Acceleration Clause ✔✔Allows lenders to demand payment in full if the borrower defaults on the loan (can be construed as predatory lending) Alienation Clause (Due on Sale Clause) ✔✔Says you must repay your mortgage if you sell your home to a new owner (loan is not assumable) Appraiser Independance Requirements replaced HVCC ✔✔home valuation code of conduct Due on Demand Clause ✔✔(Considered a predatory practice) The lender can demand repayment of the loan in full at anytime for any reason HOEPA ✔✔Home Ownership and Equity Protection Act (Reg Z Sec 32) Amends TILA Nonrecourse Agreement ✔✔Loan agreement under which the collateral securing a loan is the unltimate source of repayment, and the lender cannot hold the borrower personably liable in the event of default. Lender can seize (and sell) the collateral but cannot seize non-pledged asset or property. ReConveyance ✔✔Method in which a lein is removed from a property when payment is made in full. Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ✔✔Purpose is to promote the financial stability of US by improving accountability and transparency in the financial system. Created the Consumer Financial Protection Bureau. Changed MLO compensation rules Housing and Economic Recovery Act (HERA) of 2008 ✔✔Signed by GW Bush. Est. national minimum standards for mortgage training, including prelicensing and annual continuing education. Also, under the SAFE Act, all MLO's must beither state-licensed or federally registered. SAFE Act - Secure and Fair Enforcement for Mortgage Licensing Act: part of HERA of 2008 ✔✔Requires all states to implement a MLO licensing process that meets standards through the Nationwide Mortgage Lending System & Registry (NMLS) In CA that compliance act is called SB - 36. SAFE Act Objectives ✔✔*Provide uniform license applications and reporting requirements *Provide licensing database *Improve flow of info to and between regulators *Provide increased accountability and tracking of MLO's *Streamline the licensing process *Enhance consumer protection and support anti-fraud measures *Provide consumers info about MLO's *Require MLO's to act in "the best interest of the client" *Facilitate responsible behavior in the subprime mkt *Facilitate the collection and disbursement of consumer complaints NMLS ✔✔Started in 2004 by the Conference of State Bank Supervisors (CSBS) and the American Assoc. of Residential Mortgage Regulators (AARMR) They wrote model legislation reviewed by HUD for states to follow Mortgage Loan Originator Definition ✔✔Someone who for compensation or gain or expectation thereof: takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan Independent Contractor ✔✔May not engage in residential mortgage loan activities as a loan processor or underwriter unless state licensed Unique Identifier ✔✔*Required by the SAFE Act for all state licensed MLO's or federally registered MLO's employed by a depository institution regulated by a federal banking agency or regulated by the Farm Credit Admin. *Required on all mktg materials, applications, required disclosures & business cards FINRA Financial Industry Regulatory Authority ✔✔Built and maintains the online NMLS system RESPA (X) Real Estate Settlement Procedures Act 0f 1974 ✔✔*Enforced by HUD *Intended to help consumers become better shoppers for settlement services and eliminate unnecessary increases in the costs of certain settlement services MLO License Not Required ✔✔*Purely administrative or clerical tasks for a licensee *Only performing real estate brokerage work *Time share credit work *Loan processor or underwriter who does not represent to the public that they perform MLO work Federal Banking Agencies ✔✔The Board of Gov.'s of the Fed. Reserve System, Comptroller of the Currency, Dir. of the Office of Thrift Supervision, National Credit Union Administration and the FDIC. Depository Institution ✔✔Any bank or savings assoc. including credit union Non-Traditional Mortgage Product ✔✔Any mortgage product other than a 30 yr fixed rate Residential Mortgage Loan ✔✔Any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling or residential real estate upon which a dwelling is constructed or is intended to be constructed a dwelling