CMA Mortgage Regulations and Compliance 2 — Questions and Answers
Question 1: Under RESPA, what is the maximum tolerance for increases in third-party settlement service charges between the Loan Estimate and Closing Disclosure?
- 0%
- 5%
- 10% (Correct answer)
- 15%
Correct answer: 10%
RESPA allows a 10% tolerance for third-party charges where the borrower was permitted to shop but selected a provider from the lender's written list.
Question 2: Which federal law prohibits mortgage lenders from discriminating based on the racial composition of a neighborhood?
- HMDA
- ECOA
- Fair Housing Act (Correct answer)
- CRA
Correct answer: Fair Housing Act
The Fair Housing Act prohibits redlining and other discriminatory practices based on race, color, religion, national origin, sex, disability, or familial status.
Question 3: A loan officer collects a $500 application fee before providing the Loan Estimate. Under TRID rules, this practice is:
- Permitted if disclosed on the application
- Permitted only for credit report fees (Correct answer)
- Prohibited entirely
- Permitted with written borrower consent
Correct answer: Permitted only for credit report fees
TRID prohibits collecting any fees before the borrower receives and indicates intent to proceed with the Loan Estimate, except for a bona fide credit report fee.
Question 4: The Home Mortgage Disclosure Act (HMDA) requires lenders to collect and report data primarily to:
- Set maximum interest rates by region
- Identify potential discriminatory lending patterns (Correct answer)
- Calculate required reserve ratios
- Establish minimum down payment requirements
Correct answer: Identify potential discriminatory lending patterns
HMDA data collection helps regulators and the public identify whether lenders are serving the housing needs of their communities and detect discriminatory lending patterns.
Question 5: Under Regulation Z, the right of rescission for a refinance transaction expires how many business days after the last of three triggering events?
- 1 business day
- 2 business days
- 3 business days (Correct answer)
- 5 business days
Correct answer: 3 business days
Borrowers have 3 business days to rescind after consummation, delivery of the rescission notice, or delivery of all material disclosures, whichever occurs last.
Question 6: Which agency is primarily responsible for enforcing the Equal Credit Opportunity Act (ECOA) for mortgage lenders?
- HUD
- CFPB (Correct answer)
- OCC
- FDIC
Correct answer: CFPB
The Consumer Financial Protection Bureau (CFPB) has primary enforcement authority for ECOA, which prohibits credit discrimination based on protected characteristics.
Question 7: A mortgage company pays a real estate agent a referral fee for sending buyers to their loan officers. Under RESPA Section 8, this arrangement is:
- Permitted if disclosed in writing
- Permitted if the referral fee is under $100
- Prohibited regardless of disclosure (Correct answer)
- Permitted only in non-purchase transactions
Correct answer: Prohibited regardless of disclosure
RESPA Section 8 prohibits kickbacks and unearned fees for referrals of settlement services, regardless of disclosure or the amount involved.
CMA Mortgage Regulations and Compliance 2
Under RESPA, what is the maximum tolerance for increases in third-party settlement service charges between the Loan Estimate and Closing Disclosure?