Chapter 1 Laws Regulation Flashcards
Which of the following is part of the Mortgage Assistance Relief ServicesRule?
A. Negotiators may be paid an up-front fee
B. Borrowers must pay a fee if they cancel their contract with the
negotiator
C. Negotiators can’t interfere with communication between borrowers andlenders
D. Negotiators only have to present reasonable lender offers to the
borrower
C
Borrowers are entitled to a free credit report if the lender takes adverseaction against them and they ask for their report within how many days of receiving notice of the action? A. 30 B. 60 C. 90 D. 120
B
What should a loan originator do on a Loan Estimate address field when the borrower requests a pre-approval?
A. Leave it blank
B. Enter one or more zip codes of likely locations
C. Enter the applicant’s personal address
D. Deny the loan application
B
The APR must be finalized at least how many days before closing? A. 1 B. 3 C. 5 D. 7
B
The APR must be finalized at least three days before closing - Also final Til
3 days after application - delivered within
7 business days after initial application placed in mail
3 business days prior to closing - Final Til (APR)
****You are working on a file referred to you by a realtor. The realtor calls you to see if there is going to be any problem getting the customer qualified. The realtor wants to know what the borrower’s credit scores are before presenting the offer.
The most appropriate course of action is to:
A. refer the realtor to the borrower.
B.never disclose a borrower’s information to a realtor.
C. obtain permission from the borrower to disclose the information.
D. tell the realtor the credit score.
A
HUD-1 is used for what type of mortgage? a. Refinance B. Reverse and all 1-4 unit residential property C. ARMs D. QM
B
HUD-1 for reverse mortgage and TILA for refinance
The HUD-1 Settlement Statement/Closing Disclosure is required to be usedas the standard real estate settlement form in all transactions in the United States that involve federally-related mortgage loans and have closing costs for the borrower.
The Truth-in-Lending Act (TILA) was implemented by the: A. Federal Reserve Board B. Fannie Mae C. Federal Bureau of Investigation D. Federal Express
A
The HUD-1/Closing Disclosure is not required if? A. Borrower has no closing cost B. If it’s a reverse mortgage C. If the consumer rescinds the offer D. If there is no appraisals
Answer: A
The HUD-1/Closing Disclosure isnot required if the borrower has no closing costs.
All of the following loans are covered by HOEPA except: A. Purchase Money B. Home Equity C. Refinances D. Reverse Mortgages
D
HOEPA covers Purchase Money Mortgage, HEL, and Refinance loan
What type of balloon mortgage is allowed in a HOEPA loan? A. Short term bridge loans B. Interest Only Loan C. Long Term Balloons D. None of the above
A
What conditions must be satisfied before a foreclosure proceedings can take place?
A. The borrower agrees to mitigation
B. the servicer determines that the borrower is ineligible for mitigation and has no more possible appeals; the borrower declines any offers, or the borrower fails to honor the terms of an agreement.
C. When the lender successfully uses the borrower
D. When the judgement decides on the case
B
The Fair Credit Reporting Act is enforced by: A. HUD B. FCC C. FHA D. FTC
D
Regulation Z requires an initial ARM interest rate adjustment notice must be provided toconsumers:
(a) between 15 and 45 days before the first payment at the adjusted level is due.
(b) between 30 and 60 days before the first payment at the adjusted level is due.
(c) between 180 and 210 days before the first payment at the adjusted level is due.
(d) between 210 and 240 days before the first payment at the adjusted level is due.
D
The rule defines small creditors as businesses with less than $2
billion in assets and fewer than 500 closed-end, first-lien residentialmortgages in the previous year is defined by which of the following
A. FHA
B. QM ATR
C. RHS
D. Fannie Mae
Answer: QM loan Small Creditor Exception
As defined under TRID, charges for third-party services and recording fees paid by or imposed on the consumer are grouped together and subject to a 10% cumulative tolerance.
Which of the following charges is subject to the 10% cumulative tolerance?
(a) Amounts placed into an escrow, impound, reserve or similar account.
(b) Charges paid to third-party service providers for services not required by the creditor.
(c) Charges for third-party services where the charge is not paid to the creditor or the creditor’s affiliate.
(d) Fees paid to an unaffiliated third party if the creditor did not permit the consumer to shop fora third-party service provider for a settlement service.
C
ECOA allows an applicant to have a copy of his: A. Credit score B. Credit report C. Property appraisal report D. Bank records
C
According to MDIA, what is the waiting period once initial disclosures are provided to the borrower before the loan can close?
- 10 business days
- 7 business days
- 5 business days
- 3 business days
7 business days
The applicant and MLO is almost complete with the LE when the MLO notices that there is an increase in the interest rate. What should an MLO do?
A. With the borrower permission, revise the loan estimate and increase the closing cost on an unlocked loan
B. With the borrower permission, revise the loan estimate and increase the closing cost on an locked loan
C. With the lenders approval, With the borrower permission, revise the loan estimate and increase the closing cost on an unlocked loan
D. With the lenders approval, With the borrower permission, revise the loan estimate and increase the closing cost on a locked loan
A
****A borrower wants to purchase a 2nd home and tells you that they intend to rent the property out when they are not living in it. You have reviewed their financial information and realize that the borrower would qualify for financing if the property is classified as a2nd residence. However, if the property is classified as an investment property, the borrower is unlikely to qualify. What should you do?
A. Classify the property as a rental property even though the borrower intends to reside there part of the year.
B. Classify the property as a 2nd residence; since the borrower intends to use the property for part of the year, this is acceptable.
C. Classify the property as a 2nd residence because it is not legal for the borrower to
personally reside in a property classified as a rental for any length of time.
D. Deny the borrower because it is neither legal to rent out a 2nd residence or reside in a rental property for any length of time.
A
How many days does lenders have to refund refund any excessive variance between the GFE and the HUD-1? A. 30 days B. 60 C. 90 D. 120
Answer: B
Lenders have 30 days to refund any excessive variance between the GFE and the HUD-1.
A change to which of the following does NOT trigger a new 3-daywaiting period?
A. Seller credits buyer money for landscaping
B. APR
C. Loan product
D. Addition of a prepayment penalty
A
Which of the following for must be made available, upon request by the borrower (for reverse mortgages) one business day prior to closing for the settlement statement? A. LE B. GFE C. HUD-1 D. FNMA 1003
Answer C
Settlement statement for reverse mortgage is a HUD-1
If a Loan Estimate is mailed, It must be mailed how many days before loan consummation? A. 1 B. 3 C. 5 D. 7
D
The HUD-1/Closing Disclosure is not required if? A. Borrower has no closing cost B. If it’s a reverse mortgage C. If the consumer rescinds the offer D. If there is no appraisals
Answer: A
The HUD-1/Closing Disclosure isnot required if the borrower has no closing costs.
How many days does an applicant have after receipt of an adverse actionnotice to request a statement of reasons from the lender? A. 10 B. 15 C. 30 D. 60
D
Pay attention to applicant or MLO or lender
Adverse Action Notices must be retained for how long? A. 24 months B. 25 months C. 36 months D. 60 months
B
What type of disclosure do you give to a loan with no land? A. No disclosure needed B. TILA Disclosures C. LE and CD D. GFE
Answer: B. A home such as mobile home not attached to land is called a chattel nd covered by the TILA Disclosures
What is the punitive charges for failure to comply with ECOA?
A. $10,000 in individual actions and the lesser of $500,000 or 1 percent of the MLO net worth in class actions.
B. $10,000 in individual actions and one year in jail.
C. 1,000 and/or 30,000 year in jail
D. $10,000 in individual actions and the lesser of $500,000 or 1 percent of thecreditor’s net worth in class actions.
Answer D $10,000 in individual actions and the lesser of $500,000 or 1 percent of thecreditor’s net worth in class actions.
The Good Faith Estimate/Loan Estimate must be sent to the borrowerwithin how many business days of receiving a loan application? A. 1 B. 3 C. 5 D. 10
B
A supreme court decision has held that:
a) RESPA does not prohibit earned fees
b) Markups are not illegal unless they are split
c) RESPA does not prohibit markups if they are earned
d) Minimal markups do not violate RESPA
b) Markups are not illegal unless they are split
What type of loan is exempt from HOEPA?
A. Refinance, Government, New construction, investment
B. Reverse, Government, New construction, investment
C. Refinance , Government, Residential, investment
D. Reverse, Residential, New construction, investment
B
HOEPA exempts, Reverse Mortgages, Governmental Mortgages, Investment and new construction
What law protects homeowners from foreclosure-prevention scams?
A. Foreclosure Mediation Rule
B. Mortgage Assistance Relief Services Rule
C. Truth-in-Lending Act
D. Homeowner’s Protection Act
B
What is exempt from ability to repay rule?
A. Home Equity, Reverse Mortgages, Construction Loan. Commercial Loan and money Mortgages
B. Home Equity, Refinance Mortgages, Construction Loan and vacant land, and timeshare
C. Home Equity, Reverse Mortgages, Construction Loan and vacant land, and timeshare
D. Home Equity, Reverse Mortgages, Construction Loan and vacant land, and Money Mortgage
Answer: C
The ability to repay exempts the following
Home Equity, Reverse Mortgages, Construction Loan and vacant land, and timeshare
What type of disclosure is the HUD-1? A. Application disclosure B. Pre-Settlement C. Settlement D. Post- Settlement
B
The HUD-1 Settlement Statement/Closing Disclosure is required to be used as the standard real estate settlement form in all transactions in the United States that involve federally-related mortgage loans and have closing costs for the borrower.
Which of the following has a grace period of 60 days payment before being penalized? A. Initial Escrow Statement B. Final Escrow Statement C. Service Transfer Disclosure D. HUD-1 Disclosure
Answer: C
Borrowers can’t be penalized for non-payment if they continued tomake payments to the prior servicer; this grace period expires after60 days.
According to RESPA, a lender making a purchase loan may collect how many months of hazard insurance at settlement?
- 12 months
- 14 months
- Two months
- Only what is required to pay the insurance premium
14 months
Which are two forms of settlement disclosure? A. HUD-1 and ABA B. Final HUD-1 and ABA C. Final HUD-1/CD and Initial Escrow D. Initial HUD-1 and Initial Escrow
C
Answer C
RESPA requires two disclosures that must be given at settlement: Final HUD-1 Settlement (if the borrower has closing costs for reverse mortgages)or the Closing Disclosure, and the Initial Escrow Statement, which may be given shortly after closing.
The 60 days does lenders have to refund any excessive variance between
A. Final HUD-1 and GMP
B. GFE and HUD-1
C. GFE and Appraisal
D. Loan Estimate and the Closing Disclosure
D
Which of the following is true of CD?
A. there is no 3-business-day-receipt requirement for MLO
B. there is no 3-business-day-receipt requirement for sellers.
C. There is no 3-business-day-receipt requirement for lenders
D. None of the above
B
When should a revised loan estimate be received?
A. 3 business days before loan consummation and mailed 7 days prior to consummation
B. 3 business days before loan consummation and mailed 10 days prior to consummation
C. 4 business days before loan consummation and mailed 7 days prior to consummation
D. 4 businessl days before loan consummation and mailed 10 days prior to consummation
Answer. C
Lender must ensure that the revised estimate is received at least 4 business days prior to loan consummation (mailed at least 7
business days prior).
Rescission Business Days
In this case, a business day is every day but Sunday and federal holidays. If the closing is scheduled before then, the changes may be reflected in the closing statement without reissuing the estimate.
The servicer has how many days to notify the borrower if the servicing rights have been sold and are being transferred to another company? A. 3 B. 5 C. 15 D. 45
Answer: C
According to RESPA, the loan servicer must notify the borrower 15 days before the effective date of the loan transfer.
Kay is behind on her mortgage payments and is concerned that she will soon be going into the foreclosure process. Kay receives a phone call from a company stating that they can help her avoid foreclosure if she pays them $3,000 upfront to discuss options with her servicer. What type of scheme is likely occurring in this situation?
- Loan Flipping
- Foreclosure Rescue Scheme
- Illegal Property Flipping
- Equity Skimming
Foreclosure Rescue Scheme
The Home Mortgage Disclosure Act (HMDA) was implemented by the:
A. Department of Housing and Urban Development
B. Department of Veterans Affairs
C. Federal Communication Commission
D. Federal Reserve Board
D
Alexandra is a licensed mortgage loan originator, and she works for a licensed mortgage lender. Alexandra also works part time as a mortgage loan originator at her friend’s brokerage. Is Alexandra doing anything wrong?
- Yes, Alexandra is working simultaneously for two companies, which is prohibited
- No, Alexandra is properly licensed
- Yes, Alexandra is not properly licensed
- No, Alexandra can work for more than 1 company at a time
Yes, Alexandra is working simultaneously for two companies, which is prohibited
Which of the following is true of loan revisions?
A. It’s only allowed in an LE under the right circumstances
B. It’s only allowed on GFE under right circumstances
C. It’s allowed on both GFE and LE under the right circumstances
D. It’s neither allowed for GFE nor LE
Answer C
Creditors may not revise an estimate because of technical issues, incorrect calculations or low estimates.
They can revise the estimate if changing circumstances:
Increase the closing costs (interest rate increase on an unlockedloan), disaster such as storm that damage home, borrower lost job, or consumer wait more than ten days with intent to proceed, more than 60 days for new construction loan.
What does the borrower receives an at the closing or within 45 days after closing that estimates the first-year escrow payment for property taxes and homeowner’s insurance.
A. Initial Escrow Statement
B. Final Escrow Statement
C. LE
D. CD
Answer A
Initial Escrow Statement
The borrower receives an Initial Escrow Statement at the closing or Within 45 days after closing that estimates the first-year escrow
payment for property taxes and homeowner’s insurance.
The Mortgage Servicing Disclosure Statement must be sent to the
borrower within how many business days of receiving a loan application?
A. 1
B. 3
C. 5
D. 10
B
When must the the initial Closing Disclosure must be received? A. Three business days after application B. Three business days before closing. C. At Closing D. At time of appraisal
B. At least three business days before closing.
If the buyer request the settlement statement be made available, when should the buyer expect it to be delivered? A. One business day before closing B. Three business days before closing C. Seven business days before closing D. At closing
Answer A. Upon request by the buyer for reverse mortgages Settlement Statement itemizes the costs and disbursements to the buyer and seller and must be made available, upon request by the borrower (for reverse mortgages) one business day prior to closing.
Which of the following is part of a post settlement statement? A. HUD-1 and ABA B. Final HUD-1 and Initial Escrow C. Service Transfer and Annual Escrow D. Final HUD-1 and Annual Escrow
C
The applicant and MLO is almost complete with the LE when the MLO notices that there is an increase in the interest rate. What should an MLO do?
A. With the borrower permission, ask creditor to revise the loan estimate and increase the closing cost on the unlocked loan
B. With the borrower permission, revise the loan estimate and increase the closing cost on an locked loan
C. With the lenders approval, With the borrower permission, revise the loan estimate and increase the closing cost on an unlocked loan
D. With the lenders approval, With the borrower permission, revise the loan estimate and increase the closing cost on a locked loan
Answer A
Creditors may not revise an estimate because of technical issues, incorrect calculations or low estimates.
They can revise the estimate if changing circumstances:
Increase the closing costs (interest rate increase on an unlockedloan), disaster such as storm that damage home, borrower lost job, or consumer wait more than ten days with intent to proceed, more than 60 days for new construction loan.
A loan originator who accepts an upfront fee for negotiating a loan modification is violating which law? A. RESPA B. TILA C. HMDA D. MARS
D
The lender has how many days after settlement to refund any portion ofcharges on the HUD-1 that exceeded the acceptable variance? A. 15 B. 30 C. 45 D. 60
B
Which government agency enforces the RESPA regulations? A. CFPB B. FCC C. FHA D. FTC
A
What disclosure does the borrower receives an at the closing or within 45 days after closing that estimates the first-year escrow payment for property taxes and homeowner’s insurance? A. Initial Escrow Statement B. Final Escrow Statement C. Service Transfer Disclosure D. HUD-1 Disclosure
A. Initial Escrow Statement
HUD-1 is used for what type of mortgage? a. Refinance B. Reverse C. ARMs D. QM
B
A borrower is in the process of a loan application and got fired, what should the MLO do?
A. Offer to revise GFE/LE
B. Offer to use the same comps if it’s less than 60 days since the applicant got fired
C. Offer to talk to the lender
D. Reject the loan
A
Which law requires businesses to print only the last five card numbers ona credit card receipt? A. Homeowner’s Protection Act B. Fact Act C. Gramm-Leach-Bliley D. Dodd-Frank
B
A borrower must indicate an Intent to Proceed within how many business days after receiving the Loan Estimate? A. 3 B. 10 C. 15 D. 30
B
Consumer waits more than 10 business days to indicate an Intent to Proceed May need to have their LE/GFE revised
Which fees can be adjusted with no tolerance?
A. Loan Origination, Interest, Title
B. Credit Report, Appraisal, Recording, Title if recommended
C. Processing Fee
D. Hazard, TItle, Pre-Paid mortgage Interest
Answer D
Hazard Insurance, Title Insurance. Pre paid mortgage or per diem
Which of the following requires maintain eacrow account for property tax and hazard insurance on principal residencies for five years? A. TIlA B. RESPA C. HPML D. HOEPA
C
Which of the following best describes third party charges:
A. Fees paid to any party other than the creditor.
B. Fees paid to any party other than affiliates of the creditor.
C. Fees for services the borrower Is not allowed to choose.
D. All of the above.
The correct answer is D. Third party charges include the appraisal fee, credit report fee, flood certification, private mortgage insurance, termite inspection report, recording fees, surveys, and other fees.
An applicant that is interested in a reverse mortgage should receive which disclosures?
A. TIL Disclosures, Special information Booklet- “Your Loan Tool Kit, Mortgage Servicing Disclosure Statement, ABA, Appraisal Independence Disclosures
B. GFE and HUD-1, Initial/Final TILA disclosure
C. Initial/Final TILA disclosure
D. LE, CD, Service Transfer Disclosure,
B
What do ability to pay cover?
A. closed end, Primary and Investment Property
B. Closed End, Residential, Open and Money Mortgage
C. Closed End, Refinance. HELOC, and Money Mortgage
D. Closed End, Secondary Lien, Jumbo Loans
A
Which of the following is NOT delivered to a reverse mortgage applicant? A. TILA Disclosure B. Loan Estimate C. Good Faith Estimate D. HUD-1
B
Reverse mortgage applicants use GFE not LE
When must the The initial Closing Disclosure must be received? A. Three business days after application B. Three business days before closing. C. At Closing D. At time of appraisal
B
The HUD-1 Settlement Statement is required for what type oftransaction? A. Cash purchase of a condo B. Financed purchase of a warehouse C. Reverse Mortgage D. Cash purchase of a strip mall
C
An applicant is applying for a reverse mortgage, which form should the MLO use? A. LE/HUD-1 B. GFE/HUD-1 C. LE/Initial Escrow GFE/Initial Escrow
Answer B
GFE/HUD-1 are used for reverse mortgages.
Which of the following is true of loan revisions?
A. It’s only allowed in an LE under the right circumstances
B. It’s only allowed on GFE under right circumstances
C. It’s allowed on both GFE and LE under the right circumstances
D. It’s neither allowed for GFE nor LE
C
Which of the following is considered a “federally related mortgage loan” under Regulation X?
(a) A one-to-four family structure is located on 50 acres of land
(b) A farm loan
(c) A loan to purchase a property that includes a gas station and convenience store
(d) A loan to purchase a duplex and rehabilitate it into a single-family dwelling
D
****What kind of authority does the Consumer Financial Protection Bureau have:
A. None
B. Limited authority subject to the regulators of the Federal Reserve
C. Rule making and enforcement authority over many consumer financial laws
D. Unlimited power over all federally insured financial institutions
C