Federal Mortgage-Related Laws Flashcards
What Act became effective June 20, 1975, with the purpose of helping consumers become better shoppers for settlement services?
Real Estate Settlement Procedures Act
As set forth by Regulation X, which of the following is NOT a condition required for a person licensed and able to perform both the services of an MLO and real estate broker?
The individual must provide a bundled services discount to the party for the services.
Regulation B sets forth that in any system of evaluating creditworthiness, a creditor may consider the age of an elderly applicant when such age is used to favor the elderly applicant in extending credit. As defined and used in Regulation B, which of the following defines elderly?
age 62 or older
Regulation Z defines the ____ as the cost of consumer credit as a dollar amount.
finance charge
As set forth by Section 32 of Regulation Z, a high-cost mortgage must NOT include ____ unless the loan has a maturity of 12 months or less because it is being used as a bridge loan.
a balloon payment
Which fee can be included in the terms of a mortgage loan that must adhere to the loan term restrictions of Regulation Z, Section 32 and/or Section 35?
late fee
The _____ is responsible for enforcing the high-cost loan provisions set forth by the Home Ownership Protection Act through Regulation Z, Section 32.
Consumer Financial Protection Bureau
In order for a junior mortgage on a primary residence to be considered a higher-priced loan, the APR must exceed the applicable average prime offer rate by at least
3.5%.
One of the most critical points of the Loan Originator Compensation Rule is the prohibition of the practice of
steering.
What does TRID stand for?
TILA-RESPA Integrated Disclosure Rule
The TILA-RESPA Rule applies to
home equity loans.
As part of the loan application process, for HMDA reporting purposes lenders are to collect information on the applicant’s
race, sex, and ethnicity.
Regulation C implements the
Home Mortgage Disclosure Act.
According to the Fair Credit Reporting Act, seven years is the maximum length of time information can be reported on a credit report, EXCEPT for a
bankruptcy filing.
As set forth by the BSA/AML Act, with regard to electronic funds transfer transactions, a SAR must be filed for transactions aggregating _____or more regardless of potential suspects.
$25,000
Which financial arrangement is EXEMPT from the Real Estate Settlement Procedures Act?
temporary transaction
The legislation that sets out specific procedures and guidelines for closing and settlement procedures is
RESPA.
To stay in compliance with the Equal Credit Opportunity Act and Regulation B, if Juan applied for a loan on March 1 and XYZ Mortgage Company rejected his loan application on March 5, XYZ must send Juan a written explanation of its decision by
March 31.
TILA, as implemented by Regulation Z, sets forth recession requirements for mortgage loans. Which statement is FALSE specific to these requirements?
The right of rescission period always begins on the day of loan consummation, even if the actual notices are provided to the borrowers after consummation.
What Regulation ensures that some borrowers have the right of rescission for three business days after a loan contract is signed?
Regulation Z
As set forth by Regulation Z, Section 32, what is NOT a trigger used to define a high-cost mortgage loan?
excessive prepayment penalty
Which of these is NOT a prohibited loan term for a high-cost loan?
mandatory escrow account
What law defines a high-cost mortgage loan, also known as a Section 32 loan?
Home Ownership and Equity Protection Act
In Section 35 of Regulation Z, which implements TILA, all of the following are thresholds that define a mortgage loan as higher-priced EXCEPT
loan exceeds the APOR by 2.5% for a first mortgage lien
According to Regulation Z, creditors granting loans meeting HOEPA higher-priced mortgage loan criteria may not assess late fees in excess of ___ of past due payments or pyramid late fees.
4%
The ____ consolidates four disclosure forms into two forms for closed-end credit transactions secured by real property.
TILA-RESPA Rule
The annual escrow account statement must include an explanation of how any surplus is being handled by the servicer. If the surplus is less than ____, the servicer may refund such amount to the borrower or credit such amount against the next year’s escrow payments.
$50
A notification that appears in a consumer’s credit file instructing lenders to take extra steps to verify the consumer’s identity before processing a loan application is called a(n)
fraud alert.
The Safeguards Rule, within the GLB Act, requires companies to
develop a written information security plan to ensure the security and confidentiality of customer records.
Within three business days after a lender receives a complete mortgage loan application, the lender must provide the applicant with a written list of homeownership counseling organizations that includes a minimum of ____ HUD-approved housing counseling agencies in the applicant’s area.
ten
Regulation X sets forth that when a servicer receives a loss mitigation application at least ___ days before a foreclosure sale, the servicer must promptly review the application to determine if it is complete.
45
Which act requires the lender to provide the borrower a reason for rejection of credit in writing within 30 days of loan application?
Equal Credit Opportunity Act
The Equal Credit Opportunity Act is implemented by
Regulation B.
According to the Truth in Lending Act, a borrower closing on what loan type must be given notice of the right to rescind the loan?
owner-occupied refinance
The purpose of ____ is to promote the informed use of consumer credit by requiring disclosures about its terms and cost to ensure that consumers are provided with greater and more timely information on the nature and costs of obtaining credit extensions.
TILA
A $100,000 mortgage loan will be considered a Section 32 high-cost loan if the points and fees are greater than
5% of the loan amount.
Which of these is NOT a requirement for a high-cost loan subject to the terms and provisions of Section 32 of HOEPA?
mortgage insurance
The Red Flags Rule that requires certain businesses and organizations to develop, implement, and administer an identity theft prevention program is part of what federal law?
Fair and Accurate Credit Transactions Act.
On the Closing Disclosure, the Calculating the Cash to Close section on Page 3 must list figures from the most recent Loan Estimate. In addition to indicating if there is a change, the change must be explained and, if there is a tolerance cure, it must be shown as a ____ in Section J on Page 2.
Lender credit to the borrower
Lenders submit Loan/Application Registers in order to comply with what law?
HMDA
As set forth by Regulation Z, before enforcing an acceleration clause that appears as part of the mortgage, lenders must wait until payments are delinquent at least ____ days.
120
When completing a Loan Estimate, where should a licensed mortgage loan originator include an estimate of hazard insurance premiums?
Prepaids
The Loan Estimate and Closing Disclosure both have Section F Prepaids, Section G Initial Escrow Payment at Closing, and Section H Other. There is a(n) ______ tolerance for change for the costs in these three sections.
Unlimited
On the Loan Estimate, broker fees paid directly by the borrower must be
Itemized separately from other originations fees
While it is illegal to ask or consider the race or ethnicity of an applicant, which federal legislation requires that this information be requested from every applicant?
Home Mortgage Disclosure Act
Regulation B requires that applicants must be made aware of their right to receive an appraisal report created as the result of their mortgage loan application. This disclosure must be mailed or delivered to applicants not later than ___ business days after the lender receives a complete application.
3
What type of loan is NOT reportable under HMDA?
Loans used primarily for agricultural purposes
A credit report contains the following types of information EXCEPT
Employment and income history
As defined and used throughout FCRA and Regulation V, _____ means any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who participates in the decision to extend, renew, or continue credit.
Creditor
Which statement is TRUE as it relates to how a lender determines if the settlement charge goes on the Closing Disclosure in Section B (Services Borrower Did Not Shop For) or Section C (Services Borrower Did Shop For)?
If borrower Ellie chose the provider from a written list, the fee goes in Section B of the CD
HMDA
Aids in identifying discriminatory lending patterns.
Which statement is NOT a requirement set forth by TRID specific to who is to provide and be listed in the creditor’s information section of the Loan Estimate (LE) as a creditor?
If a mortgage broker is completing the LE, use the name of the mortgage broker
As it relates to TRID requirements for providing a Loan Estimate (LE) to an applicant, what statement is FALSE?
If a consumer only requests a pre-approval and provides 6 0f 6 elements of a complete application, the MLO is not obligated to provide a LE
What type of loan is NOT reportable under HMDA?
Loans used primarily for agricultural purposes
As set forth in Regulation V, if a consumer files a Chapter 7 bankruptcy, the consumer will probably have to wait ____ years for the negative credit information to drop off credit reports.
10
As defined and used throughout Regulation Z when referring to the delivery requirements for a Loan Estimate and Closing Disclosure, _____ means the time that a consumer becomes contractually obligated on a credit transaction.
Consummation
The main purpose of the Fair Credit Reporting Act is to
Create reasonable procedures to ensure the confidentiality and accuracy of consumer credit information
Who is NOT subject to Section 114 of the Fair and Accurate Credit Transactions Act that sets forth the identity theft red flags rule?
Doctors
The primary purpose of the FACT Act is to
Protect consumers from identity theft
According to the Fair and Accurate Credit Transactions Act, which situation would NOT be a valid reason for a consumer to add a fraud alert to a credit report?
A woman who changes her name after a divorce
The Home Mortgage Disclosure Act provides the data for tracking lender compliance with the provisions of the Fair Housing Act and the
Equal Credit Opportunity Act
The servicer must notify the borrower at least ____ during the escrow account computation year if there is a shortage or deficiency in the escrow account.
Once
According to the FCRA, all of the following would have a business need for accessing a consumer’s credit reports EXCEPT a(n)
Private club making a decision about a person’s membership eligibility
As set forth by the FCRA, when loan denial is based on information in a consumer report from a consumer credit reporting agency, the ____ must include a disclosure of a numerical credit score.
Statement of Adverse Action
Which federal legislation requires that, in cases where an application is taken in person and the applicant does NOT wish to provide information specific to his ethnicity, an MLO must make a visual determination and/or use a surname as the basis for this determination?
Home Mortgage Disclosure Act
Per the Telemarketing Sales Rule, a loan servicer cannot call a customer later than ___ days after a customer’s name is included on the National Do Not Call Registry.
31
The Telemarketing Sales Rule established
Appropriate legal cold calling hours
Regulation P, which implements the Financial Privacy Rule of the GLB Act, sets forth requirements for delivering the Privacy Policy notice to consumers. Which of the following is NOT an acceptable method for delivering the Privacy Policy notice?
Post a sign with the privacy policy in each branch or office
For how many months after a loan closes may a mortgage loan originator call to solicit new business from a customer whose phone number is on the National Do Not Call Registry?
18 Months
What rule within the GLB Act governs the collection and disclosure of nonpublic personal information to third parties?
Financial Privacy Rule
Under the GLB Act, regulated by Regulation P, customers must receive a loan servicer’s privacy notice ____ for as long as the customer relationship lasts.
Once every year
The Federal Trade Commission’s Telemarketing Sales Rule prohibits telemarketers from calling anyone
Before 8 am or after 9 pm
Lyle calls XYZ Mortgage to inquire about current rates and provides his name and phone number. Assuming that Lyle’s name is on the National Do Not Call Registry, how long does XYZ Mortgage have to follow up with Lyle?
3 Months
