Federal Lending Regulations Flashcards
7 cards from real Mortgage practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Federal Lending Regulations flashcards as text
Under Regulation Z, a refinance on a primary residence gives the borrower a right of rescission period of:
Answer: 3 business days
Borrowers have three business days after closing, delivery of the Notice of Right to Rescind, or delivery of the required disclosures — whichever is latest — to rescind a non-purchase mortgage on their primary home.
A mortgage loan originator who takes a loan application and offers or negotiates terms without holding a license is violating which federal law?
Answer: The SAFE Mortgage Licensing Act
The SAFE Act requires all MLOs who take applications and negotiate loan terms to be either state-licensed or federally registered.
Under the Gramm-Leach-Bliley Act (GLBA), mortgage lenders must provide a privacy notice to consumers:
Answer: At account opening and annually thereafter
GLBA requires financial institutions to deliver an initial privacy notice when a customer relationship is established and annually every year the relationship continues.
RESPA Section 8 prohibits which of the following practices?
Answer: Paying or receiving kickbacks for referrals of settlement services
RESPA Section 8 specifically prohibits giving or accepting anything of value in exchange for referrals of federally related mortgage settlement services.
Under the ATR/QM rule, a Qualified Mortgage generally cannot have a debt-to-income ratio exceeding:
Answer: 43%
Under the original QM rule, a maximum DTI of 43% was the general limit, though GSE-eligible loans had a temporary safe harbor; new price-based QM rules replaced DTI caps in 2021.
Which federal regulation specifically prohibits a lender from requiring a borrower to purchase credit life insurance as a condition of obtaining a mortgage?
Answer: Regulation Z (TILA)
TILA/Regulation Z prohibits tying the granting of credit to the purchase of credit insurance, and requires disclosure when such insurance is voluntarily chosen.
A lender discovers an APR error after closing and the disclosed APR was understated by 0.20% on a regular mortgage. Under TILA, the lender must:
Answer: Refund the overcharge because the error exceeds the 1/8% tolerance
An understatement of 0.20% exceeds the 1/8% (0.125%) regular mortgage tolerance, requiring the lender to cure the error by refunding the amount overcharged.