Red Flag Rules are part of what federal law?
A. ECOA
B. FACT Act
C. Gramm-Leach-Bliley Act
D. SAFE Act
B. FACT ACT
Section 114 of the FACT Act is known as the Red Flags Rules, which, among other things, requires financial institutions and creditors to implement a written identity theft prevention program. [R048]
In order to fulfill RESPA requirements, the Good Faith Estimate (GFE) must be provided to the borrower within three business days of application. Which statement would NOT meet the standards set by RESPA?
A. If hand delivered to the borrower's residence,
A. If hand delivered to the borrower's residence, it can be delivered within five business days.
RESPA only requires that the Good Faith Estimate be provided within three days and accepts the mailing of that document to fulfill that requirement. It is nev
f the final APR on a fixed rate loan deviates from the initial APR shown on the TIL by more than ________, an additional waiting period is triggered before the loan can close.
A. 1/8%
B. 1/4%
C. 3/8%
D. 1/2%
A. 1/8%
Any change to the initial APR disclosed in the original TIL that deviates by more than 1/8 of 1 percent (.125) for a fixed rate transaction will require new disclosures, which triggers a waiting period of three business days after the borrower rec
Regulation Z applies to all
A. business loans with collateral.
B. commercial real estate loans.
C. personal real estate credit transactions.
D. real estate purchase transactions.
C. personal real estate credit transactions.
The provisions of TILA apply to each lender who offers or extends credit to consumers (people, not companies) for personal, family, or household purposes. Under the Act, the definition of credit includes all re
For how many days must the settlement charges detailed in a GFE be available?
A. 3 business days
B. 5 business days
C. 10 business days
D. 15 business days
C. 10 business days
The settlement charges in the GFE must be available for 10 business days. [R036]
What's another name for Regulation Z?
A. ECOA
B. RESPA
C. TILA
D. Title VIII
C. TILA
Regulation Z is also referred to as the Truth in Lending Act (TILA). [R095]
Which federal legislation requires that, in cases where the borrower does not wish to provide information as to race or national origin, the loan officer must make a visual determination or use a surname as the basis for this determination?
A. Equal Credi
C. Home Mortgage Disclosure Act
In order to monitor whether credit needs of local communities are being met, the Home Mortgage Disclosure act requires that race or national origin be marked on every application. [R106]
The main purpose of the FCRA is to
A. create reasonable procedures for denying credit to credit-worthy consumers.
B. create reasonable procedures to ensure the confidentiality and accuracy of consumer credit information.
C. make it mandatory that all user
B. create reasonable procedures to ensure the confidentiality and accuracy of consumer credit information.
The main purpose of the FCRA is to help ensure that, when applying for loans, consumers are evaluated with accurate and confidential credit reports.
Which would LEAST LIKELY be a changed circumstance that would trigger the need to provide a new GFE to a borrower?
A. The borrower asks to change from an adjustable rate loan to a fixed rate loan.
B. The co-mortgagor loses his job and the new debt ratio m
D. The loan originator learns that the alimony the borrower receives (which was not included in her income analysis) will cease after she is remarried next month.
If the MLO can demonstrate that he did not rely on that particular information in issuing th
A loan on a borrower's primary dwelling where the APR exceeds at least 1.5% of the applicable average prime offer rate for a first lien loan is known as a
A. high cost loan.
B. higher-priced loan.
C. HOEPA loan.
D. predatory loan.
B. higher-priced loan.
This is a higher-priced loan as defined by the Mortgage Disclosure Improvement Act. [R140]
Which topic makes up the greatest percentage on the national mortgage loan originator's licensing exam?
A. ethics
B. federal mortgage-related law
C. general mortgage knowledge
D. mortgage loan origination activities
B. federal mortgage-related law
The SAFE Act mandates that all mortgage loan originators pass a national licensing exam with 35% of the questions on federal mortgage-related law. [R121]
The SAFE Act mandates specific topics that must be covered as part of a state-licensed loan originator's continuing education every year. Which of these is a required topic?
A. appraisal
B. fair lending
C. FHA loans
D. secondary markets
B. fair lending
The SAFE Act requires continuing education on federal law and regulation; ethics, including fraud, consumer protection, and fair lending; and nontraditional mortgage products. [R072]
In order for a junior mortgage on a primary residence to be considered a higher-priced loan, the APR must exceed the applicable average prime offer rate by at least
A. 1.5%.
B. 3.5%.
C. 8%.
D. 10%.
B. 3.5%
The Mortgage Disclosure Improvement Act defines a higher-priced junior mortgage loan as one that exceeds the applicable average prime offer rate by at least 3.5%. [R141]
A state law that requires payment of interest on an escrow account is
A. consistent with RESPA and could therefore be enforced by the state.
B. in direct violation of RESPA and would therefore be overturned.
C. inconsistent with RESPA and could therefore
A. consistent with RESPA and could therefore be enforced by the state.
RESPA does not require payment of interest on an escrow account; however, states are allowed to have tighter requirements than those mandated under RESPA, as long as the law is consist
Assuming there has been no fraud or adverse action, a consumer is entitled to a free copy of his credit report
A. every six months.
B. every year.
C. every 18 months.
D. every two years.
B. every year.
FCRA provisions entitle consumers to one free disclosure every 12 months, upon request, from each of the three nationwide credit bureaus. [R024]
Which statement about loan origination fees on a GFE is FALSE?
A. The fee cannot change unless there is a changed circumstance.
B. The fee includes services performed by or on behalf of the loan originator.
C. Lender and mortgage broker fees for the same
C. Lender and mortgage broker fees for the same transaction must be itemized.
Actually, the fees for the lender and mortgage broker are not itemized; they must be shown as a lump sum. [R147]
A mortgage loan originator is NOT required to provide a GFE or a TIL if the borrower
A. applies for loans from multiple lenders.
B. is unlikely to be approved for a loan.
C. refuses to provide the government monitoring data required in the application.
D.
D. withdraws the application before the end of the three business-day period.
If the applicant withdraws the application or the lender turns down the loan before the end of the three business-day period after application, RESPA does not require the loan o
Under which federal legislation does the consumer have the right to receive a copy of the appraisal report on a dwelling that is to be used as collateral for a loan?
A. ECOA
B. HMDA
C. RESPA
D. TILA
A. ECOA
Since the appraised value and the property condition are considered in the approval process, the consumer has the right to inspect the document being used to evaluate these facts, according to the Equal Credit Opportunity Act. [R080]
Each of these loans would be excluded under the definition of a higher-priced loan EXCEPT
A. an initial construction loan.
B. a home equity line of credit.
C. a purchase loan.
D. a reverse mortgage.
C. a purchase loan.
A purchase loan, if it meets the mandated triggers, could qualify as a higher-priced loan under the Mortgage Disclosure Improvement Act. [R142]
Which act provides a specific definition of a nontraditional loan?
A. Homeownership Equity Protection Act
B. Mortgage Disclosure Improvement Act
C. Secure and Fair Enforcement Mortgage Licensing Act
D. Truth in Lending Act
C. Secure and Fair Enforcement Mortgage Licensing Act
The SAFE Act provides a definition of nontraditional mortgage products and requires prelicensing and continuing education on this topic. [R146]
HMDA requires lenders to request what information from applicants for home mortgage loans?
A. applicant's race
B. number of children the applicant has
C. religion of the applicant
D. source of the down payment money
A. applicant's race
The Home Mortgage Disclosure Act requires that the applicant be asked their race or national origin for monitoring purposes. [R028]
Section 32, which governs high cost/high interest loans, is implemented by which federal legislation?
A. ECOA
B. HMDA
C. RESPA
D. TILA
D. TILA
High cost/high interest loans are governed by Section 32 of Regulation Z, which implements the Truth in Lending Act. [R059]
How soon after a borrower is provided with all required disclosures may a loan close?
A. after a 3-business day waiting period from when disclosures were delivered
B. on the 7th business day after the disclosures were provided
C. within 3 business days of
B. on the 7th business day after the disclosures were provided
The amended Truth in Lending Act requires a 7-business day waiting period before a loan can close. [R143]
Which is NOT regulated by RESPA?
A. escrow accounts
B. GFE disclosure timing
C. kickbacks
D. racial discrimination
D. racial discrimination
Racial discrimination is prohibited by the Civil Rights Act and the Fair Housing Act. RESPA is concerned with real estate settlement procedures. [R113]
What are the terms of the "cooling off" period if a loan falls under HOEPA?
A. three business days prior to closing
B. three business days after closing
C. ten business days prior to closing
D. ten business days after closing
A. three business days prior to closing
Once the final fees are calculated and a "Section 32" disclosure is signed, three business days must pass before closing the loan and disbursing funds. [R081]
According to the Truth in Lending Act, how long is the right of rescission for borrowers who have not been provided with full disclosure of the APR (within stated limits)?
A. three business days
B. thirty days
C. one year
D. three years
D. three years
If the APR indicated in the final TILA disclosure is greater than the specified limits (the greater of 0.5% of the amount financed or $100) the borrower has three years to rescind the contract. [R017]
When a change in interest rates prior to closing will increase the borrower's settlement charges to the point of exceeding the tolerances, mortgage loan originators must provide the borrower with a new GFE
A. at least 1 business day prior to closing.
B. w
C. within 3 business days of recognizing the changed circumstances.
RESPA indicates that when it is necessary to provide a revised GFE, loan originators generally must do so within three business days of receiving information sufficient to establish chang
Under RESPA, what is the maximum fine that can be imposed for each instance of a kickback?
A. $5,000
B. $7,000
C. $10,000
D. $15,000
C. $10,000
The fine per kickback can be as much as $10,000 per incident. [R079]
The Truth in Lending Act (TILA) was enacted to
A. delay closings.
B. enable banks to sell mortgages more easily.
C. prevent abuses in consumer credit cost disclosures.
D. put procedures in place for handling settlement.
C. prevent abuses in consumer credit cost disclosures.
TILA requires lenders to disclose consumer credit costs in a uniform manner to promote informed use of consumer credit, enabling them to compare credit costs and shop around for the best credit terms.
According to HMDA, what must be forwarded to the regulator by March 1 of each year?
A. Adverse Action Notices
B. Do Not Call List
C. Loan/Application Register
D. Red Flags Policy
C. Loan/Application Register
The Home Mortgage Disclosure Act requires that all data collected the prior year on the Loan/Application Register be forwarded to the regulator by March 1. [R010]
HMDA stands for
A. Home Mortgage Disclosure Act.
B. Home Mortgage Discovery Act.
C. Homeowners Mortgage Discovery Act.
D. Household Mortgage Disclosure Act.
A. Home Mortgage Disclosure Act.
HMDA stands for the Home Mortgage Disclosure Act. [R029]
The Real Estate Settlement Procedures Act requires that the borrower, at what point, sign the Good Faith Estimate after the initial loan application?
A. 3 business days prior to closing
B. within 3 business days
C. within 30 days
D. never
D. never
RESPA does not require that the Good Faith Estimate is signed by the borrower, but does require that it be provided within 3 business days. [R067]
Loan officer Carol is in a hurry to leave on her vacation, and she leaves a customer's file that contains his Social Security number and bank account numbers on her desk. Carol's carelessness is violating what federal law?
A. ECOA
B. FACT Act
C. HMDA
D. R
B. FACT Act
The FACT Act addresses the problem of identity theft, and a loan officer who does not secure consumer files would be in violation of that act. [R044]
Higher-priced loans" are defined by which law?
A. HOEPA
B. HMDA
C. RESPA
D. TILA
D. TILA
The Mortgage Disclosure Improvement Act, which defines higher-priced loans, is an amendment to the Truth in Lending Act. [R139]
The SAFE Act is part of the
A. Community Reinvestment Act.
B. Housing and Economic Recovery Act.
C. Patriot Act.
D. Real Estate Settlement and Procedures Act.
B. Housing and Economic Recovery Act.
The SAFE Act is a key component the Housing and Economic Recovery Act of 2008. [R071]
What law requires that borrowers be shown how much they are going to pay for credit in dollars and percentages?
A. CRA
B. ECOA
C. GFE
D. TILA
D. TILA
The Truth in Lending Act or Regulation Z requires that borrowers be shown how much they are going to pay for credit in dollars and percentages and that lenders use an APR (annual percentage rate). [R087]
The estimate of settlement charges on a GFE must be made available for at least _____ business days.
A. 3
B. 7
C. 10
D. 15
C. 10
While there are no restrictions on the amount of time an interest rate must remain available, the estimate for all other settlement charges must be available for at least 10 business days
According to the Truth in Lending Act, which loan type includes the right to rescind?
A. construction
B. non-owner occupied refinance
C. owner occupied refinance
D. purchase
C. Owner Occupied refinance
Under the Truth in Lending Act, consumers have the right to rescind any credit transaction involving the establishment of a security interest (usually a mortgage) in their principal residence, except for the initial purchase or
ABC Mortgage Company has been accused of inappropriately calling two consumers on the National Do No Call Registry. What is the total maximum fine ABC could incur for this?
A. $11,000
B. $16,000
C. $20,000
D. $32,000
D. $32,000
The National Do Not Call Registry includes provisions that could lead to an $16,000 fine for each instance of calling a number that is on the list. [R007]
According to the SAFE Act, a mortgage loan originator employed by a federally insured depository institution
A. is not required to be registered or licensed.
B. must be both registered and state licensed.
C. must be registered.
D. must be state licensed.
C. must be registered.
The SAFE Act requires any mortgage loan originator employed by a federally insured depository institution to be registered. [R016]
Which financial arrangement is EXEMPT from the Real Estate Settlement Procedures Act?
A. home equity lines of credit
B. loan assumption
C. refinancing
D. temporary transaction
D. temporary transaction
RESPA covers loans secured with a mortgage placed on a one- to four-family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit. RESPA does not co
Which cost would be included in the APR calculation on the TILA?
A. down payment
B. escrow deposit
C. mortgage insurance
D. pest inspection fee
C. mortgage insurance
The APR reflects the total cost to borrow money. Mortgage insurance is one of those costs, but the others are merely costs associated with buying property, not necessarily with a mortgage, and so would not be part of the APR calculat
To comply with the FACT Act, a mortgage loan originator should
A. consider all legal forms of income when evaluating a loan application.
B. note the race of all loan applicants on the LAR.
C. place all loan applications and documentation in a secure place
C. place all loan applications and documentation in a secure place when not working on them.
The FACT Act requires that all consumer information be secured to avoid identity theft. [R077]
According to the FACT Act, which situation would NOT be a reason for a consumer to add an ID alert to a credit report?
A. a computer programmer who is transferred by his company to London for a year
B. a man whose wallet was stolen and whose credit card w
D. a woman who changes her name after a divorce
A name change is not handled via ID alert. [R014]
Adam secures a loan to buy a small office building that he intends to rent. Under the Truth in Lending Act, how long will he have to change his mind after he signs the note?
A. 0 days; there is no right of rescission
B. 1 business day
C. 3 business days
D
A. 0 days; there is no right of rescission
Regulation Z does not require a rescission period for a commercial loan. [R019]
Two days after borrower Jim received a GFE, he tells the lender he wants to change the loan terms from adjustable to fixed. When must he receive a revised GFE?
A. within 1 business day
B. within 3 business days
C. at least 2 business days prior to closing
B. within 3 business days
An updated GFE is usually required within three business days of learning of changed circumstances. [R009]
Which federal regulation limits the length of time that adverse collection information may appear in a consumer's credit report?
A. Regulation B
B. Regulation C
C. Regulation V
D. Regulation Z
C. Regulation V
The Fair Credit Reporting Act, or Regulation V, limits the number of years that negative credit information can appear in a credit report. [R103]
According to the Fair Credit Reporting Act, if adverse action is taken against a credit applicant because of information on a credit report, the lender who used that report is required to
A. inform the applicant that the reporting agency was the decision
C. provide to the consumer the name, address, and telephone number of the consumer reporting agency that furnished the report.
No lender may use a credit report to deny a loan based on information reported in that credit report without providing the consu
A lender that provides only which service would NOT be required to forward statistical information under the Home Mortgage Disclosure Act?
A. financing for multi-unit housing with at least five units
B. first mortgages
C. home equity loans
D. second mortg
A. financing for multi-unit housing with at least five units
The Home Mortgage Disclosure Act only applies to one- to four-family housing. Five units would be considered commercial financing and is not subject to HMDA. [R088]
Which law ensures lenders use an annual percentage rate (APR) so that the borrowers have the information they need to make informed comparisons?
A. Equal Credit Opportunity Act
B. Fair Housing Act
C. Regulation X
D. Regulation Z
D. Regulation Z
Under Regulation Z, lenders must use an annual percentage rate (APR) so that the borrowers have the information they need to make informed comparisons among different lenders. [R115]
According to the FACT Act, which of these could be considered a failure to secure private information?
A. burning old files in a steel drum behind the office once a month
B. hiring a document destruction company to remove all old files
C. shredding docume
D. throwing documents into the trash for the cleaning crew to empty nightly
The FACT Act has requirements for securing and disposing of personal information such as Social Security numbers. Files should be secure, even after hours. [R013]
Which legislation does NOT allow a lender, when qualifying income, to consider the possibility of a borrower having additional children?
A. ECOA
B. FCRA
C. RESPA
D. TILA
A. ECOA
Under Regulation Z, which advertisement would trigger the requirement to disclose all finance charges and the true APR?
A. "Interest rates at an all-time low"
B. "Monthly payments under $700"
C. "No money down"
D. "Stop paying rent
B. "Monthly payments under $700"
Regulation Z requires that once you state any type of credit terms in advertising, such as an exact interest rate or monthly payment, you must disclose all finance charges and total annual percentage rate (APR). [R078]
According to the ECOA, an adverse action notice is NOT required to include the
A. appraiser's name.
B. credit bureau.
C. federal regulator.
D. lender.
A. appraiser's name.
The appraiser is not required to be listed, even if value of condition was the reason for the loan denial. The lender, credit agency, and federal regulator are all required on a statement of credit denial. [R012]