“Regulatory risk” is a term of art used by regulators and compliance personnel alike to refer to the possible consequences to the general public and the bank of noncompliance with any particular regulation. Real estate lending gives rise to a myriad of regulatory risks. Factors under this risk category could potentially include financial harm to borrowers; legal, reputation, and financial harm to a financial institution; new, evolving or amended laws and regulations, corrective action and the potential for civil and financial liability. The many risks inherent in real estate-related consumer protection laws and regulations, as well as commercial real estate laws and regulations, will vary in relation to changes in the law, the marketing of products and other public policy considerations.
The articles contained in this section of the NBA Compliance Handbook are designed to address the several regulatory considerations that arise in real estate lending matters. The subjects covered in this section include: Real Estate Financing covering Conventional Purchase Money Mortgage Loans for Residential Single-Family Dwellings and Loan Underwriting Procedures; Selected Forms and Notices, including Disclosure and Notice Requirements for Real Estate Loans as required by Regulations B and Z; Flood Insurance Compliance; a Checklist for Residential Purchase Money Conventional Real Estate Loan; Real Estate Settlement Procedures Act (RESPA Compliance) Summary; Private Mortgage Insurance Cancellation Article; Homeownership Counseling Notification Explanation; Regulation C: Implementing the Home Mortgage Disclosure Act; Fair Housing Act; Adjustable Rate Mortgages (Regulation Z); HOEPA: “High Rate”, Closed-End Home Equity Loans; Reverse Mortgages; Trust Deeds – Optional Future Advances Clause; Farm Homestead Protection Act; Real Estate Appraisals; Real Estate Lending Standards; Security Interest in Rents; and Real Estate Closing Agent - “Good Funds” state legislation.