Mortgage Federal Lending Regulations 3 — Questions and Answers
Question 1: Under TILA, the Annual Percentage Rate (APR) must be disclosed to within how many basis points for a regular mortgage transaction?
- 1/8 of 1% (12.5 bps) (Correct answer)
- 1/4 of 1% (25 bps)
- 1/2 of 1% (50 bps)
- 1% (100 bps)
Correct answer: 1/8 of 1% (12.5 bps)
For regular mortgage transactions, TILA requires the APR to be accurate within 1/8 of 1 percentage point (0.125%).
Question 2: Which regulation implements the Real Estate Settlement Procedures Act (RESPA)?
- Regulation X (Correct answer)
- Regulation Z
- Regulation B
- Regulation C
Correct answer: Regulation X
Regulation X is the Federal Reserve/CFPB regulation that implements RESPA, governing settlement services and disclosures.
Question 3: A lender requires a borrower to use a specific title company affiliated with the lender without disclosing the relationship. This most likely violates:
- RESPA's affiliated business arrangement disclosure requirements (Correct answer)
- TILA's APR disclosure rules
- ECOA's anti-discrimination provisions
- HMDA's data reporting requirements
Correct answer: RESPA's affiliated business arrangement disclosure requirements
RESPA requires lenders to disclose affiliated business arrangements and prohibits mandatory use of affiliated settlement service providers.
Question 4: Under the SAFE Act, a state-licensed mortgage loan originator must pass a national test with a minimum score of:
- 75% (Correct answer)
- 70%
- 80%
- 65%
Correct answer: 75%
The SAFE Act requires MLOs to pass the NMLS national test with a minimum score of 75% to obtain licensure.
Question 5: HOEPA (Home Ownership and Equity Protection Act) applies to which type of mortgage loans?
- High-cost home loans exceeding APR and points/fees thresholds (Correct answer)
- All conforming conventional loans
- FHA-insured purchase transactions only
- Loans with LTV ratios above 80%
Correct answer: High-cost home loans exceeding APR and points/fees thresholds
HOEPA triggers when a loan's APR or points and fees exceed specific thresholds, classifying it as a high-cost mortgage with additional consumer protections.
Question 6: Under TRID, the Closing Disclosure must be received by the borrower at least how many business days before consummation?
- 3 business days (Correct answer)
- 1 business day
- 5 business days
- 7 business days
Correct answer: 3 business days
TRID requires borrowers to receive the Closing Disclosure at least three business days before the loan closes.
Question 7: Which act requires federally chartered depository institutions to meet the credit needs of all segments of their communities, including low- and moderate-income neighborhoods?
- Community Reinvestment Act (CRA) (Correct answer)
- Fair Housing Act
- Equal Credit Opportunity Act
- Home Mortgage Disclosure Act
Correct answer: Community Reinvestment Act (CRA)
The CRA of 1977 requires banks to serve the credit needs of entire communities, including LMI areas, and regulators examine and rate CRA performance.
Mortgage Federal Lending Regulations 3
Under TILA, the Annual Percentage Rate (APR) must be disclosed to within how many basis points for a regular mortgage transaction?