Mortgage Regulations and Abbreviations

ECOA requires that: An incomplete loan application be discarded An applicant be informed whether an application was accepted or rejected within 60 days of filing a complete application Every applicant be granted some type of loan An applicant be given notification of the status of his/her loan application within 30 days

An applicant be given notification of the status of his/her loan application within 30 days

The agency that focuses its actions directly on consumers, consolidates responsibilities and supervision of financial entities, products, and services, and protects consumers from unfair, deceptive, and abusive acts and practices is the: Consumer Protection Agency Consumer Financial Protection Bureau Federal Housing Administration Department of Housing and Urban Development

CFPB

Under the S.A.F.E. Act, states and their regulatory agencies have the duty and the authority to enact licensing standards that meet the requirements of the Act, while overall responsibility for interpretation, implementation, and compliance currently lies with: The NMLS The Federal Reserve HUD The CFPB

CFPB

Which of the following is most likely to be considered a violation of Regulation B? Charging a minority borrower a higher interest rate due to a low down payment Declining a loan for a single woman due to a low credit score Charging a minority borrower a higher interest rate than a similarly situated non-minority borrower Declining a loan for a borrower who is 75 due to a high debt-to-income ratio

Charging a minority borrower a higher interest rate than a similarly situated non-minority borrower

The federal agency that implements and enforces rules related to the origination of FHA loans is the: Consumer Financial Protection Bureau (CFPB) Department of Housing and Urban Development (HUD) Federal Trade Commission (FTC) National Credit Union Administration (NCUA)

HUD

Even before the adoption of the Dodd-Frank Act and the Ability to Repay Rule, which of the following federal laws created specific requirements for the verification and documentation of a borrower's repayment ability? Home Ownership and Equity Protection Act Real Estate Settlement Procedures Act Fair and Accurate Credit Transactions Act Equal Credit Opportunity Act

Home Ownership and Equity Protection Act

The regulations issued for the implementation of ECOA are known as: Regulation E Regulation B Regulation C Regulation X

Regulation B

Which regulation implements the provisions of ECOA? Regulation Z Regulation X Regulation B Regulation C

Regulation B

Which government agency is responsible for policing and enforcing misleading advertisement for credit? HUD CFPB TILA Federal Reserve

The answer is CFPB. The CFPB now has primary enforcement responsibility over TILA. The FTC does still retain some authority.

Redlining is addressed in which federal law? RESPA HOEPA FCRA ECOA

The answer is ECOA. The Equal Credit Opportunity Act (ECOA) prohibits discrimination in extension of credit based on race, color, religion, national origin, sex, marital status, age, potential to have or raise children, the fact that the applicant receives income from a public assistance program, or the fact that the applicant has exercised his or her rights under the Consumer Credit Protection Act.

What legislation was enacted because of anecdotal evidence that women were not treated on an equal basis with men in credit markets, particularly in mortgage credit markets? HOEPA FACTA ECOA Fair Housing Act

The answer is ECOA. The Equal Credit Opportunity Act is a fair lending law passed primarily because of anecdotal evidence that women were not treated on an equal basis with men in credit markets.

A consumer report is defined under which of the following federal laws? FACTA FCRA ECOA HMDA

The answer is FCRA. FCRA defines a consumer report as any information from a consumer reporting agency that relates to a consumer's creditworthiness, credit standing, credit capacity, character, personal characteristics, or mode of living, used or expected to be used, in order to determine eligibility for credit or insurance, or to evaluate a consumer for employment.

What federal legislation requires loan originators to collect demographic data to ensure that creditors are not engaging in discriminatory lending? ECOA HMDA GLB Act FCRA

The answer is HMDA. The Home Mortgage Disclosure Act is a reporting law that helps the federal government, among other things, identify discriminatory lending practices.

Which of the following deals most specifically with representations made in mortgage advertising? Regulation X HMDA MAP Rule E-SIGN Act

The answer is MAP Rule. The Mortgage Acts and Practices Rule (MAP Rule or Regulation N) deals specifically with prohibited material misrepresentations in any commercial communication, including advertising, regarding the terms of mortgage credit products.

Which of the following is intended to ensure that consumers are provided with information on the nature and costs of the settlement process? FCRA HPA HOEPA RESPA

The answer is RESPA. The purpose of RESPA and Regulation X is to help consumers become better shoppers for settlement (closing) services by providing them with information on the nature and costs of the settlement process. RESPA and Regulation X are also intended to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.

Which of the following federal regulations prohibits discrimination based on race, color, religion, sex, marital status, or national origin in a credit transaction? Regulation C Regulation B Regulation Z Regulation G

The answer is Regulation B. Regulation B implements the provisions of the Equal Credit Opportunity Act (ECOA), which ensures that all persons, consumers, and businesses are given an equal chance to obtain credit by prohibiting discrimination based on criteria including race, color, religion, national origin, sex, marital status, and age (provided the individual is of age to enter into a contract).

Inquiring as to whether income is derived from alimony, child support, or separate maintenance is prohibited by which of the following? Regulation C Regulation Z Regulation D Regulation B

The answer is Regulation B. Under Regulation B, a loan originator may not ask whether an applicant receives alimony, child support, or separate maintenance payments not needed in order to get credit, unless he or she is first told that this information does not have to be provided. If regular alimony, child support, or separate maintenance payments need to be counted as income to qualify for credit, an applicant may be asked to prove that it has been received consistently.

The requirement that borrowers receive the Consumer Handbook on Adjustable-Rate Mortgages is required under which regulation? Regulation X Regulation Z Regulation C Regulation M

The answer is Regulation Z. Regulation Z cites a series of required disclosures, including the Consumer Handbook on Adjustable-Rate Mortgages (the CHARM Booklet), published by the Federal Reserve Board and the Federal Home Loan Bank Board, or a similar booklet.

A disclosure that allows a consumer to more easily compare loan options is required under which regulation? Regulation B Regulation Z Regulation V Regulation H

The answer is Regulation Z. The TILA-RESPA Rule, included in Regulation Z, outlines the requirements for use of the Loan Estimate and the Closing Disclosure, intended to facilitate the ability of consumers to determine whether they can afford a particular loan, and/or compare specific loan products, including their costs over the life of the loan.

Which of the following specifies current disclosure requirements under the TILA-RESPA (TRID) Rule? Regulation Z Regulation C Regulation O Regulation B

The answer is Regulation Z. The TILA-RESPA Rule, or TRID Rule, sets forth disclosure requirements and model forms for the two consolidated disclosures, the Loan Estimate and Closing Disclosure, and provides guidance to ensure compliance by licensees and exempt persons required to follow its provisions. The Rule's provisions amended Section 19 of Subpart C of Regulation Z (12 C.F.R. §1026.19) and added two sections to Subpart E.

Advertising an attractive interest rate that a mortgage professional is not at liberty to offer is a major ethical offense and a violation of: Regulation Z The Equal Credit Opportunity Act Regulation X The Fair Credit Reporting Act

The answer is Regulation Z. Under the requirements of Regulation Z, an ad may state specific credit terms only if those terms actually are or will be arranged or offered to the consumer. Bait-and-switch credit promotions are not allowed. These involve advertising a loan at very attractive terms and then informing potential customers that, while the advertised loan is not available, a substitute is.

Under the Fair Housing Act: Lending decisions cannot be made based on residency status Charging different fees based on race is prohibited Lenders must provide clear, plain-language disclosures Lenders are required to report demographic information to the federal government

The answer is charging different fees based on race is prohibited. The Fair Housing Act prohibits discrimination in the sale, rental, and financing of any residential housing based on race, color, religion, national origin, sex, familial status, or mental or physical handicap, and therefore, prohibits charging different fees based on race. Residency status is not a protected category under the Fair Housing Act. Disclosure requirements are not imposed by the Fair Housing Act. Government reporting requirements are covered under the Home Mortgage Disclosure Act (HMDA).

A purpose of the Home Mortgage Disclosure Act (HMDA) is to: Identify possible discriminatory lending patterns Ensure that prices of homes are fairly quoted Help lenders decide on mortgage interest rates Provide borrowers with property listings and their prices

The answer is identify possible discriminatory lending patterns. The HMDA was enacted because of credit shortages in certain urban neighborhoods and the failure of some financial institutions to provide adequate home financing to qualified applicants on reasonable terms and conditions. Its main purpose is to provide the public with information about how well financial institutions are meeting the credit needs of the people in the neighborhoods and communities they serve; aid public officials in targeting public investments so as to attract investments from the private sector; and allow for the public to determine possible discriminatory lending patterns and to assist in enforcing laws against discrimination.

Each of the following is true about the Department of Housing and Urban Development (HUD), except: The Federal Housing Administration, with its liberal-eligibility FHA loan programs, operates under HUD's authority It provides or makes referrals related to housing counseling for loan applicants seeking a HECM or high-cost home loan Public housing and multi-family housing fall under its purview It has a major role in overseeing the mortgage industry

The answer is it has a major role in overseeing the mortgage industry. Although the federal Department of Housing and Urban Development (HUD) no longer oversees the mortgage industry (that job has been taken over by the Consumer Financial Protection Bureau, or CFPB), it continues to operate in a number of important areas relating to housing. These areas include programs related to community planning and development, public housing and multi-family housing, and providing counseling for those seeking to purchase a home. The Federal Housing Administration (FHA) also operates under HUD; the FHA sponsors loan programs with relatively liberal qualification requirements, insuring financial institutions that offer loans to individuals who might not qualify for a prime loan.

Which of the following is not true concerning ECOA? It requires lenders to notify loan applicants of their application status within 30 days Its provisions are implemented by Regulation B It requires lenders to give borrowers a copy of their appraisal and a notice stating they are entitled to a copy of the appraisal It requires the disclosure of the APR on all advertisements which contain an interest rate

The answer is it requires the disclosure of the APR on all advertisements which contain an interest rate. Regulation B implements the provisions of ECOA. Under ECOA, a creditor is required to provide an applicant with a copy of all appraisals and other written valuations developed in connection with an application for credit that is to be secured by a first lien on a dwelling. A copy of each appraisal or other written valuation must be provided the earlier of promptly upon completion or three business days prior to consummation of the transaction for closed-end credit or account opening for open-end credit. The creditor must mail or provide a notice of the applicant's right to receive a copy of all written appraisals developed in connection with the application no later than three business days after receiving a completed application. ECOA also requires creditors to notify loan applicants within 30 days regarding application status (i.e., incomplete, accepted, denied, etc.).

Under Regulation X, the term "loan originator" applies to a: Loan processor Mortgage broker only Mortgage broker or lender Mortgage lender only

The answer is mortgage broker or lender. Regulation X defines a loan originator to include a lender or mortgage broker.

Under RESPA, the servicer may require a borrower to pay into an escrow account to cover disbursements that are unanticipated or disbursements made before the borrower's monthly payments are available in the account, a cushion or reserve that must be no greater than _____ of the estimated total annual disbursements from the escrow account. One half One third One sixth One twelfth

The answer is one sixth. Under RESPA, a lender may require the borrower to establish an escrow account at closing. The loan servicer may require a borrower to pay into the account to cover disbursements that are unanticipated or disbursements made before the borrower's monthly payments are available in the account. This is the escrow cushion or reserve, which must be no greater than one sixth of the estimated total annual disbursements from the escrow account.