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Federal Mortgage-Related Laws

Terms in this set (100)

The penalties for paying or accepting an illegal referral fee are:
Fines of up to $10,000 and up to one year in prison
An annual escrow analysis is used to do which of the following?
Prevent escrow overages
The disclosure requirements of RESPA would apply to which of the following loans?
A loan to purchase a duplex and rehabilitate it into a single-family dwelling
You have taken a loan application from a customer with an excellent credit score. When does ECOA require that you advise him about the status of his application?
Within 30 days
Mr. Jones's loan application has been denied and he is provided with an Adverse Action Notice as required by ECOA. Which of the following pieces of information would not be included on the notice?
His credit score
According to fair lending laws, which of the following may loan applicants be asked to disclose for HMDA data collection purposes?
Their race
Finance charges always include which of the following?
Mortgage broker fee
Which of the following is not included in calculating the APR?
Escrow fees
The amount of the down payment, the amount of the finance charge, or the number of payments needed are all examples of _______________ under TILA.
Trigger terms
A borrower has gone to settlement for a cash-out refinance on Tuesday for his principal residence. His rescission period is over at midnight on Friday. According to the provisions specified under federal law, what is the first possible day the loan could fund?
Saturday
HOEPA creates protections for high-cost loans under:
TILA
Subprime loans with interest rates that are not high enough to trigger protections under HOEPA, but which are subject to some protections under Regulation Z are known as:
Higher-priced mortgage loans
Prepayment penalties for high-cost mortgages are:
Prohibited
XYZ Mortgage Company just mailed a Closing Disclosure to a consumer. The waiting period prior to closing will begin:
The third business day after the Closing Disclosure is mailed
The mandatory waiting period between issuance of disclosures and consummation may be waived:
If the consumer requests a waiver due to a bona fide financial emergency
There is a ____ accuracy tolerance for amounts stated on the Loan Estimate and the actual closing costs if the consumer is allowed to shop for his/her own settlement service provider.
10%
In what area of the Loan Estimate would a borrower be able to see if their loan has a balloon payment?
The "Loan Terms" table
The Loan Originator Compensation Rule is intended to discourage which of the following practices?
Steering
The Loan Originator Compensation Rule defines compensation to include all of the following, except:
Payments collected by a loan originator organization for services other than loan
origination services
Which of the following lending terms is not prohibited for a high-cost loan regulated under HOEPA?
An adjustable interest rate
Lenders must report detailed information about loan transactions and demographic information concerning borrowers. Which of the following laws creates that reporting requirement?
HMDA
If an individual submits false information for the purposes of obtaining a federally-covered loan, he/she could face:
A fine of up to $1,000,000 and imprisonment
Under the Homeowners Protection Act, borrowers can request that lenders cancel PMI when their loan balance is less than ____, or a lender may collect PMI until ____ loan-to-value is reached.
80%; 78%
If a mortgage broker decides to use telemarketing to establish leads for loan origination, which of the following should occur?
The broker should obtain access to the Do-Not-Call Registry
If a consumer opens an account online, the Gramm-Leach-Bliley Act states that what period of time constitutes a "reasonable opportunity" to opt out of information sharing?
30 days
If a loan applicant chooses not to disclose his or her race on a loan application, what recourse does a mortgage professional have?
Note that the applicant has declined to answer and select a race based on visual observation
Under the Fair Credit Reporting Act, which of the following entities has the burden of protecting a consumer's privacy when his/her credit information is being reported?
Credit reporting agency
The Do-Not-Call Implementation Act authorized the implementation and enforcement of:
The Do-Not-Call Registry
This involves conspiratorial involvement of mortgage professionals using the mortgage market to benefit financially from criminal behavior.
Fraud for profit
Under the Gramm-Leach-Bliley Act, which of the following is considered nonpublic information?
A borrower's current loan balances
An application is defined to consist of six pieces of information. These include the borrower's name, income, and desired loan amount, as well as:
The borrower's Social Security Number, the address of the property he or she wishes
to purchase, and an estimate of the property value
When must a lender advise loan applicants about the status of their application?
Within 30 days
What kind of loan transaction requires disclosure of the special information booklet called Your Home Loan Toolkit: A Step-by-Step Guide?
A new home purchase
For the purposes of issuing a revised Loan Estimate, "changed circumstances" must involve a change that caused estimated amounts to increase by at least:
10%
The Real Estate Settlement Procedures Act includes all of the following provisions, except:
It establishes the maximum origination fee that may be charged on a loan
Which of the following is included when calculating finance charges?
Interest
According to federal fair lending laws, which of the following facts cannot be considered when qualifying an applicant for a loan?
A female applicant is four months pregnant and might not continue working once her baby is born
Payment calculations for qualified mortgages must be based on:
The maximum interest rate that may apply during the first five years of the loan term
The rule that established requirements for ensuring that a borrower can afford to take on a mortgage loan is known as the:
Ability to Repay Rule
An attorney and a lender entered into an agreement in which the attorney's car loan payments are paid by the lender in return for the names of potential loan applicants. Who has violated RESPA?
Both the attorney and the lender
Which of the following payments is a violation of RESPA?
A mortgage broker accepts a fee for sending its customers to a title company
A lender is gathering information on loans for the purposes of HMDA reporting. Loans made on which of the following property types may be left out of the lender's reports?
Travel trailers
Murphy is a mortgage broker who has an ownership interest in a local title insurance company. When his clients apply for loans and request referrals to a title company, Murphy must:
Immediately provide an affiliated business arrangement disclosure if he refers them
to the title company in which he has an ownership interest
A real estate agent receives a $50 restaurant gift certificate from a mortgage broker as a token of appreciation for referring a home buyer to the mortgage broker. Which of the following laws was violated as a result of this transaction?
RESPA
Why did Congress enact the Home Mortgage Disclosure Act?
To help identify patterns of discriminatory lending
Which of the following reasons for denying an applicant a loan is a violation of fair lending laws?
The applicant's recent marital status may lead to a change in employment
A mortgage broker pays for title services on behalf of a developer. In return, the developer agrees to refer prospective buyers to the mortgage broker. Who has violated RESPA?
Both the mortgage broker and the developer
RESPA does not apply to:
Loans for business, commercial, and agricultural purposes
If a mortgage professional advertises a loan product at "7.25% APR for the first six months! After first six months, APR is 10.5%, subject to increase based on market conditions," what (if any) additional disclosure does TILA require?
No other information is required
All of the following features are prohibited for a qualified mortgage, except:
Adjustable interest rates
Which of the following is true of the Home Loan Toolkit booklet?
If there are multiple borrowers, it is only required to be given to one of them
The Real Estate Settlement Procedures Act applies to:
Residential loans
What federal statute serves to control the settlement costs of residential mortgage loans?
RESPA
It is legal for settlement service provider A to pay settlement service provider B a portion of fees charged to a borrower only when:
Service provider B has performed bona fide services to earn the fee
When must loan applicants receive an Adverse Action Notice if they do not qualify for a loan?
Within 30 days of the adverse action
Under ECOA, when is a notice concerning the right to obtain a copy of the appraisal due to a consumer?
Within three business days of loan application
Jack has applied for a refinance of his mortgage, which is secured by a first lien on his home. He asks if he can see the appraisal report that his lender ordered and learns that:
The lender must provide a copy of the appraisal upon completion, or three business
days prior to consummation, whichever is earlier
Five siblings have ownership rights to a property. If a refinance transaction affecting the property is subject to rescission, how many of these individuals must submit a rescission notice in order to void the loan?
Any one of the five
A lender is permitted to deny an applicant credit based on which of the following factors?
The applicant lacks income stability
If a creditor violate ECOA, how many years does a consumer have in which to take civil action?
Five
What is the purpose of Regulation B?
To prohibit discriminatory treatment of credit applicants
An acceptable anti-money laundering program must include all but which of the following elements?
Approval by FinCEN prior to its implementation
The Fraud Enforcement and Recovery Act was adopted by Congress in 2009 to:
Facilitate the prosecution of those who commit mortgage fraud
Which of the following is true of PMI?
Loan servicers must give borrowers an annual disclosure stating that they may have
the right to cancel their PMI
This occurs when an individual misrepresents qualifying information in order to improve his or her chances of securing a mortgage loan.
Fraud for housing
MaxMortgage is a lender that is hoping to revive the subprime lending market with the origination of high-cost mortgages. To ensure that it has an ongoing source of funding, violates ECOA, how many years does a consumer have in which to take civil
MaxMortgage plans to sell its loans in the secondary market. After consulting with its attorney, MaxMortgage learns that:
Before selling high-cost mortgages, MaxMortgage must provide purchasers with a notice that the loans are subject to HOEPA
As a result of provisions included in the Dodd-Frank Act, HOEPA was revised to extend its provisions to:
Open-end transactions and purchase money mortgages
The Dodd-Frank Act includes provisions that are intended to help struggling homeowners to obtain loan modifications by:
Requiring the CFPB to write servicing rules to facilitate loss mitigation efforts
Minimum standards for mortgages, which have been established through rulemaking proceedings mandated by the Dodd-Frank Act, include a requirement to:
Establish standards for the evaluation of the repayment ability of borrowers
The USA PATRIOT Act is a federal law that Congress adopted in response to:
The terrorist attacks on September 11, 2001
The federal agency that is responsible for implementation and enforcement of the USA PATRIOT Act is:
The Treasury Department
The investigations that are conducted to identify perpetrators of financial crimes and the rulemaking regarding anti-money laundering provisions of the PATRIOT Act are carried out by the ______ within the _______.
The Financial Crimes Enforcement Network (FinCEN); Treasury Department
Regulations adopted pursuant to the USA PATRIOT Act are:
Applicable to residential mortgage loan originators, who became subject to the
regulations in February 2012
Money laundering is most accurately described as:
Filtering money through a series of transactions in order to prevent the tracing of the
funds to their original illegal source
Which of the following scenarios would violate Section 8 of RESPA and its prohibition against unearned fees?
A title company pays a mortgage broker $100 per client for referral of settlement
business
The servicing rules require live contact with a delinquent borrower:
By the 36th day of delinquency
RESPA applies to:
Federally-related mortgage loans
The Supreme Court has issued an opinion regarding markups, stating that:
Markups are not a violation of RESPA as long as the fee is not split
An affiliated business arrangement disclosure is due:
At the time a referral is made
When calculating finance charges in compliance with TILA, all of the following are included, except:
Closing agent fees, when the borrower chooses the closing agent
Which of the following federal agencies has supervisory responsibilities for TILA compliance?
CFPB
Which of the following is defined as the cost of credit expressed as a dollar amount?
Finance charge
What is the primary purpose of the Truth-in-Lending Act?
To ensure that creditors provide consumers clear disclosure of the terms of credit
Under TILA guidelines, all of the following disclosures are provided for an adjustable-rate loan, except:
Statement that the interest rate will be offered for the duration of the loan
John and Jane Brown are co-owners of a property that is their principal residence, and are entering into a refinance transaction that is subject to rescission. John is provided with one copy of the Notice of Right to Cancel, and Jane receives none. What is their deadline for rescission?
Three years after closing
The Gramm-Leach-Bliley Act specifies that a consumer must be given _________ to opt out before personal financial information is disclosed to a third party.
A reasonable opportunity
Which of the following is not a duty assigned to the CFPB by the Dodd-Frank Act?
Granting and denying mortgage loan originator licenses
The definition of "nonpublic personal information" includes:
Account balance and history
HUD is still responsible for writing rules and implementing which of the following acts?
The Fair Housing Act
For charges subject to a 10% tolerance, to the extent that the sum of the charges added together exceeds the sum of charges disclosed on the Loan Estimate by more than 10%:
A consumer is eligible for a refund of the difference
Which of the following is one of the stated reasons for implementing the new integrated mortgage disclosure forms?
To use clear language that borrowers can understand
Which of the following transactions is covered by the TILA-RESPA Rule?
First mortgage on a single-family dwelling
When must the Loan Estimate be provided to the consumer?
No more than three business days after receipt of a loan application
For which of the following is the creditor permitted to charge more than it discloses in the Loan Estimate (i.e., there is no tolerance limitation) and still meet the good faith requirement?
Prepaid interest
When must the Closing Disclosure be provided to the loan applicant under the TRID rule?
No later than three business days prior to consummation
Which is the only fee that the creditor may collect prior to providing the Loan Estimate?
Credit report fee
Who is ultimately responsible for ensuring that the Loan Estimate is provided?
The creditor
Is the creditor permitted to call the borrower and provide the information contained in the Closing Disclosure over the phone?
No, because the Closing Disclosure must be in writing
What is the maximum fee a creditor may charge a loan applicant for preparation of a Closing Disclosure?
$0
Which of the following is not a change or correction to the Closing Disclosure that would cause a new three-business-day waiting period to begin?
An additional $500 seller credit
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