MLO Test Flashcards
Laws and stuff (44 cards)
What does TILA regulate?
It regulates credit disclosures and protects consumers from unfair lending practices.
What is the purpose of the Ability-to-Repay (ATR) rule under TILA?
To ensure lenders verify that borrowers can afford their mortgage payments.
What is the purpose of HOEPA (Home Ownership and Equity Protection Act)?
To prevent predatory lending practices in high-cost loans.
What is the maximum variation allowed between the Loan Estimate (LE) and Closing Disclosure (CD) for lender fees?
0% tolerance—lender fees cannot increase.
What document must be provided within 3 business days of a mortgage application?
The Loan Estimate (LE).
What does HOEPA amend?
The Truth in Lending Act (TILA).
Under TILA, how long must loan originators retain evidence of compliance?
2 years.
What is the penalty for a single willful violation of TILA?
Up to $5,000 per day.
What is the primary purpose of RESPA?
To prevent kickbacks, referral fees, and unearned fees in real estate transactions.
Which section of RESPA prohibits kickbacks and referral fees?
Section 8.
Which types of transactions are NOT covered by RESPA?
All-cash sales, commercial loans, and vacant land purchases.
What is the penalty for a RESPA violation?
Up to $10,000 fine and/or 1 year in prison per violation.
What does ECOA prohibit?
Discrimination in lending based on protected classes (race, gender, age, etc.).
How long does a lender have to send a notice of action taken under ECOA?
30 days from receiving a loan application.
Under ECOA, when must a lender provide a borrower with a copy of the appraisal report?
At least 3 days before closing.
Which protected class is covered under ECOA but NOT under the Fair Housing Act?
Marital status and age.
What is the penalty for a lender who violates ECOA?
Up to $10,000 per violation.
What is the purpose of HMDA?
To detect discriminatory lending practices by requiring lenders to report loan data.
What key borrower information must be collected under HMDA?
Race, ethnicity, and gender.
Where must HMDA data be reported annually?
The Loan Application Register (LAR).
What is the purpose of the FCRA?
To regulate how credit information is collected and used.
What does FACTA (Fair and Accurate Credit Transactions Act) provide consumers?
The right to one free credit report per year from each bureau.
Who enforces FCRA?
The Consumer Financial Protection Bureau (CFPB).
How long do bankruptcies remain on a credit report?
Up to 10 years.
