA?869
    • Q 8.24.1 : What is the exception for posting a fair housing poster at a dwelling offered for sale or rental?870
    • Q 8.24.2 : What is the format of the fair housing poster?870
  • Q 8.25 : What is the privilege for information related to a self-test?872
    • Q 8.25.1 : What is a self-test for purposes of the privilege?872
    • Q 8.25.2 : What information is covered by the privilege?873
    • Q 8.25.3 : What information is not covered by the self-test privilege?873
  • Q 8.26 : What is the scope of the privilege?873
    • Q 8.26.1 : To what extent may an aggrieved person, applicant or the government use information covered by the privilege?874
    • Q 8.26.2 : How can the self-test privilege be lost?874
  • Q 8.27 : What are the corrective action requirements of the privilege?874
    • Q 8.27.1 : What type of corrective action is required?874
    • Q 8.27.2 : What type of relief is required?875
    • Q 8.27.3 : What type of relief is not required?875
    • Q 8.27.4 : Is taking corrective action an admission of a violation?875
  • Q 8.28 : Are other privileges still available if a lender claims the self-test privilege?876
    • Q 8.28.1 : Is there a similar self-test privilege under the Equal Credit Opportunity Act?876
  • Q 8.29 : Does FairHA prohibit retaliatory-type actions?876
  • Q 8.30 : Does FairHA have any requirements regarding record retention?877
  • Q 8.31 : What is the potential liability of a person under FairHA for failing to comply with FairHA?878
  • Q 8.32 : What private parties may bring a civil action under FairHA?878
    • Q 8.32.1 : Who is an “aggrieved person”?879
  • Q 8.33 : How is FairHA administratively enforced by HUD?879
  • Q 8.34 : What damages or penalties may be imposed for a violation of FairHA?880
  • Q 8.35 : In what cases must certain government agencies with authority to enforce ECOA administratively provide a notice to the U.S. Department of Housing and Urban Development and to an applicant?882
  • Appendix 8A : Former 24 C.F.R. Part 109—Fair Housing Advertising887
  • Appendix 8B : Fair Housing Poster893
Chapter 9: Home Mortgage Disclosure Act (HMDA) Richard J. Andreano ~ Ballard Spahr LLP
  • Q 9.1 : What is the scope of HMDA?896
  • Q 9.2 : What is a “financial institution”?896
  • Q 9.3 : What is a “branch office”?897
    • Q 9.3.1 : What is a “branch office” of a depository institution?897
    • Q 9.3.2 : What is a “branch office” of a credit union?897
    • Q 9.3.3 : What is a “branch office” of a for-profit mortgage institution?897
  • Q 9.4 : What is a “dwelling”?898
    • Q 9.4.1 : What is a “manufactured home”?898
    • Q 9.4.2 : What is not considered a dwelling?898
  • Q 9.5 : What is the “FFIEC”?899
  • Q 9.6 : What is a “home-improvement loan”?899
    • Q 9.6.1 : What is the classification requirement for a non-dwelling secured loan?899
    • Q 9.6.2 : Do home improvements include improvements to the real property?899
    • Q 9.6.3 : What if there is a mixed-use property?899
    • Q 9.6.4 : What if the loan is a commercial loan?900
    • Q 9.6.5 : What if a loan falls into multiple categories?900
  • Q 9.7 : What is a “home-purchase loan”?900
    • Q 9.7.1 : What if the home-purchase loan is assumed?901
    • Q 9.7.2 : What if there are multiple properties?901
    • Q 9.7.3 : What if the property is a mixed-use property?901
    • Q 9.7.4 : What if the property is used primarily for agricultural purposes?901
    • Q 9.7.5 : What if the loan is a commercial loan?902
    • Q 9.7.6 : What if the loan is a construction loan?902
    • Q 9.7.7 : What if there is a first lien loan and second lien loan?902
    • Q 9.7.8 : What if a loan falls into multiple categories?902
  • Q 9.8 : What is a “metropolitan area”?902
  • Q 9.9 : What is a “refinancing”?902
    • Q 9.9.1 : Are Modification, Consolidation and Extension Agreements reported as refinancings?903
    • Q 9.9.2 : What if a loan falls into multiple categories?903
  • Q 9.10 : What are the criteria that trigger HMDA coverage for a depository institution?903
  • Q 9.11 : What are the criteria that trigger HMDA coverage for a for-profit mortgage institution?904
  • Q 9.12 : Why are the HMDA coverage triggers tied to assets and office locations on December 31 of the preceding calendar year and loan origination volume during the preceding calendar year?905
  • Q 9.13 : Do subsidiaries of depository institutions report separate from their parent institutions?905
  • Q 9.14 : When institutions merge, how does that impact HMDA coverage and reporting?905
  • Q 9.15 : What is the HMDA exemption for certain state-chartered or state-licensed institutions?906
  • Q 9.16 : What are sources for guidance and interpretations of HMDA?907
    • Q 9.16.1 : What is Regulation C?907
    • Q 9.16.2 : What is the Regulation C Commentary?907
    • Q 9.16.3 : What is A Guide to HMDA Reporting: Getting It Right!?907
    • Q 9.16.4 : What are the FAQs?907
    • Q 9.16.5 : What other information sources are available?908
  • Q 9.17 : Does HMDA preempt state law?908
  • Q 9.18 : What loan applications, originations of loans and purchases of loans are subject to HMDA data collection and reporting requirements?908
    • Q 9.18.1 : What is an “application”?909
    • Q 9.18.2 : What is a prequalification request?909
    • Q 9.18.3 : What is a preapproval program?909
    • Q 9.18.4 : What is a “home-equity line of credit”?910
    • Q 9.18.5 : What are the rules for reporting of home-equity lines of credit?910
    • Q 9.18.6 : What is a “home-improvement loan”?910
    • Q 9.18.7 : What is a “home-purchase loan”?911
    • Q 9.18.8 : What is a “refinancing”?911
  • Q 9.19 : What loan transactions are excluded from the data collection and reporting requirements?911
  • Q 9.20 : What demographic data must be collected regarding an applicant?912
    • Q 9.20.1 : Must the data be collected for all loan applications?912
    • Q 9.20.2 : Is there a standard format for collection of the demographic data regarding an applicant?912
    • Q 9.20.3 : What are the applicant ethnicity categories?912
    • Q 9.20.4 : What are the applicant race categories?912
    • Q 9.20.5 : What are the applicant sex categories?913
    • Q 9.20.6 : Must demographic data on all co-applicants be collected?913
  • Q 9.21 : What if an applicant declines to provide the demographic data?913
    • Q 9.21.1 : What are the requirements for an application taken in person?913
    • Q 9.21.2 : How are applications taken through electronic media with a video component treated?913
    • Q 9.21.3 : What if only one applicant is present with a joint application?913
    • Q 9.21.4 : What are the requirements for an application received by mail, telephone or the Internet?914
    • Q 9.21.5 : What are the requirements for an application initiated by mail, telephone or the Internet that is completed in person?914
  • Q 9.22 : What other data must be collected regarding the applicant?914
    • Q 9.22.1 : What income data is reported?914
    • Q 9.22.2 : How must income data be reported?915
    • Q 9.22.3 : Is there an exception to collecting income data for loans to employees?915
    • Q 9.22.4 : Are there other exceptions to the collection of income data?915
  • Q 9.23 : What data must be collected regarding the loan application?915
    • Q 9.23.1 : What are the requirements for reporting application or loan numbers?916
    • Q 9.23.2 : What is the date an application was received?916
    • Q 9.23.3 : What is the date an application was received for applications received from a mortgage broker?916
    • Q 9.23.4 : What are the application/loan type categories?916
    • Q 9.23.5 : What are the property type categories?917
    • Q 9.23.6 : What is a manufactured home?917
    • Q 9.23.7 : How are modular homes treated?917
    • Q 9.23.8 : What are the application/loan purpose categories?917
    • Q 9.23.9 : What are the owner occupancy categories?917
    • Q 9.23.10 : What is reported for the loan amount?918
    • Q 9.23.11 : What is reported for the loan amount when an institution makes a counteroffer?918
    • Q 9.23.12 : What is reported as the loan amount for a home-equity line of credit?919
    • Q 9.23.13 : What is reported as the loan amount with an assumption?919
    • Q 9.23.14 : What is reported as the loan amount for a preapproval request that was denied?919
    • Q 9.23.15 : What are the preapproval categories?919
    • Q 9.23.16 : What loan applications/loans are subject to preapproval reporting?919
    • Q 9.23.17 : What are the action taken categories?920
    • Q 9.23.18 : What applications may be reported as being withdrawn?920
    • Q 9.23.19 : What applications may be reported as approved but not accepted?920
    • Q 9.23.20 : When may an application be reported as being closed for incompleteness?921
    • Q 9.23.21 : What action taken is reported for a loan that is conditionally approved?921
    • Q 9.23.22 : What action taken is reported for rescinded loans?921
    • Q 9.23.23 : Does an institution report a decision not to purchase a loan?921
    • Q 9.23.24 : What is the date of action taken?921
    • Q 9.23.25 : What is the date of action taken for an originated loan?922
    • Q 9.23.26 : Is the flexibility regarding the date used for the date of action taken restricted?922
    • Q 9.23.27 : What is the date of action taken for a construction/ permanent loan that is originated?922
    • Q 9.23.28 : What is the date of action taken for an application that is approved but not accepted?922
    • Q 9.23.29 : What is the date of action taken for other actions?923
    • Q 9.23.30 : What are the property location categories?923
    • Q 9.23.31 : What are the requirements if a property is not located in a metropolitan area in which an institution has or is deemed to have a home or branch office, or is not located in any metropolitan area?924
    • Q 9.23.32 : What are the property reporting requirements for purchased loans?924
    • Q 9.23.33 : What is the special property location reporting requirement for banks and savings associations?924
    • Q 9.23.34 : What is the property location reporting requirement for census tracts with lower populations?925
    • Q 9.23.35 : What are the property location reporting requirements for preapprovals that are denied or approved but not accepted?925
    • Q 9.23.36 : What is reported for property location if the potential site of a mobile or manufactured home is not known?925
    • Q 9.23.37 : What property location is reported if there are multiple properties?925
    • Q 9.23.38 : What are the types of purchaser categories?926
    • Q 9.23.39 : When is purchaser information reported?926
    • Q 9.23.40 : What if there is more than one purchaser?926
    • Q 9.23.41 : What are the rate spread reporting requirements?926
    • Q 9.23.42 : What is the average prime offer rate?927
    • Q 9.23.43 : What is a comparable transaction?927
    • Q 9.23.44 : What is the date the interest rate is set?928
    • Q 9.23.45 : Is the rate spread reported for all loans?928
    • Q 9.23.46 : What are the HOEPA status categories?928
    • Q 9.23.47 : What applications are subject to HOEPA status reporting?928
    • Q 9.23.48 : What are the lien status categories?929
    • Q 9.23.49 : What applications are subject to lien status reporting?929
    • Q 9.23.50 : How is lien status determined?929
    • Q 9.23.51 : May an institution rely on other information to determine lien status for an originated loan?929
    • Q 9.23.52 : May an institution consider other factors to report lien status for an application that does not result in an originated loan?930
  • Q 9.24 : What optional data may be collected?930
    • Q 9.24.1 : What are the reasons for denial categories?930
    • Q 9.24.2 : Is reporting the reasons for denial optional for all institutions?932
  • Q 9.25 : Are certain institutions subject to additional loan data collection requirements?932
  • Q 9.26 : Which institution reports a brokered or correspondent loan?932
    • Q 9.26.1 : What are a “broker” and an “investor” for purposes of HMDA broker rule?933
    • Q 9.26.2 : How does the broker rule work in practice?933
    • Q 9.26.3 : What if a broker uses an investor’s underwriting criteria?933
  • Q 9.27 : What if an institution purchases a participation interest in a loan?934
  • Q 9.28 : Is there software available for recording of HMDA data?934
  • Q 9.29 : Is there a standard format for the recording and reporting of data under HMDA?934
    • Q 9.29.1 : What is a Loan/Application Register?935
  • Q 9.30 : How often must an institution’s Loan/Application Register be updated?935
    • Q 9.30.1 : Are there institutions subject to a more frequent updating requirement?935
  • Q 9.31 : May only a single Loan/Application Register be used?936
  • Q 9.32 : Must entries be grouped in a particular manner on a Loan/Application Register?936
  • Q 9.33 : For what calendar year must a loan or loan application be reported in an institution’s Loan/Application Register?936
  • Q 9.34 : When is a loan or loan application reported if the application is received in one calendar year and final action is taken in the following calendar year?936
  • Q 9.35 : When must an institution’s Loan/Application Register be submitted to the government?937
    • Q 9.35.1 : May a Loan/Application Register be submitted in paper or electronic format?937
    • Q 9.35.2 : Who must certify an institution’s Loan/Application Register?937
  • Q 9.36 : Which government agency receives an institution’s Loan/Application Register?937
    • Q 9.36.1 : What government agency receives the Loan/Application Register of a subsidiary of a bank or savings association?938
  • Q 9.37 : Can HMDA data be resubmitted?938
  • Q 9.38 : What does the government do with an institution’s Loan/Application Register?938
  • Q 9.39 : What does the government do with HMDA data in general?939
  • Q 9.40 : What are the public disclosure requirements for an institution’s HMDA data?939
    • Q 9.40.1 : What are the public disclosure requirements for an institution’s HMDA disclosure statement?939
    • Q 9.40.2 : For what length of time must a HMDA disclosure statement be made available to the public?940
    • Q 9.40.3 : Must a HMDA disclosure statement be made available to the public in any particular form?940
    • Q 9.40.4 : What are the public disclosure requirements for an institution’s Loan/Application Register?940
    • Q 9.40.5 : What data must be removed from an institution’s Loan/Application Register prior to public disclosure?940
    • Q 9.40.6 : What applications must be included in a Loan/Application Register requested by a member of the public?940
    • Q 9.40.7 : Must the data in a modified Loan/Application Register be presented in any particular order?941
    • Q 9.40.8 : For what length of time must a modified Loan/Application Register be made available to the public?941
    • Q 9.40.9 : Must a Loan/Application Register be made available to the public in any particular form?941
    • Q 9.40.10 : During what times must an institution’s HMDA data be made available at a home or branch office?941
    • Q 9.40.11 : May an institution impose any charge in connection with providing HMDA data?941
    • Q 9.40.12 : Must an institution provide public notice of the availability of its HMDA data?941
  • Q 9.41 : What are the record retention requirements for HMDA data?942
    • Q 9.41.1 : What are the record retention requirements for an institution’s HMDA disclosure statement?942
    • Q 9.41.2 : What are the record retention requirements for an institution’s Loan/Application Register?942
  • Q 9.42 : Who can enforce HMDA?942
  • Q 9.43 : What is the potential liability for HMDA violations?943
    • Q 9.43.1 : Are all reporting errors violations?943
    • Appendix 9A : Regulation C, Appendix B951
    • Appendix 9B : Loan/Application Register953
    • Appendix 9C : Loan/Application Register Code Sheet955
    • Appendix 9D : Regulation C, Appendix A957
    • Appendix 9E : Checklist for Person Completing the LAR967
    • Appendix 9F : Checklist for Certifying Officer969
    • Appendix 9G : Home Mortgage Disclosure Act Notice971
Chapter 10: Fair Debt Collection Practices Act (FDCPA) Reid Herlihy ~ Patton Boggs LLP
  • Q 10.1 : What is the purpose of FDCPA?974
  • Q 10.2 : What is the scope of FDCPA?974
  • Q 10.3 : What are sources for guidance and interpretations of FDCPA?975
    • Q 10.3.1 : What are the FTC formal advisory opinions?975
    • Q 10.3.2 : What is the FTC Staff Commentary on FDCPA?976
    • Q 10.3.3 : What are the FTC informal staff opinion letters?976
  • Q 10.4 : Does FDCPA preempt state law?977
  • Q 10.5 : Basically, what types of debts are covered by FDCPA?978
  • Q 10.6 : Basically, what collection activities are covered by FDCPA?978
  • Q 10.7 : What basic principles are applied by courts in construing FDCPA?978
  • Q 10.8 : What is a “communication”?979
  • Q 10.9 : What is a “consumer”?980
  • Q 10.10 : What is the special definition of “consumer” for certain purposes?980
  • Q 10.11 : What is a “creditor”?981
  • Q 10.12 : What is a “debt”?981
  • Q 10.13 : Must a debt be delinquent or in default for FDCPA to apply?982
  • Q 10.14 : What is a “debt collector”?983
    • Q 10.14.1 : What is a person whose principal business purpose is the collection of debt?984
    • Q 10.14.2 : What is a person who regularly collects debts owed to another?984
    • Q 10.14.3 : Is a creditor using an alternate name to collect its own debts a debt collector?985
    • Q 10.14.4 : Is a party who purchases a debt a debt collector?985
    • Q 10.14.5 : Is a lawyer collecting a debt subject to FDCPA?986
  • Q 10.15 : What is “location information”?986
  • Q 10.16 : What is a “State”?986
  • Q 10.17 : Are any parties expressly excluded from being considered a debt collector?987
  • Q 10.18 : What is the debt collector exclusion for an officer or employee of a creditor?987
  • Q 10.19 : What is the debt collector exclusion for a party that collects debts of an affiliate?988
  • Q 10.20 : What is the debt collector exclusion for legal process?988
  • Q 10.21 : What is the debt collector exclusion for nonprofit organizations?988
  • Q 10.22 : What is the debt collector exclusion for activity incidental to a bona fide fiduciary obligation or escrow arrangement?989
  • Q 10.23 : What is the debt collector exclusion for originated debts?989
  • Q 10.24 : What is the debt collector exclusion for acquired debts?990
    • Q 10.24.1 : Does FDCPA establish when a debt is considered to be in default for purposes of the acquired debt exclusion or the creditor exclusion?990
  • Q 10.25 : What is the debt collector exclusion for debts obtained by a secured party?991
  • Q 10.26 : What is the exclusion for government debt collection practices?991
  • Q 10.27 : What is the debt collector exception for private bad check enforcement programs?991
  • Q 10.28 : Are there restrictions on communications by a debt collector with the consumer or third parties?992
  • Q 10.29 : What is the special definition of “consumer” for purposes of communications in connection with debt collection?992
  • Q 10.30 : What are the general requirements for communications with a consumer in connection with debt collection?993
  • Q 10.31 : What is the prohibition against communications with the consumer at an unusual or inconvenient time or place?993
  • Q 10.32 : What is the prohibition against communications with the consumer if the consumer is represented by an attorney?994
  • Q 10.33 : What is the prohibition against communications at the consumer’s place of employment if the employer prohibits such communication?995
  • Q 10.34 : What are the general prohibitions against communications with third parties in connection with debt collection?996
  • Q 10.35 : What is the exception to the prohibition for communications with third parties to obtain location information?997
    • Q 10.35.1 : What is “location information”?997
    • Q 10.35.2 : What are the requirements for acquiring location information about the consumer?997
  • Q 10.36 : When must a debt collector cease communicating with a consumer in connection with debt collection?999
    • Q 10.36.1 : What specific communications are permitted after a consumer instructs a debt collector to cease communication?1000
  • Q 10.37 : Are there restrictions on the harassment or abuse of a consumer by a debt collector in connection with the collection of a debt?1000
  • Q 10.38 : What is the general prohibition against harassment or abuse in connection with the collection of a debt?1000
  • Q 10.39 : What specific harassing or abusive acts are prohibited in connection with the collection of a debt?1002
    • Q 10.39.1 : What is the prohibition against the use or threat of violence or criminal means?1002
    • Q 10.39.2 : What is the prohibition against the use of obscene or profane language?1002
    • Q 10.39.3 : What is the prohibition against the publication of lists of consumers who refuse to pay debts?1003
    • Q 10.39.4 : What is the prohibition against advertising a debt for sale?1003
    • Q 10.39.5 : What is the prohibition against repeated or continuous contact?1003
    • Q 10.39.6 : What is the prohibition against telephone contact without disclosing the caller’s identity?1004
  • Q 10.40 : Are there prohibitions against false or misleading representations by a debt collector in connection with the collection of a debt?1005
  • Q 10.41 : What is the general prohibition against false or misleading representations in connection with the collection of a debt?1005
  • Q 10.42 : What specific false or misleading representations are prohibited in connection with the collection of a debt?1006
  • Q 10.43 : What is the prohibition against the failure to disclose the purpose of communications and that the person is a debt collector?1007
    • Q 10.43.1 : Is the so-called “Miranda warning” in fact required for only initial communications?1009
  • Q 10.44 : What is the prohibition against misrepresenting government affiliation in connection with the collection of a debt?1010
  • Q 10.45 : What is the prohibition against misrepresenting the debt or what the debt collector may receive in connection with the collection of a debt?1010
  • Q 10.46 : What is the prohibition against misrepresenting that an individual is an attorney in connection with the collection of a debt?1012
  • Q 10.47 : What is the prohibition against assertions that nonpayment of a debt will result in arrest, imprisonment, garnishment or similar consequences?1012
  • Q 10.48 : What is the prohibition against assertions that actions will be taken that are not legally permitted or not intended?1013
  • Q 10.49 : What is the prohibition against asserting that a sale, referral or other transfer of a debt will result in certain adverse consequences?1014
  • Q 10.50 : What is the prohibition against misrepresenting that the consumer committed a crime?1015
  • Q 10.51 : What is the prohibition against the communication of false credit information?1015
  • Q 10.52 : What is the prohibition against communications that falsely represent government authorization or action?1016
  • Q 10.53 : What is the prohibition against false representations or deceptive means to collect debt or obtain information about the consumer?1016
  • Q 10.54 : What is the prohibition against misrepresenting that debts have been turned over to innocent purchasers for value?1017
  • Q 10.55 : What is the prohibition against misrepresenting that documents are legal process?1017
  • Q 10.56 : What is the prohibition against misrepresenting that documents are not legal process or do not require consumer action?1018
  • Q 10.57 : What is the prohibition against the use of a name other than the true name of the company?1018
    • Q 10.57.1 : Does the prohibition regarding use of other than a company’s true name apply to bona fide d/b/a names?1019
  • Q 10.58 : What is the prohibition against misrepresenting that a party is or works for a consumer reporting agency?1019
  • Q 10.59 : Are there prohibitions against unfair or unconscionable conduct by a debt collector in connection with the collection of a debt?1020
  • Q 10.60 : What is the general prohibition on the use of unfair or unconscionable means to collect a debt?1020
  • Q 10.61 : What specific practices are prohibited in connection with the collection of a debt?1021
  • Q 10.62 : What is the prohibition against unauthorized charges?1022
  • Q 10.63 : What is the prohibition against the acceptance of postdated checks or similar payment means?1022
  • Q 10.64 : What is the prohibition against the solicitation of postdated checks or similar payment means?1023
  • Q 10.65 : What is the prohibition against the depositing of postdated checks or similar payment means?1023
  • Q 10.66 : What is the prohibition against causing charges to a consumer for communications?1023
  • Q 10.67 : What is the prohibition against dispossession or threats of dispossession and related threats without the legal right or intention?1024
  • Q 10.68 : What is the prohibition against content on the exterior of communications?1025
  • Q 10.69 : Are there requirements for a debt collector to validate a debt it is attempting to collect?1026
  • Q 10.70 : What are the debt validation notice requirements for a debt collector?1027
  • Q 10.71 : How is the debt validation notice requirement triggered?1027
  • Q 10.72 : How must the notification be provided?1028
  • Q 10.73 : What format is required for the notification?1028
  • Q 10.74 : What content is required for the notification?1029
  • Q 10.75 : What are the requirements for a debt collector if a consumer disputes a debt?1029
  • Q 10.76 : What are the requirements when a consumer who owes multiple debts makes a single payment to a debt collector?1031
  • Q 10.77 : Are there restrictions regarding legal actions brought by a debt collector to collect a debt?1031
  • Q 10.78 : What restrictions apply to legal actions initiated against consumers by debt collectors?1032
  • Q 10.79 : Are there prohibitions regarding the use of deceptive forms by a debt collector in connection with the collection of a debt?1033
  • Q 10.80 : What are the prohibitions associated with forms that misrepresent the involvement of a third party in collecting debt?1033
  • Q 10.81 : Can FDCPA apply to loss mitigation efforts by third parties?1034
  • Q 10.82 : How may FDCPA be enforced?1034
  • Q 10.83 : What is the potential liability for failing to comply with FDCPA?1034
  • Q 10.84 : What government agencies may enforce FDCPA?1036
  • Appendix 10A : FTC Staff Commentary on the FDCPA1043
Chapter 11: FHA-Insured Mortgage Loans Timothy A Vanderver ~ Patton Boggs LLP
Catherine V Buell ~ Patton Boggs LLP
  • Q 11.1 : What is FHA’s role in the housing finance market?1078
  • Q 11.2 : What will this chapter cover?1079
  • Q 11.3 : Exactly what does FHA do?1079
    • Q 11.3.1 : What types of mortgage loans does FHA insure?1079
  • Q 11.4 : Which lenders’ mortgage loans will FHA insure?1080
    • Q 11.4.1 : How does a lender become an FHA-approved mortgage lender?1080
    • Q 11.4.2 : What is a loan correspondent? What does it do?1081
    • Q 11.4.3 : What is required for a lender to maintain its status as an FHA-approved mortgagee?1082
    • Q 11.4.4 : What is an approved Title I lender?1082
  • Q 11.5 : What are the eligibility criteria for an FHA-insured mortgage loan?1082
    • Q 11.5.1 : What are the maximum mortgage limits for an FHA-insured loan?1083
  • Q 11.6 : Are there any special servicing requirements?1083
  • Q 11.7 : How does a lender know how it is required to operate and what is required to make FHA-insured mortgage loans?1084
  • Q 11.8 : What enforcement measures can HUD take against lenders who violate FHA rules?1085
    • Q 11.8.1 : What is the Mortgagee Review Board and what does it do?1085
    • Q 11.8.2 : What is Credit Watch and why does it matter to an FHA-approved lender?1086
    • Q 11.8.3 : What other sanctions can HUD impose on a lender and its officers and employees?1087
  • Q 11.9 : What are FHA’s programs for insuring single-family mortgage loans?1088
  • Q 11.10 : What requirements must be satisfied for a dwelling to be eligible for FHA mortgage insurance?1088
    • Q 11.10.1 : Are there limitations on the purchase price of a dwelling or on the maximum mortgage amount if a loan is to be insured by FHA?1089
    • Q 11.10.2 : Are there income limitations for prospective purchasers?1089
    • Q 11.10.3 : What are the credit requirements for borrower eligibility?1089
    • Q 11.10.4 : What are the downpayment requirements for FHA-insured mortgage loans?1090
    • Q 11.10.5 : Is downpayment assistance to a purchaser permitted?1090
    • Q 11.10.6 : What are seller concessions?1091
  • Q 11.11 : Exactly what insurance coverage does FHA provide?1091
    • Q 11.11.1 : What does FHA insurance cost?1092
  • Q 11.12 : What limitations are placed on fees charged to the borrower?1092
  • Q 11.13 : How is an FHA-insured mortgage obtained?1093
  • Q 11.14 : How do appraisals work for FHA-insured mortgage loans?1093
  • Q 11.15 : When was the section 203(k) loan program started and what is its purpose?1093
    • Q 11.15.1 : How do section 203(k) loans work?1094
    • Q 11.15.2 : What are the mortgage amount limits under the 203(k) program?1094
    • Q 11.15.3 : What is the application and lending process for a section 203(k) loan?1095
    • Q 11.15.4 : What types of properties are eligible for a section 203(k) loan?1095
    • Q 11.15.5 : What are the rules under the section 203(k) program for new construction and demolition of existing structures?1095
    • Q 11.15.6 : May section 203(k) loans be used for condominiums and “mixed use” residential properties?1096
    • Q 11.15.7 : What are the requirements/standards for the improvements under the section 203(k) program?1097
    • Q 11.15.8 : What are the cost efficiency/energy conservation standards for the section 203(k) program?1098
    • Q 11.15.9 : What are the section 203(k) program requirements for smoke detectors?1098
    • Q 11.15.10 : What other property standards apply under the section 203(k) program?1098
  • Q 11.16 : How and when is the property’s value assessed under the section 203(k) program?1098
  • Q 11.17 : Are there restrictions on the interest rate and other fees under the section 203(k) program?1099
  • Q 11.18 : Are any restrictions placed on the borrower once the construction is completed?1101
  • Q 11.19 : What property requirements does FHA impose for manufactured housing?1101
    • Q 11.19.1 : Does FHA impose any site requirements for manufactured housing?1102
  • Q 11.20 : Is there a sales price limit or maximum mortgage amount for manufactured housing?1102
  • Q 11.21 : Are there income limitations and credit requirements for prospective purchasers of manufactured housing?1102
  • Q 11.22 : What insurance does FHA provide for manufactured housing loans?1102
    • Q 11.22.1 : What does this insurance cost?1103
  • Q 11.23 : What is the “construction to permanent” program for manufactured housing?1103
  • Q 11.24 : Will FHA insure condominiums?1103
    • Q 11.24.1 : What are the differences between the section 234(c) program and the basic section 203(b) single-family mortgage insurance program?1103
  • Q 11.25 : Does HUD insure reverse mortgages?1104
    • Q 11.25.1 : How do HECMs work?1105
    • Q 11.25.2 : What are the borrower eligibility requirements for HECMs?1105
    • Q 11.25.3 : What are the property requirements for HECMs?1105
  • Q 11.26 : How are HECMs processed and underwritten?1106
  • Q 11.27 : What are the charges applicable to HECMs?1106
  • Q 11.28 : How can a homeowner default on a HECM Loan?1106
  • Q 11.29 : Are there any other FHA single-family programs?1106
  • Q 11.30 : What is Ginnie Mae?1107
    • Q 11.30.1 : What does Ginnie Mae do?1107
    • Q 11.30.2 : Why does Ginnie Mae guarantee mortgage-backed securities?1108
    • Q 11.30.3 : Whose securities are eligible for guarantee by Ginnie Mae?1108
  • Q 11.31 : What are the requirements to become a Ginnie Mae–approved Issuer/Servicer?1108
  • Q 11.32 : Exactly what does an Issuer/Servicer do to obtain the Ginnie Mae guarantee?1109
  • Q 11.33 : What can lenders who are not approved Issuers/Servicers do to take advantage of the Ginnie Mae guarantee program?1110
  • Q 11.34 : What is required of an Issuer/Servicer for a Ginnie Mae MBS in addition to servicing the FHA loan?1110
Chapter 12: The Bank Secrecy Act and Anti-Money Laundering Compliance Carol R. Van Cleef ~ Patton Boggs LLP
  • Q 12.1 : Is money laundering/terrorist financing a concern in residential mortgage lending?1118
  • Q 12.2 : Does the residential mortgage lending industry have any legal obligation to prevent money laundering, financing of terrorism or conduct of other financial crimes?1119
  • Q 12.3 : Which laws apply to the industry and which ones do not?1119
  • Q 12.4 : What is the United States’ mortgage fraud initiative?1120
  • Q 12.5 : What steps can the industry take to prevent the abuse?1121
  • Q 12.6 : What is the role of an AML compliance program?1122
  • Q 12.7 : What is money laundering?1123
    • Q 12.7.1 : What is “placement”?1123
    • Q 12.7.2 : What is “layering”?1123
    • Q 12.7.3 : What is “integration”?1123
    • Q 12.7.4 : How are the lines between these phases blurring?1123
  • Q 12.8 : What is the difference between fraud and money laundering?1124
  • Q 12.9 : Are terrorist financing and money laundering the same thing?1125
  • Q 12.10 : How do terrorist financing and money laundering differ?1125
  • Q 12.11 : Can money be laundered in residential mortgage transactions?1125
  • Q 12.12 : Can residential mortgage lending be a source for financing terrorist activity?1126
  • Q 12.13 : How can the industry protect itself from being abused for money laundering or terrorist financing purposes?1126
  • Q 12.14 : What is the difference between AML compliance, the Patriot Act and the Bank Secrecy Act (BSA)?1126
  • Q 12.15 : What is the difference between AML compliance and OFAC compliance?1127
  • Q 12.16 : What laws apply and to whom?1128
    • Q 12.16.1 : Who is subject to BSA?1128
    • Q 12.16.2 : Who is subject to OFAC?1129
    • Q 12.16.3 : What are the federal money laundering criminal statutes?1130
    • Q 12.16.4 : What federal laws prohibit material support to terrorists?1131
    • Q 12.16.5 : What are the Federal Sentencing Guidelines and how do they apply to the residential mortgage lending industry?1131
    • Q 12.16.6 : Do state laws matter?1131
  • Q 12.17 : Who needs an AML compliance program?1132
  • Q 12.18 : Is a separate OFAC compliance program required?1133
  • Q 12.19 : What is included in an AML compliance program?1133
    • Q 12.19.1 : What kind of AML compliance program is required by BSA?1134
    • Q 12.19.2 : How do AML compliance programs outlined by the Federal Sentencing Guidelines differ?1134
    • Q 12.19.3 : Which AML compliance program requirements should mortgage lending industry participants follow?1134
    • Q 12.19.4 : How does an OFAC compliance program differ?1135
  • Q 12.20 : What are the differences between what is required by law and what are best practices for an AML compliance program?1135
  • Q 12.21 : What types of policies, procedures and controls are needed to prevent money laundering and terrorist financing?1135
  • Q 12.22 : What is the role of the AML compliance officer?1136
  • Q 12.23 : Who needs AML training in our organization and how often?1136
  • Q 12.24 : What is an independent audit or review?1137
  • Q 12.25 : What is the first step in developing an AML compliance program?1138
  • Q 12.26 : What is the next step in developing an AML compliance program?1139
  • Q 12.27 : What is a risk assessment in connection with an AML compliance program?1139
  • Q 12.28 : What is the role of a risk assessment?1139
  • Q 12.29 : Why should a risk assessment be conducted?1140
  • Q 12.30 : Who should conduct the risk assessment?1140
  • Q 12.31 : When should a risk assessment be conducted?1141
  • Q 12.32 : How should the risk assessment be conducted?1141
  • Q 12.33 : How is the risk assessment used?1141
  • Q 12.34 : Who is responsible for AML compliance in residential mortgage lending?1142
  • Q 12.35 : Is everyone in residential mortgage lending required to have an AML compliance program?1143
  • Q 12.36 : What AML requirements are depository institutions subject to?1143
  • Q 12.37 : Under what circumstances may an organization be required to have an AML compliance program?1144
  • Q 12.38 : Can an organization rely on the AML compliance program of another entity?1144
  • Q 12.39 : What has FinCEN proposed for non-bank residential mortgage lenders and originators?1145
  • Q 12.40 : Will an AML compliance program be required for non-bank residential mortgage lenders and originators?1145
    • Q 12.40.1 : What parties in mortgage lending transactions would be subject to the AML compliance program requirement for non-bank residential mortgage lenders and originators?1145
    • Q 12.40.2 : What would the AML compliance program need to include?1146
    • Q 12.40.3 : What kinds of policies, procedures and internal controls would be needed?1146
    • Q 12.40.4 : What would be the responsibilities of the AML compliance officer?1147
    • Q 12.40.5 : Who would need to be trained and what type of training would be needed?1147
    • Q 12.40.6 : What is independent testing and how often would it need to be performed?1147
    • Q 12.40.7 : What would be the consequences if a non-bank residential mortgage lender or originator did not develop an AML compliance program?1148
    • Q 12.40.8 : How much time would a non-bank residential mortgage lender or originator have to develop and implement the program?1148
    • Q 12.40.9 : Would suspicious activity reporting be required?1148
    • Q 12.40.10 : What types of suspicious transactions would be reported?1148
    • Q 12.40.11 : Would a non-bank residential mortgage lender or originator need to report a transaction as suspicious if another entity is filing a report?1149
    • Q 12.40.12 : What would a non-bank residential mortgage lender or originator need to file?1149
    • Q 12.40.13 : Would a non-bank residential mortgage lender or originator need to immediately notify law enforcement or FinCEN of a suspicious transaction?1150
    • Q 12.40.14 : If a non-bank residential mortgage lender or originator notified law enforcement and FinCEN, would it still need to file a SAR?1150
    • Q 12.40.15 : What records would a non-bank residential mortgage lender or originator need to maintain and for how long?1150
    • Q 12.40.16 : Who would have access to the supporting documents?1151
    • Q 12.40.17 : Could a non-bank residential mortgage lender or originator disclose that it filed a SAR?1151
    • Q 12.40.18 : Would a non-bank residential mortgage lender or originator have to do anything different than other financial institutions when reporting suspicious activity?1152
    • Q 12.40.19 : What other requirements of BSA will apply?1152
  • Q 12.41 : What BSA recordkeeping requirements may apply if AML compliance program requirements are extended to non-bank residential mortgage lenders and originators?1152
  • Q 12.42 : What reporting requirements are required by law?1153
    • Q 12.42.1 : When is a Currency Transaction Report (CTR) filed?1153
    • Q 12.42.2 : How does a CTR differ from a Form 8300?1153
    • Q 12.42.3 : What determines whether an organization must use the CTR or the Form 8300?1153
  • Q 12.43 : What should an organization do if it finds suspicious activity?1154
  • Q 12.44 : What are an organization’s business partners required to do?1154
  • Q 12.45 : What can business partners ask an organization to do?1155
  • Q 12.46 : Can an organization find out if a business partner files a SAR on one of the organization’s customers?1155
  • Q 12.47 : How can an organization share information on suspected activity with its business partners or other parties?1155
  • Q 12.48 : Does an organization report suspicious activity directly to law enforcement?1155
  • Q 12.49 : Does an organization breach privacy laws when it provides information to law enforcement?1156
  • Q 12.50 : What are the common red flags for money laundering or terrorist financing in the residential real estate industry?1156
  • Q 12.51 : Is fraud reported as a suspicious activity even if it is not money laundering?1157
  • Q 12.52 : Where can additional red flags be found?1157
Chapter 13: The Treatment of Residential Mortgages in Bankruptcy Michael P Richman ~ Patton Boggs LLP
Anthony Nguyen ~ Patton Boggs LLP
  • Q 13.1 : Is bankruptcy governed by state or federal law?1166
    • Q 13.1.1 : What is Title 11 of the United States Code?1166
    • Q 13.1.2 : What are the Federal Rules of Bankruptcy Procedure?1166
    • Q 13.1.3 : How does federal bankruptcy law rely on state law?1167
  • Q 13.2 : What are the different “chapters” of bankruptcy?1167
  • Q 13.3 : What are voluntary versus involuntary bankruptcy cases?1167
  • Q 13.4 : What is the “estate”?1168
  • Q 13.5 : What is the automatic stay?1168
    • Q 13.5.1 : Who is covered by the automatic stay?1169
    • Q 13.5.2 : When does the automatic stay begin?1169
    • Q 13.5.3 : How long does the automatic stay last?1169
    • Q 13.5.4 : What actions are prohibited by the automatic stay?1170
    • Q 13.5.5 : What effect does bankruptcy have on a pending foreclosure action?1170
    • Q 13.5.6 : What are the penalties for violating the automatic stay?1171
  • Q 13.6 : How can one be excused, or “seek relief” from the automatic stay?1171
    • Q 13.6.1 : What is “adequate protection”?1171
  • Q 13.7 : Can repeat bankruptcy filers lose certain automatic stay protections?1172
  • Q 13.8 : What happens when the debtor still has equity in the property?1172
    • Q 13.8.1 : What are the differences between a sale of property during bankruptcy and through a plan?1173
  • Q 13.9 : What are sales “free and clear” of interests?1173
    • Q 13.9.1 : Under what circumstances might a court approve or not approve a sale of property during bankruptcy?1173
    • Q 13.9.2 : How will such a sale of property occur?1174
  • Q 13.10 : What is a “credit bid”?1174
  • Q 13.11 : How does one assert their claim in a bankruptcy case?1174
    • Q 13.11.1 : Do I need to file a “proof of claim”?1174
    • Q 13.11.2 : When do I need to file my “proof of claim”?1175
  • Q 13.12 : What is the section 341 “meeting of the creditors”?1175
  • Q 13.13 : How are claimants treated in bankruptcy?1176
    • Q 13.13.1 : How do secured and unsecured claimants differ?1177
    • Q 13.13.2 : What is an administrative claim?1177
    • Q 13.13.3 : Is my secured claim eligible for post-petition interest?1177
  • Q 13.14 : How will the property securing my claim be valued?1178
  • Q 13.15 : What is a Chapter 7 case?1178
    • Q 13.15.1 : What is a “no asset” Chapter 7 case?1178
    • Q 13.15.2 : What is the Chapter 7 “abuse” test?1178
  • Q 13.16 : Who is the Chapter 7 trustee?1179
  • Q 13.17 : How are my rights as a secured creditor of residential real property affected in a Chapter 7 case?1179
  • Q 13.18 : What is the trustee’s “abandonment” of property?1180
  • Q 13.19 : How do the debtor’s “exemptions” affect a bankruptcy case?1180
  • Q 13.20 : What is the debtor’s “reaffirmation” of a prior debt?1181
  • Q 13.21 : What is the debtor’s option to “ride through” on a home mortgage?1182
  • Q 13.22 : How can I seek dismissal of the bankruptcy case?1183
  • Q 13.23 : Will the debtor’s Chapter 7 discharge affect my security interest?1183
  • Q 13.24 : What is a Chapter 13 case?1183
    • Q 13.24.1 : Who is limited from participating in a Chapter 13 case?1184
    • Q 13.24.2 : Are non-debtors covered by the automatic stay in a Chapter 13 case?1184
  • Q 13.25 : Who is the Chapter 13 trustee?1184
  • Q 13.26 : How are my rights as a secured creditor of residential real property affected in a Chapter 13 case?1185
  • Q 13.27 : What is the plan process under a Chapter 13 case?1186
    • Q 13.27.1 : Am I bound to the plan process, or can I seek stay relief?1186
    • Q 13.27.2 : Can creditors file competing Chapter 13 plans as they can in Chapter 11 (upon expiration or termination of exclusivity)?1187
    • Q 13.27.3 : What is the difference between “plan payments” and “post-petition” payments?1187
    • Q 13.27.4 : How long must a Chapter 13 plan last?1187
    • Q 13.27.5 : In what ways may a secured claim be treated in a Chapter 13 plan?1188
    • Q 13.27.6 : Do I vote in a Chapter 13 plan?1188
    • Q 13.27.7 : What are the confirmation requirements for a Chapter 13 plan?1189
  • Q 13.28 : What is a Chapter 13 “super-discharge”?1189
  • Q 13.29 : How can I seek conversion or dismissal of the bankruptcy case?1190
  • Q 13.30 : What is a Chapter 11 case?1190
  • Q 13.31 : Who takes the role of “trustee” in a Chapter 11 case?1190
  • Q 13.32 : When will I see a Chapter 11 case as a residential lender?1191
  • Q 13.33 : What is DIP financing?1191
    • Q 13.33.1 : Can post-petition financing prime my security interest?1192
  • Q 13.34 : How do Chapter 11 cases differ from Chapter 13 cases?1192
  • Q 13.35 : What is the “creditors’ committee”?1193
  • Q 13.36 : What is the Chapter 11 plan and the process it involves?1193
    • Q 13.36.1 : What is the “Disclosure Statement”?1193
    • Q 13.36.2 : How do I vote in favor of or against the plan?1194
    • Q 13.36.3 : What is plan “classification”?1194
    • Q 13.36.4 : What is “impairment”?1195
    • Q 13.36.5 : What is “cram down” in a Chapter 11 plan?1195
    • Q 13.36.6 : What is the “best interests test”?1196
    • Q 13.36.7 : What is the “indubitable equivalent”?1196
    • Q 13.36.8 : What is the Bankruptcy Code section 1111(b) election?1196
    • Q 13.36.9 : What are the requirements for the confirmation of a debtor’s plan?1197
    • Q 13.36.10 : What is the effect of confirmation?1198
  • Q 13.37 : How can I seek conversion or dismissal of the bankruptcy case?1198
  • Q 13.38 : What is a Chapter 12 case?1199
  • Q 13.39 : How does a Chapter 12 case differ from cases under the other chapters?1199
  • Q 13.40 : What are the trustee’s “avoidance powers”?1200
    • Q 13.40.1 : What is a “transfer”?1200
    • Q 13.40.2 : How is this avoidance power exercised?1200
    • Q 13.40.3 : What are the trustee’s “strong arm” lien avoidance powers?1200
    • Q 13.40.4 : How might defects in the security documentation affect my rights?1201
    • Q 13.40.5 : What is a preference?1202
    • Q 13.40.6 : What is the “preference period”?1203
    • Q 13.40.7 : What is an “insider”?1203
    • Q 13.40.8 : When is a transfer deemed to have occurred?1203
    • Q 13.40.9 : If I have financed a mortgage within the preference period, am I subject to liability?1204
    • Q 13.40.10 : How might late perfection or the lack of perfection affect my rights?1205
    • Q 13.40.11 : If the debtor has made payments towards his mortgage obligation during the preference period, are those avoidable by the trustee?1205
    • Q 13.40.12 : What is a fraudulent transfer?1205
Chapter 14: Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM) Lewis Goss ~ Patton Boggs LLP
  • Q 14.1 : What is the scope of CAN-SPAM?1216
  • Q 14.2 : What is “affirmative consent”?1216
  • Q 14.3 : What is a “commercial electronic mail message”?1217
  • Q 14.4 : What is a “dictionary attack”?1217
  • Q 14.5 : What is a “domain name”?1217
  • Q 14.6 : What is an “electronic mail address”?1217
  • Q 14.7 : What is an “electronic mail message”?1217
  • Q 14.8 : What is a “harvesting”?1218
  • Q 14.9 : What is “header information”?1218
  • Q 14.10 : What is “Internet access service”?1218
  • Q 14.11 : What does “materially” mean?1218
  • Q 14.12 : What is a “protected computer”?1219
  • Q 14.13 : What is a “recipient”?1219
  • Q 14.14 : What is a “routine conveyance”?1219
  • Q 14.15 : Who is a “sender”?1219
  • Q 14.16 : What is “sexually oriented material”?1220
  • Q 14.17 : What is “sexually explicit conduct”?1220
  • Q 14.18 : What is a “transactional or relationship message”?1220
  • Q 14.19 : What is a “valid physical postal address”?1221
  • Q 14.20 : What are the sources for guidance and interpretation of CAN-SPAM?1221
  • Q 14.21 : How does CAN-SPAM affect state law?1221
  • Q 14.22 : What is the relationship of CAN-SPAM to other federal laws?1222
  • Q 14.23 : How is the primary purpose of an electronic mail message determined?1222
  • Q 14.24 : What is required or prohibited for the header of commercial electronic mail?1223
    • Q 14.24.1 : When is header information materially false or misleading?1224
    • Q 14.24.2 : If the “from” line is accurate, may header information be considered materially false or materially misleading?1224
    • Q 14.24.3 : Can a message be relayed or retransmitted to disguise its origin?1224
    • Q 14.24.4 : What are the responsibilities of a person in connection with the promotion of their business by commercial email messages with materially false or materially misleading header information?1224
    • Q 14.24.5 : Are third parties responsible for violations of the prohibition against the promotion of a business in commercial email messages with materially false or materially misleading header information?1225
  • Q 14.25 : What is required or prohibited for the subject headings for commercial electronic mail?1226
  • Q 14.26 : What information must be included in a commercial electronic mail message?1226
  • Q 14.27 : What “opt out” mechanism must be included in a commercial electronic mail message?1226
    • Q 14.27.1 : Is there any requirement regarding the appearance in a commercial electronic mail message of the “opt out” mechanism?1227
    • Q 14.27.2 : How long must the “opt out” mechanism be available?1227
    • Q 14.27.3 : Is the requirement to keep the mechanism active violated if the “opt out” mechanism temporarily becomes unavailable?1227
    • Q 14.27.4 : Can the recipient be given the option to “opt out” of only specific message types?1227
    • Q 14.27.5 : Can a person be required to pay a fee, provide information or take other steps to “opt out”?1228
  • Q 14.28 : What must a sender do once a recipient makes an “opt out” request?1228
    • Q 14.28.1 : Does the prohibition against initiating commercial electronic mail messages also apply to a person acting on behalf of a sender?1228
    • Q 14.28.2 : Can a sender use the electronic mail address of a recipient who “opts out” for any purpose other than implementing the “opt out”?1229
  • Q 14.29 : Can a person send a commercial electronic mail message to an electronic mail address that was obtained through harvesting addresses or dictionary attacks?1229
  • Q 14.30 : Does CAN-SPAM apply to relayed or retransmitted messages?1229
  • Q 14.31 : Are there additional requirements for commercial electronic mail containing sexually oriented material?1230
  • Q 14.32 : Which federal agencies can enforce CAN-SPAM violations and under what authority may they do so?1230
  • Q 14.33 : May the states enforce CAN-SPAM violations?1230
    • Q 14.33.1 : Are there any limits on state action while federal action is pending?1231
    • Q 14.33.2 : What statutory damages are available in a state action?1231
    • Q 14.33.3 : What aggravated damages are available?1231
    • Q 14.33.4 : Is there a way to reduce the damages?1231
  • Q 14.34 : May Internet access service providers bring actions for violations of CAN-SPAM?1232
Chapter 15: Electronic Signatures in Global and National Commerce Act (ESIGN) Lewis Goss ~ Patton Boggs LLP
  • Q 15.1 : What is the purpose of ESIGN?1236
  • Q 15.2 : What is the scope of ESIGN?1236
  • Q 15.3 : Who is a “consumer”?1237
  • Q 15.4 : What is considered “electronic”?1237
  • Q 15.5 : What is an “electronic agent”?1237
  • Q 15.6 : What is an “electronic record”?1237
  • Q 15.7 : What is an “electronic signature”?1237
  • Q 15.8 : What is a “federal regulatory agency”?1237
  • Q 15.9 : What is “information”?1238
  • Q 15.10 : Who is a “person”?1238
  • Q 15.11 : What is a “record”?1238
  • Q 15.12 : What is a “transaction”?1238
  • Q 15.13 : What are the sources for guidance and interpretation of the ESIGN Act?1238
    • Q 15.13.1 : What are the limits on federal and state regulatory agency interpretation authority?1239
  • Q 15.14 : Does ESIGN preempt state laws, statutes and regulations?1239
    • Q 15.14.1 : May a state law, statute, or regulation modify, limit or supersede ESIGN?1239
    • Q 15.14.2 : What is the Uniform Electronic Transactions Act?1240
  • Q 15.15 : What is the general rule of ESIGN?1240
  • Q 15.16 : Are there additional requirements for electronic records provided to consumers?1240
    • Q 15.16.1 : Is a contract unenforceable if consent or confirmation of consent of the consumer is not obtained in accordance with ESIGN?1242
    • Q 15.16.2 : What are the consequences if the requirements to obtain consent or confirmation of consent after a change in hardware or software are not followed?1242
  • Q 15.17 : How does withdrawal of consent by a consumer to receive electronic records affect past and future electronic records?1242
    • Q 15.17.1 : When is the withdrawal of consent by a consumer to receive electronic records effective?1242
  • Q 15.18 : Does ESIGN affect the content or timing requirements applicable to disclosures or other records required by other laws?1243
  • Q 15.19 : Does ESIGN affect the proximity requirements for disclosures or other records required by other laws?1243
  • Q 15.20 : How does ESIGN affect verification or acknowledgment requirements?1243
  • Q 15.21 : How does ESIGN affect notary or acknowledgment requirements?1243
  • Q 15.22 : Do electronic records satisfy legal requirements to retain contracts or other records?1244
  • Q 15.23 : Is an electronic record considered an original copy?1244
  • Q 15.24 : Can a federal or state regulatory agency require that records be maintained in paper form?1244
  • Q 15.25 : Can an electronic record satisfy a check retention requirement?1245
  • Q 15.26 : What is the result if an electronic record is not in a form that is capable of being retained and accurately reproduced?1245
  • Q 15.27 : Is the enforceability of an electronic record affected if an electronic agent is used in the formation, creation or delivery of the record?1245
  • Q 15.28 : Are oral communications covered under ESIGN?1245
  • Q 15.29 : Does ESIGN apply to the business of insurance?1246
  • Q 15.30 : Does ESIGN apply to a foreclosure or related notice?1246
  • Q 15.31 : What other types of documents and records are not subject to ESIGN?1246
Chapter 16: Fair Labor Standards Act (FLSA) Douglas B Mishkin ~ Patton Boggs LLP
  • Q 16.1 : What is the purpose of the FLSA?1252
  • Q 16.2 : Who administers the FLSA?1252
  • Q 16.3 : Does the FLSA preempt state law?1252
  • Q 16.4 : Who is an “employer”?1252
  • Q 16.5 : Who is an “employee”?1253
  • Q 16.6 : Who is not an employee?1253
  • Q 16.7 : What does the FLSA require?1254
  • Q 16.8 : What does “suffered or permitted to work” mean?1254
  • Q 16.9 : What is included in “hours worked”?1255
  • Q 16.10 : What is the de minimis rule?1256
  • Q 16.11 : How is overtime calculated?1256
    • Q 16.11.1 : What is the “regular rate”?1256
    • Q 16.11.2 : What is a “workweek”?1257
    • Q 16.11.3 : What is the “fluctuating workweek”?1257
    • Q 16.11.4 : What is a “Belo plan”?1258
    • Q 16.11.5 : What is “compensatory time off”?1258
  • Q 16.12 : Are there exemptions from the FLSA requirements?1258
    • Q 16.12.1 : What is the “administrative” exemption?1259
    • Q 16.12.2 : What is the Department of Labor’s position on the applicability of the administrative exemption to loan officers?1259
    • Q 16.12.3 : What is the “professional” exemption?1261
    • Q 16.12.4 : What is the “executive” exemption?1261
    • Q 16.12.5 : What is the “computer” exemption?1261
    • Q 16.12.6 : What is the “outside sales” exemption?1262
    • Q 16.12.7 : What is the “highly compensated employee” exemption?1263
  • Q 16.13 : What is the good faith reliance defense to liability?1263
  • Q 16.14 : What is the Statute of Limitations?1264
  • Q 16.15 : What may a successful plaintiff recover?1264
  • Q 16.16 : Who may be sued?1265
  • Q 16.17 : Are there recordkeeping requirements under the FLSA?1265
  • Q 16.18 : Does the FLSA prohibit retaliation against an employee?1265
  • Appendix 16A : DOL Administrator’s Interpretation No. 2010-11269
  • Appendix 16B : FLSA 2006-311279
Chapter 17: Consumer Privacy and Data Security Deborah M Lodge ~ Patton Boggs LLP
Jason Fiebig ~ Patton Boggs LLP
  • Q 17.1 : What is the purpose of federal consumer privacy and data security laws?1288
  • Q 17.2 : What is the scope of federal consumer privacy and data security laws?1289
  • Q 17.3 : Do the federal consumer privacy and data security laws preempt state law?1290
  • Q 17.4 : Why should a business be concerned about privacy?1290
  • Q 17.5 : What businesses need to be concerned about privacy?1290
  • Q 17.6 : What is the Gramm-Leach-Bliley Act (GLBA)?1291
  • Q 17.7 : What is the Fair Credit Reporting Act (FCRA)?1291
    • Q 17.7.1 : What is the Fair and Accurate Credit Transactions Act (FACTA)?1292
  • Q 17.8 : What is the Health Insurance Portability and Accountability Act (HIPAA)?1292
  • Q 17.9 : What is the Health Information Technology for Economic and Clinical Health Act (HITECH)?1292
  • Q 17.10 : What is the FTC’s health breach notification rule?1293
  • Q 17.11 : What is the Children’s Online Privacy Protection Act (COPPA)?1293
  • Q 17.12 : What is the Federal Trade Commission Act (FTC Act)?1293
  • Q 17.13 : What does GLBA cover?1294
  • Q 17.14 : What is the purpose of GLBA?1294
  • Q 17.15 : What is a “financial institution”?1294
  • Q 17.16 : What is a “consumer”?1294
    • Q 17.16.1 : What is a “customer”?1295
    • Q 17.16.2 : Why is the distinction between “consumer” and “customer” relevant?1295
  • Q 17.17 : What is “nonpublic personal information”?1295
    • Q 17.17.1 : What is “personally identifiable information”?1295
  • Q 17.18 : What is the financial Privacy Rule?1296
  • Q 17.19 : What are privacy notices?1296
    • Q 17.19.1 : What are model privacy notices?1296
    • Q 17.19.2 : When must privacy notices be given?1296
  • Q 17.20 : What restrictions are placed on the disclosure and handling of nonpublic personal information for affiliates?1297
  • Q 17.21 : What restrictions are placed on the disclosure and handling of nonpublic personal information for non-affiliates?1297
  • Q 17.22 : What are opt out notice requirements?1297
  • Q 17.23 : What are the exceptions to the privacy notice and opt out requirements?1298
  • Q 17.24 : What is the Safeguards Rule?1298
    • Q 17.24.1 : What is a written information security plan?1299
    • Q 17.24.2 : What should an information security plan cover?1299
    • Q 17.24.3 : What is involved in addressing risks in employee management and training?1299
    • Q 17.24.4 : What is involved in addressing risks in information systems, and detecting and managing system failures?1300
    • Q 17.24.5 : Is there a breach notification requirement under the Safeguards Rule?1300
  • Q 17.25 : What agencies enforce GLBA?1300
    • Q 17.25.1 : What entities fall under the FTC’s enforcement jurisdiction?1301
  • Q 17.26 : Do mortgage lenders need to comply with GLBA on mortgage transactions?1301
    • Q 17.26.1 : What is the special customer rule for mortgage loan transactions?1301
  • Q 17.27 : Does GLBA preempt state law?1302
  • Q 17.28 : What is the Fair Credit Reporting Act (FCRA)?1302
    • Q 17.28.1 : What is the purpose of FCRA with respect to consumer privacy?1302
    • Q 17.28.2 : What does FCRA cover relating to consumer privacy?1302
  • Q 17.29 : What is a “consumer report”?1303
  • Q 17.30 : What is a “consumer reporting agency”?1303
  • Q 17.31 : What is “adverse action”?1303
  • Q 17.32 : What are the primary privacy-related provisions of FCRA?1303
  • Q 17.33 : Who is subject to the disposal of consumer information requirements?1303
    • Q 17.33.1 : What does the FTC’s Disposal Rule require?1304
    • Q 17.33.2 : Has the FTC enforced the Disposal Rule?1305
  • Q 17.34 : What is the Fair and Accurate Credit Transactions Act (FACTA)?1305
    • Q 17.34.1 : What does FACTA cover?1305
    • Q 17.34.2 : What is the purpose of FACTA?1305
  • Q 17.35 : What is the “Red Flags Rule”?1306
  • Q 17.36 : What is the “Disposal Rule”?1306
  • Q 17.37 : What is the “affiliate marketing rule”?1306
  • Q 17.38 : What is the Health Insurance Portability and Accountability Act (HIPAA)?1307
    • Q 17.38.1 : What is the purpose of HIPAA?1307
  • Q 17.39 : What is “protected health information” (PHI)?1307
  • Q 17.40 : What is a “covered entity”?1307
  • Q 17.41 : What is a “business associate”?1308
  • Q 17.42 : What protections does HIPAA provide?1308
    • Q 17.42.1 : Who/what does HIPAA cover?1308
    • Q 17.42.2 : What are the basic requirements of the HIPAA Privacy Rule?1308
    • Q 17.42.3 : What are the basic requirements of the HIPAA Security Rule?1309
  • Q 17.43 : What agency enforces HIPAA?1309
  • Q 17.44 : When was the HITECH Act passed?1309
    • Q 17.44.1 : What is the purpose of the HITECH Act?1309
    • Q 17.44.2 : How did the HITECH Act amend the HIPAA privacy, security and enforcement rules?1309
  • Q 17.45 : What is the FTC’s health breach notification rule?1310
    • Q 17.45.1 : Who is covered by the health breach notification rule?1310
    • Q 17.45.2 : What does the health breach notification rule require?1310
    • Q 17.45.3 : Does the health breach notification rule preempt state breach notification laws?1311
  • Q 17.46 : What does COPPA cover?1311
    • Q 17.46.1 : What is the purpose of COPPA?1311
  • Q 17.47 : What is a “child”?1311
  • Q 17.48 : What is an “operator”?1312
  • Q 17.49 : What is “personal information”?1312
  • Q 17.50 : What is “verifiable parental consent”?1312
  • Q 17.51 : What is required under COPPA?1312
    • Q 17.51.1 : Who is covered by COPPA?1313
    • Q 17.51.2 : What are the six “general privacy protections” under COPPA?1313
  • Q 17.52 : What agency enforces COPPA?1313
  • Q 17.53 : What does CAN-SPAM cover?1314
    • Q 17.53.1 : What is the purpose of CAN-SPAM?1314
    • Q 17.53.2 : Do the requirements of CAN-SPAM regarding soliciting through emails apply to emails sent to current customers?1314
    • Q 17.53.3 : What are the main requirements of CAN-SPAM?1314
    • Q 17.53.4 : Can consumers opt out of all emails?1315
  • Q 17.54 : What are the penalties for not complying with CAN-SPAM?1315
  • Q 17.55 : What is the Federal Trade Commission Act (FTC Act)?1316
    • Q 17.55.1 : What is the purpose of Section 5 of the FTC Act?1316
    • Q 17.55.2 : What entities are subject to the FTC’s jurisdiction?1316
  • Q 17.56 : What are “unfair or deceptive acts or practices in or affecting commerce”?1316
  • Q 17.57 : What types of actions has the FTC taken against companies that fail to comply with their own privacy policies, misrepresent their privacy practices, or fail to take adequate measures to protect consumer data?1317
  • Q 17.58 : Will the FTC issue regulations setting minimum standards for consumer privacy and data security protections?1317
  • Q 17.59 : What is expected from the FTC in the privacy area?1318
  • Q 17.60 : What are examples of recent legislative initiatives in the privacy area?1320
  • Q 17.61 : What can be expected in the future?1320
  • Q 17.62 : Do many states have data breach notification statutes?1321
    • Q 17.62.1 : What are the goals of data breach notification statutes?1321
  • Q 17.63 : What do data breach notification statutes generally require?1321
  • Q 17.64 : What are the remedies under data breach notification statutes?1322
  • Q 17.65 : Can financial institutions get reimbursed for their costs if they are harmed due to identity theft caused by inadequate protection for consumer data?1322
  • Q 17.66 : How is “personal information” generally defined?1323
  • Q 17.67 : Do the data breach notification statutes apply to companies outside the states?1323
  • Q 17.68 : What is the general time frame for providing breach notification?1323
Chapter 18: Telemarketing Sales Rule Veronica Bryant ~ Patton Boggs LLP
Heather Hutchings ~ Dykema Gossett PLLC
  • Q 18.1 : What is the Telemarketing Sales Rule?1332
  • Q 18.2 : What activities are governed by the Telemarketing Sales Rule?1333
  • Q 18.3 : What is a “seller”?1333
  • Q 18.4 : What is a “telemarketer”?1333
  • Q 18.5 : What is an “established business relationship”?1333
  • Q 18.6 : What is a “customer”?1333
  • Q 18.7 : What is a “person”?1334
  • Q 18.8 : What is an “outbound telephone call”?1334
  • Q 18.9 : What is a source for guidance regarding the Telemarketing Sales Rule?1334
  • Q 18.10 : Does the Telemarketing Sales Rule preempt state law?1334
  • Q 18.11 : Why do both the FTC and FCC have similar Do Not Call Registry requirements?1335
  • Q 18.12 : May a call be placed to an individual who has indicated he or she does not wish to receive any calls from or on behalf of a particular seller?1335
  • Q 18.13 : May a call be placed to a number that appears on the National Do Not Call Registry?1335
  • Q 18.14 : Are there specific requirements for an express written agreement of a person authorizing the seller to place calls?1336
    • Q 18.14.1 : Can an electronic signature constitute a signature for purposes of such an express written agreement?1336
  • Q 18.15 : May a call be placed to an individual in an area code without first obtaining the portion of the National Do Not Call Registry for that area code?1336
  • Q 18.16 : May a seller simply rely on the National Do Not Call Registry obtained by a telemarketer who is engaged by the seller?1337
  • Q 18.17 : What are the costs to obtain the National Do Not Call Registry?1337
  • Q 18.18 : Are there steps that a seller or telemarketer can take to avoid liability under the TSR if the seller or telemarketer, in error, places a call to a person who has made a company-specific request not to be called or places a call to a number on the National Do Not Call Registry?1337
  • Q 18.19 : Does the TSR prohibit abandoned calls?1338
  • Q 18.20 : What constitutes an abandoned call?1338
  • Q 18.21 : What steps must a seller or telemarketer take so that it may not be found to have abandoned a call in violation of the TSR?1338
  • Q 18.22 : May a seller, or a person calling on behalf of a seller, use a prerecorded message?1339
  • Q 18.23 : May a prerecorded message be used if there is an established business relationship with the person?1339
  • Q 18.24 : What are the specific requirements for obtaining authorization to place a call with a prerecorded message to a person?1339
  • Q 18.25 : Is there a certain amount of time the telemarketer must permit the phone to ring?1340
  • Q 18.26 : Are there any disclosures that must be given in connection with a call containing a prerecorded message?1340
  • Q 18.27 : Must an opt out mechanism be included in a call containing a prerecorded message?1340
  • Q 18.28 : What is the general time period for which a seller must retain records under the Telemarketing Sales Rule?1341
  • Q 18.29 : Must a seller maintain copies of telemarketing scripts used?1342
  • Q 18.30 : What information must the seller maintain about its customers?1342
  • Q 18.31 : Must a seller maintain any specific information related to employees directly involved in telephone sales or solicitations?1342
  • Q 18.32 : Must a seller maintain verifiable authorizations or records of express informed consents or express agreements obtained in connection with the Telemarketing Sales Rule?1343
  • Q 18.33 : Must the seller maintain the applicable records in any particular format?1343
  • Q 18.34 : May a seller and telemarketer allocate the recordkeeping responsibility among themselves pursuant to a written agreement?1343
  • Q 18.35 : Who is responsible for maintaining the records in the event of a dissolution or termination of the seller’s business?1344
  • Q 18.36 : Who is responsible for maintaining the records in the event of a sale, assignment or other change in ownership of the seller’s or telemarketer’s business?1344
  • Q 18.37 : What is the potential liability for failing to comply with the Telemarketing Sales Rule?1344
  • Q 18.38 : What government agency enforces the Telemarketing Sales Rule?1344
  • Q 18.39 : What government agencies enforce the do not call requirements?1344
Chapter 19: State Law/Preemption John D Socknat ~ Ballard Spahr LLP
  • Q 19.1 : Does state law apply to residential mortgage transactions?1348
    • Q 19.1.1 : Does state law apply to all lenders?1348
    • Q 19.1.2 : Which state’s law applies to a residential mortgage transaction?1349
    • Q 19.1.3 : Do state laws establish different rules based on the loan type or amount?1349
    • Q 19.1.4 : What government agencies regulate the residential mortgage industry at the state level?1349
  • Q 19.2 : What are the different types of state laws that regulate residential mortgage lending?1350
  • Q 19.3 : What types of disclosures must be provided to applicants/borrowers?1350
    • Q 19.3.1 : Do disclosures have to be signed by applicants/borrowers?1351
  • Q 19.4 : Are there limits or restrictions on interest rates and fees that may be charged?1351
    • Q 19.4.1 : May the limits or restrictions on interest rates and fees differ based upon the type of loan offered or the lender?1351
  • Q 19.5 : Are there limits or restrictions on prepayment fees?1351
  • Q 19.6 : Are there limits or restrictions on late charges?1352
  • Q 19.7 : Do entities performing residential mortgage loan-related activity need to be licensed?1352
    • Q 19.7.1 : What types of entities are exempt from licensing requirements?1352
    • Q 19.7.2 : Do individual employees of licensed entities need to be licensed?1353
    • Q 19.7.3 : What is the SAFE Act?1353
    • Q 19.7.4 : Does the SAFE Act apply to all entities?1353
  • Q 19.8 : What is predatory lending?1354
    • Q 19.8.1 : What is a high-cost loan?1354
    • Q 19.8.2 : What is a subprime loan?1355
    • Q 19.8.3 : What steps have states taken to prevent or limit predatory, high-cost and/or subprime loans?1355
    • Q 19.8.4 : What is the Statement on Subprime Mortgage Lending?1356
    • Q 19.8.5 : What is the Guidance on Nontraditional Mortgage Product Risks?1357
    • Q 19.8.6 : What is the “ability to repay”?1357
  • Q 19.9 : What is preemption?1358
    • Q 19.9.1 : How is preemption different from an exemption?1358
    • Q 19.9.2 : When does federal law preempt state law?1358
    • Q 19.9.3 : What happens if state law conflicts with federal law?1358
  • Q 19.10 : What is the Depository Institutions Deregulation and Monetary Control Act (DIDMCA)?1359
    • Q 19.10.1 : What does DIDMCA preempt?1359
    • Q 19.10.2 : What entities can rely on DIDMCA preemption?1360
  • Q 19.11 : What is the National Bank Act?1360
    • Q 19.11.1 : What does the National Bank Act preempt?1361
    • Q 19.11.2 : What entities can rely on National Bank Act preemption?1361
  • Q 19.12 : What is the Home Owners’ Loan Act (HOLA)?1361
    • Q 19.12.1 : What does HOLA preempt?1361
    • Q 19.12.2 : What entities can rely on HOLA preemption?1362
  • Q 19.13 : What is the Federal Credit Union Act (FCUA)?1362
    • Q 19.13.1 : What does the FCUA preempt?1362
    • Q 19.13.2 : What entities can rely on FCUA preemption?1363
  • Q 19.14 : What is the Alternative Mortgage Transaction Parity Act (AMTPA)?1363
    • Q 19.14.1 : What is an alternative mortgage transaction?1363
    • Q 19.14.2 : What does AMPTA preempt?1364
    • Q 19.14.3 : What entities can rely on AMPTA preemption?1364
  • Q 19.15 : What is the Most Favored Lender Doctrine?1365
    • Q 19.15.1 : What does the Most Favored Lender Doctrine preempt?1365
    • Q 19.15.2 : What entities can rely on the Most Favored Lender Doctrine?1365
  • Q 19.16 : What do Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) residential mortgage-related requirements preempt?1366
    • Q 19.16.1 : What entities can rely on FHA or VA preemption?1366
  List of Abbreviations
  Index

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