Loan Officer Federal Laws: TILA Questions and Answers

Question 1

Under the Truth in Lending Act (TILA), which of the following fees is generally EXCLUDED from the calculation of the finance charge?

Accepted Answer

Third-party appraisal fee

Answer

Loan origination fee

Answer

Mortgage broker fee

Answer

Discount points

Question 2

A loan applicant is refinancing their primary residence. They sign the closing documents on a Monday. According to TILA's right of rescission, what is the deadline for them to cancel the transaction?

Accepted Answer

Thursday at midnight

Answer

Tuesday at 5:00 PM

Answer

Wednesday at midnight

Answer

Friday at the close of business

Question 3

An advertisement for a mortgage loan prominently features an attractive monthly payment amount. According to TILA (Regulation Z), what additional information MUST be disclosed in the advertisement?

Accepted Answer

The Annual Percentage Rate (APR) and the terms of repayment

Answer

The loan officer's NMLS ID

Answer

A statement that rates are subject to change

Answer

The estimated property taxes and insurance

Question 4

A borrower receives a Closing Disclosure, and three days later, before consummation, the lender adds a prepayment penalty to the loan terms. What is the consequence of this change under the TILA-RESPA Integrated Disclosure (TRID) rules?

Accepted Answer

A new three-business-day waiting period is required after the borrower receives a corrected Closing Disclosure.

Answer

The closing can proceed as scheduled without any change.

Answer

The lender must issue a revised Loan Estimate within one business day.

Answer

The borrower is entitled to a credit for the amount of the penalty.

Question 5

Which of the following scenarios would classify a first-lien mortgage as a Higher-Priced Mortgage Loan (HPML)?

Accepted Answer

The APR is 1.5% or more above the Average Prime Offer Rate (APOR).

Answer

The APR is 1.0% above the Average Prime Offer Rate (APOR).

Answer

The loan includes a prepayment penalty clause.

Answer

The borrower's down payment is less than 20%.

Question 6

The primary purpose of the Truth in Lending Act (TILA) is to:

Accepted Answer

Ensure that credit terms are disclosed in a meaningful and uniform way.

Answer

Set maximum interest rates that creditors can charge.

Answer

Regulate the transfer of loan servicing rights between lenders.

Answer

Prevent discrimination in mortgage lending based on protected characteristics.