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NMLS > The initial application - Chapter 3 > Flashcards

The initial application - Chapter 3 Flashcards

1
Q

What is the difference between a pre-qualification and a pre-approval?

A

A pre-qual is the first step that gives the borrower an idea of how much they would likely qualify. A pre-approval is the second step and a conditional commitment to grant the mortgage.

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2
Q

What is the main purpose of TILA - Reg Z?

A

To protect consumers from predatory lending practices.

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3
Q

what year was TILA created?

A

1968

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4
Q

True/False - Reg Z does not apply to business, commercial, agriculture loans

A

TRUE

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5
Q

Name some of the rules that fall under the TILA umbrella

A 
Dodd-Frank
HOEPA (sec 32)
HPML (sec 35
QM
ATR
LO compensation
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6
Q

What are the penalties for someone who gives false or inaccurate disclosure information, consistently understates the APR, or otherwise fails to comply with Reg Z?

A

fine up to $5000 and or up to 1 year of imprisonment.

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7
Q

True/False - if a rate is advertised, the APR must also be disclosed.

A

TRUE

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8
Q

True/False - If a lender is advertising an adjustable rate credit plan, there does not need to be a mention of the APR.

A

FALSE - the advertisement must say that the APR may increase or is subject to change.

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9
Q

What regulation is the MAP rule? (mortgage acts and practice rule_

A

Regulation N

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10
Q

What is the main purpose of Regulation N?

A

regulate advertising

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11
Q

What year was Reg N established?

A

2011

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12
Q

True/False - it is a violation of the map rule to make any material misrepresentations expressly or by implication in any commercial communication.

A

TRUE

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13
Q

How long must commercial communication be kept to comply with the MAP rules?

A

minimum of 2 years from the date the communication was made to the consumer.

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14
Q

What are the six pieces of information that triggers an application

A 
Property address
Estimated property value
Name of borrower
Social security number to pull credit
Income
Loan amount requested

memory tool - use the acronym “PENCIL”

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15
Q

Which Regulation is HMDA?

A

Regulation C

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16
Q

what is the main purpose of HMDA?

A

To track information and prevent discrimination

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17
Q

Who enforces HMDA?

A

CFPB

18
Q

What regulation is ECOA?

A

Reg B

19
Q

What is the main purpose of ECOA?

A

To prevent discrimination on specified protected classes.

20
Q

Who enforces ECOA?

A

CFPB

21
Q

What are the two comprehensive prohibitions against discriminatory lending practices in ECOA

A

A lender must not discriminate on a prohibited bases
A lender must not make any oral or written statements that would discourage on a prohibited basis a person from making an application

22
Q

True/False - a lender can always inquire about an applicant’s spouse or former spouse

A

FALSE - can only inquire in certain scenarios (relying on spouse’s income, community property state, alimony/child support)

23
Q

How many days must the lender notify the applicant of any action taken on the applicant’s request for credit?

A

30 days

24
Q

ECOA requires that the lender provide an applicant a copy of their appraisal within how many days of consummation?

A

3 days

25
Q

What are the two differences between the Fair Housing Act and ECOA?

A

Fair Housing adds disability to the list of protected classes.
Fair housing applies to all types of housing.

26
Q

What does TRID stand for?

A

Tila Respa Integrated Disclosure.

27
Q

What is the main purpose of TRID?

A

To simplify the disclosure process

28
Q

When was TRID created?

A

2015

29
Q

TRID does not apply to which mortgage transaction?

A

HELOCs

Reverse Mortgages

30
Q

What did the Mortgage Disclosure Improvement Act (MDIA) of 2009 introduce?

A

3/7/3 rule - Disclosures within 3 days of application, can’t close for 7 days business days after app, redicslosure of an inaccurate APR at least 3 days prior to closing.

31
Q

True/False - the LE must be provided to the borrower within 3 business days following the receipt of the application.

A

TRUE

32
Q

TRUE/FALSE - the LE must be delivered no later than 5th business day before consummation of the transaction.

A

FALSE - 7 days before consummation

33
Q

TRUE/FALSE - the final LE must be received by the borrower no less than 4 business days before closing.

A

TRUE

34
Q

What is a zero tolerance Fee?

A

Charges that cannot increase at all between the original disclosure on the LE and the final charge on the CD.

35
Q

What are some examples of zero tolerance fees?

A

Fees paid to the lender
fees paid to a third party if the lender did not permit the consumer to shop for the service
transfer taxes

36
Q

What are some fees that are considered a 10% tolerance fee?

A

recording fees
third party services where the borrower shopped
a service provider on the lender’s written list of service providers.

37
Q

What are some examples of no tolerance fees?

A

prepaid interest
insurance premiums
escrows
services required by the lender, if the borrower shops and picks someone not on the written list of service providers.

38
Q

True/False - The home loan tool kit is another disclosure required by TRID.

A

TRUE - must be provided within 3 business days of application.

39
Q

What is the main purpose of the Electronic Signatures in Global and National Commerce Act?

A

Allows for e-signatures on a mortgage loan document.

40
Q

How often must HMDA data be reported?

A

Quarterly starting in 2020

41
Q

How long must a CD be kept?

A

5 years

42
Q

What is the purpose of the 4506T?

A

Sent to the IRS to confirm the numbers on the tax returns are accurate.
Can help determine if fraud exists.

NMLS (10 decks)

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