When there is no tax return history for a rental property, FHA guidelines require lenders to reduce the gross rental income by 25% to account for vacancies and maintenance.
"If there is no history of rental income on the borrower's tax returns, the lender must reduce the market rent by 25% before considering it as effective income."
- HUD 4000.1 FHA Single Family Housing Policy Handbook
References:
HUD 4000.1, FHA Rental Income Requirements (see Rental Income)

The Real Estate Settlement Procedures Act (RESPA) applies to federally related mortgage loans, which include:
* Loans made by lenders insured by a federal agency (such as FHA or VA loans)
* Loans intended for sale to Fannie Mae or Freddie Mac
* Loans from lenders that are federally regulated or insured
RESPA's goal is to protect consumers by requiring disclosures related to the costs of real estate transactions, preventing kickbacks, and ensuring transparency in the settlement process. It applies to most residential mortgage loans.
Other options:
* County-related mortgage loans (B), state registration loans (C), and unified commerce loans (D) are not standard terms under RESPA.
References:
* Real Estate Settlement Procedures Act (RESPA)
* 12 CFR Part 1024, Regulation X

Under Federal Reserve Regulation Z, which implements the Truth in Lending Act (TILA), interest is classified as a finance charge because it represents the cost of borrowing the funds over the life of the loan.
Finance charges include any fee that a borrower pays as a condition of obtaining the loan, such as interest, points, and certain fees.
* Notary fees (A), credit report fees (C), and title insurance (D) are not considered finance charges because they are third-party fees not directly related to the cost of borrowing.
References:
Truth in Lending Act (TILA), 12 CFR §1026.4
CFPB Regulation Z Guidelines

To prevent fraud, mortgage companies are required to independently verify information provided in the loan application by contacting third parties not involved in the transaction (e.g., employers, financial institutions).
Relying solely on documents supplied by the borrower or MLO can lead to acceptance of falsified information.
"Verification of income, employment, and other borrower information must be obtained directly from third parties not involved in the transaction."
- Fannie Mae Selling Guide; SAFE MLO National Test Study Guide
References:
Fannie Mae, Verification of Employment and Income

Under the Homeowners Protection Act (HPA) of 1998, PMI must be automatically terminated by the lender when the principal balance reaches 78% of the original value of the property (based on the original amortization schedule), provided the borrower is current on payments.
"PMI must be automatically terminated by the lender when the principal balance of the mortgage is first scheduled to reach 78 percent of the original value of the property, if the borrower is current on payments."
- 12 USC § 4901-4910, Homeowners Protection Act (HPA)
References:
CFPB, Private Mortgage Insurance Cancellation
Homeowners Protection Act of 1998