TILA Flashcards
1
Q
T or F
For HELOC advertising, a triggering term stated in the negative as well as the affirmative would trigger additional disclosures.
A
TRUE
This is only true for HELOC advertising and not other types of loans. For example, if you advertised “no annual fee” for the first year, that would be in the negative and it would trigger the additional disclosures for the HELOCs. But not for home equity LOANS.
2
Q
T or F
A construction loan inspection fee charged during the construction loan phase is a finance charge under Reg Z?
A
TRUE
3
Q
The term negative amortization should be avoided if the bank originates certain _________________.
A
high cost closed-end mortgage loans
4
Q
What is definition of a ‘business day’ for the purposes of rescission?
A
Monday through Saturday excluding federal legal holidays
5
Q
Multiple advance construction loans are considered ______________ for the purposes of calculating an APR.
A
irregular transaction
6
Q
A creditor must provide affected consumers with a notice that includes a statement that the consumer may reject the change but the consumer’s ability to use the account for further advances will be terminated or suspended when a creditor ________________.
A
makes a significant change in terms of a credit card account
7
Q
T or F
HELOCs are considered covered transactions for Reg Z ability to repay requirements?
A
FALSE
Home mortgages are included, but HELOCs, Reverse Mortgages, and Construction Loans are not.
8
Q
T or F
HELOCs must adhere to TRID disclosure requirements?
A
FALSE
Home mortgages are included, but HELOCs, Reverse Mortgages, Timeshares, and Construction Loans are not.
9
Q
T or F
Origination charges are subject to the zero tolerance disclosure standards?
A
TRUE
10
Q
The Truth in Lending Act (TILA) was implemented through what regulation?
A
Regulation Z
11
Q
What is the primary purpose of TILA?
A
to make credit shopping easier for consumers by requiring disclosure of certain credit terms in a meaningful and uniform manner
12
Q
What credit is covered by Reg Z?
A
credit offered or extended by a creditor that is
- subject to a finance change or payment in more than 4 installments (including payday loans)
- primarily for personal, family, or household purposes
- as specific credit card arrangements that may not meet the first two requirements
13
Q
What is the threshold for exempted Reg Z loans?
A
credit for an amount more than $54,600 (as of January 1,2015) not secured by real property or a dwelling and not a ‘private education loan’
14
Q
Reg Z disclosures must be provided __________.
A
before loan consummation
15
Q
For closed end credit, disclosure statements that become inaccurate due to either ___________ or __________ must be redisclosed to the customer no later than _______ before consummation.
A
- any changed term, unless the original disclosure was based on an estimate and labeled as an estimate
- all changed terms if the APR changes more than 1/8 of one percent from that which was originally disclosed in a regular transaction or more than 1/4 of one percent in an irregular transaction
- 3 business days
16
Q
For closed end loans, what is the definition of application for loans secured by real property?
A
1) consumer’s name 2) consumer’s income 3) consumer’s social security number 4) property address 5) an estimate of the value of the property 6) the mortgage loan amount sought
17
Q
What mortgage loans are outside of TRID applicability? (‘other mortgages’)
A
Reverse Mortgages and Chattel dwelling loans
18
Q
For ‘other mortgages’ (and timeshares subject to RESPA), a Good Faith Estimate of the disclosures required by Reg Z must be ________________.
A
delivered or mailed to the consumer not later than the third business day after the creditor receives the consumer’s written application
19
Q
For timeshares subject to RESPA, an initial Good Faith Estimate of the disclosures required by Reg Z must be ________________.
A
provided to the consumer not later than the earlier of loan consummation or three business day after the creditor receives the consumer’s application
20
Q
For timeshares subject to RESPA, a corrected Good Faith Estimate of the disclosures required by Reg Z must be ________________.
A
provided to the consumer at loan consummation or settlement
21
Q
For timeshares subject to RESPA, a ‘business day’ is ________________.
A
a day in which the creditor’s offices are open to the public for carrying on substantially all of its business functions
22
Q
The creditor must deliver or mail the early estimated disclosures ________________.
A
not less than the seventh business day before the consummation of the transaction
(7 day waiting period)
23
Q
If the APR becomes inaccurate (outside of established thresholds), when must the creditor must provide corrected disclosures with all changed terms?
A
the consumer must receive the corrected disclosure no later than 3 business days before consummation
(3 day waiting period)
24
Q
Unless they are delivered in person, corrected disclosures are deemed to be received by the consumer ______________.
A
three business days after they are mailed
25
What statement is required on all early disclosures (initial and corrected)?
"You are not required to complete this agreement merely because you have received these disclosures or signed a loan application."
26
For the purposes of early disclosure delivery requirements, a 'business day' is ______________.
any day the lender is open to the public for conducting substantially all of its business functions
27
Neither the creditor nor any person may impose a fee upon the consumer in connection with an application for a transaction that is subject to RESPA and secured by the consumer's dwelling before ___________________.
the consumer has received the applicable early disclosure
| bonafide and reasonable credit report fees are exempt
28
For purposes of early disclosure receipt requirements and waiting periods, a 'business day' is ________________.
any calendar day except Sundays and legal holidays specified by law
29
T or F
| A consumer may waive the receipt requirements and waiting periods required by Reg Z?
TRUE
In the case of a bonafide personal emergency, a consumer may waive the waiting periods by providing the creditor with a written, dated waiver that describes the emergency and is signed by all consumers who are primarily liable on the transaction. (A preprinted form may not be used)
30
For variable rate transactions secured by the customers principal dwelling, with a term greater than one year, certain disclosures ___________.
* must be given at the time an application is provided or before the consumer pays a nonrefundable fee, whichever is earlier OR
* for phone or brokered applications, up to 3 business days following the application
31
What are the general disclosure requirements of private education loans?
* certain disclosures must be provided at the time of application
* a disclosure statement must be provided within 3 days of receiving an application
32
Reg Z disclosures must be based ___________.
on the legal obligation between the parties
33
For Reg Z disclosures with demand obligations, disclosures must be based on ____________.
an assumed maturity of one year
| unless a specific maturity date defined
34
If information on which a Reg Z disclosure is based is unknown, the creditor must ______________.
estimate the information and state that the disclosure is an estimate.
35
What format must Reg Z disclosures be in?
* written
* conspicuous
* segregated
36
T or F
When applications are accessed by the consumer in electronic form, the early home loan disclosures may be provided without regard to the consumer consent provision of E-Sign.
TRUE
37
For closed end non mortgage and 'other mortgage' loans, APR should be disclosed more conspicuously and described as ___________________.
"The cost of your credit as a yearly rate"
38
For closed end non mortgage and 'other mortgage' loans, an irregular transaction is one that includes one or more of the following:
* multiple advances
* irregular payment periods (other than the first payment period)
* irregular payment amounts (other than the first payment period)
39
What are the APR tolerances for closed end non mortgage loans?
* 1/8 of one percent in a regular transaction
| * 1/4 of one percent in an irregular transaction
40
What are the APR tolerances for closed end 'other mortgage' loans?
the rate is still considered accurate if the rate results from the disclosed finance charge and that finance charge is either accurate under the rule or accurate under rescission rules
41
For rescindable closed end non mortgage and 'other mortgage' loans, the APR and finance charge are considered to be accurate if
* they are greater than the amounts required to be disclosed OR
* they are understated by no more than the greater of 1/2 of one percent of the face amount of the note or $100 OR
* for 'other mortgage loans' they are understated by no more than the greater of one percent of the face amount of the note or $100
42
For closed end non mortgage and 'other mortgage' loans, the finance charge must be disclosed ___________________.
* more conspicuously AND
| * described as "The dollar amount the credit will cost you."
43
T or F
| Appraisal, investigation and credit report fees are included in the finance charge for 'other' mortgage loans?
FALSE
| But they are included in closed end non mortgage loans
44
Are application fees that are charged to all applicants regardless of whether or not credit is actually extended considered a finance change on closed end non mortgage and 'other mortgage' loans?
NO
45
What is the tolerance for finance charges on closed end non mortgage loans?
* within $5 for amount financed of $1,000 or less
| * within $10 for larger transactions
46
What are the tolerances for finance charges on closed end 'other mortgage' loans?
$100 for understated finance charges and any amount for overstatements
47
For closed end non mortgage and 'other mortgage' loans, the amount financed must be described as _______________.
"The amount of credit provided to you or on your behalf"
48
For closed end non mortgage and 'other mortgage' loans, how is the amount financed computed?
* determine the principal loan amount,
* add other amounts financed by creditor that are not finance changes, and
* subtract any prepaid finance charges
49
For closed end non mortgage and 'other mortgage' loans, the total of payments must be described as ______________.
"The amount you will have paid when you have made all scheduled payments"
50
For closed end non mortgage and 'other mortgage' loans, the total of payment is generally the sum of ______________.
the finance charge and the amount financed
51
For closed end non mortgage and 'other mortgage' loans, the total sales price is used in _________ and must be described as ____________.
* used in a credit sale
| * "The total price of your purchase on credit including your down payment of $____"
52
For closed end non mortgage loans, payment schedule must include:
* number, amount, and timing of payments scheduled to repay the obligation
* exact amount of payments^
* any applicable PMI payments until automatic termination
^ if payment vary based on finance charge, the highest and lowest payment and statement payments are in that range
53
T or F
| For closed end non mortgage and 'other mortgage' loans, prepayment options must be disclosed?
TRUE
54
For closed end non mortgage and 'other mortgage' loans, security interests must be disclosed and include:
* explanation that creditor has or is acquiring a security interest in the property purchased as part of the transaction, or in property specifically identified, as part of the transaction
* any applicable 'spreader' clauses
55
For closed end non mortgage and 'other mortgage' loans, a variable rate disclosure must be given in ___________________.
all transactions where the APR may increase after consummation.
56
What must be included on the variable rate disclosure for closed end non mortgage and 'other mortgage' loans secured with term one year or less.
* circumstances under which the rate may increase
* any limitations on the increase^
* the effect of the increase
* an example of the prepayment terms that would result from an increase
^ if the loan is secured by a dwelling, there must be a limit on the interest rate that can be imposed over the life of the loan
57
For closed end non mortgage and 'other mortgage' loans, secured by real property (other than a timeshare), interest rates and payment information must be disclosed:
* in a prominently placed table
* similar to the model form
* with no more than 5 columns
* in at least 10 point font
58
For closed end non mortgage and 'other mortgage' loans, secured by real property (other than a timeshare), interest rates and payment information must include:
* interest rate disclosures outlining
- amortization
- fixed or adjustable rates
- applicable payment increases
* payment disclosures outlining
- amortization
- how payments will be applied and to what portion of the loan
- balloon payments
59
For the mandatory mortgage loan closing disclosure, the title must be ______________ and the statement of purpose must be ___________.
* 'Closing Disclosure'
| * 'This form is a statement of final loan terms and closing costs. Compare this document with your Loan Estimate'
60
What are the overall areas required on the mandatory mortgage loan closing disclosure?
* closing information
* transaction information
* loan information
* a table including information that has changes from the Loan Estimate
* loan disclosures
* escrow information
61
What are the loan purpose options on the mandatory mortgage loan closing disclosure?
purchase, refinance, construction or home equity
62
When there are multiple consumers liable on the transaction who must receive disclosures?
It depends on if the loan is rescindable;
- in nonrescindable transactions, only one disclosure statement need be given and may be given to any consumer who has primary liability
- for rescindable transactions, all consumers with the right to rescind must receive
* a copy of the disclosure statement AND
* two copies of the notice of the right to rescind the transaction unless provided by email, in which case only one copy need be sent to each party
63
What post consummation events require disclosures?
Refinancing - Assumptions - rate adjustments
64
When do right of rescission disclosure requirements apply?
when the transaction takes a lien on the consumer's principal dwelling and the loan is not a purchase, acquisition, or initial construction mortgage transaction
65
Does the right of rescission apply to a refinancing by the same creditor?
It depends.
It only applies if new funds advance
66
When the right of rescission applies, who has the right to rescind and when?
* any person, including any non-borrower, who has an ownership interest in the dwelling being given as collateral and uses it as their principal dwelling
* within 3 business days after the latest of
- consummation
- delivery of the material Truth in Lending disclosures
- delivery of the notice of the right to rescind
67
For the purposes of rescission, a 'business day' is _______________________.
all calendar days except Sundays and legal holidays specified by law
68
Until the rescission period has expired, the creditor may not:
* disburse funds other than into a valid escrow account
* perform any services
* deliver any materials
69
During the rescission period, the bank may:
* prepare the loan check
* perfect the security interest
* prepare to discount or assign the contract to a third party
* accrue finance charges, if allowed by state law
70
What is the effect of valid rescission?
* security interest becomes void
* the consumer is not liable for any finance charge
* within 20 days, the creditor must return any money or property given to anyone in connection with the transaction and release any liens or take any other action necessary to reflect the security interest termination
* once the creditor has returned all money and property owed to consumer, the consumer must tender all money and property owed to the creditor
71
When and how can a consumer waive the right to rescind?
* waivers are valid only if there is a bona fide personal financial emergency
* a separate written and dated waiver must be signed by all consumers with a right to cancel
* the waiver must describe the emergency, and the bank cannot use preprinted forms for this purpose
72
Failure to properly provide the right of rescission affords the customer an additional ____________.
three years to rescind the transaction
73
If an ad states a rate of finance charge, it must state the ___________.
annual percentage rate or APR
74
If the rate may be increased after loan consummation, the advertisement must state _________.
this fact
75
In an advertisement for a loan not secured by a dwelling, only the ______ may be stated, except __________.
* APR
* a simple annual rate or periodic rate applied to a balance may be stated in conjunction with, but not more consciously than, the APR
76
In an advertisement for a loan is secured by a dwelling, only the ______ may be stated, except __________.
* APR
| * a simple annual rate applied to a balance may be stated in conjunction with, but not more consciously than, the APR
77
If any triggering term is used in an ad, then the following disclosures are required:
* amount or percentage of down payment (credit sales only)
* terms of repayment which reflect the repayment obligations, including, if applicable, the balloon payment
* APR, and, if the APR may be increased after consummation, that fact must be stated
78
What are the Reg Z triggering terms?
Amount or percentage of down payment - number of payments or period of repayment - amount of payments - amount of finance charge
79
For ads in catalogs or on multipage or in electronic form, the ad will be considered a single ad if ______________.
the triggering terms clearly reference the page or location of the additional information
80
Ads on television or radio that contain triggering terms may meet the requirements for additional disclosures by either:
* disclosing the additionally required information OR
* disclosing the APR^ and a way to obtain additional information
^ and, if it may increase after closing, that fact
81
What terms are prohibited in advertisements for credit secured by a dwelling?
* misleading use of 'fixed'
* misleading comparisons
* misrepresenting government endorsements
* misleading use of the lender's name
* misleading claims of debt elimination
* misleading use of 'counselor'
* misleading foreign language ads
82
Loan Estimates must be delivered or mailed ____________ and/or __________ and are deemed received __________.
* not later than the third business day after the creditor receives the consumer's application
* not later than the seventh business day before consummation (excluding timeshares)
* three business days after they are delivered or placed in the mail
83
Mortgage loan disclosure waiting times can be waived if ___________.
* the loan is needed to meet a bonafide personal financial emergency and the consumer has received the early disclosures
* the waiver is a dated written statement^, signed by all consumers who are primarily liable on the obligation, that describes the emergency
^ printed forms for this purpose are prohibited
84
No person may impose a fee on the consumer prior to __________, except ___________.
* the consumer's receipt of the Loan Estimate and indicated intent to proceed with the transaction
* a bonafide and reasonable fee to obtain a credit report
85
Creditors may not require the consumer to __________ until the Loan Estimate is provided.
verify any application information
86
The Loan Estimate will be deemed to be in good faith if ____________.
the charges paid by the consumer do not exceed the amount disclosed or the allowable tolerances
87
What are the allowable tolerances for disclosed third party charges on the loan estimate?
* the aggregate amount of charges paid by the consumer does not exceed the aggregate disclosed by more than 10 percent
* the charges paid to the third party are not paid to the creditor or an affiliate
* the creditor permits the consumer to shop for the service
88
A creditor may use a revised estimate if a changed circumstance causes the aggregate charges to increase by more than _____ percent.
10
89
A creditor may use a revised estimate if the consumer becomes ineligible for the previously disclosed charge because of a changed circumstance affected the _____________.
consumer's creditworthiness or value of the security
90
A creditor may use a revised estimate if the interest rate ___________.
was not locked when the estimates were given
91
A creditor may use a revised estimate if the consumer indicates an intent to proceed with the transaction _____________.
more than 10 business days after the disclosures are provided
92
Revised disclosures must be provided within ______________.
three business days of the receipt of information that established the reason for the revision
93
A consumer must receive revised disclosures at least _____________.
four business days prior to the loan consummation
94
Final disclosures on mortgage loans must reflect ___________ and be provided ____________.
* the actual terms of the transaction
| * no later than three business days before consummation
95
T or F The creditor must be the one to provide the mortgage final disclosure to the consumer?
FALSE
| Settlement agents may provide the disclosure but creditors are responsible for insuring compliance
96
If disclosures become inaccurate before consummation, the creditor must provide corrected disclosures so that _______________.
the consumer receives them at or before consummation
However, the creditor must permit the consumer to inspect the disclosures at least one business day immediately preceding consummation and may only omit items related to the seller
97
If any of these items becomes inaccurate, new disclosures and a new waiting period is required:
* APR
* loan product changed
* prepayment penalty is added
98
If an event occurs during the 30 days following consummation to the make the final disclosures inaccurate, and the inaccuracy results in a change to an amount actually paid by the consumer, the creditor must _____________.
provide a corrected disclosure no later than 30 days after receiving the information establishing the inaccuracy
99
If an event occurs during the 30 days following consummation to the make the final disclosures inaccurate, and the inaccuracy is from a clerical error on a non-numeric disclosure, the creditor must _____________.
provide the corrected disclosure no later than 60 days after consummation
100
If amounts paid by the consumer exceeds the amounts disclosed in the estimated disclosures in an amount greater than the allowed tolerance, the creditor must _____________.
refund the excess and provide a corrected disclosure that reflects the refund no later than 60 days after consummation
101
T or F
| Creditors are allowed to charge consumers average charges for a settlement service?
TRUE
| So long as the average charges are calculated per regulatory requirements
102
T or F
| No fees may be imposed on any person for the preparation or delivery of disclosures.
TRUE
103
Creditors must provide a ______________ booklet to consumers who apply for a consumer loan secured by real property UNLESS ________.
* RESPA special information
| * the loan purpose is not the purchase of a 1 to 4 family residential property.
104
The RESPA special information booklet must be mailed or delivered not later than ___________.
three business days after the application is received UNLESS the application is denied within three days
105
In the case of a home equity line of credit, the creditor must provide the consumer with the book ______________.
"When your home is one the Line" or any successor booklet issued by the CFPB
106
T or F
| Changes may be made to the required special information booklet?
TRUE
| Although changes are specifically limited
107
Loan estimates must include the statement ______________.
"Save this Loan Estimate to compare with your Closing Disclosure"
108
Special requirements apply to all variable rate transactions secured by the consumer's principal dwelling with a loan term __________.
greater than one year
109
What must be provided to ARM consumers and when?
* Consumer Handbook on Adjustable Rate Mortgages (CHARM) AND
* a loan program disclosure for each ARM loan program in which the consumer expresses an interest
* provided at the time an application form is provided or before a nonrefundable fee is paid (whichever is earlier)
110
ARM loan program disclosures can included which two examples?
* a historical example using $10,000 loan amount and showing how the loans would have been affected by interest rate changes during the past 15 years with the disclosure being revised once an year to update the index OR
* the maximum periodic increase in rates and payment under the program and the initial rate and payment for that loan, along with a statement that the payment may increase or decrease substantially, depending on rate changes
111
What is a High Cost Mortgage?
Loans secured by the consumer's principal dwelling and in which either an APR-based trigger, a points and fees based trigger, or a prepayment penalty trigger is met
112
What is the APR-based trigger in High Cost Mortgages?
The APR at consummation will exceed the average prime offer rate by more than
- 6.5 percentage points for a first lien transaction OR
- 8.5 percentage points for a first lien transaction if the dwelling is personal property and the loan amount is less than $50,000 OR
- 8.5 percentage points for a subordinate lien transaction
113
What is the points and fees based trigger in High Cost Mortgages?
The total points and fees payable by the consumer at or before loan closing will exceed
- 5% of total loan amount for a transaction with a loan amount of $20,000 or more (adjusted annually) OR
- the lesser of 8% of the total loan amount or $1000 for a transaction with a loan amount of less than $20,000 (adjusted annually)
114
What is the prepayment penalty trigger in High Cost Mortgages?
* the creditor is able to charge a prepayment penalty, more than 36 months after consummation or account opening, OR
* the prepayment penalties can exceed more than 2% of the amount prepaid
115
What transactions are exempt from High Cost Mortgage Rules?
* reverse mortgages
* initial construction of a dwelling
* a transaction initiated by a Housing Finance Agency where the Agency is the creditor
* a transaction originated pursuant to the USDA's Rural Development Direct Loan Program
116
High Cost Mortgage disclosures must be provided ________________.
at least three business days before the loan consummation.
117
What constitutes a 'business day' for High Cost Mortgage disclosures?
all calendar days except Sundays and legal holidays specified by law
118
What notice must be included on High Cost Mortgage disclosures?
"You are not required to complete this agreement merely because you have received these disclosures or signed a loan application. If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligation under the loan."
119
What is the amount borrowed disclosure tolerance for High Cost Mortgage disclosures?
disclosures will be treated as accurate if amount is not more than $100 above or below the amount required to be disclosed
120
T or F
| High Cost Mortgages may contain negative amortization.
FALSE
121
T or F
| Creditors may increase the interest rate upon default for High Cost Mortgages.
FALSE
| An increase in the interest rate after default is prohibited.
122
There is no presumption of compliance for a High Cost Mortgage where the periodic payment ____________.
does not fully amortize the loan
123
A creditor may not extend a high-cost mortgage to a consumer unless the creditor obtains from the consumer a certificate that ____________________.
indicates that the consumer has obtained credit counseling from a HID-certified counselor after the consumer received the good faith estimate or high cost disclosures
124
High Cost Mortgages late payments must be specifically permitted by the terms of the loan contract and cannot exceed ______________ and may not be imposed unless the payment ____________.
* 4% of the past due payment amount
| * received after the 15th day after it was due
125
What is a Higher Priced Mortgage Loan?
closed-end consumer transactions secured by the consumer's principal dwelling with an APR that exceeds the average prime rate for a comparable transaction as of the date the interest rate is set by
- 1.5 or more percentage points for first lien loans that do not exceed the maximum principal balance limit set by Freddie Mac OR
- 2.5 or more percentage points for first lien loans that exceed the maximum principal balance limit set by Freddie Mac OR
- 3.5 percentage points for subordinate lien loans
126
T or F
Creditors must establish escrow accounts before consummation on Higher Priced Mortgages secured by a first lien on the consumer's principal dwelling.
TRUE
Although there are a few exceptions
127
T or F
| A payment is still considered to be a period payment if it does not include later fees or other fees?
TRUE
A periodic payment is an amount sufficient to cover principal, interest, and escrow payments for a billing cycle.
128
For a consumer credit transaction secured by a dwelling, a loan originator must include on the loan documents:
* its name and NMLSR ID
* the name of the individual loan originator and the NMLSR ID
^ these must appear on the credit application, the note, and the security instrument
129
Contracts for consumer closed-end credit secured by a dwelling or a home equity line secured by a principal dwelling, may not include:
* terms that require arbitration or any other non-judicial procedure to resolve controversy or settle claims
* provisions that bar a consumer from bringing a claim in court
130
Mortgage transfer disclosures must be provided to the consumer _______________.
on or before the 30th calendar day following the date of the transfer
131
T or F
| Mortgage transfer disclosures must be provided to all consumers liable on the debt.
FALSE
Even if more than one consumer is liable on the debt, only one disclosure must be provided. It must be provided to the consumer who is primarily liable.
132
Mortgage transfer disclosures must include:
* who is transferring
* date of transfer
* who can receive notice of rescission and issues concerning payments
* if the debt may be recorded
* partial payment policy
133
What is the definition of open-end credit?
Consumer credit extended under a plan where;
* repeated transactions re contemplated,
* a finance charge is imposed on an outstanding balance, AND
* the amount of credit (less any outstanding balance) generally is made available
^ including credit and charge cards
134
T or F
| Charges for terminating an open-end credit plan must be disclosed in writing and in a form the consumer may keep.
FALSE
135
T or F
Reductions in the credit limit of an open-end credit plan must be disclosed in writing and in a form the consumer may keep.
FALSE
136
On home equity open-end plans, the terms ___________ and ___________ must be more conspicuous than other disclosures when required to be disclosed with corresponding amounts.
* finance change
| * annual percentage rate (APR)
137
T or F
Periodic statements and advertisements for are excluded from the requirement that home equity open-end plans terms finance charge and APR must be more conspicuous than other disclosures.
TRUE
138
What is the annual percentage rate?
the measure of the cost of credit expressed as a yearly rate
139
What is the APR tolerance for open-end credit?
The APR is accurate if it is not more than 1/8th of one percent above or below the correct APR
140
Open-end account opening disclosures must be provided to the consumer __________.
before the first transaction
141
Charges that are not required to be disclosed in tubular format on open-end plans (not home-secured) may be disclosed after account opening but ____________________.
before the consumer becomes liable for the charge
| ^ provided they are disclosed in a time and manner that the consumer would be likely to notice them
142
For each periodic rate that may be used to calculate interest in a non-home secured open-end plan, the rate must be expressed as _______.
a periodic rate and APR
143
Open-end periodic statements must generally be mailed or delivered for each billing cycle at the end of which _____________________.
the consumer account has a debit or credit balance of more than $1 or if a finance change has been imposed
144
Credit card account issuers must have reasonable procedures to ensure that periodic payments are mailed or delivered ___________.
at least 21 days prior to the payment due date
145
General credit card account disclosures must include a minimum statement warning stating what?
"Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance".
146
Open-end annual statement of billing rights must be sent ________________.
* at least once per calendar year, at intervals not less than 6 months nor more than 18 months, either to all consumers or to each consumer entitled to receive a periodic statement OR
* creditors may send a short-form billing rights statement with each periodic statement
147
For open-end home equity plans, if the creditor prohibits additional credit or reduces the credit limit, a notice must be ________________.
mailed or delivered to each affected consumer not later than 3 business days after the action is taken
148
For open-end plans (that are not home equity plans) if a creditor decreases a consumer's credit limit, no over the limit fee or penalty rate change be charged for a consumer's exceeding the new limit UNLESS:
a notice of the new limit was provided orally or in writing at least 45 days before imposing the limit
149
When a credit card issuer imposes any annual or other fee to renew, a notice must be provided _____________.
at least 30 days or one billing cycle (whichever is less) before the mailing of the periodic statement on which the fee will be charged
150
T or F
| Open-end home equity plans secured by a consumer's dwelling are limited to the consumer's principal dwelling.
FALSE
151
Open-end home equity plan disclosures must be provided to the consumer _____________.
* at the time of the application OR
| * if application is not received in person, within three business days of receipt of application
152
Open-end home equity plans with fixed rates must include an example transaction that is _____________.
based on a $10,000 balance using a recent APR, that shows the minimum periodic payment and the time it would take to repay the $10,000
153
Open-end home equity plans with variable rates must include an example transaction that is _____________.
* the minimum payment required when the maximum APR is reached, based on a $10,000 balance and the earliest date it may be imposed
* a historical example based on a $10,000 outstanding principal balance showing how the APR and payments would have been effected by index changes for the past 15 years and including the terms of the plans (such as rate carryover or payment limitations)
154
What items must be bolded in a credit card solicitation and application?
* APR
* Introductory Rate
* Rate that will be effective after the premium initial rate expires
* Fees or other percentage amounts
155
Direct mail credit card disclosures must be accurate as of ____________.
the date of mailing
| ^ APR must be one used within 60 days before mailing
156
Electronic credit card disclosures must be accurate as of ____________.
the date sent
| ^ APR must be in effect within 30 days before sending
157
For open-end billing errors, the dispute must be resolved or a written acknowledgement provided to the consumer within _________.
30 days
| ^ if not resolved, creditor must resolve within 2 billing cycles (not to exceed 90 days)
158
If the creditor determines that the consumer owes all or part of the disputed debt, the creditor must:
* notify the consumer that the payment is due and state what is owed
* allow the consumer any grace period allowed in the plan to repay the debt
159
Open-end payments must be credited to the consumers account as of ________________.
the date of the receipt of the payment, except when a delay in crediting does not result in a charge
160
Credit card issuers must _________ to consider an applicant's income or assets and current obligations.
establish reasonable policies and procedures
161
During the first year of an open-end credit cards plan, the total amount of fees that may be charged __________________.
may not exceed 25% of the credit limit in effect when the plan was opened.
162
All loans secured by a dwelling must have a lifetime rate cap included in any credit contract when:
* a closed-end loan has an APR that may increase after consummation
* an open-end loan when the APR may increase during the plan
163
Regulation Z requires that creditors must keep evidence of compliance for ________________ after disclosures are ____________.
* 2 years
| * required to be made or action is required to be taken
164
Records of compliance for closed-end loans secured by a real estate must be retained for __________ after the later of the date of consummation or ______________.
* 3 years
| * required to be made or action is required to be taken
165
For all closed-end mortgage loans, the creditor must make a reasonable and good faith determination at or before consummation that the consumer will have ________________.
a reasonable ability to repay the loan according to its terms
166
Qualified Mortgage (QM) APR standards are deemed to comply (safe harbor) if:
* APR is below Reg Z HPML threshold of 1.5% basis points above APOR if secured by first lien OR
* 3.5% if secured by second lien.
167
A QM is deemed to have a rebuttable presumption if the ________________.
APR is above threshold (but still a QM)
168
What are the requirements for QM loans?
* no negative amortization or interest only
* no terms longer than 30 years
* no balloon payment (unless 'smaller creditor')
* 43% or lower DTI
- according to Appendix Q
- or meets GSE purchase or government-guarantee or insurance test
- points and fees not above threshold
^ 3% for loans above $101,953
169
What are the general QM small creditor exception requirements?
* total assets of less than $2 billion at end of year AND
* originated 500 or fewer first lien-secured covered transactions (aggregated with affiliates) AND
* extended more than 50% of its total first lien-secured covered transactions on properties located in counties designated either rural or underserved by CFPB
170
T or F
| Only rates that can increase after consummation qualify as an ARM?
TRUE
171
ARM loan requirements only apply to loans secured by __________________.
the consumer's principal dwelling
172
High Priced Mortgage Loan (HPML) requirements only apply to loans secured by __________________.
the consumer's principal dwelling
173
What loans are excluded as HPML's?
* non principal dwelling loans
* HELOC's (not home equity loans)
* reverse mortgages
* bridge loans
* construction-only loans
174
What are the thresholds for HPMLs?
APR exceeds the 'average prime offer rate' (APOR) by
* 1.5% basis points if secured by first lien OR
* 3.5% if secured by second lien.
175
What are the HPML restrictions?
* cannot make loan without considering borrower's ability to repay from sources other than the homes value
* prepayment penalties are restricted/prohibited
* escrowing required for property taxes and homeowners insurance for first lien loans
^borrower may be given the opportunity to opt out of escrow after 5 years
176
What is HOEPA and what loans are covered?
* Home Ownership Equity Protection Act (Section 32 of Reg Z)
* high rate or high fee loans secured by the consumers principal dwelling
^unlike HPML's HELOC's are included
177
What qualifies as a HOEPA high rate?
* APR is 6.5 points over APOR if secured by first lien OR
* 8.5 points over for a first-lien transaction if dwelling is personal property and loan amount is less than $54,600 OR
* a subordinate lien
178
What qualifies as a HOEPA high fee?
Loans total points and fees exceed
* 5% of total loan amount of $20,391 or more OR
* 8% of total loan amount or $1020 for loan amount less than $20,391
179
What qualifies as a HOEPA prepayment penalty?
if the prepayment penalty can be charged by more than 36 months out of more than 2%
180
What happens if you have a HOEPA loan?
* additional disclosures (you can loose your home)
* homeownership counseling required (before consummation)
* limitations placed on the loan (fee limitations, etc.)
181
T or F
| Reg Z has appraisal prohibitions to ensure the integrity of the appraisal process for home secured loans?
TRUE
182
What are the HPML appraisal restrictions?
* applies to HPML that are NOT QM's (rebuttable presumptions)
* appraiser must be certified or licensed
* appraisal must included physical inspection of interior of the property
* transactions less than $25,0000 are exempt
* provide appraisal 2 days before consummation (cannot be waived)
* for flips - must obtain 2nd appraisal at no cost to applicant
183
What are the 3 prohibited practices for loan originator compensation practices?
* receive compensation based on interest rates or points^
* receive compensation from a lender or another party if the originator already received compensation from the consumer
* direct or 'steer' a consumer to accept a mortgage loan that is not in the consumer's interest in order to increase the originator's compensation
^ can be based on percentage of loan amount
184
Notice of Sale or Transfer must be given to consumers by who and when?
* the new loan owner
| * mailed or delivered on or before the 30th calendar day after the date the covered person acquired the loan
185
When must open-end loan change in terms notices be made?
disclosures must be made to the consumer at least 45 days before the adverse change
186
T or F
| Credit card accounts do not include a right to set off?
TRUE
| unless there is a prior signed agreement
187
What is dwelling for a Home Equity Line of Credit (HELOC)?
1 to 4 family residential structure
188
What is the limit for penalty fees on a credit card?
* $25
^ can be higher for repeat violations
* can’t be higher than the dollar amount associated with the violation
189
Can credit cards have inactivity fees?
NO
190
Can credit cards have multiple penalty fees for the same transaction or violation?
NO
191
T or F
| APR is a triggering rule for all Reg Z credit advertising
FALSE
| APR is not a trigger for closed-end credit
192
T or F
| A loan change from a fixed rate to a variable rate requires redisclosure?
TRUE
| deemed a refi by CFPB-requires new disclosures
193
T or F
| Open-end credit has no tolerances that require redisclosure.
TRUE
194
ABC has mailed the Browns their early TILA disclosures regarding a home loan application. When may ABC debit the Browns’ account for an application fee?
No fees can be charged until the Brown's receive their disclosure. Disclosures are deemed received the 3rd business days after mailing.
195
What finance charge must be disclosed on the itemization of the amount financed?
The only finance charge that must be disclosed on the itemization of the amount financed is prepaid finance charges.
196
In order for a waiver of the right to rescind to be effective, what must happen?
all parties with the right to rescind must sign it, and it must describe the reason for the waiver
197
T or F
| Fees that are charged to customers who pay cash cannot be considered a finance charge.
TRUE
198
T or F
| A bank must obtain a customers affirmative consent before delivery of an electronic home equity early disclosure?
FALSE
Consent does not need to be received for certain early disclosures or for advertisements. It also does not need to be obtained for hard copies—only for electronic disclosures.
199
For credit card solicitations disclosing a premium rate, the rate must be at least ______ point type.
16
200
When credit card checks accessing open-end accounts (not home secured) are sent to a borrower and the finance charge terms are different than originally disclosed, when must the disclosures be displayed prominently on the front page of the checks?
When provided more than 30 days after the account is opened
201
T or F
| Points paid by the borrower in cash at closing are generally considered to be a prepaid finance charge.
TRUE
Points are considered a finance charge because it represents a payment to the creditor that is a cost of obtaining the credit.
202
A billing error notice must be submitted by the customer ___________________.
within 60 days after the first statement that reflected the error
203
T or F
Open End credit transactions right of rescission applies only to transactions secured by the consumer's principal dwelling.
TRUE
The right to rescind a transaction is required only in a transaction secured by a consumer's principal dwelling. Once a notice of the right to rescind is given and the rescission period passes, no additional rights to rescind are granted to the consumer in a home equity plan provided the advances are made in accordance with the plan's provisions. The exercise of the right to rescind must be in writing to be effective. A consumer cannot rescind orally by telephone. Two notices of the right to rescind must be given to each consumer with an ownership interest in the property securing the account.
204
Prepayment penalties are acceptable in HPML so long as they are limited to ___________.
the first 36 months of the loan
205
What must the bank do after determining no billing error occurred and the consumer owes all or part of the amount in dispute?
The creditor must send a notice to the consumer explaining why the billing error alleged by the consumer is not correct. The creditor must also furnish documentation at the consumer's request. The consumer must be given any free ride that is normally offered under the terms of the plan, and the creditor must allow the consumer time to pay the amount before reporting it as delinquent.
206
T or F
| No disclosures of specific examples are required on open-end accounts other than home equity plans.
TRUE
207
T or F
The initial disclosures provided to the borrower on a home equity plan may be on the application itself and do not have to be in a form the consumer can keep.
TRUE
208
T or F
| A billing error includes a charge for an item the quality of which dissatisfied the consumer.
FALSE
| But charges for items not purchased or not delivered is included.
209
T or F
| TILA requires disclosures regarding limits on the number of interest rate increases in each calendar year.
FALSE
There is no requirement in Regulation Z for the lender to limit the number of interest rate increases in any calendar year. However, a lifetime interest rate cap must be included in the contract and must be disclosed.
210
T or F
| A bank must honor a customers request to apply extra payments to certain balances.
FALSE
The bank must apply extra payments to the highest accruing balance. Requests from the consumer on how to apply the payment may be honored at the bank's discretion.
211
Written credit card applications must be submitted for cardholders that are __________.
under the age of 21
212
T or F
A customer service representative who assists applicants that complete an application and collect application data, but does not have loan authority would be considered a loan originator?
TRUE
213
If the bank determines that the application will be denied within the required three business, early disclosures are _______.
not required to be sent (but the applicant must be notified of the adverse action)
214
If a creditor decreases a consumer's credit limit, no fee or penalty rate can be charged when a consumer exceeds the new limit, unless _________________________.
a notice of the new limit was provided orally or in writing at least 45 days before imposing the limit
215
What are the requirements when a customer notifies the bank that their credit card periodic statement contains an incorrect amount?
The creditor must either mail an acknowledgment of the error within 30 days or complete its investigation and notify the consumer of its findings within 30 days. The creditor must complete an investigation of the alleged error within two complete billing cycles after receiving notice of the error from the consumer, but in no event more than 90 days. The creditor may not attempt to collect the disputed amount and may not make an adverse credit report concerning the disputed amount until the investigation is complete and the consumer has an opportunity to pay.
216
T or F
| All closed-end dwelling-secured loans require that a creditor determine a borrowers ability to repay the loan.
TRUE
217
A card issuer must disclose a minimum payment on a periodic statement for an open-end credit account that is not home-secured by _________________.
disclosing the estimated monthly payment for repaying in 36 months
218
What must a bank do when a customer exercises their right of recession after the customer has removed all of the funds from the account?
Release the lien on the property immediately, then refund to the Smiths the amounts they spent for the title policy and appraisal, and then demand repayment of the loan (without interest
219
A bank decides to send an advertising piece to consumers in its local community to promote its home equity lines of credit. The ad will be sent via email. What are the APR disclosure requirements?
The rate must be ''reasonably current.'' For an emailed ad, ''reasonably current'' is a rate in effect during the 30 days before the transmission of the email.
220
If any triggering terms is used in an ad (including the amount or percentage of the down payment), then ______ and ______ must also be disclosed.
* the APR and terms of repayment
| * the amount or percentage of the down payment
221
When a credit card program includes an annual fee that equals a percentage of the average balance of the account during the previous year what must be disclosed?
the initial application or solicitation either the fee amount or the percentage amount and identify the amount against which the percentage is based
222
T or F
A loan to purchase a principal residence, secured by the residence is a closed-end loan subject to the right of recession?
FALSE
In any transaction where a security interest will be taken in a consumer's principal dwelling and where the loan is not exempt under 1026.23(1)(f), each consumer with an ownership interest in the home has the right to rescind the transaction. A loan to purchase a principal residence secured by the residence is exempt because it is a residential mortgage transaction, meaning it is used to purchase or construct the dwelling. However, a home improvement loan for the borrower's principal dwelling, secured by the dwelling would be subject to the right of recession.
223
T or F
TRID disclosures are not template based, they are dynamic in construction and content and based upon loan program and other terms.
TRUE
| only the applicable disclosure sections should be delivered
224
T or F
| The 7 days waiting period only applies to the original loan estimate and not any revised loan estimates.
TRUE
225
T or F
| Tolerances do not have to be refunded if the customer was not actually harmed (actually paid the fees)
FALSE
It does not matter if the consumer actually is harmed, if the tolerances require a refund, the refund must be what was disclosed not what was actually paid
226
Revised loan estimates must be provided within ___________ from the event that gave rise to the revision
3 business days
| ^ no new 7-day period after a revised loan estimate is provided
227
T or F
| The buyer must receive the closing disclosure no later than 3 business days before consummation.
TRUE
| ^ note: received not sent like what is allowable with the loan estimate
