Truth-in-Lending Act (TILA)

Which of the following is NOT required to be disclosed in an advertisement which contains a trigger term as set forth in the Truth-in-Lending Act? A. The number of payments for the loan B. The amount of principal covered in each payment C. The annual percentage rate D. The amount or percentage of down payment

B. The amount of principal covered in each payment If an advertisement contains a trigger term, the following additional disclosures must be made: the amount or percentage of the down payment, the payment schedule, including the number, timing, and amount of the payments (principal and interest), and the annual percentage rate.

A first lien higher-priced mortgage loan (HPML) is defined as a loan with an annual percentage rate which exceeds the average prime offer rate by: A. 1% B. 1.5% C. 8% D. 0.13%

B. 1.5% A higher-priced mortgage loan is a consumer credit transaction that has an annual percentage rate that exceeds the average prime offer rate for a comparable transaction by 1.5% for a first lien loan or 3.5% for a subordinate lien loan.

The stated purpose of the Truth-in-Lending Act is to: A. Protect consumers from unethical mortgage lenders by requiring use of the Good Faith Estimate for all mortgage loans B. Assist consumers in comparing credit to avoid the uninformed use of credit C. Restrict the interest rates charged by lenders D. Prevent discrimination based on protected class distinctions

B. Assist consumers in comparing credit to avoid the uninformed use of credit The Truth-in-Lending Act promotes the informed use of credit and protects borrowers from unethical lenders by requiring the clear and conspicuous disclosure of the terms and conditions of consumer loans offered.

Which of the following advertisements contains a term that would require additional disclosures under the Truth-in-Lending Act? A. "Buy for less than rent!" B. "Interest rates as low as 5.65% APR!" C. "Own for $700 per month!" D. "No origination fee charged!"

C. "Own for $700 per month!" Each of the following is a trigger term, requiring additional disclosures to the applicant: the amount or percentage of a down payment, the number of payments or term of the loan, the amount of any periodic payment, or the amount of any finance charge. Stating that a loan will have payments of $700 per month would require additional disclosures under the Truth-in-Lending Act.

Which of the following would be considered to be a high-cost home loan if the average prime offer rate is 3%? A. A ten-year second mortgage with an annual percentage rate of 5.25% B. A first lien mortgage with an annual percentage rate of 7.5% C. A 15-year mortgage loan with an annual percentage rate of 10% D. A reverse mortgage with an annual percentage rate of 5.5%

C. A 15-year mortgage loan with an annual percentage rate of 10% A high-cost home loan is a consumer credit transaction that is secured by the borrower's principal dwelling, the terms of which exceed certain statutory thresholds. Under the rate threshold, a loan is a high-cost home loan if the annual percentage rate exceeds the average prime offer rate by more than 6.5 percentage points for a first lien loan; 8.5 percentage points for a first lien transaction if the dwelling is personal and the loan amount is less than $50,000; or 8.5 percentage points for a subordinate lien loan [10% (APR) − 3% (APOR) = 7%; 7% exceeds the 6.5% threshold].

Which of the following was enacted to ensure meaningful disclosure of credit terms so that the consumer will be able to compare the various credit terms available and avoid the uninformed use of credit? A. Real Estate Settlement Procedures Act B. Equal Credit Opportunity Act C. Truth-in-Lending Act D. Fair Housing Act

C. Truth-in-Lending Act The Truth-in-Lending Act was enacted to ensure meaningful disclosure of credit terms so that the consumer will be able to compare the various credit terms available and avoid the uninformed use of credit. The Truth-in-Lending Act is implemented by Regulation Z.

Which of the following loans would not be covered by any portion of the Truth-in-Lending Act? A. A loan for the purchase of a condominium to be used as a primary residence B. A loan for the purchase of a second home C. A loan for the purchase of a duplex, of which the owner will occupy one unit D. A loan for the purchase of a single-family home to be used as a rental property

D. A loan for the purchase of a single-family home to be used as a rental property Provisions of the Truth-in-Lending Act cover credit transactions that are primarily for personal, family, or household purposes. Purchase or renovation of a rental property, or the purchase of property in which the borrower does not intend to reside, is considered to be a business purpose. As such, a loan to be used to purchase a rental property would not be covered under the TILA.

Which of the following would be considered a "dwelling" under the Truth-in-Lending Act? A. Residential apartment building B. Residential fiveplex C. Office building D. Residential condominium

D. Residential condominium Under the Truth-in-Lending Act, a dwelling is defined as a residential structure that contains one to four units, whether or not it is attached to real property. A dwelling includes an individual condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence.

Which of the following does not apply to a high-cost home loan? Section 32 of Regulation Z A. TILA B. Home Ownership and Equity C. Protection Act D. Section 32 of RESPA

D. Section 32 of RESPA The Home Ownership and Equity Protection Act, the Truth-in-Lending Act, and 12 C.F.R. 1026.32 (Section 32 of Regulation Z) all pertain to high-cost home loans.

Which of the following is true if a borrower effectively rescinds on a refinance transaction on their primary residence? A. Borrowers can only rescind on investment properties and second homes B. The borrower is entitled to damages from the lender C. The borrower must reimburse the lender for third-party fees spent D. The borrower is entitled to a refund of their prepaid appraisal fee

D. The borrower is entitled to a refund of their prepaid appraisal fee Within 20 days after a borrower properly rescinds a credit transaction, the creditor must return any money or property received by any person in connection with the transaction and take appropriate steps to show that the mortgage or trust deed is voided and the consumer has no responsibility for the loan or any finance charges associated with it.