Mortgage Mortgage Federal Laws and Regulations Questions and Answers 2 — Questions and Answers
Question 1: Under the Real Estate Settlement Procedures Act (RESPA), which of the following is prohibited?
- Providing a Loan Estimate within three business days
- Kickbacks or referral fees for settlement services (Correct answer)
- Requiring an escrow account for taxes and insurance
- Disclosing the Annual Percentage Rate to borrowers
Correct answer: Kickbacks or referral fees for settlement services
RESPA Section 8 explicitly prohibits kickbacks, fee-splitting, and unearned fees in connection with federally related mortgage loans.
Question 2: What is the primary purpose of the Home Mortgage Disclosure Act (HMDA)?
- To cap interest rates on residential mortgages
- To require lenders to report lending data for fair lending analysis (Correct answer)
- To establish maximum loan-to-value ratios
- To mandate homebuyer education courses
Correct answer: To require lenders to report lending data for fair lending analysis
HMDA requires covered lenders to collect and publicly disclose mortgage lending data so regulators and the public can monitor for discriminatory lending patterns.
Question 3: Under the Equal Credit Opportunity Act (ECOA), a lender must provide an adverse action notice within how many days of taking negative action on a mortgage application?
- 10 days
- 30 days (Correct answer)
- 45 days
- 60 days
Correct answer: 30 days
ECOA and Regulation B require creditors to notify applicants of adverse action within 30 days of taking such action.
Question 4: Which federal law requires mortgage servicers to provide borrowers with an annual escrow account statement?
- Truth in Lending Act (TILA)
- Fair Credit Reporting Act (FCRA)
- Real Estate Settlement Procedures Act (RESPA) (Correct answer)
- Homeowners Protection Act (HPA)
Correct answer: Real Estate Settlement Procedures Act (RESPA)
RESPA Section 10 requires mortgage servicers to conduct an annual escrow account analysis and provide borrowers with a statement of activity.
Question 5: The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) requires mortgage loan originators to do which of the following?
- Obtain a state license or federal registration through the NMLS (Correct answer)
- Complete a property appraisal before closing
- Provide borrowers with a HUD-1 settlement statement
- Submit quarterly reports to the Consumer Financial Protection Bureau
Correct answer: Obtain a state license or federal registration through the NMLS
The SAFE Act mandates that all mortgage loan originators be either state-licensed or federally registered through the Nationwide Multistate Licensing System (NMLS).
Question 6: Under the Homeowners Protection Act (HPA), a lender is required to automatically terminate private mortgage insurance (PMI) when the loan balance reaches what percentage of the original property value?
- 80%
- 78% (Correct answer)
- 75%
- 70%
Correct answer: 78%
The HPA requires automatic termination of PMI when the loan-to-value ratio reaches 78% of the original value, based on the amortization schedule.
Mortgage Mortgage Federal Laws and Regulations Questions and Answers 2
Under the Real Estate Settlement Procedures Act (RESPA), which of the following is prohibited?