Federal Mortgage-Related Laws section

Question 1

What does (RESPA) Stand For

Answer 1

Real Estate Settlement and Procedures Act

Question 2

What ACT protects consumers from excessive settlement costs and unearned fees

Answer 2

Real Estate Settlement and Procedures Act

Question 3

What ACT Limits the amount of funds that creditors can require consumers to deposit into escrow accounts

Answer 3

Real Estate Settlement and Procedures Act

Question 4

What ACT Establish disclosures, policies, and procedures to facilitate timely communications between loan servicers and consumers

Answer 4

Real Estate Settlement and Procedures Act

Question 5

What does (CFPB) stand for

Answer 5

Consumer Financial Protection Bureau

Question 6

Who is responsible for the enforcement of Real Estate Settlement and Procedures Act(RESPA) and for issuing implementing regulation

Answer 6

Consumer Financial Protection Bureau (CFPB)

Question 7

What is Regulation X (12 C.F.R. §1024.1 et seq.)

Answer 7

RESPA’s regulations

Question 8

The addition of Subpart C to Regulation X, addressing mortgage servicing is an example of changes made to ( ) by the ( ) over time.

Answer 8

(RESPA) - Real Estate Settlement and Procedures Act

(CFPB) - Consumer Financial Protection Bureau

Question 9

What does RESPA apply to

Answer 9

“federally-related mortgage loans

Question 10

Loans secured by a first or subordinate lien on residential property are known as

Answer 10

federally-related mortgage loans by RESPA

Question 11

loans secured by a first or subordinate lien on residential property are covered under ( ) and are considered ( )

Answer 11

RESPA and federally-related mortgage loans

Question 12

Loans made with collateral insured by the federal government (e.g., flood insurance

Answer 12

RESPA applies to “federally-related mortgage loans,” which are defined as loans secured by a first or subordinate lien on residential property which are:

Question 13

Loans made with funds from a lender regulated by the federal government or that has deposits insured by the federal government (e.g., depository institutions regulated by the FDIC or NCUA)

Answer 13

RESPA applies to “federally-related mortgage loans,” which are defined as loans secured by a first or subordinate lien on residential property which are:

Question 14

Loans Intended for sale to Fannie Mae or Freddie Mac

Answer 14

RESPA applies to “federally-related mortgage loans,” which are defined as loans secured by a first or subordinate lien on residential property which are:

Question 15

loans Made by a creditor regulated under the Truth-in-Lending Act,

Answer 15

RESPA applies to “federally-related mortgage loans,” which are defined as loans secured by a first or subordinate lien on residential property which are:

Question 16

Made by a mortgage broker and assigned to a creditor

Answer 16

RESPA applies to “federally-related mortgage loans,” which are defined as loans secured by a first or subordinate lien on residential property which are:

Question 17

Transactions involving a federally-related mortgage loan include most loans secured by a lien first or subordinate positions? for residential properties( T _ F )

Answer 17

Both True

Question 18

The definition of “federally-related mortgage loans,” the requirements of RESPA apply to

Answer 18

virtually every home loan secured by a mortgage. Because the definition is so broad

Question 19

Does RESPA apply to Loans for business, commercial, or agricultural purposes?

Answer 19

No

Question 20

Does RESPA apply to

Answer 20

Temporary financing, such as construction loans (if the loan may be converted to permanent financing by the same lender, the exemption does not apply)

Question 21

If temporary financing, such as construction loans (if the loan may be converted to permanent financing by the same lender, Temporary financing, such as construction loans (if the loan may be converted to permanent financing by the same lender, the exemption does not apply)does the exemption apply?

Answer 21

no

Question 22

Does RESPA apply to Loans for business, commercial, or agricultural purposes?

Answer 22

No

Question 23

Does RESPA apply to Loans secured by vacant land

Answer 23

no

Question 24

When is a loan secured by vacant land or unimproved property?

Answer 24

when no proceeds of the loan will be used to construct a one-to-four-family residential structure

Question 25

If the proceeds from a loan will be used to locate a manufactured home or construct a structure within two years from the settlement date will it be exempt?

Answer 25

No

Question 26

Does RESPA apply to loan assumptions which are permissible without lender approval

Answer 26

no

Question 27

Does RESPA apply to Transactions between lenders and investors for the sale of a closed loan to a purchaser in the secondary market

Answer 27

no

Question 28

Does RESPA apply to Loan conversions, when a new note is not required and the provisions are consistent with those of the original mortgage

Answer 28

no

Question 29

RESPA section 8 covers?

Answer 29

prohibition against giving or receiving a fee, kickback, or “anything of value” pursuant to an “agreement or understanding” for the referral of settlement business.

Question 30

There are a number of terms in RESPA that relate to the Section 8 prohibition

Answer 30

Affiliated business arrangement, Agreement or understanding, Bona fide discount point, Borrower credit, Fee-splitting and kickbacks, Markups

Question 31

Many service providers have a business relationship and an ownership interest in other settlement service providers. For example, a mortgage company may have an ownership interest in a title company, What is this called( )is the relationship permissible under any circumstances?( )

Answer 31

Affiliated business arrangement

Yes, the relationship must be disclosed to a borrower through an “affiliated business arrangement disclosure.”

Question 32

Can an agreement of understanding for a referral be stated or written

Answer 32

yes

Question 33

Can an agreement of understanding for a referral be not written or verbalized but established through a practice, pattern, or course of conduct, to offer things of value in exchange for the referral of settlement business

Answer 33

yes

Question 34

Discount points paid by the borrower which reduce the interest rate. Typically, one point is equal to 1% of the principal amount of the loan are known as

Answer 34

Bona fide discount point

Question 35

Borrower credit also know as YSP an abbreviation for?

Answer 35

yield spread premium

Question 36

the borrower credit is a fee paid to the borrower by the lender when a loan is originated at a higher interest rate than the lowest rate for which the borrower qualifies known as

Answer 36

yield spread premium

Question 37

The borrower credit know as ( ) is used to

Answer 37

“yield spread premium”

subsidize closing costs, such as the origination or broker fee, because it is financed so that out-of-pocket closing costs are “borrowed” from the lende

Question 38

Do RESPA nor Regulation X define “fee-splitting” or “kickbacks

Answer 38

No

Question 39

Fee-splitting and kickbacks terms are generally understood to refer to

Answer 39

paying or accepting unearned fees, or marking up the fee for a particular settlement service and splitting the overage with another settlement service provider

Question 40

Has the supreme court rules that Markups are a violation of RESPA

Answer 40

NO

Question 41

Are there any instances where Markups are a violation of RESPA

Answer 41

when an upcharge is split between two parties. paying or accepting unearned fees, or marking up the fee for a particular settlement service and splitting the overage with another settlement service provider

Question 42

While unilateral markups without fee-splitting do not violate RESPA, the Truth-in-Lending Act includes a rule stating

Answer 42

that the amount charged for settlement services may not exceed the amount actually received by the settlement service provider for that service (12 C.F.R. §1026.19(f)(3)(i))

Question 43

Since marking up fees for settlement services may lead to litigation

Answer 43

the practice is one that should not be used without obtaining legal advice and consulting state law, as many states prohibit a lender from marking up third-party charges

Question 44

a person, other than an employee of a lender, that renders origination services and serves as an intermediary between a borrower and a lender in a transaction that involves a federally-related mortgage loan. This includes persons that close loans in their own name in table-funded transactions

Answer 44

Mortgage broker

Question 45

an action, either written or oral, that influences the selection of a provider of a settlement service.

Answer 45

Referral

Question 46

borrowers depend on a number of settlement service providers to prepare for closing. Third-party services are provided by appraisers, inspectors, credit reporting agencies, title insurers, and loan processors.

Answer 46

Settlement service

Question 47

Origination of a loan, including taking applications, loan processing, and underwriting and funding is an example of what type of service

Answer 47

Settlement service

Question 48

Rendering of services by a mortgage broker, including counseling, taking applications, obtaining verifications and appraisals, loan processing and origination services, and communicating with a borrower/lender is an example of what type of service

Answer 48

Settlement service

Question 49

Providing services related to origination, processing, or funding of a mortgage is an example of what type of service

Answer 49

Settlement service

Question 50

Providing title services is an example of what type of service

Answer 50

Settlement service

Question 51

Rendering of services by an attorney is an example of what type of service

Answer 51

Settlement service

Question 52

Preparation of documents (notarization, delivery, recordation) is an example of what type of service

Answer 52

Settlement service

Question 53

Rendering of:
Credit reports
Appraisals
Inspections
is an example of what type of service

Answer 53

Settlement service

Question 54

Conducting settlement by a settlement agent and related services
Providing services involving:
Mortgage insurance
Hazard, flood, or other casualty insurance
Homeowner’s warranties
Mortgage life, disability, or similar insurance
Real property taxes
Other assessments or charges on real property
Rendering of services by a real estate agent or broker
Providing any other services for which a settlement service provider requires payment

are examples of what type of service

Answer 54

Settlement service

Question 55

a partnership or joint venture created between settlement service providers for the illegal purpose of splitting fees under the guise of a bona fide affiliated business arrangement.

Answer 55

Sham affiliated business arrangement

Question 56

this term includes, but is not limited to, any payment, advance, loan, or service including money, discounts, commissions, salaries, stock, opportunities to participate in a money-making program, tickets to theatre or sporting events, services at special rates, and trips at another’s expense. This term also covers special financial arrangements, such as distributions of partnership profits, increased equity in a company, special banking terms, or the reduction of existing debt. The regulations state that the term “payment” is “synonymous with the giving or receiving of any ‘thing of value’ and does not require transfer of money” (12 C.F.R. §1024.14(d)

Answer 56

Thing of value

Question 57

Loan Estimate is an example of what type of disclosure intended to provide consumers with the information that they need to shop for settlement services

Answer 57

mandatory disclosures required by RESPA

Question 58

Closing Disclosure is an example of what type of disclosure intended to provide consumers with the information that they need to shop for settlement

Answer 58

mandatory disclosures required by RESPA

Question 59

special information booklet, is an example of what type of disclosure intended to provide consumers with the information that they need to shop for settlement

Answer 59

mandatory disclosures required by RESPA

Question 60

affiliated business arrangement disclosure is an example of what type of disclosure intended to provide consumers with the information that they need to shop for settlement

Answer 60

mandatory disclosures required by RESPA

Question 61

disclosures related to mortgage servicing and escrow accounts, and, in certain transactions, the Good Faith Estimate and HUD-1 Settlement Statement. is an example of what type of disclosure intended to provide consumers with the information that they need to shop for settlement

Answer 61

mandatory disclosures required by RESPA

Question 62

A special information booklet is due no later than

Answer 62

no later than three business days after a mortgage loan application is received or prepared

Question 63

A special information booklet is due no later than three business days after a mortgage loan application is received or prepared, A special information booklet is due no later than three business days after a mortgage loan application is received or prepared

Answer 63

Your Home Loan Toolkit: A Step-by-Step Guide

Question 64

This booklet:

Explains the settlement process
Tells borrowers that they have the right to negotiate the terms of a loan
Reviews the protections that RESPA creates for borrowers
Warns borrowers that their use of false information on a loan application can lead to loss of their home, a poor credit rating, and even criminal prosecution for fraud

Answer 64

“Your Home Loan Toolkit: A Step-by-Step Guide.”

Question 65

The special information booklet must be provided by the lender, by in-person delivery or by placing it in the mail, within

Answer 65

three business days of receiving or preparing a mortgage loan application

Question 66

If a borrower uses a mortgage broker, is it the mortgage broker’s responsibility to provide the booklet

Answer 66

yes

Question 67

If there are multiple borrowers, such as spouses, is only one special information booklet disclosure necessary

Answer 67

Yes and it may be provided to any one of the borrowers.

Question 68

Creditors are very limited in the changes they may make to the special information booklet and those changes are

Answer 68

add their contact information to its cover
The booklet may also be reproduced in any form, stamped with a mortgage professional’s contact information and translated into any language

Question 69

The special information booklet can not

Answer 69

be combined into a larger document with other disclosures

Question 70

Consumers who are shopping for an open-end loan, such as a HELOC, must receive an information brochure called

Answer 70

What You Should Know about Home Equity Lines of Credit

Question 71

What You Should Know about Home Equity Lines of Credit was originally written by

Answer 71

the Federal Reserve Board

Question 72

is the “What You Should Know about Home Equity Lines of Credit booklet required for a refinance

Answer 72

NO

Question 73

is the “What You Should Know about Home Equity Lines of Credit booklet required for a A closed-end loan secured by a subordinate lien

Answer 73

no

Question 74

is the “What You Should Know about Home Equity Lines of Credit booklet required for A reverse mortgage loan

Answer 74

no

Question 75

If the lender denies the borrower’s application before the end of the three-business-day period for disclosure, is a special information booklet required

Answer 75

No

Question 76

When must a settlement service provider disclose the an affiliated business arrangement to the loan applicant

Answer 76

at the time of making the referral (

Question 77

Appendix D to Regulation X includes

Answer 77

recommended format and language for use in disclosing an affiliated business arrangement.

Question 78

what is the record retention requirement for affiliated business arrangement disclosures

Answer 78

5 years

Question 79

Describe the business arrangement, including the percentage of ownership interest of the referring party and service provider
Indicate that the referral may result in a financial benefit for the referring party
Estimate the costs that will be charged by the provider to whom the loan applicant is referred
Advise the borrower that he/she is not required to use the service provider to whom he/she was referred and that other providers are available (note, however, that lenders can require the use of a particular attorney, appraiser, and credit reporting agency are disclosures that must be made in the

Answer 79

Affiliated Business Arrangement Disclosure

Question 80

RESPA and Regulation X impose a requirement on servicers to provide notice to consumers of any assignment, sale, or transfer of servicing. The entity that is making the transfer is known as the

Answer 80

transferor servicer

Question 81

transferor servicer must provide notice to the consumer no less than

Answer 81

15 days before the effective date of the transfer of servicing

Question 82

The entity that receives servicing rights is known as the

Answer 82

transferee servicer,” and must provide notice to the consumer no more than 15 days after the transfer.

Question 83

the “transferee servicer,” must provide notice to the consumer no more than

Answer 83

15 days after the transfer.

Question 84

Is a combined transfer notice from both servicers is permitted if provided to the consumer

Answer 84

yes as long as its at least 15 days before the effective date of the transfer.

Question 85

The effective date of the transfer
A name, address, and toll-free phone number that the consumer can use to contact the transferee servicer for answers to questions about the transfer
The date on which the transferor servicer will no longer accept payments and the transferee will accept them (these must be the same date or consecutive dates)
An indication of whether the transfer will impact the continued availability of optional insurance products
A statement that the transfer does not change the terms or conditions of the mortgage are rights that must be outlines in the

Answer 85

notice of transfer of servicing rights

Question 86

If a consumer sends an on-time payment to the transferor servicer during the 60-day period that begins on the effective date of the transfer, can the payment be treated as late for any reason

Answer 86

No

Question 87

Requiring an annual escrow account analysis is an example of how regulation X

Answer 87

prevents loan servicers from overcharging for escrow payments

Question 88

Limiting the cushion that a borrower must maintain to cover unanticipated disbursements to is an example of how regulation X( ) and that amount and that amount is

Answer 88

prevents loan servicers from overcharging for escrow payments

one sixth of the estimated total annual disbursements

Question 89

Regulation x requires the refund of any surpluses greater than or equal to $50 within

Answer 89

30 days after completion of the escrow account analysis that reveals a surplus

Question 90

Regulation x stipulates that the servicer may credit the amount towards the next year’s escrow payments

Answer 90

If the surplus is less than $50,

Question 91

To ensure that borrowers know about amounts deposited into and disbursed from escrow accounts.

Answer 91

RESPA has established special disclosure requirements

Question 92

When is the Initial escrow account statement given

Answer 92

this disclosure is typically given at settlement

Question 93

How many days does the lender have to deliver the Initial escrow account statement

Answer 93

45 days from settlement to deliver it.

Question 94

The mandatory disclosures that are related to escrow accounts include

Answer 94

the initial escrow account statement and the annual escrow account statement

Question 95

Initial escrow account statement: this disclosure is typically given at( ) However, the lender has( ) days from settlement to deliver it

Answer 95

at settlement.

45 Days

Question 96

The amount of the borrower’s mortgage payment and the portion that is deposited into the escrow account
Itemized estimated taxes, insurance, and other payments to be made from the escrow account during the computation year
The amount that the servicer has selected as a cushion are all required to be shown in the
A “trial running balance” (the accounting process used to reach target balances over the course of a computation year)

Answer 96

The initial escrow statement

Question 97

Annual escrow account statement: this disclosure is due within

Answer 97

30 days

Question 98

ECOA’s implementing regulations are known collectively as

Answer 98

Regulation B

Question 99

The CFPB is the agency that is primarily responsible for implementing and enforcing

Answer 99

ECOA

Question 100

the Office of Fair Lending and Equal Opportunity is directly responsible for enforcing

Answer 100

the Office of Fair Lending and Equal Opportunity is directly responsible for enforcing

Question 101

Does the FTC also retains some of the authority that it historically held for enforcing the compliance of non-depository lenders, mortgage brokers, and mortgage loan originators with ECOA.

Answer 101

yes

Question 102

ECOA applies to transactions for the extension of credit by any person who regularly

Answer 102

extends, renews or continues credit

Question 103

Does Ecoa also apply to person who “…regularly refers applicants to creditors, or selects or offers to select creditors to whom requests for credit can be made.”

Answer 103

yes

Question 104

Unlike RESPA and TILA, ECOA applies to

Answer 104

extensions of credit for business, commercial, and agricultural use.

Question 105

what is HELOC

Answer 105

Home Equity Line of Credit

Question 106

a creditor’s refusal to offer credit in the amount or according to the terms requested by a loan applicant (with the exception of a successful negotiation of loan terms and conditions between a creditor and an applicant). is known as

Answer 106

Adverse action

Question 107

utilizing a factor, value, or weight that is less favorable to elderly applicants than warranted by the creditor’s experience, or that is less favorable than the factor is known as

Answer 107

Negative factor or value

Question 108

Within ( ) days of receipt of a loan or credit application, lenders must notify consumers in writing of action taken

Answer 108

30 days

Question 109

Where there is more than one applicant for a mortgage loan, Notice of Action Taken is only required to be given

Answer 109

False

Question 110

Notice of Incomplete Application must be given within

Answer 110

30 days

Question 111

A notice of the right to receive a copy of all written appraisals associated with the transaction is required ( ) and must be supplied within ( )days

Answer 111

a transaction involves a mortgage loan that will be secured by a first lien on a dwelling

3

Question 112

A notice of the right to receive a copy of all written appraisals associated with the transaction is required ( ) and must be supplied within ( )days

Answer 112

a transaction involves a mortgage loan that will be secured by a first lien on a dwelling

3 of the loan application

Question 113

A copy of all appraisals and other written valuations is require( ) and is due

Answer 113

When a transaction involves a mortgage loan that will be secured by a first lien on a dwelling

These are due “promptly” after they are completed or at least three business days prior to consummation, whichever is earlier. Borrowers may waive the timing requirement as long as they still receive an appraisal copy at or prior to consummation

Question 114

Are notices of the right to receive a copy of all written appraisals and A copy of all appraisals and other written valuations required for second liens, other subordinate loans, and loans that are not secured by a dwelling (e.g., loans secured solely by land).

Answer 114

no

Question 115

Exceptions to Providing the Appraisal Report Creditors must deliver a copy of an appraisal “promptly upon completion” or three business days prior to consummation, whichever is earlier; Unless

Answer 115

timing requirement may be waived by the borrower, and he or she may agree to receive a copy at or before consummation. In order to do this, the borrower must submit an oral or written request to the creditor three business days prior to consummation

Question 116

If the creditor denies a loan application or the application is withdrawn by the consumer, the obligation to provide copies of valuations still exists. However, the deadline is extended to?

Answer 116

30 days after the date on which the creditor determines the transaction will not proceed

Question 117

The Home Mortgage Disclosure Act (HMDA) is a

Answer 117

federal fair lending law that was enacted with the goal of discouraging redlining

Question 118

after notifying an applicant of action taken or of incompleteness, the creditor must retain the following records:

Any application that it receives
Any information required to be obtained concerning the applicant’s characteristics for the purposes of monitoring ECOA compliance
Any other written or recorded information used in evaluating the application and not returned to the applicant
A copy of:
The Notice of Action Taken
The statement of specific reasons for adverse action taken
Any written statement submitted by the applicant alleging a violation of ECOA or Regulation B

For how long?

Answer 118

25 Months

Question 119

When a creditor adopts a neutral policy without discriminatory intent, and the policy has a discriminatory impact, this is known as

Answer 119

disparate impact, and there is some potential for liability under ECOA

Question 120

ECOA stands for

Answer 120

Equal Credit Opportunity Act

Question 121

what does CCPA stand for

Answer 121

Consumer Credit Protection Act

Question 122

what does TILA stand for

Answer 122

Truth in Lending Act

Question 123

The regulations issued pursuant to TILA are known as

Answer 123

Regulation Z

Question 124

The loans that are covered by TILA are subject to two sets of rules:

Answer 124

those for open-end credit and those for closed-end credit

Question 125

There are three general terms that loan originators will encounter throughout the law and Regulation Z

Answer 125

application, business day, and consummation

Question 126

With regard to transactions for mortgage credit, a complete application includes the following six pieces of information:

Answer 126

The consumer’s name
Social Security Number, which is used to obtain a credit report
Income
The address of the property to secure the loan
An estimate of the value of the property securing the loan
The loan amount sought
(12 C.F.R. §1026.2(a)(3)(ii))

Question 127

One of the primary goals of TILA is the establishment

Answer 127

f uniform standards for stating the cost of credit.