HOEPA/ECOA

ECOA requires creditors to notify applicants of action taken on their application within ____ days of receipt of the application.

60

Which of the following ECOA disclosures are allowed to be delivered electronically?

A copy of the appraisal report The Adverse Action Disclosure The Equal Opportunity Credit Notice All of the above *LEARNING QUESTION! The correct answer is "D" All disclosures required by ECOA may be delivered electronically as long as (1) the consumer agrees to electronic delivery, and (2) the electronic delivery is in accord with the E-Sign Act.

The Equal Credit Opportunity Act requires the adverse action notice to be in writing. Which of the following is/are required to be disclosed on an adverse action notice?

A statement of the action taken The name and address of the federal agency that administers compliance with respect to the creditor A statement of specific reasons for the action taken or a disclosure of the applicant's right to a statement of specific reasons within 30 days if requested Name and address of the creditor must also be enclosed in the notice.

Which of the following is not covered by many of the provisions of the Equal Credit Opportunity Act?

An extension of "incidental credit"

The law that prohibits a loan officer from discouraging anyone from applying for a loan is:

ECOA

The law that requires a notice of action letter is:

ECOA and Regulation B have specific requirements for adverse action notices. The required elements, listed in 12 CFR 202.9 include that the notice provide the creditor's name and address, a statement of the action taken, a list of the principle and specific reasons for the adverse action, and the ECOA notice.

When evaluating a customer's income, a creditor may not:

Refuse to consider public assistance the same as other income. Discount the customer's income because of their sex or marital status. Refuse to consider alimony or child support.

Regulation "B" refers to:

Regulation B is the regulation which puts the Equal Credit Opportunity Act into effect. the terms "Reg B" and "ECOA" are often used synonymously.

Which of the following statements is true regarding the Section 32 Disclosure?

Regulation Z requires the format of the type fact to be at least 12- point type and be formatted in bold print.

ECOA prohibits discrimination in giving credit based on

The Equal Credit Opportunity Act (ECOA) prohibits discrimination in the granting of credit based on race, color, religion, national origin, sex, marital status, age or receipt of public assistance.

The law that prohibits discrimination:

The Equal Credit Opportunity Act (ECOA) prohibits discrimination in the granting of credit based on race, color, religion, national origin, sex, marital status, age or receipt of public assistance.

What law sets a time limit on how long you can have a complete application before it must be dispositioned?

The Equal Credit Opportunity Act dictates that you must inform a consumer of the disposition of their loan with 30 days of having received all of the information you have requested.

The purpose of the Equal Credit Opportunity Act is

To promote the availability of credit without regard to race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract); To prohibit discrimination based upon the fact that all or part of the applicant's income derives from a public assistance program; To prohibit discrimination based upon the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act.

According to the Equal Credit Opportunity Act, how long must a lender retain records on applications?

Twelve months

Under the Equal Credit Opportunity Act you must notify an applicant of a credit denial:

Within 3 business days

Jason, a Mortgage Loan Originator with XYZ Mortgage Brokers, originated a loan, which was determined to be a High Cost loan according to the Home Ownership and Equity Protection Act. Which of the following is true?

High cost loans as determined by Section 32 of the Truth in Lending Act (the Home Ownership and Equity Protection Act) carry a number of consumer protections. In addition to the three listed above, the Home Ownership and Equity Protection Act restricts prepayment penalties and balloon payments. Many states also restrict these loans. See the particular state laws in the states where you originate loans.

Dave, a Mortgage Loan Originator with XYZ Mortgage Brokers, originated a loan, which he thinks may be a High Cost loan according to the Home Ownership and Equity Protection Act. Which of the following is not included in his calculations?

Interest is not counted in the points and fees test for a federally regulated High Cost loan. All of the other fees listed usually count in the computation.

An item never found on a credit report is

It would be a violation of ECOA to include the subject's race on a credit report. Only those items which report the history of credit management or those thought to be of value in making a credit decision may be included in the report.

Ryan is a Mortgage Loan Originator for XYX Mortgage Brokers. His company purchases leads from companies that market on the Internet. Ryan talks to a number of consumers in his prospecting efforts. He often talks to ten or twelve consumers a night to get to one or two who will put in an application. Does Ryan have to issue adverse action notices for those from whom he does not take an application?

No. Mortgage applications have to be in writing. Since this is just conversation, Ryan does not have to issue adverse action notices.

ECOA requires the following disclosures:

The Equal Credit Opportunity Act (ECOA) requires that notification of action be provided. In addition, the creditor shall provide a notice that discloses the purpose of ECOA and is substantially similar to the following: The federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The federal agency that administers compliance with this law concerning this creditor is [name and address as specified by the appropriate agency listed in appendix A of this regulation].

Which Federal Law first gave the borrower the right to receive a copy of their appraisal report?

The Equal Credit Opportunity Act in section 202.14 grants the borrower the right to receive a copy of their appraisal report. In the Consumer Compliance Handbook, the OCC says, "Regulation B requires that [the lender and/or broker] provide a copy of the appraisal report used in connection with an application for credit to be secured by a lien on a dwelling. A [lender and/or broker] may provide the copy either routinely (whether or not credit is granted or the application is withdrawn) or upon an applicant's written request. If [the lender and/or broker] provides an appraisal report only upon request, it must inform the applicant in writing of the right to receive a copy of the report."

Under which circumstances is a written adverse action notice not required?

The Equal Credit Opportunity Act says, (e) Withdrawal of approved application. When an applicant submits an application and the parties contemplate that the applicant will inquire about its status, if the creditor approves the application and the applicant has not inquired within 30 days after applying, the creditor may treat the application as withdrawn and need not comply with paragraph (a)(1) [requirement for written notification] of this section.

Jack took an application from Judy who was 7 months pregnant at the time. During the application Jack asked if she was excited about the birth of her child. Jack told Judy that he had three children and had all of them in private school. During their back and forth conversation, he asked Judy how she intended to educate her children, through public school, private school, or through home schooling. Which of the following is true?

The Equal Credit Opportunity Act says, A creditor shall not inquire about birth control practices, intentions concerning the bearing or rearing of children, or capability to bear children. A creditor may inquire about the number and ages of an applicant's dependents or about dependent-related financial obligations or expenditures, provided such information is requested without regard to sex, marital status, or any other prohibited basis. CFR Title 12 Part 202 (the Equal Credit Opportunity Act) (d) (3). What may appear to be harmless conversation can in fact be a violation of their civil rights. MLOs should always be careful to restrict themselves to the questions asked on the Uniform Residential Loan Application (the 1003).

Gail is an MLO who works for a mortgage broker. Mandy, a single mother, came into Gail's office to apply for a loan. During the application, Gail found out that Mandy received food stamps to feed her children. Gail told Mandy that none of the lenders she dealt with would do a loan for her if she was receiving public assistance to help feed her children. Which of the following is true?

The Equal Credit Opportunity Act specifically says that Mandy could not have been turned down because of receipt of public assistance. Mandy may not have qualified for a loan based on her income. But Gail should have finished the application and if Mandy did not income qualify, turned Mandy down for a lack of income or turned her down because of the instability of her income rather than telling her none of the lenders she dealt with would do a loan for someone receiving food stamps.

Which Federal agency is the prudential regulator for the Equal Credit Opportunity Act?

The Federal Trade Commission regulates the Equal Credit Opportunity Act for mortgage brokers and mortgage banks which are unaffiliated with nationally or state chartered banks and savings institutions. The Federal Reserve Board actually controls Regulation B, which applies The Equal Credit Opportunity Act. However, they are not the primary regulator for mortgage brokers and mortgage bankers.

HOEPA:

The Home Ownership and Equity Protection Act of 1994 (HOEPA) addresses certain deceptive and unfair practices in home equity lending when refinancing a mortgage or applying for a home equity installment loan. It amends the Truth in Lending Act (TILA) and establishes requirements for certain loans with high rates and/or high fees. The rules for these loans are contained in Section 32 of Regulation Z, which implements TILA, so the loans are sometimes called "Section 32 Mortgages." A loan is "covered" by the Act if it is a first mortgage and the annual percentage rate (APR) is more than 8 points higher than the rates on Treasury securities of comparable maturity (10% if the loan is a second mortgage) OR if the total fees and points payable by the consumer at or before closing equal the larger of $579 (for 2010) or 8% of the total loan amount.

Under the ECOA, you cannot be denied credit because:

The correct answer is "B" The Equal Credit Opportunity Act (ECOA) prohibits discrimination in the granting of credit based on race, color, religion, national origin, sex, marital status, age or receipt of public assistance.

The ECOA applies to:

The correct answer is "C" The Equal Credit Opportunity Act (ECOA) prohibits discrimination in the granting of credit based on race, color, religion, national origin, sex, marital status, age or receipt of public assistance.

Regarding mortgage lending, no one may take the following actions based on race, color, national origin, religion, sex, familial status, handicap or disability:

The prudential federal regulator of The Equal Credit Opportunity Act is the Federal Reserve Board. It prohibits discrimination in the issuance of credit, including mortgage lending.