SAFE Federal Mortgage-Related Laws 2 — Questions and Answers
Question 1: Under RESPA, a 'controlled business arrangement' (now called an 'affiliated business arrangement') requires the referrer to:
- Obtain HUD approval before making referrals
- Provide an Affiliated Business Arrangement disclosure to the consumer (Correct answer)
- Charge the consumer a fee for the referral
- Register the arrangement with the CFPB annually
Correct answer: Provide an Affiliated Business Arrangement disclosure to the consumer
RESPA requires settlement service providers to give consumers an Affiliated Business Arrangement (AfBA) disclosure when referring them to an affiliated company.
Question 2: The Homeowners Protection Act (HPA) requires automatic cancellation of PMI when the borrower's LTV reaches what threshold based on the original amortization schedule?
- 80%
- 78% (Correct answer)
- 75%
- 70%
Correct answer: 78%
The HPA mandates automatic PMI cancellation when the mortgage balance reaches 78% LTV based on the original amortization schedule, even without borrower request.
Question 3: Under HMDA, which of the following institutions is NOT generally required to report mortgage data?
- A bank with assets over $54 million located in an MSA
- A credit union originating 25 or more closed-end loans in the prior year
- A mortgage company originating 100 or more closed-end loans in the prior year
- A small non-depository lender originating fewer than 25 closed-end mortgages annually (Correct answer)
Correct answer: A small non-depository lender originating fewer than 25 closed-end mortgages annually
Non-depository lenders originating fewer than 25 closed-end mortgage loans in each of the two preceding calendar years are exempt from HMDA reporting.
Question 4: The Equal Credit Opportunity Act (ECOA) requires creditors to notify applicants of adverse action within how many days for applications involving credit primarily for personal use?
- 15 days
- 30 days (Correct answer)
- 45 days
- 60 days
Correct answer: 30 days
ECOA requires creditors to provide notice of adverse action within 30 days of receiving a completed credit application.
Question 5: Under the Gramm-Leach-Bliley Act (GLBA), financial institutions must provide customers with a privacy notice:
- Only when the customer requests one
- At the time of establishing a customer relationship and annually thereafter (Correct answer)
- Only when nonpublic personal information will be shared with third parties
- Every two years as long as the relationship continues
Correct answer: At the time of establishing a customer relationship and annually thereafter
GLBA requires financial institutions to give customers a privacy notice at account opening and annually for as long as the customer relationship continues.
Question 6: Which federal law specifically prohibits lenders from discriminating in residential real estate transactions based on race, color, national origin, religion, sex, familial status, or disability?
- Equal Credit Opportunity Act
- Community Reinvestment Act
- Fair Housing Act (Correct answer)
- Home Mortgage Disclosure Act
Correct answer: Fair Housing Act
The Fair Housing Act (Title VIII of the Civil Rights Act of 1968) prohibits discrimination in residential real estate transactions including the sale, rental, and financing of housing.
Question 7: Under Regulation Z, the right of rescission for a refinance of a primary residence allows the consumer how many business days to cancel the transaction?
- 1 business day
- 3 business days (Correct answer)
- 5 business days
- 7 business days
Correct answer: 3 business days
Regulation Z grants consumers a 3-business-day right of rescission for refinance transactions secured by their primary residence, with the period beginning on the latest of three triggering events.
SAFE Federal Mortgage-Related Laws 2
Under RESPA, a 'controlled business arrangement' (now called an 'affiliated business arrangement') requires the referrer to: