Chapter 11 - Federal Lending and Usury Laws

Question 1

Equal Credit Opportunity Act

Answer 1

credit is made available without discrimination or protected classes

Question 2

Truth in Lending (TILA) (regulation z)

Answer 2

disclosure of loan costs
Result of 2008
Customers given meaningful info with respect to the cost of credit - helps consumer shop around

1) Finance charge - total costs consumer pays
2) APR (annual percentage rate) - total interest along with other finance charges

Question 3

Right to Rescind

Answer 3

1st mortgages don’t apply

Consumer has 3 day right to rescind or cancel credit transaction

Question 4

Reg Z or Tila applies to

Answer 4

residential property four units of less & consumer credit

• doesn’t apply to business, commercial, ag, residential over four units
• doesn’t apply to owner financing

Question 5

credit advertising

Answer 5

must be vague - cannot have number associated with it

Question 6

RESPA

Answer 6

Real Estate Settlement Procedures Act
Inform buyers and sellers of settlement costs when purchase of 1 - 4 residential dweling
RESPA is aobut documents required to buyer and seller
Includes upfront loan estimate and detailed closing disclosure 3 days prior to closing

Question 7

Respa doesn’t apply to

Answer 7

Property larger than 25 acres
Contracts for deed - installment land contracts - purchase money mortgages or seller financing
second mortgages
loan assumptions

Question 8

TRID

Answer 8

TILA and Respa together merged 
Loan Estimate (given up front) 
Closing disclosure (given 3 days prior to closing)

Question 9

usury laws

Answer 9

addresses charging interest rate in excess of permitted law, varies from state to state

Question 10

Federal Reserve

Answer 10

Nations central bank - helps stabilize the economy

1) have authority to create money
- over supply causes inflation
- under supply causes recession
2) Reserve requirements
- the more the feds require to be kept in reserve, the less that can be used for loans (rates go up)
3) Feds set rate
4) open market operations
- fed buys bonds, pumps money into economy
- fed sells bonds, takes money out of economy