Exam-Federal Law Flashcards
The Fair Credit Reporting Act covers all of the following, EXCEPT:
a) Disclosing obligations on users of consumer reports
b) Prohibiting discrimination regarding the handicapped
c) Regulating the consumer reporting industry
d) Ensuring fair, timely and accurate reporting of credit information
b) Prohibiting discrimination regarding the handicapped
Regulation B allows all of the following except:
a) inquiries about the ages of dependents.
b) inquiries about citizenship and residency status.
c) using the terms husband or wife when inquiring about a potential co-borrower.
d) Inquiring about paying child support and/or alimony
c) using the terms husband or wife when inquiring about a potential co-borrower.
HMDA requires the lenders to obtain what information for each borrower?
a) Age and Race
b) Race and Sex
c) Marital status and Sex
d) Marital status and Age
b) Race and Sex
A borrower elects to buy down the interest rate on his mortgage loan, using three discount points. This appears on the Loan Estimate and would be considered a:
a) Zero Tolerance Fee
b) 10% Cumulative Tolerance Fee
c) No Tolerance Fee
d) 10% Tolerance Fee
a) Zero Tolerance Fee
Under what law is a lender required to provide an adverse action disclosure if the borrower’s credit is the reasoning for all or part of the decision to deny the loan application:
a) Regulation Z
b) Regulation X
c) Regulation C
d) Regulation B
d) Regulation B
HMDA is the acronym for:
a) House and Mortgage Deposit Act.
b) Home Mortgage Discovery Act.
c) Home Mortgage and Development Act.
d) Home Mortgage Disclosure Act.
d) Home Mortgage Disclosure Act.
FCRA is the acronym for:
a) Federal Credit Reporting Act.
b) Federal Certificate of Reimbursement Act.
c) Fair Credit Reporting Act.
d) Federal Community Redevelopment Act.
c) Fair Credit Reporting Act.
GLBA allows a lender to do which of the following?
a) Share a borrower’s information with those necessary to complete the loan request
b) Share a borrower’s information with anyone if no fee is received
c) Sell a borrower’s information to anyone as long as it is private
d) Sell a borrower’s information with the parent company, affiliates and non-affiliates
a) Share a borrower’s information with those necessary to complete the loan request
RESPA imposes requirements about, or prohibits, all of the following, except:
a) the loan origination fee.
b) the amount of prepaids.
c) information that must be disclosed to the borrower at the loan application or within 3 business days of the application.
d) kickbacks and referral fees.
a) the loan origination fee.
If an applicant has been denied credit, how long does the lender have to get a letter of adverse action to him/her?
a) 10 days
b) 15 days
c) 30 days
d) It is not necessary to send a letter, as long as the borrower knew they had bad credit before they applied.
c) 30 days
The practice of getting people to sell their homes at bargain prices by suggesting that certain ethnic groups are going to move into the area is nicknamed:
a) Price fixing
b) Redlining
c) Steering
d) Blockbusting
d) Blockbusting
Which of the following is a purpose of RESPA?
a) To regulate interest rates
b) To monitor high cost loans
c) To eliminate kickback and referral fees
d) To track real estate settlement trends
c) To eliminate kickback and referral fees
You and the borrower believe an Adjustable Rate Mortgage would be best for the borrower. What is the name of the booklet you are required to give?
a) CHARM Booklet
b) ARM Disclosure
c) Fair Lending Practices Booklet
d) RESPA Booklet
a) CHARM Booklet
CFPB is the acronym for:
a) Congressional Fair Public Business Act.
b) Consumer Financial Protection Bureau.
c) Consumers Federal Policy Bureau.
d) Congressional Federal Protection Board.
b) Consumer Financial Protection Bureau.
Which of the following is an acceptable condition on which to base a mortgage loan originator’s compensation?
a) On what type of interest rate the loan has
b) The LTV amount on the loan
c) A fixed percentage of the loan amount
d) Based on the term of the loan
c) A fixed percentage of the loan amount
If a loan is a refinance, and the loan is improperly closed and funded in one day with no three-day rescission period, how long do the borrowers have to rescind the transaction?
a) One day
b) Three days
c) One week
d) Three years
d) Three years
How many days in advance of transferring a loan to another lender must the current mortgage servicer inform that customer of the transfer to another lender who will subsequently be servicing the loan?
a) 15
b) 20
c) 3
d) 45
a) 15
Which of the following is a protected class under the Fair Housing Act?
a) A handicapped individual
b) A person 62 years of age or older
c) An African-American
d) An American Indian
a) A handicapped individual
What is the maximum penalty for providing false information on a federally related loan?
a) $5,000 fine and one year jail time
b) $250,000 fine and 30 years jail time
c) Revoke license and $1,000 fine
d) Up to $1,000,000 fine and jail time
d) Up to $1,000,000 fine and jail time
An MLO is required to protect a borrower’s non-public personal information, per what federal law?
a) Regulation B
b) Regulation X
c) Regulation Z
d) Regulation P
d) Regulation P
If a loan originator is in a face-to-face loan interview with the applicant, and the applicant does not wish to answer the questions in Section 10 on the 1003 , the loan officer must:
a) research and obtain the information.
b) end the process.
c) check the box “I do not wish to furnish this information”.
d) fill out the information based on visual observation.
d) fill out the information based on visual observation.
All the following could not be considered a higher-priced loan, except:
a) A reverse mortgage
b) A home equity line of credit
c) An initial construction loan
d) A purchase loan
d) A purchase loan
A Loan Estimate:
a) Must be within $500 of the final costs
b) Is an estimate only and is not required to reflect the actual settlement costs
c) Should exhibit a reasonable relationship to the actual final settlement costs
d) Must be within $1,000 of the final costs
c) Should exhibit a reasonable relationship to the actual final settlement costs
A mortgage broker provides tickets for an NFL game to a title company executive for referring customers to them. Which federal law does this arrangement violate?
a) RESPA
b) TILA
c) SAFE Act
d) Loan Originator Compensation
a) RESPA
Which federal law is responsible for the creation of the CFPB?
a) TILA
b) TRID
c) Dodd-Frank
d) The SAFE Act
c) Dodd-Frank
Regulation Z requires:
a) disclosure of the settlement costs to buyers and sellers.
b) disclosure of the impound accounts and the prepaids of the borrower(s).
c) computation and disclosure of the APR to the borrowers.
d) disclosure of servicing information on the loan.
a) disclosure of the settlement costs to buyers and sellers.
If the file is incomplete, for borrower non-performance a declination letter must be sent within:
a) 10 days
b) 15 days
c) 30 days
d) It is not necessary to send a letter if the file is incomplete
d) It is not necessary to send a letter if the file is incomplete
The responsibility of financial institutions to meet both the deposit and credit needs of the community, including the needs of low- income families, is called?
a) the Home Mortgage Disclosure Act.
b) the Community Reinvestment Act.
c) the Fair Credit Reporting Act.
d) the Equal Credit Opportunity Act.
b) the Community Reinvestment Act.
An MLO who supplied a revised LE to a borrower must retain that document for:
a) 5 years
b) 90 days
c) 1 year
d) 3 years
d) 3 years
What is NOT likely to happen if the lender/investor finds fraud?
a) A 1% interest rate increase on the loan
b) The lender and/or broker will be required to repurchase the loan
c) The entire loan can be called due and payable
d) The loan officer must pay back any premium made on the loan
a) A 1% interest rate increase on the loan
If a loan officer were to take a loan application Tuesday at 1:00 p.m., what is the last day that the Good Faith Estimate must be mailed or disclosed?
a) The same day, Tuesday before end of business
b) The next day, Wednesday before 5pm
c) Friday before midnight
d) Within 3 days before 5pm
c) Friday before midnight
Who of the following would be an appropriate person to discuss the borrower’s credit with to determine whether they qualify for the proposed loan or not?
a) Seller
b) Selling agent
c) Underwriter
d) Listing Agent
c) Underwriter
FHA is the acronym for:
a) Fair Habitation Act
b) Federal Housing Act
c) Fair Home Act
d) Fair Housing Act
d) Fair Housing Act
The following two disclosures are required by RESPA, if applicable:
a) 1003 and AfBA
b) 1003 and 1008
c) Borrower’s Signature Authorization and GFE
d) .LE and AfBA
d) .LE and AfBA
How often do RESPA regulations require that an escrow statement be provided to the borrower?
a) 10 days after the end of the calendar year
b) Annually
c) 30 days BEFORE the end of the calendar year
d) Annually 15 days after the funding of the loan by the new servicer
b) Annually
An MLO purchases tickets for a sporting event and provides those tickets to a local real estate agent as a thank you for a referral and also in the hopes that that real estate agent will continue to send clients, this would be considered:
a) An acceptable practice
b) An illegal practice
c) An acceptable practice as long as it is a fair price for services actually provided
d) Acceptable only if fully disclosed
b) An illegal practice
When is an Affiliated Business Agreement required?
a) Always when there is a co-borrower/affiliate
b) Only purchase loans
c) It is no longer required
d) At the time the borrower is referred to the affiliated business partner
d) At the time the borrower is referred to the affiliated business partner
RESPA does not apply to:
a) Vacant Land
b) A duplex
c) A property with 5 acres
d) A triplex
a) Vacant Land
After meeting with the borrowers to complete a loan application, you return to your office and order a Tri-Merged credit report. Now that you have a credit report, what Loan Disclosure must you now prepare and mail (or give) to them?
a) Notice to Home Loan Applicant
b) Credit Authorization Consent
c) Denial Letter
d) Rapid Rescore
a) Notice to Home Loan Applicant
“Seller Concessions,” as relates to the mortgage business are:
a) illegal forms of advertising by real estate agents and companies.
b) offers by sellers to pay the buyers’ down payment.
c) offers by sellers to contribute to the closing costs of the buyer.
d) special add-ons built into the property to make it more sell able to induce buyers into purchasing.
c) offers by sellers to contribute to the closing costs of the buyer.
The federal act that requires lenders to disclose mortgage loan information by geographic area is:
a) HMDA.
b) FCRA.
c) ECOA.
d) RESPA.
a) HMDA.
What is the minimum amount of time that a lender has to inform the borrower that they are transferring service?
a) 15 days
b) 45 days
c) 10 days
d) 60 days
a) 15 days
What is a purpose of the Truth in Lending Act?
a) To enable consumers to compare the cost of credit from lender to lender
b) To keep loan officers honest
c) To prevent kickback and referral fees
d) To oversee commercial lending
a) To enable consumers to compare the cost of credit from lender to lender
Which of the following does TRID require be disclosed within three days of application on a purchase transaction?
a) Lead paint notice
b) A 1008
c) APR disclosure
d) The HomeLoan Toolkit
d) The HomeLoan Toolkit
Who provides the Annual Escrow Account Disclosure Statement?
a) The Mortgage Loan Originator
b) The Broker
c) The Title Company
d) The Servicing Lender
d) The Servicing Lender
TILA does not apply to which of the following:
a) Purchases
b) Refinance transactions
c) 2-4 Unit Owner Occupied Rental units
d) Commercial loans
d) Commercial loans
Which of the following must be provided to the client on an ARM loan?
a) “When Your Home is on the Line”
b) “Your Settlement Costs and You” booklet by HUD
c) CFPB
d) The CHARM Handbook
d) The CHARM Handbook
Which rule requires all financial institutions to design, implement, and maintain safeguards to protect customer information while it is in the custody and control of the institution and its agents?
a) The Privacy Rule
b) The Red Flags Rule
c) The Safeguard Rule
d) The Disposal Rule
c) The Safeguard Rule
The CHARM booklet was prepared by:
a) the CFPB.
b) The Dept. of Housing and Urban Development.
c) The Federal Housing Administration.
d) The Federal Reserve Board.
a) the CFPB.
Which is not a disclosure required within 3 business days of receiving an application?
a) The Loan Estimate
b) Environmental hazard disclosure
c) The Home Loan Toolkit
d) The CHARMS bookklet for Adjustable Rate Mortgages
b) Environmental hazard disclosure
An MLO is looking over a borrower’s credit report and sees a fraud alert, under the Economic Growth, Regulatory Relief and Consumer Protection Act, how long can a fraud alert be on a borrower’s credit report?
a) 90 days
b) 1 year
c) 30 days
d) 6 months
b) 1 year
Which Act requires the Home Loan Toolkit to be sent to the borrower on a purchase?
a) TILA
b) ECOA
c) APR Disclosure
d) TRID
d) TRID
Which rule dictates how instructions are required to dispose of consumer’s information?
a) The Safeguard Rule
b) The Disposal Rule
c) The Qualified Mortgage Rule
d) TRID
b) The Disposal Rule
Which property is exempt under RESPA?
a) Owner occupied dwellings
b) 25 acres or more
c) Condominiums
d) PUDs and condominiums
b) 25 acres or more
According to the Fair and Accurate Credit Transaction Act, when are borrowers entitled to get a copy of their credit scores?
a) Once a year
b) When the borrower has been turned down for a loan
c) When the borrower is on public assistance
d) A borrower has no right to a free copy of his credit scores
a) Once a year
Dodd-Frank mandated which of the following rules that now appear under TILA:
a) FACTA
b) The Disposal Rule
c) Qualified Mortgage
d) The Safeguard Rule
d) The Safeguard Rule
An MLO provides the borrower a Loan Estimate in her office the day after the application was completed, the borrower signs all disclosures and verbally tells the MLO they are ready to proceed with the loan. The loan originator can charge the borrower for an appraisal:
a) That day
b) Within 3 business days
c) After the borrower has provided their written intent to proceed
d) After the borrower has signed all the disclosures
a) That day
If a home is purchased with an FHA owner-occupied loan, what type of FHA refinance can the borrower use to refinance?
a) FNHMA
b) USFA
c) IRRRL
d) Streamline
d) Streamline
What information is a mortgage loan originator not allowed to ask a borrower who is applying for a home mortgage?
a) Race
b) Sex
c) Ethnicity
d) Receipt of Public Assistance
d) Receipt of Public Assistance
What are the penalties for violating Section 8 of RESPA?
a) $5,000 per incident and up to one year in jail
b) $10,000 per incident plus one year jail time
c) $100,000 plus up to 30 years in jail
d) $1,000,000 plus up to one year in jail
b) $10,000 per incident plus one year jail time
A yield spread premium is disclosed on which document?
a) TIL disclosure
b) Loan Estimate
c) Servicing disclosure
d) Rescission disclosure
b) Loan Estimate
Which of the following is NOT calculated into the APR?
a) Fixed interest rate
b) Lender’s origination fee
c) Realtor’s commission
d) Discount points
c) Realtor’s commission
The Privacy Rule of GLBA requires a lender to provide a borrower with a consumer privacy notice:
a) Three business days prior to closing
b) Three business days after application
c) Before disclosing information to non-affiliated third parties
d) Each time the servicing is transferred
c) Before disclosing information to non-affiliated third parties
Define “Business day” under the Truth in Lending Act for the three day right of rescission.
a) Monday through Friday, except federally related holidays
b) Monday through Saturday except legal public holidays
c) Any day the mortgage company is open for “business”
d) Monday thru Sunday except legal public holidays
b) Monday through Saturday except legal public holidays
A “trigger term” is any number used in advertising, other than the APR. When a trigger term is used, the advertising must include all of the following EXCEPT the:
a) Origination fee
b) Payment
c) Rate
d) Term
a) Origination fee
When can a lender collect a loan origination fee?
a) When the loan closes
b) When the borrower gives the lender their intent to proceed
c) When the revised LE has gone out
d) After the appraisal comes backs
a) When the loan closes
If a borrower and a co-borrower are refinancing a home that they both occupy, at the closing - who must receive a copy of the rescission disclosure?
a) Both borrowers
b) Either borrower or co-borrower
c) Neither borrower because it is a refinance
d) Neither borrower because it is owner occupied and was already financed
a) Both borrowers
What is not included in the APR calculations?
a) Mortgage insurance premium
b) Origination fee
c) Processing fee
d) Hazard insurance premium
d) Hazard insurance premium
In compliance with the general provisions of Regulation Z, how long is a lender required to maintain records?
a) 2 years
b) 5 years
c) 7 years
d) 4 years
a) 2 years
According to Regulation B, which of the following is not recommended?
a) Including income from alimony or child support if it is to be computed into the income
b) Including the payment of alimony or child support into the borrower’s liabilities
c) Always referring to the man as borrower and the woman as co- borrower
d) Asking if the applicant is married
d) Asking if the applicant is married
ECOA is also a part of what Reg.:
a) X
b) Z
c) B
d) C
c) B
What is the purpose of HMDA?
a) To detect discriminatory lending
b) To prevent high cost loans
c) To regulate Home Mortgage Appraisals
d) To oversee the FHA
a) To detect discriminatory lending
What law requires the lender to collect a borrower’s demographic information for first mortgages and home improvement loans?
a) HOEPA
b) TILA
c) ECOA
d) HMDA
d) HMDA
A lender just closed a loan for a borrower. After closing, they realize there was a tolerance violation. Under TRID, how long does the lender have to provide a corrected CD to correct non-numerical errors and document refunds for tolerance violations?
a) 30 calendar day
b) 60 calendar days
c) 90 calendar days
d) 10 calendar days
b) 60 calendar days
