TRID

Question 1

Which of the following closed-end loans is subject to the right of rescission?

a. A loan to purchase a vacation home, secured by the vacation home itself
b. A loan to purchase a principal residence, secured by the residence
c. A loan to purchase furniture for use in a principal dwelling, secured by the furniture
d. A home improvement loan for the borrower’s principal dwelling, secured by the dwelling

Answer 1

d. A home improvement loan for the borrower’s principal dwelling, secured by the dwelling In any transaction where a security interest will be taken in a consumer’s principal dwelling and where the loan is not exempt, each consumer with an ownership interest in the home has the right to rescind the transaction. The loans to purchase a vacation home and purchase furniture are not covered because they do not involve a consumer’s principal dwelling. The loan to purchase a principal dwelling is exempt because it is a residential mortgage transaction, meaning it is used to purchase or construct the dwelling.

Question 2

For how long may consumers exercise the right to rescind transactions in closed-end loans?

a. Three years after the consummation of the transaction
b. Three calendar days after the consummation of the transaction or the receipt of notice of the right to rescind, whichever is later
c. Three business days after the later of the consummation, delivery of notice of the right to rescind, or delivery of the required disclosures
d. Three business days after the receipt of the early disclosures

Answer 2

c. Three business days after the later of the consummation, delivery of notice of the right to rescind, or delivery of the required disclosures. This is the rule for a normal transaction. The consumer will have the right to rescind the transaction for three years after the consummation of the transaction if the lender fails to give the required disclosures or the rescission notice to the consumer in the rescindable transaction.

Question 3

Which of the following disclosures is NOT required on the itemization of the amount financed?

a. The amount of proceeds distributed directly to the borrower
b. The amounts paid to others on behalf of the borrower
c. An itemization of the various types of finance charges
d. The persons to whom amounts are paid on the borrower’s behalf

Answer 3

c. An itemization of the various types of finance charges

The only finance charge that must be disclosed on the itemization of the amount financed is prepaid finance charges. No other types of finance charges are disclosed on this form. The other choices are required disclosures for the itemization of the amount financed.

Question 4

Borrower A has a variable rate loan secured by his principal dwelling for a term of 10 years. Which of the following is NOT a TIL requirement for his loan?

a. Providing a variable rate disclosure of certain terms of the loan program at the earlier of the application time or before a nonrefundable fee is paid.
b. Limiting the number of interest rate increases in each calendar year.
c. Including an interest rate cap in the loan contract.
d. Providing a consumer handbook on ARMs to the borrower.

Answer 4

b. Limiting the number of interest rate increases in each calendar year. There is no requirement in Reg 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 5

The State National Bank credit card program includes an annual fee that equals a percentage of the average balance of the account during the previous year. Of the following statements, which is true regarding the TIL requirements applicable to this fee?

a. TIL prohibits charging a fee based on a percentage of a balance.
b. The bank must disclose in the initial application or solicitation either a fee amount or the percentage amount and identify the amount against which the percentage is based.
c. The consumer must affirmatively agree in writing to pay this fee before the bank can charge it.
d. The bank must give the consumer 30 days’ notice every year before the fee is charged and allow the consumer to cancel the account before it is assessed.

Answer 5

b. The bank must disclose in the initial application or solicitation either a fee amount or the percentage amount and identify the amount against which the percentage is based.

Question 6

Which statement is NOT true regarding the application disclosure made by the lender on a home equity plan?

a. Disclosure must be made at the time the application is provided
b. Disclosure must be in a form the borrower can keep.
c. Disclosure must describe the security interest and warn that in the event of default the borrower could lose the dwelling.
d. Disclosure must describe payment terms.

Answer 6

b. Disclosure must be in a form the borrower can keep. The initial disclosures provided to the borrower on a HELOC may be on the application itself and do not have to be in a form the consumer may keep.

Question 7

In an open-end account that is NOT a home equity plan, which of the following does NOT have to be provided to the consumer?

a. An initial disclosure statement
b. A brochure with a transaction example of a $1,000 balance for six months
c. A periodic statement
d. A statement of billing rights

Answer 7

b. A brochure with a transaction example of a $1,000 balance for six months No disclosures of specific examples are required on open-end accounts other than home equity plans. The disclosures described in the other choices are required.

Question 8

When must a notice be received from a consumer in order to be considered a “billing error notice”?
a. Within 30 days after the transaction that is subject of the alleged error.

b. Within 90 days after the first statement that reflected the error.
c. Within 60 days after the transaction that is subject of the alleged error.
d. Within 60 days after the first statement that reflected the error.

Answer 8

d. Within 60 days after the first statement that reflected the error.

Question 9

Which statement is true regarding a consumer’s right to rescind an open-end credit transaction?

a. Right of rescission applies only to transactions secured by the consumer’s principal dwelling.
b. Right of rescission applies separately to each advance of funds made under a home equity plan.
c. Right of rescission can be made orally or in writing.
d. Notice of right of rescission is made only to the primary borrower.

Answer 9

a. Right of rescission applies only to transactions secured by the consumer’s principal dwelling. 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 10

When a bank makes a rescindable closed-end home improvement loan to a consumer, to which of the following may the bank advance funds before the end of the rescission period?

a. To the borrower
b. To the contractor for delivery of materials
c. To an escrow account with a third-party escrow agent
d. To an escrow account with the borrower acting as the escrow agent

Answer 10

c. To an escrow account with a third-party escrow agent Until the rescission period has expired and the creditor is reasonably certain that the consumer has not exercised his right to rescind, the creditor may not disburse any loan proceeds except into escrow. The escrow agent or trustee on the escrow account cannot be the consumer.

Question 11

First National bank agreed to make a rescindable closed-end home improvement loan to Mr. and Mrs. Smith. The Notice of the Right to Rescind was given to the Smiths on Tuesday at the closing of the loan along with the material disclosures. The Smiths purchased a title policy and paid for a property appraisal for the bank in connection with the transaction. A lien was filed against the Smiths’ home on Tuesday afternoon. The bank funded the loan on Friday morning at the request of Mr. Smith by crediting the Smiths’ joint checking account with the loan proceeds. On Friday afternoon, Mrs. Smith had a change of heart concerning the transaction and deposits a rescission notice in the mail to the bank. The bank receives the notice on Tuesday morning. All funds have been withdrawn from the account. What should the bank do?

a. Notify the Smiths that the loan proceeds are immediately due and payable and that once the funds are repaid, the lien on the property will be released
b. 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 for the loan (without interest).
c. Release the lien on the property immediately, and then send a written request to the Smiths asking for repayment of the loan proceeds (without interest).
d. Send a letter to the Smiths explaining that because the rescission notice was not sent within the proper time period, it is ineffective and the loan is still valid.

Answer 11

b. 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 for the loan (without interest). If the consumer rescinds before midnight of the third business day after the later of (1) consummation, (2) receipt of the notice of the right to rescind, or (3) the receipt of the material disclosures, the rescission is effective. In this case, the last day to rescind would have been Friday at midnight. Therefore, Mrs. Smith’s rescission notice was effective, and the transaction was properly rescinded. Once a transaction is rescinded, the creditor must release any lien within 20 days and tender to the consumer any amounts paid in connection with the transaction, even though the money may not have represented profit to the creditor. in this case, the cost of the title policy and appraisal would have to be refunded by the bank. Once the creditor has fulfilled these responsibilities, the consumer must tender any funds advanced to him or her. The bank should have been careful not to fund the loan until it was reasonably sure the borrowers had not rescinded it.

Question 12

A consumer customer reports to First National Bank’s credit card department that his credit card periodic statement contains an amount that is incorrect. What should the bank do?

a. Begin an investigation of the alleged error but require the consumer to pay the disputed amount pending the completion of the investigation
b. Conduct an investigation and mail within 30 days an acknowledgment of the error notice, a correction of the error, or a notice that there is no error
c. Complete an investigation of the error in no more than 60 days
d. Conduct a reasonable investigation of the alleged error and report the disputed amount to the credit bureau as delinquent

Answer 12

b. Conduct an investigation and mail within 30 days an acknowledgment of the error notice, a correction of the error, or a notice that there is no error 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 2 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 action report concerning the disputed amount until the investigation is complete and consumer has an opportunity to pay.

Question 13

If a bank completes an investigation of an alleged billing error and determines that no billing error occurred and the consumer owes all or part of the amount, what must the bank do?

a. Immediately report to the credit bureau the amount that was the subject of the investigation as delinquent
b. Disallow any free-ride period normally given to the consumer on the account for amounts owing periodically and require the consumer to make the payment immediately
c. Send the consumer a notice that explains why no billing error occurred
d. Require the consumer to produce documentation for any future billing notices

Answer 13

c. Send the consumer a notice that explains why no billing error occurred 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 14

Which of the following situations is NOT considered a billing error?

a. The failure to credit a payment.
b. The inclusion of a charge for an item not purchased by the consumer.
c. The inclusion of a charge for an item the quality of which dissatisfied the consumer.
d. The inclusion of a charge for an item delivered to the wrong location.

Answer 14

c. The inclusion of a charge for an item the quality of which dissatisfied the consumer. This section does not cover disputes related to the quality of an item or service the consumer received.

Question 15

For which disclosure must a bank obtain a customer’s affirmative consent before delivery?

a. A hard copy of a right-to-cancel notice.
b. An electronic credit card application disclosure.
c. An electronic disclosure statement on a car loan.
d. An electronic home equity early disclosure.

Answer 15

c. An electronic disclosure statement on a car loan. 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 16

What must a married couple do to waive their right of rescission on their residential property?

a. Call the bank’s toll-free telephone number
b. Obtain the loan officer’s written approval
c. Sign the bank’s standard waiver form
d. Sign a written statement indicating the reason for the waiver.

Answer 16

d. Sign a written statement indicating the reason for the waiver. In order for a waiver of the right to rescind to be effective, all parties with the right to rescind must sign it, and it must describe the reason for the waiver

Question 17

A creditor receives a phone application for a HELOC. Before the time period for mailing out the early disclosure and the Reg Z-mandated brochure, the creditor reviews the applicant’s credit history and discovers the applicant will not qualify for the LOC due to a bankruptcy filing last year. Which of the following BEST describes how Reg Z treats this situation?

a. The creditor may wait and send the early disclosures and brochure with the AAN required by Reg B.
b. The early disclosures and brochure must be sent out within the required time period after receipt of the telephone application, even if the loan is declined within that period.
c. If the credit denial was made within 30 days after receipt of the telephone application, the creditor does not have to send the early disclosures and brochure.
d. If the credit denial was made within the period of time Reg Z allows for mailing the early disclosures and brochure, the creditor does not have to send the early disclosures or the brochure.

Answer 17

d. If the credit denial was made within the period of time Reg Z allows for mailing the early disclosures and brochure, the creditor does not have to send the early disclosures or the brochure. If the bank determines that the application will be denied within the three business days and notifies the applicant, the early disclosures are not required.

Question 18

In determining a prepaid finance charge for a final APR calculation, a compliance officer notes an unusual settlement agent fee. What should the compliance officer FIRST determine?

a. Whether the fee will be prepaid
b. Whether the fee is a service, transaction or delivery fee
c. Whether the fee is charged in a comparable cash transaction
d. Whether the loan will be secured by a dwelling or a residential mortgage transaction

Answer 18

c. Whether the fee is charged in a comparable cash transaction Fees that are charged to customers who pay cash cannot be considered a finance charge.

Question 19

On Jan 10, ABC Bank decides to send an advertising piece to consumers in its local community to promote its HELOC. The ad will be sent via email. The bank’s HELOC has an interest rate based upon the national prime rate plus a 5% margin. However, the bank is offering a lower promotional interest rate that is fixed for 6 months. In the ad, the bank plans to disclose the promotional rate and the fact that it is valid for 6 months from the date of loan closing. The bank will also need to disclose an actual APR charged on this product during the previous November. Additionally, the ad will include a list of all the fees required to close the loan and the maximum APR that can be charged under the plan. Will this ad meet TILA requirements?

a. Yes, all required disclosures have been made
b. No, the ad must include the fact that a security interest will be taken on the consumer’s home.
c. No, the ad must include the specific index and margin upon which the rate is based.
d. No, the ad must disclose a rate used during the 30 days before the date the ad is transmitted.

Answer 19

d. No, the ad must disclose a rate used during the 30 days before the date the ad is transmitted. 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 20

Which of the following features is acceptable in a high-cost mortgage loan?

a. A late fee constituting 5% of the amount past due
b. A payment schedule that allows for negative amortizations
c. A prepayment penalty provision effective for the first year of the loan.
d. An unconditional demand clause.

Answer 20

c. A prepayment penalty provision effective for the first year of the loan. Prepayment penalties are acceptable as long as they are limited to the first 36 months of the loan.

Question 21

If a loan is to be secured by a consumer’s principal dwelling, which of the following actions is prohibited with regard to an appraiser?

a. The banker does not understand the comparable values in an appraisal and asks the appraiser to clarify the information.
b. The banker tells the appraiser that the appraisal will need to show that the property is worth at least $100,000, or the bank will not be able to make the loan.
c. The banker notices that there is a factual error in the appraisal and asks the appraiser to correct it.
d. The banker refuses to pay for an appraisal submitted past the date that the appraiser agreed to provide it.

Answer 21

b. The banker tells the appraiser that the appraisal will need to show that the property is worth at least $100,000, or the bank will not be able to make the loan. A banker’s disclosure to the appraiser of the minimum required property value necessary to approve the loan is considered an attempt to influence or encourage the appraiser to value the property at least that amount.

Question 22

How must a card issuer disclose a minimum payment on a periodic statement for an open-end credit account that is not home-secured?

a. By disclosing the actual repayment for the consumer’s account balance, rate, and terms over the remaining term of the account
b. By providing a toll-free telephone number that will respond with a generic payment example
c. By disclosing the estimated monthly payment for repaying in 36 months
d. By disclosing several generic examples that could apply to the consumer’s account

Answer 22

c. By disclosing the estimated monthly payment for repaying in 36 months

Question 23

Which of the following charges is generally considered to be a prepaid finance charge?

a. Points paid by the borrower in cash at closing
b. An application fee of $250 paid in cash at the time of application and collected from all applicants whether or not the application is approved
c. A $300 fee for an appraisal in a real estate transaction
d. A $750 fee for a title policy in a real estate transaction

Answer 23

a. Points paid by the borrower in cash at closing This fee is a finance charge because it represents a payment to the creditor that is a cost of obtaining credit. The other fees are specifically exempt from the definition of finance charge. Application fees charged to all applicants, whether or not credit is actually granted, are not finance charges. The purpose of the fee is to cover the costs of services performed in processing the loan application. The other choices are for services performed in connection with a real estate loan and are excluded from the definition of finance charge.

Question 24

Which of these transactions requires the earliest disclosure?

a. A $60,000 loan with a variable interest rate to purchase part of a municipal bond issue
b. A $15,000 closed-end loan with a fixed interest rate to build a swimming pool at the borrower’s residence
c. A $150,000 loan with a fixed interest rate to purchase a residence.
d. A $200,000 loan with a variable interest rate to purchase a residence

Answer 24

d. A $200,000 loan with a variable interest rate to purchase a residence An adjustable rate mortgage (ARM) program disclosure must be given at the time of the application when the loan will be made to purchase the borrower’s principal dwelling and will have a variable interest rate. The $60,000 loan to purchase part of a municipal bond issue with variable interest rate is not a covered transaction because it is more than $53,000 (as adjusted annually) and is not secured by real estate. The $15,000 loan to build a swimming pool at the borrower’s residence with a fixed interest rate only requires disclosures before consummation. The $150,000 loan to purchase a residence with a fixed interest rate requires the first disclosure to be made within 3 business days of the application.

Question 25

If an advertisement for a lender's mortgage loan product states that "we offer 15- and 30-year loans," what additional disclosures are required by Regulation Z? a. The terms of repayment, amount of the down payment (in a credit sale), and the APR. b. The APR and an example based on a $10,000 purchase price c. The monthly payment amount based on a $10,000 purchase price and a maturity recently offered by the bank d. No additional disclosures are required.

Answer 25

a. The terms of repayment, amount of the down payment (in a credit sale), and the APR. If any triggering terms are used (including the amount or percentage of the down payment), then the APR and terms of repayment and the amount or percentage of the down payment must also be disclosed.

Question 26

For how long must a lender retain evidence of compliance with TILA? a. One year following consummation of the transaction for all transactions. b. 25 months from the date of the application, except for mortgages, which have a 5 year retention requirement. c. 6 months from the date the loan is repaid, except for mortgages, which have a 5 year retention requirement d. 2 years after the disclosures are required to be made, except for mortgages, which have a 5 year retention requirement.

Answer 26

d. 2 years after the disclosures are required to be made, except for mortgages, which have a 5 year retention requirement.

Question 27

Which of the following statements is true regarding the requirement that a creditor determine a borrower's eligibility to repay the loan? a. Applies only to loans secured by the consumer's principal dwelling b. Applies only to higher-priced loans c. Applies to HELOCs d. Applies to all closed-end dwelling-secured loans

Answer 27

d. Applies to all closed-end dwelling-secured loans

Question 28

Which of the following is a "loan originator?" a. The office manager of a manufactured home retail center who does not accept applications from customers b. A bank teller who distributes preprinted home loan rate sheets to customers who inquire c. A customer service representative who assists applicants that complete an application and collect application data, but does not have loan authority d. A real estate broker who refers prospective pruchasers to a mortgage company

Answer 28

c. A customer service representative who assists applicants that complete an application and collect application data, but does not have loan authority

Question 29

Which of the following is NOT a required disclosure on a loan secured by a dwelling? a. APR b. Interest rate c. GMI d. A statement that there is no guarantee the loan can be refinanced

Answer 29

c. GMI All of the alternative answers are required except for c. GMI is collected on the application. It is not disclosed on the TILA disclosure.

Question 30

Sam owes a balance of $5,000 on his credit card account at Bank B. His minimum payment is $150 per month. $1,000 of his balance is accruing interest at 3% (a promotional rate); the remaining balance is accruing interest at 14%. Sam received a bonus at work and submitted an additional payment of $500 on his account this month. Which statement is true regarding the bank's responsibility for applying the extra payment? a. If Sam specifies the balance to which the extra payment should be applied, the bank must honor his request b. The bank should apply the extra payment to the balance accruing at the 14% rate c. The bank may apply the extra payment at its own discretion d. The bank should pay off the oldest credit first, regardless of the interest rate

Answer 30

b. The bank should apply the extra payment to the balance accruing at the 14% rate 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 31

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? a. When provided at the time the account is opened b. When provided more than 30 days after the account is opened c. When provided in the same envelope as the credit card d. When provided more than 10 days after the account is opened.

Answer 31

b. When provided more than 30 days after the account is opened

Question 32

If a bank is charging a premium rate in a credit card solicitation, how must it disclose this rate? a. In bold type and underlined b. In a different color ink c. In a different font d. In 16 point type

Answer 32

d. In 16 point type

Question 33

A bank's compliance officer received a complaint from a credit card customer indicating that she received her credit card statement and noted that her credit limit had been reduced to less than the balance she owes. She claims that she was charged an over-the-limit fee before she was informed. The compliance officer reviewed the statement and determined that the customer was correct. If the bank determined that the credit limit should be lowered, what should it have done? a. Charge over the limit fees until the balance owed falls below the credit limit b. Notify the customer that they were terminating the account c. Provide notice 45 days before the decrease to the credit limit d. Suspend future credit priviledges

Answer 33

c. Provide notice 45 days before the decrease to the credit limit. 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 a notice of the new limit was provided orally or in writing at least 45 days before imposing the limit.

Question 34

On Monday, ABC Bank received a written application from the Browns for a loan to purchase their home. Later that day ABC mailed the Browns their early TILA disclosures. On what day may ABC debit the Browns' account for an application fee? a. Tuesday b. Wednesday c. Thursday d. Friday

Answer 34

d. Friday The Reg Z Commentary explains the timing of the 3 day rule better. It says that if a creditor places the disclosure in the mail, the creditor may impose a fee after the consumer receives the disclosures, or in all cases, after midnight on the third business day following mailing of the disclosures. The example they use is where an application is received on Monday, the disclosures are mailed on Tuesday and the fee can be charged AFTER MIDNIGHT on Friday. So, in the question above, the fee can be charged after midnight on Thursday (or essentially on Friday).

Question 35

Which of the following statements is true regarding providing credit cards accounts to cardholders under the age of 21? a. Accounts can only be issued to cardholders who are at least 21. b. Co-signers are required on credit card accounts to consumers who are under 21. c. The consumer must submit a written application. d. Consumers must be provided with credit counseling prior to card issuance.

Answer 35

c. The consumer must submit a written application. Credit card accounts may be issued to young consumers, but the issuer must obtain a written application and is required to determine if the consumer has an independent ability to make the minimum payment, or obtain a co-signer or guarantor who is at least 21 and has the ability to make the payment.

Question 36

What does Reg Z cover?

Answer 36

Consumer credit that is subject to a finance charge or repayable in more than 4 installments; and primarily for personal, family or household purposes.

Question 37

What types of loans does Reg Z exclude from coverage?

Answer 37

- business purpose, including governmental agencies - public utilities credit - securities or commodities accounts - home fuel budget plans - student loan programs - employee-sponsored retirement plans - tax-shelter annuities - government-deferred compensation plans

Question 38

What if a disclosure statement becomes inaccurate before consummation?

Answer 38

The lender must provide a revised disclosure prior to consummation

Question 39

Are taxes, licensing fees and registration fees finance charges?

Answer 39

Generally no because these are paid by cash and finance customers. There may be some instances in which a tax is a finance charge (read the question carefully to determine if it's paid only by customers financing the credit, or if it's paid by both cash anf

Question 40

Are inspection and handling fees for the staged disbursement of construction-loan proceeds considered finance charges?

Answer 40

Yes

Question 41

Are charges absorbed by the creditor as a cost of doing business a finance charge?

Answer 41

No, but if the creditor separately imposed a charge (not absorbed it) to a consumer, then yes it would be a finance charge. Also, a charge imposed by a creditor to a third party is not a finance charge.

Question 42

Is forfeiture of interest a finance charge?

Answer 42

Yes, if a loan is secured by a CD and the creditor doesn't pay interest on the deposit collateral, then yes, it is and it must be reflected in the loan's APR.

Question 43

When must the loan estimate be provided?

Answer 43

No later than the 3rd business day following receipt of the consumer's application.

Question 44

When must the closing disclosure be provided?

Answer 44

Must be in the consumer's possession 3 days before consummation.

Question 45

What does TRID apply to?

Answer 45

most closed-end consumer purposes transaction secured by real property, regardless of the lender's interest in a dwelling.

Question 46

What constitutes an "application" under TRID? HINT: 6 elementss

Answer 46

Name Income SSN Property address Estimated property value Loan amount sought Once these six pieces of info are collected, the LE must be sent within 3 business days!

Question 47

What are the 2 timing requirements for the LE?

Answer 47

The creditor must deliver or place the LE in the mail: - No later than the 3rd business day after receiving an app - At least 7 business days before transaction consummation The 7 day waiting period may be waived if the consumer has a bona fide financial emergency.

Question 48

What is a "business day" as defined by Reg Z?

Answer 48

All calendar days except Sundays and legal public holidays.

Question 49

Is the LE required if the applicant denies or withdraws the application within the first three business days?

Answer 49

No

Question 50

What is the mailbox rule?

Answer 50

Determines the date on which the disclosure can be considered as received by the consumer = 3 business days.

Question 51

When must the service provider shopping list be provided to the applicant?

Answer 51

Within 3 business days of application.

Question 52

What if a creditor quotes an estimate on the LE and that borrower was NOT allowed to shop and that fee increases?

Answer 52

There can be no increase in the fee that was originally disclosed on the LE.

Question 53

What kind of fee changes are allowed for services you selected because the consumer chose NOT to shop?

Answer 53

Certain increases are allowed.

Question 54

What kind of fee changes are allowed for services the consumer paid to providers NOT on the creditor's list?

Answer 54

Any fee increases are allowed.

Question 55

When must a revised LE disclosure be provided to an applicant?

Answer 55

If there is a changed circumstance or inaccuracy due to a changed circumstance. In a nutshell, revision is allowed only if the aggregate cost increase from the changed circumstance is greater than 10%.

Question 56

What are some examples of a changed circumstance?

Answer 56

Some include: - circumstances affecting settlement costs - circumstances affecting consumer eligibility - revision requests by the consumer - the interest rate is being locked - the LE is expiring - the settlement date on a construction loan is being delayed

Question 57

When must a revised LE be delivered?

Answer 57

Within 3 business days of receiving changed circumstance information. The borrower must receive the revised LE by the 4th business day before consummation. \*mailbox rule applies.

Question 58

Record of the final LE must be retained for three years from the date: a. Of consummation b. Disclosure was made c. The required action was taken d. Whichever is the later of all of the above.

Answer 58

d. Whichever is the later of all of the above.

Question 59

Which of the following consumer purpose loans secured by RE does NOT require the new LE disclosure? a. Loans secured by a dwelling or property planned for a dwelling b. HELOCs c. Construction-only loans d. Loans to trusts for tax or estate planning purposes e. b&d f. None of the above

Answer 59

b. HELOCs

Question 60

Once presented in the LE, fees for service providers whom the borrower was not allowed to shop for a. Cannot increase b. May increase up to 10% in the aggregate c. May vary by any amount

Answer 60

a. Cannot increase

Question 61

T/F: Charges paid to third party service providers selected by the consumer and NOT on the creditor's written list cannot increase by any amount.

Answer 61

F

Question 62

T/F: Creditors cannot delay delivery of the LE if they already have the consumer's name, income, SSN, property address and value, and loan amount sought.

Answer 62

T

Question 63

When changed circumstances requires a revised LE, it must be received by the borrower a. The day after the creditor receives changed circumstance information b. At least 4 business days before consummation c. At least 7 business days before consummation

Answer 63

b. At least 4 business days before consummation

Question 64

Which of the following loans are NOT exempt from TRID rules? a. HELOCs b. Reverse mortgages c. Business purpose loans d. Loans secured by moveable property (not attached to real property) like mobile homes e. None of the above.

Answer 64

e. None of the above. All of those are subject to TRID rules

Question 65

T/F: If in-person delivery is not the chosen method, then the "mailbox rule" comes into effect.

Answer 65

T

Question 66

If the creditor has evidence of the borrower's having received the closing disclosure, does the creditor need to honor the mailbox rule?

Answer 66

No, so long as the creditor has a return email (NOT a read receipt, that specifically acknowledges receipt of the closing disclosure) the creditor can immediately being the three-day countdown to consummation.

Question 67

Does the consumer have the right to waive the three-day waiting period between closing disclosure and consummation?

Answer 67

Yes, but only for a bona fide financial emergency.

Question 68

Is there any time the three-day waiting period between the closing disclosure and consummation would require a re-start?

Answer 68

Yes, if a revision or correction of the CD become necessary.

Question 69

What new section of the closing disclosure informs the consumer as to whether or not the creditor accepts partial payments and how they are to be handled?

Answer 69

The partial payment policy. This is on the fourth page of the CE.

Question 70

What new section of the closing disclosure informs the consumer regarding the establishment of an escrow account, and provides details of the costs - and waiver fee, if there is one?

Answer 70

The escrow account disclosure. This is on the fourth page of the CE.

Question 71

What new section of the closing disclosure contains information whether or not state law protects the consumer from any unpaid balance in the event of foreclosure?

Answer 71

The liability after foreclosure. This is on the fifth page of the CE.

Question 72

Which of the following responses below are true of the closing disclosure? a. The borrower must be in possession of the CD no later than 3 business days before consummation b. The borrower must receive the CD at least 7 business days before consummation. c. The CD replaces the HUD-1 Settlement Statement and the final TIL. d. A "business day" for the CD, is Monday thru Sunday, excluding legal holidays. e. A & C

Answer 72

e. A & C

Question 73

Which of the following scenarios requires a revised closing disclosure, but does NOT reset the 3 day clock to close? a. The loan's APR becomes inaccurate and increases by more than 0.125 percent b. The loan product changes c. A prepayment penalty provision is added to the loan. d. Another term is changed

Answer 73

d. Another term is changed. The correct CD needs to be provided at or before consummation OR the borrower may request and receive the revised disclosure one day before consummation.

Question 74

What happens if there is a change after the deal has been consummated, for example, the recording fee was more than expected?

Answer 74

If that change occurs during the 30 days following consummation, a revised CD is required. This rule applies whenever there is a change in the amount paid by the borrower or seller over what disclosed. AND the revised CD must be delivered no later than 30 CALENDAR days from the day the change was discovered.

Question 75

What happens if there is a clerical (something non-numeric, like the wrong service provider name) be discovered after the deal has been consummated?

Answer 75

The creditor must provide a revised CD within 60 calendar days of consummation (NOT within 60 days of discovery).

Question 76

What if something like the transfer taxes increases between the Loan Estimate and the Closing Disclosure?

Answer 76

The creditor must provide a revised disclosure and a refund, so as not to be considered in violation. This must be done 60 CALENDAR days from the date of consummation. This is referred to as the "tolerance cure"

Question 77

The market has shifted and the APR on your borrower's loan has gone from 3.4% to 3.6%. How will this affect your Closing Disclosure? a. A revised CD will have to be issued, but no additional time is needed before the consummation. b. Not only will a revised CD need to be issued, but an additional 3 days will have to pass before consummation. c. A change this small does not require a revision or any additional time.

Answer 77

b. Not only will a revised CD need to be issued, but an additional 3 days will have to pass before consummation.

Question 78

What is the retention period for the closing disclosure?

Answer 78

5 years from the date of consummation. If the loan is sold or transferred, the creditor must provide a copy of the CD to the new owner or servicer. They in turn, must retain that record for the remainder of the 5 years.

Question 79

Your institution has purchased a portfolio of mortgage loans from another lender. How long must you retain copies of the Closing Disclosures it contains? a. 3 years from the date of the portfolio purchase b. 5 years from the date of the portfolio purchase c. The remainder of the 5 years from each loan's consummation.

Answer 79

c. The remainder of the 5 years from each loan's consummation.

Question 80

Which of the following loans would be exempt from the new TRID requirements? a. A loan secured by 50 acres of property b. A construction-only loan c. A temporary loan secured by real estate d. All of the above e. None of the above is exempt. All are subject to TRID

Answer 80

e. None of the above is exempt. All are subject to TRID

Question 81

There's been an increase in the transfer taxes on your borrower's loan. Under TRID rules, the tolerance cure give you a ___ day grace period in which to provide a revised closing disclosure and refund. a. 30 business days b. 30 calendar days c. 60 business days d. 60 calendar days

Answer 81

d. 60 calendar days

Question 82

You deliver your Closing Disclosure on Monday and closing is scheduled for Thursday. The final walk through takes place on Tuesday, resulting in a $50 increase in hazard insurance. If that is the only change to the terms in your CD, what is required? a. You must provide a revised CD followed by an additional 3-day waiting period b. You must provide a revised CD at or before consummation, with NO additional waiting period c. This change does not require a revised CD or any additional waiting period

Answer 82

b. You must provide a revised CD at or before consummation, with NO additional waiting period

Question 83

Under new TRID rules, the Closing Disclosure must be ____ no later than 3 business days before consummation a. Sent to the borrower b. Received by the borrower c. Completed d. Emailed

Answer 83

b. Received by the borrower

Question 84

T/F: A lender's interest in a dwelling is NOT a determining factor in whether or not a loan falls subject to the new TRID rules.

Answer 84

T

Question 85

T/F: Should a clerical error be discovered in a CD after consummation - the wrong service provider name, for example - you must get a revised CD into the borrower's and/or seller's hands within 60 days of the error's discovery.

Answer 85

F

Question 86

The Mortgage Department asks the Compliance Officer to evaluate its current practices surrounding collecting application fees from mortgage loan applicants in light of the new TRID rules that became effective October 3, 2015. Which of the following options presented by the Mortgage Department to the Compliance Officer complies with Regulation Z? a. Collection application fees from applicants (cash or check) at time application is submitted and hold for deposit until after bank receives intent to proceed from applicant b. Send a Request for Application Fee Form to applicant with Loan Estimate and other disclosures with instruction to submit after customer provides an intent to proceed with the application c. Have applicant sign a form that provides the method of payment (credit card number or bank account number) for the application fee at the time the application is completed and with to process the payment until after the intent to proceed is received d. Have applicant sign an authorization form at time of application that authorizes the bank to deduct the application fee from the customer's checking account or savings account

Answer 86

b. Send a Request for Application Fee Form to applicant with Loan Estimate and other disclosures with instruction to submit after customer provides an intent to proceed with the application

Question 87

"Your Home Loan Toolkit" is one of the disclosures that needs to be provided to consumer home loan applicants... a. Not later than 3 business days after a covered application is received b. With an application form to be completed by an applicant for a covered application c. At least 3 business days prior to loan consummation for a covered loan d. At least 3 business days after a covered loan application is received

Answer 87

a. Not later than 3 business days after a covered application is received

Question 88

Which one of the following loan purposes is NOT an acceptable "Loan Purpose" disclosure for the Loan Estimate or Closing Disclosure form on page 1? a. Purchase b. Construction c. Home Improvement d. Home Equity Loan

Answer 88

c. Home Improvement

Question 89

What loans does TRID cover?

Answer 89

Most closed-end consumer credit transactions secured by real estate.

Question 90

Does TRID cover vacant land?

Answer 90

Yes. Think "DIRT"

Question 91

What is a chattel dwelling and is it covered under TRID?

Answer 91

Mobile home loans without land. (E.g., purchasing a mobile home and placing it in a mobile home park.) No it's not covered under TRID. Chattel dwellings are considered personal property, not real estate.

Question 92

Are reverse mortgages and HELOCs covered under TRID?

Answer 92

No

Question 93

If a creditor makes 5 or fewer mortgages in a year, do the TRID rules apply?

Answer 93

No

Question 94

If a mortgage broker receives the application, can the creditor or the mortgage broker provide the LE?

Answer 94

Either, but the creditor still remains responsible for compliance requirements.

Question 95

What two forms did the LE integrate?

Answer 95

The GFE & Early TIL

Question 96

T/F: The LE must provide consumers with a good faith estimate of credit costs and transaction terms; the CD must generally contain the actual terms and costs of the transaction.

Answer 96

T

Question 97

What two disclosures does the CD integrate?

Answer 97

Final TIL and HUD-1

Question 98

T/F: The LE & CD forms are template-based.

Answer 98

False. They are dynamic (they only provide information that is meaningful. If it's not meaningful, it's not on it) in construction and content based upon loan program and other terms and conditions of the transaction.

Question 99

T/F: The LE must be delivered or mailed at least 7 business days before consummation. The 7-day period applies only to provision of the original/first LE (not revised LEs).

Answer 99

True

Question 100

What are the 3 buckets of "tolerances" or "variations" on the LE?

Answer 100

- zero tolerance ("no variations") - unlimited tolerance ("variations permitted") - 10% cumulative tolerance ("limited increases")

Question 101

For the "no variations" (zero tolerance) section, can the creditor charge more than the estimated amount?

Answer 101

No, unless there is a valid "changed circumstance" or other triggering event.

Question 102

For the "variations permitted" section, can changes vary by any amount between the LE and CD?

Answer 102

Yes, but still have to disclose in good faith.

Question 103

What does the bank need to do if changes in the "limited increases" bucket exceeds the 10% cumulative threshold?

Answer 103

The Bank is out of tolerance and must issue a refund.

Question 104

If amounts paid by the consumer at closing exceeds amounts disclosed on the LE _beyond_ applicable tolerance thresholds, what needs to happen?

Answer 104

The creditor must refund the excess to the consumer AND must deliver or mail a corrected CD reflecting refund to later than 60 days after consummation. (This is the Reg Z requirement, if a loan isn't covered under TRID, RESPA says you must refund within 30 days.)

Question 105

For zero tolerance changes, __ amount charged beyond what was disclosed on the LE must be refunded.

Answer 105

any

Question 106

For 10% cumulative tolerance charges, if the sum of the charges exceeds the sum of such charges disclosed on the LE by more than 10%, the ______ must be refunded.

Answer 106

difference

Question 107

If a consumer is permitted to shop for the settlement service, and the consumer chooses a provider that was on the bank-provided list, the curing tolerance is limited to the _______ variance category.

Answer 107

10% cumulative

Question 108

If the consumer is permitted to shop for a provider and selects a provider that was not on the bank-provided list, the tolerance is subject to the ______ variance category.

Answer 108

Unlimited

Question 109

Is the list of providers given to consumers considered a "referral" under RESPA?

Answer 109

Yes

Question 110

Banks must provide a written list identifying __ \_\_\_\_ ____ available provider for each settlement service for which the consumer is permitted to shop.

Answer 110

at least one

Question 111

Banks can provide revised LEs only for _____ \_\_\_\_\_\_ that occur after providing the LE and settlement charges increase more than is permitted (tolerance level) or the consumer's eligibility is affected.

Answer 111

changed circumstances Keep in mind that although a revised LE is provided, the tolerance level does not "reset."

Question 112

What is a changed circumstance?

Answer 112

- Extraordinary event beyond the control of any interested party or other unexpected event specific to the consumer or the transaction (war, natural disaster), - Information specific to the transaction or consumer that the creditor relied on upon when providing the LE and that was inaccurate or changed after the disclosures were provided (loss of employment, appraisal issues), - new information specific to the consumer or transaction that the creditor did not rely on when providing the LE

Question 113

When must the revised LE be provided to the consumer?

Answer 113

Within 3 business days from the event that gave rise from the revised LE

Question 114

Creditor is responsible for ensuring the consumer ***_receives_*** the CD no later than __ business days prior to consummation. What does "received" mean?

Answer 114

3 Received means, if in person, was accepted upon delivery, or if mailed, within 3 business days. ("mailing rule.")

Question 115

Settlement agent must provide the ____ a CD at or before consummation.

Answer 115

seller