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MLO-National 2013 > MLO-Federal Mortgage-Related Laws > Flashcards

MLO-Federal Mortgage-Related Laws Flashcards

1
Q
  1. According to RESPA, the HUD-1 must be used for:
    a. all commercial and residential property.
    b. all residential property.
    c. business property.
    d. 1-4 residential property.
A

d. 1-4 residential property.

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2
Q
  1. The Truth in Lending Act applies to all real estate loans except:
    a. personal loans.
    b. business loans.
    c. family loans.
    d. two-unit income property to be owner occupied within a year.
A

b. business loans.
b. business loans.
Correct answer is (b).
Business, commercial, and agricultural loans are exempt from the Truth in Lending Disclosures. The Truth in Lending Act is found in 15 United States Code. Exempt transactions are found in Section 1603.

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3
Q
  1. Regulation B implements the:
    a. ECOA.
    b. HMDA.
    c. RESPA.
    d. TILA.
A

a. ECOA.

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4
Q
  1. According to the ECOA, which of the following does not have to be included in an adverse action notice?
    a. Appraiser
    b. Credit bureau
    c. Lender
    d. Regulator
A

a. Appraiser
Correct answer is (a).
Under ECOA, the credit bureau, lender, and federal regulator must be included on a statement of credit denial. The appraiser’s name does not have to be included even if the appraised value of the property was the reason for the denial of credit.

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5
Q
  1. The SAFE Act requires mortgage loan originators to complete all of the following in their pre-licensure
    education courses, except:
    a. 2 hours of standards on non-traditional mortgage lending.
    b. 3 hours of ethics, which must include fraud, consumer protection, and fair lending.
    c. 3 hours of federal law and regulations.
    d. 5 hours of appraisal standards.
A

d. 5 hours of appraisal standards.

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6
Q 
6. Which law requires the disclosure of the late payment charged or the method used to compute a late
payment charge?
a. ECOA
b. FCRA
c. RESPA
d. TILA
A

d. TILA
Correct answer is (d).
A late payment fee is a true cost of credit. Therefore, it must be disclosed to the consumer under the Truth in Lending Act.

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7
Q
  1. A few years ago, Bill became a victim of identity theft. Recently, Bill received a corrected credit clearance from Indent Credit Reporting Services. Indent accurately cleared Bill’s credit records of the harmful creditoriginating from the identity theft. The theft originated due to their incorrect maintenance of information collection procedures. Which federal law protected Bill’s consumer rights?
    a. Consumer Creditor Law
    b. Equal Consumer Law
    c. Fair Credit Reporting Act
    d. Truth in Lending Act
A

c. Fair Credit Reporting Ac
Correct answer is (c).
The Fair Credit Reporting Act (FCRA) is one of the most important laws that protect consumer identity and credit information. It is designed to promote the accuracy, fairness, and privacy of the information collected and maintained by credit reporting agencies.

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8
Q
  1. All of the following are SAFE Act requirements for state-licensed mortgage loan originators, except:
    a. undergo drug testing to ensure the competency of the mortgage loan originator.
    b. pass a written qualified test.
    c. submit fingerprints for a criminal background check.
    d. complete prelicensure education courses.
A

a. undergo drug testing to ensure the competency of the mortgage loan originator.
Correct answer is (a).
The SAFE Act requires state-licensed mortgage loan originators to pass a written qualified test, to complete prelicensure education courses, to take annual continuing education courses, and requires all MLOs to submit fingerprints to the Nationwide Mortgage Licensing System (NMLS) for submission to the FBI for a criminal background check.

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9
Q
  1. Which federal agency monitors compliance with the Equal Credit Opportunity Act?
    a. Federal Reserve Board
    b. Federal Trade Commission
    c. Housing and Urban Development
    d. Housing Finance Board
A

b. Federal Trade Commission
Correct answer is (b).
The FTC is the agency that monitors compliance with consumer protection laws of which the ECOA is one.

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10
Q
  1. On loans governed by RESPA, a buyer or seller may legally be charged for all of the following, except:
    a. preparation of the loan documents.
    b. conducting an appraisal prior to the loan.
    c. preparation of the Uniform Settlement Statement.
    d. preparation of credit reports.
A

c. preparation of the Uniform Settlement Statement.

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11
Q
  1. According to RESPA, when does the mortgage loan originator have to give the Special Information
    Booklet to a borrower applying for a mortgage to purchase a home?
    a. After closing the transaction
    b. Within 3 days of receiving the loan application
    c. Within 3 business days of receiving the loan application
    d. Within 7 business days of receiving the loan application
A

c. Within 3 business days of receiving the loan application

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12
Q
  1. How frequently must a company update its internal Do Not Call list?
    a. Weekly
    b. Monthly
    c. Quarterly
    d. Yearly
A

b. Monthly
Correct answer is (b).
An internal Do No Call List must be updated every 30 days.

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13
Q
  1. The length of time that adverse credit collection information may appear in a credit report is regulated by:
    a. Regulation B.
    b. Regulation C.
    c. Regulation V.
    d. Regulation X.
A

c. Regulation V.
Correct answer is (c).
The Federal Reserve Board’s Regulation V implements the Fair Credit Reporting Act, which limits the number of years that negative credit may be included in consumer credit reports.

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14
Q
  1. The Real Estate Settlement Procedures Act pertains to federally related loans used to purchase 1-4
    single-family property used as a personal residence. RESPA regulates:
    a. credit practices.
    b. disclosures regarding settlement costs.
    c. interest rate disclosures.
    d. all closing practices for real property sales.
A

b. disclosures regarding settlement costs
Correct answer is (b).
RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. When borrowers apply for a mortgage loan, mortgage brokers and/or lenders must give the borrowers certain disclosures regarding settlement procedures and costs. This helps consumers understand settlement services.

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15
Q
  1. The SAFE Act states that a waiting period of __________ calendar days is required prior to the candidate
    being allowed to retake a failed test component.
    a. 7
    b. 14
    c. 30
    d. 60
A

c. 30

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16
Q
  1. Under RESPA, a lender making a loan that includes escrowed payments, is able to collect a maximum of how many months at closing?
    a. None
    b. One
    c. Two
    d. Three
A

c. Two
Correct answer is (c).
A lender may collect up to 2-month’s worth of payments.

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17
Q 
17. Which of the following must be disclosed under TILA and is the relative cost of credit expressed as a
yearly rate?
a. Finance charge
b. Annual percentage rate
c. Payment terms
d. Total amount financed
A

b. Annual percentage rate

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18
Q
  1. RESPA applies to ALL:
    a. commercial real estate loans.
    b. real estate purchase transactions.
    c. collaterized business loans.
    d. real estate transactions for 1-4 unit residential dwellings.
A

d. real estate transactions for 1-4 unit residential dwellings.

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19
Q 
19. What law promotes the informed use of consumer credit by requiring disclosures about its terms and
costs?
a. Community Reinvestment Act
b. Fair Credit Reporting Act
c. Home Mortgage Disclosure Act
d. Truth-in-Lending Act
A

d. Truth-in-Lending Act

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20
Q
  1. Regulation Z requires creditors to make good faith estimates of the required mortgage disclosures, and deliver or place them in the mail:
    a. no later than 3 days after receiving a consumer’s application for a dwelling-secured closed-end loan.
    b. no later than 3 business days after receiving a consumer’s application for a dwelling-secured closed-end loan.
    c. no later than 7 days after receiving a consumer’s application for a dwelling-secured closed-end loan.
    d. no later than 7 business days after receiving a consumer’s application for a dwelling-secured closed-end loan.
  2. The Housing and Economic Recovery Act (HERA)
A

b. no later than 3 business days after receiving a consumer’s application for a dwelling-secured closed-end loan.

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21
Q
  1. The Housing and Economic Recovery Act (HERA) was signed into law in July of:
    a. 2006
    b. 2007
    c. 2008
    d. 2009
A

c. 2008

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22
Q
  1. The SAFE Act requires all mortgage loan originators to pass the NMLS-developed SAFE Mortgage Loan
    Originator Test, including both national and state components, with a score of __________ or better on
    each component.
    a. 50%
    b. 70%
    c. 75%
    d. 80%
A

c. 75%

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23
Q
  1. According to TILA, for purposes of rescission and the 3-day or 7-day waiting period, how is a business
    day defined? A business day is defined as:
    a. all calendar days except Sundays and legal public holidays.
    b. a day in which the creditor’s offices are open to the public for carrying on substantially all of its business functions.
    c. Monday through Friday and 1/2 day on Saturday.
    d. all weekdays except legal holidays.
A

a. all calendar days except Sundays and legal public holidays.

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24
Q
  1. A loan officer knows that a prospective buyer will not qualify for a loan and tells the person not to waste
    the time applying for the loan. What law has been violated?
    a. CRA
    b. ECOA
    c. FCA
    d. NFIA
A

b. ECOA

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25
Q
  1. Prior to closing, the interest rates changed to a point of exceeding the tolerances. When must the
    borrower be provided with a revised GFE?
    a. Within 1 business day prior to closing
    b. Within 3 business days after discovering the changed circumstances
    c. Within 3 business days of closing
    d. Within 7 business days after discovering the changed circumstances
A

b. Within 3 business days after discovering the changed circumstances
Correct answer is (b).
When loan originators must provide a revised GFE, RESPA indicates that it should be done with three business days.

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26
Q
  1. The SAFE Act requires mortgage loan originators to:
    a. complete continuing education courses.
    b. obtain a college degree prior to licensing.
    c. pass an oral examination.
    d. do all of the above.
A

a. complete continuing education courses.

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27
Q
  1. The SAFE Act establishes licensing and registration requirements for:
    a. Mortgage Loan Brokers.
    b. Mortgage Loan Lenders.
    c. Mortgage Loan Officers.
    d. Mortgage Loan Originators
A

d. Mortgage Loan Originators

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28
Q
  1. According to SAFE requirements, how many hours of Nationwide Mortgage Licensing System (NMLS)-
    approved education is necessary prior to licensing?
    a. 5
    b. 10
    c. 15
    d. 20
A

d. 20

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29
Q
  1. Under the ECOA, a lender has how many days to notify an applicant of an underwriting decision?
    a. 3 days
    b. 10 days
    c. 30 days
    d. 45 days
A

c. 30 days

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30
Q
  1. According to the FACT Act, which of the following acts could be considered a failure to secure private
    information?
    a. Disposing of old files monthly at a document destruction company
    b. Dumping old files in the trash bin behind the building
    c. Shredding documents before disposing of them in the trash
    d. Throwing shredded documents in a land fill
A

b. Dumping old files in the trash bin behind the building

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31
Q
  1. Which of the following practices by mortgage brokers is prohibited?
    a. Acting as a lender in the same transaction
    b. Charging higher interest rate than other mortgage brokers in the neighborhood
    c. Offering credit from only one lender
    d. Referring a real estate agent to a customer for a fee
A

d. Referring a real estate agent to a customer for a fee

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32
Q
  1. How is the Truth in Lending Act implemented?
    a. Regulation B
    b. Regulation Z
    c. HUD
    d. Title 1
A

b. Regulation Z

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33
Q
  1. In 1974, the Equal Credit Opportunity Act implemented a provision to protect consumers, with additional
    amendments added in 1976. The provision makes it unlawful for banks and other creditors to discriminate against creditworthy individuals based on sex or marital status. In addition, the provision protects consumers in receipt of public assistance. What is the provision called?
    a. Right to credit
    b. Right to rescind
    c. Regulation B
    d. Regulation Z
A

c. Regulation B

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34
Q
  1. Which of the following is not one of the federal mortgage-related laws covered in the national component
    of the SAFE Mortgage Loan Originator exam?
    a. Real Estate Settlement Procedures Act
    b. Truth-in-Lending Act
    c. Equal Credit Opportunity Act
    d. Securities Exchange Act of 1934
A

d. Securities Exchange Act of 1934

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35
Q 
35. A person found guilty of giving or accepting kickbacks under RESPA, may be fined up to \_\_\_\_\_\_\_ for
each violation.
a. $5,000
b. $10,000
c. $15,000
d. $20,000
A

b. $10,000

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36
Q
  1. Is it permissible for a loan originator to “gross up” child support received by an applicant?
    a. No, it cannot be grossed up, but 1/2 can be deducted from the house payment.
    b. Yes, it is always permissible to gross up any net income received by an applicant.
    c. No, child support cannot be grossed up because it is intended to support a child.
    d. Yes, it is permissible to gross up any verifiable net income that is likely to continue for three years or more.
A

d. Yes, it is permissible to gross up any verifiable net income that is likely to continue for three years or more.
Correct answer is (d).
Under ECOA all verifiable net incomes likely to continue for at least three years may be used and should be grossed up.

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37
Q
  1. Which of the following does not relate to one of the purposes of the SAFE Act?
    a. Enhancing consumer protection
    b. Improving mortgage interest rates
    c. Increasing integrity in the residential mortgage market
    d. Reducing fraud
A

b. Improving mortgage interest rates

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38
Q
  1. Prior to renewing a SAFE-compliant license, how many hours of continuing education are necessary?
    a. 3
    b. 5
    c. 8
    d. 12
A

c. 8

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39
Q
  1. The SAFE Act is part of the:
    a. Consumer Protection Act.
    b. Financial Institutions Reform, Recovery, and Enforcement Act.
    c. Housing and Economic Recovery Act.
    d. Housing and Community Development Act.
A

c. Housing and Economic Recovery Act.
Correct answer is (c).
The SAFE Act is part of the Housing and Economic Recovery Act of 2008 (HERA).

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40
Q
  1. Which additional disclosure must be made if only the annual percentage rate is disclosed in an advertisement for property?
    a. The amount or percentage of the down payment
    b. The terms of repayment
    c. The amount of any finance charge
    d. Requires no additional disclosure
A

d. Requires no additional disclosure`

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41
Q
  1. The Fair and Accurate Credit Transactions Act of 2003 allows consumers to request and obtain a free
    credit report once every __________ from each of the three nationwide consumer credit reporting companies—Equifax®, Experian®, and TransUnion®.
    a. 12 months
    b. 6 months
    c. 3 months
    d. month
A

a. 12 months

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42
Q
  1. Under the Truth in Lending Act, the dollar amount of the finance charge is not required on:
    a. loans to be used for the purpose of financing the purchase of the borrower’s dwelling.
    b. an agricultural loan to purchase of a farm tractor.
    c. a loan to purchase household furnishings.
    d. none of the above.
A

b. an agricultural loan to purchase of a farm tractor.
Correct answer is (b).
EXEMPT: business, commercial and agricultural loans. NOT EXEMPT: consumer and all real estate loans require a disclosure.

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43
Q
  1. What is the purpose of the SAFE Act?
    a. Creates a regional licensing database
    b. Helps ensure fraudulent activities
    c. Requires minimum licensing and education for loan originators
    d. Sets up a database to track loans
A

c. Requires minimum licensing and education for loan originators

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44
Q
  1. Which of the following properties is not an example of a “dwelling” as defined by the SAFE Act?
    a. Structure that contains one to four units
    b. Condo
    c. Office building
    d. Mobile home
A

c. Office building

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45
Q
  1. Which of the following course topics is not in compliance with the SAFE Act?
    a. Business development
    b. Commercial lending
    c. Financial planning
    d. All of the above
A

d. All of the above
Correct answer is (d).
The following course topics have been determined to not be in compliance with the SAFE Act: general self-improvement courses; financial planning courses; any courses related to selling, sales, marketing, lead-generation, or business development; loan product training, product marketing, or advertising; any courses related to consumer data mining, market segmentation, or minority marketing practices; any information technology-related course; commercial lending; and courses on federal, state, or local law not related to mortgage.

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46
Q
  1. Under the ECOA, a MLO has a completed application when the:
    a. applicant calls to inquire about loan programs.
    b. applicant requires a specific interest rate.
    c. MLO prepares a written application.
    d. MLO has received all the information that the creditor regularly obtains and considers in evaluating
    applications for a loan.
A

d. MLO has received all the information that the creditor regularly obtains and considers in evaluating applications for a loan.

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47
Q
  1. Of the following which is excluded from the calculation of the APR on the TIL Statement?
    a. Broker’s origination fee
    b. Lender’s discount points
    c. Mortgage insurance premium
    d. None of the above
A

d. None of the above
Correct answer is (d).
All of them are included, therefore none of them are excluded.

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48
Q
  1. The HOEPA addresses certain deceptive and unfair practices in home equity lending. It amends TILA and establishes requirements for certain loans with high rates and/or high fees. The rules for these loans are contained in what Section of Regulation Z?
    a. Section B
    b. Section X
    c. Section 23
    d. Section 32
A

d. Section 32

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49
Q
  1. RESPA (Real Estate Settlement Procedures Act) applies to which of the following?
    a. First-lien residential loans for condominiums only
    b. Second-lien commercial loans
    c. First-lien residential loans for cooperatives, condominiums and one-to-four family homes
    d. None of the above
A

c. First-lien residential loans for cooperatives, condominiums and one-to-four family homes

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50
Q
  1. Under the SAFE Act, what organization must help develop and maintain a nationwide mortgage licensing system (NMLS)?
    a. Conference of State Bank Supervisors
    b. National Association of Home Builders
    c. National Association of Mortgage Bankers
    d. The Federal Reserve
A

a. Conference of State Bank Supervisors
Correct answer is (a).
The SAFE Act requires the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to establish and maintain a nationwide mortgage licensing system and registry system for the residential mortgage.

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51
Q
  1. To meet the educational requirements of the SAFE Act, mortgage loan originators must complete:
    a. pre-licensing courses only.
    b. continuing education courses only.
    c. pre-licensing and continuing education courses.
    d. pre-licensing courses and a college degree.
A

c. pre-licensing and continuing education courses.

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52
Q
  1. Even though it is unlawful to consider race when underwriting a loan, which federal law requires the
    inclusion of this information on the loan application?
    a. ECOA
    b. FCRA
    c. HMDA
    d. SAFE Act
A

c. HMDA
Correct answer is (c).
The Home Mortgage Disclosure Act requires this information in order to determine if discriminatory practices are being used.

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53
Q
  1. Which of the following deals with the regulation of prospecting activities?
    a. National Do Not Call law
    b. Do Not Fax rules
    c. CAN-SPAM Act of 2003
    d. All of the above
A

d. All of the above
Correct answer is (d).
Anytime real estate solicitation involves the use of the telephone, cell phone, fax, or e-mail, the licensee must comply with applicable federal and state do not call, do not fax, and anti-spam laws.

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54
Q
  1. Regulation Z requires that consumers be informed of credit terms by the:
    a. real estate broker.
    b. trustee.
    c. creditor.
    d. escrow officer.
A

c. creditor.

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55
Q
  1. Each early TILA disclosure must include what statement?
    a. “TIL disclosure must reflect the terms of the legal obligation between the parties.”
    b. “TIL disclosure must state disclosure is an “estimate” when information necessary for an accurate
    disclosure is unknown.”
    c. “You are allowed to wait three (3) business days prior to signing loan documents.”
    d. “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”
A

Correct answer is (d).
Statement of fact.
55. Each early TILA disclosure must include what statement?
a. “TIL disclosure must reflect the terms of the legal obligation between the parties.”
b. “TIL disclosure must state disclosure is an “estimate” when information necessary for an accurate
disclosure is unknown.”
c. “You are allowed to wait three (3) business days prior to signing loan documents.”
d. “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”

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56
Q
  1. What must be included in a commercial e-mail message?
    a. Clear and conspicuous identification that the message is an advertisement or solicitation
    b. Valid and conspicuous phone number of the sender
    c. Clear and conspicuous notice that the recipient may not opt out of further commercial e-mail messages from the sender
    d. Clear and conspicuous identification of time and date of message
A

a. Clear and conspicuous identification that the message is an advertisement or solicitation

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57
Q
  1. Which of the following is not a SAFE Act licensing standard for state-licensed mortgage loan originators?
    a. Has had no felonies in the past 7 years
    b. Demonstrates no financial responsibility and lacks fitness
    c. Never had a loan originator license revoked
    d. Never had a felony involving fraud, dishonesty, breach or trust or money laundering
A

b. Demonstrates no financial responsibility and lacks fitness
Correct answer is (b).
All state-licensed mortgage loan originators must meet the following standards: never had a loan originator license revoked; has had no felonies in the past 7 years; never had a felony involving fraud, dishonesty, breach or trust or money laundering; demonstrates financial responsibility and general fitness; scores 75% or better on a national test; takes eight hours of continuing education annually; and maintain licensure through NMLS.

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58
Q
  1. The Department of Housing and Urban Development (HUD) defines “application” as a:
    a. means of relating one scenario to another.
    b. request from a borrower for an offer of mortgage loan terms.
    c. request from a loan originator for an offer of mortgage loan terms.
    d. software program.
A

b. request from a borrower for an offer of mortgage loan terms.

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59
Q
  1. The ECOA is implemented by:
    a. Regulation B.
    b. Regulation Z.
    c. the Board of Directors of NAR.
    d. the Board of Governors.
A

a. Regulation B.
Correct answer is (a).
The primary purpose of the ECOA, as implemented by Regulation B, is to prevent banks and other creditors from discriminating when granting credit by requiring them to make extensions of credit equally available to all creditworthy applicants with fairness, impartiality, and without discrimination on any prohibited basis. The regulation applies to consumer and other types of credit transactions.

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60
Q
  1. Of the following federal laws, which is NOT intended to primarily address issues of privacy and identity protection relating to credit?
    a. Gramm-Leach-Bliley
    b. FACTA
    c. ECOA
    d. FCRA
A

c. ECOA
Correct answer is (c).
Although all deal with consumer credit, the ECOA deals primarily with anti-discrimination in credit. The others deal directly with credit reporting and protecting the consumer’s financial records and identity.

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61
Q
  1. Which act was responsible for creating the Secure and Fair Enforcement for Mortgage Licensing Act of
    2008?
    a. State Mortgage Licensing Act (SMLA) of 2008
    b. Housing Refinement Act (HRA) of 2008
    c. Housing and Urban Development Act (HUDA) of 2008
    d. Housing and Economic Recovery Act (HERA) of 2008
A

d. Housing and Economic Recovery Act (HERA) of 2008
Correct answer is (d).
The Housing and Economic Recovery Act (HERA) of 2008 was signed into law on July 30. The Secure and Fair Enforcement for Mortgage Licensing Act is a key component of HERA.

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62
Q
  1. The Gramm-Leach-Bliley Act is also known as the:
    a. Fair and Accurate Credit Transaction Act.
    b. Financial Services Modernization Act.
    c. Fair Housing Initiatives Program.
    d. Housing and Economic Recovery Act.
A

b. Financial Services Modernization Act.
Correct answer is (b).
The Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, repealed part of the Glass-Steagall Act of 1933. The Gramm-Leach-Bliley Act allowed commercial banks, investment banks, securities firms, and insurance companies to consolidate.

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63
Q 
63. RESPA allows for the borrower to inspect the HUD-1 Settlement Statement how many days prior to the
actual settlement?
a. 7 days
b. 3 days
c. 2 days
d. 1 day
A

d. 1 day
Correct answer is (d).
RESPA allows the borrower to have at least 1 day to inspect the HUD-1 Settlement Statement.

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64
Q
  1. According to RESPA, which disclosure must be given to borrowers when they apply for a loan to
    purchase a home?
    a. Good Faith Estimate (GFE) of settlement costs
    b. Mortgage Servicing Disclosure Statement
    c. Special Information Booklet
    d. All of the above
A

Correct answer is (d).
All of the documents are required at the time of application or the lender must mail them within 3 business days of receiving the loan application.

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65
Q
  1. HOEPA is also referred to as Section:
    a. 8.
    b. 16.
    c. 30.
    d. 32.
A

d. 32.Correct answer is (d).

The Home Ownership and Equity Protection Act (HOEPA) is contained in Section 32 of Regulation Z

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66
Q
  1. According to RESPA, when does the mortgage loan originator have to give the Special Information Booklet to a borrower applying to refinance his or her home?
    a. At the time of application
    b. Within 3 days of receiving the loan application
    c. Within 3 business days of receiving the loan application
    d. None of the above
A

d. None of the above
Correct answer is (d).
The Special Information Booklet is required for purchase transactions only, not for a refinance.

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67
Q
  1. A mortgage broker is not required by RESPA to provide a written GFE, when:
    a. exact settlement service fees are not known.
    b. interest rates are expected to fall prior to closing.
    c. one is presented orally at the time of application.
    d. the loan application is denied within three business days of the application.
A

d. the loan application is denied within three business days of the application.

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68
Q
  1. Which of the following are objectives of the SAFE Act?
    a. Providing uniform license applications and reporting requirements for state licensed-loan originators.
    b. Providing a comprehensive licensing and supervisory database.
    c. Providing increased accountability and tracking of loan originators.
    d. All of the above.
A

d. All of the above.

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69
Q
  1. The Home Mortgage Disclosure Act passed in 1975, is implemented by:
    a. the FTC.
    b. the FRB.
    c. Regulation C
    d. Regulation H.
A

c. Regulation C
Correct answer is (c).
The Federal Reserve Board’s (FRB) Regulation C implements the Home Mortgage Disclosure Act. (HMDA)

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70
Q
  1. The red flag rules are part of:
    a. FHA.
    b. FACTA.
    c. MDIA.
    d. SAFE Act.
A

b. FACTA.
Correct answer is (b).
The FACT Act, section 114 is known as the Red Flag Rules.

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71
Q 
71. According to the federal Truth in Lending Act, which fees may be included in the finance charge for a
transaction secured by real property?
a. Interest
b. Credit report fees
c. Title fees
d. Appraisal fees
A

a. Interest
Correct answer is (a).
Regulation Z specifies the items included in the finance charge: interest, loan fees, assumption fees, finder’s fees, and buyer’s points. Regulation Z also specifies the items that are not to be included in the finance charge for a real estate loan are seller’s points, title fees, fees for preparing documents, notary charges, appraisal fees and credit-report fees. [TILA 6500, 226.4(c)]

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72
Q
  1. TILA as modified by the Mortgage Disclosure Improvement Act, requires a waiting period prior to
    consummation of a transaction. How long is the waiting period?
    a. 3 days from the receipt of the TIL Statement by the consumer
    b. 3 business days from the mailing or delivery of the TIL Statement to the consumer.
    c. 7 business days from the mailing or delivery of the TIL Statement to the consumer.
    d. 7 days from the receipt of the TIL Statement by the consumer
A

c. 7 business days from the mailing or delivery of the TIL Statement to the consumer.
Correct answer is (c).
MDIA requires a seven business day waiting period prior to consummation from delivery or mailing of the TIL Statement to the consumer prior to consummation. This timing begins when a creditor mails or otherwise delivers the TIL Statement to the consumer. It is not based on receipt date or assumed receipt date by the consumer but rather mailing or delivery by the creditor.

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73
Q 
73. Which law states that consumers are allowed 1 free credit report upon written request from the credit
reporting bureaus?
a. ECOA
b. FACT
c. FCRA
d. SAFE
A

c. FCRA
Correct answer is (c).
The Fair Credit Reporting Act (FCRA) gives consumers this right. Choice “b” FACT looks correct, but the appropriate abbreviations for the Fair and Accurate Credit Transactions Act are FACT Act or FACTA…NOT simply FACT.

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74
Q
  1. Which disclosures are regulated by Regulation Z?
    a. Truth in Lending Disclosure Statement, Right of Rescission, and Section 32 loan
    b. Truth in Lending Disclosure Statement and Adjustable-Rate Disclosures
    c. Truth in Lending Disclosure Statement
    d. Truth in Lending Disclosure Statement, Adjustable-Rate Disclosures, Right of Rescission, and Section 32 loans
A

d. Truth in Lending Disclosure Statement, Adjustable-Rate Disclosures, Right of Rescission, and Section 32 loans

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75
Q
  1. Regulation V implements the:
    a. ECOA.
    b. FCRA.
    c. HMDA.
    d. TILA.
A

b. FCRA.
Correct answer is (b).
The Fair Credit Reporting Act is implemented by the Federal Reserve Board’s Regulation V.

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76
Q
  1. Which of the following types of loans are exempt from RESPA?
    a. 4-unit residential building
    b. Condominiums
    c. Property with 25 acres or more
    d. Single-family property
A

Correct answer is (c).
RESPA covers 1-4 residential property. It does not cover land tracts of 25 or more acres, whether there is a residence or not.

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77
Q
  1. The 20 hours of pre-licensing education approved by the Nationwide Mortgage Licensing System
    includes:
    a. 3 hours of federal law and regulations.
    b. 5 hours of United States financial history courses.
    c. 9 hours of macroeconomic courses.
    d. 10 hours of mathematical calculation courses.
A

a. 3 hours of federal law and regulations.

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78
Q
  1. Can a consumer waive the 7-day or 3-day waiting periods regarding the TIL Statement disclosure?
    a. No, the waiting period cannot be waived
    b. No, only the creditor can waive the waiting period
    c. Yes, if the consumer can show that it is a bona fide personal financial emergency
    d. Yes, if the creditor needs to close the transaction to meet monthly performance goals
A

c. Yes, if the consumer can show that it is a bona fide personal financial emergency

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79
Q
  1. In advertising the availability of real estate loans, using any of the following phrases by itself would be a
    violation of the federal Truth in Lending Act’s Regulation Z, except:
    a. 5% down payment.
    b. 360 payments.
    c. easy terms available.
    d. 30-year loans.
A

c. easy terms available.

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80
Q
  1. Which act has the primary purpose of preventing banks and other creditors from discriminating when granting credit by requiring them to make extensions of credit equally available to all creditworthy
    applicants with fairness, impartiality, and without discrimination on any prohibited basis?
    a. ECOA
    b. FHLMC
    c. RESPA
    d. TILA
A

a. ECOA
Correct answer is (a).
The primary purpose of the Equal Credit Opportunity Act is to prevent banks and other creditors from discriminating when granting credit by requiring them to make extensions of credit equally available to all creditworthy applicants with fairness, impartiality, and without discrimination on any prohibited basis.

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81
Q
  1. Under the HMDA, which of the following information must be requested from borrowers?
    a. Applicants religion
    b. Applicants number of children
    c. Applicants national origin
    d. Applicants sexual orientation
A

c. Applicants national origin
Correct answer is (c).
HMDA requires lenders to ask applicants their race and national origin for monitoring purposes.

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82
Q
  1. The federal statute, that makes it a crime to use false or misleading methods to obtain customer information possessed by financial institutions is called the:
    a. Gordon-Leigh-Bailey Act.
    b. Fair Credit Reporting Act.
    c. Gramm-Leach Bliley Act.
    d. Fair and Accurace Credit Act.
A

c. Gramm-Leach Bliley Act.
Correct answer is (c).
The Gramm-Leach Bliley Act makes it a crime to use false or misleading methods to obtain customer information possessed by financial institutions.

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83
Q
  1. Which loan would exempt a lender from collecting statistical data under HMDA?
    a. A 1st on single-family residence
    b. A 1st on a small, 5-unit apartment building
    c. Refinancing a condominium
    d. A home equity loan
A

b. A 1st on a small, 5-unit apartment building
Correct answer is (b).
The Home Mortgage Disclosure Act (HMDA) applies to 1-4 residential property. Five units is considered commercial and is not subject to HMDA.

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84
Q
  1. Title V of HERA is more commonly known as the:
    a. FACT Act.
    b. FIRREA.
    c. SAFE Act.
    d. TILA.
A

Correct answer is (c).
The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) is Title V of the Housing and Economic Recovery Act of 2008 (HERA).

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85
Q
  1. Regulation V implements the:
    a. Home Mortgage Disclosure Act.
    b. Gramm-Leach-Bliley Act.
    c. Fair Credit Reporting Act.
    d. Real Estate Settlement Procedures Act.
A

c. Fair Credit Reporting Act.
Correct answer is (c).
Regulation V of the FRB implements the Fair Credit Reporting Act.

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86
Q
  1. The federal Fair Housing Act covers all of the following, except:
    a. construction of a duplex.
    b. loan for a new truck used in construction.
    c. purchasing an existing home.
    d. leasing rental housing
A

b. loan for a new truck used in construction
Correct answer is (b).
The Fair Housing Act does not cover personal property, such as a vehicle.

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87
Q
  1. The main purpose of RESPA is to:
    a. regulate all real estate loans.
    b. choose a lender that can process applications for loans.
    c. regulate home improvement loans.
    d. require that disclosures be made by lenders that make loans on 1-to-4 unit dwellings.
A

d. require that disclosures be made by lenders that make loans on 1-to-4 unit dwellings.
Correct answer is (d).
RESPA’s main purpose is to provide purchasers of real property with information to take the mystery out of settlement (closing) process.

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88
Q
  1. The SAFE Act helps reduce fraud by establishing licensing requirements for:
    a. appraisers.
    b. home inspectors.
    c. mortgage loan originators.
    d. real estate brokers.
A

c. mortgage loan originators.
Correct answer is (c).
The SAFE Act enhances consumer protection and reduces fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators.

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89
Q 
89. Under Regulation Z, which advertisement would NOT trigger the requirement to disclose all finance
charges and the APR?
a. "5% 30-year mortgage"
b. "Monthly payments under $800"
c. "No money down"
d. "Stop paying rent"
A

d. “Stop paying rent”
Correct answer is (d).
Choices (a) and (b) obviously are triggers. Choice (c) is also a trigger because “No money down” means $0 down payment. Reg. Z Sec. 226.24 Advertising (d)(1)(i) states that “the amount or percentage of any downpayment” is a triggering term. The advertisement should say “Low downpayment” to avoid the trigger.

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90
Q
  1. Which type of mortgage loan originator does not require registration according to SAFE Act requirements?
    a. Those employed by credit unions.
    b. Those employed by a federally insured depository institution.
    c. Those employed by banks owned and operated by another country.
    d. Those employed by a federally-supervised subsidiary.
A

c. Those employed by banks owned and operated by another country.
Correct answer is (c).
The SAFE Act states that a mortgage loan originator employed by a federally-insured depository institution, any credit union, or an owned and controlled subsidiary that is federally-supervised, must be registered.

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91
Q
  1. Unless state consumer protection laws conflict with a particular federal law, the:
    a. state law usually applies.
    b. state law never applies.
    c. county law applies.
    d. federal law applies.
A

a. state law usually applies.

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92
Q
  1. According to the SAFE Act, an individual who takes a residential mortgage loan application and offers or
    negotiates terms of a residential mortgage loan for compensation or gain is known as a:
    a. loan broker.
    b. loan originator.
    c. loan processor.
    d. real estate broker.
A

b. loan originator.

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93
Q
  1. Under which federal law are negative amortization loans not permitted?
    a. ECOA
    b. FACTA
    c. HOEPA
    d. TILA
A

c. HOEPA
Correct answer is (c).
The Home Ownership and Equity Protection Act (HOEPA) does not permit loans that result in a negative amortization.

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94
Q
  1. A federal law requires a loan officer to provide information on an applicant’s race or national origin if the
    applicant does not want to provide it voluntarily. Which law requires this?
    a. ECOA implemented by Reg. B
    b. HMDA implemented by Reg. C
    c. PCFI implemented by Reg. P
    d. FCRA implemented by Reg. V
A

b. HMDA implemented by Reg. C
Correct answer is (b).
The Home Mortgage Disclosure Act (HMDA) implemented by Reg.C requires the national origin, race, and sex of applicant be marked on every application.

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95
Q 
95. Within \_\_\_\_\_\_\_\_\_\_\_\_ after receiving an application for a mortgage loan, a creditor must mail or deliver
disclosures to the borrower.
a. 1 day
b. 1 business day
c. 3 days
d. 3 business days
A

d. 3 business days
Correct answer is (d).
Both TILA (Reg. Z) and RESPA (Reg. X) require that disclosure are mailed within 3 business of receipt of a mortgage loan application.

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96
Q
  1. Which act ensures that all consumers are given an equal chance to obtain credit?
    a. Fair Credit Reporting Act
    b. Equal Credit Opportunity Act
    c. Truth in Lending Act
    d. Rights to Financial Privacy Act
A

b. Equal Credit Opportunity Act

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97
Q
  1. Which Act establishes procedures for correcting credit records, providing them for legitimate business
    needs only, and keeping them confidential?
    a. Equal Credit Opportunity Act
    b. Fair Credit Reporting Act
    c. Home Equity Loan Consumer Protection Act
    d. Section 32 Mortgages
A

b. Fair Credit Reporting Act
Correct answer is (b).
The Fair Credit Reporting Act establishes procedures for correcting mistakes on a person’s credit record and requires that a consumer’s record only be provided for legitimate business needs. It also requires that the record be kept confidential.

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98
Q
  1. Which loan would be exempt from Regulation Z?
    a. A loan for agricultural purposes made by a federally chartered bank.
    b. A loan for household purposes obtained from a credit union.
    c. A $90,000 mortgage from a savings association secured by a single-family residence.
    d. A $15,000 loan used to purchase an owner-occupied mobile home.
A

a. A loan for agricultural purposes made by a federally chartered bank.
Correct answer is (a).
Agricultural and other business loans are exempt from Regulation Z. Even though a mobile home may be considered personal property, if it is intended as the consumer’s principal dwelling it is governed by Regulation Z.

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99
Q
  1. The main purpose of the Truth in Lending Act is to:
    a. minimize usury.
    b. establish the maximum annual percentage rate.
    c. limit the cost of credit available to consumers.
    d. promote the informed use of consumer credit.
A

d. promote the informed use of consumer credit.
Correct answer is (d).
The main purpose of the Truth in Lending Act is to promote the informed use of consumer credit by requiring creditors to disclose credit terms so consumers can make comparisons between different sources of credit.

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100
Q
  1. According to the Fair Credit Reporting act, with the exception of _________, 7 years is the maximum
    length of time that information can be reported on a credit report.
    a. collections
    b. credit card slow payments
    c. bankruptcy
    d. mortgage accounts
A

c. bankruptcy
Correct answer is (c).
A credit reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. There is no time limit on reporting information about criminal convictions.

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101
Q
  1. What is the main purpose of the FCRA?
    a. Create procedures to deny credit to creditworthy borrowers.
    b. Create procedures for consumers to dispute accurate information in their credit reports.
    c. Create procedures to ensure confidentiality and accuracy of consumer credit information.
    d. Require creditors to provide consumers copies of their credit reports.
A

c. Create procedures to ensure confidentiality and accuracy of consumer credit information.
Correct answer is (c).
The federal Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness and privacy of information in the files of consumer reporting agencies.

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102
Q
  1. Which of the following is not an objective of the SAFE Act?
    a. Providing uniform license applications and reporting requirements for state licensed-loan originators
    b. Providing no anti-fraud measures
    c. Providing a comprehensive licensing and supervisory database
    d. Providing increased accountability and tracking of loan originators
A

b. Providing no anti-fraud measures
Correct answer is (b).
Objectives of the SAFE Act include providing uniform license applications and reporting requirements for state licensed-loan originators; providing a comprehensive licensing and supervisory database; aggregating and improving the flow of information to and between regulators; providing increased accountability and tracking of loan originators; and others.

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103
Q
  1. Which of the following would be exempt from Regulation Z?
    a. Loan for agricultural purposes made by a federally chartered bank.
    b. Loan for household purposes obtained from a credit union.
    c. $90,000 mortgage from a savings and loan institution secured by a single-family residence.
    d. $15,000 loan used to purchase an owner-occupied mobile home.
A

a. Loan for agricultural purposes made by a federally chartered bank.
Correct answer is (a).
Agricultural and other business loans are exempt from Regulation Z. Even though a mobile home may be considered personal property, if it is intended as the consumer’s principal dwelling, it is governed by Regulation Z.

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104
Q
  1. According to TILA, what is the rescission period for borrowers who have not been provided with full
    disclosure of the APR (within stated limits)?
    a. 3 days
    b. 3 weeks
    c. 3 months
    d. 3 years
A

d. 3 years
Correct answer is (d).
Under the Truth in Lending Act, if the APR stated in the TILA disclosure is greater than the specified limits (the greater of 0.5% of the loan amount or $100), the borrower has 3 years to rescind the contract.

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105
Q
  1. HOEPA is an addendum of:
    a. Regulation B.
    b. Regulation C.
    c. Regulation X.
    d. Regulation Z.
A

d. Regulation Z.
Correct answer is (d).
The Home Ownership and Equity Protection Act (HOEPA) is Section 32 of Regulation Z.

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106
Q
  1. Which of the following practices is not prohibited by RESPA?
    a. Seller-required title insurance
    b. Unlimited deposits into escrow accounts
    c. Earned fees
    d. Kickbacks and fee-splitting
A

c. Earned fees
Correct answer is (c).
Certain practices are prohibited under the Real Estate Settlement Procedures Act. These include kickbacks, fee splitting, unearned fees, seller-required title insurance, and unlimited deposits into escrow accounts.

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107
Q
  1. How is the conforming loan limit for conventional loans set each year?
    a. Fannie Mae and Freddie Mac determine the loan limits each year from the data collected in HMDA
    reports from the previous year.
    b. The Federal Housing Finance Agency (FHFA) uses the October to October percentage increase/decrease in average housing prices in the Monthly Interest Rate Survey of the Federal Housing Finance Agency (FHFA) to adjust the conforming loan limits for the subsequent year.
    c. The Federal Housing Administration (FHA), which is part of the U.S. Dept. of Housing and Urban
    Development (HUD) and administers various mortgage loan programs, determines which loans
    cannot exceed the statutory limit and adjusts the loan limits accordingly.
    d. The US Treasury Department uses the current housing trend to determine the current values and then adjusts the conforming loan amount for the subsequent year.
A

b. The Federal Housing Finance Agency (FHFA) uses the October to October percentage increase/decrease in average housing prices in the Monthly Interest Rate Survey of the Federal Housing Finance Agency (FHFA) to adjust the conforming loan limits for the subsequent year.
Correct answer is (b).
The Federal Housing Finance Agency (FHFA) publishes the conforming loan limits annually that apply to all conventional mortgages that are delivered to Fannie Mae, including both the general loan limits and the high-cost area loan limits. High-cost area loan limits vary by geographic location.

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108
Q
  1. The Truth in Lending Act is contained in the:
    a. Business and Profession Code.
    b. Federal Brokers Act.
    c. Federal Consumer Credit Protection Act.
    d. Federal Fair Housing Act.
A

c. Federal Consumer Credit Protection Act
Correct answer is (c).
The Consumer Credit Protection Act of 1968 was landmark legislation that launched Truth in Lending disclosures of the terms and costs of consumer credit - creditors had to state the cost of borrowing in a common language so that the consumer could determine what the charges are, compare the costs of loans, and shop for the best credit deal.

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109
Q
  1. The regulations of RESPA pertain to:
    a. all residential property.
    b. residential properties with 1-to-4 units.
    c. commercial properties only.
    d. agricultural and farm property.
A

b. residential properties with 1-to-4 units.
Correct answer is (b).
RESPA applies to all federally related mortgage loans made by lenders for the sale or transfer of 1-4 unit residential dwellings.

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110
Q
  1. Which statement regarding RESPA is incorrect?
    a. RESPA applies to all residential property.
    b. RESPA gives the buyer to inspect the settlement statement at least 1 day before closing.
    c. RESPA limits the amount of escrow reserves.
    d. RESPA requires a HUD booklet and GFE to be given to the buyer.
A

a. RESPA applies to all residential property.
Correct answer is (a).
RESPA applies to 1-4 family residences and condominiums.

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111
Q 
111. Which of the following is a professional requirement for state-licensed Mortgage Loan Originators
according to the SAFE Act?
a. $1,000 licensing fee
b. Criminal background check
c. Possession of a college degree
d. Submission of fingerprints to the CIA
A

b. Criminal background check
Correct answer is (b).
The SAFE Act requires all MLOs to submit fingerprints to the Nationwide Mortgage Licensing System (NMLS). Afterwards, the fingerprints are sent to the Federal Bureau of Investigation to complete a criminal background check.

112
Q
  1. Which statement is not a purpose of the Real Estate Settlement Procedures Act?
    a. Help consumers get fair settlement services by requiring that key service costs be disclosed in advance.
    b. Protect consumers by prohibiting certain practices that increase the cost of settlement services.
    c. Protect consumers by eliminating kickbacks and referral fees that unnecessarily increase the costs
    of settlement services.
    d. Disclose the APR for a loan.
A

d. Disclose the APR for a loan.
Correct answer is (d).
The purposes of RESPA are to help consumers get fair settlement services by requiring that key service costs be disclosed in advance, to protect consumers by eliminating kickbacks and referral fees that unnecessarily increase the costs of settlement services, and to further protect consumers by prohibiting certain practices that increase the cost of settlement services.

113
Q
  1. Under the ECOA, a lender must provide an applicant a copy of the appraisal report obtained in
    connection with the loan for which the applicant applied. Which statement is incorrect?
    a. The applicant must send a written request within a reasonable period of time of the application
    b. The lender must promptly send a copy of the appraisal report upon receiving the written request
    c. The applicant must pay for the cost of the appraisal in order to be entitled to a copy
    d. The lender may require the applicant to reimburse the lender for the cost of the appraisal
A

c. The applicant must pay for the cost of the appraisal in order to be entitled to a copy
Correct answer is (c).
Each creditor shall promptly furnish an applicant, upon written request by the applicant made within a reasonable period of time of the application, a copy of the appraisal report used in connection with the applicant’s application for a loan that is or would have been secured by a lien on residential real property. The creditor may require the applicant to reimburse the creditor for the cost of the appraisal. [US Code, title 15, Chpt. 41, SubChpt. IV, Section 1691.(d)]

114
Q
  1. What is the SAFE Act designed for?
    a. To assist the flow of the real estate market
    b. To enhance consumer protection and reduce fraud
    c. To implement safety standards in home inspection
    d. To help consumers seek better appraisals for their properties
A

b. To enhance consumer protection and reduce fraud
Correct answer is (b).
The SAFE Act is designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing and registration of state-licensed mortgage loan.

115
Q
  1. Creditors must verify that an applicant can repay the mortgage loan under the:
    a. CRA.
    b. HMDA.
    c. HOEPA.
    d. HPA.
A

c. HOEPA.
Correct answer is (c).
The Home Ownership and Equity Protection Act (HOEPA) requires verification of the applicant’s ability to repay a high-cost/high-interest loan.

116
Q
  1. Which data is NOT part of the data collected for monitoring under Regulation C?
    a. Race
    b. Age
    c. National origin
    d. Sex
A

b. Age
Correct answer is (b).
The Federal Reserve Board’s Regulation C implements the Home Mortgage Disclosure Act (HMDA). HMDA does not collect data on the borrower’s age.

117
Q
  1. RESPA requires that borrowers receive disclosures at various times. Which of the following disclosures usually is not made at the time of the loan application?
    a. Annual Escrow Loan Statement
    b. Good Faith Estimate of Settlement Costs
    c. Special Information Booklet
    d. Loan Servicing Disclosure Statement
A

a. Annual Escrow Loan Statement
Correct answer is (a).
When a potential homebuyer applies for a home loan, the lender must give the buyer a Special Information Booklet, Good Faith Estimate, and a Mortgage Servicing Disclosure Statement.

118
Q
  1. Lenders submit Loan Application/Registers in order to comply with the:
    a. FTC.
    b. FACT Act.
    c. FCRA.
    d. HMDA.
A

Correct answer is (d).
The Home Mortgage Disclosure Act (HMDA) requires lenders to track the ethnicity, race, and sex of borrowers for residential loans.

119
Q 
119.
	In which document does RESPA require that both the real estate broker commission and the mortgage broker compensation are disclosed?
	a.	GFE
	b.	HUD-1
	c.	TILA
	d.	All of the above
A

b. HUD-1
Correct answer is (b).
The HUD-1 Statement requires that sources of compensation for all parties to the transaction are disclosed.

120
Q
  1. A commercial e-mail message is any one sent to:
    a. facilitate or confirm an existing commercial transaction.
    b. advertise or promote a product or service.
    c. provide notice about certain changes in a subscription, membership, an account or loan.
    d. confirm a transaction.
A

b. advertise or promote a product or service.
Correct answer is (b).
A commercial e-mail message is any electronic mail message, the primary purpose of which is the commercial advertisement or promotion of a commercial product or service. E-mail sent as part of an ongoing commercial transaction, called transactional e-mail messages, are excluded from the Act.

121
Q 
121.
	SAFE requires \_\_\_\_\_\_\_\_\_\_ hours of NMLS approved pre-licensure education to be completed.
a.	5
b.	10
c.	15
d.	20
A

d. 20

122
Q
  1. According to the SAFE Act, states are encouraged to establish a system that keeps track of:
    a. mortgage interest rates around the country.
    b. mortgage loan originators offering the best loan programs.
    c. mortgage loan originators that meet SAFE Act requirements.
    d. real estate licensees with a negative employment history.
A

c. mortgage loan originators that meet SAFE Act requirements.
Correct answer is (c).
The SAFE Act encourages states to participate in the Nationwide Mortgage Licensing System and Registry, and requires states to have a system in place for licensing and registering loan originators that meet its requirements.

123
Q
  1. The SAFE Act requires states to set minimum net worth or surety bond requirements or establish a:
    a. recovery fund paid for by consumers.
    b. recovery fund paid for by insurance companies.
    c. recovery fund paid for by loan originators.
    d. state-imposed tax to fund a recovery account.
A

c. recovery fund paid for by loan originators.

124
Q

124.
Title VIII of the Civil Rights Act of 1968 and the Fair Housing Amendments Act of 1988, taken together constitute the:
a. Civil Rights Act.
b. Fair Housing Act.
c. Fair Housing Initiative.
d. Fair and Equal Housing Protection Act.

A

b. Fair Housing Act.
Correct answer is (b).
Title VIII of the Civil Rights Act of 1968 and the Fair Housing Amendments Act of 1988, taken together constitute the Fair Housing Act.

125
Q

125.

How many hours does the SAFE Act require of continuing education to be completed each year prior to renewal?

A

8

126
Q

On the initial TIL Statement the APR for an ARM is 6.55%. If the APR were to change to 7% prior to close, what is the waiting period after redisclosure?

a. 3 days
b. 3 business days
c. 7 days
d. 7 business days

A

Correct answer is (b).
Any change to the initial APR for an ARM that changes more than 1/4% must be redisclosed, which triggers an 3-business day waiting period after the borrower received the updated disclosures.

127
Q 
127.
	Of the following, which is NOT asked on loan applications?
	a.	National Origin
	b.	Race
	c.	Religion
	d.	Sex
A

c. Religion

128
Q
  1. The Financial Services Modernization Act of 1999:
    a. allowed commercial banks, investment banks, securities firms, and insurance companies to consolidate.
    b. is also known as the Gramm-Leach-Bliley Act.
    c. repealed part of the Glass-Steagall Act.
    d. is all of the above.
A

Correct answer is (d).
The Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, repealed part of the Glass-Steagall Act of 1933. The Gramm-Leach-Bliley Act allowed commercial banks, investment banks, securities firms, and insurance companies to consolidate. d. is all of the above.

129
Q
  1. Which situation would violate ECOA but is required by HMDA?
    a. Based on your customer’s accent, you ask where he is from?
    b. Your customer’s last name is Kim and you ask, “That’s Korean, right?”
    c. You notice that your customer is wearing a beautiful cross and ask which church she attends.
    d. You ask a very pregnant customer if she plans to have more children.
A

b. Your customer’s last name is Kim and you ask, “That’s Korean, right?”
Correct answer is (b).
HMDA requires that race, ethnicity, and sex are noted by the lender based on visual observation and surname. If Mr. Kim chose not to complete Part X of the Uniform Residential Loan Application, the loan originator could mark “Asian” as Mr. Kim’s race.

130
Q
  1. TILA requires that disclosures must be:
    a. clear and conspicuous, in writing, retainable by the consumer, reflect terms of the legal obligation, and provided to the applicant within 3 business days after receipt of an application for credit.
    b. clear and conspicuous, in writing, retainable by the consumer, reflect terms of the legal obligation, use estimates appropriately (and if based on estimates indicate this fact), and provided to the applicant within 3 business days after receipt of an application for credit.
    c. clear and conspicuous, in writing, retainable by the consumer, use estimates appropriately (and if based on estimates indicate this fact), and provided to the applicant within 3 business days after receipt of an application for credit.
    d. clear and conspicuous, retainable by the consumer, reflect terms of the legal obligation, use estimates appropriately (and if based on estimates indicate this fact), and provided to the applicant within 3 business days after receipt of an application for credit.
A

b. clear and conspicuous, in writing, retainable by the consumer, reflect terms of the legal obligation, use estimates appropriately (and if based on estimates indicate this fact), and provided to the applicant within 3 business days after receipt of an application for credit.
Correct answer is (b).
TILA states that disclosures must be clear and conspicuous, in writing, retainable by the consumer, reflect terms of the legal obligation, use estimates appropriately (and if based on estimates indicate this fact), and provided to the applicant within 3 business days after receipt of an application for credit.

131
Q
  1. If a loan originator has a SAFE-compliant license, the 20 hours education approved by the Nationwide Mortgage Licensing System:
    a. must be completed again to obtain licensing in another state.
    b. must be completed every year to maintain licensed status.
    c. does not have to be completed again.
    d. must be completed again unless a fee is paid.
A

Correct answer is (c).
SAFE requires 20 hours of NMLS approved pre-licensure education to be completed. This education need only be completed or certified once, regardless of the number of states in which one is licensed.

132
Q
  1. Under the SAFE Act, which person would not be considered a loan originator?
    a. Mortgage loan broker who takes applications
    b. Loan officer who calls prospective borrowers to discuss loan terms
    c. Loan processor who also negotiates the terms of loans
    d. Office manager of a mortgage company
A

d. Office manager of a mortgage company

133
Q

One of the most important laws protecting consumers’ identities and credit information is the:

a. Fair Credit Reporting Act.
b. Fair Debt Collection Practices Act.
c. Federal Trade Commission Act.
d. Home Mortgage Disclosure Act.

A

a. Fair Credit Reporting Act.
Correct answer is (a).
All are important consumer protection laws, but the FCR protects credit information.

134
Q

Brad just took a listing on a three-bedroom fixer-upper home in a school district with high ratings. Brad wrote the following ads. Which ad follows acceptable advertising guidelines?

a. “This is the best home in the neighborhood and is in an exceptional school district.”
b. “Nice fixer, three-bedrooms, located by parks and schools with high ratings.”
c. “Clean, bright, and move-in ready for the right family.”
d. “Beautiful home near parks, in a Hispanic neighborhood.”

A

b. “Nice fixer, three-bedrooms, located by parks and schools with high ratings.
Correct answer is (b).
Choices (a), (c), and (d) use half-truths, offensive terms, inflated claims and/or ambiguous or superlative terms.

135
Q
  1. If only the annual percentage rate (APR) is disclosed in an advertisement for property, which additional disclosures must be made?
    a. The amount or percentage of the down payment
    b. The terms of repayment
    c. The amount of any finance charge
    d. No other disclosures are required
A

d. No other disclosures are required

136
Q

136.
In order to be eligible for a SAFE Act-compliant license, an applicant must not have a:
a. bad credit history.
b. felony conviction in the past seven years.
c. minor traffic violation in the past seven years.
d. real estate license.

A

Correct answer is (b).
To be eligible for a license under the SAFE Act, an individual must not have been convicted of a felony within the past seven years or convicted of certain types of felonies at any time prior to application.

137
Q
  1. Which of the following statements is true regarding the SAFE Act?
    a. A person can avoid the SAFE Act requirements by physically locating outside of the state
    b. A person can avoid the SAFE Act by physically locating out of state and conducting business via the internet
    c. A person can avoid the SAFE Act by physically locating out of state and conducting business via telephone
    d. If a person physically locates out of a state, he or she is not immune to the SAFE Act
A

d. If a person physically locates out of a state, he or she is not immune to the SAFE Act
Correct answer is (d).
According to the SAFE Act, each state is able to establish and enforce the provisions of the licensing system and prevents an individual from avoiding a state’s requirements by physically locating outside of the state and conducting business by telephone or other means.

138
Q

The __________ ensures that all consumers are given an equal chance to obtain credit.

a. Equal Credit Opportunity Act
b. RESPA
c. Rights to Financial Privacy Act
d. Truth in Lending Act

A

a. Equal Credit Opportunity Act
Correct answer is (a).
The Equal Credit Opportunity Act (ECOA) ensures that all consumers are given an equal chance to obtain credit. This does not mean that all consumers who apply for credit receive it.

139
Q

HOEPA is enforced by the:

a. FTC.
b. FDIC.
c. FIRPTA.
d. FRB.

A

a. FTC.
Correct answer is (a).
HOEPA is enforced by the Federal Trade Commission, which is the primary federal agency tasked with enforcing consumer credit laws.

140
Q

The federal Truth in Lending Act promotes informed consumer credit usage. What directive was issued to accomplish the TILA objectives by requiring lenders to state the cost of borrowing in a common language so that consumers can figure out what the charges are, compare the costs of loans, and shop for the best credit deal?

a. Equal Credit Opportunity Act
b. Finance Act B
c. Regulation B
d. Regulation Z

A

d. Regulation Z
Correct answer is (d).
To accomplish the objectives of TILA, the Board of Governors of the Federal Reserve System issued a directive called Regulation Z. It requires creditors to give certain disclosures to the consumer before making a loan contract.

141
Q

HUD’s Regulation __________ forbids a seller from requiring the use of a particular title company as a condition of the sale.

a. B
b. V
c. X
d. Z
A

c. X
Correct answer is (c).
HUD’s Reg. X, Sec. 3500.16 Title companies states “No seller of property that will be purchased with the assistance of a federally related mortgage loan shall violate section 9 of RESPA (12 U.S.C. 2608).”

142
Q

Which of the following costs would be included in the calculation of the APR on the TIL Statement.

a. Downpayment
b. Private mortgage insurance
c. Termite inspection
d. Title insurance

A

b. Private mortgage insurance
Correct answer is (b).
The APR reflects the actual cost of borrowing money expressed as a percentage, which includes PMI. The other costs are settlement costs, which are not part of the financing.

143
Q

The __________ establishes procedures for correcting mistakes on a person’s credit record and requires that a consumer’s record only be provided for legitimate business needs.

a. Right to Financial Privacy Act
b. Fair Trade Commission Act
c. Fair Credit Reporting Act
d. Home Equity Loan Consumer Protection Act

A

c. Fair Credit Reporting Act
Correct answer is (c).
The Fair Credit Reporting Act establishes procedures for correcting mistakes on a person’s credit record and requires that a consumer’s record only be provided for legitimate business needs.

144
Q

The right of rescission under TILA is the right of the:

a. creditor to cancel the contract.
b. borrower to prepay the loan.
c. creditor to calculate the APR.
d. borrower to cancel the contract.

A

d. borrower to cancel the contract.

145
Q

The federal law that was written specifically to combat predatory lending is the:

a. Real Estate Settlement Procedures Act.
b. Truth in Lending Act.
c. Home Ownership and Equity Protection Act.
d. Fair Housing Act.

A

c.Home Ownership and Equity Protection Act.
Correct answer is (c).
While only one federal law—the Home Ownership and Equity Protection Act—is specifically designed to combat predatory lending, federal agencies have taken actions, sometimes jointly, under various federal consumer protection laws.

146
Q

A newly licensed MLO working for Best Mortgage was cold calling consumers. Of the 20 consumers called, 2 were listed on the National Do Not Call Registry. What is the maximum fine that Best Mortgage could pay?

a. $4,000
b. $8,000
c. $16,000
d. $32,000

A

d. $32,000
Correct answer is (d).
Best Mortgage could pay $16,000 for each infraction.

147
Q

By encouraging states to establish minimum standards for licensing for mortgage loan originators, the SAFE Act:

a. ignores fraudulent practices in the mortgage industry.
b. makes underwriting requirements less strict.
c. helps to reduce fraud.
d. minimizes consumer protection.

A

c. helps to reduce fraud.
Correct answer is (c).
The SAFE Act enhances consumer protection and reduces fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators.

148
Q

President Bush signed the Fair and Accurate Transactions Act of 2003 (FACT Act or FACTA), amending the FCRA. This regulation is enforced by the:

a. OCC.
b. FRB.
c. FTC.
d. HUD.

A

c. FTC.
Correct answer is (c).
The FACT Act or FACTA is enforced by the FTC.

149
Q

One of the key safeguards of the Federal Fair Credit Reporting Act (FCRA) is:

a. running a consumer credit check without telling the subject violates FCRA and carries substantial civil penalties.
b. requesting a credit check is ok as long as it is necessary for a background check.
c. requesting a credit check is ok if it is needed in a workman’s comp claim case.
d. none of the above.

A

a. running a consumer credit check without telling the subject violates FCRA and carries substantial civil penalties.
Correct answer is (a).
Consumers must give permission to “run a credit check”.

150
Q

Mortgage Fraud is investigated by the Federal Bureau of Investigation and is punishable by up to:

a. 20 years in federal prison or $1,000,000 fine, or both.
b. 25 years in federal prison or $1,000,000 fine, or both.
c. 30 years in federal prison or $1,000,000 fine.
d. 30 years in federal prison or $1,000,000 fine, or both.

A

d. 30 years in federal prison or $1,000,000 fine, or both.
Correct answer is (d).
The Fraud Enforcement and Recovery Act of 2009 increased the penalties for a federal conviction for mortgage fraud to a maximum of 30 years in prison and a fine of up to $1 million. FERA also increased the statute of limitations for mortgage fraud from five years to 10 years.

151
Q

Consumers can request and obtain a free credit report once every 12 months from each of the three nationwide consumer-credit reporting companies. This was made possible by the:

a. Mortgage Reform and Anti-Predatory Act.
b. Fair and Accurate Credit Transactions Act.
c. Fair Housing Act.
d. Fair Housing Amendments Act.

A

Correct answer is (b).
The Fair and Accurate Credit Transactions Act of 2003 (FACTA or FACT Act) allows consumers to request and obtain a free credit report once every 12 months from each of the three nationwide consumer-credit reporting companies—Equifax®, Experian®, and TransUnion®.

152
Q

How many hours does the SAFE Act require of NMLS approved pre-licensure education to be completed?

a. 20
b. 25
c. 30
d. 35
A

a. 20

153
Q

According to the SAFE Act, state-enacted legislation:

a. must never exceed the SAFE Act.
b. may exceed the SAFE Act.
c. is not legal.
d. is only legal if approved by all states.

A

Correct answer is (b).
The SAFE Act’s licensing and registration standards for mortgage loan originators represent minimum standards. States may add legislation that may exceed the minimum standards of the SAFE Act.

154
Q

Under the SAFE Act, mortgage loan originators must complete how many hours of Nationwide Mortgage Licensing System-approved pre-licensing education?

a. 10
b. 20
c. 30
d. 40

A

b. 20
Correct answer is (b).
State-licensed mortgage loan originators must complete 20 hours of NMLS approved education.

155
Q

All state licensed and federally registered mortgage loan originators must be registered with the:

a. Federal Commissions Committee.
b. Nationwide Mortgage Licensing System and Registry.
c. State Licensing Board
d. Federal Trade Commission.

A

b. Nationwide Mortgage Licensing System and Registry.

156
Q
  1. The Fair and Accurate Credit Reporting Act requires businesses, such as financial institutions that rely on consumer reports, to detect, prevent, and mitigate identity theft. To help with this task, the Interagency Guidelines were developed to identify “red flags” that might indicate identity theft. Which of the following could be a red flag?
    a. A person notifies a credit card issuer of a change of address and soon thereafter, asks the card issuer for replacement cards
    b. Documents are submitted that include information that is inconsistent with the person applying for credit
    c. A person supplies a Social Security Number (SSN) that has not been issued or is listed on the Social Security Administration’s Death Master File
    d. All of the above
A

d. All of the above
Choices (a), (b), and (c) are all red flags. Other red flags include a consumer’s notation on a credit report such as a fraud alert or credit freeze. Also, unusual patterns in the consumer’s use of credit, such as a recent increase in inquiries or new credit accounts, changes in the use of credit, or accounts closed. In addition, suspicious documents that appear to be forged or reassembled, an address that either does not exist or is that of a mail drop or prison, a phone number that is invalid or associated with a pager or answering service, use of an account that has been inactive for a “reasonably lengthy period of time,” or mail sent to the account holder that is returned while the transaction continues.

157
Q

Which Act established procedures for correcting mistakes on a person’s credit record?

a. Equal Credit Opportunity Act
b. Fair Credit Reporting Act
c. Real Estate Settlement Procedures Act
d. Right to Financial Privacy Act

A

The Fair Credit Reporting Act established procedures for correcting mistakes on a person’s credit record.

158
Q

On a federally related mortgage loan, RESPA which settlement fee is prohibited by RESPA?

a. Attorney fees
b. Loan origination fees
c. Referral fees
d. Credit report fees
A

c. Referral fees
Correct answer is (c).
RESPA prohibits referral fees. It allows fees for performance, such as attorney fees, credit report fees and loan origination fees.

159
Q

159.
Based on the term, “loan originator”, what type of tasks are excluded from the SAFE Act?
a. Administrative and clerical duties
b. Matching a favorable loan program to a mortgage applicant
c. Negotiating loan terms for a mortgage applicant
d. Soliciting prospective mortgage consumers

A

a. Administrative and clerical duties
Correct answer is (a).
The SAFE Act describes activities in the residential mortgage process that are excluded from the definition of “loan originator. Activities that are excluded include administrative or clerical tasks.

160
Q

What three RESPA federally required disclosures must be provided within three days of receipt of the loan application for a purchase money loan?

a. GFE, CHARM Booklet, and HUD-1
b. GFE, Mortgage Disclosure Servicing Statement, and a Special Information Booklet, which contains consumer information regarding various real estate settlement services
c. GFE, Affiliate Business Arrangement, and Mortgage Disclosure Servicing Statement
d. GFE, HUD-1, and the Truth in Lending Disclosures

A

Correct answer is (b).
RESPA requires that within three days of receipt of the loan application for a purchase money loan, the GFE, Mortgage Disclosure Servicing Statement, and a Special Information Booklet must be given to the borrower.

161
Q

Under the Red Flag Rules, which could be considered a warning sign of identity theft?

a. Suspicious account application documents
b. Suspicious personal identifying information, such as a suspicious address
c. Unusual account activity
d. All of the above

A

d. All of the above
The Interagency Guidelines on Identity Theft Detection, Prevention, and Mitigation are part of the Fair and Accurate Credit Transactions Act of 2003 (FACTA). Under the Red Flags Rules, financial institutions and creditors must develop a written program that identifies and detects the relevant warning signs—or “red flags”—of identity theft. These may include, unusual account activity, fraud alerts on a consumer report, attempted use of suspicious account application documents, suspicious address, or notices from customers, law enforcement authorities, or other businesses about possible identity theft in connection with covered accounts.

162
Q

Which federal agency enforces the FCRA?

a. FACT
b. FDIC
c. FHA
d. FTC

A

Correct answer is (d).
The Fair Credit Reporting Act (FCRA) is enforced by the Federal Trade
Commission (FTC) and state consumer protection agencies.

163
Q

Which Act requires a Mortgage Servicing Disclosure Statement?

a. ECOA
b. HOEPA
c. RESPA
d. TILA

A

c. RESPA
Correct answer is (c).
RESPA requires that borrowers are given a Mortgage Servicing Disclosure Statement to disclose that the servicing of the mortgage will be sold.

164
Q

On loans governed by RESPA, a buyer or seller may NOT legally be charged for:

a. preparation of the loan documents.
b. conducting an appraisal prior to the loan.
c. preparation of the Uniform Settlement Statement.
d. preparation of credit reports.

A

Correct answer is (c).
As provided by RESPA, a lender may not assess a fee or charge anyone in connection with or on account of the preparation of the Uniform Settlement Statement.

165
Q

SAFE requires __________ hours of continuing education to be completed each year prior to renewal.

a. 4
b. 8
c. 16
d. 24

A

b. 8
Correct answer is (b).
SAFE requires 8 hours of continuing education to be completed each year prior to renewal.

166
Q

A person obtained 80% financing for an office building. Under TILA, what is the rescission period?

a. 3 days
b. 3 business days
c. 7 business days
d. There is no right of rescission.

A

d. There is no right of rescission.
Correct answer is (d).
TILA does not pertain to commercial loans.

167
Q

A creditor denied an applicant a loan. Which document must be sent to the applicant?

a. Advice of Denied Application
b. Adverse Action Notice
c. Good Faith Notice
d. HUD-1 Statement

A

b. Adverse Action Notice
Correct answer is (b).
An adverse action notice informs a consumer that he or she has been denied credit, employment, insurance, or other benefits based on information in a credit report. The notice should indicate which credit reporting agency was used, and how to contact them. This is required by the Fair Credit Reporting Act (FCRA).

168
Q

When are the funds disbursed for an owner-occupied residential refinance?

a. At the time of closing
b. After the 3-day rescission period
c. Five days after closing
d. The same day that the loan closes

A

b. After the 3-day rescission period
Correct answer is (b).
TILA gives owner-occupants of residential property until midnight of the 3rd business day to rescind. Therefore, lenders wait until the 4th business day after closing to disburse funds.

169
Q

According to the FACT Act, which person would most likely not add an ID alert to a credit report?

a. Person is transferred from Texas to Michigan for a 2-year position
b. Person’s wallet is stolen and not retrieved by the police
c. Person changes his or her name
d. Marine goes overseas for military duty

A

c. Person changes his or her name
Correct answer is (c).
The ID Alert does not cover name changes.

170
Q

The SAFE Act provides which of the following information to consumers about mortgage loan originators?

a. Current interest rates for all states
b. Past disciplinary actions
c. Types of loan programs offered
d. Underwriting requirements for loan qualification

A

b. Past disciplinary actions
Correct answer is (b).
The SAFE Act provides consumers with accessible information on the employment history and disciplinary actions against mortgage loan originators.

171
Q

Which of the following is one of the Do Not Call Rules?

a. Mortgage loan originators may use caller ID blocking.
b. Mortgage loan originators must identify themselves before making the solicitation.
c. Sender must have voluntarily received recipient’s fax number.
d. Transactional e-mail messages are excluded from the Act.

A

b. Mortgage loan originators must identify themselves before making the solicitation.
Correct answer is (b).
Mortgage loan originators must identify themselves before making the solicitation and must identify that the call is a solicitation. Mortgage loan originators may NOT use caller ID blocking. Choice (c) deals with Do Not Fax Rules and choice (d) deals with the CAN-Spam Act.

172
Q

What is the commonality of finance charge, APR, payment schedule, and amount financed?

a. Holden Act
b. Home Ownership and Equity Reduction Act
c. Real Estate Settlement Procedures Act
d. Truth in Lending Act

A

d. Truth in Lending Act
Correct answer is (d).
These are required disclosures under the Truth in Lending Act, implemented by Regulation Z.

173
Q

If the annual percentage rate provided in the good faith estimate is out of tolerance under TILA, creditors must provide a corrected TIL disclosure statement to a consumer:

a. at the time of consummation of the transaction.
b. one week before the consummation of the transaction.
c. on or before the 3rd business day before consummation of the transaction.
d. no more than 3 business days after the consummation of the transaction.

A

c. on or before the 3rd business day before consummation of the transaction.
Correct answer is (c).
If the annual percentage rate provided in the good faith estimates changes beyond a specified tolerance for accuracy (more than 1/8 of 1% in a regular transaction or 1/4 of 1% in an irregular transaction), creditors must provide corrected disclosures, which the consumer must receive on or before the third business day before consummation of the transaction.

174
Q

Under HOEPA, what is the fee threshold percentage that would trigger HOEPA disclosures?

a. 6%
b. 8%
c. 10%
d. 12%
A

b. 8%
Correct answer is (b).
A loan is covered under HOEPA if the total fees and points payable by the consumer at or before closing exceed the larger of $579 or eight percent of the total loan amount. (The $579 figure is for 2010.)

175
Q

The organization with the acronym FCRA whose purpose is to require that consumer-reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit:

a. Fair Credit Reporting Agency
b. False Credit Reporting Agency
c. Federal Credit Repair Agency
d. Federal Credit Repair Association

A

a. Fair Credit Reporting Agency
Correct answer is (a).
The acronym, FCRA, stands for the Fair Credit Reporting Agency.

176
Q

When advertising a property for sale, which of the following statements would place the loan originator in violation of the federal Truth-in-Lending Act?

a. 3-bedroom, 2 bath, excellent FHA or VA financing available; total price $225,000
b. 4-bedroom, 2 baths, easy terms; total price $225,000
c. 3-bedroom, 2 bath, large lot, with 10% down; total price $225,000
d. 3-bedroom, 3 bath, owner will help finance; total price $225,000

A

Correct answer is (c).
An ad must disclose all credit terms if it contains any one of the following four triggering terms: (1) the down payment, (2) the number, or term of payments, (3) the amount of any payment, or (4) the finance charge. In this case, the 10% down payment triggers the other disclosures.

177
Q
  1. The Truth in Lending Act is Title 1 of the:
    a. 1866 Civil Rights Act.
    b. Civil Rights Act of 1968.
    c. Consumer Credit Protection Act of 1968.
    d. Equal Credit Opportunity Act.
A

c. Consumer Credit Protection Act of 1968.
Correct answer is (c).
The federal Truth in Lending Act (TILA) is Title 1 of the Consumer Credit Protection Act of 1968.

178
Q

A creditor is allowed to collect which fees from a consumer prior to the issuance of the initial TIL disclosure?

a. Appraisal fee
b. Credit report fee
c. Inspection fee
d. All of the above

A

b. Credit report fee
Correct answer is (b).
Under TILA, prior to the issuance of early disclosures, collection of fees from a mortgage applicant are limited to a reasonable credit report fee.

179
Q
  1. Form 1003, Section X: Information for Government Monitoring Purposes must be completed to comply with the:
    a. CRA.
    b. FCRA.
    c. HMDA.
    d. TILA.
A

c. HMDA.
Regulation C implements the Home Mortgage Disclosure Act (HMDA). One of the purposes of HMDA is to identify possible discriminatory lending patterns and enforce antidiscrimination statutes by requiring the collection and disclosure of data about applicant and borrower characteristics.

180
Q
  1. The National Flood Insurance Reform Act, passed in 1994, is overseen by:
    a. FRB - Federal Reserve Board.
    b. FTC - Federal Trade Commission.
    c. HUD - Department of Housing and Urban Development.
    d. NFIP - National Flood Insurance Program.
A

a. FRB - Federal Reserve Board.
Correct answer is (a).
The Federal Reserve Board oversees the National Flood Insurance Reform Act through its Regulation H.

181
Q

The SAFE Mortgage Loan Originator Test consists of which two component types?

a. Appraisal and Finance
b. Federal and State Specific
c. Math and English
d. National and State-Specific

A

d.National and State-Specific
Correct answer is (d).
The SAFE Mortgage Loan Originator Test consists of two component types: National and State-Specific.

182
Q

What is the name of the process by which state agencies certify that licensed mortgage loan originators have successfully completed state education and/or state testing requirements?

a. Disapproval process
b. Certification
c. Interviewing
d. Licensing
A

Correct answer is (b).
“Certification” is the process by which state agencies certify that licensed mortgage loan originators have successfully completed state education and/or state testing requirements in satisfaction of the SAFE Act prelicensing education and state test requirements.

183
Q

Which of the following statements about RESPA is true?

a. It applies to all federally related home loans used to purchase or refinance a principal residence.
b. It only applies to FHA-insured loans.
c. It protects lenders by eliminating kickbacks and referral fees.
d. It promotes unfair settlement services.

A

It applies to all federally related home loans used to purchase or refinance a principal residence.
Correct answer is (a).
RESPA applies to all federally related home loans used to purchase or refinance real property or improved real property of one-to-four units, providing the property includes the principal residence of the borrower.

184
Q

Sometimes TILA is referred to as:

a. Regulation C.
b. Regulation X.
c. Regulation Y.
d. Regulation Z.
A

d. Regulation Z.

185
Q

The SAFE Act prohibits employees of an agency-related institution from originating residential mortgage loans without first registering with the:

a. Mortgage Association.
b. Nationwide Mortgage Licensing System and Registry.
c. State Commissioner’s Registry.
d. State Government Registry.

A

b. Nationwide Mortgage Licensing System and Registry. (NMLS)

186
Q

According the Gramm-Leach-Bliley Act, of the following which is most likely to be public information?

a. Borrower’s credit score
b. Borrower’s gross taxable income
c. Borrower’s sales price of current home
d. Borrower’s savings account number

A

Borrower’s sales price of current home.
Correct answer is (c).
Borrower’s credit scores taxable income, savings account numbers, and social security numbers are private information and must be protected.

187
Q

Under RESPA, an affiliated business arrangement (AfBA)disclosure must be provided:

a. at the time of application, even if there are no AfBAs.
b. at or prior to the time a referral is made, if there is an AfBA.
c. within 3 days of settlement, even if there are no AfBAs.
d. ten business days after closing, if there is an AfBA.

A

b. at or prior to the time a referral is made, if there is an AfBA.
Correct answer is (b).
RESPA requires an AfBA disclosure ( at or prior to the time of the referral) whenever a settlement service provider involved in a RESPA covered transaction refers the consumer to a provider with whom the referring party has an ownership or other beneficial interest.

188
Q

Which of the following is responsible for registering all state licensed and federally registered mortgage loan originators?

a. Federal Commissions Committee
b. Federal Reserve Board
c. Nationwide Mortgage Licensing System and Registry
d. Mortgage Licensing Association

A

c. Nationwide Mortgage Licensing System and Registry
Correct answer is (c).
All state licensed and federally registered mortgage loan originators must be registered with the Nationwide Mortgage Licensing System and Registry maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.

189
Q

On what document is the initial APR disclosed?

a. GFE statement
b. Initial escrow statement
c. HUD-1 statement
d. TIL statement

A

d. TIL statement
Correct answer is (d).
The Truth in Lending (TIL) statement discloses the annual percentage rate (APR) along with the total cost of the financing.

190
Q

.When is a loan originator not required to provide a GFE or TIL Statement to a borrower?

a. The borrower applies to multiple lenders for the same loan.
b. The borrower refuses to complete Section X of the Uniform Loan Application.
c. The borrower withdraws the application within 3 business days.
d. The borrower may not be approved for the loan.

A

c.The borrower withdraws the application within 3 business days.
Correct answer is (c).
If the borrower withdraws the application (or the lender turns down the loan)within 3 business days, the MLO does not have to provide the disclosure documents.

191
Q

A first-lien loan would be considered a Section 32 loan if the points and fees are greater than:

a. 7.99% of the sale price.
b. 8% of the sale price.
c. 7.99% of the loan amount.
d. 8% of the loan amount.

A

d. 8% of the loan amount.
Correct answer is (d).
A first-lien loan would be considered a Section 32 loan if the points and fees payable by the consumer at or before closing EXCEED 8% of the total loan amount. Exceed means 8.01% or more, therefore 7.99% of the loan amount would NOT be considered a Section 32 loan.

192
Q

Pre-licensing education requirements mandated by the SAFE Act call for state-licensed mortgage loan originators to complete courses approved by the:

a. Nationwide Mortgage Loan System (NMLS)
b. Nationwide Mortgage Licensure Society (NMLS)
c. Nationwide Mortgage Licensing Selection Committee (NMLSC)
d. Nationwide Mortgage Licensing System (NMLS)

A

d. Nationwide Mortgage Licensing System (NMLS)
Correct answer is (d).
Pre-licensing education requirements mandated by the SAFE Act call for state-licensed mortgage loan originators to complete courses approved by the Nationwide Mortgage Licensing System (NMLS).

193
Q

Which federal act includes the Privacy Rule?

a. FIRREA
b. Glass-Steagall Act
c. Gramm-Leach-Bliley Act
d. Robinson Patman Act

A

c. Gramm-Leach-Bliley Act
Correct answer is (c).
Title V - Privacy, of the Gramm-Leach-Bliley Act, requires clear disclosure by all financial institutions of their privacy policy regarding the sharing of non-public personal information with both affiliates and third parties.

194
Q

What are the penalties for not determining the flood status, not notifying the borrower of the status and insurance requirements, failing to escrow premium if an escrow account is required for the other payments and/or failing to force place insurance when required?

a. $250 for each violation with no maximum amount
b. $350 for each violation with a maximum $100,000 per calendar year
c. $500 for each violation with a maximum $100,000 per calendar year
d. $3,500 for each violation with a maximum $1,000,000 per calendar year

A

Correct answer is (b).
Anyone who does not determine flood status of a property is subject to $350 for each violation with a maximum $100,000 per calendar year.

195
Q

Under the Do-Not-Call rules, at what time of day may a loan originator make cold calls?

a. Only between 8:00 a.m. and 9:00 p.m.
b. Anytime
c. Only between 9:00 a.m. and 6:00 p.m.
d. Never

A

Correct answer is (a).
Under the Do-Not-Call rules, mortgage loan originators may make cold calls provided that the calls are only made between 8:00 a.m. and 9:00 p.m.

196
Q

The entities regulated by the FACT Act (FACTA)are:

a. Consumer Reporting Agencies (CRAs), users of Consumer Reports, and furnishers of information to the Federal Trade Commission (FTC).
b. Consumer Reporting Agencies (CRAs), users of Consumer Reports, and furnishers of information to Consumer Reporting Agencies (CRAs).
c. Consumer Reporting Agencies (CRAs) and furnishers of information to Consumer Reporting Agencies (CRAs).
d. Consumer Reporting Agencies (CRAs), users of Consumer Reports, and furnishers of information to The Department of Housing and Urban Development (HUD).

A

b. Consumer Reporting Agencies (CRAs), users of Consumer Reports, and furnishers of information to Consumer Reporting Agencies (CRAs)
Correct answer is (b).
The FACT Act regulates consumer-reporting agencies (CRAs), users of consumer reports, and furnishers of information to consumer reporting agencies (CRAs).

197
Q

Any individual who, for compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan application must be licensed or registered as a:

a. Mortgage Loan Appraiser.
b. Real Estate Broker.
c. Mortgage Loan Originator.
d. Real Estate Sales Associate.

A

c.Mortgage Loan Originator.
Correct answer is (c).
Any individual who, for compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan application must be licensed or registered as a Mortgage Loan Originator.

198
Q

Under HOEPA, what are the terms of the “cooling off” period?

a. 3 days after closing
b. 3 days prior to closing
c. 7 days prior to closing
d. 10 days after closing

A

Correct answer is (b).
Under HOEPA, after calculating the final fees and signing a Section 32 disclosure, 3 days must pass before closing the loan and disbursing the funds.

199
Q

199.
All residential mortgage loan originators must be __________ according to the SAFE Act.
a. federally licensed
b. nationally registered
c. either state-licensed or federally registered
d. state registered

A

Correct answer is (c).
c. either state-licensed or federally registered
According to the SAFE Act, all residential mortgage loan originators must be either state-licensed or federally registered.

200
Q

The SAFE Act is designed to:

a. assist the flow of the real estate market.
b. enhance consumer protection and reduce fraud.
c. help consumers seek better appraisals for their properties.
d. implement safety standards in home inspection.

A

b. enhance consumer protection and reduce fraud.
Correct answer is (b).
The SAFE Act is designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing and registration of state-licensed mortgage loan.

201
Q

Under ECOA, when qualifying a borrower for a mortgage loan, a lender might not consider which source of income?

a. Alimony paid irregularly
b. Annuity income
c. Part-time employment
d. Public assistance income

A

a. Alimony paid irregularly
Correct answer is (a).
When evaluating income, creditors may not refuse to consider reliable public assistance income, part-time employment, Social Security, pensions, or annuities. A creditor must consider reliable alimony, child support, or separate maintenance payments, but may ask for proof that the income is received consistently.

202
Q

.In general, the Do Not Call rules do not apply to calls made:

a. containing a commercial solicitation.
b. if an established business relationship already exists.
c. for business purposes.
d. during normal business hours.

A

b. if an established business relationship already exists.
Correct answer is (b).
Do Not Call rules apply to calls containing a commercial solicitation (most cold calls). The rules do not apply to calls made if an established business relationship already exists.

203
Q

Which of the following loans is exempt from the Truth in Lending Act on the basis of the type of loan itself?

a. Agricultural loan
b. FHA loan to buy a home
c. VA loan to refinance a veteran’s home
d. $25,000 loan from a credit union for home improvement purposes

A

a. Agricultural loan
Correct answer is (a).
Business loans and agricultural loans are exempt from the Truth in Lending Act.

204
Q

Pursuant to the Federal Fair Credit Reporting Act, a consumer’s credit report must contain consumer information bearing on which of the following:

a. credit capacity.
b. credit standing.
c. credit worthiness.
d. all of the above.

A

d. all of the above.
Correct answer is (d).
A consumer’s credit report must contain information regarding a person’s credit capacity, credit standing, and credit worthiness.

205
Q

A state law requires that interest is paid on escrow accounts. This is:

a. not in violation of RESPA, so the state could enforce the law.
b. inconsistent with RESPA, so the state cannot enforce the law.
c. in direct violation of RESPA, so the state law is invalid.
d. similar to the RESPA requirement, so should pose no problem.

A

a. not in violation of RESPA, so the state could enforce the law.
Correct answer is (a).
RESPA neither requires nor prohibits payment of interest on an escrow account.

206
Q

Under TILA, what is the relative cost of credit expressed as a yearly rate?

a. APR
b. ARM
c. CPI
d. GDP

A

Correct answer is (a).
The annual percentage rate (APR) is the relative cost of credit expressed as a yearly rate. Expressed as a percentage, it is the relationship of the total finance charge to the total amount financed.

207
Q

What network of lenders provides financing alternatives for a borrower who is seeking to purchase a rural property for agricultural production?

a. Farmer’s Home Administration (FmHA)
b. Farm Credit System
c. WRAP
d. American Farm Workers

A

b. Farm Credit System
Correct answer is (b).
The Farm Credit System is a national network of lenders that work together to provide funds to foster agricultural production and finance the purchase of rural property.

208
Q

The process by which state agencies certify that licensed mortgage loan originators have successfully completed state education and/or state testing requirements in satisfaction of the SAFE Act Prelicense Education and state test requirements is known as:

a. approval process.
b. certification.
c. licensing.
d. screening.

A

Correct answer is (b).
Certification is the process by which state agencies certify that licensed mortgage loan originators have successfully completed state education and/or state testing requirements in satisfaction of the SAFE Act PE and state test requirements.

209
Q

The SAFE Act was passed on:

a. July 30, 2008.
b. August 30, 2008.
c. September 30, 2008.
d. October 30, 2008.

A

Correct answer is (a).
a. July 30, 2008.
The SAFE Act was passed on July 30, 2008.

210
Q

The SAFE Act requires agencies to jointly develop and maintain a system for registering residential mortgage loan originators who are employees of agency-related institutions including all of the following, except:

a. Farm Credit System institutions.
b. home inspectors’ association.
c. national and state banks.
d. savings associations.

A

b. home inspectors’ association.
Correct answer is (b).
The SAFE Act requires agencies to jointly develop and maintain a system for registering residential mortgage loan originators who are employees of agency-related institutions including national and state banks, savings associations, credit unions, and Farm Credit System institutions.

211
Q

The main purpose of TILA is to:

a. eliminate or minimize usury.
b. establish the maximum annual percentage rate.
c. limit the cost of credit available to consumers.
d. require disclosure of credit terms so consumers can compare loans.

A

d. require disclosure of credit terms so consumers can compare loans.
Correct answer is (d).
The main purpose of the Act is to promote the informed use of consumer credit by requiring creditors to disclose credit terms so consumers can make comparisons between different sources of credit. The Act is implemented by Regulation Z.

212
Q

Broker Tom offers extensive sales training classes in his office. During a recent office session, he discussed a Federal act, which protects consumers from unfair closing practices. Tom, placed emphasis on kickback fees, fee splitting, referral fees and non-disclosure of closing costs. What is the Federal law?

a. National Credit Protection Law
b. Real Estate Settlement Procedures Act
c. Regulatory Credit Settlement Act
d. Right to Credit Settlement Act

A

b. Real Estate Settlement Procedures Act
correct answer is (b).
The purpose of RESPA is to help consumers get fair settlement services by requiring that key service costs be disclosed in advance. To protect consumers by eliminating kickbacks and referral fees that unnecessarily increase the costs of settlement services and to further protect consumers by prohibiting certain practices that increase the cost of settlement services. HUD’s Office of Consumer and Regulatory Affairs is responsible for enforcing RESPA.

213
Q

The SAFE Act affects subprime mortgage lending by offering:

a. alternative financing for subprime borrowers.
b. bailout assistance for failing subprime lenders.
c. lines of credit to create subprime mortgages.
d. training and examination requirements.

A

d. training and examination requirements.
Correct answer is (d).
The SAFE Act facilitates responsible behavior in the subprime mortgage market by providing training opportunities and examination requirements related to subprime mortgage lending.

214
Q

Which is not a requirement under the Gramm-Leach-Bliley Act’s Safeguards Rule?

a. Protect the confidentiality of personal consumer information
b. Protect the integrity of personal consumer information
c. Protect consumers by allowing them to add their phone numbers to a list that prohibits unauthorized calls
d. Protect against unauthorized access to use of consumer information

A

c. Protect consumers by allowing them to add their phone numbers to a list that prohibits unauthorized calls
Correct answer is (c).
Under the Gramm-Leach-Bliley Act, the Safeguards Rule, enforced by the Federal Trade Commission, requires financial institutions to have a security plan to protect the confidentiality and integrity of personal consumer information.

215
Q

Which of the following financial information is not reflected on the TIL Statement?

a. Amount financed
b. Finance charges
c. Note rate
d. Total of payments

A

c. Note rate
Correct answer is (c).
The APR is required on the TIL Statement, but not the note rate.

216
Q

What is the waiting period that the SAFE Act requires prior to a candidate being allowed to retake a failed test component?

a. 7 calendar days
b. 30 calendar days
c. 60 calendar days
d. 90 calendar days

A

b. 30 calendar days
Correct answer is (b).
The SAFE Act states that a waiting period of 30 calendar days is required prior to the candidate being allowed to retake a failed test component (either National or State).

217
Q

Ads should not have words that state or imply a preference with regard to race, color, religion, handicap, sex, or familial status. What words and phrases are considered clearly offensive?

a. Gated
b. Parks nearby
c. Singles only
d. Nice

A

c. Singles only
Correct answer is (c).
Ads should not have words that state or imply a preference or limitation with regard to race, color, religion, handicap, sex, or familial status. Some words are clearly objectionable while other words and phrases are marginally objectionable because they convey a wrong signal, particularly to those who have been victims of discrimination in the past.

218
Q

All of the following course topics have been determined to not be in compliance with the SAFE Act, except (in other words which topic is in compliance with the SAFE Act):

a. commercial lending.
b. fair lending.
c. financial planning courses.
d. loan product training.

A

b.fair lending.
Correct answer is (b).
The following course topics have been determined to not be in compliance with the SAFE Act: general self-improvement courses; financial planning courses; any courses related to selling, sales, marketing, lead-generation, or business development; loan product training, product marketing, or advertising; any courses related to consumer data mining, market segmentation, or minority marketing practices; any information technology-related course; commercial lending; and courses on federal, state, or local law not related to mortgage.

219
Q

Which of the following statements about RESPA is not true?

a. It applies to all federally related home loans used to purchase or refinance a principal residence. b. It protects consumers by eliminating kickbacks and referral fees that increase settlement service costs. c. It only applies to FHA-insured loans. d. It helps consumers get fair settlement services by requiring the advance disclosure of key service costs.
A

Correct answer is (c).
RESPA applies to all federally related home loans used to purchase or refinance real property or improved real property of one-to-four units, providing the property includes the principal residence of the borrower.

220
Q

Which organization develops the written exam that state-licensed mortgage loan originators must take and pass?

a. Nationwide Mortgage Loan System (NMLS)
b. Nationwide Mortgage Licensure Society (NMLS)
c. Nationwide Mortgage Licensing Administrators (NMLA)
d. Nationwide Mortgage Licensing System (NMLS)

A

d. Nationwide Mortgage Licensing System (NMLS)
Correct answer is (d).
The SAFE Act requires state-licensed mortgage loan originators to pass a qualified written test developed by the Nationwide Mortgage Licensing System (NMLS) and administered by an approved test provider.

221
Q

Which federal law does not allow a lender to consider the borrower’s family size when qualifying income for the borrower.

a. ECOA
b. FCRA
c. HMDA
d. RESPA

A

Correct answer is (a).

The ECOA does not all discrimination based on family size.

222
Q

Section 32 of Regulation Z covers:

a. . high cost, high interest loans.
b. red flags.
c. discrimination in lending.
d. cold calling potential customers.

A

a.. high cost, high interest loans

Reg. Z, Section 32 is part of TILA and covers high cost/high interest loans.

223
Q

The sharing of non-public confidential information between financial institutions is addressed in the:

a. ECOA.
b. FCRA.
c. GLBA.
d. TILA.
A

c. GLBA.
Correct answer is (c).
The Gramm-Leach-Bliley Act sets specific guidelines on the sharing of non-public confidential information between financial institutions.

224
Q

Under the Fair Credit Reporting Act, what must a lender do if an adverse action is taken against a credit applicant based on information in the applicant’s credit report?

a. Give the applicant a copy of the credit report.
b. Explain that the credit reporting agency was the decision maker, not the lender.
c. Give the consumer the contact information of the credit reporting agency that issued the report.
d. Remind the applicant that good credit is his or her responsibility.

A

c. Give the consumer the contact information of the credit reporting agency that issued the report.
Correct answer is (c).
Under FCRA, the lender must provide the contact information of the credit reporting agency to the applicant.

225
Q

Which of the following situations would not apply to the SAFE Act?

a. A loan originator negotiating the terms of mortgage loan with a prospective borrower
b. A loan originator negotiating the terms of a mortgage loan with a lender
c. An attorney who is negotiating the terms of a mortgage loan with a client
d. An attorney employed by a loan originator who is negotiating the terms of a loan with a client

A

c. An attorney who is negotiating the terms of a mortgage loan with a client
Correct answer is (c).
The Safe Act’s definition of a “loan originator” generally would not apply to, for example, a licensed attorney who negotiates terms of a residential mortgage loan with a prospective lender on behalf of a client, unless the attorney is compensated by a lender, mortgage broker, or other mortgage loan originator or by an agent of such lender, mortgage broker, or other loan originator.

226
Q

Under RESPA, how often must a creditor reconcile its escrow accounts to be sure that excess funds are not being kept (excess funds are returned to the borrower?

a. Monthly
b. Quarterly
c. Semi-annually
d. Annually

A

Correct answer is (d).

RESPA requires creditors to perform an annual escrow account analysis and return any excess over $50 to the borrower.

227
Q

Of the following, which does the FTC enforce?

a. TILA
b. ECOA
c. FCRA
d. All of the above

A

Correct answer is (d).
The Federal Trade Commission (FTC) enforces laws that protect consumers, which includes Truth in Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, and others.

228
Q

The acronym FCRA stands for:

a. Formal Credit Reporting Agency
b. Federal Criminal Reporting Act
c. Fair Credit Reporting Act
d. Federal Credit Reporting Act

A

c. Fair Credit Reporting Act
Correct answer is (c).
The acronym FCRA stands for the Fair Credit Reporting Act.

229
Q

In addition to a criminal background check, state-licensed mortgage loan originators must give authorization to the Nationwide Mortgage Licensing System (NMLS) to obtain a:

a. driving record.
b. previous employer verification.
c. credit report.
d. social security number verification.

A

c. credit report.
Correct answer is (c).
The SAFE Act also requires all mortgage loan originators to submit fingerprints to the Nationwide Mortgage Licensing System (NMLS) for submission to the FBI for a criminal background check. In addition, state-licensed originators must provide authorization for NMLS to obtain an independent credit report.

230
Q

According to HMDA, what must be forwarded to the regulator by March 1 of each year?

a. Adverse Action Notices
b. Do Not Call List
c. Loan/Application Register
d. Red Flags Policy

A

c. Loan/Application Register
Correct answer is (c).
According to the Home Mortgage Disclosure Act, by March 1 following the calendar year for which the loan data are compiled, a financial institution shall send its complete loan/application register to the agency office. [203.5 (a)]

231
Q

How many days after the initial loan application, does RESPA require the borrower to sign the GFE?

a. Within 30 days
b. Within 3 days
c. Within 3 business days
d. Never

A

d. Never
Correct answer is (d).
RESPA does not require the borrower to sign the Good Faith Estimate. They must receive it within 3 business days.

232
Q

What was the landmark legislation that launched Truth in Lending disclosures in 1968?

a. Community Reinvestment Act
b. Consumer Credit Protection Act
c. Equal Credit Opportunity Act
d. Real Estate Settlement Procedures Act

A

b. Consumer Credit Protection Act
The Consumer Credit Protection Act of 1968, which launched Truth in Lending disclosures, was landmark legislation. This Act forces the creditors to state the cost of borrowing in a common language so that consumers can figure out what the charges are, compare the costs of loans, and shop for the best credit deal.

233
Q

HUD’s Regulation X implements:

a. FCRA.
b. RESPA.
c. SAFE.
d. TILA.

A

b. RESPA.
Correct answer is (b).
HUD’s Reg. X implements the Real Estate Settlement Procedures Act (RESPA).

234
Q

What is a creditor NOT permitted to ask borrowers when taking a loan application?

a. Name of employer
b. Home address
c. Pay child support
d. Receive child support
A

Correct answer is (d).
Under ECOA, creditors may ask “Is there additional income you would like to use as a basis for repaying this obligation?” The applicant may choose to disclose child support or separate maintenance income.

235
Q

On July 30, 2008, the __________ Act created the SAFE Act.

a. Housing and Urban Development
b. Housing and Community Development
c. Housing and Economic Recovery
d. Housing and Ethical Financial Reinforcement

A

c. Housing and Economic Recovery (HERA)
Correct answer is (c).
On July 30, 2008, the Housing and Economic Recovery Act of 2008 was signed into law, and includes the Secure and Fair Enforcement for Mortgage Licensing Act.

236
Q

The SAFE Act is part of the:

a. Financial Institutions Reform, Recovery, and Enforcement Act.
b. Gramm-Leach-Bliley Act.
c. Housing and Economic Recovery Act.
d. Troubled Assets Relief Program.

A

Correct answer is (c).

The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) is part of the Housing and Economic Recovery Act.

237
Q

HMDA is also referred to as:

a. Regulation B.
b. Regulation C.
c. Regulation X.
d. Regulation Z.
A

Correct answer is (b).
The Home Mortgage Disclosure Act (HMDA) was enacted by Congress and implemented by the Federal Reserve Board’s Regulation C. Compliance with HMDA is enforced by the Federal Deposit Insurance Act for national banks.

238
Q

What does TILA consider the tolerance for accuracy of the annual percentage rate?

a. Not less than 1/8 of 1% in a regular transaction
b. Not more than 1/8 of 1% in an irregular transaction
c. Not more than 1/8 of 1% in a regular transaction
d. Not more than 1/2 of 1% in an irregular transaction

A

Correct answer is (c).
As a general rule, the annual percentage rate is considered accurate if it is not more than 1/8 of 1 percentage point above or below the annual percentage rate. In an irregular transaction, the annual percentage rate is considered accurate if it is not more than 1/4 of 1 percentage point above or below the annual percentage.

239
Q

Which federal law protects against discrimination in the sale, rental, or financing of residential property on the basis of race, color, national origin, religion, sex, familial status, or handicap?

a. CRA of 1977
b. ECOA of 1976
c. FHA of 1988
d. MDIA of 2008
A

c. FHA of 1988

240
Q

Which of the following is a violation of the Federal Fair Credit Reporting Act:

a. Not informing the subject of a consumer credit check
b. Not informing the subject of the contents of their credit check
c. Not informing the subject of the intended use of their credit check
d. All of the above

A

d. All of the above

All of the choices violate the FCRA.(Federal Fair Credit Reporting Act)

241
Q

Reg. B Section 202.5 of the Equal Credit Opportunity Act states that you cannot discourage an application for which of the following reasons?

a. Information regarding a spouse, marital status, income from alimony/child support, sex of applicant, dependent information, color, religion, or origin
b. Information regarding marital status, income from alimony/child support, sex of applicant, dependent information, race, color, religion, or origin
c. Information regarding a spouse, marital status, income from alimony/child support, sex of applicant, dependent information, race, color, religion, or origin
d. Information regarding a spouse, marital status, sex of applicant, dependent information, race, color, religion, or origin

A

Correct answer is (c).
Reg. B states that you cannot discourage an application on information regarding a spouse, marital status, income from alimony/child support, sex of applicant, dependent information, race, color, religion, or national origin.

242
Q

What is the purpose of FACTA?

a. Prevent lending discrimination
b. Allow equity skimming
c. Prevent identity theft
d. Discourage predatory lending
A

c. Prevent identity theft

The Fair and Accurate Credit Transaction Act of 2003 (Fact Act or FACTA) helps prevent identity theft.

243
Q

What is the passing score that the SAFE Act requires all mortgage loan originators to pass with on the NMLS-developed SAFE Mortgage Loan Originator Test for each component?

a. 65%
b. 75%
c. 85%
d. 95%

A

b. 75%
Correct answer is (b).
The SAFE Act requires all mortgage loan originators to pass the NMLS-developed SAFE Mortgage Loan Originator Test, including both national and state components, with a score of 75% or better on each component.

244
Q

Under which directive is a creditor required to furnish consumers with certain disclosures prior to a contract for loan?

a. Fannie Mae guidelines
b. Freddie Mac guidelines
c. Regulation Z
d. Equal Credit Opportunity Act

A

c.Regulation Z
Correct answer is (c).
Regulation Z (Reg. Z) requires a creditor to furnish certain disclosures to the consumer before a contract for a loan is made.

245
Q

Which of the following would not be considered a creditor under the ECOA?

a. Real estate brokers who arrange financing to purchase real property
b. Banks and finance companies
c. Credit card companies
d. Individuals offering credit terms when selling their personal property, such as cars

A

d. Individuals offering credit terms when selling their personal property, such as cars
ECOA applies to any organizations or people who regularly extend credit, including banks, small loan and finance companies, retail and department stores, credit card companies, credit unions, and even real estate brokers who arrange financing. The ECOA does not apply to individuals who do not regularly extend financing.

246
Q

Regulation X prohibits:

a. finance charges.
b. licensing and certification.
c. payment of unearned fees.
d. trust accounts.

A

RESPA, implemented by Regulation X, prohibits unearned fees. Therefore, a mortgage broker or lender cannot refer a real estate agent to a customer for a fee or pay a fee to a real estate agent or developer for referring a borrower.

247
Q

The educational requirements of the SAFE Act require a mortgage loan originator to complete pre-licensing courses and:

a. a college degree.
b. continuing education courses.
c. additional courses by the Department of Housing and Urban Development.
d. additional courses developed by the Federal Reserve.

A

b. continuing education courses.
Correct answer is (b).
The SAFE Act requires that state-licensed mortgage loan originators (MLOs) complete pre-licensure education (PE) and annual continuing education (CE) courses.

248
Q

Of the following, which is NOT required under RESPA?

a. GFE given at time of loan application
b. Data regarding race of applicant voluntary given by applicant at time of loan application
c. Special Information Booklet given at time of loan application
d. HUD-1 statement given to buyer and seller

A

b. Data regarding race of applicant voluntary given by applicant at time of loan application
The Homeowners Mortgage Disclosure Act (HMDA) is the federal law that requires lenders to collect information about the race, national origin, and sex of the applicant.

249
Q

The Home Ownership and Equity Protection Act is specifically designed to combat:

a. predatory lending.
b. guidelines for adjustable-rate mortgages.
c. loan limits.
d. junk fees.

A

a. predatory lending.
Correct answer is (a).
The federal Home Ownership and Equity Protection Act (HOEPA) is specifically designed to combat predatory lending.

250
Q

The educational requirements of the SAFE Act require a mortgage loan originator to complete pre-licensing courses and:

a. a college degree.
b. continuing education courses.
c. additional courses by the Department of Housing and Urban Development.
d. additional courses developed by the Federal Reserve.

A

Correct answer is (b).
The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 establishes requirements for the licensing and registration of all Mortgage Loan Originators (MLOs).

251
Q

The act that established licensing and registration requirements for Mortgage Loan Originators is the:

a. National Mortgage Act of 2008.
b. Secure and Fair Enforcement for Mortgage Licensing Act of 2008.
c. Secure Mortgage Licensing Act of 2009.
d. Mortgage Relief Act of 2008.

A

Correct answer is (b).
The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 establishes requirements for the licensing and registration of all Mortgage Loan Originators (MLOs).

252
Q

How does the SAFE Act handle consumer complaints against mortgage loan originators?

a. It creates an online forum where consumers can post complaints regarding mortgage loan originators.
b. It determines whether or not the complaint is valid through a court hearing.
c. It facilitates the collection and disbursement of complaints on behalf of state mortgage regulators.
d. It privately investigates each consumer complaint and responds accordingly.

A

Correct answer is (c).

The SAFE Act facilitates the collection and disbursement of consumer complaints on behalf of state mortgage regulators.

253
Q

The Mortgage Loan Originator examination consists of which of the following components?

a. International and national component
b. State-specific and national component
c. International and state-specific component
d. National component only

A

b. State-specific and national component
Correct answer is (b).
The SAFE Mortgage Loan Originator exam consists of a national and state-specific component.

254
Q

The SAFE Act establishes and maintains:

a. a database of prospective mortgage borrowers.
b. nationwide lending criteria for evaluating borrowers.
c. a nationwide mortgage licensing system and registry.
d. underwriting criteria for lenders.

A

c. a nationwide mortgage licensing system and registry.
The SAFE Act is designed to establish and maintain a nationwide mortgage licensing system and registry for the residential mortgage industry.

255
Q

Which law requires a loan originator to provide a Special Information Booklet to a borrower?

a. FIRREA
b. GLBA
c. RESPA
d. TILA
A

c. RESPA
RESPA requires that a lender or mortgage broker provide the borrower with a special information booklet prepared by HUD within three business days of receiving a mortgage loan application.

256
Q

The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) establishes and maintains a:

a. nationwide mortgage licensing system and registry.
b. database of national mortgage interest rates.
c. list of criteria for underwriting guidelines.
d. list of ethical practices when soliciting prospective borrowers.

A

a. nationwide mortgage licensing system and registry.
Correct answer is (a).
The SAFE Act requires the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to establish and maintain a nationwide mortgage licensing system and registry system for the residential mortgage .

257
Q

What type of e-mail is excluded from the CAN-SPAM Act of 2003?

a. Business e-mail message
b. Commercial e-mail message
c. Transactional e-mail message
d. Written e-mail message
A

A commercial e-mail message as “any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service.” E-mails sent as part of an ongoing commercial transaction, called transactional e-mail messages, are excluded from the Act.

258
Q

Which of the following is not a SAFE Act requirement for state-licensed mortgage loan originators?

a. Complete prelicensure education courses
b. Pass a written qualified test
c. Submit fingerprints for a criminal background check
d. Undergo drug testing to ensure the competency of the mortgage loan originator

A

d. Undergo drug testing to ensure the competency of the mortgage loan originator
The SAFE Act requires state-licensed mortgage loan originators to pass a written qualified test, to complete prelicensure education courses, to take annual continuing education courses, and requires all MLOs to submit fingerprints to the Nationwide Mortgage Licensing System (NMLS) for submission to the FBI for a criminal background check.

259
Q

Jack, a MLO, left a customer’s file that contained a social security number, on his desk when he went to lunch. This carelessness violates the:

a. ECOA.
b. FACT Act.
c. FCRA.
d. FDIC.
A

b. FACT Act.
Correct answer is (b).
The FACT Act, passed in 2007, requires lenders to secure consumers’ files.

260
Q

Which act has the primary purpose of preventing banks and other creditors from discriminating when granting credit by requiring them to make extensions of credit equally available to all creditworthy applicants with fairness, impartiality, and without discrimination on any prohibited basis?

a. ECOA
b. FHLMC
c. RESPA
d. TILA
A

a. ECOA
Correct answer is (a).
The primary purpose of the Equal Credit Opportunity Act is to prevent banks and other creditors from discriminating when granting credit by requiring them to make extensions of credit equally available to all creditworthy applicants with fairness, impartiality, and without discrimination on any prohibited basis.

261
Q

Under TILA, how long are creditors required to retain records?

a. 2 years
b. 3 years
c. 4 years
d. 5 years
A

a. 2 years

TILA requires creditors to maintain records for two years.

262
Q

To help states comply with the SAFE Act, the act establishes a:

a. code of ethics based on international mortgage laws.
b. database of affordable interest rates.
c. nationwide mortgage licensing system and registry.
d. software program to track their own mortgage originators.

A

c. nationwide mortgage licensing system and registry.
Correct answer is (c).
To help facilitate state compliance with the SAFE Act, the Act directs the establishment of a Nationwide Mortgage Licensing System and Registry (NMLS).

263
Q

If the APR on a fixed-rate loan exceeds the initial TIL disclosure by more than _________, the borrower has an additional 3-business day waiting period.

a. 1/8%
b. 1/4%
c. 1/2%
d. 3/4%
A

Correct answer is (a).
a. 1/8%
If the APR exceeds the initial TIL disclosure by 1/8% (0.125), a new TIL disclosure must be made. This triggers another 3-business day waiting period.

264
Q

A consumer is entitled to a free copy of his or her credit report every __________, assuming there has been no fraud or adverse action.

a. 6 months
b. year
c. 18 months
d. 2 years
A

b. year
The Fair Credit Reporting Act allows consumers to obtain 1 free credit report every 12 months, upon request from the nationwide credit reporting bureaus.

265
Q

For a federally-related mortgage loan, how much can a lender charge to prepare escrow account statements?

a. Up to $100
b. 0.25% of the loan
c. Hourly wage
d. No fee
A

d. No fee
Hud’s Reg. X [Sec. 3500.12 No fee.] No fee shall be imposed or charge made upon any other person, as a part of settlement costs or otherwise, by a lender in connection with a federally related mortgage loan made by it (or a loan for the purchase of a manufactured home), or by a servicer for or on account of the preparation and distribution of the HUD-1 or HUD-1A settlement statement, escrow account statements, or statements required by the Truth in Lending Act.

266
Q

HMDA data allows government agencies to:

a. evaluate lender compliance with anti-discrimination laws.
b. determine where government funding be issued for low income housing and urban development.
c. determine who is conducting predatory lending practices.
d. monitor other agencies using “checks and balances”.

A

a. evaluate lender compliance with anti-discrimination laws.
Home Mortgage Disclousure act.
HMDA requires lenders to collect and report data on an annual basis

267
Q

Which federal agency enforces the ECOA?

a. FDIC
b. FIRPTA
c. FTC
d. FRB
A

c. FTC
The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Equal Credit Opportunity Act (ECOA), which prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or because you get public assistance.

268
Q

TILA is overseen by:

a. HUD - The Department of Housing and Urban Development
b. FTC - The Federal Trade Commission
c. FRB - Federal Reserve Board
d. FBI - Federal Bureau of Investigation

A

Correct answer is (c).
TILA is overseen by the Federal Reserve Board, implemented by Regulation Z, and enforced by the Federal Trade Commission.

269
Q

RESPA applies to all of the following loans, except:

a. loans to purchase a condominium unit.
b. loans for construction of the borrower’s home, that is convertible to permanent financing.
c. loans to purchase a 3-unit residential building.
d. temporary construction loans.

A

d. temporary construction loans.
RESPA covers loans made by federally related lenders that are secured with a mortgage placed on a one-to four-family residential property, including a condominium unit, a cooperative share, a time share or a manufactured home (mobile home) located on the real property securing the lender’s interest. A construction loan is covered if it is used as or may be converted to permanent financing by the same lender; its term is two years or more, and it is not to a bona fide builder; or the lender issues a commitment for permanent financing. A temporary construction loan is not covered.

270
Q

When was the SAFE Act passed?

a. 2006
b. 2007
c. 2008
d. 2009
A

c. 2008

271
Q

Which department ensures that a state’s licensing requirements meet the SAFE Act’s federally-mandated standards?

a. The Federal Reserve
b. National Association of Realtors
c. Department of Housing and Urban Development (HUD)
d. National Association of Home Builders

A

c. Department of Housing and Urban Development (HUD) The SAFE Act states that the Department of Housing and Urban Development (HUD) must determine whether an individual state’s mortgage loan originator licensing standards meet the federally-mandated minimum standards.

272
Q

Which is the FTC authorized website that consumers can use to obtain their annual free credit report?

a. www.freecreditreport.ftc
b. www.annualcreditreport.com
c. www.freeannualcreditreport.gov
d. www.freecreditreport.com
A

The only FTC authorized vendor is www.annualcreditreport.com.

273
Q

RESPA applies to which of the following?

a. First-lien residential loans for condominiums only
b. Second-lien commercial loans
c. First-lien residential loans for cooperatives, condominiums and one-to-four family homes
d. None of the above

A

c. First-lien residential loans for cooperatives, condominiums and one-to-four family homes
RESPA applies to first-lien residential mortgages for one-family to four-family homes, cooperatives, and condominiums.

274
Q

The Privacy Rule requires that financial institutions provide consumers with the institution’s Consumer Privacy Policy disclosure:

a. at least annually during the continuation of the relationship.
b. only at the at the time of establishing a customer relationship.
c. only if the institution revises the Privacy Policy.
d. by affixing the policy in an obvious and visible wall in the main office of the institution.

A

a. at least annually during the continuation of the relationship.
The privacy policy disclosure of a financial institution’s privacy policy is required to take place at the time of establishing a customer relationship with a consumer and not less than annually during the continuation of such relationship.

275
Q

The Equal Credit Opportunity Act is overseen by:

a. the FTC.
b. the FTC (Federal Trade Commission) for mortgage brokers, and the OCC (Office of the Comptroller of the Currency) for mortgage bankers.
c. HUD (Department of Housing and Urban Development) for mortgage brokers, and FTC (Federal Trade Commission) for mortgage bankers
d. HUD - the Department of Housing and Urban Development for mortgage brokers, and OCC - The Office of the Comptroller of the Currency for mortgage bankers

A

b. the FTC (Federal Trade Commission) for mortgage brokers, and the OCC (Office of the Comptroller of the Currency) for mortgage bankers.
The Equal Credit Opportunity Act is overseen by the FTC and by the Office of the Comptroller of the Currency. The FTC oversees mortgage brokers and the OCC oversees mortgage bankers.

276
Q

According to the SAFE Act, all residential mortgage loan originators must be:

a. federally licensed.
b. nationally registered.
c. state registered.
d. either state-licensed or federally registered.

A

d. either state-licensed or federally registered.
According to the SAFE Act, all residential mortgage loan originators must be either state-licensed or federally registered.

MLO-National 2013 (5 decks)

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