section 17 unit 1: Federal Legislation Affecting the Real Estate Industry

The neighbors in South Mountain Village got tired of all the drug dealing and criminal activity surrounding a shop, the Mystery Market. The community boycotted the store, which eventually closed, and with the help of local financial institutions, a social services center was added to the area. What act is this an example of? a. Community Reinvestment Act b. Consumer Credit Protection Act c. Equal Credit Opportunity Act d. Home Mortgage Disclosure Act

a. Community Reinvestment Act

Craig is applying for a federally related loan from his bank to buy a large ranch house on five acres. a. RESPA applies b. RESPA doesn't apply

a. RESPA applies

Within a minority community, providing credit only to creditworthy individuals a. discriminatory b. not a discriminatory

b. not a discriminatory

A bank makes public the results of a federal agency review.

CRA

Requires lenders to invest in development and rehabilitation of the communities they serve

CRA - The Community Reinvestment Act

A lender extends credit to a Muslim applicant and to an equally creditworthy Protestant applicant.

ECOA

A lender sends a mortgage applicant a copy of the appraisal for the property being purchased.

ECOA

Lists protected classes against whom lenders may not discriminate when making credit unavailable

ECOA - The Equal Credit opportunity Act

A bank publicly discloses information about the mortgages it granted.

HMDA

Allows review of lending data to evaluate where mortgages are given and where they are not

HMDA - The Home Mortgage Disclosure Act

Tyler is a developer who renovates a long-abandoned warehouse in a low-income neighborhood into a community center, complete with space for after-school programs, a daycare, and a gym. Tyler is able to complete the renovation with a loan funded by a local bank. Which act requires financial institutions to make credit available for this type of development? a. Community Reinvestment Act b. Consumer Credit Protection Act c. Equal Credit Opportunity Act d. Home Mortgage Discrimination Act

a. Community Reinvestment Act

The ______ was enacted in 2010 to create stricter regulation of the financial services industry to reduce costs for consumers from (for instance), undisclosed kickbacks. a. Dodd-Frank Wall Street Reform and Consumer Protection Act b. Equal Credit Opportunity Act c. Real Estate Settlement Procedures Act d. Truth in Lending Act

a. Dodd-Frank Wall Street Reform and Consumer Protection Act

Letitia and Marla have purchased a fixer-upper. They borrowed enough on an FHA loan to pay for the property and the renovation costs. a. RESPA applies b. RESPA doesn't apply

a. RESPA applies

Tilly is applying for a loan so she can buy the home of her dreams. She protects herself by making sure she understands the facts and her responsibilities regarding a mortgage. Meanwhile, TILA protects Tilly by ___________. a. Requiring lenders to make full disclosure of the terms and conditions in any offers of credit b. Setting annual income thresholds for borrowers to guard against the possibility of getting in over their heads c. Educating consumers about the ways in which creditors seek to misinform borrowers d. Requiring creditors to recite an oath of honesty to loan applicants

a. Requiring lenders to make full disclosure of the terms and conditions in any offers of credit That purpose is implemented through a boatload of rules with which lenders must comply.

Ron can explain that the choice of mortgage broker is completely up to the client. a. allowed under RESPA b. not allowed under RESPA

a. allowed under RESPA

Ron can give his client the name and contact number for at least three mortgage brokers. a. allowed under RESPA b. not allowed under RESPA

a. allowed under RESPA

Denying a minority applicant a loan for a home in a white community, but approving a similar loan to the same applicant for a home in a minority community a. discriminatory b. not discriminatory

a. discriminatory

Marketing more expensive loan products to a minority community, and more affordable products to a majority community a. discriminatory b. not discriminatory

a. discriminatory

Regulating the Power of Regulatory Agencies: APA It balances the powers of regulating agencies. a. true b. false

a. true

Regulating the Power of Regulatory Agencies: APA It requires agencies to keep the public informed of their organization, procedures, and rules. a. true b. false

a. true

The ______ was enacted in 1974 as a response to discriminatory practices by lenders. It was created to help ensure that access to consumer credit was not based on protected class status, but on creditworthiness. a. Community Reinvestment Act b. Equal Credit Opportunity Act c. Home Mortgage Disclosure Act d. Real Estate Settlement Procedures Act

b. Equal Credit Opportunity Act

Donna is purchasing a home using all cash from her lottery winnings. a. RESPA applies b. RESPA doesn't apply

b. RESPA doesn't apply RESPA doesn't apply in this case, because the transaction doesn't involve a loan.

Kendra is buying an auto repair business, including the building and land. a. RESPA applies b. RESPA doesn't apply

b. RESPA doesn't apply RESPA doesn't apply to commercial loans.

Chance and Maury are purchasing a farm house on 100 acres. a. RESPA applies b. RESPA doesn't apply

b. RESPA doesn't apply RESPA doesn't apply to tracts of land of 25 or more acres, with or without an existing residence.

Smitty and Kate are financing a 40-acre lot upon which they hope one day to build their dream home. a. RESPA applies b. RESPA doesn't apply

b. RESPA doesn't apply RESPA doesn't apply to transactions for land tracts of 25 or more acres.

The Truth in Lending Act requires lenders to make certain ______ to consumers. a. concessions b. disclosures c. loans d. rates available

b. disclosures

In addition to reducing settlement costs, RESPA helps protect the consumer by requiring clarity around settlement fees. The borrower in a real estate transaction must receive certain disclosures. Which two of these are the names of the disclosure forms related to RESPA? a. TRID b. loan estimate c. RESPA disclosure d. closing disclosure

b. loan estimate d. closing disclosure

Tilly is a high school teacher who's decided to purchase a home nearer to the school where she works. She looks through a "Homes for Sale" magazine to see if there are any homes she can afford, and she sees a listing for a cute two-bedroom with a fenced yard big enough for both of her dogs! The price is a little high, but the ad excitedly proclaims, "Financing available!" Does TILA require that Tilly see additional terms of credit with this ad? a. yes b. no

b. no TILA requires that all terms be provided if any credit terms are discussed. For this ad, the phrase, "Financing available," isn't specific about terms of credit. If the ad had listed a specific credit term (other than the APR), then all the relevant credit terms would also have to be stated in the ad. "Financing available" doesn't count as a specific credit offer, so you're right; this ad isn't required to provide any additional credit information. If the ad had listed a specific credit term, then all the relevant credit terms would also have to be stated in the ad.

Ron can accept a referral fee from any mortgage broker whose name he gives to his client. a. allowed under RESPA b. not allowed under RESPA

b. not allowed under RESPA

Ron can give his client the name of the best mortgage broker and accept a fee from that mortgage broker for doing so. a. allowed under RESPA b. not allowed under RESPA

b. not allowed under RESPA

Refusing credit to members of a minority community who can't prove creditworthiness a. discriminatory b. not discriminatory

b. not discriminatory

Natalie is a single mother of twins and receives government assistance to help make ends meet. She's been living with her mother for the last few years but really wants to buy her own home to gain some independence. She's got a little in savings and has good credit, but when a lender turns her away because she receives public assistance she worries that she'll never be able to get a loan. What act prevents automatic discriminatory practices by lenders and protects individuals like Natalie? a. Community Reinvestment Act b. Consumer Credit Protection Act c. Equal Credit Opportunity Act d.

c. Equal Credit Opportunity Act

About 50% of the borrowers in Neighborhood One are Hispanic, while only 4% in Neighborhood Two are Hispanic. The median home price in both neighborhoods is the same. However, statistics show that there is a significantly greater percentage of minority and low-income borrows who were denied financing for loans on properties in Neighborhood Two and were offered lower rates to live in Neighborhood One. What act is intended to prevent this type of potentially discriminatory lending pattern? a. Community Credit Act b. Consumer Credit Protection Act c. Equal Credit Opportunity Act d. Home Mortgage Disclosure Act

d. Home Mortgage Disclosure Act

Regulation Z codifies the rules of the ______. a. Equal Credit Opportunity Act b. Home Mortgage Disclosure Act c. Real Estate Settlement Procedures Act d. Truth in Lending Act

d. Truth in Lending Act

Tilly's lender explains to her that ____________ requires that she be provided with a disclosure statement within three days of receiving her loan application. a. regulation a b. regulation t c. regulation c d. regulation z

d. regulation z Yes, if you hear a lender talking about Regulation Z, you should understand that the lender likely means the rules surrounding the Truth in Lending Act.