Federal Mortgage Related Laws

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: 1% 1.5% 8% 0.13%

The answer is 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 final APR for a loan is disclosed on the: Final Loan Estimate Final Appraisal Notice Note Closing Disclosure

The answer is Closing Disclosure. The final annual percentage rate on a loan is set forth in the Closing Disclosure.

According to ECOA, a lender may use which of the following in considering loan eligibility? Citizenship status Sex National origin Race

The answer is citizenship status. For purposes of determining creditworthiness and its rights and remedies should a prospective borrower fail to comply with the terms of a loan, a lender may inquire on an applicant's citizenship.

Which of the following circumstances is least likely to lead to a determination that two entities are operating a sham affiliated business arrangement under RESPA? The same person owns both entities One entity shares office space with the other entity One entity's business comes exclusively from referrals from another entity Both entities share the same employees

The answer is the same person owns both entities. An affiliated business arrangement is an arrangement in which a person or his or her associate is in a position to refer real estate settlement service business for a federally-related mortgage loan and has either an affiliate relationship with, or ownership interest of more than 1% in, a provider of settlement services and refers business to or influences the selection of that provider. As ownership in an affiliated business is part of the definition of an affiliated business relationship, such ownership does not necessarily point to a sham operation.

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? Real Estate Settlement Procedures Act Equal Credit Opportunity Act Truth-in-Lending Act Fair Housing Act

The answer is 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 best describes the Homeowners Protection Act? Regulates higher-priced mortgage loans Sets forth Section 32 loan rules Establishes PMI requirements Implements the Home Ownership and Equity Protection Act

The answer is establishes PMI requirements. The provisions of the Homeowners Protection Act regulate when and how a homeowner may cancel and/or terminate private mortgage insurance.

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

The answer is "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.

A mortgage loan in the amount of $15,757 is a high-cost home loan if it has points and fees that exceed: 5% of the loan amount 6% of the loan amount $1,099 $1,260

The answer is $1,099. A loan may be a high-cost home loan if it exceeds a points and fees threshold. For a transaction like this one, which has a loan amount of less than $21,980, the loan is high-cost if its points and fees equal the lesser of 8% of the total loan amount or $1,099. In this case, $15,757 × 8% = 1,260. $1,099 is less than 8% of the loan amount, meaning that if its points and fees exceeded $1,099, it would be high-cost.

Which of the following is most likely to issue a rule regarding TILA enforcement? State regulator CFPB HUD Congress

The answer is CFPB. The Consumer Financial Protection Bureau, created under the Dodd-Frank Act, is authorized to carry out the enforcement and rulemaking authority of the Truth-in-Lending Act and the Real Estate Settlement Procedures Act.

A lender is prohibited from asking about income received from alimony by: The GLB Act Privacy laws ECOA Regulation Z

The answer is ECOA. A loan originator is precluded from making certain inquiries, in order to prevent discrimination against a loan applicant based on his or her age or marital status. Asking whether an applicant receives alimony or child support if such payments are not necessary to qualify the applicant for the loan is prohibited. However, if such payments are to be included in the applicant's qualifying income, he or she may be asked to provide proof of its regular receipt.

According to ECOA, a residential mortgage lender may ask a borrower about which of the following for compliance monitoring purposes? Child support income Ethnicity Alimony income Separate maintenance payments

The answer is Ethnicity. In taking a loan application, a creditor may ask a loan applicant about his or her race, ethnicity and gender, provided that it is only for purposes of monitoring fair lending law compliance.

A borrower receives a document which contains a list of all closing costs, a disclosure of the borrower credits received on the transaction, an estimate of the cash the borrower needs to bring in to closing, and the sales price. Which of the following best identifies this document? Loan Closure Closing Disclosure Itemization of Amount Financed Loan Estimate

The answer is Loan Estimate. The Loan Estimate provides an "estimate" only of closing costs. The Closing Disclosure sets forth the" actual" costs of the subject mortgage lending transaction in a clear and understandable manner.

Including misrepresentations regarding the amount of credit available to a borrower in an advertisement is specifically prohibited by: RESPA The HMDA Rule The MAP Rule ECOA

The answer is MAP Rule. Pursuant to the Mortgage Acts and Practices Rule (MAP Rule) and Regulation N, it is prohibited for a licensee to make a misrepresentation in an advertisement with regards to the amount of credit available to a borrower.

A lender may not charge for the preparation of any documents required in a federally-regulated mortgage loan transaction, based on provisions of the: Truth-in-Lending Act Home Ownership and Equity Protection Act Real Estate Settlement Procedures Act Fair Lending Act

The answer is Real Estate Settlement Procedures Act. The Real Estate Settlement Procedures Act provides that no fee can be charged by a lender for the preparation and distribution of documents required in connection with the making of a federally-related mortgage loan. These documents include, but are not limited to, the Closing Disclosure, escrow account statements or statements required by the Truth-in-Lending Act.

The rule dealing with the accurate disclosure of the cost and terms of credit is: Regulation X Regulation Z Regulation C Regulation Y

The answer is Regulation Z. Regulation Z implements the Truth-in-Lending Act and provides rules requiring the disclosure of material information related to the terms and costs of a specific mortgage loan. Cost of credit is expressed with Finance Charges and APR.

Which of the following statements about the Loan Estimate is NOT true? The lender is solely responsible for providing the Loan Estimate to the prospective borrower The Loan Estimate need not be provided if the borrower is seeking a refinance of an existing loan The Loan Estimate is not a loan guarantee The Loan Estimate must be provided to the applicant no more than three business days after submission of the application

The answer is The Loan Estimate need not be provided if the borrower is seeking a refinance of an existing loan. The Loan Estimate must be provided to a prospective borrower applying for any federally-regulated mortgage loan, including a refinance. It must be provided no more than three business days after the licensee receives an application. Although it need not be provided directly by the lender, it is the lender that is ultimately responsible for ensuring that the borrower has received the required disclosure.

Assume an application is taken on Monday. Assuming no federal holidays, by which day must the Loan Estimate be issued? Tuesday Wednesday Thursday Friday

The answer is Thursday. Pursuant to Regulation Z, the Loan Estimate must be provided to a loan applicant within three business days of a lender's receipt of a completed loan application and no less than seven business days prior to loan consummation. If a completed application is received on Monday, the Loan Estimate must be provided no later than the following Thursday.

Which line of the Loan Estimate would reflect any lender credits? Funds for Borrower Closing Costs Financed Adjustments and Other Credits Total Closing Costs

The answer is Total Closing Costs. The Total Closing Costs section totals the Loan Costs and Other Costs tables, plus the amount of any lender credits, on the Loan Estimate

A lender mails the Loan Estimate on Monday. Assuming no holidays and the lender is open on Saturdays, what is the earliest day on which the transaction may be consummated? Tuesday of the following week The following Monday Wednesday of the following week The following Thursday

The answer is Tuesday of the following week. A Loan Estimate must be provided to the loan applicant no more than three business days after receipt of an application and no less than seven business days prior to loan consummation. A business day is defined for Loan Estimate purposes as all calendar days except Sundays and legal public holidays. Using this information, the transaction could not be consummated earlier than Tuesday of the following week.

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

The answer is 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].

Under the PATRIOT Act, an account established to receive deposits from or make payments on behalf of a foreign financial institution, or to handle other financial transactions related to such an institution, is called: A correspondent account A foreign account A diplomatic account A delegate account

The answer is a correspondent account. A correspondent account is an account established to receive deposits from or make payments on behalf of a foreign financial institution or to handle other financial transactions related to a foreign financial institution.

All of the following are mortgage loans subject to coverage under the Home Mortgage Disclosure Act, except: A loan to purchase a condominium unit A home improvement loan made for the purpose of repairing, rehabilitating, or remodeling a dwelling A home equity loan used to pay off outstanding medical bills A loan to purchase a mobile home or multi-family dwelling

The answer is a home equity loan used to pay off outstanding medical bills. Loans subject to the Home Mortgage Disclosure Act (HMDA) include home purchase loans for any residential dwelling, home improvements loans made for the purpose of repair, rehabilitation or remodeling a dwelling, and refinance loans of a loan previously covered by HMDA.

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

The answer is 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.

HMDA can best be described as: A reporting law meant to discover discrimination by lenders Homeowners Mortgage Delinquency Act A section of RESPA which limits the amount of money that can be held in a borrower's escrow account A federal statute which states that borrowers have a right to a free copy of their credit report every 12 months

The answer is a reporting law meant to discover discrimination by lenders. The Home Mortgage Disclosure Act (HMDA) was enacted because of credit shortages in certain urban neighborhoods and the failure of certain financial institutions to provide adequate home financing to qualified applicants on reasonable terms. Its provisions allow for the determination of discriminatory lending patterns and to assist in enforcing fair lending laws.

The Disposal Rule, a part of the Fair and Accurate Credit Transactions Act, is intended to prevent: Abuse of covered loans Predatory use of prepayment penalties Abuse of mandatory arbitration clauses Acts of fraud such as identity theft

The answer is acts of fraud such as identity theft. The Disposal Rule seeks to protect the privacy of consumer information and reduce the risk of fraud and identity theft. Under the Rule, businesses are required to take reasonable and appropriate measures to dispose of sensitive information derived from consumer reports and records to protect against "unauthorized access to or use of the information."

At what point during a transaction may a consumer withdraw their consent to receive disclosures electronically? After the initial consent but before actual delivery of the documents After the initial consent but before e-signatures are placed on documents A consumer may not withdraw consent once it has been given Any time during the transaction

The answer is any time during the transaction. Pursuant to the E-Sign Act, a borrower may withdraw consent to receive documents electronically at any time during the course of the transaction. If a consumer later withdraws consent to electronic delivery, the validity or enforceability of an existing contract made prior to the withdrawal of consent may not be affected.

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

The answer is 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.

Under the Financial Privacy Rule of the Gramm-Leach-Bliley Act, a customer of Big Box Bank is entitled to a privacy notice: At the time he or she obtains a financial product from the bank and annually thereafter At any time the bank provides non-public personal information to a non-affiliated third party Every six months Annually

The answer is at the time he or she obtains a financial product from the bank​ and annually thereafter. A consumer is an individual who obtains or has obtained a financial product or service from a financial institution for personal, family, or household reasons. A consumer who has a continuing relationship with the institution is considered to be a customer; a customer is entitled to a privacy notice at the time a financial product is obtained and automatically every year for as long as the relationship lasts.

Which of the following is required to be reported under the BSA? Currency transactions exceeding $10,000 All mortgage loans exceeding $100,000 All currency transactions Currency transactions less than $5,000

The answer is currency transactions exceeding $10,000. The Bank Secrecy Act requires a financial institution to report to the Financial Crimes Enforcement Network (FinCEN) single or structured currency transactions that exceed $10,000. Such a report must be made on a Currency Transaction Report and filed within 15 days following the day on which the reportable transaction occurred.

Which of the following would most likely not be considered a federally-regulated mortgage loan as defined by RESPA? Hard money, privately-placed loan Subprime loan FHA loan Conventional loan

The answer is hard money, privately-placed loan. Federally-related mortgage loans include FHA, VA, or other government-sponsored loans and most conventional loans, purchase loans, assumptions, refinances, and reverse mortgages, and subordinate lien loans. A private mortgage loan would not be considered a federally-related mortgage loan.

According to RESPA, when would fee splitting be allowed? Never If all parties are licensed If all parties render a service If all parties are employed by different companies

The answer is if all parties render a service. A settlement service provider may charge a borrower a fee only for work performed. RESPA and Regulation X prohibit fee-splitting and receiving unearned fees for services not actually performed. No person may give and no person may accept any portion, split, or percentage of any fee for the rendering of a settlement service in connection with a transaction involving a federally-related mortgage loan unless it is for services actually performed.

Regulation C requires lenders to: Report the race of its borrowers to HUD Provide free credit reports to declined borrowers and advise credit counseling If the borrower declines to self-report, indicate the borrower's race based on visual observation Disclose the APR to the borrower three days after application

The answer is if the borrower declines to self-report, indicate the borrower's race based on visual observation​. Regulation C (HMDA) has the purpose of identifying discrimination by requiring originators to request the race, ethnicity and sex of each applicant. If a loan applicant does not disclose his or her personal information with regards to ethnicity, race, or sex, HMDA requires a loan originator to note that information in the application based on visual observation or surname.

Under the Telemarketing Sales Rule, which of the following is true about an established business relationship? It is a relationship between a company and a consumer, based on a consumer's inquiry about an offered product or service within three months immediately preceding the date of a telemarketing call If a company and a consumer have an established business relationship, the company is never prohibited from making telemarketing sales calls to the consumer An established business relationship only exists if a consumer has purchased goods or services from the company An established business relationship would exist if a consumer made an inquiry of the company within six months of a telemarketing phone call

The answer is it is a relationship between a company and a consumer, based on a consumer's inquiry about an offered product or service within three months immediately preceding the date of a telemarketing call. An established business relationship is a relationship between the company and a consumer, based on the consumer's purchase, rental, or lease of the seller's goods or services, or a financial transaction between the consumer and seller, within the 18 months immediately preceding the date of a telemarketing call, or the consumer's inquiry or application regarding an offered product or service, within the three months (NOT six months) immediately preceding the date of a telemarketing call.

Which of the following is true under ECOA? Lenders can use racial redlining as a business practice Lenders cannot request information about race unless the information is used for government monitoring purposes Covered lenders must report all loan activity on an annual basis Lenders must give borrowers a free copy of their credit report if requested

The answer is lenders cannot request information about race unless the information is used for government monitoring purposes. For the sole purpose of monitoring compliance with fair lending laws, a creditor may ask about a loan applicant's ethnicity, race, and sex. While the applicant is not required to provide that information, if he or she declines to do so, the loan originator may note that information based on visual observation of the applicant.

Which of the following would not be considered a settlement service as defined by RESPA? Real estate brokerage services Title insurance services Appraisal services Loan modification services

The answer is loan modification services. Settlement service fees are charges incurred in the mortgage loan origination process. They include real estate brokerage services, title fees, appraisal costs, credit report fees, and costs related to the settlement, or closing, of the loan.

Which of the following is not considered one of the six essential pieces of information constituting an application under RESPA? Borrower Social Security Number Loan program Borrower monthly income Loan amount

The answer is loan program. The six essential pieces of a loan application are the borrower's name, Social Security Number and income, the address of the property which will act as collateral for the loan, the estimated value of the property, and the amount of the loan sought. The loan product for which the applicant is applying is NOT an essential piece of an application.

Which of the following would not need to be contained in a privacy notice? Categories of information collected Categories of affiliates with whom information is shared Names of affiliates with whom information is shared Categories of information disclosed

The answer is names of affiliates with whom information is shared. A privacy notice must clearly, conspicuously, and accurately state the company's privacy practices, including what information the company collects and discloses about its consumers and customers, the types of entities with which it shares the information, and how it protects or safeguards the information.

According to ECOA, discrimination is: Never allowed Allowed if based on income Allowed if based on sex Allowed if based on marital status

The answer is never allowed. A creditor may not discriminate against an applicant in any aspect of a credit transaction on the basis of race, color, religion, national origin, sex, marital status, or age, because all or part of his or her income derives from a public assistance program, or because he or she has, in good faith, exercised any right under the Consumer Credit Protection Act. The amount and probable continuance of income may be considered in evaluating an applicant's creditworthiness; however, making a lending decision based wholly or in part on income is not discrimination.

According to ECOA, discrimination based upon age is: Allowed if the borrower does not have legal capacity Allowed only if disclosed to the borrower Never allowed Allowed if the individual is the co-borrower rather than the borrower

The answer is never allowed. Under the Equal Credit Opportunity Act, discrimination based on a loan applicant's age is never permitted. Refusing to engage in a transaction with a consumer because he or she does not have legal capacity to engage in a contract (i.e., he or she is a minor) is not discrimination.

A borrower is refinancing an investment property. The borrower originally purchased the home as a primary residence, but the property is now used as an investment property. The borrower's business partner is also a signer on the loan and a title holder. Who must receive the property rescission notice? Tenant only Both borrowers The tenant and primary borrower No rescission notice is required

The answer is no rescission notice is required. The right of rescission only applies to a mortgage loan secured by the borrower's primary residence. Since the right of rescission does not apply to the refinance of an investment property, a rescission notice would not be required.

Which of the following is not a requirement of the E-Sign Act? Establish a process for withdrawing consent to e-delivery of documents Establish a process to ensure that the consumer is able to use applicable technology Provide notice to consumer of their right to receive documents in paper form Obtain written consent from consumer to utilize electronic signatures

The answer is obtain written consent from consumer to utilize electronic signatures. The E-Sign Act allows for the use of electronic records to satisfy any law, regulation, or rule that requires information be provided in writing, as long as the consumer consents to electronic delivery. The consumer must be advised that he or she has the option to receive information in a non-electronic form, the right to subsequently opt out of electronic delivery, and the right to be provided with information about the hardware and software required to allow him or her to access and retain the electronic records. The consumer's consent to electronic delivery must be provided in a way that reasonably shows that he or she can access information in the electronic form that will be used.

A borrower is refinancing the loan on the home in which he lives. The borrower's father was a co-signer on the loan but has never lived in the home. Who must receive the proper rescission notice? Either the occupying borrower or the father Occupying borrower and father Father only Borrower only

The answer is occupying borrower and father. Any consumer who has an interest in the property, even if he or she did not sign the note, may exercise the right of rescission. Therefore, each person must be given two copies of a notice of the right to rescind. A rescission by one consumer constitutes a rescission by all.

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

The answer is 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 TILA Home Ownership and Equity Protection Act Section 32 of RESPA

The answer is 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 transactions would not require the use of a Closing Disclosure? Settlement involving a refinance of a loan on a primary residence Settlement involving a loan being used to purchase a fourplex which is to be used strictly as an investment property Settlement involving a cash purchase of a home to be used as a primary residence Settlement involving a loan being used to purchase a condominium to be used as an investment property

The answer is settlement involving a cash purchase of a home to be used as a primary residence. A Closing Disclosure sets forth the final terms and conditions of a residential mortgage loan. If no loan is required in the purchase of residential real property, the Closing Disclosure is not necessary.

The MAP Rule addresses: Specific requirements regarding representations made in mortgage advertising Specific disclosure requirements for closing costs Specific requirements regarding e-signatures Specific requirements regarding disclosure of the APR

The answer is specific requirements regarding representations made in mortgage advertising. The Mortgage Acts and Practices Rule (MAP Rule or Regulation N) sets forth advertising regulations under which it is prohibited for any person to make a material misrepresentation in any commercial communication regarding any term of any mortgage credit product.

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? The number of payments for the loan The amount of principal covered in each payment The annual percentage rate The amount or percentage of down payment

The answer is 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.

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

The answer is 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.

Which of the following is NOT true about an Affiliated Business Arrangement Disclosure Statement? It must be provided to the prospective borrower at or before the time a third-party service provider referral is made It must specify the nature of any relationship between a settlement service provider and the referring licensee The disclosure may be provided instead of the list of third-party service providers from which the borrower can shop for services A person that has a 2% interest in a settlement service provider to which the person is referring a borrower has an affiliated business arrangement with the referred-to entity

The answer is the disclosure may be provided instead of list of third-party service providers from which the borrower can shop for services. An affiliated business arrangement is an arrangement in which a person is in a position to refer real estate settlement service business for a federally-related mortgage loan and has either an affiliate relationship with, or a direct or beneficial ownership interest of more than 1% in, a provider of settlement services and refers business to, or influences the selection of, that provider. The Affiliated Business Arrangement Disclosure Statement must be provided on a separate piece of paper to the borrower at or before the time of a face-to-face referral or a referral made in writing or by electronic media, within three business days of a telephone referral, or, if referred by the lender, at the time the Loan Estimate is provided.

A borrower submits all six pieces of information to a lender which constitute a loan application. However, the borrower refuses to tell the lender which loan program he prefers. Which of the following is true regarding the lender's obligation to issue a Loan Estimate? The lender is not required to issue the Loan Estimate The lender is required to issue the Loan Estimate without disclosing a loan program The lender is not allowed to issue a Loan Estimate The lender is required to issue a Loan Estimate and may guess regarding the loan program

The answer is the lender is required to issue a Loan Estimate and may guess regarding the loan program. Upon receipt of a completed loan application, a lender must, within three business days of receipt, issue a Loan Estimate to the applicant. The Loan Estimate must provide a good faith estimate of the costs of the credit and the terms of the transaction based on the best information available at the time the disclosure is made.

Which of the following best describes a lender's obligation under the Equal Credit Opportunity Act? The lender must deny the loan after 90 days if it has not been approved The lender must notify the borrower within three days of declining a loan application The lender must notify the borrower within 60 days of receipt of an application on the status of the file The lender must take some form of action within 30 days of receipt of a completed application

The answer is the lender must take some form of action within 30 days of receipt of a completed application. Pursuant to Regulation B, a creditor must, within 30 days after receipt of a completed application, advise the loan applicant of action taken, whether it is a decision to grant credit or the denial of the application. An application is considered received when it includes the consumer's name and Social Security Number, income, the address of the property serving as collateral for the loan, an estimate of the value of the subject property, and the amount of the mortgage loan sought.

Which of the following would be an acceptable reason to decline a loan application? The borrower is a member of a minority race The borrower fails to disclose their race The borrower has a habit of going on maternity leave The mortgage loan originator feels the borrower is lying

The answer is the mortgage loan originator feels the borrower is lying. A loan originator may not discriminate in a credit transaction on the basis of race, color, religion, national origin, sex, marital status, or age, because all or part of the applicant's income derives from a public assistance program, or because he or she has, in good faith, exercised any right under the Consumer Credit Protection Act. However, if a loan originator believes in good faith that the loan applicant is not being truthful in the application, that would constitute an acceptable reason to deny an application.

A lender decides that they will only give copies of appraisals to borrowers if requested. According to ECOA: This is not allowed This is allowed, as long as a written disclosure is given to the borrower at some point in the loan process This is allowed, as long as the borrower is given a disclosure at the time of loan application This is allowed, as long as the borrower is given a disclosure within three days of the time of loan application

The answer is this is not allowed. Pursuant to the ECOA Valuations Rule, no later than the third business day after receipt of an application for credit to be secured by a first lien mortgage, a creditor must mail or provide a notice of the applicant's right to receive a copy of all written appraisals developed in connection with the application. A creditor is required to provide an applicant with a copy of all appraisals and other written valuations (i.e., any estimate of the value of a dwelling) developed in connection with an application for credit that is to be secured by a first lien on a dwelling. A copy of each appraisal must be provided the earlier of promptly upon completion or, for a closed-end loan, three business days prior to consummation.

If the Closing Disclosure is mailed, when is it deemed received by the borrower? Six business days after mailing Seven business days after mailing Three business days after mailing Only upon actual receipt by the borrower

The answer is three business days after mailing. A Closing Disclosure is deemed received by the loan applicant three business days after it has been placed in the mail or sent for delivery. It may also be completed and delivered electronically if done in compliance with the Electronic Signatures in Global and National Commerce Act (E-Sign Act).

Within how many days of receipt of a loan application, as defined under federal rule, must a lender issue a Loan Estimate? Three banking days Three disclosure days Three calendar days Three business days

The answer is three business days. Pursuant to Regulation Z, the Loan Estimate must be provided to a loan applicant within three business days of a lender's receipt of a completed loan application and no less than seven business days prior to loan consummation.

Based on a valid change in circumstance, a creditor must re-issue a Loan Estimate: Immediately upon learning of the change Within three business days of learning of the change Within one business day of learning of the change Within five business days of learning of the change

The answer is within three business days of learning of the change. A revised Loan Estimate may be provided if changed circumstances cause a settlement charge to increase or, in the case of charges subject to the 10% tolerance rule, cause the total of all such charges to increase by more than the permitted 10%. In general, a revised Loan Estimate must be delivered or placed in the mail no later than three business days after receiving the information sufficient to allow the issuance of a revised Loan Estimate and no less than four business days before consummation.

Assuming that a borrower is not allowed to shop for the appraisal, which of the following best describes the applicable tolerance? No tolerance requirement Zero tolerance Tolerance depends on certain factors 10% tolerance

The answer is zero tolerance. If a loan applicant is not allowed to shop for an unaffiliated third-party service provider (e.g., an appraiser), the actual charge for such services may not exceed the amount quoted in the Loan Estimate; in other words, there is zero tolerance. Unless there is a change in circumstance, allowing for a re-issuance of the Loan Estimate, other fees in this category include transfer taxes, the mortgage licensee's origination charge, and if the interest rate is locked, the credit or charge for the interest rate chosen or the adjusted origination charge.