CMC Federal Regulations and Compliance Standards 2 — Questions and Answers
Question 1: Under RESPA, a 'kickback' is defined as any fee, kickback, or thing of value paid for the referral of settlement service business. What is the maximum criminal penalty for a RESPA Section 8 violation?
- $5,000 fine and up to 1 year imprisonment
- $10,000 fine and up to 1 year imprisonment (Correct answer)
- $25,000 fine and up to 5 years imprisonment
- $50,000 fine and up to 2 years imprisonment
Correct answer: $10,000 fine and up to 1 year imprisonment
RESPA Section 8 violations carry a criminal penalty of up to $10,000 in fines and up to one year in prison.
Question 2: The Qualified Mortgage (QM) rule's 'points and fees' cap for loans of $100,000 or more is:
- 2%
- 3% (Correct answer)
- 4%
- 5%
Correct answer: 3%
For loans of $100,000 or more, the QM points and fees cap is 3% of the total loan amount.
Question 3: Which federal law requires lenders to provide a Loan Estimate within 3 business days of receiving a completed loan application?
- RESPA
- TILA
- TRID (TILA-RESPA Integrated Disclosure) (Correct answer)
- HMDA
Correct answer: TRID (TILA-RESPA Integrated Disclosure)
TRID, which combined TILA and RESPA disclosures, mandates the Loan Estimate be delivered within 3 business days of application.
Question 4: Under the Servicemembers Civil Relief Act (SCRA), what is the maximum interest rate a lender may charge on a mortgage for an active-duty servicemember?
- 4%
- 5%
- 6% (Correct answer)
- 8%
Correct answer: 6%
SCRA caps mortgage interest rates at 6% per year for servicemembers who entered active duty after taking out the loan.
Question 5: The Home Mortgage Disclosure Act (HMDA) was enacted primarily to:
- Set maximum allowable interest rates on home loans
- Detect discriminatory lending patterns and ensure credit is available in communities (Correct answer)
- Require lenders to maintain escrow accounts for taxes and insurance
- Establish uniform appraisal standards for residential properties
Correct answer: Detect discriminatory lending patterns and ensure credit is available in communities
HMDA requires lenders to collect and report loan data to help regulators identify potential redlining and fair lending violations.
Question 6: A lender charges a borrower $1,200 for a credit report that actually costs $30. Under which law is this most likely a violation?
- Fair Credit Reporting Act
- RESPA Section 8 prohibiting fee splitting (Correct answer)
- Equal Credit Opportunity Act
- Gramm-Leach-Bliley Act
Correct answer: RESPA Section 8 prohibiting fee splitting
RESPA Section 8 prohibits marking up third-party settlement service fees beyond their actual cost.
Question 7: The Ability-to-Repay (ATR) rule requires lenders to consider which of the following before extending credit?
- Only the borrower's current income and debt-to-income ratio
- Eight specific underwriting factors including income, assets, employment, credit history, and monthly payment (Correct answer)
- The borrower's net worth and investment portfolio
- Only the property value relative to the loan amount
Correct answer: Eight specific underwriting factors including income, assets, employment, credit history, and monthly payment
The ATR rule requires lenders to evaluate eight specified factors to verify a borrower's ability to repay the mortgage.
CMC Federal Regulations and Compliance Standards 2
Under RESPA, a 'kickback' is defined as any fee, kickback, or thing of value paid for the referral of settlement service business.
What is the maximum criminal penalty for a RESPA Section 8 violation?