Truth in Lending (Reg Z) Flashcards
What MUST be included in mortgage training as it relates to TILA-RESPA Integrated Disclosure (TRID)?
A. Disclosures must be provided at the time of application
B. Disclosures must be provided within three business days of application
C. Disclosures must be provided within five days of application
D. Disclosures must be provided within seven business days of application
B. Disclosures must be provided within three business days of application
Under the TRID provisions of Regulation Z, a Loan Estimate disclosure must be provided (delivered or sent) within three business days of the lender’s receipt of an application.
Business day in this context means any days that the creditor’s offices are open for carrying out substantially all of its business functions.
The 3 business days for not-in person disclosure is satisfied when the lender sends the disclosure, not when the applicant receives it. However, you cannot charge any fees outside a credit report fee until the applicant receives the LE and provides intent to proceed.
Which of the following would be considered a potential finding for credit cards?
A. Account payments were credited on the date received
B. Account payoff quotes were good for five business days
C. An account was reported “past due” after 30 days of nonpayment
D. An account had a credit balance for more than 60 days
D. An account had a credit balance for more than 60 days
According to Regulation Z, credit balances must be returned to the consumer in no more than seven business days if requested by the consumer. A credit balance of more than 60 days has the potential to be in violation of this provision; thus, it is a finding. Each of the other choices is not a finding as there is no potential regulatory violation in any of them.
A loan officer makes a purchase-money mortgage loan to enable a newlywed couple to purchase a 4-unit residential building. The couple will live in one unit and rent the other three units to low- and moderate-income families. The loan is for $800,000 for five years. Regulation Z does NOT apply to this loan because the loan is:
A. Covered under CRA.
B. For only five years.
C. For a business purpose.
D. For a multi-family dwelling.
C. For a business purpose.
Which of the following is the MOST helpful when validating an APR understatement?
A. The disclosed APR and actual APR
B. Total amount of payments on the TIL
C. Amount of prepaid finance charges
D. Amount of the collateral pledged
A. The disclosed APR and actual APR
To determine whether an APR has been understated, the two obvious data points are the disclosed APR and actual APR. Only then can you determine whether the difference is a compliance issue under Regulation Z. examining the total payments on the TIL disclosure and amount of prepaid finance charges are not enough to make that determination. And the amount of collateral has no bearing at all on an APR understatement.
A bank posted a complete set of the credit card agreements offered to customers on its public website. The compliance professional discovered that the bank made changes to the customer credit card agreements on June 30 and followed all the change-in-terms requirements. What else needs to be done in this situation?
A. Update the customer credit card agreements on the public website and submit the revised agreements to the CFPB no later than the first business day on or after July 1
B. Update the customer credit card agreements on the public website and submit the revised agreements to the CFPB no later than the first business day on or after July 31
C. Update the customer credit card agreements on the public website and submit the revised agreements to the CFPB no later than the first business day on or after December 31
D. Update the customer credit card agreements on the public website; the bank is not required to submit the revised agreements to the CFPB as long as the CFPB has the original agreements
B. Update the customer credit card agreements on the public website and submit the revised agreements to the CFPB no later than the first business day on or after July 31, 2023
Regulation Z requires that banks post on their public websites all their current credit card agreements. If changes have been made to any of those agreements, the changed agreements must be posted as well as providing the revised agreements to the CFPB no later than July 31 (30 days later). This is the requirement, not immediately (July 1) or by the end of the year (December 31).
A bank’s attorneys have drafted a new security agreement containing a “dragnet clause” stating that collateral securing previous loans will also secure any new loan made by the bank to the same customer. Which of the following statements describes Regulation Z’s requirements concerning disclosure involving this type of language?
A. Regulation Z does not deal with this type of disclosure, since this is a matter of state law.
B. Each time a subsequent loan is made, the bank must list the loan number and collateral of the former loan on the disclosure statement, and the borrower must initial that section.
C. At the time a subsequent loan is made, the bank must disclose that collateral securing previous loans will also secure this loan.
D. Collateral securing other loans may not be pledged to secure subsequent loans as set forth in Regulation Z.
C. At the time a subsequent loan is made, the bank must disclose that collateral securing previous loans will also secure this loan.
When evaluating a new student loan product, the compliance professional needs to verify that the offer of credit is valid for at least how long?
A. 15 days
B. 30 days
C. 45 days
D. 60 days
B. 30 days
Under Regulation Z’s requirement for Private Education Loans (PELs), rates and terms must be valid for at least 30 days.
If a creditor plans to make changes to the terms of a credit card, what must the creditor do before the changes take effect? Select all that apply.
A. Give the consumer the option to cancel the card before the changes take effect
B. Give the cardholder 60 days advance notice
C. Give the cardholder 45 days advance notice
A and C
What are the institution’s responsibilities regarding credit balances on open-end loans?
Must make a good faith effort to return/refund the balance to the consumer if the credit is on the account for more than 6 months.
The bank must refund the credit balance within seven business days from receipt of a written request from the consumer.
True/False: Creditors can charge a fee based on different payment methods, for example, phone payments vs online payments.
False.
For credit card accounts under an open-end (not home-secured) consumer credit plan, a creditor may not impose a separate fee to allow consumers to make a payment by any method, such as mail, electronic, or telephone payments, unless such payment method involves an expedited service by a live customer service agent.
When is a loan considered a Private Education Loan?
If the loan is for closed-end, non-real estate secured loans in which any of the funds of the loan is to finance post secondary education.
What is a bona fide emergency?
Loss of home or loss of health are generally the only two permissible bona fide emergencies per regulators.
Are there APR or finance change tolerances for open end credit?
A. Yes for both
B. APR only
C. Finance charges only
D. No for both
B. APR only
The basic disclosure tolerance for both open-end and closed-end credit is 1/8% (0.125%) above or below the precise APR.
Lenders can charge a fee of up to $__, or $__ if the violation is a repeat violation on a credit card.
$32, $43
The limits apply to penalty fees other than late fees for all card issuers (small or large), as well as late fees imposed by smaller card issuers.
Repeat violations means occurring during the same billing cycle or in one of the next 6 billing cycles.
For purposes of calculating an APR, an “irregular transaction” includes:
A. Multiple advance construction loans
B. A single payment loan
C. A loan with a final balloon payment
D. A loan with quarterly payments
A. Multiple advance construction loans
Which of the following is incorrect regarding credit card disclosure requirements?
A. 30 days notice for change of terms (rate or other significant changes)
B. Minimum payment disclosures
C. Late payment disclosures
D. Renewal disclosures for change of terms
A. 30 days notice for change of terms (rate or other significant changes)
It’s 45 days.
True/False: Special early disclosure requirements for credit card solicitations and applications do NOT apply to lines of credit assessed solely by account numbers.
True
How many days does a consumer have to make payments on a credit card from when the institution mails the statement?
A. 7 days
B. 14 days
C. 21 days
D. 30 days
C. 21 days
An institution must send periodic statements on an open-end loan if there is a _____ on the account.
balance
If a credit card creditor plans to change terms, it must send the consumer a notice 45 days before:
A. Increasing the interest rate
B. Changing certain fees
C. Making other significant changes to the terms of the account.
D. All of the above.
D. All of the above.
Card issuers cannot impose a fee for:
A. Declining to authorize a transaction
B. Inactivity, such as when the consumer is no longer using the account
C. Closing or terminating the account
D. All of the above
D. All of the above
Rescission provisions do not apply to which types of loans?
Purchase money loans, as well as refinances of the loan with no new money.
If new money was included, the ROR rules would apply to the new money.
If the institution sells a loan, are there any disclosure requirements?
Yes, Notice of Sale or Transfer must be sent to all loans that are secured by a borrower’s principal dwelling if their loan has been sold or transferred.
The notice must be sent by the purchasing institution (not the transferrer).
It does not apply when the asset is sold to affiliates if there is no change in the payee, address to which payment must be delivered, account number, or amount of payment due.
Does the periodic rate have to appear on the periodic statement of an open-end account?
Yes. Any periodic rate that may be used to calculate the finance charge, the type of the transaction and the range of the balances to which it applies and the corresponding APR are all required on the statement, in addition to some other requirements.