CMA Regulations & Compliance 3 — Questions and Answers
Question 1: Under the Fair Housing Act, which of the following is a protected class?
- Credit score
- Familial status (Correct answer)
- Employment history
- Net worth
Correct answer: Familial status
The Fair Housing Act protects against discrimination based on race, color, national origin, religion, sex, familial status, and disability.
Question 2: Which document replaced the HUD-1 Settlement Statement for most residential mortgage transactions after October 3, 2015?
- Loan Estimate
- Closing Disclosure (Correct answer)
- Truth-in-Lending Disclosure
- Good Faith Estimate
Correct answer: Closing Disclosure
The TRID rule replaced the HUD-1 Settlement Statement with the Closing Disclosure for most closed-end consumer mortgage transactions.
Question 3: Under the SAFE Act, which type of mortgage loan originator must register with the NMLS but is NOT required to obtain a state license?
- Mortgage brokers
- Independent contractors
- Employees of federally regulated depository institutions (Correct answer)
- State-chartered mortgage bankers
Correct answer: Employees of federally regulated depository institutions
Employees of federally regulated depository institutions (banks, credit unions, savings associations) must register with the NMLS but are not required to obtain a state MLO license.
Question 4: What is the primary purpose of the Community Reinvestment Act (CRA)?
- To set maximum interest rates on mortgage loans
- To encourage depository institutions to meet the credit needs of all communities, including low- and moderate-income areas (Correct answer)
- To require lenders to offer down payment assistance programs
- To regulate appraisal practices in underserved markets
Correct answer: To encourage depository institutions to meet the credit needs of all communities, including low- and moderate-income areas
The CRA encourages insured depository institutions to help meet the credit needs of communities in which they operate, particularly low- and moderate-income neighborhoods.
Question 5: A lender charges a borrower a higher interest rate based on their race rather than their creditworthiness. This is an example of:
- Disparate impact
- Overt discrimination (Correct answer)
- Redlining
- Steering
Correct answer: Overt discrimination
Overt discrimination occurs when a lender explicitly uses a prohibited basis (such as race) to make credit decisions.
Question 6: The Gramm-Leach-Bliley Act (GLBA) primarily governs which area of mortgage compliance?
- Loan origination disclosures
- Privacy of consumers' nonpublic personal information (Correct answer)
- Anti-money laundering requirements
- Appraisal independence
Correct answer: Privacy of consumers' nonpublic personal information
The GLBA requires financial institutions to protect consumers' nonpublic personal information and provide privacy notices describing how information is shared.
Question 7: Under the Dodd-Frank Act, the CFPB has supervisory authority over which type of mortgage market participants?
- Only federally chartered banks with assets over $10 billion
- Nonbank mortgage companies and large banks with assets over $10 billion (Correct answer)
- Exclusively state-chartered credit unions
- Only mortgage brokers, not retail lenders
Correct answer: Nonbank mortgage companies and large banks with assets over $10 billion
The CFPB has supervisory authority over nonbank mortgage originators and servicers, as well as banks and credit unions with assets over $10 billion.
CMA Regulations & Compliance 3
Under the Fair Housing Act, which of the following is a protected class?