Respa

Question 1

Which of the following is NOT true about an Affiliated Business Arrangement Disclosure Statement?

It must be provided to the prospective borrower at or before the time a third-party service provider referral is made

It must specify the nature of any relationship between a settlement service provider and the referring licensee

The disclosure may be provided instead of the list of third-party service providers from which the borrower can shop for services

A person that has a 2% interest in a settlement service provider to which the person is referring a borrower has an affiliated business arrangement with the referred-to entity

Answer 1

The disclosure may be provided instead of the list of third-party service providers from which the borrower can shop for services

Question 2

Real Estate Settlement Procedures Act (RESPA)
Question
Which of the following would most likely not be considered a federally-related mortgage loan as defined by RESPA?

A. Hard money, privately-placed loan
B. Subprime loan
C. FHA loan
D. Conventional loan

Answer 2

The answer is hard money, privately-placed loan. Federally-related mortgage loans include FHA, VA, or other government-sponsored loans and most conventional loans, purchase loans, assumptions, refinances, and reverse mortgages, and subordinate lien loans. A private mortgage loan would not be considered a federally-related mortgage loan.

Question 3

Real Estate Settlement Procedures Act (RESPA)
Question
Which of the following circumstances is least likely to lead to a determination that two entities are operating a sham affiliated business arrangement under RESPA?

A. The same person owns both entities
B. One entity shares office space with the other entity
C. One entity’s business comes exclusively from referrals from another entity
D. Both entities share the same employees

Answer 3

The answer is the same person owns both entities. An affiliated business arrangement is an arrangement in which a person or his or her associate is in a position to refer real estate settlement service business for a federally-related mortgage loan and has either an affiliate relationship with, or ownership interest of more than 1% in, a provider of settlement services and refers business to or influences the selection of that provider. As ownership in an affiliated business is part of the definition of an affiliated business relationship, such ownership does not necessarily point to a sham operation.

Question 4

Real Estate Settlement Procedures Act (RESPA)
Question
According to RESPA, when would fee splitting be allowed?

A. Never
B. If all parties are licensed
C. If all parties render a service
D. If all parties are employed by different companies

Answer 4

The answer is if all parties render a service. A settlement service provider may charge a borrower a fee only for work performed. RESPA and Regulation X prohibit fee-splitting and receiving unearned fees for services not actually performed. No person may give and no person may accept any portion, split, or percentage of any fee for the rendering of a settlement service in connection with a transaction involving a federally-related mortgage loan unless it is for services actually performed.

Question 5

Real Estate Settlement Procedures Act (RESPA)
Question
A borrower receives a document which contains a list of all closing costs, a disclosure of the borrower credits received on the transaction, an estimate of the cash the borrower needs to bring in to closing, and the sales price. Which of the following best identifies this document?

A. Loan Closure
B. Closing Disclosure
C. Itemization of Amount Financed
D. Loan Estimate

Answer 5

The answer is Loan Estimate. The Loan Estimate provides an “estimate” only of closing costs. The Closing Disclosure sets forth the” actual” costs of the subject mortgage lending transaction in a clear and understandable manner.

Question 6

Real Estate Settlement Procedures Act (RESPA)
Question
Which of the following is not considered one of the six essential pieces of information constituting an application under RESPA?

A. Borrower Social Security Number
B. Loan program
C. Borrower monthly income
D. Loan amount

Answer 6

The answer is loan program. The six essential pieces of a loan application are the borrower’s name, Social Security Number and income, the address of the property which will act as collateral for the loan, the estimated value of the property, and the amount of the loan sought. The loan product for which the applicant is applying is NOT an essential piece of an application.

Question 7

A borrower requesting maximum FHA financing must have a credit score of at least:

640
500
620
580

Answer 7

The answer is 580. An applicant with a credit score of at least 580 can qualify for maximum FHA financing, that being a cash investment of 3.5%. An applicant with a credit score between 500 and 579 can qualify for a cash investment of 10%. A person with a score below 500 is not eligible for an FHA-insured loan.

Question 9

RESPA requires that a Good Faith Estimate (GFE) of loan costs and fees be provided within how many business days of receiving a loan application?
a. 1 day
b. 2 days
c. 3 days
d. 5 days

Answer 9

C- 3 days

Question 10

Which statement about the HUD-1 Settlement Statement is correct?
a. It must be provided at least three days before closing.
b. It is used to itemize and record all charges and credits in a real estate transaction.
c. It only applies to commercial property transactions.
d. It is no longer required under any circumstances.

Answer 10

A- must be provided at least three days before closing

** now replaced with closing disclosure **

Question 11

What type of fees does RESPA specifically prohibit between settlement service providers?
a. Service fees
b. Referral fees
c. Processing fees
d. Application fees

Answer 11

B : referral fees or fee splitting

Question 12

Which term refers to the unauthorized splitting of fees in situations where no actual services are performed?
a. Kickbacks
b. Fee-splitting
c. Unearned fees
d. Double-dipping

Answer 12

C - unearned fees

Question 13

What must be included in the Affiliated Business Arrangement Disclosure?
a. The percentage of ownership interest
b. The name of the referral company only
c. The name of the borrower
d. The credit score of the borrower

Answer 13

A- if an ownership or interest of 1% or more

Question 14

When must the Initial Escrow Account Statement be provided?
a. At the time of application
b. At settlement or within 45 days of settlement
c. Within 3 business days of receiving the loan application
d. At least one day before closing

Answer 14

B : at settlement or 45 days from settlement

If loan is transferred new company has 60 days

Question 15

1. RESPA prohibits lenders from requiring borrowers to use a specific affiliate settlement service provider unless financial incentives are provided.
   
   • True
   • False

Answer 15

True. If you are given 5.99% in order for yes that lender then you are obligated to use them if in return they provide you something such as low apr

Question 16

2. RESPA applies to both open-end and closed-end residential mortgage loans.
   
   • True
   • False

Answer 16

True

Question 17

1. Explain the purpose of the Loan Estimate and when it must be provided to the borrower.

Answer 17

It provides the:
interest rate,
monthly payment and
total closing cost.

Must be given within 3 days of receiving completed application

Question 18

Describe what an Initial Escrow Account Statement must show?

Answer 18

1. amount of mortgage payment and portion deposited into account
   
   2. taxes
   3. cushion amount

Question 19

Q:What does RESPA aim to detect and prevent in the settlement process?

Answer 19

A:Extra or overpriced settlement costs and unearned fees.

Question 20

Q:What practices does RESPA prohibit among settlement service providers?

Answer 20

A:Kickbacks and referral fees

Question 21

What loans are excluded from RESPA?

Answer 21

Agriculture,
business, and
commercial loans,
as well as temporary finance loans, loans secured by vacant land, and loan conversions without new notes.

Question 22

What loans are excluded from RESPA?

Answer 22

Agriculture,
business, and
commercial loans,
as well as temporary finance loans, loans secured by vacant land, and loan conversions without new notes.

Question 23

Q:When must an Initial Escrow Account Statement be provided?

Answer 23

A:At settlement or within 45 days of settlement.

Question 24

Q:When must an Initial Escrow Account Statement be provided?

Answer 24

A:At settlement or within 45 days of settlement.

Question 25

Q:What is the purpose of the Special Information Booklet under RESPA?

Answer 25

To explain the settlement process, borrowers’ rights, and the protections provided by RESPA

Question 26

What is a qualified written request under RESPA?

Answer 26

A request that includes the name of the borrower, information to identify the borrower’s loan, and a description of the error.

Question 27

What type of notice must be given to consumers when the servicing of their loan is transferred?

Answer 27

A Servicing Transfer Statement, also known as a Goodbye Letter, must be provided at least 15 days before the effective date of the transfer.

Question 28

What are the mandatory disclosures related to escrow accounts under RESPA?

Answer 28

A:Initial Escrow Account Statement and Annual Escrow Account Statement.

Question 29

When must the Annual Escrow Account Statement be provided?

Answer 29

Within 30 days of the completion of the escrow account computation year.

Question 30

What are the penalties for RESPA violations related to escrow statements?

Answer 30

Civil penalties include $111 per failure to issue an escrow statement and $223 per intentional failure, with total penalties capped at $223,229.

Question 31

What does the Special Information Booklet include for consumers shopping for an open-end loan?

Answer 31

The brochure titled “What You Should Know about Home Equity Lines of Credit.”

Question 32

Under RESPA, what must the Loan Estimate replace and within what timeframe must it be provided?

Answer 32

The Loan Estimate replaces the Good Faith Estimate (GFE) and must be provided within 3 business days of receiving a completed loan application.

Question 33

What information must the Mortgage Servicing Disclosure Statement include?

Answer 33

Whether the lender intends to service the loan or transfer servicing to another company and how to resolve complaints about the servicing of the loan

Question 34

What steps are involved in the non-judicial foreclosure process?

Answer 34

Serve and record a notice of default at least 120 days before the sale, publish the notice once a week for four consecutive weeks, with last one 20 Days before sale and conduct a public auction

Question 35

When must the Annual Escrow Account Statement be delivered to the borrower?

Answer 35

Within 30 days of the completion of the escrow account computation year.

Question 36

What is the deadline for servicers to respond to a Qualified Written Request (QWR)?

Answer 36

Acknowledge receipt within five days (excluding Saturdays, Sundays, and legal holidays) and respond within 30 to 45 days depending on the request.

Question 37

What is the deadline for servicers to respond to a Qualified Written Request (QWR)?

Answer 37

Acknowledge receipt within five days (excluding Saturdays, Sundays, and legal holidays) and respond within 30 to 45 days depending on the request.

Question 38

When must servicers return funds left in an escrow account after a loan is paid in full?

Answer 38

Within 20 days after the loan is paid in full.

Question 39

When must servicers return funds left in an escrow account after a loan is paid in full?

Answer 39

Within 20 days after the loan is paid in full.

Question 40

When must the Initial Escrow Account Statement be provided by the new servicer if a loan’s servicing is transferred?

Answer 40

Within 60 days of the date on which the servicing transfer occurs.

Question 41

When must the Initial Escrow Account Statement be provided by the new servicer if a loan’s servicing is transferred?

Answer 41

Within 60 days of the date on which the servicing transfer occurs.

Question 42

How frequently must the notice of default be published in the non-judicial foreclosure process?

Answer 42

Once a week for four consecutive weeks, with the last notice appearing at least 20 days prior to the sale.

Question 43

When must live contact be made with a delinquent borrower under RESPA’s servicing rules?

Answer 43

By the 36th day of the delinquency.

Question 44

When must written notice be provided to a delinquent borrower under RESPA’s servicing rules?

Answer 44

No later than the 45th day of the delinquency