Mortgage Loan Origination - ProSchools - Fair and Equal Credit and Lending Laws
T/F FACTA id the Fair and Accurate Consumer Telecommunications Act
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T/F Reg X implements the provisions of ECOA
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T/F The FHA prohibits discrimination in housing b/c of race, income level, religion, sex, familial status, and political party affiliations.
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The agency that drafts and interprets the regulations implementing ECOA is the Consumer Financial Protection Bureau. the Federal Trade Commission. the Office of Thrift Supervision. the Department of Justice.
The correct answer is A. As of July 21, 2011, the CFPB has rulemaking and enforcement authority over ECOA.
ECOA requires that an applicant be informed about action taken on his completed loan application within how many days of its filing? 7 30 14 3
The correct answer is B. An applicant has a right to know whether his application was accepted or rejected within 30 days of filing a complete application.
ECOA allows a creditor to do all of the following EXCEPT request information about an applicant's former spouse if that person's alimony is the basis for repayment of the requested credit. designate an applicant as "husband" or "wife." indicate whether an applicant is "Miss" or "Mrs." ask about whether income is derived from alimony, if it is needed for repaying the requested loan.
The correct answer is B. An applicant may be requested, but not required, to designate a title on an application form (such as Ms., Miss, Mr. or Mrs.). The application must disclose that the designation of a title is optional. The application must otherwise use only terms that are neutral as to sex (i.e., not refer to husband or wife). A creditor may request information concerning an applicant's spouse or former spouse if that person's alimony, child support or separate maintenance payments are a basis for repayment of the credit requested. However, a creditor cannot inquire whether income stated in an application is derived from alimony, child support, or separate maintenance payments, without disclosing that the income need not be revealed if it is not to be considered in determining the applicant's creditworthiness.
ECOA and Regulation B provide that, for qualifying purposes, a creditor cannot ask an applicant about which of the following? Residency Race or sex Age Income
The correct answer is B. ECOA and Regulation B provide that a creditor cannot ask an applicant about race, color, religion, national origin or sex of an applicant, except for monitoring purposes.
In an individual lawsuit, a violator of ECOA is subject to punitive damages of up to $100,000. $10,000. $25,000. $50,000.
The correct answer is B. ECOA can be enforced through administrative action by the agency regulating the creditor or through a civil lawsuit. A violator is subject to actual damages; reasonable attorneys' fees and costs of the plaintiff; and punitive damages of up to $10,000 in an individual lawsuit, or the lesser of $500,000 or 1 percent of the violator's net worth in a class-action lawsuit.
T/F ECOA's goal is to ensure all persons are given an equal chance to obtain credit.
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T/F FACTA established uniform standards for credit reporting
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T/F FACTA requires three major credit reporting agencies to allow consumers to obtain a free copy of their own credit report every 12 months.
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T/F Gramm-Leach Bliley requires financial institutions to give consumer privacy notices that explain information-sharing practices.
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T/F The FCRA is designed to ensure the accuracy and privacy of info used in a consumer report.
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T/F The Fair Credit Reporting Act is enforced by the CFPB
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A lender must provide a copy of the appraisal to an applicant within how many days after receipt of a written request from an applicant who has paid for the appraisal? 30 45 60 20
The correct answer is A. An applicant is entitled to a copy of the property appraisal, if the loan is to be secured by a one- to four-family dwelling, so that he may see whether it contains accurate information. The lender must provide the copy of the appraisal within 30 days of receipt of a written request, if the request is received within 90 days of the notice of action and the applicant pays for or reimburses the lender for the cost of the appraisal.
Who is responsible for ensuring that reporting of a consumer's credit standing and reputation protects his right to privacy? Consumer reporting agency Loan originator Federal Trade Commission Mortgage broker
The correct answer is A. A customer reporting agency is responsible for ensuring that the reporting of a consumer's credit standing and reputation protects his right to privacy. It may not supply information about a consumer to his employer or a prospective employer without the consumer's consent. Only people with a legitimate business need as recognized by the FCRA can get a copy of a consumer's report.
The Fair Credit Reporting Act provides all of the following courses of action for an identity theft victim who has submitted a valid police report to a consumer reporting agency EXCEPT requiring the consumer reporting agency to assist in locating the thief. requesting deletion of challenged items from the credit report. applying for a fraud alert. requesting changes in the information on the credit report.
The correct answer is A. Identity theft victims who file police reports can block fraudulent information from appearing on their credit reports, obtain copies of business records that list fraudulent transactions carried out by identity thieves, request a change of information or deletion of challenged items on their credit reports, or put fraud alerts on their credit files.
In a face-to-face application, if the applicant chooses not to provide his race, national origin or sex, the licensee must inform the applicant that note the information on the basis of visual observation and continue to process the application. they have 30 days to provide the information. the application will be rejected. the application cannot be processed until the information is provided.
The correct answer is A. If an applicant chooses not to provide his race, national origin or sex, the licensee is required to inform the applicant that the information is requested by the government for compliance monitoring purposes; that the lender cannot discriminate based on the information, or lack thereof; and that the loan originator will note it on the basis of visual observation.
All of the following are mortgage loans subject to coverage under the Home Mortgage Disclosure Act EXCEPT a home equity loan used to pay off outstanding medical bills. a home improvement loan made for the purpose of repairing, rehabilitating, or remodeling a dwelling. a loan to purchase a mobile home or multifamily dwelling. a loan to purchase a condominium unit.
The correct answer is A. Mortgage Loans are subject to coverage under HMDA include a home purchase loan for any residential dwelling, including a condominium unit, mobile home, manufactured home or multifamily dwelling; a home improvement loan made for the purpose of repairing, rehabilitating or remodeling a dwelling; and the refinancing of a home loan previously covered by HMDA (e.g., a new loan refinancing a loan that was a home purchase or home improvement loan would be covered, but refinancing of a home equity loan not involving home improvement would not be covered).
The Disposal Rule, a part of the Fair and Accurate Credit Transactions Act is intended to prevent acts of fraud such as identity theft. abuse of mandatory arbitration clauses. abuse of covered loans. predatory use of prepayment penalties.
The correct answer is A. The Disposal Rule, a part of the Fair and Accurate Credit Transactions Act regulates the way consumer information is disposed of, and it is intended to protect consumer privacy and prevent acts of fraud such as identity theft.
Which law regulates reporting of a consumer's credit history? FCRA ECOA PATRIOT Act RESPA
The correct answer is A. The Fair Credit Reporting Act regulates the reporting of a person's credit. It requires credit reporting agencies to attempt to maintain accurate reports and to limit access to reports.
The Identity Theft Prevention Program, to be established as required by the FTC Red Flags Rule, must accomplish all of the following EXCEPT be updated every six months to reflect changes in identity theft risks. identify identity theft red flags. respond to identity theft red flags. detect identity theft red flags.
The correct answer is A. The Red Flags Rule require an Identity Theft Prevention Program that will identify patterns, practices and specific forms of activity that are red flags signaling possible identity theft; detect and respond appropriately to red flags in order to prevent and mitigate identity theft; and be updated periodically to reflect changes in risks from identity theft.
Mr. Jones' loan application has been denied, and the loan originator provides him with an adverse action notice as required by ECOA. The notice would include all of the following EXCEPT credit counseling information to improve the applicant's credit score. statement of the action taken. the applicant's right to a statement of specific reasons for the action. the name and address of the federal agency that administers compliance with respect to the licensee.
The correct answer is A. The required adverse action notice includes a statement of the action taken; the ECOA Notice against unfair discrimination; the name and address of the federal agency that administers loan compliance; and the applicant's right to a statement of specific reasons for the action, and the identity of the persons or office from which the statement may be obtained, if it has not been provided already.
Under the Gramm-Leach-Bliley Act, a financial institution may share a customer's account information with a nonaffiliated third party that is a direct mail marketer. a consumer reporting agency. a telemarketer. a credit card company.
The correct answer is B. A financial institution, including a mortgage broker, is not allowed to disclose an account number or similar form of access number or access code for a credit card, deposit account, or transaction account to any nonaffiliated third party (other than a consumer reporting agency) for use in telemarketing, direct mail marketing, or other marketing through electronic mail to the consumer.
In the processing of a loan application, a lender's credit scoring system helps to evaluate the mortgage broker's fee. the applicant's creditworthiness. the loan amount. the monthly payment amount.
The correct answer is B. A lender's credit scoring system evaluates an applicant's creditworthiness based on his key attributes and aspects of the transaction.
Without violating the Equal Credit Opportunity Act a loan originator may discount or refuse to consider an applicant's income because of his age. it cannot be documented. it is part-time employment. it is from public assistance.
The correct answer is B. A loan originator may not refuse to consider income because of the applicant's age, because it comes from public assistance or because it comes from part-time employment. He can require that the applicant provide proof of the income claimed.
When must loan applicants receive an adverse action notice if they cannot qualify for a loan? Within 90 days of loan application Within 30 days of loan application Within 15 days of loan application Within 60 days of loan application
The correct answer is B. According to ECOA, loan applicants must be provided with the status of their loan application within 30 days. If they are being turned down for a loan, this notification would be the notice of adverse action.
ECOA requires that every applicant must be granted some type of loan. an applicant must be given notification of the status of his loan application within 30 days. an applicant has the right to know whether an application was accepted or rejected within 60 days of filing a complete application. an incomplete loan application must be discarded.
The correct answer is B. ECOA gives an applicant the right to receive notification of an incomplete application with reasonable time to respond and the right to know whether the application was accepted or rejected within 30 days of filing a complete application.
Which of the following reasons for denial of a loan application violates ECOA? Inadequate income Marital status indicates steady employment is unlikely. Applicant's age is below the minimum required to sign contracts. Inconsistency in payment of debts
The correct answer is B. ECOA prohibits a lender from considering the likelihood of stoppage of employment based on a person's marital status. It does allow a lender to deny credit because of inadequate income, an age below the minimum to sign contracts or a poor credit history.
Question of 22 (#12619) HMDA and Regulation C require reporting of data regarding seller financing. preapprovals. prequalifications. construction loans.
The correct answer is B. For all home purchase loans and applications, lenders must report whether a preapproval was requested and, if so, report denials of such preapproval requests. A request for preapproval is an application for a home purchase loan in which the lender, after a comprehensive analysis of the applicant's creditworthiness, issues a written commitment to make a home purchase loan up to a specified amount, subject to the home's appraisal.
Once a person registers his phone number on the federal do-not-call list, how long will it remain there? Three years Until he removes it or phone service is discontinued Five years One year
The correct answer is B. Once registered, a phone number (including a cell phone number) remains on the list until the registrant removes it or phone service is discontinued.
ECOA requires that a mortgage loan applicant must be given an appraisal disclosure, notifying him of his right to get a copy of his appraisal report, within how many days of his loan application? 60 days 30 days 90 days 120 days
The correct answer is B. The disclosure giving notice of the right to a copy of the appraisal must be given no later than at the time of application, or within 30 days of receipt of the application.
Under ECOA, a creditor includes any person who makes a residential mortgage loan. any person who regularly extends, renews or continues credit. a seller who finances the purchase of his home. any person who makes a consumer loan.
The correct answer is B. Under ECOA, a creditor is a person who, in the ordinary course of business, regularly participates in a credit decision, including setting the terms of the credit, whether it involves business credit or consumer credit. This includes any person who regularly extends, renews or continues credit (e.g., mortgage banker, bank, credit union, small loan and finance company, retail store, credit card company).
ECOA allows a creditor to ask an applicant about which of the following for the purpose of deciding whether and how much credit to extend? Applicant's country of origin Number of dependents Applicant's sex Applicant's intention to have children
The correct answer is B. Under ECOA, asking about a person's intention to have children is illegal discrimination based on sex and marital status. Asking about an applicant's sex and country of origin is acceptable only to gather information for government monitoring purposes. A lender is permitted to 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 any prohibited basis (e.g., with regard to calculating residual income for a VA loan).
Under the rules for the Do-Not-Call Registry, a mortgage broker may make an unsolicited call to a potential customer whose name is on the Registry for up to how many months after that person made an inquiry or submitted an application? 6 18 3 24
The correct answer is C. A company can call a potential customer who has made an inquiry or submitted an application for up to three months after the inquiry or application, unless he asks not to be contacted.
In order to prevent identity theft, a consumer is entitled to a free credit report quarterly. monthly. annually. semi-annually.
The correct answer is C. A consumer can request a free credit report annually.
ECOA requires that a creditor retain a loan application form for how many months? 15 10 25 30
The correct answer is C. A creditor must retain the original or a copy of any application received and all related information about the application for 25 months (12 months for business credit) after notifying an applicant of action taken on the application or of incompleteness.
An individual may bring civil action against a creditor within how many years of the date of an ECOA violation? 10 1 5 2
The correct answer is C. An individual may bring civil action against a creditor within five years of the date of an ECOA violation.
The Fair Credit Reporting Act provides which of the following with regard to information provided to consumer reporting agencies? Only the consumer can provide any information for a consumer report. The consumer has the duty to investigate any information in the consumer report that he disputes. A person who provides information that is later in dispute has a duty to investigate it. Only a consumer may provide negative information to a consumer reporting agency.
The correct answer is C. Both the CRA and the information provider have responsibilities for correcting inaccurate or incomplete information in a consumer report. Upon receipt of the notice of dispute from the CRA, the information provider must investigate; review all relevant information provided by the CRA; report the results to the CRA; and if the disputed information is inaccurate, notify all nationwide CRAs so that they can correct this information in the consumer's file.
The rules relating to the Federal Trade Commission's Do-Not-Call Registry allow calls to persons on a no-call list for neither of these. for up to three months after they have made an inquiry. for both of these. for up to 18 months after a business transaction has been completed with them.
The correct answer is C. Calls can be made to persons on the no-call list for up to 18 months after a business transaction has been completed with them (such as former clients), and for up to three months after they have made an inquiry (such as persons who called on ads).
The Equal Credit Opportunity Act protects those who apply for government jobs. apply for admission to an educational institution. seek loans from a financial institution. seek employment in a company.
The correct answer is C. ECOA applies to any creditor who regularly extends credit, including mortgage bankers, banks, small loan and finance companies, retail and department stores, credit card companies and credit unions, as well as anyone involved in granting credit such as real estate brokers and mortgage brokers who arrange financing.
A loan applicant decides to withdraw his loan application. He requests a copy of the appraisal from the lender. Is he entitled to a copy? No, because he withdrew his application No, because the lender did not take adverse action on his application Yes, if he has paid or will pay for the appraisal Yes, regardless of whether he pays for the appraisal
The correct answer is C. If the applicant pays for the appraisal, he is entitled to a copy. ECOA provides that the creditor must provide a copy of the appraisal either routinely or upon request made within 90 days of a withdrawal of the application or notice of action taken by the lender.
The Fair Credit Reporting Act defines companies that gather and evaluate consumer credit records as underwriting agencies. loan processors. consumer reporting agencies. credit bureaus.
The correct answer is C. In the Fair Credit Reporting Act, the organizations that assemble and evaluate consumer credit are called consumer reporting agencies.
A person completing a mortgage loan application must use his best judgment in entering certain demographic information (sex, race, national origin) for monitoring purposes if the applicant will not provide the requested information. The law requiring the monitoring is RESPA. FACTA. HMDA. TILA.
The correct answer is C. The Home Mortgage Disclosure Act is the law that requires monitoring of financial institutions in order to determine whether they are engaging in unlawful discriminatory practices.
The Federal Trade Commission's Red Flags Rule implements the Secure and Fair Enforcement for Mortgage Licensing Act. the PATRIOT Act. the Fair and Accurate Credit Transactions Act. the Truth in Lending Act.
The correct answer is C. The Red Flags Rule implements the Fair and Accurate Credit Transactions Act (FACTA). It requires financial institutions (including mortgage lenders) and creditors that hold any consumer account, or other account for which there is a reasonably foreseeable risk of identity theft, to develop and implement an Identity Theft Prevention Program.
The FTC Red Flags Rule requires that creditors create and monitor policies applying to red flags indicating broker-facilitation fraud. appraisal fraud. identity theft. predatory lending.
The correct answer is C. The Red Flags Rule requires financial institutions (including mortgage lenders) and creditors that hold any consumer account, or other account for which there is a reasonably foreseeable risk of identity theft, to develop and implement an Identity Theft Prevention Program.
With regard to closing a loan transaction, all of the following may be given a copy of the borrower's credit report EXCEPT the loan originator. the borrower. the seller. the underwriter.
The correct answer is C. The seller has no right to see the borrower's credit report.
Under the rules for the Do-Not-Call Registry, a mortgage broker may make an unsolicited call to a client or customer with whom he has established a business relationship for up to how many months after his last transaction? 24 3 18 6
The correct answer is C. Under the rules for the Do-Not-Call Registry, a mortgage broker may make an unsolicited call to a client or customer with whom he has established a business relationship for up to 18 months after his last transaction (e.g., the loan closing).
The FTC's Telemarketing Sales Rule requires that persons who engage in telemarketing register with the FTC to engage in such practices. call only former or current customers for leads for origination. call no one on a do-not-call list. establish policies and procedures to ensure compliance with the rule.
The correct answer is D. A company engaging in telemarketing may call someone on the Do-Not-Call list if an established business relationship exists between the company and the consumer. However, if the consumer asks to not be contacted, the company must put the consumer on the company's own do-not-call list. A telemarketer may call anyone who is not on a no-call list. The telemarketer must establish policies and procedures and train employees to ensure compliance with the rule (e.g., check the federal and company no-call lists, enter persons on the list who specify they do not wish to be called, etc.).
All of the following are included in an ECOA adverse action notice EXCEPT a statement of the action taken. name and address of the federal agency administering the loan originator's compliance with ECOA. the ECOA Notice. names and/or contact numbers for consumer credit counseling agencies.
The correct answer is D. An ECOA adverse action notice must contain a statement of the action taken, a statement of the provisions known commonly as the ECOA Notice, the name and address of the federal agency that administers compliance with respect to the loan originator; and the applicant's right to a statement of specific reasons for the action and the identity of the persons or office from which the statement may be obtained, if it has not been provided already.
ECOA requires that a creditor must provide a copy of the appraisal report to a mortgage loan applicant who is denied credit if the report is requested within how many days of the notice of action taken? 180 30 60 90
The correct answer is D. ECOA requires that a creditor must provide a notice of a right to a copy of the appraisal report within 30 days of receipt of the application and provide the applicant with a copy if it is requested within 90 days of the notice of action taken.
ECOA requires that a mortgage loan applicant must be given an appraisal disclosure, notifying him of his right to get a copy of his appraisal report if he has not been given it already within seven business days after notice of action taken on the application. any time during the application process. within seven business days of the application. no later than the time of the notice of action taken.
The correct answer is D. ECOA requires that a mortgage loan applicant must be given an appraisal disclosure notifying him of his right to get a copy of his appraisal report, if he has not been given it already, by the time he is given the notice of action taken on the application. The notice of action taken must be given within 30 days of receipt of a completed application.
The purpose of the Fair Credit Reporting Act is to help consumers shop for credit agencies. lower the cost of credit reports. enable consumers to improve their credit scores. ensure the accuracy of information in consumer reports.
The correct answer is D. The Fair Credit Reporting Act (FCRA), enforced by the Consumer Financial Protection Bureau, is designed to ensure the accuracy and privacy of the information in consumer reports.
The federal agency that oversees the Federal Do-Not-Call Registry is the Office of Homeland Security. the U.S. Department of Housing and Urban Development. the Commerce Department. the Federal Trade Commission.
The correct answer is D. The Federal Trade Commission (FTC) authorized the development of a national Do-Not-Call Registry and is responsible for overseeing it.
Under HMDA, what is the term for an application for a home purchase loan in which the lender, after a comprehensive analysis of the applicant's creditworthiness, issues a written commitment to make a home purchase loan up to a specified amount, subject to the home's appraisal? Credit evaluation request Loan application Prequalification request Preapproval request
The correct answer is D. The HMDA requires that for all home purchase loans and applications, lenders must report whether a preapproval was requested and, if so, report denials of such preapproval requests. A request for preapproval is an application for a home purchase loan in which the lender, after a comprehensive analysis of the applicant's creditworthiness, issues a written commitment to make a home purchase loan up to a specified amount, subject to the home's appraisal.
Under the Gramm-Leach-Bliley Act a privacy notice may be delivered in any of the following ways EXCEPT by mail. in person. by posting on the institution's website. by posting in the office.
The correct answer is D. The privacy notice may be delivered by mail, in person or by posting on the institution's website, provided the consumer acknowledges receipt of the notice.