Regulation Z (General)

T or F: Any loan to a corporation, partnership, proprietorship, LLC, association, estate or trust, or other organization is NOT consumer credit and is exempt from Reg Z disclosure, EXCEPT credit cards.

TRUE

T or F: Charges subject to a zero tolerance and cannot change include fees paid to the lender, mortgage broker or an affiliate thereof, fees paid to an unaffiliated third party if the lender did not permit the borrower to shop for the settlement service, or transfer taxes

TRUE

T or F: Charges subject to the 10% tolerance include recording fees and charges for third party services where the charge is not paid to the lender or its affiliate, and the consumer is permitted to shop for the service and selects a third party included on the lender's written list of service providers

TRUE

T or F: Credit extended to acquire, improve, or maintain rental property (regardless of the number of housing units) that is not owner-occupied is deemed to be for business purposes.

TRUE

T or F: Generally, if the actual amount exceeds the amount disclosed on the Loan Estimate, the LE was not made in good faith regardless of the reason for the incorrect disclosure

TRUE

T or F: HOEPA applies under the terms of the loan contract or open-end credit agreement, the creditor can charge a prepayment penalty more than 36 months after consummation or account opening, or in an amount that can exceed more than 2% of the amount prepaid

TRUE

T or F: If the disclosed finance charge is understated and the APR is understated, but the disclosed APR is closer to the actual APR than the rate that would have resulted from permitted tolerances, the disclosed APR will be considered accurate.

TRUE

T or F: If the owner expects to occupy the property for more than 14 days during the coming year, the property cannot be considered non-owner-occupied and this special rule will not apply.

TRUE

T or F: Loans used to purchase or improve rental property are considered business-purpose, and are, therefore, exempt from Reg Z. The consumer or business-purpose depends in part on whether the rental property is owner-occupied and how many units the property contains.

TRUE

T or F: Mortgage Insurance is available from government agencies (such as FHA and VA) as well as from private insurance companies. It is normally required when the borrower has only a small down payment (usually less than 20%) when buying a home

TRUE

T or F: Points paid by the seller or builder are always EXCLUDED from the Finance Charge calculation, since to be a finance charge, the fee must be directly or indirectly paid by the borrower

TRUE

T or F: QMs cannot contain risk features such as interest only or negative amortization. They must utilize certain underwriting criteria and points and fees are limited.

TRUE

T or F: A loan to a farmer to purchase a farm that is secured by the farm would be exempt from Reg Z. Even if the borrower's personal residence will be on the property, as long as the primary purpose of the loan is agricultural, Reg Z doesn't apply.

TRUE.

T or F: If the borrower is purchasing three or more units, the purpose is considered business credit and is NOT subject to disclosure under Reg Z, regardless of whether or not the borrower is occupying one of the units

TRUE.

T or F: All loans that require a Loan Estimate also require a Closing Disclosure

TRUE. All loans that require a LE also require a CD

For purposes of the right of rescission, the APR is considered accurate if the disclosed finance charge is: A. Understated by no more than 1/2 of 1% of the face amount of the note or $50, whichever is greater B. Understated by no more than 1/2 of 1% of the face amount of the note or $100, whichever is greater C. Less than the amount required to be disclosed D. Greater than the amount required to be disclosed

B and D

Loans that are ongoing and allow a consumer to borrow money, repay part or all of it, and then borrow again are called: A. Revolving credit B. Closed-end C. Adjustable credit

A. Revolving credit

How does the cost information in the CD differ from the information in the LE? A. The CD includes just taxes and fees while the LE includes the full costs B. The costs in the CD are actual costs, whereas the costs in the LE are estimated costs C. The CD includes extra costs not anticipated in the initial LE

B.

On a regular loan subject to RESPA, if the APR at the time of consummation differs from the early estimate by more than _____% (+ or -), Reg Z requires re-disclosure before the loan closes A. 1/10% (0.10%) B. 1/8% (0.125%) C. 1/4% (0.25%) D. 1/2% (0.50%)

B. 1/8% (0.125%)

Whenever a mortgage loan is sold or otherwise transferred to a new third party, a notice must be provided within _____ days of the transfer by the purchaser or transferee of the loan, not the entity selling or transferring the loan: A. 15 days B. 30 days C. 45 days D. 5 days

B. 30 days

If the loan is to be secured by a dwelling, disclosures must be provided within ______ days prior to consummation: A. two days B. three days C. four days D. five days

B. three days

Which of the following is NOTan example of closed-end credit? A. Automobile loans B. Installment loans C. Credit cards D. Home improvement loans E. Home mortgage loans

C. Credit cards

One point is normally equal to _____ percent of the principal amount A. 1/2 B. 3 C. 1 D. 4

C. One point is normally equal to one percent of the principal amount

The following information must appear on the Notice of Transfer of Mortgage Loans: A. Identification of the loan being transferred B. The identity, address, and telephone number of the loan's new owner C. The acquisition date D. How to reach an agent or party having authority to act on behalf of the loan's new owner E. The location of the place where transfer of the ownership of the debt is or may be recorded

All of the above

Which of the following would be excluded from the finance charge? A. Interest forfeited as a result of an interest reduction required by law on a time deposit used as security for an extension of credit B. Discounts offered to induce payment for a purchase by cash, check, or other means C. Application fees charged to all applicants for credit, whether or not credit is actually extended D. Charges for actual unanticipated late payment, for exceeding a credit limit, or for delinquency, default, or a similar occurrence

All of these items would be excluded from the finance charge

Which of the following loans are exempt from some parts of the ATR rule? Choose all that apply A. Reverse mortgage B. Bridge loan for 24 months C. Construction-phase loans for 8 months D. All qualified mortgages

A

Which of the applications represents a transaction covered by the TRID rule? A. 30 year fixed rate mortgage B. Reverse mortgage C. Temporary financing loan D. Home Equity Line of Credit (HELOC)

A and C

A unique Loan ID number is required on A. Loan Estimates B. In-progress applications C. Complete applications D. Closing Disclosures

A and D

Which of the following is not an example of closed-end credit? Check all that apply A. Credit cards B. Revolving credit plans C. Automobile loans D. HELOCs

A, B, and D

What aspect of a loan differentiates it between qualifying for a safe harbor and rebuttable presumption? A. The loan's APR B. The amount of money an institution can lend C. The down payment D. The consumer's credit score

A.

How many triggering terms must be used before a bank is required to provide all of the additional disclosures? A. 1 B. 2 C. 3 D. 4

A. 1

What is a home equity product? A. Credit that is borrowed against the equity in a home B. Any loan that will increase a home's value C. Loans made to improve the property value of a home D. One-time loans based on home equity

A. Credit that is borrowed against the equity in a home

In rescindable transactions, lenders must give a copy of the Regulation Z material disclosures and two copies of the written Notice of the Right to Cancel to the following persons who possess ownership interest and occupy the dwelling as a primary residence: A. All owners of collateral, individually B. Only owners who are signing the note C. The principal owner of the collateral D. Either owner of the collateral

A. Failure to give all owners, individually, material disclosures and copies of the written Right to Cancel gives the owners three years to rescind the loan

Which of the following types of loans requires a Notice of Transfer of Mortgage Loan if the loan is sold to a third party? A. Purchase loan of the borrower's vacation home to a new bank B. Home equity line of credit of the borrower's principal dwelling to an affiliate C. Refinance loan of the borrower's rental property D. Home equity loan secured by the borrower's principal dwelling sold to an affiliate strictly for administrative convenience for servicing purposes

A. Mortgage loans secured by the borrower's principal dwelling, whether open- or closed-end, sold or transferred to a third party (even an affiliate) require a notice to be provided.

Which item below is typically added to the original loan request, thereby increasing the principal amount of the note? A. Insurance premiums financed by the lender B. All finance charges C. Credit report fees D. All of the above

A. insurance premiums financed by the lender

Which item below is added to the requested loan amount in order to arrive at loan principal? A. Various charges financed by the lender B. Prepaid finance charges paid separately by the borrower C. All prepaid finance charges

A. various charges finance by the lender

The following information must appear in the Servicing Transfer Notice: A. Identification of the loan being transferred B. The identity, address, and telephone number of the loan's new owner C. The date of transfer D. How to reach an agent or party having authority to act on behalf of the loan's new owner E. The location of the place where transfer of the ownership of the debt is or may be recorded F. At the lender's option, any other information the new owner chooses to provide

All of the above

The written Notice of the Right to Cancel explains (select all that apply): A. The security interest on the home B. The consumer's right to cancel the transaction within 3 days C. The steps the consumer must take in order to cancel the transaction D. The effects of recission E. The date the recission period expires

All of the above

What is the purpose of a Qualified Mortgage (QM)? A. To guarantee that the consumer will repay the loan in full and on-time B. To provide a degree of certainty and protection to lenders against legal claims C. To allow lenders to make more money by charging more points and fees D. To allow more consumers to qualify for loans

B

Which of the following is a rescindable transaction? A. A small business loan ($15,000) secured by the borrower's personal residence B. A borrower has a $48,000 mortgage loan with First Financial. Lockwood Financial agrees to refinance the loan and increase it to $50,000. The $50,000 loan is secured by the borrower's primary dwelling C. A home improvement loan to replace the roof on a primary dwelling is secured by a second mortgage on a vacation condo D. A dentist acquires a loan to open a dental practice and secures it with a second mortgage on his home

B.

The tolerance for disclosure in regard to APR for a foreclosure is A. $5 B. $35 C. $50 D. $100

B. $35

Lenders must provide information about interest rates and payments in the form of a table. The information in the table must be in a minimum ____-point font to ensure that it is clear and conspicuous A. 8 B. 10 C. 12 D. 14

B. 10-point font

Rental property is considered owner-occupied for purposes of Reg Z if the owner expects to occupy it for at least ____ days a year A. 7 days B. 14 days C. 30 days D. 60 days

B. 14 days

Loan Principal = Various Charges Financed by the Lender + ______ A. Amount financed B. Original requested amount C. Prepaid finance charges D. Loan principal

B. Original requested amount

Name the item that is deducted from the principal amount in order to arrive at amount financed A. Insurance premiums financed by the lender B. Prepaid finance charges C. Transaction charges D. Life insurance premiums

B. Prepaid finance charges are the only items deducted from the principal amount to determine the amount financed.

Which of the following is true about points that are paid before or at loan closing? A. They can be excluded from the finance charge B. They must be deducted from the loan principal amount to calculate the amount financed C. They can be paid by the seller but not the borrower D. They must be paid in cash

B. They must be deducted from the loan principal amount to calculate the amount financed

A loan closes on Friday, March 2nd. The Reg Z material disclosures and two copies of the notice of the right to rescind were given on Thursday, March 1st. When will the three days right of rescission period end at midnight? A. Sunday March 4th B. Monday March 5th C. Tuesday March 6th D. Wednesday March 7th

B. Tuesday, March 6th

Which of the following is NOT a rescindable transaction? A. A home equity line of credit secured by a second mortgage on the borrower's principal dwelling B. The Millers are selling their current home while they build a new home. The family technically has two principal dwellings as well as a bridge temporary loan secured by their current home C. A 30-year mortgage loan used to purchase a new home (principal dwelling) D. The Wankhedes are buying a vacation home in Napa Valley. The loan for their vacation home is secured by their primary residence

C.

Which of the following is true regarding premiums for optional credit life insurance coverage? A. They should always be included in the finance charge B. They may be included in the finance charge, but only if the consumer assigns a preexisting policy C. They may be excluded from the finance charge if the lender makes a few additional disclosures

C.

Mike signs for a loan on Tuesday, Aprill 11. He receives his Reg Z materials and two copies of the right to rescind the next day (April 12). When will the rescission period for the loan end? A. Thursday, April 13 B. Friday, April 14 C. Saturday, April 15 D. Monday, April 17

C. Mike has until Saturday, April 15, to rescind

How many days does a lender have to provide the servicing transfer notice? A. 3 days B. 15 days C. 30 days D. 45 days

C. The notice must be provided within 30 days of the transfer by the purchaser or transferee of the loan, not the entity selling or transferring the loan

Which of the following dwellings are not covered by the right of rescission? A. A houseboat used as a principal residence B. A trailer used as a primary residence C. A cabin for weekend and holiday getaways D. A condo unit used as a principal residence

C. The right of rescission applies to loans secured by dwelling used as a consumer's principal residence

When a LE disclosures is required on a mortgage transaction, the lender must provide it within after receiving the loan application A. Five business days B. Five calendar days C. Three business days

C. Three business days

When the exact information necessary to prepare the LE is not known at the time, what does Reg Z require? A. Leave that information blank B. Use the default information provided by the bank C. Wait until it is found to prepare the LE D. Estimate based on experience and best available information

D.

Whenever a mortgage loan is sold or otherwise transferred to a new third party, a notice must be provided to the borrower. This notice must be provided within ___ days of the transfer by the purchaser or transferee of the loan, NOT the entity selling or transferring the loan A. 3 B. 5 C. 21 D. 30

D. 30 days but NLT when the loan itself is sold or transferred.

Blanche Dubow has a 5-year ARM loan. Which type of mortgage is this? A. Balloon B. Standard C. ATR D. Non-Standard

D. A five-year ARM loan would be considered a non-standard mortgage

A revised closing disclosure is required in which of the following events prior to consummation: A. The APR becomes inaccurate B. The loan product changes C. A prepayment penalty is added D. All of the above

D. All of the above

Costs that can change without regard to any tolerance limitation are: A. Prepaid interest, property insurance premiums, amounts placed into an escrow, impound, reserve or similar account B. Services required by the lender where the consumer is permitted to shop and the consumer selects a third-party service provider not on the lender's written list of service providers C. Charges paid to third-party service providers for services not required by the lender D. All of the above

D. All of the above

HOEPA applies to any consumer credit transaction secured by the consumer's principal dwelling in which the APR applicable to the transaction will exceed the APOR: A. 8.5 percentage points for a first-lien transaction if the dwelling is personal property and the loan amount is less than $50,000 B. 6.5 percentage points for a first-lien transaction that does not fit the above criteria C. 8.5 percentage points for a subordinate-lien transaction D. All of the above

D. All of the above

What are some of the differeny synonyms for interest? A. Discount charge B. Add-on C. Time-price differential D. All of the above

D. All of the above. Discount charge, add-on, and time-price differential are all synonyms for interest.

If the correct APR of a regular consumer loan is 8.00%, which of the following APRs (if disclosed to the consumer) would be a Reg Z violation? A. 7.85% B. 8.05% C. 7.90% D. 8.20% E. A and D

E. A and D

T or F: The right of rescission applies only to closed-end loans

FALSE

T or F: Homeowner's insurance premiums can be excluded from the finance charge if the consumer is allowed to select the insurer, even if the bank requires the insurance coverage as a condition for making the loan

FALSE.

T or F: To calculate amount financed, you should look at the principal amount of the loan

FALSE.

T or F: When calculating a "regular" loan, Reg Z requires that the disclosed APR be within 1/2% (0.5%), plus or minus the actual APR depending on the transaction

FALSE. 1/8% (0.125%) for regular loans and 1/4% (0.25%) for irregular loans.

T or F: Business loans are part of Reg Z

FALSE. Business loans are exempt from Reg Z and, therefore, do not require Reg Z disclosures.

T or F: Consummation is the same thing as closing or settlement

FALSE. Consummation occurs when the consumer becomes contractually obligated to the creditor on the loan

T or F: For purposes of the right of rescission, the APR will be considered accurate if the disclosed finance charge is understated by no more than 1/2 of 1% of the face amount of the note or $50, whichever is greater.

FALSE. For purposes of the right of rescission, the APR will be considered accurate if the disclosed finance charge is understated by no more than 1/2 of 1% of the face amount of the note or $100, whichever is greater.

T or F: In variable rate transactions it is NOT necessary to provide an example of the payments that would result from an increase in the interest rate

FALSE. In variable rate transactions, banks MUST provide an example of the payments that would result from an increase in the interest rate

T or F: A beach house that the owner will occupy for a month in the coming summer and rent out the rest of the year is not owner-occupied

FALSE. It IS considered owner-occupied

T or F: A Notice of Transfer of Mortgage Loan is required when a bank sells servicing rights to another institution

FALSE. It is required when legal title of the loan itself is sold or transferred. Not required when servicing rights change hands but ultimate ownership of the loan (the asset) is not sold or transferred.

T or F: Late payment charges are considered a finance charge

FALSE. Late payment charges are NOT considered a finance charge.

T or F: Reg Z requires lenders to provide disclosures on ALL loans made to individuals

FALSE. Reg Z applies only to "consumer credit"

T or F: Reg Z requires that lenders waive the right of rescission for "bona fide emergencies"

FALSE. Reg Z leaves the determination of whether or not to waive the right of rescission up to the lending institution

T or F: The total of payments is the total amount of money that is available to the consume

FALSE. The total of payments is the amount that the borrower will pay to the lender after all payments are made as scheduled.

To be considered a QM, a first-lien loan's APR cannot exceed the average prime offer rate

FALSE. To be considered a QM, a first-lien loan's APR cannot exceed the APOR by a certain percentage determined by the loan size

T or F: Commercial loans must also follow the ATR Rule

False. The rules apply only to consumer purposed, closed-end loans secured by a dwelling.

A closed-end consumer credit transaction secured by the consumer's principal dwelling with an APR that exceeds the APOR for a comparable transaction as of the date the interest rate is set

HPML

Which of the following are terms that refer to the basic fee that lenders charge to perform a loan transaction? Choose all that apply A. Loan fee B. Point(s) C. Origination fee D. Appraisal fee

Loan fee, point(s), and origination fee are all synonyms for loan fees.

This type of insurance protects a lender from loss if a borrower defaults on the loan and there is not enough equity in the real estate collateral to cover the amount of the loan

Mortgage Insurance

If the right of rescission is not handled properly, could a borrower get a free home if funds were advanced?

NO. Although the lender must refund all interest, fees, appraisal cost, etc., the borrower still owes the principal amount on the home

Brian and Jennifer Martin want a loan to purchase a four-unit apartment building. They intend to live in one unit and rent the other three. Would this loan be subject to Reg Z?

NO. It is considered a business-purpose loan. If the loan's purpose is to purchase rental property with more than two living units, it is considered business-purpose. Even though the rental property is owner-occupied, Reg Z does NOT apply.

Megan Johnson withdraws $20,000 from her HELOC in order to pay for her son LeRoy's college tuition. Does Reg Z require her lender to send her any additional disclosures?

NO. Loans that are made expressly for post-secondary education purposes (college expenses) have special restrictions and disclosure requirements.

The owner of a six-unit apartment building wants to use the loan to put a new roof on the building. If the owner lives in one of the units, does Reg Z apply?

NO. The fact that there are more than four rental units qualifies it as a business-purpose loan.

Are the types of loans covered by the prepayment penalty restrictions similar to the coverage of the ATR rules?

NO. They are DIFFERENT

By signing the Confirm Receipt, is the applicant guaranteeing the he or she will accept the loan?

No

Peter Corleone is applying for a loan with Bayside Financial. He is looking to borrow $350,000 to purchase a 200-acre farm that includes a 4,000 square foot house that Peter and his family plan to live in. Peter plans to grow corn on the land, and farming the land will be his primary occupation. Is this loan covered by Reg Z?

No.

Would a $53,500 loan to purchase a 30-unit apartment complex which is secured by the owner's personal residence be covered by Reg Z?

No. The purpose of the loan is to invest in a 30-unit apartment building, which is a business-purpose loan. Therefore, it is not subject to Reg Z, even though the collateral is a personal residence.

Mr. McCartney owns a four-family apartment building. All four units are rented to full-time students from the nearby college campus. Is a loan to install a new roof on the building subject to Reg Z?

No. The rental property is NOT owner-occupied

____ is a situation where the borrower would be allowed to deduct from the plaintiff's (the foreclosing bank's (recovery the amounts this new provision would allow to be deducted

Recoupment

Reg Z applies to any transaction secured by real estate or the borrower's dwelling, such as: Residential mortgage loans Home improvement loans Home equity loans Loans to purchase vacant lots Loans secured by mobile homes or houseboats Reverse mortgages High-cost home equity loans (HOEPA) HPMLs

TRUE

T or F: A QM cannot have DTI above 43%, negative amortization, I-O payments, and a balloon payment, except in certain "small creditor" situations

TRUE

T or F: A loan fee or origination fee payable to the lender is usually a percentage of the loan principal amount and is often referred to as loan "points"

TRUE

T or F: A loan to maintain or improve owner-occupied rental property is considered business-purpose if it contains more than four housing units

TRUE

T or F: ARMs are variable rate, closed-end loans for a period in excess of one year and are secured by a consumer's principal dwelling.

TRUE

T or F: All mortgage transaction disclosures must include a statement as to whether or not the obligation assumable by subsequent purchaser of the dwelling on its original terms

TRUE

T or F: Consumer loans over $61,000 are generally exempt from Reg Z disclosure requirements

TRUE

T or F: For loans that amortize, lenders must separately itemize an estimate of the amount for taxes and insurance if an escrow account will be established

TRUE

T or F: If a charge is reasonable, the creditor does not receive any compensation in connection with the charge, or it is not paid to an affiliate, it may be EXCLUDED from points and fees

TRUE

T or F: If a significant violation has occurred, in some cases, borrowers may be able to revoke a loan transaction and get all the interest back that has been charged for the loan

TRUE

T or F: Reg Z does NOT apply to transactions over $61,000 as of 2022 except when secured by real estate or a dwelling

TRUE

T or F: Reverse mortgages, temporary loans, and construction phase loans are covered by the prepayment penalties rules, but are exempt from ATR rules

TRUE

T or F: Right of rescission applies to the new amount financed which exceeds the unpaid principal balance, any unpaid finance charges on existing dept, and amounts attributed to the costs of refinance or consolidation

TRUE

T or F: Right of rescission does not apply to a residential mortgage transaction (including refinances) by the same creditor already secured by the principal dwelling

TRUE

T or F: The ATR rule applies to all consumer mortgage loans that meet the definition of "covered transaction"; it does not matter whether or not the loan is a Qualified Mortgage (QM)

TRUE

T or F: The basic rule is that a covered transaction may NOT include a prepayment penalty, with a few exceptions

TRUE

T or F: The finance charge shows the consumer the total cost of the loan in terms of dollars and cents

TRUE

T or F: The right of rescission applies to home improvement loans, home equity loans, and other loans secured by the consumer's principal dwelling, unless the purpose of the loan is to purchase or construct the dwelling

TRUE

T or F: The threshold for 2023 is $66,400

TRUE

T or F: APR is a forecast of the cost of a loan expressed as yearly rate that assumes all payments are made as scheduled

TRUE.

T or F: Knowing or willful violation of Reg Z can be punished by personal fines of up to $5,000.

TRUE.

T or F: Once a foreclosure has been initiated, a consumer has the right to rescind a transaction if a mortgage broker fee (which should have been included) was not included in the finance charge

TRUE.

If a lender forecloses on a home, does the borrower have any legal recourse after 3 years?

YES

Alison Adams is looking to finish her basement. She applies for a $30,000 loan at Bayside Financial to pay for the home improvement project. Is this loan subject to Reg Z?

YES.

Does Reg Z apply to a $14,000 loan to an individual who wants to go on vacation?

YES.

Joan and Chuck Brown receive a loan for their daughter's college tuition. The loan is secured by a mobile home in which they own and live. Does the right of rescission apply to this loan?

YES.

If a bank only charges application fees to applicants whose loans are approved, do these fees have to be included in the finance charge?

YES. In this case, the application fee is a condition of making the loan and is part of the loan cost, so it must be added to the finance charge. If it is charged to those approved and declined, then it is not a finance charge.

Henry Jones' son Adam has been accepted to a prestigious arts academy for talented youth. Adam wants to attend the arts academy instead of the public elementary school close to his home. Would a $10,000 personal loan to pay for his son's tuition that is secured by Henry's business assets be subject to Reg Z?

YES. It is the purpose of a loan, not the collateral, which determines if Reg Z applies. The purpose of this loan is personal even though the collateral is business related.

In real estate transactions, are Mortgage Insurance Premiums included in the finance charge?

YES. Mortgage insurance premiums must be included in the finance charge.

If a lender finances the premium for credit life insurance, is the premium amount added to the loan request to compute the total principal amount on the note, even though the premiums are not considered finance charges?

YES. Since the lender is financing this charge, it increases the loan by the amount of the premium.

The adjustment period that may encompass an initial rate that is lower than the fully-indexed ARM rate

discounted/start/teaser rates

Reg Z requires Loan Estimates for most consumer purpose loans secured by a dwelling and subject to: A. RESPA B. TILA C. HPML D. ARM

A. RESPA

LeRoy is looking to take out a private education loan. LeRoy completes the self-certification form developed by the Department of Education prior to closing of the loan. What information must be included on this form? Check all that apply A. The cost of attendance at the student's school B. The amount of available financial aid C. The availability of Federal loans D. LeRoy's GPA for the previous semester

A, B, and C

A customer stops by the desk of a loan officer and asks her some information about HELOCs. What information does Reg Z require Amber to provide to this oral request for information? A. Nothing in the regulation requires a creditor to respond orally to a consumer's request for information B. The APR C. The Finance Charge D. The current minimum credit score required by all applicants

A.

What does the Comparison Table tell the borrower? A. The total he or she will have paid in 5 years and the amount of principal that will be paid off, we well as the APR and TIP B. Credit information in comparison to a customer with ideal credit C. The loan the consumer is considering next to loans from other banks

A.

Which would be considered a business-purpose loan? A. A loan to purchase 50 acres of undeveloped land for future development into a strip mall shopping center B. A loan to purchase 100 acres of undeveloped land to build a sing-dwelling home within four months of purchase C. A loan to purchase one acre of undeveloped land for unspecified reasons

A.

Why is an overstated APR that results from an overstated finance charge considered accurate under Reg Z? A. Because the borrower receives a better deal than what the disclosure states and so is not harmed B. Because it is not possible to calculate a correct APR from an overstated finance charge C. Because the borrower retains the right of rescission in any event D. Because the lender used the best information available when calculating the disclosure amounts

A.

Borrowers must be given ___ days after an education loan is approved to decide whether or not to accept the loan terms offered? A. 30 B. 15 C. 5 D. 3

A. 30 days

Which type of loan has rates that adjust after consummation? A. Adjustable Rate Mortgage (ARM) B. Reverse Mortgage C. Higher-Priced Mortgage Loan (HPML) D. Home Equity Loans

A. ARM Loans have rates that adjust after consummation

Which situation may require mortgage insurance? A. The Jones family put down 3% on a standard mortgage B. The Wilson family put down 20% on a standard mortgage C. The Roberts family put down 25% on a standard mortgage D. The Rodriguez family put down 75% on a standard mortgage

A. Because the Joneses has less than 20% down, they may be required to pay mortgage insurance

If one of the service providers charges more than the guaranteed amount on the Loan Estiamte, who pays the difference? A. Lender B. Borrower C. Service Provider

A. Lender

Which of the following must be deducted from loan principal when computing the amount financed for a real estate loan? A. All mortgage insurance premiums B. Prepaid finance charges C. Prepaid title insurance premiums D. B and C

B. Only prepaid finance charges are deducted from the loan principal to calculate the amount financed

How is a disclosed finance charge on a foreclosure different than other tolerances for APR? A. The disclosed finance charge is the same as the tolerance for APRs B. The disclosed finance charge for a foreclosure is $35; whereas the APR tolerance is $100 C. The disclosed finance charge for a foreclosure is $100; whereas, the APR tolerance is $50 D. The disclosed finance charge for foreclosure is $500; whereas, the APR tolerance is $100

B. The disclosed finance charge for foreclosures is $35; whereas, the APR tolerance is $100

Morgan Jones is shopping around for a mortgage. He visits Shane Walsh, his lender at American Mortgage, to discuss th e mortgage and receive his LE. Which of the following gees should Morgan have paid up to this point? A. No fees because he is still shopping around B. A reasonable fee for a credit report C. An appraisal fee D. A notary fee

B. The lender may not charge the applicant any fees (except for a reasonable fee for a credit report) before the applicant receives the LE

Which of the following is a changed circumstance in which a bank can make changes to the LE after it has already been delivered? A. A technical error in the LE B. A miscalculation in the LE C. A changed circumstance that affects the consumer's eligibility for the terms applied for or the value of the security for the loan

C

Disclosures will be treated as accurate if the amount disclosed as the finance charge is understated by no more than $____ or greater than the amount required to be disclosed A. $50 B. $75 C. $100

C. $100

Consumer loans over a minimum threshold are generally exempt from Reg Z requirements unless they are loans secured by real property or loans secured by personal property used or expected to be used as the borrower's principal dwelling. What is the threshold for 2022? A. $59,000 B. $60,000 C. $61,000 D. $62,000

C. $61,000 is the threshold for 2022

To be considered owner-occupied, the owner must live in one of the units or dwelling that are being purchased or improved for a minimum of ___ days during the coming year? A. 7 days B. 10 days C. 14 days D. 30 days

C. 14 days

Joan and Fernando Allen are applying for a home mortgage loan at Bayside Financial. If the loan is secured by a dwelling, within how many days of applying for the loan does Reg Z require loan disclosures be made to the Allens? A. 1 B. 2 C. 3 D. 4

C. 3

What is it called when a lender agrees in writing to accept a different consumer as a primary borrower on an existing mortgage transaction? A. Points B. Redisclosure C. Assumption D. APR

C. Assumption

HOEPA applies when the transaction's total points and fees will exceed: A. 5% of the total loan amount for a transaction with a loan amount of $22,969 or more B. The lesser of 8% of the total loan amount or $1,148 for a transaction with a loan amount of less than $22,969 C. Both A and B D. Neither A or B

C. Both A and B

HPML is considered in the following instances: A. By 1.5 or more percentage points for loans secured by a first lien B. By 2.5 or more percentage points for loans secured by a first lien C. By 3.5 or more percentage points for loans secured by a subordinate lien D. All of the above

D. All of the above

The additional disclosures that must also appear in an advertisement for open-end credit that are triggered by triggering terms are: A. Any minimum, fixed, transaction, activity or similar charge that may be imposed (such as debit card fee) B. Any periodic rate that may be applied or expressed as an APR. If th e rate is variable, that fact must be disclosed C. Any membership or participation fee D. All of the above

D. All of the above

The three-day rescission period begins at the latest of which of the following three events: A. The date of the consummation of the transaction B. The date each consumer who has the right to rescind receives accurate Reg Z material disclosures C. The date each consumer has the right to rescind is provided with two copies of the notice of the right of rescission D. All of the above

D. All of the above

Which of the following do not require a loan estimate? A. Reverse mortgages B. HELOCs C. Chattel-dwelling loans D. All of the above

D. All of the above

The following are all criteria for Reg Z to apply to a loan, except: A. The loan is made for personal, family, or household use B. The loan is subject to a finance charge C. The borrower is an individual, not a corporation or business D. The loan is $30,000 or more

D. The annual threshold for 2022 is $61,000 (unless the loan is secured by real estate or a dwelling)

_________ allows a consumer to rethink a transaction before risking his or her primary dwelling A. HPML B. APR C. Material disclosure D. The right of rescission

D. The right of rescission

Even if the disclosed APR varies from the actual rate, the APR will be considered accurate if the rate results from which of the following: A. Understated by no more than $100 B. Greater than the amount required to be disclosed C. The limit is considered accurate for right of rescission requirements D. 1/8 or 1% tolerance in a regular transaction; 1/4 or 1% tolerance in an irregular transaction E. All of the above

E. All of the above

If the finance charge originally imposed on the existing obligation was an add-on or discount finance charge, the creditor need only disclose which of the following: A. The unpaid balance of the obligation assumed B. The total charges imposed by the creditor in connection with the assumption C. The APR originally imposed on the obligation D. The payment schedule and the total of payments based on the remaining obligation E. All of the above

E. All of the above

Which of the following are true in relation to Reverse Mortgages? A. A form of an annuity made payable to the borrower B. A non-recourse transaction taken by the FI on the consumer's principal dwelling, where the equity in the consumer's home is repaid over time in the form of monthly payments C. Allows a consumer to convert the equity in their home into cash while still living in the home D. Repayment occurs upon the homeowner's death or permanent move from or transfer (sale) of the hhome E. The consumer's liability is limited to no more than the proceeds of the sale of the home or sch lesser amount created under the credit obligation F. All of the above

F. All of the above

T or F: Reg Z covers loans for business, commercial, or agricultural purposes, and to extensions of credit in which the borrower is not a "natural person" (e.g., the borrower is a corporation)

FALSE. Not applicable

T or F: Payment of points is not a condition for making a real estate loan and should not be included in the finance charge disclosures

FALSE. Payment of points IS a condition for making a real estate loan and meets the definition of a finance charge and must be included in the finance charge and APR calculations

T or F: For purposes of the CD, Saturday is only considered a business day if you are open on Saturdays

FALSE. That is a banking day

T or F: APR is always the same as the interest rate charged on a loan

FALSE. The APR is NOT necessarily the same as the interest rate.

T or F: The finance charge is the total cost of the loan expressed as an Annual Percentage Rate, or an effective interest rate

FALSE. The finance charge is the total of all charges assessed as a condition for making the loan, in dollars and cents. The APR is the total cost of the loan expressed as an effective interest rate.

T or F: The principal component of a loan's total finance charge is the down payment

FALSE. The principal component of finance charge is INTEREST. It includes all other fees that are imposed on the consumer as a condition for making the loan.

Is telemarketing considered advertising and subject to Reg Z advertising rules?

YES. Oral solicitations to prospective customers are considered advertising and are subject to the rules.

Michelle Carter has had a credit card with Bayside Financial for almost 20 years. When her card expires next month, can Bayside Financial automatically send her a new card?

YES. Reg Z prohibits the issuance of credit cards except as a renewal of, or substitute for, a previously accepted credit card.

In regard to the right of rescission, Morgan Jones was quoted an APR of 4.4% on his first mortgage, but the actual APR is 4%. Will the disclosed APR be considered accurate?

Yes. Because it is understated by no more than 1%

Would a 60-month $50,000 loan to buy a new BMS be subject to Reg Z?

Yes. The loan is under the $60,000 threshold and it is to a natural person. It is also subject to a finance charge and is for personal use.