SAFE TILA and RESPA Regulations 2 — Questions and Answers
Question 1: Under RESPA, what is the maximum tolerance for increases in third-party settlement service fees that the borrower cannot shop for?
- 0% (Correct answer)
- 10%
- 15%
- No limit
Correct answer: 0%
Zero tolerance applies to third-party fees for services borrowers cannot shop for, such as the lender's appraisal or credit report.
Question 2: Which TILA disclosure shows the total dollar amount a borrower will have paid after making all scheduled payments?
- Annual Percentage Rate
- Total of Payments (Correct answer)
- Finance Charge
- Amount Financed
Correct answer: Total of Payments
The Total of Payments is the sum of all scheduled payments over the life of the loan, including principal, interest, and certain fees.
Question 3: A borrower rescinds a home equity loan on the third business day. Under TILA, within how many days must the lender return any money paid by the borrower?
- 5 calendar days
- 10 business days (Correct answer)
- 20 calendar days
- 30 calendar days
Correct answer: 10 business days
TILA requires creditors to return any money or property given by the borrower within 20 calendar days after receipt of the rescission notice, but the standard lender-return window is 20 days.
Question 4: RESPA Section 8 prohibits which of the following practices?
- Charging origination fees
- Paying referral fees between settlement service providers (Correct answer)
- Requiring title insurance
- Collecting escrow reserves
Correct answer: Paying referral fees between settlement service providers
RESPA Section 8 prohibits kickbacks and unearned fees, including referral fees paid between settlement service providers.
Question 5: Under the TRID rule, which document replaces the HUD-1 Settlement Statement for most mortgage transactions?
- Loan Estimate
- Closing Disclosure (Correct answer)
- Good Faith Estimate
- Truth-in-Lending Disclosure
Correct answer: Closing Disclosure
The Closing Disclosure replaced the HUD-1 Settlement Statement under the TRID (TILA-RESPA Integrated Disclosure) rule effective October 2015.
Question 6: Which of the following loan types is generally exempt from RESPA coverage?
- Purchase money mortgage for a primary residence
- Home equity line of credit
- Loan secured by 26 or more acres (Correct answer)
- Refinance of an owner-occupied duplex
Correct answer: Loan secured by 26 or more acres
RESPA exempts loans secured by vacant land or properties of 25 acres or more, as well as certain business-purpose loans.
Question 7: Under TILA, when must the Loan Estimate be delivered to the borrower after receiving a complete application?
- Within 1 business day
- Within 3 business days (Correct answer)
- Within 5 business days
- Within 7 business days
Correct answer: Within 3 business days
Creditors must deliver the Loan Estimate within three business days of receiving the consumer's loan application under TRID rules.
SAFE TILA and RESPA Regulations 2
Under RESPA, what is the maximum tolerance for increases in third-party settlement service fees that the borrower cannot shop for?