The initial application - Chapter 3

Question 1

What is the difference between a pre-qualification and a pre-approval?

Answer 1

A pre-qual is the first step that gives the borrower an idea of how much they would likely qualify. A pre-approval is the second step and a conditional commitment to grant the mortgage.

Question 2

What is the main purpose of TILA - Reg Z?

Answer 2

To protect consumers from predatory lending practices.

Question 3

what year was TILA created?

Answer 3

1968

Question 4

True/False - Reg Z does not apply to business, commercial, agriculture loans

Answer 4

TRUE

Question 5

Name some of the rules that fall under the TILA umbrella

Answer 5

Dodd-Frank
HOEPA (sec 32)
HPML (sec 35
QM
ATR
LO compensation

Question 6

What are the penalties for someone who gives false or inaccurate disclosure information, consistently understates the APR, or otherwise fails to comply with Reg Z?

Answer 6

fine up to $5000 and or up to 1 year of imprisonment.

Question 7

True/False - if a rate is advertised, the APR must also be disclosed.

Answer 7

TRUE

Question 8

True/False - If a lender is advertising an adjustable rate credit plan, there does not need to be a mention of the APR.

Answer 8

FALSE - the advertisement must say that the APR may increase or is subject to change.

Question 9

What regulation is the MAP rule? (mortgage acts and practice rule_

Answer 9

Regulation N

Question 10

What is the main purpose of Regulation N?

Answer 10

regulate advertising

Question 11

What year was Reg N established?

Answer 11

2011

Question 12

True/False - it is a violation of the map rule to make any material misrepresentations expressly or by implication in any commercial communication.

Answer 12

TRUE

Question 13

How long must commercial communication be kept to comply with the MAP rules?

Answer 13

minimum of 2 years from the date the communication was made to the consumer.

Question 14

What are the six pieces of information that triggers an application

Answer 14

Property address
Estimated property value
Name of borrower
Social security number to pull credit
Income
Loan amount requested

memory tool - use the acronym “PENCIL”

Question 15

Which Regulation is HMDA?

Answer 15

Regulation C

Question 16

what is the main purpose of HMDA?

Answer 16

To track information and prevent discrimination

Question 17

Who enforces HMDA?

Answer 17

CFPB

Question 18

What regulation is ECOA?

Answer 18

Reg B

Question 19

What is the main purpose of ECOA?

Answer 19

To prevent discrimination on specified protected classes.

Question 20

Who enforces ECOA?

Answer 20

CFPB

Question 21

What are the two comprehensive prohibitions against discriminatory lending practices in ECOA

Answer 21

A lender must not discriminate on a prohibited bases
A lender must not make any oral or written statements that would discourage on a prohibited basis a person from making an application

Question 22

True/False - a lender can always inquire about an applicant’s spouse or former spouse

Answer 22

FALSE - can only inquire in certain scenarios (relying on spouse’s income, community property state, alimony/child support)

Question 23

How many days must the lender notify the applicant of any action taken on the applicant’s request for credit?

Answer 23

30 days

Question 24

ECOA requires that the lender provide an applicant a copy of their appraisal within how many days of consummation?

Answer 24

3 days

Question 25

What are the two differences between the Fair Housing Act and ECOA?

Answer 25

Fair Housing adds disability to the list of protected classes. Fair housing applies to all types of housing.

Question 26

What does TRID stand for?

Answer 26

Tila Respa Integrated Disclosure.

Question 27

What is the main purpose of TRID?

Answer 27

To simplify the disclosure process

Question 28

When was TRID created?

Answer 28

2015

Question 29

TRID does not apply to which mortgage transaction?

Answer 29

HELOCs | Reverse Mortgages

Question 30

What did the Mortgage Disclosure Improvement Act (MDIA) of 2009 introduce?

Answer 30

3/7/3 rule - Disclosures within 3 days of application, can't close for 7 days business days after app, redicslosure of an inaccurate APR at least 3 days prior to closing.

Question 31

True/False - the LE must be provided to the borrower within 3 business days following the receipt of the application.

Answer 31

TRUE

Question 32

TRUE/FALSE - the LE must be delivered no later than 5th business day before consummation of the transaction.

Answer 32

FALSE - 7 days before consummation

Question 33

TRUE/FALSE - the final LE must be received by the borrower no less than 4 business days before closing.

Answer 33

TRUE

Question 34

What is a zero tolerance Fee?

Answer 34

Charges that cannot increase at all between the original disclosure on the LE and the final charge on the CD.

Question 35

What are some examples of zero tolerance fees?

Answer 35

Fees paid to the lender fees paid to a third party if the lender did not permit the consumer to shop for the service transfer taxes

Question 36

What are some fees that are considered a 10% tolerance fee?

Answer 36

recording fees third party services where the borrower shopped a service provider on the lender's written list of service providers.

Question 37

What are some examples of no tolerance fees?

Answer 37

prepaid interest insurance premiums escrows services required by the lender, if the borrower shops and picks someone not on the written list of service providers.

Question 38

True/False - The home loan tool kit is another disclosure required by TRID.

Answer 38

TRUE - must be provided within 3 business days of application.

Question 39

What is the main purpose of the Electronic Signatures in Global and National Commerce Act?

Answer 39

Allows for e-signatures on a mortgage loan document.

Question 40

How often must HMDA data be reported?

Answer 40

Quarterly starting in 2020

Question 41

How long must a CD be kept?

Answer 41

5 years

Question 42

What is the purpose of the 4506T?

Answer 42

Sent to the IRS to confirm the numbers on the tax returns are accurate. Can help determine if fraud exists.