TILA

Question 1

T or F

For HELOC advertising, a triggering term stated in the negative as well as the affirmative would trigger additional disclosures.

Answer 1

TRUE

This is only true for HELOC advertising and not other types of loans. For example, if you advertised “no annual fee” for the first year, that would be in the negative and it would trigger the additional disclosures for the HELOCs. But not for home equity LOANS.

Question 2

T or F

A construction loan inspection fee charged during the construction loan phase is a finance charge under Reg Z?

Answer 2

TRUE

Question 3

The term negative amortization should be avoided if the bank originates certain _________________.

Answer 3

high cost closed-end mortgage loans

Question 4

What is definition of a ‘business day’ for the purposes of rescission?

Answer 4

Monday through Saturday excluding federal legal holidays

Question 5

Multiple advance construction loans are considered ______________ for the purposes of calculating an APR.

Answer 5

irregular transaction

Question 6

A creditor must provide affected consumers with a notice that includes a statement that the consumer may reject the change but the consumer’s ability to use the account for further advances will be terminated or suspended when a creditor ________________.

Answer 6

makes a significant change in terms of a credit card account

Question 7

T or F

HELOCs are considered covered transactions for Reg Z ability to repay requirements?

Answer 7

FALSE

Home mortgages are included, but HELOCs, Reverse Mortgages, and Construction Loans are not.

Question 8

T or F,,,, HELOCs must adhere to TRID disclosure requirements?

Answer 8

FALSE,,, Home mortgages are included, but HELOCs, Reverse Mortgages, Timeshares, and Construction Loans are not.

Question 9

T or F

Origination charges are subject to the zero tolerance disclosure standards?

Answer 9

TRUE

Question 10

The Truth in Lending Act (TILA) was implemented through what regulation?

Answer 10

Regulation Z

Question 11

What is the primary purpose of TILA?

Answer 11

to make credit shopping easier for consumers by requiring disclosure of certain credit terms in a meaningful and uniform manner

Question 12

What credit is covered by Reg Z?

Answer 12

credit offered or extended by a creditor that is

• subject to a finance change or payment in more than 4 installments (including payday loans)
• primarily for personal, family, or household purposes
• as specific credit card arrangements that may not meet the first two requirements

Question 13

What is the threshold for exempted Reg Z loans?

Answer 13

credit for an amount more than $54,600 (as of January 1,2015) not secured by real property or a dwelling and not a ‘private education loan’

Question 14

Reg Z disclosures must be provided __________.

Answer 14

before loan consummation

Question 15

For closed end credit, disclosure statements that become inaccurate due to either ___________ or __________ must be redisclosed to the customer no later than _______ before consummation.

Answer 15

* any changed term, unless the original disclosure was based on an estimate and labeled as an estimate,

* all changed terms if the APR changes more than 1/8 of one percent from that which was originally disclosed in a regular transaction or more than 1/4 of one percent in an irregular transaction

*3 business days

Question 16

For closed end loans, what is the definition of application for loans secured by real property?

Answer 16

1) consumer’s name
2) consumer’s income
3) consumer’s social security number
4) property address
5) an estimate of the value of the property
6) the mortgage loan amount sought

Question 17

What mortgage loans are outside of TRID applicability? (‘other mortgages’)

Answer 17

Reverse Mortgages and Chattel dwelling loans

Question 18

For ‘other mortgages’ (and timeshares subject to RESPA), a Good Faith Estimate of the disclosures required by Reg Z must be ________________.

Answer 18

delivered or mailed to the consumer not later than the third business day after the creditor receives the consumer’s written application

Question 19

For timeshares subject to RESPA, an initial Good Faith Estimate of the disclosures required by Reg Z must be ________________.

Answer 19

provided to the consumer not later than the earlier of loan consummation or three business day after the creditor receives the consumer’s application

Question 20

For timeshares subject to RESPA, a corrected Good Faith Estimate of the disclosures required by Reg Z must be ________________.

Answer 20

provided to the consumer at loan consummation or settlement

Question 21

For timeshares subject to RESPA, a ‘business day’ is ________________.

Answer 21

a day in which the creditor’s offices are open to the public for carrying on substantially all of its business functions

Question 22

The creditor must deliver or mail the early estimated disclosures ________________.

Answer 22

not less than the seventh business day before the consummation of the transaction

(7 day waiting period)

Question 23

If the APR becomes inaccurate (outside of established thresholds), when must the creditor must provide corrected disclosures with all changed terms?

Answer 23

the consumer must receive the corrected disclosure no later than 3 business days before consummation

(3 day waiting period)

Question 24

Unless they are delivered in person, corrected disclosures are deemed to be received by the consumer ______________.

Answer 24

three business days after they are mailed

Question 25

What statement is required on all early disclosures (initial and corrected)?

Answer 25

“You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”

Question 26

For the purposes of early disclosure delivery requirements, a ‘business day’ is ______________.

Answer 26

any day the lender is open to the public for conducting substantially all of its business functions

Question 27

Neither the creditor nor any person may impose a fee upon the consumer in connection with an application for a transaction that is subject to RESPA and secured by the consumer’s dwelling before ___________________.

Answer 27

the consumer has received the applicable early disclosure

(bonafide and reasonable credit report fees are exempt)

Question 28

For purposes of early disclosure receipt requirements and waiting periods, a ‘business day’ is ________________.

Answer 28

any calendar day except Sundays and legal holidays specified by law

Question 29

T or F

A consumer may waive the receipt requirements and waiting periods required by Reg Z?

Answer 29

TRUE

In the case of a bonafide personal emergency, a consumer may waive the waiting periods by providing the creditor with a written, dated waiver that describes the emergency and is signed by all consumers who are primarily liable on the transaction.

(A preprinted form may not be used)

Question 30

For variable rate transactions secured by the customers principal dwelling, with a term greater than one year, certain disclosures ___________.

Answer 30

* must be given at the time an application is provided or before the consumer pays a nonrefundable fee, whichever is earlier OR

* for phone or brokered applications, up to 3 business days following the application

Question 31

What are the general disclosure requirements of private education loans?

Answer 31

*certain disclosures must be provided at the time of application

* a disclosure statement must be provided within 3 days of receiving an application

Question 32

Reg Z disclosures must be based ___________.

Answer 32

on the legal obligation between the parties

Question 33

For Reg Z disclosures with demand obligations, disclosures must be based on ____________.

Answer 33

an assumed maturity of one year

(unless a specific maturity date defined)

Question 34

If information on which a Reg Z disclosure is based is unknown, the creditor must ______________.

Answer 34

estimate the information and state that the disclosure is an estimate.

Question 35

What format must Reg Z disclosures be in?

Answer 35

* written

* conspicuous

* segregated

Question 36

T or F

When applications are accessed by the consumer in electronic form, the early home loan disclosures may be provided without regard to the consumer consent provision of E-Sign.

Answer 36

TRUE

Question 37

For closed end non mortgage and ‘other mortgage’ loans, APR should be disclosed more conspicuously and described as ___________________.

Answer 37

“The cost of your credit as a yearly rate”

Question 38

For closed end non mortgage and ‘other mortgage’ loans, an irregular transaction is one that includes one or more of the following:

Answer 38

* multiple advances

* irregular payment periods (other than the first payment period)

* irregular payment amounts (other than the first payment period)

Question 39

What are the APR tolerances for closed end non mortgage loans?

Answer 39

* 1/8 of one percent in a regular transaction

* 1/4 of one percent in an irregular transaction

Question 40

What are the APR tolerances for closed end ‘other mortgage’ loans?

Answer 40

the rate is still considered accurate if the rate results from the disclosed finance charge and that finance charge is either accurate under the rule or accurate under rescission rules

Question 41

For rescindable closed end non mortgage and ‘other mortgage’ loans, the APR and finance charge are considered to be accurate if:

Answer 41

* they are greater than the amounts required to be disclosed OR

* they are understated by no more than the greater of 1/2 of one percent of the face amount of the note or $100 OR

* for ‘other mortgage loans’ they are understated by no more than the greater of one percent of the face amount of the note or $100

Question 42

For closed end non mortgage and ‘other mortgage’ loans, the finance charge must be disclosed ___________________.

Answer 42

* more conspicuously AND

* described as “The dollar amount the credit will cost you.”

Question 43

T or F

Appraisal, investigation and credit report fees are included in the finance charge for ‘other’ mortgage loans?

Answer 43

FALSE

But they are included in closed end non mortgage loans

Question 44

Are application fees that are charged to all applicants regardless of whether or not credit is actually extended considered a finance change on closed end non mortgage and ‘other mortgage’ loans?

Answer 44

NO

Question 45

What is the tolerance for finance charges on closed end non mortgage loans?

Answer 45

* within $5 for amount financed of $1,000 or less

* within $10 for larger transactions

Question 46

What are the tolerances for finance charges on closed end ‘other mortgage’ loans?

Answer 46

$100 for understated finance charges and any amount for overstatements

Question 47

For closed end non mortgage and ‘other mortgage’ loans, the amount financed must be described as _______________.

Answer 47

“The amount of credit provided to you or on your behalf”

Question 48

For closed end non mortgage and ‘other mortgage’ loans, how is the amount financed computed?

Answer 48

* determine the principal loan amount,

* add other amounts financed by creditor that are not finance changes,

* subtract any prepaid finance charges

Question 49

For closed end non mortgage and ‘other mortgage’ loans, the total of payments must be described as ______________.

Answer 49

“The amount you will have paid when you have made all scheduled payments”

Question 50

For closed end non mortgage and ‘other mortgage’ loans, the total of payment is generally the sum of ______________.

Answer 50

the finance charge and the amount financed

Question 51

For closed end non mortgage and ‘other mortgage’ loans, the total sales price is used in _________ and must be described as ____________.

Answer 51

* used in a credit sale

* “The total price of your purchase on credit including your down payment of $____”

Question 52

For closed end non mortgage loans, payment schedule must include:

Answer 52

* number, amount, and timing of payments scheduled to repay the obligation

* exact amount of payments^

* any applicable PMI payments until automatic termination

^ if payment vary based on finance charge, the highest and lowest payment and statement payments are in that range

Question 53

T or F

For closed end non mortgage and ‘other mortgage’ loans, prepayment options must be disclosed?

Answer 53

TRUE

Question 54

For closed end non mortgage and ‘other mortgage’ loans, security interests must be disclosed and include:

Answer 54

* explanation that creditor has or is acquiring a security interest in the property purchased as part of the transaction, or in property specifically identified, as part of the transaction

* any applicable ‘spreader’ clauses

Question 55

For closed end non mortgage and ‘other mortgage’ loans, a variable rate disclosure must be given in ___________________.

Answer 55

all transactions where the APR may increase after consummation.

Question 56

What must be included on the variable rate disclosure for closed end non mortgage and ‘other mortgage’ loans secured with term one year or less.

Answer 56

* circumstances under which the rate may increase

* any limitations on the increase^

* the effect of the increase

* an example of the prepayment terms that would result from an increase

^ if the loan is secured by a dwelling, there must be a limit on the interest rate that can be imposed over the life of the loan

Question 57

For closed end non mortgage and ‘other mortgage’ loans, secured by real property (other than a timeshare), interest rates and payment information must be disclosed:

Answer 57

* in a prominently placed table,

* similar to the model form

* with no more than 5 columns

* in at least 10 point font

Question 58

For closed end non mortgage and ‘other mortgage’ loans, secured by real property (other than a timeshare), interest rates and payment information must include:

Answer 58

* interest rate disclosures outlining,

• amortization
• fixed or adjustable rates
• applicable payment increases,,,, * payment disclosures outlining
• amortization
• how payments will be applied and to what portion of the loan
• balloon payments

Question 59

For the mandatory mortgage loan closing disclosure, the title must be ______________ and the statement of purpose must be ___________.

Answer 59

* ‘Closing Disclosure’

* ‘This form is a statement of final loan terms and closing costs. Compare this document with your Loan Estimate’

Question 60

What are the overall areas required on the mandatory mortgage loan closing disclosure?

Answer 60

* closing information

* transaction information

* loan information

* a table including information that has changes from the Loan Estimate

* loan disclosures

* escrow information

Question 61

What are the loan purpose options on the mandatory mortgage loan closing disclosure?

Answer 61

purchase, refinance, construction or home equity

Question 62

When there are multiple consumers liable on the transaction who must receive disclosures?

Answer 62

It depends on if the loan is rescindable;

• in nonrescindable transactions, only one disclosure statement need be given and may be given to any consumer who has primary liability
• for rescindable transactions, all consumers with the right to rescind must receive

* a copy of the disclosure statement AND

* two copies of the notice of the right to rescind the transaction unless provided by email, in which case only one copy need be sent to each party

Question 63

What post consummation events require disclosures?

Answer 63

*Refinancing

*Assumptions

*Rate Adjustments

Question 64

When do right of rescission disclosure requirements apply?

Answer 64

when the transaction takes a lien on the consumer’s principal dwelling and the loan is not a purchase, acquisition, or initial construction mortgage transaction

Question 65

Does the right of rescission apply to a refinancing by the same creditor?

Answer 65

It depends

(It only applies if new funds advance)

Question 66

When the right of rescission applies, who has the right to rescind and when?

Answer 66

* any person, including any non-borrower, who has an ownership interest in the dwelling being given as collateral and uses it as their principal dwelling

* within 3 business days after the latest of

• consummation
• delivery of the material Truth in Lending disclosures
• delivery of the notice of the right to rescind

Question 67

For the purposes of rescission, a ‘business day’ is _______________________.

Answer 67

all calendar days except Sundays and legal holidays specified by law

Question 68

Until the rescission period has expired, the creditor may not:

Answer 68

* disburse funds other than into a valid escrow account

* perform any services

* deliver any materials

Question 69

During the rescission period, the bank may:

Answer 69

* prepare the loan check

* perfect the security interest

* prepare to discount or assign the contract to a third party

* accrue finance charges, if allowed by state law

Question 70

What is the effect of valid rescission?

Answer 70

* security interest becomes void

* the consumer is not liable for any finance charge

* within 20 days, the creditor must return any money or property given to anyone in connection with the transaction and release any liens or take any other action necessary to reflect the security interest termination

* once the creditor has returned all money and property owed to consumer, the consumer must tender all money and property owed to the creditor

Question 71

When and how can a consumer waive the right to rescind?

Answer 71

* waivers are valid only if there is a bona fide personal financial emergency

* a separate written and dated waiver must be signed by all consumers with a right to cancel

* the waiver must describe the emergency, and the bank cannot use preprinted forms for this purpose

Question 72

Failure to properly provide the right of rescission affords the customer an additional ____________.

Answer 72

three years to rescind the transaction

Question 73

If an ad states a rate of finance charge, it must state the ___________.

Answer 73

annual percentage rate or APR

Question 74

If the rate may be increased after loan consummation, the advertisement must state _________.

Answer 74

this fact

Question 75

In an advertisement for a loan not secured by a dwelling, only the ______ may be stated, except __________.

Answer 75

* APR

* a simple annual rate or periodic rate applied to a balance may be stated in conjunction with, but not more consciously than the APR

Question 76

In an advertisement for a loan is secured by a dwelling, only the ______ may be stated, except __________.

Answer 76

* APR

* a simple annual rate applied to a balance may be stated in conjunction with, but not more consciously than the APR

Question 77

If any triggering term is used in an ad, then the following disclosures are required:

Answer 77

* amount or percentage of down payment (credit sales only)

* terms of repayment which reflect the repayment obligations, including, if applicable, the balloon payment,

* APR, and, if the APR may be increased after consummation, that fact must be stated

Question 78

What are the Reg Z triggering terms?

Answer 78

Amount or percentage of down payment

• number of payments or period of repayment
• amount of payments
• amount of finance charge

Question 79

For ads in catalogs or on multipage or in electronic form, the ad will be considered a single ad if ______________.

Answer 79

the triggering terms clearly reference the page or location of the additional information

Question 80

Ads on television or radio that contain triggering terms may meet the requirements for additional disclosures by either:

Answer 80

* disclosing the additionally required information OR

* disclosing the APR^ and a way to obtain additional information

^ and, if it may increase after closing, that fact

Question 81

What terms are prohibited in advertisements for credit secured by a dwelling?

Answer 81

* misleading use of ‘fixed’

* misleading comparisons

* misrepresenting government endorsements

* misleading use of the lender’s name

* misleading claims of debt elimination

* misleading use of ‘counselor’

* misleading foreign language ads

Question 82

Loan Estimates must be delivered or mailed ____________ and/or __________ and are deemed received __________.

Answer 82

* not later than the third business day after the creditor receives the consumer’s application

* not later than the seventh business day before consummation (excluding timeshares)

* three business days after they are delivered or placed in the mail

Question 83

Mortgage loan disclosure waiting times can be waived if ___________.

Answer 83

* the loan is needed to meet a bonafide personal financial emergency and the consumer has received the early disclosures

* the waiver is a dated written statement^, signed by all consumers who are primarily liable on the obligation, that describes the emergency

^ printed forms for this purpose are prohibited

Question 84

No person may impose a fee on the consumer prior to __________, except ___________.

Answer 84

*the consumer’s receipt of the Loan Estimate and indicated intent to proceed with the transaction

* a bonafide and reasonable fee to obtain a credit report

Question 85

Creditors may not require the consumer to __________ until the Loan Estimate is provided.

Answer 85

verify any application information

Question 86

The Loan Estimate will be deemed to be in good faith if ____________.

Answer 86

the charges paid by the consumer do not exceed the amount disclosed or the allowable tolerances

Question 87

What are the allowable tolerances for disclosed third party charges on the loan estimate?

Answer 87

* the aggregate amount of charges paid by the consumer does not exceed the aggregate disclosed by more than 10 percent

* the charges paid to the third party are not paid to the creditor or an affiliate

* the creditor permits the consumer to shop for the service

Question 88

A creditor may use a revised estimate if a changed circumstance causes the aggregate charges to increase by more than _____ percent.

Answer 88

10

Question 89

A creditor may use a revised estimate if the consumer becomes ineligible for the previously disclosed charge because of a changed circumstance affected the _____________.

Answer 89

consumer’s creditworthiness or value of the security

Question 90

A creditor may use a revised estimate if the interest rate ___________.

Answer 90

was not locked when the estimates were given

Question 91

A creditor may use a revised estimate if the consumer indicates an intent to proceed with the transaction _____________.

Answer 91

more than 10 business days after the disclosures are provided

Question 92

Revised disclosures must be provided within ______________.

Answer 92

three business days of the receipt of information that established the reason for the revision

Question 93

A consumer must receive revised disclosures at least _____________.

Answer 93

four business days prior to the loan consummation

Question 94

Final disclosures on mortgage loans must reflect ___________ and be provided ____________.

Answer 94

* the actual terms of the transaction

* no later than three business days before consummation

Question 95

T or F

The creditor must be the one to provide the mortgage final disclosure to the consumer?

Answer 95

FALSE

Settlement agents may provide the disclosure but creditors are responsible for insuring compliance

Question 96

If disclosures become inaccurate before consummation, the creditor must provide corrected disclosures so that _______________.

Answer 96

the consumer receives them at or before consummation

However, the creditor must permit the consumer to inspect the disclosures at least one business day immediately preceding consummation and may only omit items related to the seller

Question 97

If any of these items becomes inaccurate, new disclosures and a new waiting period is required:

Answer 97

* APR

* loan product changed

* prepayment penalty is added

Question 98

If an event occurs during the 30 days following consummation to the make the final disclosures inaccurate, and the inaccuracy results in a change to an amount actually paid by the consumer, the creditor must _____________.

Answer 98

provide a corrected disclosure no later than 30 days after receiving the information establishing the inaccuracy

Question 99

If an event occurs during the 30 days following consummation to the make the final disclosures inaccurate, and the inaccuracy is from a clerical error on a non-numeric disclosure, the creditor must _____________.

Answer 99

provide the corrected disclosure no later than 60 days after consummation

Question 100

If amounts paid by the consumer exceeds the amounts disclosed in the estimated disclosures in an amount greater than the allowed tolerance, the creditor must _____________.

Answer 100

refund the excess and provide a corrected disclosure that reflects the refund no later than 60 days after consummation

Question 101

T or F

Creditors are allowed to charge consumers average charges for a settlement service?

Answer 101

TRUE

So long as the average charges are calculated per regulatory requirements

Question 102

T or F

No fees may be imposed on any person for the preparation or delivery of disclosures.

Answer 102

TRUE

Question 103

Creditors must provide a ______________ booklet to consumers who apply for a consumer loan secured by real property UNLESS ________.

Answer 103

* RESPA special information

* the loan purpose is not the purchase of a 1 to 4 family residential property

Question 104

The RESPA special information booklet must be mailed or delivered not later than ___________.

Answer 104

three business days after the application is received UNLESS the application is denied within three days

Question 105

In the case of a home equity line of credit, the creditor must provide the consumer with the book ______________.

Answer 105

“When your home is one the Line” or any successor booklet issued by the CFPB

Question 106

T or F

Changes may be made to the required special information booklet?

Answer 106

TRUE

Although changes are specifically limited

Question 107

Loan estimates must include the statement ______________.

Answer 107

“Save this Loan Estimate to compare with your Closing Disclosure”

Question 108

Special requirements apply to all variable rate transactions secured by the consumer’s principal dwelling with a loan term __________.

Answer 108

greater than one year

Question 109

What must be provided to ARM consumers and when?

Answer 109

* Consumer Handbook on Adjustable Rate Mortgages (CHARM) AND

* a loan program disclosure for each ARM loan program in which the consumer expresses an interest

* provided at the time an application form is provided or before a nonrefundable fee is paid (whichever is earlier)

Question 110

ARM loan program disclosures can included which two examples?

Answer 110

* a historical example using $10,000 loan amount and showing how the loans would have been affected by interest rate changes during the past 15 years with the disclosure being revised once an year to update the index OR

* the maximum periodic increase in rates and payment under the program and the initial rate and payment for that loan, along with a statement that the payment may increase or decrease substantially, depending on rate changes

Question 111

What is a High Cost Mortgage?

Answer 111

Loans secured by the consumer’s principal dwelling and in which either an APR-based trigger, a points and fees based trigger, or a prepayment penalty trigger is met

Question 112

What is the APR-based trigger in High Cost Mortgages?

Answer 112

The APR at consummation will exceed the average prime offer rate by more than

• 6.5 percentage points for a first lien transaction OR
• 8.5 percentage points for a first lien transaction if the dwelling is personal property and the loan amount is less than $50,000 OR
• 8.5 percentage points for a subordinate lien transaction

Question 113

What is the points and fees based trigger in High Cost Mortgages?

Answer 113

The total points and fees payable by the consumer at or before loan closing will exceed

• 5% of total loan amount for a transaction with a loan amount of $20,000 or more (adjusted annually) OR
• the lesser of 8% of the total loan amount or $1000 for a transaction with a loan amount of less than $20,000 (adjusted annually)

Question 114

What is the prepayment penalty trigger in High Cost Mortgages?

Answer 114

* the creditor is able to charge a prepayment penalty, more than 36 months after consummation or account opening, OR

* the prepayment penalties can exceed more than 2% of the amount prepaid

Question 115

What transactions are exempt from High Cost Mortgage Rules?

Answer 115

* reverse mortgages

* initial construction of a dwelling

* a transaction initiated by a Housing Finance Agency where the Agency is the creditor

* a transaction originated pursuant to the USDA’s Rural Development Direct Loan Program

Question 116

High Cost Mortgage disclosures must be provided ________________.

Answer 116

at least three business days before the loan consummation

Question 117

What constitutes a ‘business day’ for High Cost Mortgage disclosures?

Answer 117

all calendar days except Sundays and legal holidays specified by law

Question 118

What notice must be included on High Cost Mortgage disclosures?

Answer 118

“You are not required to complete this agreement merely because you have received these disclosures or signed a loan application. If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligation under the loan.”

Question 119

What is the amount borrowed disclosure tolerance for High Cost Mortgage disclosures?

Answer 119

disclosures will be treated as accurate if amount is not more than $100 above or below the amount required to be disclosed

Question 120

T or F

High Cost Mortgages may contain negative amortization.

Answer 120

FALSE

Question 121

T or F

Creditors may increase the interest rate upon default for High Cost Mortgages.

Answer 121

FALSE

An increase in the interest rate after default is prohibited.

Question 122

There is no presumption of compliance for a High Cost Mortgage where the periodic payment ____________.

Answer 122

does not fully amortize the loan

Question 123

A creditor may not extend a high-cost mortgage to a consumer unless the creditor obtains from the consumer a certificate that ____________________.

Answer 123

indicates that the consumer has obtained credit counseling from a HID-certified counselor after the consumer received the good faith estimate or high cost disclosures

Question 124

High Cost Mortgages late payments must be specifically permitted by the terms of the loan contract and cannot exceed ______________ and may not be imposed unless the payment ____________.

Answer 124

* 4% of the past due payment amount

* received after the 15th day after it was due

Question 125

What is a Higher Priced Mortgage Loan?

Answer 125

closed-end consumer transactions secured by the consumer’s principal dwelling with an APR that exceeds the average prime rate for a comparable transaction as of the date the interest rate is set by

• 1.5 or more percentage points for first lien loans that do not exceed the maximum principal balance limit set by Freddie Mac OR
• 2.5 or more percentage points for first lien loans that exceed the maximum principal balance limit set by Freddie Mac OR
• 3.5 percentage points for subordinate lien loans

Question 126

T or F

Creditors must establish escrow accounts before consummation on Higher Priced Mortgages secured by a first lien on the consumer’s principal dwelling.

Answer 126

TRUE

Although there are a few exceptions

Question 127

T or F

A payment is still considered to be a period payment if it does not include later fees or other fees?

Answer 127

TRUE

A periodic payment is an amount sufficient to cover principal, interest, and escrow payments for a billing cycle.

Question 128

For a consumer credit transaction secured by a dwelling, a loan originator must include on the loan documents:

Answer 128

* its name and NMLSR ID

* the name of the individual loan originator and the NMLSR ID

(these must appear on the credit application, the note, and the security instrument)

Question 129

Contracts for consumer closed-end credit secured by a dwelling or a home equity line secured by a principal dwelling, may not include:

Answer 129

* terms that require arbitration or any other non-judicial procedure to resolve controversy or settle claims

* provisions that bar a consumer from bringing a claim in court

Question 130

Mortgage transfer disclosures must be provided to the consumer _______________.

Answer 130

on or before the 30th calendar day following the date of the transfer

Question 131

T or F

Mortgage transfer disclosures must be provided to all consumers liable on the debt.

Answer 131

FALSE

Even if more than one consumer is liable on the debt, only one disclosure must be provided. It must be provided to the consumer who is primarily liable.

Question 132

Mortgage transfer disclosures must include:

Answer 132

* who is transferring

* date of transfer

* who can receive notice of rescission and issues concerning payments

* if the debt may be recorded

* partial payment policy

Question 133

What is the definition of open-end credit?

Answer 133

Consumer credit extended under a plan where;

* repeated transactions re contemplated

* a finance charge is imposed on an outstanding balance, AND

* the amount of credit (less any outstanding balance) generally is made available

(including credit and charge cards)

Question 134

T or F

Charges for terminating an open-end credit plan must be disclosed in writing and in a form the consumer may keep.

Answer 134

FALSE

Question 135

T or F

Reductions in the credit limit of an open-end credit plan must be disclosed in writing and in a form the consumer may keep.

Answer 135

FALSE

Question 136

On home equity open-end plans, the terms ___________ and ___________ must be more conspicuous than other disclosures when required to be disclosed with corresponding amounts.

Answer 136

* finance change

* annual percentage rate (APR)

Question 137

T or F

Periodic statements and advertisements for are excluded from the requirement that home equity open-end plans terms finance charge and APR must be more conspicuous than other disclosures.

Answer 137

TRUE

Question 138

What is the annual percentage rate?

Answer 138

the measure of the cost of credit expressed as a yearly rate

Question 139

What is the APR tolerance for open-end credit?

Answer 139

The APR is accurate if it is not more than 1/8th of one percent above or below the correct APR

Question 140

Open-end account opening disclosures must be provided to the consumer __________.

Answer 140

before the first transaction

Question 141

Charges that are not required to be disclosed in tubular format on open-end plans (not home-secured) may be disclosed after account opening but ____________________.

Answer 141

before the consumer becomes liable for the charge

(provided they are disclosed in a time and manner that the consumer would be likely to notice them)

Question 142

For each periodic rate that may be used to calculate interest in a non-home secured open-end plan, the rate must be expressed as _______.

Answer 142

a periodic rate and APR

Question 143

Open-end periodic statements must generally be mailed or delivered for each billing cycle at the end of which _____________________.

Answer 143

the consumer account has a debit or credit balance of more than $1 or if a finance change has been imposed

Question 144

Credit card account issuers must have reasonable procedures to ensure that periodic payments are mailed or delivered ___________.

Answer 144

at least 21 days prior to the payment due date

Question 145

General credit card account disclosures must include a minimum statement warning stating what?

Answer 145

“Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance”.

Question 146

Open-end annual statement of billing rights must be sent ________________.

Answer 146

* at least once per calendar year, at intervals not less than 6 months nor more than 18 months, either to all consumers or to each consumer entitled to receive a periodic statement OR,

* creditors may send a short-form billing rights statement with each periodic statement

Question 147

For open-end home equity plans, if the creditor prohibits additional credit or reduces the credit limit, a notice must be ________________.

Answer 147

mailed or delivered to each affected consumer not later than 3 business days after the action is taken

Question 148

For open-end plans (that are not home equity plans) if a creditor decreases a consumer’s credit limit, no over the limit fee or penalty rate change be charged for a consumer’s exceeding the new limit UNLESS:

Answer 148

a notice of the new limit was provided orally or in writing at least 45 days before imposing the limit

Question 149

When a credit card issuer imposes any annual or other fee to renew, a notice must be provided _____________.

Answer 149

at least 30 days or one billing cycle (whichever is less) before the mailing of the periodic statement on which the fee will be charged

Question 150

T or F

Open-end home equity plans secured by a consumer’s dwelling are limited to the consumer’s principal dwelling.

Answer 150

FALSE

Question 151

Open-end home equity plan disclosures must be provided to the consumer _____________.

Answer 151

* at the time of the application OR

* if application is not received in person, within three business days of receipt of application

Question 152

Open-end home equity plans with fixed rates must include an example transaction that is _____________.

Answer 152

based on a $10,000 balance using a recent APR, that shows the minimum periodic payment and the time it would take to repay the $10,000

Question 153

Open-end home equity plans with variable rates must include an example transaction that is _____________.

Answer 153

* the minimum payment required when the maximum APR is reached, based on a $10,000 balance and the earliest date it may be imposed, OR

* a historical example based on a $10,000 outstanding principal balance showing how the APR and payments would have been effected by index changes for the past 15 years and including the terms of the plans (such as rate carryover or payment limitations)

Question 154

What items must be bolded in a credit card solicitation and application?

Answer 154

* APR

* Introductory Rate

* Rate that will be effective after the premium initial rate expires

* Fees or other percentage amounts

Question 155

Direct mail credit card disclosures must be accurate as of ____________.

Answer 155

the date of mailing

(APR must be one used within 60 days before mailing)

Question 156

Electronic credit card disclosures must be accurate as of ____________.

Answer 156

the date sent

(APR must be in effect within 30 days before sending)

Question 157

For open-end billing errors, the dispute must be resolved or a written acknowledgement provided to the consumer within _________.

Answer 157

30 days

(if not resolved, creditor must resolve within 2 billing cycles (not to exceed 90 days))

Question 158

If the creditor determines that the consumer owes all or part of the disputed debt, the creditor must:

Answer 158

* notify the consumer that the payment is due and state what is owed

* allow the consumer any grace period allowed in the plan to repay the debt

Question 159

Open-end payments must be credited to the consumers account as of ________________.

Answer 159

the date of the receipt of the payment, except when a delay in crediting does not result in a charge

Question 160

Credit card issuers must _________ to consider an applicant’s income or assets and current obligations.

Answer 160

establish reasonable policies and procedures

Question 161

During the first year of an open-end credit cards plan, the total amount of fees that may be charged __________________.

Answer 161

may not exceed 25% of the credit limit in effect when the plan was opened.

Question 162

All loans secured by a dwelling must have a lifetime rate cap included in any credit contract when:

Answer 162

* a closed-end loan has an APR that may increase after consummation

* an open-end loan when the APR may increase during the plan

Question 163

Regulation Z requires that creditors must keep evidence of compliance for ________________ after disclosures are ____________.

Answer 163

* 2 years

* required to be made or action is required to be taken

Question 164

Records of compliance for closed-end loans secured by a real estate must be retained for __________ after the later of the date of consummation or ______________.

Answer 164

* 3 years

* required to be made or action is required to be taken

Question 165

For all closed-end mortgage loans, the creditor must make a reasonable and good faith determination at or before consummation that the consumer will have ________________.

Answer 165

a reasonable ability to repay the loan according to its terms

Question 166

Qualified Mortgage (QM) APR standards are deemed to comply (safe harbor) if:

Answer 166

*APR is below Reg Z HPML threshold of 1.5% basis points above APOR if secured by first lien OR

* 3.5% if secured by second lien

Question 167

A QM is deemed to have a rebuttable presumption if the ________________.

Answer 167

APR is above threshold (but still a QM)

Question 168

What are the requirements for QM loans?

Answer 168

* no negative amortization or interest only

* no terms longer than 30 years

* no balloon payment (unless ‘smaller creditor’)

* 43% or lower DTI

• according to Appendix Q
• or meets GSE purchase or government-guarantee or insurance test
• points and fees not above threshold (3% for loans above $101,953)

Question 169

What are the general QM small creditor exception requirements?

Answer 169

* total assets of less than $2 billion at end of year AND

* originated 500 or fewer first lien-secured covered transactions (aggregated with affiliates) AND

* extended more than 50% of its total first lien-secured covered transactions on properties located in counties designated either rural or underserved by CFPB

Question 170

T or F

Only rates that can increase after consummation qualify as an ARM?

Answer 170

TRUE

Question 171

ARM loan requirements only apply to loans secured by __________________.

Answer 171

the consumer’s principal dwelling

Question 172

High Priced Mortgage Loan (HPML) requirements only apply to loans secured by __________________.

Answer 172

the consumer’s principal dwelling

Question 173

What loans are excluded as HPML’s?

Answer 173

* non principal dwelling loans

* HELOC’s (not home equity loans)

* reverse mortgages

* bridge loans

* construction-only loans

Question 174

What are the thresholds for HPMLs?

Answer 174

APR exceeds the ‘average prime offer rate’ (APOR) by

* 1.5% basis points if secured by first lien OR

* 3.5% if secured by second lien

Question 175

What are the HPML restrictions?

Answer 175

* cannot make loan without considering borrower’s ability to repay from sources other than the homes value

* prepayment penalties are restricted/prohibited

* escrowing required for property taxes and homeowners insurance for first lien loans

(borrower may be given the opportunity to opt out of escrow after 5 years)

Question 176

What is HOEPA and what loans are covered?

Answer 176

* Home Ownership Equity Protection Act (Section 32 of Reg Z)

* high rate or high fee loans secured by the consumers principal dwelling

(unlike HPML’s HELOC’s are included)

Question 177

What qualifies as a HOEPA high rate?

Answer 177

* APR is 6.5 points over APOR if secured by first lien OR

* 8.5 points over for a first-lien transaction if dwelling is personal property and loan amount is less than $54,600 OR

* a subordinate lien

Question 178

What qualifies as a HOEPA high fee?

Answer 178

Loans total points and fees exceed

*5% of total loan amount of $20,391 or more OR

* 8% of total loan amount or $1020 for loan amount less than $20,391

Question 179

What qualifies as a HOEPA prepayment penalty?

Answer 179

if the prepayment penalty can be charged by more than 36 months out of more than 2%

Question 180

What happens if you have a HOEPA loan?

Answer 180

* additional disclosures (you can loose your home)

* homeownership counseling required (before consummation)

* limitations placed on the loan (fee limitations, etc.)

Question 181

T or F

Reg Z has appraisal prohibitions to ensure the integrity of the appraisal process for home secured loans?

Answer 181

TRUE

Question 182

What are the HPML appraisal restrictions?

Answer 182

* applies to HPML that are NOT QM’s (rebuttable presumptions)

* appraiser must be certified or licensed^

* appraisal must included physical inspection of interior of the property

* transactions less than $25,0000 are exempt

* provide appraisal 2 days before consummation (cannot be waived)

^for flips - must obtain 2nd appraisal at no cost to applicant

Question 183

What are the 3 prohibited practices for loan originator compensation practices?

Answer 183

* receive compensation based on interest rates or points^

* receive compensation from a lender or another party if the originator already received compensation from the consumer

* direct or ‘steer’ a consumer to accept a mortgage loan that is not in the consumer’s interest in order to increase the originator’s compensation

^ can be based on percentage of loan amount

Question 184

Notice of Sale or Transfer must be given to consumers by who and when?

Answer 184

* the new loan owner

* mailed or delivered on or before the 30th calendar day after the date the covered person acquired the loan

Question 185

When must open-end loan change in terms notices be made?

Answer 185

disclosures must be made to the consumer at least 45 days before the adverse change

Question 186

T or F

Credit card accounts do not include a right to set off?

Answer 186

TRUE

unless there is a prior signed agreement

Question 187

What is dwelling for a Home Equity Line of Credit (HELOC)?

Answer 187

1 to 4 family residential structure

Question 188

What is the limit for penalty fees on a credit card?

Answer 188

* $25 (can be higher for repeat violations)

*Can’t be higher than the dollar amount associated with the violation

Question 189

Can credit cards have inactivity fees?

Answer 189

NO

Question 190

Can credit cards have multiple penalty fees for the same transaction or violation?

Answer 190

NO

Question 191

T or F

APR is a triggering rule for all Reg Z credit advertising

Answer 191

FALSE

APR is not a trigger for closed-end credit

Question 192

T or F

A loan change from a fixed rate to a variable rate requires redisclosure?

Answer 192

TRUE

deemed a refi by CFPB and therefore requires new disclosures

Question 193

T or F

Open-end credit has no tolerances that require redisclosure.

Answer 193

TRUE

Question 194

ABC has mailed the Browns their early TILA disclosures regarding a home loan application. When may ABC debit the Browns’ account for an application fee?

Answer 194

No fees can be charged until the Brown’s receive their disclosure. Disclosures are deemed received the 3rd business days after mailing.

Question 195

What finance charge must be disclosed on the itemization of the amount financed?

Answer 195

The only finance charge that must be disclosed on the itemization of the amount financed is prepaid finance charges.

Question 196

In order for a waiver of the right to rescind to be effective, what must happen?

Answer 196

all parties with the right to rescind must sign it, and it must describe the reason for the waiver

Question 197

T or F

Fees that are charged to customers who pay cash cannot be considered a finance charge.

Answer 197

TRUE

Question 198

T or F

A bank must obtain a customers affirmative consent before delivery of an electronic home equity early disclosure?

Answer 198

FALSE

Consent does not need to be received for certain early disclosures or for advertisements.

It also does not need to be obtained for hard copies—only for electronic disclosures.

Question 199

For credit card solicitations disclosing a premium rate, the rate must be at least ______ point type.

Answer 199

16

Question 200

When credit card checks accessing open-end accounts (not home secured) are sent to a borrower and the finance charge terms are different than originally disclosed, when must the disclosures be displayed prominently on the front page of the checks?

Answer 200

When provided more than 30 days after the account is opened

Question 201

T or F

Points paid by the borrower in cash at closing are generally considered to be a prepaid finance charge.

Answer 201

TRUE

Points are considered a finance charge because it represents a payment to the creditor that is a cost of obtaining the credit.

Question 202

A billing error notice must be submitted by the customer ___________________.

Answer 202

within 60 days after the first statement that reflected the error

Question 203

T or F

Open End credit transactions right of rescission applies only to transactions secured by the consumer’s principal dwelling.

Answer 203

TRUE

The right to rescind a transaction is required only in a transaction secured by a consumer’s principal dwelling. Once a notice of the right to rescind is given and the rescission period passes, no additional rights to rescind are granted to the consumer in a home equity plan provided the advances are made in accordance with the plan’s provisions. The exercise of the right to rescind must be in writing to be effective. A consumer cannot rescind orally by telephone. Two notices of the right to rescind must be given to each consumer with an ownership interest in the property securing the account.

Question 204

Prepayment penalties are acceptable in HPML so long as they are limited to ___________.

Answer 204

the first 36 months of the loan

Question 205

What must the bank do after determining no billing error occurred and the consumer owes all or part of the amount in dispute?

Answer 205

The creditor must send a notice to the consumer explaining why the billing error alleged by the consumer is not correct. The creditor must also furnish documentation at the consumer’s request. The consumer must be given any free ride that is normally offered under the terms of the plan, and the creditor must allow the consumer time to pay the amount before reporting it as delinquent.

Question 206

T or F

No disclosures of specific examples are required on open-end accounts other than home equity plans.

Answer 206

TRUE

Question 207

T or F

The initial disclosures provided to the borrower on a home equity plan may be on the application itself and do not have to be in a form the consumer can keep.

Answer 207

TRUE

Question 208

T or F

A billing error includes a charge for an item the quality of which dissatisfied the consumer.

Answer 208

FALSE

But charges for items not purchased or not delivered is included.

Question 209

T or F

TILA requires disclosures regarding limits on the number of interest rate increases in each calendar year.

Answer 209

FALSE

There is no requirement in Regulation Z for the lender to limit the number of interest rate increases in any calendar year. However, a lifetime interest rate cap must be included in the contract and must be disclosed.

Question 210

T or F

A bank must honor a customers request to apply extra payments to certain balances.

Answer 210

FALSE

The bank must apply extra payments to the highest accruing balance. Requests from the consumer on how to apply the payment may be honored at the bank’s discretion.

Question 211

Written credit card applications must be submitted for cardholders that are __________.

Answer 211

under the age of 21

Question 212

T or F

A customer service representative who assists applicants that complete an application and collect application data, but does not have loan authority would be considered a loan originator?

Answer 212

TRUE

Question 213

If the bank determines that the application will be denied within the required three business, early disclosures are _______.

Answer 213

not required to be sent (but the applicant must be notified of the adverse action)

Question 214

If a creditor decreases a consumer’s credit limit, no fee or penalty rate can be charged when a consumer exceeds the new limit, unless _________________________.

Answer 214

a notice of the new limit was provided orally or in writing at least 45 days before imposing the limit

Question 215

What are the requirements when a customer notifies the bank that their credit card periodic statement contains an incorrect amount?

Answer 215

The creditor must either mail an acknowledgment of the error within 30 days or complete its investigation and notify the consumer of its findings within 30 days. The creditor must complete an investigation of the alleged error within two complete billing cycles after receiving notice of the error from the consumer, but in no event more than 90 days. The creditor may not attempt to collect the disputed amount and may not make an adverse credit report concerning the disputed amount until the investigation is complete and the consumer has an opportunity to pay.

Question 216

T or F

All closed-end dwelling-secured loans require that a creditor determine a borrowers ability to repay the loan.

Answer 216

TRUE

Question 217

A card issuer must disclose a minimum payment on a periodic statement for an open-end credit account that is not home-secured by _________________.

Answer 217

disclosing the estimated monthly payment for repaying in 36 months

Question 218

What must a bank do when a customer exercises their right of recession after the customer has removed all of the funds from the account?

Answer 218

Release the lien on the property immediately, then refund to the Smiths the amounts they spent for the title policy and appraisal, and then demand repayment of the loan (without interest)

Question 219

A bank decides to send an advertising piece to consumers in its local community to promote its home equity lines of credit. The ad will be sent via email. What are the APR disclosure requirements?

Answer 219

The rate must be ‘‘reasonably current.’’ For an emailed ad, ‘‘reasonably current’’ is a rate in effect during the 30 days before the transmission of the email.

Question 220

If any triggering terms is used in an ad (including the amount or percentage of the down payment), then ______ and ______ must also be disclosed.

Answer 220

* the APR and terms of repayment

* the amount or percentage of the down payment

Question 221

When a credit card program includes an annual fee that equals a percentage of the average balance of the account during the previous year what must be disclosed?

Answer 221

the initial application or solicitation either the fee amount or the percentage amount and identify the amount against which the percentage is based

Question 222

T or F

A loan to purchase a principal residence, secured by the residence is a closed-end loan subject to the right of recession?

Answer 222

FALSE

In any transaction where a security interest will be taken in a consumer’s principal dwelling and where the loan is not exempt under 1026.23(1)(f), each consumer with an ownership interest in the home has the right to rescind the transaction. A loan to purchase a principal residence secured by the residence is exempt because it is a residential mortgage transaction, meaning it is used to purchase or construct the dwelling. However, a home improvement loan for the borrower’s principal dwelling, secured by the dwelling would be subject to the right of recession.

Question 223

T or F

TRID disclosures are not template based, they are dynamic in construction and content and based upon loan program and other terms.

Answer 223

TRUE

only the applicable disclosure sections should be delivered

Question 224

T or F

The 7 days waiting period only applies to the original loan estimate and not any revised loan estimates.

Answer 224

TRUE

Question 225

T or F

Tolerances do not have to be refunded if the customer was not actually harmed (actually paid the fees).

Answer 225

FALSE

It does not matter if the consumer actually is harmed, if the tolerances require a refund, the refund must be what was disclosed not what was actually paid

Question 226

Revised loan estimates must be provided within ___________ from the event that gave rise to the revision

Answer 226

3 business days

(no new 7-day period after a revised loan estimate is provided)

Question 227

T or F

The buyer must receive the closing disclosure no later than 3 business days before consummation.

Answer 227

TRUE

Note: received not sent like what is allowable with the loan estimate