CFE CFE Consumer Protection & Lending Compliance

Question 1

Which federal law requires lenders to disclose the Annual Percentage Rate (APR) and total finance charges to borrowers?

Accepted Answer

Truth in Lending Act (TILA)

Answer

Equal Credit Opportunity Act (ECOA)

Answer

Fair Housing Act

Answer

Community Reinvestment Act (CRA)

Question 2

Under the Equal Credit Opportunity Act (ECOA), a lender may NOT deny credit based on which factor?

Accepted Answer

National origin

Answer

Credit score

Answer

Debt-to-income ratio

Answer

Payment history

Question 3

A financial examiner finds that a bank charges higher interest rates to borrowers in minority neighborhoods despite similar credit profiles. This is an example of:

Accepted Answer

Predatory lending and redlining

Answer

Prudent risk management

Answer

Compliant tiered pricing

Answer

Standard underwriting practice

Question 4

What is the primary purpose of the Community Reinvestment Act (CRA)?

Accepted Answer

To encourage banks to meet the credit needs of all communities they serve, including low-income areas

Answer

To regulate mortgage interest rates

Answer

To insure consumer deposits up to $250,000

Answer

To establish minimum capital requirements for banks

Question 5

Which regulation implements the Real Estate Settlement Procedures Act (RESPA) and requires lenders to provide a Loan Estimate to mortgage applicants?

Accepted Answer

Regulation X

Answer

Regulation B

Answer

Regulation Z

Answer

Regulation E

Question 6

A 'qualified mortgage' under the Dodd-Frank Act must include which feature?

Accepted Answer

Verification that the borrower has the ability to repay

Answer

A balloon payment at maturity

Answer

An adjustable interest rate

Answer

A prepayment penalty