Chapter 1: Financial Technology, The Safe Act, and the Federal Reserve

Question 1

Truth-In Lending Act (TILA)

Answer 1

Requires lenders to inform borrowers of the total costs of getting a loan, covering interest rates and terms. Also known as “REGULATION Z”

Question 2

Who handles TILA?

Answer 2

The Consumer Financial Protection Bureau (CFPB)

Question 3

What is The SAFE Act of 2008

Answer 3

The Secure and Fair Enforcement for Mortgage Licensing Act was designed for consumer protection to reduce fraud by setting minimum standards for the licensing and registration of MLOs, state-licensed mortgage loan originators

Question 4

The SAFE Act defines a Mortgage Loan Originator (MLO) as an individual who:

Answer 4

-takes a residential mortgage application // offers or negotiates terms of a residential mortgage loan for compensation or gain

Question 5

Fiscal Policy

Answer 5

The policy of a government in controlling the amount of taxation and expenditures, which together make up the budget

Question 6

Monetary Policy

Answer 6

How the federal government controls and directs the money supply of our nation.

Question 7

The Federal Reserve

Answer 7

• The bank of the US government
• Central bank for other US banks
• Protects consumers in credit transactions
• Manages nation’s money supply

Question 8

Open Market Operations (OMOs)

Answer 8

The buying and selling of government securities (bonds) by the Federal Reserve’s Market Committee; it puts money into or takes money out of circulation.

Question 9

Federal Funds Rate

Answer 9

The interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.

Question 10

EXPANSIONARY MONETARY POLICY increases Money Supply by:

Answer 10

1. Reducing the federal reserve discount rate
2. Reducing reserve requirements and/or
3. Buying government bonds

Question 11

CONTRACTIONARY MONETARY POLICY decreases Money Supply by:

Answer 11

1. Increasing the “discount rate”
2. Increasing reserve requirements
3. Selling government bonds

Question 12

The SAFE Mortgage Licensing Act (SAFE Act):

Answer 12

• Applies to all persons, in all states and territories
• Requires licensing registration by NMLS as a Mortgage Loan Originator (MLO
• Applies to residential mortgage loans only

Question 13

The SAFE Act is administered by the recently created:

Answer 13

Consumer Financial Protection Bureau (CFPB)

Question 14

Nationwide, all licensed/registered MLOs:

Answer 14

• Are issued a unique identifier number
• Must take 8 hours of Continuing Education annually
• Must pay required anual fees

Question 15

Prior to getting licensed and registered by the NMLS, all applicants must:

Answer 15

• Pass FBI criminal background check
• Pass a 125 question national test (UST)
• Take 20 hours of pre-licensing education

Question 16

The Federal Reserve System does not control:

Answer 16

Regulation Z

Question 17

Open Market Operations are controlled by:

Answer 17

Sales and purchases of the US Treasury Bonds by the Federal Reserve

Question 18

Which one of the US Treasury securities used to finance the US and our national debt are for the longest period of time?

Answer 18

Treasury Bonds

Question 19

The Central Bank for the United States is:

Answer 19

The Federal Reserve

Question 20

Because of new advances in mobile devices and Financial Technology, in 2025 banking jobs will decrease by:

Answer 20

30%-40%

Question 21

Which is the rate of interest banks charge their best customers?

Answer 21

Prime rate

Question 22

All state-licensed MLOs must have never:

Answer 22

• had a mortgage loan originator license revoked
• had a felony in the past 7 years
• had a felony involving fraud, dishonesty, breach of trust, or money laundering

Question 23

The rate of interest charged by the Federal Reserve to member banks is called the:

Answer 23

Discount rate