CMA Regulations & Compliance 2 — Questions and Answers
Question 1: Under the Home Mortgage Disclosure Act (HMDA), which institution is generally required to collect and report loan data?
- Any lender that originates at least 25 closed-end mortgage loans in each of the two preceding calendar years (Correct answer)
- All financial institutions regardless of loan volume
- Only federally chartered banks with assets over $50 million
- Credit unions exclusively
Correct answer: Any lender that originates at least 25 closed-end mortgage loans in each of the two preceding calendar years
HMDA requires covered institutions that originate at least 25 closed-end or 100 open-end mortgage loans in each of the two preceding calendar years to collect and report data.
Question 2: Which federal law requires lenders to provide borrowers with a Closing Disclosure at least three business days before loan consummation?
- RESPA
- TILA-RESPA Integrated Disclosure (TRID) rule (Correct answer)
- ECOA
- FCRA
Correct answer: TILA-RESPA Integrated Disclosure (TRID) rule
The TRID rule, effective October 2015, requires lenders to deliver the Closing Disclosure to borrowers at least three business days prior to loan consummation.
Question 3: A mortgage loan originator who is employed by a state-licensed mortgage company must be licensed under which system?
- Federal Reserve licensing system
- Nationwide Multistate Licensing System (NMLS) (Correct answer)
- HUD Approved Lender Registry
- OCC Licensing Database
Correct answer: Nationwide Multistate Licensing System (NMLS)
The SAFE Act requires mortgage loan originators at state-licensed companies to register and obtain a license through the NMLS.
Question 4: Under RESPA Section 8, which of the following is PROHIBITED?
- Charging origination fees
- Paying a referral fee to a real estate agent for sending mortgage business (Correct answer)
- Collecting an escrow deposit at closing
- Requiring title insurance
Correct answer: Paying a referral fee to a real estate agent for sending mortgage business
RESPA Section 8 prohibits kickbacks and referral fees between settlement service providers for the referral of business.
Question 5: Which regulation implements the Equal Credit Opportunity Act (ECOA)?
- Regulation B (Correct answer)
- Regulation C
- Regulation X
- Regulation Z
Correct answer: Regulation B
Regulation B implements ECOA and prohibits creditors from discriminating against applicants based on protected characteristics.
Question 6: The Ability-to-Repay (ATR) rule requires lenders to make a reasonable, good-faith determination of a borrower's ability to repay based on how many underwriting factors?
- 5
- 8 (Correct answer)
- 10
- 12
Correct answer: 8
The ATR rule requires lenders to consider at least eight specific underwriting factors including income, assets, employment, credit history, and monthly payment obligations.
Question 7: A Qualified Mortgage (QM) under the CFPB's rules generally cannot have points and fees exceeding what percentage of the total loan amount for loans of $100,000 or more?
- 2%
- 3% (Correct answer)
- 4%
- 5%
Correct answer: 3%
For loans of $100,000 or more, a Qualified Mortgage cannot have points and fees exceeding 3% of the total loan amount.
CMA Regulations & Compliance 2
Under the Home Mortgage Disclosure Act (HMDA), which institution is generally required to collect and report loan data?