Truth-In Lending and Real Estate Settlement Procedures Act

Question 1

All but one of the following is included in the “finance charge” under the Truth-in-Lending provisions:

A) Points
B) Loan finders fee
C) Attorney fee
D) Service charges

Answer 1

C) Attorney Fee

Such fee would be incurred regardless of whether credit was extended

Question 2

Regulation Z provides a right of recession:

I. For first mortgages to finance the purchase of a dwelling
II. Which expires after three business days following the date of consummation of the transaction or date on which the lender makes material disclosures, whichever is later

A) I only
B) II only
C) Both I and II
D) Neither I nor II

Answer 2

B) II only
II. Which expires after three business days following the date of consummation of the transaction or date on which the lender makes material disclosures, whichever is later

First liens to purchase or construct a dwelling are exempt

Question 3

Truth-in-Lending laws apply to:

A) Commercial loan transactions involving real property
B) Residential real estate mortgages
C) All personal property transactions
D) Unconscionable contracts

Answer 3

B) Residential real estate mortgages

Question 4

Regulation Z controls which of the following?

I. The amount of interest that can be charged in a credit transaction
II. What can be included in an advertisement of certain credit transactions

A) I only
B) II only
C) Both I and II
D) Neither I nor II

Answer 4

B) II only

II. What can be included in an advertisement of certain credit transactions

Question 5

Under Truth-in-Lending, it is permissible to have an ad that only states:

A) The interest rate
B) The down payment
C) Easy payment terms available
D) The monthly payment

Answer 5

C) Easy payment terms available

Question 6

When computing an annual percentage rate for disclosure purposes under the Truth-in-Lending Law, you would include as finance charges:

I. Service charge for making the loan
II. Finders fees

A) I only
B) II only
C) Both I and II
D) Neither I nor II

Answer 6

C) Both I and II
I. Service charge for making the loan
II. Finders fees

These are loan finder fees

Question 7

The rules related to advertising that are contained in the Truth-in-Lending Laws:

I. Would permit the use of the phrase “no payments the first year” without further disclosure of financing terms
II. Apply to newspaper, radio, TV, and magazine ads but not to direct mail solicitation

A) I only
B) II only
C) Both I and II
D) Neither I nor II

Answer 7

D) Neither I nor II

Also apply to direct mail

Question 8

Which of the following would be a proper basis for denial of a loan under the Equal Credit Opportunity Act (ECOA). The applicant is:

A) Unmarried
B) To old
C) A welfare receipt
D) Bad credit risk

Answer 8

D) Bad credit risk

Question 9

If the required disclosures are not made under the federal Truth-In-Lending law, the borrower continues with a right of recession for how long?

A) One year
B) Two years
C) Three years
D) Four years

Answer 9

C) Four Years