Other Federal Laws and Regulation Flashcards
A mortgage loan in the amount of $18,000 is a high-cost home loan if it has points and fees that exceed:
A.5% of the loan amount
B.6% of the loan amount
C.$1,305
D.$1,195
The answer is $1,305. A loan may be a high-cost home loan if it exceeds a points and fees threshold.
For a transaction like this one, which has a loan amount of less than $26,092, the loan is high-cost if its points and fees equal the lesser of 8% of the total loan amount or $1,305. In this case, $18,000 × 8% = 1,440. $1,305 is less than 8% of the loan amount, meaning that if its points and fees exceeded $1,305, it would be high-cost.
Which of the following is not a requirement of the E-Sign Act?
A.Establish a process for withdrawing consent to e-delivery of documents
B.Establish a process to ensure that the consumer is able to use applicable technology
C.Provide notice to consumer of their right to receive documents in paper form
D.Obtain written consent from consumer to utilize electronic signatures
The answer is obtain written consent from consumer to utilize electronic signatures. The E-Sign Act allows for the use of electronic records to satisfy any law, regulation, or rule that requires information be provided in writing, as long as the consumer consents to electronic delivery. The consumer must be advised that he or she has the option to receive information in a non-electronic form, the right to subsequently opt out of electronic delivery, and the right to be provided with information about the hardware and software required to allow him or her to access and retain the electronic records. The consumer’s consent to electronic delivery must be provided in a way that reasonably shows that he or she can access information in the electronic form that will be used.
The MAP Rule addresses:
A.Specific requirements regarding representations made in mortgage advertising
B.Specific disclosure requirements for closing costs
C.Specific requirements regarding e-signatures
D.Specific requirements regarding disclosure of the APR
The answer is specific requirements regarding representations made in mortgage advertising. The Mortgage Acts and Practices Rule (MAP Rule or Regulation N) sets forth advertising regulations under which it is prohibited for any person to make a material misrepresentation in any commercial communication regarding any term of any mortgage credit product.
All of the following are mortgage loans subject to coverage under the Home Mortgage Disclosure Act, except:
A.A loan to purchase a condominium unit
B.A home improvement loan made for the purpose of repairing, rehabilitating, or remodeling a dwelling
C.A home equity loan secured by unimproved land
D.A loan to purchase a mobile home or multi-family dwelling
The answer is a home equity loan secured by unimproved land. Loans subject to the Home Mortgage Disclosure Act (HMDA) include, broadly speaking, home purchase loans for any residential dwelling, home improvements loans made for the purpose of repair, rehabilitation or remodeling a dwelling, and refinance loans of a loan previously covered by HMDA. HMDA excludes, among numerous other transactions, home equity loans secured by liens on unimproved land.
Which of the following is required to be reported under the BSA?
A.Currency transactions exceeding $10,000
B.All mortgage loans exceeding $100,000
C.All currency transactions
D.Currency transactions less than $5,000
The answer is currency transactions exceeding $10,000. The Bank Secrecy Act requires a financial institution to report to the Financial Crimes Enforcement Network (FinCEN) single or structured currency transactions that exceed $10,000. Such a report must be made on a Currency Transaction Report and filed within 15 days following the day on which the reportable transaction occurred.
Which of the following best describes the Homeowners Protection Act?
A.Regulates higher-priced mortgage loans
B.Sets forth Section 32 loan rules
C.Establishes PMI requirements
D.Implements the Home Ownership and Equity Protection Act
The answer is establishes PMI requirements. The provisions of the Homeowners Protection Act regulate when and how a homeowner may cancel and/or terminate private mortgage insurance.
Under the Telemarketing Sales Rule, which of the following is true about an established business relationship?
A.It is a relationship between a company and a consumer, based on a consumer’s inquiry about an offered product or service within three months immediately preceding the date of a telemarketing call
B.If a company and a consumer have an established business relationship, the company is never prohibited from making telemarketing sales calls to the consumer
C.An established business relationship only exists if a consumer has purchased goods or services from the company
D.An established business relationship would exist if a consumer made an inquiry of the company within six months of a telemarketing phone call
Including misrepresentations regarding the amount of credit available to a borrower in an advertisement is specifically prohibited by:
A.RESPA
B.The HMDA Rule
C.The MAP Rule
D.ECOA
The answer is MAP Rule. Pursuant to the Mortgage Acts and Practices Rule (MAP Rule) and Regulation N, it is prohibited for a licensee to make a misrepresentation in an advertisement with regards to the amount of credit available to a borrower.
Which of the following would not need to be contained in a privacy notice?
A.Categories of information collected
B.Categories of affiliates with whom information is shared
C.Names of affiliates with whom information is shared
D.Categories of information disclosed
The answer is names of affiliates with whom information is shared. A privacy notice must clearly, conspicuously, and accurately state the company’s privacy practices, including what information the company collects and discloses about its consumers and customers, the types of entities with which it shares the information, and how it protects or safeguards the information.
Under the PATRIOT Act, covered entities must have a CIP, which stands for:
A.Customer Identification Program
B.Consumer Identification Protocol
C.Corrected Information Protocol
D.Correspondent Information Program
The answer is Customer Identification Program. The PATRIOT Act requires covered entities to have and use Customer Identification Programs, or CIPs, to help verify consumer identities and combat identity theft, money laundering, and terrorist financing activities.
HMDA can best be described as:
A.A reporting law meant to discover discrimination by lenders
B.Homeowners Mortgage Delinquency Act
C.A section of RESPA which limits the amount of money that can be held in a borrower’s escrow account
D.A federal statute which states that borrowers have a right to a free copy of their credit report every 12 months
The answer is a reporting law meant to discover discrimination by lenders. The Home Mortgage Disclosure Act (HMDA) was enacted because of credit shortages in certain urban neighborhoods and the failure of certain financial institutions to provide adequate home financing to qualified applicants on reasonable terms. Its provisions allow for the determination of discriminatory lending patterns and to assist in enforcing fair lending laws.
Under the Financial Privacy Rule of the Gramm-Leach-Bliley Act, a customer of Big Box Bank is entitled to a privacy notice:
A.At the time they obtain a financial product from the bank and annually thereafter
B.At any time the bank provides nonpublic personal information to a nonaffiliated third party
C.Every six months
D.Annually
The answer is at the time they obtain a financial product from the bank and annually thereafter. A consumer is an individual who obtains or has obtained a financial product or service from a financial institution for personal, family, or household reasons. A consumer who has a continuing relationship with the institution is considered to be a customer; a customer is entitled to a privacy notice at the time a financial product is obtained and automatically every year for as long as the relationship lasts.
At what point during a transaction may a consumer withdraw their consent to receive disclosures electronically?
A.After the initial consent but before actual delivery of the documents
B.After the initial consent but before e-signatures are placed on documents
C.A consumer may not withdraw consent once it has been given
D.Any time during the transaction
The answer is any time during the transaction. Pursuant to the E-Sign Act, a borrower may withdraw consent to receive documents electronically at any time during the course of the transaction. If a consumer later withdraws consent to electronic delivery, the validity or enforceability of an existing contract made prior to the withdrawal of consent may not be affected.
The Disposal Rule, a part of the Fair and Accurate Credit Transactions Act, is intended to prevent:
A.Abuse of covered loans
B.Predatory use of prepayment penalties
C.Abuse of mandatory arbitration clauses
D.Acts of fraud such as identity theft
The answer is acts of fraud such as identity theft. The Disposal Rule seeks to protect the privacy of consumer information and reduce the risk of fraud and identity theft. Under the Rule, businesses are required to take reasonable and appropriate measures to dispose of sensitive information derived from consumer reports and records to protect against “unauthorized access to or use of the information.
The Disposal Rule, a part of the Fair and Accurate Credit Transactions Act, is intended to prevent
The Disposal Rule, a part of the Fair and Accurate Credit Transactions Act (FACTA), is intended to prevent identity theft and protect consumer privacy by requiring businesses and individuals to properly dispose of sensitive information derived from consumer reports. This rule mandates that any entity that uses consumer reports for a business purpose must take reasonable measures to dispose of them securely. This includes documents and electronic files containing personal information such as Social Security numbers, credit histories, and other private data. By ensuring that this information is effectively destroyed, the Disposal Rule aims to reduce the risk of unauthorized access and misuse of personal information, thereby helping to safeguard consumers against identity theft and fraud.
