Mortgage Mortgage Federal Lending 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 Good Faith Estimate to borrowers
- Accepting kickbacks for referrals of settlement services (Correct answer)
- Disclosing affiliated business arrangements
- Allowing borrowers to shop for title insurance
Correct answer: Accepting kickbacks for referrals of settlement services
RESPA Section 8 prohibits kickbacks or fee-splitting for referrals of settlement services.
Question 2: What is the maximum timeframe a lender has to provide a Loan Estimate after receiving a mortgage application under TRID rules?
- 1 business day
- 3 business days (Correct answer)
- 5 business days
- 7 business days
Correct answer: 3 business days
Under TILA-RESPA Integrated Disclosure (TRID) rules, lenders must provide a Loan Estimate within 3 business days of receiving a loan application.
Question 3: Which federal law requires lenders to disclose the Annual Percentage Rate (APR) to borrowers?
- Fair Housing Act
- Truth in Lending Act (TILA) (Correct answer)
- Community Reinvestment Act
- Home Mortgage Disclosure Act
Correct answer: Truth in Lending Act (TILA)
The Truth in Lending Act (TILA) requires lenders to disclose the APR and other credit terms to borrowers.
Question 4: Under the Equal Credit Opportunity Act (ECOA), which factor may a lender legally consider when evaluating a mortgage application?
- Applicant's race
- Applicant's marital status
- Applicant's credit history (Correct answer)
- Applicant's national origin
Correct answer: Applicant's credit history
ECOA prohibits discrimination based on race, color, religion, national origin, sex, marital status, or age, but allows consideration of creditworthiness factors like credit history.
Question 5: What does the Home Mortgage Disclosure Act (HMDA) primarily require from covered lenders?
- Maintain escrow accounts for all borrowers
- Report data about mortgage lending activity to regulators (Correct answer)
- Offer below-market interest rates in underserved areas
- Provide free credit counseling to first-time homebuyers
Correct answer: Report data about mortgage lending activity to regulators
HMDA requires covered lenders to collect and report data about their mortgage lending activity to help identify potential discriminatory lending patterns.
Question 6: Under the Dodd-Frank Act, what entity was created to oversee consumer financial protection in mortgage lending?
- Federal Housing Finance Agency (FHFA)
- Office of the Comptroller of the Currency (OCC)
- Consumer Financial Protection Bureau (CFPB) (Correct answer)
- Federal Deposit Insurance Corporation (FDIC)
Correct answer: Consumer Financial Protection Bureau (CFPB)
The Dodd-Frank Wall Street Reform and Consumer Protection Act established the CFPB to regulate consumer financial products and services, including mortgages.
Mortgage Mortgage Federal Lending Regulations Questions and Answers 2
Under the Real Estate Settlement Procedures Act (RESPA), which of the following is prohibited?