Mortgage Regulations and Compliance Flashcards
7 cards from real CMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Mortgage Regulations and Compliance flashcards as text
Which of the following triggers the right of rescission under the Truth in Lending Act?
Answer: Refinance of a primary residence with a new lender
The right of rescission under TILA applies to refinances and home equity loans secured by the borrower's principal dwelling, not to purchase transactions.
Under the Community Reinvestment Act (CRA), federal banking regulators evaluate institutions on their record of:
Answer: Meeting the credit needs of low- and moderate-income communities
The CRA requires federal regulators to assess and rate banks on how well they serve the credit needs of their entire communities, especially low- and moderate-income areas.
The Homeowners Protection Act (HPA) requires automatic cancellation of borrower-paid PMI when the LTV ratio reaches:
Answer: 78%
HPA requires automatic PMI cancellation on the date the principal balance is scheduled to reach 78% LTV based on the original amortization schedule.
Under Regulation X (RESPA), servicers must acknowledge a Qualified Written Request (QWR) within:
Answer: 5 business days
Servicers must acknowledge receipt of a QWR within 5 business days and resolve the borrower's inquiry within 30 business days (extendable to 45).
Which law requires mortgage servicers to maintain escrow accounts for taxes and insurance when the LTV exceeds 80% on conventional loans?
Answer: RESPA
RESPA and its implementing regulation Regulation X govern escrow account requirements, including when servicers must maintain escrow accounts and how they must be administered.
A borrower's annual percentage rate (APR) on a loan exceeds the Average Prime Offer Rate (APOR) by 3.5 percentage points for a first-lien mortgage. This loan is classified as a:
Answer: Higher-Priced Mortgage Loan
A first-lien mortgage is a Higher-Priced Mortgage Loan (HPML) if its APR exceeds APOR by 1.5 percentage points or more, triggering additional protections.
Under the SAFE Act, which entity maintains the Nationwide Multistate Licensing System (NMLS)?
Answer: The Conference of State Bank Supervisors (CSBS)
NMLS is operated by the Conference of State Bank Supervisors (CSBS) in partnership with the American Association of Residential Mortgage Regulators (AARMR).