Federal Mortgage-Related (2)

Which of the following is NOT included in the definition of a complete application that triggers TILA's application disclosure requirements?

A "complete application" is defined as the receipt of a borrower's name, Social Security number, gross monthly income, the subject property address, the loan amount, and an estimate of value of the subject. Answer: most recent two months of bank statements

Louis applied for a loan on May 1. XYZ Mortgage Company rejected his loan application on May 5. XYZ must send him a written explanation of their decision by

A lender is required to provide the borrower a reason for rejection of credit, in writing, within 30 days of the loan application. Answer: May 30

An MLO is considered to have an affiliated business relationship with a title company to whom it refers business if it has an ownership interest of more than

An affiliated business arrangement is a situation where a person in a position to refer settlement services has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1% in a provider of settlement services and who then refers business to that provider or in some way influences the selection of that provider. Answer: 1%

What action would not be considered "adverse action" according to the Fair Credit Reporting Act if based on information from a credit report?

Any negative decision made, based on the information reported on a credit report, constitutes an adverse action. Granting a mortgage loan is not considered a negative decision. Answer: granting a mortgage loan based on the terms the consumer applied for

The Dodd-Frank Act definition of a qualified mortgage (QM) includes all of these features EXCEPT

Interest-only loans are prohibited by the qualified mortgage (QM) rule. Answer: interest-only loan offerings.

Which of the following is NOT a requirement for providing a revised Loan Estimate (LE) to a borrower?

Lenders are not prohibited from providing revised disclosures, as a courtesy, for informational purposes at any time to keep the consumer updated on any changes in fees. However, such a practice may lead to confusion of both the borrower and the lender if it is not made clear that such disclosures do not impact good faith analysis. Answer: A lender is prohibited from providing revised LE disclosures for informational purposes only.

Which federal legislation requires that the lender perform an annual audit of the escrow account balance and distributions to bring the account within $50 of the actual balance based on the previous 12 months disbursements?

Since RESPA governs all settlement costs, including escrow disbursements, it requires the lender to keep an appropriate amount in the escrow account. However, RESPA does not allow the lender to keep excess funds in that account. Answer: prepaids

Under the Home Ownership and Equity Protection Act, a creditor may not refinance a Section 32 loan into another Section 32 loan within the first ______________ of origination, unless the new loan is in the borrower's best interest.

A creditor may not refinance a HOEPA loan into another HOEPA loan within the first 12 months of origination without showing that it is in the borrower's best interest AnswerL 12 months

An MLO is not required to provide a borrower with a Loan Estimate if the lender turns down the loan within

Borrowers must receive a Loan Estimate within three business days of applying for a residential mortgage loan unless the lender turns the loan down before then. Answer: 3 days

According to the FCRA, when must a credit agency give a consumer a free copy of his credit report?

FCRA provisions entitle consumers to a free copy of their credit report if credit is denied based on what is in the report. Answer: if the loan application is denied because of information in the report

When completing a Loan Estimate, where should a licensed mortgage loan originator include an estimate of hazard insurance premiums paid in advance?

Homeowners insurance premiums, mortgage insurance premiums, property taxes, and interest paid prior to the first loan payment are listed in the Prepaids section of the Loan Estimate. Answer: prepaid

Regulation Z applies to all residential loans

Regulation Z does not apply to business, commercial, or agricultural loans, loans payable with four or less installments and without a finance charge, or to loans made to corporations, partnerships, associations, and agencies. Answer: with more than four installments.

Which law was enacted to eliminate requiring the use of certain third-party settlement providers as a condition of getting a loan?

Section 9 of RESPA was intended to help consumers become better shoppers for settlement services and to eliminate unnecessary increases in the costs of certain settlement services due to kickbacks and referral fees. Answer: RESPA

The Dodd-Frank Act created what entity?

The CFPB was created by Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. Answer: Consumer Financial Protection Bureau

The three business-day right of rescission is in effect for what type of loan closing?

The right of rescission is only in effect for refinances, not purchases. It applies to owner-occupied refinances only. Answer: owner- occupied refinance