Skip to main content

Search

Mortgage Lending: 4.2.4.4.1 The role of the HUD-1 or HUD-1A settlement statement

Until October 2015, the HUD-1 or HUD-1A “settlement statement” was used when closing every mortgage transaction subject to RESPA.160 Since then, it has only been required for reverse mortgages and open-end loans—primarily home equity lines of credit.161 Regulation X and RESPA direct the “settlement agent” and “the person conducting the settlement,” respectively, to complete the settlement statement and provide it to the borrower at or before closing.16

Mortgage Lending: 4.2.4.4.5 Documentation requirements

Lenders must retain copies of the settlement statement for five years from the date of settlement, unless the lender disposes of its interest in the mortgage and does not service the mortgage. In that case, the lender must provide its copy of the settlement statement to the new owner or servicer of the mortgage as a part of the transfer of the loan file.183

Mortgage Lending: 4.2.5 Transfer of Servicing Notice

Until October 3, 2015, RESPA required anyone making a federally related mortgage loan to disclose to each applicant whether the servicing of the loan may be assigned, sold, or transferred at any time during the term of the mortgage.212 Effective October 2015, loans subject to TILA’s disclosure requirements, or exempt from disclosure, became exempt from the servicing notice requirement.213

Mortgage Lending: 11.1 Introduction

This chapter discusses land installment contracts, which are also known as contracts for deed, bond for deed, bond for title, installment sale contracts, long-term land contracts, and land sale contracts. Here they are referred to collectively as land installment contracts or land contracts. Land contracts are essentially a form of seller financing in which legal title remains in the seller’s name until all payments have been made. This type of contract is often described to low-income people as a way to acquire homeownership without needing to deal with a bank or get credit approval.

Mortgage Lending: 4.4.2 Truth in Lending Damages Claims

Failure to comply with TILA’s disclosure requirements or substantive restrictions may give rise to claims for actual damages,313 statutory damages,314 and attorney fees.315 Rescission is also available for a limited set of violations and is discussed in the following subsection.316

Mortgage Lending: 4.4.4 Assignee Liability

The TILA provision imposing liability for damages applies to any creditor that violates the Act.338 “Creditor” is defined as the party to whom an obligation is initially payable. This definition is particularly significant because it is common for the original creditor to assign the obligation to another entity after consummation.

Mortgage Lending: 4.4.6 Originator and Servicer Liability

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act created certain requirements for loan originators, distinct from creditors.359 Loan originators are specifically liable for those violations, a change from the usual rule that originators are not liable for TILA violations.360 Who qualifies as a loan originator is discussed in

Mortgage Lending: 4.6.1 Overview and Remedies

The Home Ownership and Equity Protection Act (HOEPA)377 carves out a class of high-rate loans and subjects them to special regulation. For these loans (known as HOEPA loans or high-cost loans), HOEPA requires additional disclosures, prohibits certain abusive loan terms and practices, imposes additional penalties, and extends the potential liability of assignees.

Mortgage Lending: 4.6.2 Advance Look Disclosures

Covered loans are subject to additional disclosure requirements. The consumer must be given special “advance look” HOEPA disclosures at least three business days prior to consummation,391 to assure that the consumer has time to reflect.

Mortgage Lending: 4.8.3 Restrictions Applicable to Any Person

Four key CROA prohibitions apply to any “person” and not just to credit repair organizations.432 These restrictions have important potential applications to loan churning, appraisal fraud, and falsification of the consumer’s income.433 Yet some courts have refused to give meaning to the Act’s explicit extension of these prohibitions to any person.

Mortgage Lending: 4.8.4 Remedies

Civil liability for violations of CROA includes actual damages or the total amount the consumer paid to the credit repair organization, whichever is greater, plus reasonable attorney fees.444 Punitive damages are specifically authorized.445 Despite the Act’s inclusion of this provision for civil liability, of a disclosure requirement of the right to sue a credit repair organization that violates the Act, and of a prohibition on the waiver of any right under CROA,

Mortgage Lending: 4.9 Civil RICO

The federal Racketeer Influenced and Corrupt Organizations Act (RICO)450 provides powerful civil remedies, including attorney fees and treble damages, to victims subjected to a broadly defined range of “racketeering activity” or to the collection of an “unlawful debt.”451 The use of RICO in consumer cases is discussed in more detail in NCLC’s Federal Deception Law.452

Mortgage Lending: 4.10 Servicemembers Civil Relief Act

The Servicemembers Civil Relief Act (SCRA) provides special protections for military service personnel on active duty and their dependents.481 The Act requires lenders to reduce the interest rate on debts that were owed before the servicemember went on active duty—including mortgage loans—to six percent.482 It also provides protections against default judgments, tolling of the statute of limitations for claims by and against the servicemember, restrictions on eviction from residential proper

Mortgage Lending: 4.11.3 State-Chartered Banks, Savings Associations, and Credit Unions

Federal law provides an interest rate cap for federally insured state-chartered banks, savings associations, and credit unions: the higher of a federal rate, the institution’s home state rate, or the rate of the state where the loan is made.511 While the Federal Deposit Insurance Corp. and the National Credit Union Administration have certain regulatory authority over such institutions, there are no extensive federal regulations governing their ability to make home mortgages.

Mortgage Lending: 4.14.1 Introduction

The Consumer Financial Protection Act gives the Bureau of Consumer Financial Protection522—commonly known as the Consumer Financial Protection Bureau or CFPB—a number of different forms of rulemaking authority concerning consumer financial services. These include regulations interpreting specific consumer credit statutes; rules prohibiting unfair, deceptive, or abusive acts or practices; rules requiring certain disclosures; and rules providing for consumers’ right to obtain certain information.

Mortgage Lending: 4.14.3 UDAAP Rulemaking

An important area of CFPB authority is its ability to write rules to prevent unfair, deceptive, or abusive acts or practices (UDAAP authority) in connection with a broad array of consumer financial products and services.537 The Act includes definitions of “unfair”538 and “abusive.”539 It does not define “deceptive,” but the Federal Trade Commission (FTC)540 and a large body of decisions under

Mortgage Lending: 4.14.4 Disclosure and Right to Information Rules

The CFPB can prescribe rules to ensure that the features of consumer financial products are fully, accurately, and effectively disclosed so that consumers understand the costs, benefits, and risks associated with the product.545 The CFPB is authorized to issue model disclosure forms that may be used by creditors and that will then provide a safe harbor for the creditor.546 The CFPB may also permit creditors to experiment with trial disclosures, also under a safe harbor.