Mortgage Loan Origination - ProSchools - Lession 10 - TILA-RESPA Integrated Disclosures (TRID)

A creditor must provide the Loan Estimate within how many days?

3 business days

How long must records for a Loan Estimate Disclosure be kept?

3 years

How long must records for a Closing Disclosure be kept?

5 years

A creditor must provide the Loan Estimate how many days prior to connsumation?

7 Business Days

Charges for survey fees appear in which section of the Closing Disclosure? A.) Loan Costs B.) Other Loan Costs C.) Calculating Costs to Close D.) Summaries of Transaction

A.) Loan Costs Charges for survey fees appear in the Loan Costs.

Which of the following protects a homeowner from claims of others to legal rights in his property? A.) Purchase of an owner's title insurance policy B.) Assumption of the prior homeowner's insurance policy C.) Purchase of mortgage insurance D.) Purchase of a lender's title insurance policy

A.) Purchase of an owner's title insurance policy Correct. A buyer will buy, or have the seller buy for him, an owner's title insurance policy insuring him against loss due to claims of others to the title or to legal rights in the property.

In a comparison of annual percentage rates for two separate loan programs, which of the following should be the same? A.) The term of each loan B.) Prepaid finance charges C.) Interest rates D.) The loan origination fee

A.) The term of each loan Correct. Because an APR is based on the term of the loan, the APR for a 15-year loan cannot be compared to the APR for a 30-year loan. The APRs being compared must be for loans with the same term.

All of the following are considered finance charges EXCEPT A.) home inspection fee paid by the borrower. B.) loan origination fee. C.) initial mortgage insurance premium. D.) discount points.

A.) home inspection fee paid by the borrower. Finance charges are costs of obtaining the loan. They include all fees paid by the borrower to and kept by the lender, (e.g., the loan origination fee and discount points). They also include the cost of any mortgage broker fees and premiums for life insurance or mortgage insurance required by the lender. Fees charged a consumer by a settlement agent, attorney, or escrow or title company conducting the closing are finance charges only if the lender requires the particular services, requires the imposition of the charge, or retains a portion of the charge. They do not include other costs incurred to close the sale (e.g., home inspection fees).

The Loan Estimate and Closing Disclosure may NOT be provided by A.) telephone. B.) fax. C.) mail. D.) hand delivery.

A.) telephone. Correct. The Loan Estimate and Closing Disclosure may be provided in person; by mail or delivery; or by electronic transmission, as long as it is done in compliance with the Electronic Signatures in Global and National Commerce Act. The disclosures may not be given orally.

Interest, service charges, transaction charges, buyer's points, loan fees and mortgage insurance are examples of what is included in the dollar amount called A.) the finance charge. B.) the lease fee. C.) the available credit. D.) the rate disclosure.

A.) the finance charge. Correct. The finance charge is the dollar amount charged for credit. It includes interest and other costs, such as service charges, transaction charges, buyer's points, loan fees and mortgage insurance. It also includes the premiums for credit life, accident and health insurance, if required, and for property insurance, unless the buyer may select the insurer.

A Loan Estimate must be provided to a loan applicant within how many business days following receipt of the application? A.) 1 B.) 3 C.) 7 D.) 10

B.) 3 If a borrower does not get the Loan Estimate when he applies for the loan, the loan originator must mail or deliver it to him within the next three business days.

The Loan Estimate must be provided to a borrower at least how many business days prior to consummation? A.) 10 B.) 7 C.) 3 D.) 30

B.) 7 The Loan Estimate must be provided to a borrower within three business days after the loan application is received and at least seven business days prior to consummation.

Which of the following is designed to show all receipts and disbursements by the closing agent in a refinance transaction in which there is no seller? A.) Loan Estimate B.) Closing Disclosure C.) HUD-1 D.) HUD-1A

B.) Closing Disclosure For loan transactions without a seller, such as refinancing loans or subordinate-lien loans, the Closing Disclosure is utilized to show all receipts and disbursements. Personal Notes: Hud is no longer around and this is closing agent so closing disclosure by narrowing

Which of the following items may not increase above the estimate in the Loan Estimate? A.) Floating interest rate B.) Origination fee C.) Appraisal fee D.) Title insurance

B.) Origination fee Correct.There is zero tolerance (i.e., no increase is allowed above the amounts included on the Loan Estimate) for the origination charge; transfer taxes; and, while the interest rate is locked, the credit or charge for the interest rate chosen and the adjusted origination charge. There is a 10% tolerance allowed for increases in the sum of the charges for certain services where the loan originator requires the use of a particular provider or the borrower uses a provider selected or identified by the loan originator, including charges involved with appraisal services and title insurance. However, if the borrower selects a third-party service provider not found on the loan originator's written list of providers, there is no tolerance limitation and the final cost may exceed that disclosed on the Loan Estimate.

A borrower has paid the fee for the credit report before closing. How is this fee noted in a Closing Disclosure? A.) Origination Costs B.) Services Borrower Did Not Shop For C.) Services Borrowers Did Shop For D.) Prepaids

B.) Services Borrower Did Not Shop For In the Closing Disclosure, a credit report is shown under Services Borrowers Did Not Shop For as being paid in the Before Closing column.

Which of the following does not appear in the Loan Estimate? A.) The loan term B.) The anticipated ARM rates for the first five years C.) Whether the subject loan is assumable D.) The property purchase price

B.) The anticipated ARM rates for the first five years Correct. In the heading on page 1 of the Loan Estimate, the licensee must indicate the property address and its sale price as well as the loan's term. The Other Considerations table on page 3 provides the applicant with information on appraisals, the homeowner's insurance requirement, the lender's late payment policy, loan servicing information and whether the loan may be assumed or refinanced. Anticipated ARM rates for the first five years of the loan are not disclosed, although the total the applicant will have paid in principal, interest, mortgage insurance and loan costs for that time period is, in the Comparisons table on page 3.

A creditor must provide the Loan Estimate within how many business days after receipt of a residential mortgage loan application? A.) One B.) Three C.) Five D.) Seven

B.) Three Correct. In general, for a federally related mortgage loan, the Loan Estimate must be delivered or mailed within three business days after receipt of a written application and no later than the seventh business day before the transaction is consummated. Exempt from the requirements of the TILA-RESPA Rule are home equity lines of credit, reverse mortgages, mortgages secured by a mobile home or dwelling that is not attached to real property and loans made by a person that does not make more than five mortgage loans in a year.

In the Closing Disclosure, escrow account deposits include A.) an assumption fee. B.) flood insurance premiums. C.) a loan origination fee. D.) a recording fee.

B.) flood insurance premiums. Hazard insurance, including flood insurance premiums to be placed in an escrow account, is listed under Other Costs.

Disclosures after consummation must be provided to an applicant for a 30-year home loan when A.) the mortgage broker must pay third-party providers. B.) the loan is an adjustable rate mortgage. C.) the loan contains prepayment penalties. D.) the interest rate is not locked in.

B.) the loan is an adjustable rate mortgage. When the interest rate is adjusted and results in a new payment amount, disclosure must be provided to the borrower at least 210 days, and no more than 240 days, before the first payment is due at the adjusted rate. These subsequent disclosures must include the following information: an explanation that the specific time period in which the current interest rate has been in effect is ending and the interest rate and mortgage payment will change; the effective date of the interest rate adjustment and when additional future interest rate adjustments are scheduled to occur; any other changes to loan term, features or options taking effect on the same date as the interest rate adjustment (e.g., expiration of interest-only or payment-option features); and a table showing the current and new interest rates and payments and the date the first payment is due at the new rate.

The loan originator mails a Loan Estimate to an applicant. The applicant is considered to have received it A.) on the day of mailing. B.) three business days after it is mailed. C.) two business days after it is mailed. D.) three calendar days after it is mailed, regardless of whether that includes a legal holiday or weekend.

B.) three business days after it is mailed. Correct. If the Loan Estimate is mailed, the applicant is considered to have received it three business days after it is mailed. For purposes of the TILA-RESPA Rule, a business day, as it relates to the Loan Estimate, is any day on which the creditor's offices are open for carrying out substantially all of its business.

Which of the fees below has a 10% tolerance for changes on the Loan Estimate? A.) Transfer fees charged by the broker B.) Origination fees C.) Title insurance chosen from a list of providers offered by the lender D.) Initial escrow deposit

C.) Title insurance chosen from a list of providers offered by the lender Settlement charges can increase prior to closing. If they do, the loan originator may be responsible for paying the increase. Transfer fees and origination fees have a zero tolerance, meaning that the loan originator must pay for any increase. There is no tolerance for the initial escrow fee, meaning that the loan originator has no responsibility for any increase. Other charges are subject to a 10% tolerance. The creditor may charge more for a particular service or recording fee than initially disclosed as long as the total for all such charges, when added together, does not exceed 10% of the amount disclosed. Charges subject to the 10% tolerance limitation are recording fees and charges for third-party provider services if the charge is not paid to the creditor or its affiliate and the consumer is permitted to shop for a service provider and chooses a provider from the creditor's written list.

According to TILA, a loan cost paid separately before or at consummation of a transaction or withheld from the proceeds of a loan is A.) a POC item. B.) an escrow account item. C.) a prepaid finance charge. D.) a prepaid closing cost.

C.) a prepaid finance charge. Correct. TILA defines the finance charge as the cost of consumer credit as a dollar amount. It includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as a condition of getting the loan. It includes interest paid over the life of the loan as well as prepaid finance charges. TILA defines a prepaid finance charge (e.g., points, origination fees and mortgage broker fees) as any finance charge paid separately in cash or by check before or at consummation of a transaction, or withheld from the proceeds of the credit at any time.

If multiple applicants are involved in a transaction that can be rescinded, the Closing Disclosure must be provided to A.) any party to the transaction. B.) any requesting party. C.) each party who has a right to rescind. D.) the primary borrower.

C.) each party who has a right to rescind. Correct. If multiple applicants are involved in the transaction, the Closing Disclosure must be provided in a rescindable transaction (e.g., a refinance) to each party who has the right to rescind.

The lender's or mortgage broker's origination charge A.) has no tolerance limitation. B.) has a 10% tolerance. C.) has a zero tolerance. D.) is not subject to tolerance.

C.) has a zero tolerance. The lender's or mortgage broker's origination charge has a zero tolerance, meaning it cannot change unless a new Loan Estimate is provided.

RESPA does not require a loan originator to provide a written Loan Estimate if A.) the borrower waives it. B.) the loan application is approved within three business days of the application. C.) the loan application is denied within three business days of the application. D.) the loan originator has orally disclosed the Loan Estimate .

C.) the loan application is denied within three business days of the application. A mortgage broker must provide a Loan Estimate, even if the exact settlement service fees are not known or if he has orally discussed the Loan Estimate with the applicant, within the three-business-day disclosure period. He need not provide it if the credit application is denied within three business days.

The only thing you may charge before a Loan Estimate

Credit Report

The loan originator's estimate of the charges and terms must be available for at least what period of time after the Loan Estimate is provided? A.) 7 calendar days B.) 7 business days C.) 10 calendar days D.) 10 business days

D.) 10 business days The estimate of the charges and terms must be available for at least 10 business days from when the Loan Estimate is provided.

After consummation if overpaid the creditor must refund the excess to the consumer within how many days? A.) 7 Business days B.) 10 Business days C.) 30 Calendar days D.) 60 Calendar days

D.) 60 Calendar days

Which of the following documents provides the borrower with information about prepayment penalties? A.) 1003 Loan Application Form B.) The Loan Estimate C.) The Closing Disclosure D.) Both the Loan Estimate and the Closing Disclosure

D.) Both the Loan Estimate and the Closing Disclosure Both the Loan Estimate and the Closing Disclosure indicate on page 1 in their respective Loan Terms sections whether a loan product will have a prepayment penalty.

Which of the following would be considered part of the finance charge when figuring the annual percentage rate under the Truth-in-Lending Act (Regulation Z)? A.) Credit report fee B.) Title insurance premium C.) Notary fee D.) Discount points

D.) Discount points Under Truth in Lending, the lender must disclose all finance charges which might include buyer's points, loan fees, finder's fees paid to the person bringing the borrower to the lender, service charges, mortgage insurance premiums and interest. He must add these charges together and calculate them as a percentage of the loan balances during the term of the loan to arrive at the APR. Actual costs not retained by lenders (title fees, legal fees, closing costs, property taxes, appraisal fees, recording fees, notary fees, etc.) are not considered finance charges and are not included in the APR.

Which of the following charges have a 10% tolerance? A.) Settlement services selected by a borrower who shopped for his own service provider B.) Origination fees C.) Daily interest charges D.) Government recording charges

D.) Government recording charges Government recording charges have a 10% tolerance. The origination fee has a zero tolerance. Charges with no tolerance restriction include settlement services selected by a borrower who shopped for his own service provider, homeowners insurance and daily interest charges.

Which of the following charges have no tolerance restriction? A.) Transfer taxes B.) The lender's or mortgage broker's origination charges C.) While the borrower's interest rate is locked, the credits or charges for the interest rate chosen D.) Settlement service providers not on the loan originator's list who are selected by a borrower

D.) Settlement service providers not on the loan originator's list who are selected by a borrower Correct. When the borrower selects settlement services he shopped for (not on the loan originator's list of providers), there is no tolerance restriction on the loan provider's GFE. The other choices have a zero tolerance.

When actual charges at settlement exceed the estimates on the Loan Estimate by more than the zero or 10% tolerances, the loan originator A.) must refund the entire charge. B.) must pay a fine of up to 100% of the excess charged. C.) may reimburse the borrower the excess not later than at settlement. D.) has 60 days from settlement to refund the excess to the borrower.

D.) has 60 days from settlement to refund the excess to the borrower. The loan originator does have an opportunity to cure a tolerance violation. He can do this by reimbursing to the borrower the amount in excess of the tolerance. He does not have to reimburse the entire amount above the estimate. The reimbursement must be made either at settlement or within 60 calendar days after settlement.

The Closing Disclosure includes all of the following EXCEPT A.) property price. B.) title examination fees. C.) down payment. D.) housing expense ratio.

D.) housing expense ratio. The Closing Disclosure includes money owed and paid at closing, including title charges, property price and down payment. The housing expense ratio used in evaluating the borrower's application has nothing to do with funds at closing.

In regard to the Loan Estimate, the term "changed circumstances" applies to all of the following EXCEPT A.) acts of God, war, disaster or other emergency. B.) information about the borrower or transaction that was relied on in providing the GFE that has changed or is found to be inaccurate. C.) the borrower asking for a different loan amount or terms. D.) the loan originator changing the brokerage fee.

D.) the loan originator changing the brokerage fee. The term "changed circumstances" applies to acts of God, war, disaster or other emergencies; information particular to the borrower or transaction that was relied on in providing the Loan Estimate that changed or is found to be inaccurate (e.g., information about the borrower's credit quality, the loan amount, the estimated value of the property); new information particular to the borrower or transaction that was not relied on in providing the GFE; or other circumstances such as boundary disputes, the need for flood insurance, or environmental problems.

What is Regulation Z?

TILA

Who is responsible that the consumer receives all disclosures?

The creditor

What is the purpose of the Closing disclosure?

clear and understandable Mortgage costs

What is the purpose of the Loan Estimate disclosure?

help the consumer understand the key features, costs and risks of the loan

Learning Objective: which charges are subject to a zero tolerance, a 10% tolerance and no tolerance.

third-party service providers and recording fees