Mortgage Federal Mortgage-Related Laws 3 — Questions and Answers
Question 1: Under ECOA, a creditor must notify a loan applicant of an adverse action within how many days of receiving a completed application?
- 15 days
- 30 days (Correct answer)
- 45 days
- 60 days
Correct answer: 30 days
ECOA and Regulation B require creditors to provide an adverse action notice within 30 days of receiving a completed application.
Question 2: Which protected class was added to the Fair Housing Act by the 1988 amendments?
- Race and national origin
- Sex and religion
- Familial status and disability (Correct answer)
- Marital status and age
Correct answer: Familial status and disability
The Fair Housing Amendments Act of 1988 added familial status and disability (handicap) to the original protected classes.
Question 3: HMDA requires covered lenders to collect and report data on mortgage applications primarily to:
- Calculate the lender's Community Reinvestment Act rating
- Detect and deter discriminatory lending patterns (Correct answer)
- Set maximum allowable interest rates by geography
- Verify borrower income for underwriting purposes
Correct answer: Detect and deter discriminatory lending patterns
HMDA data is used by regulators and the public to identify potential discriminatory or predatory lending practices across geographic areas.
Question 4: Under the Fair Housing Act, which of the following lender actions is considered illegal steering?
- Offering a higher rate to a borrower with a low credit score
- Directing minority applicants toward higher-cost loan products without objective basis (Correct answer)
- Declining a loan based on insufficient income documentation
- Requiring a larger down payment due to a low appraisal
Correct answer: Directing minority applicants toward higher-cost loan products without objective basis
Steering occurs when lenders direct borrowers to less favorable loan products based on a protected characteristic rather than creditworthiness.
Question 5: The Community Reinvestment Act (CRA) was enacted primarily to address:
- Predatory lending in high-cost mortgage markets
- Redlining and the failure of banks to serve low- and moderate-income communities (Correct answer)
- Excessive mortgage origination fees charged to first-time buyers
- Discrimination in the secondary mortgage market
Correct answer: Redlining and the failure of banks to serve low- and moderate-income communities
CRA was enacted in 1977 to encourage depository institutions to help meet the credit needs of the communities they serve, including low- and moderate-income neighborhoods.
Question 6: Which agency is primarily responsible for enforcing ECOA in the context of mortgage lending by non-bank mortgage companies?
- Federal Reserve Board
- Office of the Comptroller of the Currency
- Consumer Financial Protection Bureau (CFPB) (Correct answer)
- Federal Housing Finance Agency (FHFA)
Correct answer: Consumer Financial Protection Bureau (CFPB)
The CFPB has primary enforcement authority over ECOA (Regulation B) for non-depository mortgage lenders.
Question 7: Under ECOA, a creditor MAY ask about an applicant's marital status in which situation?
- When the applicant is applying for an unsecured personal loan
- When state property law directly affects the creditor's rights in the collateral (Correct answer)
- Only when the co-applicant requests the information
- Never — marital status cannot be collected under any circumstance
Correct answer: When state property law directly affects the creditor's rights in the collateral
Regulation B allows creditors to ask about marital status when it is relevant to state law rights in the collateral securing the loan, such as in community property states.
Mortgage Federal Mortgage-Related Laws 3
Under ECOA, a creditor must notify a loan applicant of an adverse action within how many days of receiving a completed application?