Know The Rules – RESPA and Florida Compliance

1 Know The Rules . RESPA and Florida Compliance Continuing Education for Florida Mortgage Professionals Know The Rules RESPA and Florida Compliance A considerable amount of care has been taken to provide accurate and timely information. However, any ideas, suggestions, opinions, or general knowledge presented in this text are those of the author and other contributors, and are subject to local, state and federal laws and regulations, court cases, and any revisions of the same. The reader is encouraged to consult legal counsel concerning any points of law. This book should not be used as an alternative to competent legal counsel. Printed in the United States of America. P2 . 2007 Bookmark Education All inquiries should be addressed to: Bookmark Education 6203 W. Howard Street Niles, IL 60714-3403.

2 (800) 716-4113. TABLE OF CONTENTS. INTRODUCTION ..1. Types of Government 1. 2. Regulation of Professional 3. Equal Treatment and Fairness .. 3. Impact on Mortgage RESPA ..5. Coverage of Definitions of Federally Related Mortgage Loan .. 5. Exemptions from RESPA 's Coverage of Federally Related Mortgage Loans .. 7. Summary of RESPA 's 8. Special Information Contents of Special Information Booklet .. 8. Reproduction of the Special Information 9. Delivering the Special Information Booklet .. 10. Copy of Special Information Booklet .. 10. Consumer Information on Home Purchasing and Related Topics ..29. Summary Special Information Booklet .. 30. Good Faith Contents and Form of Good Faith Estimate .. 30. Delivery of the Good Faith 33. Summary Good Faith Estimate .. 34. HUD-1 and HUD-1A Settlement Use of HUD-1 or HUD-1A Settlement Statements.

3 34. Reproduction of Settlement 48. Inspection and Delivery of the Settlement Statements .. 49. Settlement Statement 49. Summary HUD-1 and HUD-1A Settlement 50. Prohibition Against Kickbacks and Unearned Fees ..50. Prohibition of Referral 50. Prohibition of Splitting of Charges .. 51. Permitted Payments .. 51. Penalties for 52. Affiliated Business 52. Illustrations Regarding Prohibition Against Kickbacks and Unearned Fees .. 56. Summary Prohibition Against Kickbacks and Unearned 60. Escrow Limits on Payments to Escrow 60. Escrow Account Analyses and Escrow Statements .. 61. Lender/Servicer Administration of Escrow Accounts .. 62. Summary Escrow 62. Title Companies ..62. Mortgage Servicing Transfers ..63. 2007 Bookmark Education Servicing Disclosure Statement and Applicant 63. Notices of Transfer of Loan Servicing.

4 69. Duty of Loan Servicer to Respond to Borrower 73. Damages and 74. Summary Mortgage Servicing Transfers .. 75. RESPA Enforcement and Penalties .. 75. Proposed RESPA Reform .. 75. HUD's Proposed Rule .. 76. Reaction to HUD's Proposed Rule .. 77. 78. Florida 79. 79. 79. General Provisions .. 83. Financial Services Commission and Office of Financial Regulation .. 83. Investigations, Complaints, and Examinations .. 83. Record 84. Prohibited Advertising - Record 85. 85. Liability In Case Of Unlawful Transaction .. 86. Liability to the 86. Conflicting 86. Waiver .. 87. Prohibited Practices .. 87. Disposition of Insurance Proceeds .. 88. Arbitration .. 89. Mortgage Business Schools .. 90. Professional Education Requirements .. 90. Mortgage Broker Requirements .. 91. Who Needs a License?.

5 91. Mortgage Broker's 92. Renewal of Mortgage Broker's License .. 93. Principal Broker and Branch Broker Requirements .. 93. Licensure as a Mortgage Brokerage Business .. 94. Renewal of Mortgage Brokerage Business License or Branch Office License .. 94. Mortgage Brokerage Business Branch 95. Mortgage Brokerage Agreements and Mortgage Broker Disclosures .. 95. Principal Place of Business Requirements .. 96. Requirements of Licensees .. 96. Mortgage Brokerage Files .. 98. Mortgage Brokerage and Lending Transaction 99. Administrative Penalties and Fines; License 99. Brokerage 101. Fees Earned Upon Obtaining a Bona Fide Commitment .. 102. Requirements for Brokering Loans to Noninstitutional Investors .. 103. Mortgage Lender 105. Who Needs a License? .. 105. Mortgage Lender's License Requirements.

6 106. Correspondent Mortgage Lender's License Requirements .. 108. Renewal of Mortgage Lender's License; Branch Office License 109. Branch 110. Requirements of Mortgage Lender 110. 2007 Bookmark Education Mortgage Lender Files .. 112. Mortgage Brokerage and Lending Transaction 112. Loan Application 113. Lock-In Agreement .. 114. Commitment Process .. 115. Expiration of Lock-In Agreement or 116. Administrative Penalties and Fines; License 116. Net Worth .. 118. Mortgage Lender or Correspondent Mortgage Lender When Acting As a Mortgage Brokerage Business .. 118. Lender Fees and 118. Requirements for Selling Loans to Noninstitutional Investors .. 118. Servicing 119. Other Products and 120. Florida Fair Lending Act ..121. High Cost Loans and Predatory 121. Purpose of the Florida Fair Lending Act.

7 121. Definitions as Used in the Florida Fair Lending Act:.. 121. Acts Prohibited by the Florida Fair Lending 122. Disclosures Required For High-Cost Home 125. Liability of Purchasers and 126. Rights of Borrowers To Cure Under High-Cost Home Loans .. 126. Powers and Duties of the Commission and Office .. 127. Enforcement .. 128. Loans Under Florida Uniform Land Sale Practices APPENDIX A Final Examination (visit ) ..130. 2007 Bookmark Education INTRODUCTION. Homeownership is a substantial component of the American Dream. That American Dream underlies the United States mortgage industry's moneymaking enterprise. Ordinary citizens realize the dream of home ownership by relying on the mortgage professional's assistance to obtain the financing required to purchase a home. The profit-taking nature of mortgage lending and the inherent risks of money borrowing combine to present substantial hazards to the homeowners.

8 The federal government and most state governments have stepped in to help promote and protect the interests of the borrower. In fact, the government has effectively placed the burden of consumer protection upon the mortgage professional. As a result of various laws and regulations, the mortgage professional must balance the for-profit nature of the lending business with the obligation to protect the consumer. Types of Government Regulation Licensure State governments typically regulate the mortgage industry by requiring licensure of individuals and businesses participating in the business of mortgage lending or mortgage brokering. Almost every state provides a system for licensing ownership of a mortgage business, and any person which operates a mortgage lending or mortgage brokerage business without obtaining the required license is subject to government- imposed penalties.

9 In addition to licensure of the owner or the business, state laws may also require the licensure of loan officers and other individuals employed by mortgage lenders, mortgage bankers and mortgage brokers. The licensure process is intended to permit only qualified, ethical individuals to participate in the mortgage industry. A license application may request the applicant's personal history, including financial service job history, credit history and criminal records, in order to help determine the quality of an individual's credentials. The application may further require that an applicant make certain statements (sometimes called averments ) pledging to maintain certain professional standards once the individual becomes licensed as a mortgage professional. Some states require that applicants satisfy certain experience requirements, education requirements and/or pass a written examination in order to obtain a license.

10 Once having successfully obtained a license, the licensee then faces continued regulation of its licensed activities. Regulation may include: Satisfaction of a minimum net worth requirement Requirement to maintain fidelity and/or surety bonds in the event of financial loss or violation of license requirements Physical examinations of loan files and records Continuing education Mandatory disclosures to borrowers 1. 2007 Bookmark Education Restrictions on high cost loans Some parties have called for a federal registry of mortgage brokers in order to implement more uniform licensing requirements across the country. For now though, each state determines the licensing requirements for its mortgage professionals. Individuals who handle loans in more than one state must comply with the requirements of each of those states.