RAM MORTGAGE PRESENTS STUDY MATERIAL FOR THE MORTGAGE LOAN ORIGINATOR (MLO) TEST

1. RAM MORTGAGE PRESENTS STUDY MATERIAL FOR THE MORTGAGE LOAN ORIGINATOR (MLO) TEST MORTGAGE LOAN BROKERS---ARE REAL ESTATE PROFESSIONALS ACTING AS THE INTERMEDIARY BETWEEN THE CONSUMER AND THE LENDER IN A MORTGAGE TRANSACTION. INSTITUTIONAL LENDERS---ARE FINANCIAL INSTITUTIONS THAT ARE REGULATED BY LAW. THEY INCLUDE COMMERCIAL BANKS, SAVINGS BANKS, INSURANCE COMPANIES, CREDIT UIONS, AND FINANCE COMPANIES , AS WELL AS GOVERNMENT CHARTERED COOPERATIONS SUCH AS FNMA (FANNIE MAE) AND FHLMC (FREDDIE MAC).

2. GOVERNMENT LOAN PROGRAMS GNMAVAFHA MAX LOAN AMOUNT LTV 100% 96.5% DOWNPAYMENT 0% 3.5% RATIOS 0/41% 36/50% MINIMUM CREDIT SCORE 680 DOCUMENTATION TYPE FULL FULL PMI/MIP 2% 2.25% OWNER OCCUPIED (O) O/NON OWNER /NON-OWNER (NON)

3. RATIOS AND CREDIT SCORING PITI (TOTAL MONTHLY PAYMENT) FRONT END RATIO= GROSS MONTHLY INCOME PITI + ALL OTHER MONTHLY DEBTS BACK END RATIO= GROSS MONTHLY INCOME CREDIT SCORES RANGE FROM 400 TO 900 BANKRUPTCY SCORE RANGES FROM 0 TO 1300 WITH A HIGHER NUMBER INDICATING A GREATER RISK OF DEFAULT

4. ABILITY TO REPAY THE LOAN SELF-EMPLOYED TAX RETURNS OFTEN FAIL TO REFLECT ACTUAL NET INCOME. IN MANY CASES A SELF-EMPLOYED PERSON IS ABLE TO TAKE DEDUCTIONS FOR TAX PURPOSES THAT DISTORT THE TRUE INCOME PICTURE. ALT-A PROGRAMS--- USES 12 TO 24 MONTHS PERSONAL BANK STATEMENTS TO SUPPORT THE INCOME STATED ON THE LOAN APPLICATION. STATED IS ALMOST A LOAN PRODUCT THAT IS GONE. A TRUE STATED INCOME PROGRAM IS DEFINETELY GONE.

5. TYPES OF SUBPRIME LOANS THREE TYPES OF SUBPRIME LOANS: 1. HARD MONEY—OWNER ACCEPTS CASH FROM A LENDER IN EXCHANGE FOR A PROMISE TO PAY (NOTE) SECURED BY REAL ESTATE OWNED BY THE BORROWER. CHARCTERISTICS ARE; SHORT TERM, HIGHER INTEREST RATE AND LOWER LOAN TO VALUE. PURCHASE MONEY LOANS ( THOSE AT TIME OF PURCHASE) ARE NOT REGARDED AS HARD MONEY LOANS. 2. SOFT MONEY---ARE LOANS WHERE CASH DOES NOT CHANGE HANDS…..SUCH AS SELLER CARRY-BACK. THE SELLER GIVES TITLE IN EXCHANGE FOR A NOTE SECURED BY A DEED OF TRUST WHICH IS A LIEN AGAINST THE PROPERTY CONVEYED.

6. TYPES OF SUBPRIME LOANS 3. EQUITY LOANS---ARE LOANS MADE BASED UPON AN OWNER’S EQUITY IN REAL PROPERTY. EQUITY IS THE DIFFERENCE BETWEEN FAIR MARKET VALUE AND THE INDEBTEDNESS AGAINST THE PROPERTY. PRIVATE LENDERS----ARE PERSONS OR FIRMS WHO WISH TO RECEIVE A HIGHER RATE OF RETURN FOR THEIR SAVINGS THAN WOULD BE POSSIBLE FROM OTHER AVAILABLE INVESTMENTS. IN CALIFORNIA, PRIVATE INDIVIDUALS MAY NOT MAKE A LOAN THAT EXCEEDS 10% INTEREST OR 5% ABOVE THE SAN FRANCISCO FEDERAL RESERVE BANK’S RATE FOR ADVANCES TO MEMBER BANKS, WHICHEVER IS GREATER. THIS IS CALLED USURY RESTRICTIONS. LOANS ARRANGED BY REAL ESTATE BROKERS ARE EXEMPT FROM USURY LIMITATIONS BUT ARE NOT WITHOUT ANY LIMITATIONS. CONTRACT LAW HOLDS THAT AN UNCONSCIONABLE CONTRACT WILL NOT BE ENFORCED BY THE COURTS.

7. PRIMARY AND SECONDARY MORTGAGE MARKETS PRIMARY MARKET—IS WHERE LOANS ARE MADE DIRECTLY TO THE BORROWER. SECONDARY MARKET---INVOLVES THE SALE OF EXISTING LOANS. MORTGAGE BROKERS USUALLY ARE NOT INVOLVED. MORTGAGE BANKERS—DIFFER FROM MORTGAGE BROKERS IN THAT THEY GENERALLY ARE NOT THIRD PARTIES TO A LOAN. THEY NORMALLY FUND THE LOAN WITH THEIR OWN FUNDS. MORTGAGE BANKERS ARE ENGAGED IN THE PRIMARY MORTGAGE MARKET WHEN MAKING THE LOAN AND IN THE SECONDARY MARKET IN THE SALE OF THE LOAN. MORTGAGE BANKERS ARE ALSO KNOW AS MORTGAGE COMPANIES. THEY PRIMARILY DEAL IN RESIDENTIAL PROPERTIES.

8. TWO WAYS TO SELL MORTGAGE LOANS TWO WAYS TO SELL A LOAN; A. SERVICE RETAINED---MEANS THE MORTGAGE BANKER OR INSTITUTION SELLS THE LOAN BUT KEEPS THE SERVICING. B. SERVICE RELEASED---MEANS THE MORTGAGE BANKER OR INSTITUTION SELLS THE LOAN AND SERVICING AS WELL. IF A MORTGAGE BANKER OR INSTITUTION BELIEVES THAT INTEREST RATES WILL FALL, HE OR SHE WILL WANT TO HOLD AS LARGE A LOAN INVENTORY AS POSSIBLE. REASON LENDERS WANT HUGE DOLLAR PACKAGES OF MORTGAGES IS SO THEY CAN ISSUE MORTGAGE-BACKED SECURITIES. MORTGAGE WAREHOUSING IS WHERE MORTGAGE BANKERS BORROW FROM COMMERCIAL BANKS USING THEIR MORTGAGE INVENTORY TO OBTAIN ADDITIONAL CAPITAL FOR LOANS.

9. CONFORMING AND NON-CONFORMING LOANS CONFORMING LOANS---a conforming loan is a mortgage loan that conforms to GSE (developed by FANNIE & FREDDIE MAC) guidelines. NON-CONFORMING LOANS—any loan not meeting conforming loan guidelines. PIGGY-BACK LOANS; A. PARTICIPATING LOANS---WHERE A SINGLE LOAN IS DIVIDED INTO PARTS AND THE PARTS HAVE VARYING DEGREES OF RISK. EXAMPLE; $1,000,000 LOAN LENDER A TAKES THE BOTTOM PORTION $700,000 AT 9.5% LENDER B TAKES THE TOP PROTION $300,000 AT 12.5% THE SECOND LENDER IS SUBORDINATE TO THE FIRST LENDER THUS IS AT GREATER RISK. THE BLENDED RATE IS 10.5%.

10. STATE LICENSING REQUIREMENTS REAL ESTATE COMMISSIONER REQUIREMENTS; 1. REQUIRES 5 YEARS OF ACTIVE PARTICIPATION IN THE REAL ESTATE BUSINESS IN CALIFORNIA AS A BROKER. 2. CANNOT ACTIVELY ENGAGE IN THE BROKER OR SALESPERSON ACTIVITIES THAT ARE REGULATED BY THE DEPARTMENT OF REAL ESTATE. THE COMMISSIONER HAS THE POWER TO ADOPT, AMEND OR REPEAL RULES AND REGULATIONS NECESSARY FOR THE ENFORCEMENT OF THE REAL ESTATE LAW. ADMINISTRATIVE PROCEDURE ACT; 1. INJUCTION—IS A COURT ORDER THAT FORBIDS A PERSON FROM PERFORMING OR PERMITTING AN ACT.

11. STATE LICENSING REQUIREMENTS 2. RECEIVER—WHERE IT CAN BE SHOWN TO THE COURT’S SATISFACTION THAT THE VIOLATIONS OR THREATENED VIOLATIONS JEOPARDIZE FUNDS AND PROPERTIES OF OTHERS. IF AN AUDIT REVEALS COMMINGLING OR CONVERSION OF MORE THAN $10,000 IN TRUST FUNDS, THE COURT MAY PREVENT THE LICENSEE FROM PERFORMING ANY ACTS OR PRIVILEGES OF HIS/HER REAL ESTATE LICENSE PENDING FURTHER COURT ORDER. WITHIN 5 DAYS A HERAING MUST BE HELD AND A RECEIVER MAY BE APPOINTED TO EXERCISE ALL THE POWERS OF THE LICENSEE INCLUDING FILING A PETITION FOR BANKRUPTCY. 3. ORDER TO DESIST AND REFRAIN---THE ORDER SHALL SPECIFY THE ACTIVITY AS WELL AS THE FACTUAL AND LEGAL BASIS FOR THE ORDER. WITHIN 30 DAYS AFTER RECEIPT OF AN ORDER THE RESPONDENT MAY REQUEST A HEARING. STATUE OF LIMITATIONS IS THREE YEARS FROM OCCURRENCE AND HAS A TEN YEAR CAP ON BRINGING DISCIPLINARY ACTION.

12. STATE LICENSING REQUIREMENTS STEPS IN AN ADMINISTRATIVE PROCEDURES; 1. ACCUSATION---SHALL BE A WRITTEN STATEMENT OF CHARGES IN ORDINARY AND CONCISE LANGUAGE THE ACTS OR COMISSIONS WITH WHICH THE RESPONDENT IS CHARGED. 2. STATEMENT OF ISSUES---SHALL BE A WRITTEN STATEMENT SPECIFYING THE STATUES AND RULES WITH WHICH THE RESPONDENT MUST SHOW COMPLIANCE BY PRODUCING PROOF AT THE HEARING. 3. STATEMENT TO RESPONDENT—SETS FORTH THE RIGHT TO REQUEST A HEARING. 4. NOTICE OF DEFENSE---WITHIN 15 DAYS AFTER SERVICE OF THE ACCUSATION MAY FILE WITH THE AGENCY HIS/HER DEFENSE OR DENIAL.

13. STATE LICENSING REQUIREMENTS 5. PREHEARING—CONFERRENCE TO CLARIFY ISSUES, OBTAIN INITIAL RULINGS, OBJECT TO EVIDENCE, ETC. AS WELL AS TO EXPLORE SETTLEMENT POSSIBILITIES WITHOUT THE NECESSITY OF A HEARING. 6. THE HEARING—AN ADMINISTRATIVE LAW JUDGE PRESIDES OVER THE HEARING. 7. RECONSIDERATION—THE ACCUSED PARTY OR THE DEPARTMENT OF REAL ESTATE CAN ASK FOR RECONSIDERATION OF ALL OR PART OF THE DECISION BY THE ADMINISTRATIVE LAW JUDGE. 8. JUDICIAL REVIEW—A LICENSEE MAY FILE A PETITION FOR JUDICIAL REVIEW OF DISCIPLINARY ACTION BEFORE THE SUPERIOR COURT.

14. STATE LICENSING REQUIREMENTS PENALTIES—THE RESULT OF DISCIPLINARY HEARINGS CAN BE FINES, RESTITUTION, SUSPENSION, OR REVOCATION OF A LICENSE. THE RESTRICTED LICENSE DOES NOT GIVE A LICENSEE ANY PRIVILEGES OR AUTOMATIC RENEWAL RIGHTS. A PERSON MUST BE LICENSED AT THE TIME A COMMISSION WAS EARNED. RECOVERY ACCOUNT—THE FUND SHALL BE LIABLE FOR NO MORE THAN $20,000 FOR ANY SINGLE ACTION AND NO MORE THAN $100,000 FOR ANY LICENSEE. IF PAYMENT IS MADE FROM THE RECOVERY ACCOUNT, ALL LICENSES AND LICENSE RIGHTS THAT YOU HAVE UNDER THE REAL ESTATE LAW WILL BE AUTOMATICALLY SUSPENDED ON THE DATE OF PAYMENT AND CANNOT BE REINSTATED UNTIL THE RECOVERY ACCOUNT HAS BEEN REIMBURSED FOR THE AMOUNT PAID PLUS INTEREST AT THE PREVAILING RATE.

15. STATE LICENSING REQUIREMENTS REAL ESTATE BROKER IS ONE WHO; 1.SELLS OR OFFERS TO SELL, BUYS OR OFFERS TO BUY, SOLICITS PROPECTIVE SELLERS OR PURCHASERS OF, SOLICITS OR OBTAINS LISTINGS OF, OR NEGOTIATES THE PURCHASE, SALE OR EXCHANGE OF REAL ESTATE PROPERTY OR A BUSINESS OPPORTUNITY. 2.LEASES OR RENTS OR OFFERS TO LEASE OR RENT, OR PLACES FOR RENT, OR SOLICITS FOR PROSPECTIVE TENANTS,OR NEGOTIATES THE SALE, PURCHASE OR EXCHANGES OF LEASES ON REAL PROPERTY, OR ON A BUSINESS OPPORTUNITY, OR COLLECTS RENTS FROM REAL PROPERTY, OR IMPROVEMENTS THEREON, OR FROM BUSINESS OPPORTUNITIES. 3.ASSISTS OF, OFFERS TO ASSIST IN FILING AN APPLICATION FOR THE PURCHASE OR LEASE OF, OR IN LOCATING OR ENTERING UPON, LANDS OWNED BY THE STATE OR FEDERAL GOVERNMENT.

16. STATE LICENSING REQUIREMENTS 4.SOLICITS BORROWERS OR LENDERS FOR OR NEGOTIATES LOANS OR COLLECTS PAYMENTS OR PERFORMS SERVICES FOR BORROWERS OR LENDERS OR NOTE OWNERS IN CONNECTION WITH LOANS SECURED DIRECTLY OR COLLATERALLY BY LIENS ON REAL PROPERTY OR ON A BUSINESS OPPORTUNITY. 5. SELLS OR OFFERS TO SELL, BUYS OR OFFERS TO BUY, OR EXCHANGES A REAL PROPERTY SALES CONTRACT, OR A PROMISSORY NOTE SECURED DIRECTLY OR COLLATERALLY BY A LIEN ON REAL PROPERTY OR ON A BUSINESS OPPORTUNITY, AND PERFORMS SERVICES FOR THE HOLDERS THEREOF. THE PRIMARY PURPOSE OF LICENSING REAL BROKERS IS TO PROTECT THE PUBLIC. ALL LICENSEES ARE REQUIRED TO BE FINGERPRINTED.

17. STATE LICENSING REQUIREMENTS AN APPLICANT MUST BE 18 YEARS OF AGE. THEY NEED NOT BE A RESIDENT OF CALIFORNIA. LICENSE APPLICANTS MUST BE HONEST AND TRUTHFUL. CONVICTION OF A CRIME THAT IS EITHER A FELONY OR INVOLVES MORAL TURPITUDE MAY RESULT IN DENIAL OF A LICENSE. A MINIMUM OF TWO YEARS’ FULL-TIME EXPERIENCE IS REQUIRED AS A REAL ESTATE SALESPERSON TO APPLY FOR A BROKERS LICENSE. A FOUR-YEAR DEGREE FROM AN ACCREDITED COLLEGE EXEMPTS THE APPLICANT FROM THE EXPERIENCE REQUIREMENT. GRADUATES OF AN ACCREDITED LAW SCHOOL ARE EXEMPT FROM THE EXPERIENCE AND EDUCATION REQUIREMENTS. PERSONS HAVING AA DEGREE NEED ONLY HAVE ONE YEAR EXPERIENCE AS A SALES PERSON TO APPLY FOR A BROKERS LICENSE.

18. STATE LICENSING REQUIREMENTS THERE IS NO PARTNERSHIP LICENSE ALTHOUGH A BROKER CAN BE A PARTNER WITH ANOTHER BROKER. A CORPORATION CAN BE LICENSED AS A BROKER. THE DESIGNATED BROKER FOR THE CORPORATION IS RESPONSIBLE FOR THE SUPERVISION AND CONTROL OF THE ACTIVITIES CONDUCTED ON BEHALF OF THE CORPORATION BY ALL OTHER OFFICERS AND EMPLOYEES SO AS TO ENSURE FULL COMPLIANCE WITH THE LAW. A REAL ESTATE SALESPERSON IS LICENSED BY DRE TO WORK UNDER THE SUPERVISION OF A LICENSED BROKER.

19. STATE LICENSING REQUIREMENTS LICENSING REQUIREMENTS FOR A REAL ESTATE SALESPERSON INCLUDE: * MUST BE AT LEAST 18 YEARS OLD * MUST BE HONEST AND TRUTHFUL * FOR A 4 YEAR RENEWABLE LICENSE AN APPLICANT MUST PASS A COLLEGE-LEVEL REAL ESTATE COURSE, A REAL ESTATE PRACTICE COURSE, AND OTHER BROKER APPROVED COURSE. * APPLICANT MUST SUBMIT AN APPLICATION (FORM RE 400A) TO TAKE THE EXAMINATION. MUST PASS STATE EXAM WITH A MINIMUM SCORE OF 70%.

20. DEPARTMENT OF CORPORATION LICENSING PERSONAL PROPERTY BROKERS--- INCLUDES ALL PERSONS ENGAGED IN LENDING MONEY AND TAKING AS SECURITY ANY CONTRACT OR OBLIGATION THAT COULD RESULT IN THE FORFEITURE OF RIGHTS IN OR TO PERSONAL PROPERTY. 1995 THE PERSONAL PROPERTY BROKERS LAW, CONSUMER FINANCE LENDERS LAW, THE COMMERCIAL FINANCE LENDERS LAW WERE CONSOLIDATED INTO THE CALIFORNIA FINANCE LENDERS LAW. CFL---IS ANY PERSON LICENSED UNDER THIS LAW WHO MAKE OR BROKER LOANS SECURED BY PERSONAL PROPERTY, OR A COMBINATION OF REAL AND PERSONAL PROPERTY. REAL PROPERTY SECURED LOANS MUST BE FOR OVER $5,000.

21. DEPARTMENT OF CORPORATION LICENSING A CFL CAN BE LICENSED AS A LENDER, A BROKER, OR BOTH. A CFL BROKER MAY ONLY BROKER LOANS TO A DIRECT LENDER LICENSED UNDER THE CALIFORNIA FINANCE LENDERS LAW BY THE DEPARTMENT OF CORPORATIONS. BROKERING OF A LOAN SECURED BY REAL PROPERTY TO ANY OTHER LENDER SUCH AS A BANK, SAVINGS BANK, OR THRIFT AND LOAN IS NOT AUTHORIZED. CRITERIA FOR FUNDING CFL LOANS: 1. APPROVAL NOT CONSISTANT WITH AN INSTITUTIONAL . LENDERS APPROVAL CRITERIA. 2. LICENSEE MUST BE THE BENEFICIARY ON THE PROMISSORY NOTE. 3. LICENSEE MUST USE THEIR OWN FUNDS TO MAKE THE LOAN.

22. DEPARTMENT OF CORPORATION LICENSING A CFL LICENSEE MAY BE: AN INDIVIDUAL, PARTNERSHIP, CORPORATION, JOINT VENTURE, ASSOCIATION, JOINT STOCK COMPANY, TRUST, GOVERNMENT ENTITY, OR POLITICAL SUBDIVISION OF A GOVERNMENT PERSON OR GROUP. NO EXAMINAMTION IS REQUIRED FOR A CFL LICENSE. EVERY LOCATION AT WHICH ACFL LICENSE WISHES TO CONDUCT BUSINESS MUST BE LICENSED. APPLICANTS MUST : 1. HAVE NET WORTH OF $25,000 2. PAY A $200 APPLICATION FEE AND A $100 INVESTIGATION FEE 3. PROVIDE AND MAINTAIN A $25,000 SURETY BOND. 4. FILE AN ANNUAL FINANCIAL AND STATISTICAL REPORT FOR THE PRIOR CALENDAR YEAR 5. CALIFORNIA RESIDENTIAL MORTGAGE LOAN REPORT MUST BE SUBMITTED BY MARCH 31 OF EACH YEAR FOR THE PRIOR CALENDAR YEAR

23. DEPARTMENT OF CORPORATION LICENSING FAILURE TO PAY ANNUAL ASSESSMENT WILL RESULT IN REVOCATION OF A LICENSE. CRMLA—APPLIES TO ONE TO FOUR RESIDENTIAL UNITS AND IS ADMINISTERED BY THE DEPARTMENT OF CORPORATIONS. EXEMPT FROM THIS REGULATION INCLUDE; 1. BUSINESS LENDERS (AS WELL AS AGRICULTURAL) 2. BANKS AND SAVINGS BANK 3. INSURANCE COMPANIES 4. CREDIT UNIONS 5. PRIVATE INDIVIDUALS USING THEIR OWN FUNDS TYPES OF LICENSES UNDER CRMLA: 1. CRMLA LENDER---IS LIMITED TO 5 % OF TOTAL LOANS CAN BE BROKERED 2. CRMLA SERVICER—IS ONE WHO RECEIVES MORE THAN 3 INSTALLMENT PAYMENTS OF PRINCIPAL AND INTEREST.

24. DEPARTMENT OF CORPORATION LICENSING CRMLA REQUIREMENTS ARE: 1. NET WORTH OF $250,000 AND MAINTAINED AT ALL TIMES 2. PROVIDE AND MAINTAIN A SURETY BOND OF $50,000 3. PAY $900 FILING FEE AND $100 INVESTIGATION FEE 4. NO EXAMINATION OR TEST IS REQUIRED 5. USE OF INDEPENDENT CONTRACTORS IS FORBIDDEN 6. LICENSEES NEED NOT HAVE A CALIFORNIA PLACE OF BUSINESS 7. SUBJECT TO EXAMINATION OF BOOKS AND RECORDS ANYTIME BUT SUCH AN EXAMINATION SHALL BE AT LEAST ONCE EVERY 48 MONTHS 8. ANNUAL REPORTS ARE DUE BY MARCH 1 9. AUDITED REPORT MUST BE FILED WITH THE COMMISSIONER WITHIN 105 DAYS OF LICENSEE’S FISCAL YEAR HOUSING FINANCIAL DISCRIMINATION ACT OF 1977 REQUIRES CERTAIN REPORTING (SUCH AS REDLINING) FOR LOANS MADE IN CALIFORNIA.

25. MORTGAGE LOAN ACTIVITIES REQUIRING A LICENSE BROKER—IS A PERSON WHO, FOR A COMPENSATION OR IN EXPECTATION OF A COMPENSATION, REGARDLESS OF THE FORM OR TIME OF PAYMENT, PERFORMS ONE OF THE ACTS DESIGNATED BY BUSINESS AND PROFESSIONAL CODE 10131. THE CODE STATES “FOR ANOTHER OR OTHERS” FALLS WITHIN THE DEFINITION OF A BROKER. “IN THE BUSINESS” REFERS TO ACQUIRING LOANS FOR RESALE, NOT TO KEEP AS AN INVESTMENT. TO BE IN THE BUSINESS MEANS ACQUIRING 8 OR MORE REAL ESTATE LOANS IN ONE CALENDAR YEAR. THE REAL ESTATE COMMISSIONER REQUIRES THAT SOLICITATION MATERIAL USED BY ADVANCE FEE BROKERS BE SUBMITTED TO THE COMMISSIONER AT LEAST 10 DAYS PRIOR TO USE.

26. MORTGAGE LOAN ACTIVITIES REQUIRING A LICENSE IT IS UNLAWFUL FOR ANY PERSON TO CLAIM, DEMAND, CHARGE, RECEIVE, COLLECT OR CONTRACT FOR AN ADVANCED FEE FOR SOLICITING LENDERS ON BEHALF OF BORROWERS. A BROKERS LICENSE IS REQUIRED FOR ALL DEALING WITH MINERIAL, OIL OR GAS PROPERTIES UNLESS THE PERSON IS THE OWNER OR HAS POWER OF ATTORNEY TO ACT ON BEHALF OF THE OWNER OR IS MINING FOR SUCH MINERIALS. SECURITIES LAW OF 1968 PUTS THE RESPONSIBILTY FOR BROKER -DEALER OR AGENT ACTIONS ON THE COMMISSIONER OF CORPORATIONS NOT DRE. LOAN CORRESPONDENT---IS A PERSON OR FIRM THAT ACTS FOR A LENDER IN ARRANGING LOANS OR THE SALE OF EXISTING LOANS FOR COMPENSATION. A PERSON IS EXEMPT FROM THIS LICENSING IF HE/SHE ACTED FOR ONE SAVINGS BANK AND UNDER A WRITTEN AGREEMENT. THIS DOES NOT APPLY TO GOVERNMENT LOANS SUCH AS VA OR FHA.

27. EXEMPTIONS FROM LICENSING REQUIREMENTS LICENSING IS BASED ON DOING ACTS FOR OTHERS, EXEMPTION IS A PRINCIPAL WHO DEALS FOR HIM/HER SELF. THE STATUE REGARDING THE BUYING AND SELLING MORTGAGES AND TRUST DEEDS THE INDIVIDUAL OR FIRM IS EXEMPT IF SEVEN OR FEWER TRANSACTION ARE DONE IN ONE CALENDAR YEAR. THERE IS NO THRESHOLD NUMBER OF MINERAL, OIL, OR GAS TRANSACTIONS ALLOWED PRIOR TO THE REAL ESTATE BROKER LICENSING REQUIREMENTS. REAL ESTATE LAW REQUIRES THAT THE ENGAGEMENT IN LISTED ACTIVITIES BE FOR COMPENSATION. DOING ACTS WITHOUT COMPENSATION MAY EXEMPT A PERSON FROM LICENSING REQUIREMENTS.

28. EXEMPTIONS FROM LICENSING REQUIREMENTS A REGULAR OFFICER OF A CORPORATION OR A GENERAL PARTNER OF A PARTNERSHIP CAN LEASE OR SELL REAL PROPERTY OWNED BY THE CORPORATION OR PARTNERSHIP AS WELL AS BUY OR LEASE REAL PROPERTY FOR THE PARTNERSHIP OR CORPORATION. AN ATTORNEY AT LAW CANNOT TAKE SALE LISTING OR OTHERWISE ENGAGE IN LICENSED ACTIVITIES WHEN NOT DIRECTLY RELATED TO ACTING IN A LEGAL CAPACITY. ATTORNEY’S MAY NOT SHARE FEES OR DISBURSEMENTS DIRECTLY OR INDIRECTLY WITH OTHER PERSONS WHO NEGOTIATED THE LOAN OR WITH THE LENDER. LICENSED AND CHARTERED LENDERS ACTING UNDER STATE OR FEDERAL LICENSE OR CHARTER CAN HANDLE LOAN TRANSACTIONS AND SECURITIES SECURED BY REAL ESTATE EVEN THOUGH THEY ARE NOT LICENSED AS REAL ESTATE BROKERS. EXEMPT ARE ANY NONPROFIT COOPERATIVE ASSOCIATION ORGANIZED UNDER CHAPTER 1 OF DIVISION 20 OF THE FOOD AND AGRICULTURE CODE.

29. EXEMPTIONS FROM LICENSING REQUIREMENTS OTHERS EXEMPT FROM REQUIRED LICENSING INCLUDE: 1. PERSONS PERFORMING CLERICAL WORK 2. MANAGER OF A HOTEL, MOTEL, OR AUTO AND TRAILER PARK 3. MANAGER OF AN APARTMENT BUILDING OR COMPLEX 4. PURCHASE, SALE OR EXCHANGE OF RADIO, TELEVISION, OR CABLE BUSINESS OPPORTUNITY NOT INVOLVING REAL PROPERTY 5. MINERAL, OIL, AND GAS TRANSACTIONS BY ORDER OF A COURT OF COMPETENT JURISDICTION EMPLOYEES OF PROPERTY MANAGEMENT FIRMS CAN: 1. SHOW RENTAL UNITS 2. PROVIDE AND ACCEPT PREPRINTED RENTAL APPLICATIONS 3. ACCEPT DEPOSITS OR FEES FOR CREDIT CHECKS OR ADMINISTRATIVE COST 4. PROVIDE INFORMATION ABOUT RENTAL UNITS SET FORTH BY EMPLOYER 5. ACCEPT SIGNED LEASES AND RENTAL AGREEMENTS FINDERS FEES ARE LEGAL IN CALIFORNIA PROVIDING THE FINDER IS “SIMPLY PAID FOR INTRODUCTING THE PARTIES AND TAKES NO PART IN THE NEGOTIATIONS,”

30. SUPERVISION AND LICENSING COMPLIANCE IN CALIFORNIA, A BROKER HAS BOTH A “NEED AND LEGAL DUTY TO SUPERVISE,” HIS OR HER SALESPEOPLE. BROKERS SHOULD KNOW AS MUCH ABOUT THE CHARACTER OF THEIR SALESPERSONS AS REASONABLY POSSIBLE. CORRECTIONS OF A PROBLEM AFTER THE FACT CAN BE EXPENSIVE AND IT MIGHT ALSO PLACE THE BROKER’S LICENSE IN JEOPARDY. BUSINESS AND PROFESSIONAL CODE SECTION 10177(H) PROVIDES THAT BROKERS ARE SUBJECT TO DISCIPLINARY ACTION IF THEY FAIL TO EXERCISE REASONABLE SUPERVISION AND CONTROL OVER THE ACTIVITIES OF THEIR SALES PERSONS.

31. SUPERVISION AND LICENSING COMPLIANCE BROKERS ARE REQUIRED TO IMMEDIATELY AND IN WRITING NOTIFY THE COMMISSIONER WHENEVER EMPLOYMENT OF A SALES PERSON IS STARTED OR TERMINATED. IF A SALESPERSON IS DISCHARGED FOR A VIOLATION OF THE REAL ESTATE LAW THAT SUBJECT THE SALESPERSON TO DISCIPLINARY ACTION BY THE COMMISSIONER, A CERTIFIED WRITTEN STATEMENT OF FACTS MUST BE IMMEDIATELY PROVIDED TO THE COMMISSIONER. THE COMMISSIONER CAN DENY, SUSSPEND, OR REVOKE A REAL ESTATE LICENSE OF A CORPORATE OFFICER OR AGENT ACTING UNDER ITS LICENSE WITHOUT REVOKING THE LICENSE OF THE CORPORATION. DEFRAUDING A FEDERALLY INSURED LENDER OR AGENCY IS A FEDERAL CRIME PUNISHABLE BY UP TO 30 YEARS IMPRISIONMENT AND UP TO ONE MILLION DOLLARS IN FINES.

32. SUPERVISION AND LICENSING COMPLIANCE BROKER IS NO LONGER REQUIRED TO REVIEW , INITIALING, AND DATING ALL DOCUMENTS OF HIS/HER SALESPEOPLE WITHIN 5 DAYS AFTER PREPARATION OR SIGNING, OR BEFORE CLOSE OF ESCROW WHICHEVER COMES FIRST. THE BROKER IS ALLOWED TO USE THE SERVICES OF SALESPERSONS AND OTHER BROKERS TO ASSIST IN ADMINISTERING SALESPERSON SUPERVISION. A BROKER MUST HAVE A WRITTEN CONTRACT WITH HIS/HER SALESPEOPLE. A BROKER MUST MAINTAIN A DEFINITE PLACE OF BUSINESS IN CALIFORNIA. EACH BRANCH MAINTAINED BY THE BROKER MUST HAVE A SEPARATE LICENSE.

33. SUPERVISION AND LICENSING COMPLIANCE A REAL ESTATE BROKER ACTING AS A SALESPERSON FOR ANOTHER BROKER MUST BE UNDER A WRITTEN CONTRACT AND MAY PERFORM SERVICES ON BEHALF OF THE EMPLOYING BROKER AT ANY LOCATION WHERE THE BROKER IS LICENSED. A FICTITIOUS NAME IS A NAME OTHER THAN THE SURNAME OF THE PRINCIPAL (S). It is also known as an assumed name. Fictitious name statements are good for 5 years and can be renewed. GUIDELINES FOR AN UNLICENSED ASSISTANT INCLUDE: 1. PERFORMING ONLY ACTIVITIES NOT REQUIRING A LICENSE 2. COLD CALLING AND OBSERVING THE DO NOT CALL LIST 3. OPEN HOUSE MAY GREET PUBLIC, PLACE SIGNS OR HAND OUT PREPRINTED MATERIAL, PREPARE COMPARATIVE MARKET ANALYSIS, ARRANGE APPOINTMENTS, PREPARE AND DESIGN ADVERTISING,PREPARE DOCUMENTS, ARRANGE PICKUP OR MAILINGS, ACCEPT RECEIPT FOR TRUST FUNDS OR PRINCIPALS, COMMUNICAT WITH PRINCIPALS, AND REVIEW DOCUMENTS.

34. SUPERVISION AND LICENSING COMPLIANCE PROBLEMS IN TELEMARKETING LOANS INCLUDE: 1. MISLEADING VERBEGE 2. COMPENSATION FORECLOSURE CONSULTANT LAW: 1. REUIRES FORECLOSURE CONSULTANT CONTRACTS BE IN WRITING 2. SAFEGUARDS PUBLIC AGAINST DECEIT AND FINANCIAL HARDSHIPS 3. PERMIT RECISSION (WITHIN 3 BUSINESS DAYS) OF FORECLOSURE CONSULTANT CONTRACTS CIVIL CODE SECTION 2945(B) SHOW PROFESSIONAL EXEMPT FROM THESE FORECLOSURE CONSULTANT LAWS SUCH AS ATTORNEY’S. REAL ESTATE BROKERS INVOLVED IN SALE OF A FORECLOSURE , LENDERS, ETC.

35. AGENCY AGENT—IS ONE WHO ACTS FOR OR REPRESENTS ANOTHER CALLED THE PRINCIPAL IN DEALING WITH THIRD PARTIES. IN REAL ESTATE TRANSACTIONS THE AGENT IS THE “BROKER” AND THE SALESPERSON OF THE BROKER ARE “SUBAGENTS” OF THE PRINCIPAL. ANY PERSON WHO HAS THE CAPACITY TO CONTRACT CAN BE A PRINCIPAL AND APPOINT AN AGENT TO REPRESENT HIM OR HER. A PRINCIPAL IS LIABLE FOR ACTS OF THE AGENT ACTING WITHIN THE SCOPE OF THE AGENCY. COMPENSATION TO THE AGENT IS NOT A FACTOR IN DETERMINING IF AN AGENCY EXISTS.

36. AGENCY EMPLOYEE---IS A PERSON WHO WORKS UNDER THE DIRECTION AND CONTROL OF ANOTHER. AN AGENT GENERALLY HAS MORE DISCRETION THAN AN EMPLOYEE, WHO MUST FOLLOW THE DIRECTIONS OF AN EMPLOYER IN THE ACCOMPLISHMENT OF A TASK. BECAUSE A BROKER HAS A SUPERVISORY DUTY AS TO HIS OR HER SALESPEOPLE, THE DRE CONSIDERS REAL ESTATE SALESPERSONS TO BE EMPLOYEES OF THEIR BROKER (AS WELL AS SUBAGENT OF THE PRINCIPAL). INDEPENDENT CONTRACTOR---IS A PERSON HIRED TO PERFORM A TASK. UNLIKE AN AGENT OR EMPLOYEE, THE INDEPENDENT CONTRACTOR IS NOT SUBJECT TO THE DIRECTION OF AN EMPLOYER OR PRINCIPAL. THEY ARE CONTRACTED FOR RESULTS.

37. AGENCY THE INDEPENDENT CONTRACTOR DOES NOT HAVE THE DUTIES OF AN AGENT TO THE PERSON HIRING THE INDEPENDENT CONTRACTOR, NOR IS THAT PERSON GENERALLY LIABLE FOR WRONGFUL ACTS OF THE INDEPENDENT CONTRACTOR. AN INDEPENDENT CONTRACTOR IS RESPONSIBLE FOR HIS/HER OWN SOCIAL SECURITY AND INCOME TAXES AND EMPLOYEE CONTRIBUTIONS TO SOCIAL SECURITY, AS WELL AS PAY THE EMPLOYER’S SOCIAL SECURITY CONTRIBUTIONS. IN CALIFORNIA, THE BROKER MUST HAVE A WRITTEN RELATIONSHIP CONTRACT WITH SALESPERSONS. BY STATE LAW THE REAL ESTATE BROKER IS AN AGENT AND AGENCY-TYPE DUTIES ARE MANDATED.

38. AGENCY TWO BASIC TYPES OF AGENTS; 1. SPECIAL AGENT—HAS THE LIMITED AUTHORITY SET FORTH IN THE AGENCY AGREEMENT. A REAL ESTATE AGENT IS USUALLY A SPECIAL AGENT EMPLOYED BY A PRINCIPAL TO PERFORM A SPECIFIC TASK. 2. GENERAL AGENT—HAS BROAD AUTHORITY TO PERFORM THE TASKS NECESSARY TO CARRY OUT AN ENDEAVOR. POWER OF ATTORNEY—IS A WRITTEN INSTRUMENT AUTHORIZING THE AGENT KNOWN AS ATTORNEY IN FACT TO ACT FOR THE PRINCIPAL AS SET FORTH IN THE INSTRUMENT. MOST POWERS OF ATTORNEY ARE SPECIAL OR LIMITED POWERS AUTHORIZING SPECIFIC ACTS. AN ALL-INCLUSIVE POWER OF ATTORNEY WOULD ALLOW THE ATTORNEY IN FACT TO DO ANY ACT THE PRINCIPAL COULD DO.

39. AGENCY WAYS AGENCIES CAN BE CREATED: 1. EXPRESS AGENCY—CREATED BY A VERBAL OR WRITTEN AGREEMENT. THE “EQUAL-DIGNITIES RULE” STIPULATES THAT IF AN ACT MUST BE IN WRITING BECAUSE OF THE STATUE OF FRAUDS, THEN AN AGENCY AGREEMENT TO ENTER SUCH A CONTRACT MUST ALSO BE IN WRITING. 2. AGENCY BY IMPLICATION—IS CREATED BY THE ACTIONS OF THE PARTIES. OSTENSIBLE AGENCY IS AN AGENCY BY IMPLICATION WHERE NO AGENCY WAS ACTUALLY INTENDED BY THE PARTIES, BUT A THIRD PARTY CAN RELY ON THE AGENCY. 3. AGENCY BY ESTOPPEL—PROHIBITS THE PRINCIPAL FROM DENYING THAT A PERSON IS HIS/HER AGENT IF THE PRINCIPAL HAS MISLED ANOTHER TO HIS/HER PREJUDICE INTO BELIEVING THAT A PERSON IS THE AGENT.

40. AGENCY 4. AGENCY BY RATIFICATION---IS FORMED WHEN A PRINCIPAL ACCEPTS THE BENEFITS OF AN UNAUTHORIZED PERSON, NOT AUTHORIZED TO ACT AS AN AGENT, OR AN ACT BY AN AGENT BEYOND THE AGENT’S AUTHORITY. BY ACCEPTING THE BENEFITS OF AN AGREEMENT, THE PRINCIPAL RATIFIES THE CONTRACT. THE CIVIL CODE ALLOWS A PERSON TO RESCIND OR VOID HIS OR HER RATIFICATION IF THE RATIFICATION WAS MADE WITH FALSE OR IMPERFECT KNOWLEDGE AS TO THE FACTS. AUTHORITY OF AGENTS: 1. EXPRESS AUTHORITY—AUTHORITY THAT HAS BEEN STATED VERBALLY OR IN WRITING.

41. AGENCY 2. IMPLIED AUTHORITY---IT IS UNDERSTOOD BUT NOT STATED FOR THE AGENT TO PERFORM ACTS NECESSARY TO PROPERLY PERFORM THEIR EXPRESS AUTHORITY. 3. CUSTOMARYAUTHORITY---IS BASED ON THE AGENT’S POSITION. A GENERAL MANAGER OF A REAL ESTATE OFFICE WOULD HAVE THE CUSTOMERY AUTHORITY TO CONTRACT FOR OFFICE SUPPLIES. UNDISCLOSED AGENCY: 1. SECRET AGENT---IS ONE WHO APPEARS TO BE ACTING AS A PRINCIPAL. A THIRD PARTY DEALING WITH A SECRET AGENT MAY USE PERSONAL SETOFFS AGAINST MONIES DUE THE AGENT. THE PERSON WHO WOULD BENEFIT BY THE EXISTENCE OF THE AGENCY HAS THE DUTY OF PROOF AS TO THE EXISTENCE OF THAT AGENCY.

42. AGENCY FIDUCIARY DUTY INCLUDES: 1. LOYALTY 2. OBEDIENCE 3. CONFIDENTIALITY 4. FULL DISCLOSURE 5. DUE DILIGENCE 6. ACCOUNTABILITY 7. COMPLETE HONESTY DELEGATION OF DUTIES---UNLESS PROVIDED IN THE AGENCY AGREEMENT, AN AGENT CANNOT DELEGATE AGENCY DUTIES TO ANOTHER. IF THE BROKER HAS A PERSONAL INTEREST IN THE LOAN OR IF IT INVOLVES A RELATIVE, CLOSE ASSOCIATE OR FRIEND THIS RELATIONSHIP SHOULD BE MADE KNOW TO THE PARTIES.

43. AGENCY TERMINATION OF AGENCY—BECAUSE AN AGENCY IS A CONSENUAL RELATIONSHIP, EITHER PRINCIPAL OR AGENT CAN UNILATERALLY TERMINATE AN AGENCY AT ANY TIME. AN OWNER CANNOT TERMINATE AN AGENCY COUPLED WITH AN INTEREST. AGENCIES FOR A SPECIFIC PERIOD OF TIME AUTOMATICALLY ENDS AT THE TIME SPECIFIED. BECAUSE AN AGENCY IS A PERSONAL RELATIONSHIP OF TRUST, THE DEATH OF EITHER THE PRINCIPAL OR AGENT AUTOMATICALLY TERMINATES THE AGENCY. OTHER REASON’S FOR TERMINATION OF AGENCY: 1. INCAPACITY 2. IMPOSSIBILITY OF PERFORMANCE 3. BANKRUPTCY 4. COMPLETETION OF AGENCY PERFORMANCE

44. AGENCY TYPES OF AGENCY RELATIONSHIPS: 1. BORROWER’S AGENT 2. LENDER’S AGENT 3. DUAL AGENT NO MATTER WHAT AGENCY IT IS IT SHOULD BE IN WRITING AND THE APPROPRIATE DISCLOSURE SHOULD SPELLED OUT WHO IS PAYING COMPENSATION. A MORTGAGE COMPANY IS A PRINCIPAL TO THE TRANSACTION RATHER THAN AN AGENT. TWO MOST IMPORTANT DISCLOSURE FORMS ARE; 1. GFE 2. HUD-1 BECAUSE OF POSSIBLE AGENCY PROBLEMS, SOME BROKERS DECLINE TO HANDLE ESCROWS ON THEIR TRANSACTIONS DUE TO POSSIBLE REAL OR PERCEIVED CONFLICTS OF INTEREST.

45. DISCLOSURES IN MORTGAGE LOAN TRANSACTIONS TRUTH IN LENDING—IS A FEDERAL ACT WHICH WAS ENACTEDO PROMOTE THE INFORMED USE OF CREDIT BY REQUIRING LENDER/CREDITORS TO DISCLOSE VARIOUS TERMS AND CONDITIONS OF CREDIT. THE 1968 ACT WAS KNOWN AS REGULATION Z. THE PURPOSE OF THE DISCLOSURE ACT WAS TO ENABLE CONSUMER’S TO MAKE CREDIT COMPARISONS BETWEEN CREDIT SOURCES SO THAT INFORMED DECISIONS CAN BE MADE. NEGATIVE AMORTIZATION---WHERE LOAN PAYMENTS DO NOT COVER THE INTEREST DUE, SO THE LOAN PRINCIPAL INCREASES. THE 1968 ACT WAS AMENDED BY THE TRUTH IN LENDING SIMPLIFICATION AND REFORM ACT OF 1980. EXEMPT ARE ALL THOSE EXTENDING CREDIT 4 OR LESS TIMES A YEAR.

46. DISCLOSURES IN MORTGAGE LOAN TRANSACTIONS TRANSACTIONS WHERE CREDIT IS EXTENDED PRIMARILY FOR A BUSINESS, COMMERCIAL, OR AGRICULTURAL PURPOSES WOULD EXEMPT FROM TRUTH IN LENDING DISCLOSURES. DOLLAR LIMITATION (OVER $25,000) DOES NOT APPLY TO LOANS SECURED BY REAL ESTATE, OR BY PERSONAL PROPERTY USED OR EXPECTED TO BE USED AS THE CONSUMER’S PRINCIPAL RESIDENCE. THE AMOUNT FINANCED MUST BE SEPERATELY SET FORTH, THE TERMS “FINANCE CHARGE” AND “ANNUAL PERCENTAGE RATE” MUST BE IN LARGER OR BOLD-FACE TYPE TO STAND OUT FROM OTHER DISCLOSURES. THERE ARE 18 DISCLOSURES REUIRED BY THE TRUTH IN LENDING.

47. DISCLOSURES IN MORTGAGE LOAN TRANSACTIONS EXEMPT FROM THE ITEMIZATION OF THE “AMOUNT FINANCED” REQUIREMENT ARE TRANSACTIONS SUBJECT TO THE REAL ESTATE SETTLEMENT PROCEDURES ACT. FACTORS TO REMEMBER; 1. POINTS PAID BY THE SELLER ARE NOT CONSIDERED TO BE A FINANCE CHARGE. 2. FEES CANNOT BE CHARGED FOR REQUIRED DISCLOSURES 3. APR---IS THE COST OF CREDIT EXPRESSED AS YEARLY RATE AND MUST BE WITH IN 1/8 OF ONE PERCENT OF THE ACTUAL ANNUAL RATE FOR A NORMAL TRANSACTION ALL OTHER IRREGULAR TRANSACTIONS MUST BE WITHIN ¼ OF ONE PERCENT. 4. FOR OWNER-OCCUPIED LOANS SUBJECT TO RATE INCREASES THE FOLLOWING MUST BE INCLUDED; A. FACTORS THAT WOULD CAUSE INTEREST RATE TO INCREASE B. ANY LIMIT ON THE INCREASE C. THE EFFECT OF ANY INCREASE D. INCLUSION OF AN EXAMPLE OF THE PAYMENT TERMS AS THE RESULT OF THE INCREASE E. INCREASES WITHIN A PERIOD GREATER THAN ONE YEAR MUST DISCLOSE: THE VARIABLE RATE FEATURE AND THAT A VARIABLE RATE DISCLOSURE HAS BEEN MADE.

48. DISCLOSURES IN MORTGAGE LOAN TRANSACTIONS DISCLOSURES MUST BE PROVIDED PRIOR TO THE CONSUMER SIGNING THE NOTE. DISCLOSURES MUST BE PROVIDED FOR ANY ADJUSTABLE RATE PROGRAMS IN WHICH THE CONSUMER HAS INDICATED INTEREST. THE RIGHT OF RESCISSION IS FOR THREE DAYS AFTER THE CLOSE OF ESCROW BUT THERE ARE EXEMPTIONS SUCH AS ; 1. PURCHASE MONEY LOANS 2. NO CASH-OUT REFINANCED LOANS 3. NON-OWNER OCCUPPIED PROPERTIES IN ADVERISING CONSUMER CREDIT CERTAIN TERMS MUST BE MADE AVAILABLE; 1. RATE 2. ADJUSTABLE RATE 3. BUYDOWN RATES 4. TRIGGER TERMS SUCH AS LTV, MONTHLY PAYMENT, APR, ETC. CREDITORS ARE NOT CONSIDERED TO HAVE VIOLATED TRUTH IN LENDING BECAUSE A BONA FIDE ERROR SUCH AS TRANSPOSITION OF NUMBERS.

49. DISCLOSURES IN MORTGAGE LOAN TRANSACTIONS THE FEDERAL TRADE COMMISSION (FTC) IS CHARGED WITH THE ENFORCEMENT OF THE TRUTH IN LENDING ACT. A CIVIL PENALTY OF TWICE THE FINANCE CHARGES WITH A MINIMUM OF $100 AND A MAXIMUM OF $1,000 MAY BE GRANTED. THE MORTGAGE LOAN DISCLOSURE STATEMENT (MLDS) IS NOT REQUIRED ON FEDERALLY RELATED LOANS. IF THE BORROWER FAILS TO DISCLOSE LIENS OR INACCURATELY PROVIDES BALANCES DUE SO A LOAN CANNOT BE FUNDED, THE BORROWER MAY BE LIABLE FOR THE BROKER’S COMMISSION AS WELL AS COSTS INCURRED. NEW DISCLOSURE FORMS FOR BOTH THE BROKER AND LENDER HAVE A LOT MORE INFORMATION FOR THE CONSUMER.

50. ADDITIONAL MORTGAGE LOAN DISCLOSURES REAL ESTATE SETTLEMENTNPROCEDURES ACT (RESPA)--- PROVIDES CONSUMERS WITH A FAIR UNDERSTANDING OF SETTLEMENT COSTS SO THAT RESIDENTIAL PURCHSERS CAN SHOP FOR SETTLEMENT SERVICES AND MAKE INFORMED DECISIONS. THE PURPOSE OF THE NEW RESPA LAWS WERE TO; 1. PROVIDE ADVANCE DISCLOSURE 2. ELIMINATE KICKBACKS 3. REDUCE IMPOUND ACCOUNTS 4. REFORM TITLE RECORD KEEPING RESPA PROHIBITS A SELLER FROM REQUIRING THE HOME BUYER TO USE A PARTICULAR TITLE INSURANCE COMPANY, EITHER DIRECTLY OR INDIRECTLY, AS A CONDITION OF SALE.