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NMLS Exam > Truth in lending Act > Flashcards

Truth in lending Act Flashcards

1
Q

What regulation does this have?

A

Regulation Z

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2
Q

What is the purpose?

A

Requires creditors to disclose key terms and costs of the transaction

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3
Q

The know before you owe rule TRID integrated which 2 upfront disclosures

A

TIL and GFE which are now 1 form called Loan Estimate

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4
Q

Who must comply with the TILA?

A

Businesses who extend credit to consumers for personal or family use where installment payments are made

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5
Q

What is the disclosure for the LE

A

Given to borrower within 3 business days of app for all mortgages

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6
Q

What is definition of business day for initial disclosure

A

Any day you are open to public for business

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7
Q

Definition of business day

A
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8
Q

Which loan does not require a loan estimate?

A

Adding Heloc to a primary residence

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9
Q

How good is LE good for ?

A

10 days

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10
Q

What is 3/7/3 rule?

A

Give LE Form within 3 days after application, must wait 7 days from application to close, if anything changes lender can issue another form but must wait another 3 days to close

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11
Q

What is APR

A

Annual percentage rate - total cost of loan in form of an interest rate

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12
Q

What is TIP

A

Total interest percentage - total interest paid over life of loan as % of the amt borrowed.

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13
Q

TIP Ex: A borrower takes a loan of $120,000 at 4% interest for 30 years. The total finance charges of
the loan, if the loan fully amortizes is $85,560. What is the TIP which will be disclosed on the
Loan Estimate?

A

85,560/$120,000 = 71.3%

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14
Q

What is a finance charge?

A

Cost of credit in form of exact dollar amount

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15
Q

Items that affect APR

A

Processing fee, uw fee, points, origination

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16
Q

TILA disclosures for variable or adjustable rate loans

A
  1. Charm booklet - consumer handbook on adjustable rate mortgages
  2. Program disclosure
17
Q

What must lenders disclose on ARMS

A
  1. disclose worst rate and payment a borrower will see on ARM in first 5 years
  2. Supply initial interest rate adjustment
18
Q

What is CD

A

Closing disclosure - itemizes all closing costs in the transaction and is used at closing

19
Q

What must CD be disclosed to borrower

A

With in 3 days prior to close.

20
Q

What is the difference between LE and CD?

A

LE is estimated cost to close an CD is actual cost of closing

21
Q

What is consummation

A

When borrower becomes contractually obligated to the creditor

22
Q

How long do you keep TILA documents for LE?

A

3 Years

23
Q

How long do you keep TILA documents for CD

A

5 years

24
Q

What is a refinance

A

Any loan done after initial purchase. All primary residence refi require right of recission

25
Q

What is right of recission

A

Right of a consumer to cancel certain type of loans.

26
Q

When is 3 day right of recission given to a borrower?

A

When they seek to refinance their primary residence.

27
Q

Right of rescission does not come into play on:
> Purchase
> 2nd Home
> Rental
> Vacation Home
> All of the Above

A

All of the above

28
Q

How many copies of right to rescind and disclosure is borrower given

A

2 copes of right , 1 copy of disclosure

29
Q

What is the rescission period if each owner gets 1 copy of the right to rescind 1 copy of the
disclosure at closing?

A

3 years

30
Q

How many people does it take to rescind the loan

A

1 person who is in ownership

31
Q

If more than one person owns a property but applying for a refinance using only 1 person’s
credit and income, what happens?
a.) Lender will deny loan
b.) It can be done but rescission will only apply to borrower
c.) It can be done but right of rescission goes to all owners of the home
d.) denied all owners must be on loan

A

C

32
Q

What is an advertisement

A

Anything that is produced with intent to sell a credit plan.

33
Q

What are the REG Z advertising rules

A
  1. only advertise the terms available in credit plan being offered
    2.the ad must state APR
  2. If APR can increase it must be stated in ad
  3. A note can be held in the ad.
34
Q

What is a trigger>

A

Feature of credit plan that draws consumers to the loan

35
Q

What is cash price

A

Loan amount

36
Q

What FTC and what do they do

A

Federal trade commission , has regulation authority over advertising in TILA

37
Q

Penalty for TILA if you give false info, understate APR, or fail to comply with TILA?

A

5k or 1year prison or both per incident

38
Q

What is POC?

A

Paid outside closing like 3rd party fees

39
Q

What is PFC

A

Prepaid finance charge (lender/broker fees)

NMLS Exam (20 decks)

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