CMC Federal Regulations and Compliance Standards 3 — Questions and Answers
Question 1: Under the Fair Housing Act, which of the following is NOT a protected class at the federal level?
- Religion
- Familial status
- Sexual orientation (Correct answer)
- National origin
Correct answer: Sexual orientation
Sexual orientation is not a federally protected class under the Fair Housing Act, though many states and localities have added it independently.
Question 2: A lender's policy of refusing to make loans in certain geographic areas regardless of applicants' creditworthiness is known as:
- Steering
- Redlining (Correct answer)
- Blockbusting
- Reverse redlining
Correct answer: Redlining
Redlining is the discriminatory practice of denying services to residents of specific areas based on the racial or ethnic composition of those neighborhoods.
Question 3: Under Regulation Z, the rescission period for a refinance of a primary residence allows the borrower to cancel the loan within:
- 24 hours of closing
- 3 business days from closing, delivery of the notice, or delivery of all material disclosures (Correct answer)
- 7 calendar days from application
- 5 business days from loan approval
Correct answer: 3 business days from closing, delivery of the notice, or delivery of all material disclosures
Regulation Z grants a 3-business-day right of rescission measured from the latest of closing, delivery of the rescission notice, or delivery of required disclosures.
Question 4: The SAFE Act requires all mortgage loan originators (MLOs) to:
- Obtain a federal charter before originating loans
- Register with or be licensed through the Nationwide Multistate Licensing System (NMLS) (Correct answer)
- Carry at least $500,000 in professional liability insurance
- Complete 40 hours of continuing education annually
Correct answer: Register with or be licensed through the Nationwide Multistate Licensing System (NMLS)
The SAFE Act mandates that MLOs register with depository institutions or obtain state licensure, both recorded in the NMLS.
Question 5: Which regulation implements the Equal Credit Opportunity Act (ECOA) and prohibits discrimination in credit transactions?
- Regulation B (Correct answer)
- Regulation C
- Regulation X
- Regulation Z
Correct answer: Regulation B
Regulation B implements ECOA and requires creditors to evaluate applicants without regard to race, sex, age, religion, national origin, or receipt of public assistance.
Question 6: Under TRID rules, which event allows a lender to issue a revised Loan Estimate reflecting higher closing costs?
- The borrower requests a different loan program
- A valid changed circumstance such as a natural disaster affecting the property (Correct answer)
- The lender discovers higher costs after the original Loan Estimate was issued
- Any time within 5 business days of closing
Correct answer: A valid changed circumstance such as a natural disaster affecting the property
Revised Loan Estimates are permitted only when valid changed circumstances occur, such as acts of God, borrower-requested changes, or new information about the borrower or property.
Question 7: The Dodd-Frank Wall Street Reform Act created which agency primarily responsible for enforcing federal consumer financial protection laws including mortgage regulations?
- Federal Housing Finance Agency (FHFA)
- Consumer Financial Protection Bureau (CFPB) (Correct answer)
- Office of the Comptroller of the Currency (OCC)
- Federal Deposit Insurance Corporation (FDIC)
Correct answer: Consumer Financial Protection Bureau (CFPB)
Dodd-Frank created the CFPB in 2010 as a standalone agency to oversee consumer financial products including mortgages, credit cards, and student loans.
CMC Federal Regulations and Compliance Standards 3
Under the Fair Housing Act, which of the following is NOT a protected class at the federal level?