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Terms in this set (28)
Mortgage Disclosure Statement
is a form that clearly and completely states ALL the information and charges associated with a particular loan.
Secure and Fair Enforcement Mortgage License Act (SAFE Act)
within 30 days of commencing the activity whichever is later, all licensees must report to the Bureau of Real Estate if they make, arrange or service loans secured by real property. This requirement applies to both residential and commercial businesses. The report must be completed online using Form RE 866- Mortgage Loan Activity Notification.
Penalties for SAFE Act
Penalties are fifty dollars ($50) per day for the first 30 days the report is not filed and one hundred dollars ($100) per day for every day thereafter not to exceed a maximum of $10,000.
anyone who negotiates real estate loans
MUST BE A REAL ESTATE LICENSEE
anyone who makes COLLECTIONS on real estate loans, if that person makes more than 10 collections per year OR collects more than $40,000.00
must be licensed as a California real estate BROKER
commissions for negotiate trust deed loans
1. For first loans:
-5 percent of the principal of a loan of less than 3 years;
-10 percent of the principal of a loan of 3 years or more;
2.For second or other junior loans:
-5 percent of the principal of a loan of less than 2 years;
-10 percent of the principal of a loan of at least 2 years but less than 3 years;
-15 percent of the principal of a loan of 3 years or more.
costs and expenses of making a loan
the charges made to a borrower cannot exceed 5% of the loan or $390.00, whichever is greater, to a maximum of $700.00
broker MAY CHARGE as much commission as the borrower will agree to pay.
On "hard money loans" (cash) of $30,000.00 and over for first trust deed loans, and $20,000.00 and over for JUNIOR deeds of trust
The regulations also require that the broker provides to BOTH the buyer and seller, on first trust deed loans UNDER $30,000.00, and on junior trust deed loans UNDER $20,000.00,
copies of the appraisal report.
Loans on owner-occupied homes that are negotiated by a broker for a term of 6 or more years
may not have a balloon payment. In any situation that involves a balloon payment, the SELLER is required to notify the BUYER between 60 and 150 days BEFORE the payment is due
If the home is NOT occupied by the owner,
then the loans are exempt from balloon payments, IF the loan term is less than 3 years.
is the requirement to report annual and quarterly loan activities (review of trust fund) to the California BRE, IF, within the past 12 months, a broker has negotiated any combination of 10 or more loans to a subdivision OR a total of more than $1,000,000.00 in loans. Regulations for "big lending," as this is known, include the requirement that advertising must be reviewed by the CalBRE. The intent of the threshold reporting regulations is to protect the public by overseeing the loan activity of these "big lenders," who are using their real estate licenses to take on such activities.
passed to establish the maximum rate of interest that may be charged on specific types of loans. In CALIFORNIA , this maximum rate is 10%, or 5% over the Fed discount rate, whichever is greater. However, as noted above, there ARE cases in which the lender is exempt from this law.
Under Article 5
licensees are prohibited from pooling funds. This means that a broker must NOT accept funds UNLESS the funds are meant, and so noted, to be for a specific loan transaction. Before a broker can accept the lender's money, he must first OWN the loan OR have an unconditional written contract to buy a specific note; AND the broker must also have the authorization from the prospective borrower, giving him permission to negotiate a secured loan for the borrower.
Under Article 6
anyone who wishes to sell real estate investment type security must FIRST obtain a Commissioner's Permit. This permit is the approval of the proposed real property security and plan of distribution, and will be granted if the Commissioner finds that the security and plan of distribution are fair. The permit is not a recommendation, but merely the Commissioner's authorization of the sale. The Commissioner's Permit is valid for one year, and it may NOT be used in advertising unless the permit is shown in FULL. The cost of the permit is $100.00. Note that the Commissioner's Permit requires a $10,000.00 surety bond.
A Real Property Securities Dealer
is anyone acting as the principal or agent, who engages in the business of selling real property securities, including promissory notes or sales contracts, OR who accepts funds to be reinvested in real property securities or to be placed in an account.
A California licensed broker is permitted to act in this capacity IF he first receives an RPSD endorsement on his broker license. This endorsement requires a broker to submit the endorsement fee of $100.00, along with the proof of a $10,000 surety bond.
There are three major laws regarding financing
1. Truth in Lending Law
3. the Equal Credit Opportunity Act.
Truth In Lending Law: ( Regulation Z)
The purpose of this law is DISCLOSURE. The law requires lenders to disclose to buyers the true cost of obtaining credit so that the borrower can compare the costs of various lenders.
applies to residential loans, federally related 1-4 family properties, non-commercial properties, and family farms.
Commercial transactions are not covered under this law.
Two major sections of Truth In Lending:
1. Annual Percentage Rate (A.P.R.)
Trigger terms --- Disclosure
1. Amount or percentage of down payment ---
The amount or percentage of down payment
2. Amount of any installment --- Terms of repayment
3. Finance charge in dollars or that there is no charge for credit --- Annual percentage rate and if increase is possible
4. Number of installments --- Total finance charge
5. Period of repayment --- Total # of payments and due dates
Annual Percentage Rate
An expression of the relationship of the total finance charge to the total amount to be financed. Use of APR permits the consumer to compare rates
A standardized yardstick expressing the true annual cost of borrowing is expressed as the "APR." This law does not include a computation of unearned finance charges.
a creditor under TRUTH IN LENDING
a lender must lend funds 25 times a year and/or must lend the funds for at least 5 housing loans annually. An owner of property advertising acreage for sale could advertise "no down payment." The owner is not considered a lender under Truth In Lending guidelines.
(Does not apply to residential purchase money or first mortgage or deed of trust loans.) A clause in a contract, required by some state subdivided land sales laws, that informs a purchaser of his/her rescission rights as provided by state law.*
REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) of 1974
was created to ensure that the buyer and seller in a residential real estate transaction involving a new first mortgage loan have knowledge of all settlement costs. The Act is administered by the Consumer Financial Protection Bureau (CFPB).
prohibits kickbacks or unearned fees paid to lender for referring customers to insurance agencies, etc.
RESPA required lenders to provide what?
1 .a HUD "Guide to Settlement" booklet and a Good Faith Estimate (GFE) of all costs related to settlement to borrowers within 3 days of loan application.
2. required the use of the HUD-1 settlement statement at closing plus a final good faith estimate and Truth-in-Lending Statement.
TILA/RESPA Integrated Disclosure (TRID) Rule.
1. Lenders must give a copy of the booklet, "Your home loan toolkit" to every person at the time of application for a loan.
2. Lenders must provide a Loan Estimate of settlement costs at the time of loan application or within three business days of application.
3. A Closing Disclosure, a form designed to detail all financial particulars of a transaction, must be delivered to the borrower at least three days before closing. The actual time frame is based on the method of delivery. The settlement agent must also provide the seller with the Closing Disclosure, which may be done at consummation.
3. punishments of up to one year in jail, and/or a $10,000.00 fine
A real estate licensee is considered a "creditor"
if the licensee routinely assists sellers in determining whether a proposed buyer in a land contract or purchase-money mortgage is creditworthy.
Housing Financial Discrimination Act, or the Holden Act
is the California State law prohibiting financial institutions from engaging in discriminatory loan practices. This law attempts to prohibit redlining. Redlining
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