Mortgage Federal Lending Regulations 5 — Questions and Answers
Question 1: Under the Fair Credit Reporting Act (FCRA), a consumer has the right to receive a free credit report from each of the three major bureaus how often?
- Once every 12 months (Correct answer)
- Once every 6 months
- Twice per year
- Once per lifetime
Correct answer: Once every 12 months
FCRA entitles consumers to one free credit report per year from each of the three major credit reporting agencies via AnnualCreditReport.com.
Question 2: A lender provides a borrower with a Loan Estimate but then fails to honor the quoted interest rate after the lock expires due to lender delay. This raises concerns under:
- TRID and potential UDAAP violations (Correct answer)
- HMDA reporting requirements
- RESPA Section 9 affiliated business rules
- SAFE Act licensing standards
Correct answer: TRID and potential UDAAP violations
Failure to honor disclosed terms due to lender-caused delays can constitute unfair, deceptive, or abusive acts or practices (UDAAP) under Dodd-Frank in addition to TRID concerns.
Question 3: Which federal law requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a mortgage application?
- TILA-RESPA Integrated Disclosure (TRID) rule (Correct answer)
- The SAFE Act
- The Fair Lending Act
- The Community Reinvestment Act
Correct answer: TILA-RESPA Integrated Disclosure (TRID) rule
TRID, effective October 2015, requires the Loan Estimate to be delivered or placed in the mail no later than three business days after application receipt.
Question 4: Under ECOA, when a creditor makes a counteroffer and the applicant does not accept it, the creditor must send an adverse action notice within:
- 90 days of the counteroffer (Correct answer)
- 30 days of the original application
- 3 business days of the counteroffer
- 60 days of the counteroffer
Correct answer: 90 days of the counteroffer
If an applicant does not accept a counteroffer, ECOA requires the creditor to send an adverse action notice within 90 days of notifying the applicant of the counteroffer.
Question 5: Which entity is primarily responsible for enforcing HMDA data accuracy and fair lending compliance for non-bank mortgage lenders?
- Consumer Financial Protection Bureau (CFPB) (Correct answer)
- Federal Reserve Board
- Department of Housing and Urban Development (HUD)
- Office of Thrift Supervision (OTS)
Correct answer: Consumer Financial Protection Bureau (CFPB)
The CFPB has supervisory and enforcement authority over non-bank mortgage lenders for HMDA, TILA, RESPA, and other federal consumer financial laws.
Question 6: A prepayment penalty on a Qualified Mortgage (QM) is prohibited after how long from loan consummation?
- 3 years (Correct answer)
- 2 years
- 5 years
- 1 year
Correct answer: 3 years
QM rules prohibit prepayment penalties on loans after the first three years, and even during years 1-3 the penalty amounts are strictly capped.
Question 7: Under RESPA, a lender's escrow account analysis must be performed at least:
- Annually (Correct answer)
- Monthly
- Quarterly
- Every two years
Correct answer: Annually
RESPA requires servicers to conduct an escrow account analysis at least once every 12 months to determine if the account is sufficiently funded.
Mortgage Federal Lending Regulations 5
Under the Fair Credit Reporting Act (FCRA), a consumer has the right to receive a free credit report from each of the three major bureaus how often?