Mortgage Loan Originator Federal Regulations and Ethics 2 — Questions and Answers
Question 1: Under the Dodd-Frank Act, a 'Qualified Mortgage' (QM) provides lenders with:
- Immunity from all lawsuits
- A presumption of compliance with the ability-to-repay rule (Correct answer)
- The right to charge any fee amount
- Exemption from TRID disclosures
Correct answer: A presumption of compliance with the ability-to-repay rule
A QM provides either a safe harbor (for lower-priced QMs) or a rebuttable presumption (for higher-priced QMs) that the lender satisfied the ability-to-repay (ATR) requirement.
Question 2: Which federal law requires lenders to inform applicants of the action taken on their credit application within 30 days?
- RESPA
- TILA
- ECOA (Correct answer)
- FCRA
Correct answer: ECOA
ECOA requires creditors to notify applicants of adverse action within 30 days of receiving a completed application, or 30 days after taking the adverse action.
Question 3: Under the CAN-SPAM Act, electronic marketing communications from MLOs must include:
- The borrower's credit score
- A clear opt-out mechanism and the sender's physical postal address (Correct answer)
- The exact APR for offered products
- A disclosure approved by the CFPB
Correct answer: A clear opt-out mechanism and the sender's physical postal address
CAN-SPAM requires commercial emails to include a functioning opt-out mechanism and a valid physical postal address for the sender.
Question 4: The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to:
- Disclose all lending fees in advance
- Provide privacy notices and safeguard consumer financial information (Correct answer)
- Offer loans to all applicants regardless of creditworthiness
- Register with the SEC
Correct answer: Provide privacy notices and safeguard consumer financial information
GLBA requires financial institutions to notify consumers about their information-sharing practices and implement security measures to protect nonpublic personal information.
Question 5: An MLO who accepts a gift valued over $50 from a settlement service provider in exchange for referrals may be violating:
- TILA
- RESPA Section 8 (Correct answer)
- FCRA
- Dodd-Frank Section 1403
Correct answer: RESPA Section 8
RESPA Section 8 prohibits giving or receiving anything of value as a referral fee, making referral-based gifts a clear violation regardless of dollar amount.
Question 6: Which agency has primary supervisory authority over non-bank mortgage companies' compliance with federal consumer financial protection laws?
- OCC
- FDIC
- CFPB (Correct answer)
- Federal Reserve
Correct answer: CFPB
The Consumer Financial Protection Bureau (CFPB) has supervisory and enforcement authority over non-bank mortgage originators for federal consumer financial protection laws.
Mortgage Loan Originator Federal Regulations and Ethics 2
Under the Dodd-Frank Act, a 'Qualified Mortgage' (QM) provides lenders with: