Federal Mortgage-Related Laws Flashcards
(153 cards)
1
Q
RESPA was enacted for all but what reason?
A. Regulate mortgage advertising standards and prohibit fraudulent abuse to consumers
B. Protect consumers from excessive settlement costs and unearned fees
C. Limit escrow funding requirements
D. Establish disclosures, policies, and procedures to facilitate timely communications between loan servicers and consumers
A
A. RESPA has nothing to do with advertising
2
Q
Which act’s regulations are known as Regulation X?
A. ECOA
B. HOEPA
C. RESPA
D. TILA
A
C. Regulation X
3
Q
Which of these DOES RESPA (Real Estate Settlement Procedures Act) apply to?
A. Loans for business, commercial, or agricultural purposes
B. Loans secured by vacant land
C. Loans made with funds insured by the federal government (e.g., FHA loans)
D. Loan assumptions which are permissible without lender approval
A
C. RESPA (Real Estate Settlement Procedures Act) applies to loans made with funds insured by the federal government (E.G., FHA loans)
4
Q
What % of the principal amount of the loan does a bona fide discount point typically equal?
A 1%
B. 2%
C. 3%
D. 4%
A
A. A bona fide discount point typically equals 1% of the principal amount of the loan.
Fact: These are paid by the borrower to reduce the interest rate on a loan.
5
Q
Markups are in violation of RESPA
True or False
A
False. So long as the difference is not split with another party, technically there are no violations. That said, it is recommended that service’s costs reflect the actual amount of service provided
6
Q
The special information booklet (“Your home loan toolkit: A step by step guide”)is due no later than ___
A. 3 business days prior to consummation
B. 5 business days after consummation
C. Within 3 business days after a mortgage loan application is received or prepared
D. Within 5 business days after a mortgage loan application is received or prepared
A
C. The special information booklet (“Your home loan toolkit: A step-by-step guide”) is due within 3 days or receiving or preparing a borrowers credit application.
Fact: It is the lender’s responsibility to provide borrowers with this booklet, UNLESS the client goes through a brokerage, in which case the responsibility is passed to the brokerage.
Fact: In regards to spouses, only one booklet is necessary and can be given to either
7
Q
HELOC (Home Equity Line of Credit) loans share the same special information booklet as a residential home purchase
True or False
A
False. A HELOC booklet, titled “What you should know about home equity lines of credit is due”
Fact: Lender turn that borrower down within the three-business-day period that a booklet was due? No booklet is due now
8
Q
James, an MLO, refers a borrower he is working with to a settlement service provider in which he shares ownership, over the phone. James needs to notify his client with a written Affiliated business arrangement disclosure when?
A. 5-business days after receipt or completion of the credit application
B. Within 3-business days of the call
C. At the time of the call
D. 3-business days after receipt or completion of the credit application
A
B. The borrower must be notified in writing within 3-business days of the phone call if an affiliated business arrangement between service providers exists
Fact: If a lender REQUIRES the use of a particular settlement service provider, the disclosure is due at the time of the loan application
9
Q
RESPA imposes a __ year record retention requirement for affiliated business arrangement disclosures.
A. 2
B. 5
C. 3
D. 7
A
B. RESPA imposes a 5 year record retention requirement
10
Q
If a consumer sends an on-time payment to the transferor servicer during the 60-day period that begins on the effective date of the transfer, the payment may not be treated as late for any reason
True or False
A
True
11
Q
Regulation X prevents loan servicers from overcharging for escrow payments in all but which way?
A. Requiring an annual escrow account analysis
B. Limiting the cushion that a borrower must maintain to cover unanticipated disbursements to one sixth of the estimated total annual disbursements
C. Limiting the cushion that a borrower must maintain to cover unanticipated disbursements to one eighth of the estimated total annual disbursements
D. Requiring the refund of any surpluses greater than or equal to $50 within 30 days after completion of the escrow account analysis that reveals a surplus
A
C. Limiting the cushion that a borrower must maintain to cover unanticipated disbursements to one eighth of the estimated total annual disbursements. The correct answer is one sixth of the estimated total annual disbursements
Fact: If the surplus is less than $50, the servicer may credit the amount towards the next year’s escrow payments.
12
Q
When is the Initial escrow account statement due?
A. 30 days from settlement
B. 15 days from settlement
C. 45 days from settlement
D. 60 days from settlement
A
C. The initial escrow account statement is due 45 days from settlement
Fact: If a loan’s servicing is transferred to a new servicer, the new servicer must provide an initial escrow account statement within 60 days of the date on which the transfer occurs
13
Q
When is the Annual escrow account statement due?
A. Within 30 days of completion of the escrow account computation year
B. Within 15 days of completion of the escrow account computation year
C. Within 45 days of completion of the escrow account computation year
D. Within 60 days of completion of the escrow account computation year
A
A. The Annual escrow account statement is due within 30 days of completion of the escrow account computation year
Fact: After a transfer, the transferee servicer has 60 days to provide the borrower with an initial escrow account statement.
14
Q
Which of the following does NOT require the GFE (Good Faith Estimate) and the HUD-1 Settlement Statement?
A. Reverse mortgages
B. HELOCs (Home Equity Lines of Credit)
C. Balloon Loans
D. Mortgages secured by a mobile home or other dwelling that is not attached to land
A
C. The GFE (Good Faith Estimate) and HUD-1 Statement are not used in Balloon loans
15
Q
Within how many business days of receiving an application for a reverse mortgage, HELOC, or mortgage secured by a dwelling that is not attached to land is the broker or lender required to provide a GFE to a borrower?
A. 1
B. 5
C. 3
D. 15
A
C. The lender or broker is required to provide the borrower with a GFE within 3 days of receiving an application
16
Q
Regarding the GFE (Good faith estimate), Regulation X defines an application as a loan applicant’s submission of what 7 items of information?
A
- Name
- Monthly income
- Social security number
- Address of the home that will secure the loan
- Estimated value of the home that will secure the loan
- Loan amount
- Other information deemed necessary by the loan originator
Fact: This streamlined process is designed to prevent unreasonable delays in offering a GFE (Good Faith Estimate) to applicants, and is not intended to prevent lenders from requesting other information needed to finalize they transactions, and they may request additional information after providing a GFE.
17
Q
Of the following, which are allowed a 10% tolerance for differences between estimated and actual charges?
A. Lender-required settlement services performed by a provider chosen by the lender
B. Charges for locking an interest rate
C. Recording fees
D. Transfer taxes
E. Lender-required services and title and insurance services if the loan applicant uses a provider recommended by the lender
F. Origination charges
A
A, C, E. Lender-required services and recording fees are allowed a tolerable threshold of 10% between estimated and actual costs. Origination charges, charges for locking an interest rate, and transfer taxes are not allowed any threshold, and all other charges are allowed any threshold without limit.
18
Q
Of the options below, which does not describe a Changed circumstance affecting settlement charges in relation to the GFE (Good Faith Estimate)?
A. Changes to or inaccuracies in information the lender relied on when preparing the GFE (Good Faith Estimate)
B. Acts of God, war, and other emergencies
C. New information about the borrower or the transaction
D. A handwritten request for revision
A
A, B C. A handwritten request for revision is not allowed UNLESS it results in an increase in estimated costs.
Fact: Regulation X states that Blocks 3, 6, and 11 of the GFE may be adapted based on the particular loan situation at hand
19
Q
Which of the following is not a permitted reason to revise the GFE (Good Faith Estimate)?
A Changed circumstances affecting the loan
B. Borrower-requested changes (Unless it results in an increase in estimated costs)
C. Lender-requested changes
D. Expiration of the GFE (Good Faith Estimate)
E. Interest rate-dependent changes
A
C. Lender-requested changes without precedence will not be permitted
20
Q
When a transaction will involve more than one mortgage loan, a separate GFE is required for each loan
True or False
A
True
21
Q
When must the HUD-1 statement be provided to the borrower?
A. Within 3 business days of application receipt or completion
B. Within 5 business days of application receipt or completion
C. At least 1 business day prior to settlement
D. At least 3 business days prior to settlement
A
C. The HUD-1 statement must be provided to borrowers at least 1 business day prior to settlement
22
Q
When violating violating regulations set by RESPA (Real Estate Settlement Procedures Act) and and Regulation X regarding referral fees, fee-splitting and so on, what are the criminal penalties one may face?
A. $5,000/2 years imprisonment
B. $10,000/1 year imprisonment
C. $25,000/2 years imprisonment
D. None of the above
A
A. Violations to RESPA (Real Estate Settlement Procedures Act) and Regulation X may result in penalties up to $10,000/2 years imprisonment.
23
Q
Compensation for providing a referral to a borrower is allowable under RESPA so long as the cost is included in both the Loan estimate as well as the closing documentation, and an affiliated business disclosure has been signed
True or False
A
False. Requesting or accepting anything of value in relation to the referral of a settlement service is strictly prohibited my dude
24
Q
Fee-splitting of settlement services is prohibited unless
A. The borrower is notified through disclosure of a pre-existing business relationship
B. Services are actually performed
C.. The borrower signs consent within 3 days of application receipt or completion
D. None of the above. Fee-splitting is expressly prohibited under any circumstance
A
B. Services must actually be performed
25
Servicers must retain any documents that relate to actions taken on a borrower’s mortgage for a period of __ year(s) after the date on which the loan is discharged?
A. 3
B. 5
C. 1
D. None above
C. The Servicer must retain any documents that relate to actions taken on a borrower's mortgage for a period of 1 year after the date on which the loan is discharged (Paid in full and recorded in the land records)
26
How many days do Servicers have to return funds left in the escrow account of the borrower after the loan is paid in full?
A. 45
B. 15
C. 30
D. 20
D. Servicers have 20 days to return funds left in the escrow account after the loan is paid in full
27
When receiving a Qualified written request from a borrower regarding their loan, how many days (Excluding Saturdays, Sundays, and legal holidays) does the Servicer have to respond?
A. 5
B. 3
C. 15
D. 60
A. Servicers have 5 days (Excluding Saturdays, Sundays and legal holidays) to respond to a Qualified written request from a borrower
28
Servicers may charge a borrower for force-placed (Hazard) insurance if they have basis for believing that the borrower has failed to maintain this insurance themselves
True or False
True.
29
At least __ day(s) before the foreclosure sale date, the lender must serve the borrower with a notice of default and record a notice of default in the county where the property is located
A. 5
B. 30
C. 90
D. 120
D. 120 days
30
The lender must publish a notice of default once a week for four consecutive weeks, with the last notice appearing at least __ day(s) prior to the sale of the property
A. 30
B. 20
C. 60
D. 45
B. 20
31
After the final foreclosure notice posted by a lender, the borrower can no longer cure the default and the property must be sold at a private auction
True of False
False. The borrower can cure the default by paying all past due amounts prior to sale
32
RESPAs early intervention servicing rule requires live contact with a delinquent borrower by the __ day of the delinquency, as well as written notice no later than the __ day of delinquency
A. 30th/45th
B. 36th/60th
C. 60th/120th
D. 36th/45th
D. 36th/45th
Fact: The written notice must include:
1. A statement urging the borrower to contact his or her servicer
2. A telephone number to reach personnel assigned to work with the borrower and the servicer’s mailing address
3. A description of loss mitigation options that may be available to the borrower
4. Information on obtaining access to a list of CFPB- or HUD-approved home ownership counselors or counseling organizations
33
Civil penalties regarding Escrow account servicing is __ per failure to issue an escrow statement to a borrower as required and __ per intentional failure to issue an escrow statement to the borrower as required
A. $100/$150
B. $96/$193
C. $50/$125
D. $5,000/$10,000
B
Fact: Civil penalties under RESPA (Real Estate Settlement Procedures Act) are capped at $192,768, adjusted annually for inflation (This figure is valid as of January 15, 2020, which is the annual revision date)
34
Passed in 1974 by congress to eliminate discriminatory treatment of credit applicants, addressing practices such as redlining and reverse redlining
A. HUD (Housing and Urban Development)
B. TILA (Truth-in-Lending-Act)
C. HOEPA (Home Ownership and Equity Protection Act)
D. ECOA (Equal Credit Opportunity Act)
D. ECOA (Equal Credit Opportunity Act
35
Regulation B is also known as
A. HOEPA (Home Ownership and Equity Protection Act)
B. ECOA (Equal Credit Opportunity Act)
C. TILA (Truth-in-Lending-Act)
D. RESPA (Real Estate Settlement Procedures Act)
B.
36
Elderly is defined by ECOA (The Equal Credit Opportunity Act) as being __ or older
A. 64
B. 62
C. 64
D. 65
B
Fact:Negative factor or value is the utilization of a factor, value, or weight that is less favorable to elderly applicants than warranted by the creditor's experience, or that is less favorable than the factor, value, or weight assigned to people who are non-elderly and are most favored by a creditor on the basis of age
37
Within __ day(s) of receipt of a loan or credit application, lenders must notify consumers in writing of action taken
A. 5
B. 15
C. 30
D. 60
C. 30 days
Fact: If the creditor takes Adverse Action on the application, the notice must provide a statement of the reasons for the unfavorable decision
38
Within __ day(s) of receipt of an application that lacks information that the applicant can provide, the creditor must provide a Notice of Action or a Notice of Incompleteness
A. 5
B. 15
C. 30
D. 60
C. 30 days
39
A notice of the right to receive a copy of all written appraisals associated with the transaction. This notice is due within __ business day(s) of receipt of a loan application
A. 5
B. 3
C. 45
D. 30
B.
Fact: These requirements do not apply to second liens, other subordinate loans, and loans that are not secured by a dwelling (e.g., loans secured solely by land).
40
A copy of all appraisals and other written valuations is due “promptly” after they are completed or at least __ business day(s) prior to consummation, whichever is earlier
A. 5
B. 3
C. 45
D. 30
B. Promptly or at least three business days prior to consummation
Fact: These requirements do not apply to second liens, other subordinate loans, and loans that are not secured by a dwelling (e.g., loans secured solely by land).
41
A. Internal documents that merely restate a dwelling’s estimated value as listed in the appraisal or written valuation that will be given to the applicant
B. Publicly-available government agency statements of appraised value
C. Publicly-available lists of valuations
D. Manufacturers’ invoices for manufactured homes
E. Reports reflecting property inspections that do not provide, and are not used to develop, an estimate of the property’s value
F. Appraisal reviews that do not include the appraiser’s estimate of the property’s value or opinion of value
G. An appraisal review that does not itself state an estimate that is different from the appraisal
H. All of the above are exceptions to ECOA regulation of valuations
H. Got a little lazy there but Christ that's a lot of stuff
42
Creditors must deliver a copy of an appraisal “promptly upon completion” or __ business day(s) prior to consummation, whichever is earlier
A. 5
B. 3
C. 45
D. 30
B.
Fact: The timing requirement may be waived by the borrower, who must submit an oral or written request to the creditor three business days prior to consummation
If the creditor denies the loan application, they must provide copies of the valuation within 30 days of the date on which the creditor determined the transaction will not proceed
43
__ is a federal fair lending law that was enacted with the goal of discouraging redlining. It accomplishes this by monitoring the mortgage lending practices of depository and non-depository institutions.
A. ECOA (Equal Credit Opportunity Act)
B. FHA (Fair Housing Administration)
C. RESPA (Real Estate Settlement Procedures Act)
D. HMDA (Home Mortgage Disclosure Act)
D. The HMDA (Home Mortgage Disclosure Act)
44
For at least __ months after notifying an applicant of action taken or of incompleteness, the creditor must retain the following records:
- Any application that it receives
- Any information required to be obtained concerning the applicant’s characteristics for the purposes of monitoring ECOA compliance
- Any other written or recorded information used in evaluating the application and not returned to the applicant
- A copy of:
- The Notice of Action Taken
- The statement of specific reasons for adverse
action taken
- Any written statement submitted by the
applicant alleging a violation of ECOA or
Regulation B
A. 24
B. 36
C. 25
D. 12
C. 25 months after notifying an applicant of action taken or of incompleteness
45
ECOA (Equal Credit Opportunity Act) authorizes actual and punitive damages. Regulation B limits punitive damages to:
```
$10,000 for individual actions
The lesser of $500,000 or 1% of a creditor’s net worth in class actions
```
A. $10,000/$500,000 or 1%
B. $5,000/$250,000 or 1%
C. $10,000/$300,000 or 2%
D. $25,000/$450,000 or 2%
A
Fact: If a consumer is successful in an action for an ECOA (Equal Credit Opportunity Act) violation, the statute of limitations to file a claim for a violation of ECOA is Five Years from the date on which the alleged violation occurred. This is the same for class and Attorney General actions as well.
46
Congress enacted ____ in 1968 as Title I of the CCPA (Consumer Credit Protection Act). The ultimate goal was to promote the informed use of credit by consumers
A. ECOA (Equal Credit Opportunity Act)
B. RESPA (Real Estate Settlement Procedures Act)
C. TILA (Truth-in-Lending Act)
D. HOEPA (Home Ownership and Equity Protection Act)
C. TILA
47
Regulation Z is also known as
A. TILA (Truth in Lending Act)
B. ECOA (Equal Credit Opportunity Act)
C. HOEPA (Home Ownership and Equity Protection Act)
D. RESPA (Real Estate Settlement Procedures Act)
A.
48
What does FTC stand for?
A. For The Crown
B. Find Those Crows
C. Federal Trade Commission
D. Fry The Crepe
C. FTC stands for Federal Trade Commission
49
TILA (Truth-in-Lending Act) applies to all credit transactions which meet the following four conditions
- The credit is offered to consumers
- The offer or extension of credit is made regularly
- The credit includes a finance charge or a written agreement stating that the loan may be repaid in more than four installments
- The credit is primarily for personal, family, or household purposes
50
TILA (Truth-in-Lending Act) DOES NOT apply to all credit transactions which meet the following conditions
- Transactions for business, agricultural, or organizational credit
- Credit in excess of a threshold amount that is adjusted annually (this threshold does not apply to transactions that are secured by real property or a dwelling)
- Public utility credit
- Credit extended by a broker registered with the Securities and Exchange Commission or the
- Commodity Futures Trading Commission
- Home fuel budget plans
- Student loans made, insured, or guaranteed by the federal government, or
- Employment-sponsored retirement plans
51
Application according to TILA:
- The consumer’s name
- Social Security Number, which is used to obtain a credit report
- Income
- The address of the property to secure the loan
- An estimate of the value of the property securing the loan
- The loan amount sought
52
____ is defined as the time that a consumer becomes contractually obligated on a credit transaction
Consummation
Fact: Due to conflicting state definitions, it's safe to assume that consummation occurs at the time of closing
53
___ Is defined as a residential structure that contains one to four units, whether or not the structure is attached to real property. The definition of this term includes an individual condominium unit, cooperative unit, mobile home, or trailer, if used as a residence
Dwelling
54
____ is defined by Regulation Z as the cost of credit as a dollar amount.
The finance charge
55
____ Is defined by Regulation Z as a measure of the cost of credit
The annual percentage rate
56
For closed-end transactions, a finance charge is considered accurate if it is not understated by more than __
A. $200
B. $150
C. $100
D. $300
C. $100
Fact: OR, if the amount stated is greater than the amount required to be disclosed
57
Inaccurate disclosures of the finance charge or the annual percentage rate give consumers a basis for exercising the right to rescind a loan up to __ years after consummation
A. 1
B. 2
C. 3
D. 4
C. 3 years
58
Which fee ISN'T excluded from finance and APR calculations?
```
A. Escrow fees
B. Notary fees
C. Appraisal and credit report fees
D. Title fees
E. Origination fees
F. Document preparation fees
```
E. Origination fees
59
Which fee ISN'T included in the calculation of the finance charge
A. PMI (Private mortgage insurance) or MIP (Mortgage insurance premium)
B. Discount points and mortgage broker fees
C.Origination fees
D. Escrow fees
E. Processing fees, and
F. Underwriting fees
D. Escrow fees
60
Regulation Z says that an APR is accurate if it is not more than __ of one percentage point above or below the APR is calculated using the actuarial method
A. 1/16th
B. 1/12th
C. 1/8th
D. 1/4th
C. 1/8th of one percentage point
Fact: Regarding irregular loans, the threshold is 1/4th of one percentage point
Another Fact: An error in the disclosure of the APR is not in violation of Regulation Z if the error came from a defective calculation tool, and if that tool is discontinued with a letter of error being sent to the Bureau
61
The CHARM (Consumer handbook on adjustable-rate mortgages) booklet is due __ business day(s) after a consumer submits an application for a loan that will be secured by his/her principal dwelling.
A. 15
B. 3
C. 5
D. 1
B. The CHARM booklet is due 3 business days after a consumer submits an application for a loan that will be secured by his/her principal dwelling
Fact: Each disclosure must include, as applicable:
- A statement that the interest rate, payment, or loan term can change
- Identification of the index or formula used to make adjustments
- An explanation of how the interest rate and payment will be determined
- A recommendation that the borrower ask about the current margin value and current interest rate
- A notation that the interest rate will be discounted and a recommendation that the loan applicant ask about the amount of the discount
- The frequency of interest rate and payment changes
- The rules relating to index, interest rate, and payment amount, such as the use of rate and payment caps
- A statement, when applicable, of the fact that negative amortization can occur
- An explanation of how to calculate payments for the loan amount
- A reminder that the loan contains a demand feature
- A statement of the type of information that will be provided in notices of interest rate adjustments and an indication of when these notices will arrive
- An indication that disclosure forms are available for other variable-rate loan programs
- At the option of the creditor, an example based on a $10,000 loan:
- A historical example that shows how payments and loan balances are impacted by interest rates, based on the most recent 15 years of index values, or
- The maximum interest rate and payment for a $10,000 loan at the initial interest rate, based on the index and volume, and “…in effect as of an identified month and year for the loan program disclosure assuming maximum periodic increases in rates and payments under the program…”
62
An ARM (Adjustable Rate Mortgage) rate/payment disclosure is due at least __, but no more than __ days before a change in interest results in a new payment amount
A. 20/45
B. 15/30
C. 120/240
D. 60/120
D. Disclosure is due at least 60 but no more than 120 days before a rate change occurs where payment is altered
Fact: An exception being where the first payment is at an adjusted level and due within the first 210 days after consummation. This disclosure is due at consummation
63
An ARM rate-change disclosure must include the following information EXCEPT
A. The date that the current interest rate and payment amounts are going to change
B. A notification of any planned servicer transfers
C. A reminder of when future interest rate adjustments are scheduled to occur, and
D. A description of other changes to the loan that will occur on the date that the interest rate changes, such as the expiration of interest-only or payment-option features
B.
64
An ARM disclosure must include all BUT what
A. A periodic table showing estimated rate/payment adjustments
B. An explanation of how the interest rate is determined
C. A description of any limits on the interest rate increase
D. An explanation of how the new payment is determined
E. Information on negative amortization and prepayment penalties
A.
65
A home equity plan receives the same Loan Estimate and Closing Disclosure requirements as closed-end loans do
True or False
False. These open-end transactions have a separate set of disclosure requirements
Fact: Disclosures as well as the informational brochure “What You Should Know about Home Equity Lines of Credit,” are due at the time an application is provided to a consumer. If an MLO meets with the borrower in person, it's due immediately. If over the phone or through an intermediary agent or broker, it's due within three business days
66
The consumer may not be required to pay any nonrefundable fees in connection with an application for a home equity plan unless he/she has received the disclosures and the brochure on the risks of a home equity line of credit
True or false
True
67
A legal remedy that voids a contract between two parties, restoring each to the position held prior to the transaction
Rescission
Fact: A three-business-day rescission period (cooling-off interval) simply requires timely notice of cancellation, and a three-year rescission period exists if the borrower never received a notice of the right to rescind or accurate Truth-in-Lending disclosures at the time they entered an agreement for a mortgage loan
68
The right to rescission applies to residential mortgage transactions
True or False
False.
Fact: It also doesn't apply to a refinance or consolidation of credit, a lending transaction with a state agency, an advance in a series of advances (such as those made in a multiple-advance loan for the construction of a dwelling), and a renewal of optional insurance products
69
How many calendar days does a creditor have to return any money or property paid by the consumer in connection with a transaction that has been rescinded?
A. 5
B. 10
C. 20
D. 45
C. 20 calendar days
70
A consumer can waive the right to rescind in situations in which credit is needed to meet a bona fide financial emergency
True or false
True. The waiver must be in writing and include a description of the emergency as well as signatures of all parties that have a right to rescind
71
During a foreclosure, finance charges are considered accurate so long as they are understated by no more than __, or greater than the amount required to be disclosed
A. $25
B. $35
C. $50
D. $100
B. $34
72
Creditors are required to show evidence of compliance with Loan Estimate requirements for at least __ years after consummation
A. 5
B. 3
C. 7
D. 1
B. 3 years after consummation
73
Creditors must retain copies of the Closing Disclosure and all related documents for at least __ years after consummation
A. 5
B. 3
C. 7
D. 1
A. 5 years after consummation
74
Creditors must retain for at least __ years, the Escrow Closing Notice and Post-Consummation Partial Payment Policy
A. 5
B. 3
C. 2
D. 1
C. 2 years
75
Records related to loan originator compensation must be retained for at least three years after each receipt of payment
A. 5
B. 3
C. 2
D. 1
B. 3 years after receipt of payment
76
Records related to compliance with ability to repay requirements must be kept for at least __ years after consummation
A. 5
B. 3
C. 2
D. 1
B. 3 years after consummation
77
____ creates certain protections under the Truth-in-Lending Act for loans with high interest rates and high fees
A. TILA
B. HOEPA
C. RESPA
D. FHA
B. HOEPA (Home Ownership and Equity Protection Act)
78
A first-lien home loan is a high-cost mortgage if its APR is __ percentage points above the average prime offer rate for a comparable transaction
A. 2.5
B. 4.5
C. 6.5
D. 8.5
C. 6.5%
79
A subordinate-lien home loan is a high-cost mortgage if its APR is 8.5 percentage points above the average prime offer rate for a comparable transaction
A. 2.5
B. 4.5
C. 6.5
D. 8.5
D. 8.5%
80
Threshold for loans of $21,980 or more: the threshold is triggered if the points and fees exceed __ of the total loan amount
A. 8.5%
B. 6.5%
C. 8%
D. 5%
D. 5%
Fact: A home loan may also be a high-cost mortgage if it includes a prepayment penalty provision that is in force for more than 36 months after consummation, or prepayment penalties that can exceed more than 2% of the amount prepaid
81
Threshold for loans of less than $21,980: the threshold is triggered if the points and fees exceed the lesser of __ of the total loan amount or $1,099
A. 8.5%
B. 6.5%
C. 8%
D. 5%
C. The lesser of 8% or $1,099
82
HPMLs (Higher-priced mortgage loans) follow what tier of percentages?
A. 6.5/8.5/9.5
B. 1.5/2.5/3.5
C. 2.5/3.5/4.5
D. None of the above
B. For first-lien loans with a principal amount that does not exceed the conforming loan limit of $510,400, or up to $765,600 in high-cost areas it is 1.5%, for first-lien loans with a principal amount that exceeds the conforming loan limit (i.e., jumbo loans) it is 2.5%, and for loans secured by a subordinate lien it is 3.5%
83
What does NOT define an LO (Loan originator)?
A. Takes an application
B. Assists a consumer in applying for a loan
C. Negotiates and/or obtains credit for a consumer
D. Offers or negotiates credit terms
E. Advertises or communicates to the public an ability
F. A creditor that uses their own funding
G. or intent to engage in any of the above-listed activities
F. A loan originator is not defined as an individual that uses their own funding
84
Creditors must retain records that show compliance with Loan Estimate requirements for at least __ years after the later of:
- Consummation
- The date on which disclosures are required to be made, or
- The date on which action is required to be taken
A. 2
B. 5
C. 3
D. None of the above
C. 3 years
85
Creditors must retain records that show compliance with Closing Disclosure requirements and all related documents for at least five years after consummation
A. 5
B. 7
C. 3
D. 2
A. 5 years
86
The TRID (Tila-Respa integrated disclosures rule) states that a percentage should be disclosed using up to __ decimal places
A. 1
B. 2
C. 3
D. None
C. 3 decimal places
87
The Loan Estimate must be delivered directly to the consumer or placed in the mail no more than __ business days after the creditor receives the consumer’s application and no later than __ business days prior to consummation
A. 3/5
B. 2/5
C. 3/7
D. 5/7
A. Within 3 days or receipt or completion of the application and no less than 7 days prior to consummation
Fact: The consumer can waive the 7 day waiting period if there is a bona fide emergency, and the written statement must include
- A description of the financial emergency
- An express statement that the waiting period is waived or modified
- Signatures of all consumers that are obligated to repay the loan
Use of a pre-printed form to request a waiver of the seven-day waiting period is prohibited
88
If, within the three-business-day period after receiving a loan application, the creditor determines that the application will not be approved, or if the applicant withdraws the application, there is no obligation to provide the Loan Estimate
True or False
True
89
The regulations do not prohibit a creditor or any other person from collecting fees from a loan applicant before he or she has received the Loan Estimate and indicated intent to proceed with the loan transaction
True or False
False. Intent to proceed must be indicated and the Loan Estimate must be received prior to any fees being collected
Fact: The indication of intent may be written or verbal, and this information must be retained for at least 3 years
90
If fees for third-party services are paid to the creditor or to an affiliate of the creditor, there is a __ tolerance for variance between the estimate and actual charges
A. 1%
B. 4%
C. 10%
D. 0%
D. There is a 0% tolerance
91
Which of the following may NOT vary from the estimated fee?
A. Prepaid interest
B. Property insurance premiums
C. Amounts placed in an escrow account
D. Charges paid to affiliates of the creditor or mortgage broker
E. Charges paid to third-party service providers chosen by the consumer
F. Charges paid for third-party services not required by the creditor
D. Charges paid to affiliates of the creditor or mortgage broker, as these can be determined early on and should therefor NOT vary
92
If changed circumstances cause the charges listed on the Loan Estimate to increase, or cause the aggregate amount of estimated charges to increase by more than __%, the creditor may issue a revised Loan Estimate
A. 1%
B. 5%
C. 10%
D. 8%
C. 10%
Fact: A “changed circumstance” is defined by the Rule to include events, inaccuracies, or changes that are specific to the transaction, such as:
- Extraordinary or unexpected events
- Information that was relied on by the creditor is determined to be inaccurate or changes after the Loan Estimate is provided
- New information
93
A revised Loan Estimate is permitted if the applicant waits more than __ business days after the creditor provides a Loan Estimate before indicating his or her interest in proceeding
A. 7
B. 15
C. 5
D. 10
D. 10 days
Fact: Creditors must provide a revised disclosure to the applicant within three business days of receiving the information that prompted the change. Same day delivery is prohibited, and the revised disclosure must be received by the consumer no later than four business days prior to consummation
94
The list of settlement service providers is due within 3 business days after the Loan Estimate is received, but must be provided on a separate sheet
True or False
False. It is due at the same time, on a separate sheet
95
The first page of the Loan Estimate contains these basic sections. Which of these are not one of them
```
A. Purpose
B. Product
C. Sale price
D. List plan
E. Date issued
F. Loan type
```
D. List plan. What the hell is even that
96
The __ page of the Loan Estimate identifies the creditor and loan originator(s) involved in the transaction
A. First
B. Second
C. Third
D. Fourth
C. Third page
97
Page __ of the Loan Estimate provides Closing Cost Details, including an itemization of amounts listed more generally on page one
A. Second
B. Third
C. Fourth
D. Fifth
A. Second page
98
The __ page of the Loan Estimate contains four basic sections. These sections address general information about the transaction, a summary of loan terms, estimated projected payments, and estimated costs at closing
A. First
B. Second
C. Third
D. Fourth
A. First page
99
The Closing Disclosure must be received by the consumer no later than __ business days prior to consummation
A. 7
B. 10
C. 3
D. 5
C. 3 days prior to consummation
Fact: Timeshares require the Closing Disclosure be received no later than consummation
Another Fact: Responsibility for delivery of the Closing Disclosure rests on the creditor or the settlement agent
Last Fact: You CANNOT charge for anything relating to the Closing Disclosure, in any form
100
The __ page of the Closing Disclosure advises consumers to compare the information contained in the document with that listed on the Loan Estimate provided at the start of the transaction
A. First
B. Second
C. Third
D. Fourth
A. First
Fact: The top of the Closing Disclosure lists general information about the transaction, including the date issued, closing date, disbursement date, and identification of the settlement agent, property, borrower, seller, lender, and loan information
101
The second table on the __ page of the Closing Disclosure shows Other Costs
A. First
B. Second
C. Third
D. Fourth
B. Second
102
On the __ page, the Calculating Cash to Close table shows the consumer the cash needed to close and encourages him or her to use the table to see what has changed from the Loan Estimate
A. First
B. Second
C. Third
D. Fourth
C. Third page
103
The __ page of the Closing Disclosure offers required disclosures regarding matters such as the creditor’s policies on loan assumptions, late payments, and partial payments
A. First
B. Second
C. Third
D. Fourth
D. Fourth page
Fact: This is also the page where the Adjustable Payment (AP) Table and/or the Adjustable Interest Rate (AIR) Table may appear, if applicable to the transaction
104
The __ page of the Closing Disclosure includes the Loan Calculations table
A. Second
B. Third
C. Fourth
D. Fifth
D. Fifth
105
Which of the following changes that can occur prior to consummation, DOES NOT require the creditor to provide a revised Closing Disclosure and new three-business-day waiting period
A. A change in the APR
B. Additional down payment
C. A change in the loan product
D. Addition of a prepayment penalty
C. Additional down payment
106
There is a 30-day deadline for providing a corrected disclosure when an event occurs that causes the Closing Disclosure to become inaccurate
True or False
True. When a change, the discovery of a previously-unknown fact, or discovery of an unintentional error occurs
107
How many days does a lender have to refund excess funds if the borrower paid over the 0% for costs of services provided by the creditor or its affiliate, or the 10% tolerance limit for services provided by non-affiliates?
A. 15
B. 30
C. 60
D. 120
C. 60 days within the date of consummation
108
The Official Interpretations also address record keeping with relation to determination of average charges, providing that creditors must retain all documentation used to calculate average charges for a particular class of transactions for a period of at least ___ years after any settlement for which that average charge was used
A. 1
B. 2
C. 3
D. 4
C. 3 years
109
HOEPA was enacted as part of
A. ECOA
B. TILA
C. RESPA
D. HMDA
B. TILA
110
Lenders may require borrowers to purchase PMI (Private Mortgage Insurance) when they make down payments of less than __%
A. 5%
B. 10%
C. 20%
D. 30%
C. 20%
111
HPA stands for what
Homeowners Protection Act
112
The HPA (Homeowners Protection Act) applies to government-insured FHA or VA loans, and loans protected by PMI paid for by the lender
True or False
False
113
A short sale is a perfectly legitimate transaction. It crosses ethical guidelines, however, when performed in conjunction with
A. Chunking
B. Churning
C. Flipping
D. Flopping
D. Flopping, which is where the appraiser is enticed to produce an artificially-deflated appraised value. The lender then agrees to release the lien for the value on the appraisal after which the Realtor will typically arrange to buy the home for the false market value. Shortly after acquiring the home, the realtor will then sell it for its true market value
114
Define Cancellation Date
- The date on which an amortization schedule shows that the principal balance will reach 80% of the original value of the home, or
- The date that actual payments reduce the principal balance to 80% of the original value of the home
115
Define Original Value
Under the HPA, the original value of a home that secures a mortgage is the lesser of:
- The sales price of the home, or
- The appraised value of the home at the time of the loan's consummation
116
Define Good Payment History
Did not make a 60 day or more past due payment during the 12-month period beginning 24 months before the date on which the mortgage reaches the cancellation date and did not make a 30 day or more past due payment during the 12-month period prior to the date the mortgage reaches the cancellation date
117
Define Termination Date
The date that the principal balance is scheduled to reach 78% of the original value of the home. The date is based on the amortization schedule for the loan, and not on the actual balance that is outstanding on the termination date
118
Which of the following is NOT a way in which a borrower's required PMI may end
A. Automatic termination
B. Termination by lender appeal
C. Final termination
D. Cancellation at the borrower's request
B. Termination by lender appeal is not an option
Fact: If cancellation of PMI does not occur at the borrower's request OR at the automatic termination point, Final Termination will occur at the loan halfway period, 15 years, so long as the borrower is current on payments, there hasn't been a refinance and so on
119
The Notification of Cancellation or Termination, which indicates that the borrower no longer has PMI or an obligation to pay related fees or premiums, is due within __ day(s) of the cancellation or termination of PMI
A. 15
B. 60
C. 5
D. 30
D. 30 days
120
Within __ days after the cancellation or termination of PMI, the law requires the return of any unearned premiums to the borrower
A. 15
B. 30
C. 45
D. 60
C. 45 days
121
The statute of limitations for filing an action for violations of the HPA is __ year(s) from the date of discovering a violation of the law
A. 1
B. 2
C. 3
D. 4
D. 2 years
122
Introduced July of 2008, this bill was introduced to address the market conditions that led to the crisis
A. HOEPA
B. HPA
C. ECOA
D. HERA
D. HERA (Housing and Economic Recovery Act)
Fact: The SAFE Act is Title V of HERA, and has had the most immediate impact on mortgage professionals such as loan originators and brokers
123
____ is referred to as Regulation G
A. HERA
B. SAFE
C. ECOA
D. HOEPA
B. SAFE Act
124
An LO employed by a depository institution must be ____, as where an LO employed by a non-depository institution must be ____ through the NMLS
A. Licensed/Registered
B. Registered/Licensed
B. Registered/Licensed
125
The primary goal of HMDA is to identify urban areas where the availability of home financing at reasonable terms is limited
A. HMDA
B. FHA
C. HUD
D. HOEPA
A. HMDA (Home Mortgage Disclosure Act)
Fact: The method that HMDA establishes for achieving its goals and purposes is to require both depository and non-depository institutions to collect data at the time that they receive loan applications and submit the data to the federal agency that supervises their lending activities
126
____ implements regulations known as Regulation C
A. HOEPA
B. HMDA
C. HERA
D. SAFE
B. HMDA (Home Mortgage Disclosure Act)
127
What is a CRA?
Credit reporting agency
128
The regulations promulgated by the ____ are known as Regulation V
A. FINRA
B. HOEPA
C. RESPA
D. FCRA
D. FCRA (Fair Credit Reporting Act)
129
Furnishers have __ day(s) from the CRA’s receipt of a dispute to investigate the dispute and rectify any inaccuracies
A. 15
B. 30
C. 45
D. 60
B. 30 days from the receipt of a dispute
130
Furnishers of credit have the burden of protecting consumer privacy when credit is being used by a User
True or False
False. The User has the burden of protecting consumer privacy when using credit information passed to them by a Furnisher
131
(In relation to the FCRA (Fair Credit Reporting Act)) Any person who obtains information about a consumer under false pretenses will be fined and/or imprisoned for not more than one year
True or False
False. Imprisonment can be for no longer than 2 years
Fact: This is the standard imprisonment maximum of all FCRA related violations
132
CRAs must keep the active duty alert in the file for not less than __ month(s)
A. 12
B. 6
C. 24
D. 18
A. 12 months
133
Mortgage Professionals must respond to a consumer's written request for information on fraudulent transactions __ days after receipt of the request
A. 3
B. 5
C. 15
D. 30
D. within 30 days
134
FACTA (Foreign Account Tax Compliance Act) directed the FTC (Federal Trade Commission) and the federal banking agencies to adopt which rule?
A. Disposal act
B. Termination procedure
C. Disposal and standards
D. Disposal rule
D. Disposal rule
Fact: Lenders, mortgage brokers, and other mortgage professionals are subject to the Gramm-Leach-Bliley Act and must also incorporate methods for the disposal of information in their security program as required by the Safeguards Rule
135
The FTC Red Flags rule covers "covered loans". Which of the following is not a covered loan?
A. Offered or maintained by a financial institution or creditor
B. 4 payment bridge loan
C. Intended for personal, family, or household purposes
D. Designed to permit multiple payments or transactions
B. 4 payment bridge loan is not covered under the FTC Red Flags Rule
136
The SBA (Small Business Association) defines a small business as one that has assets of $__ million or less
A. 135
B. 165
C. 75
D. 245
B. $165 million
137
How long must CIP (Consumer Identification Program) documentation be kept?
A. 1
B. 2
C. 3
D. 5
D. 5 years
138
Within how many days must an RMLO report a SAR (Suspicious Activity Report) after an "Initial detection"?
A. 3
B. 30
C. 5
D. 60
Be. Within 30 days
Fact: RMLOs must retain SARs and supporting documentation for five years from the date of filing a SAR.
139
the CFPB is responsible for implementation and enforcement of the law and the GLB Act regulations, which are known as Regulation P
A. FCRA
B. GLB
C. MAP
D. TILA
B. GLB (Gramm-Leach-Bliley Act)
Fact: The provisions of the GLB Act require compliance with the Safeguards Rule
140
In order to assist customers with limited or no access to the Internet, the institution must mail annual notices to any customers who request them by telephone. These notices must be delivered within __ days of receiving the customer’s request
A. 5
B. 10
C. 15
D. 30
B. 10 days
Fact: The GLB Act does not include specific penalty provisions for violations of the law’s privacy provisions. Violations of the law would be addressed by the CFPB
141
The provisions of the ____ Rule are referred to as Regulation N, and apply to "commercial communications"
A. GLB
B. HOEPA
C. MAP
D. FCRA
C. MAP
142
There are special record keeping requirements under the MAP Rule. Individuals and entities that are subject to the Rule must keep copies of commercial communications about mortgage credit products for __ months
A. 12
B. 24
C. 36
D. 48
B. 24 months
143
Mortgage professionals engaged in telemarketing are required to maintain records of all telemarketing activities for a period of __ month(s) from the date the materials were produced
A. 12
B. 24
C. 36
D. 48
B. 24 months
Fact: Telemarketers must access the Do-Not-Call Registry every 31 days to update their call lists by removing the phone numbers of any individuals who have recently added themselves to the Do-Not-Call List
144
An established business relationship is a relationship between a seller and a consumer based on a financial transaction that they have shared within the __ month period that immediately precedes any sales call
A. 6
B. 8
C. 12
D. 18
D. 10 month period
Fact: Under the FTC (Federal Trade Commission) act, the MAP (Mortgage Acts and Practices), penalties are $43,280 for each violation, and when violations continue, each day is considered a separate violation.
145
Creditors must retain records to show compliance with the ATR (Ability to Repay) Rule and the QM (Qualified Mortgage) Rule for at least __ year(s) after consummation of a covered transaction
A. 1
B. 2
C. 3
D. 4
C. 3 years
Fact: The only transactions that are not subject to the requirements of the ATR Rule are open-end home equity plans, reverse mortgage loans, bridge loans with terms of 12 months or less, construction loans, and loans made by a housing finance agency
146
The ____ is calculated by adding together the index and the margin in effect at the time of consummation
A. Fully-indexed rate
B. APR
C. Penalty calculation
D. Finance charge
A. Fully-indexed rate
Fact: Of course, creditors cannot know with absolute certainty what the index will be at the time of consummation. They are therefore allowed to use a period of time, referred to as the look-back period, to identify the index value that will be used to determine the fully-indexed rate. The most common look-back period is 45 days
147
One of the most evident distinctions between qualified mortgages and non-qualified mortgages is the rigid 43% debt-to-income ratio limitation for qualified mortgages established under the QM Rule
A. 41%
B. 42%
C. 43%
D. 44%
C. 43% debt-to-income ratio
148
A qualified mortgage may include a 30 year term, so long as the points and fees cap is less than 3%
True or False
False. The term can be no longer than 30 years, and the cap more often than not must be 3% on less, depending on loan amount
Fact: A QM can not include Negative amortization, Balloon payments (with some specific exceptions, and the ability to defer payment of the principal (e.g., interest-only loans)
149
The most evident distinction between the permanent and temporary qualified mortgage standards is that qualified mortgages made under the temporary category do not have to meet the 43% DTI standard
A. 3% fee cap
B. 30 year term
C. Insurance by the FHA (Federal Housing Administration)
D. 43% DTI
D. 43% DTI
150
Excluded from the definition of “financial products and services” are
A. The business of insurance
B. Engaging in deposit-taking activities
C. Collecting debt related to a consumer product or service
D. Electronic conduit services
A & D
151
The Consumer Response Unit must submit an annual report to Congress, due no later than ____ of each year
A. January 1st
B. December 31st
C. March 31st
D. February 28th
C. March 31st
152
RESPA requires that a list of home ownership counseling organizations be provided to a loan applicant no later than __ business days after receiving a completed application
A. Three
B. Five
C. Ten
D. Fifteen
A. Three business days
Fact: The list may not be more than 30 days old at the time that it is provided. It may be provided with other disclosures
153
Lenders must report detailed information about loan transactions and demographic information concerning borrowers in order to prove they are not discriminating. Which of the following laws creates that reporting requirement?
A. TILA
B. Gramm-Leach-Bliley Act
C. RESPA
D. HMDA
D. HMDA (Home Mortgage Disclosure Act)
