CMPS Regulatory Compliance & Lending Guidelines 2 — Questions and Answers
Question 1: Under RESPA Section 8, which of the following is NOT considered a prohibited kickback?
- A lender paying a referral fee to a real estate agent
- A title company providing free office space to a broker in exchange for referrals
- A mortgage company offering marketing services agreements (MSAs) that provide fair market value compensation (Correct answer)
- A settlement service provider splitting fees with another provider without services rendered
Correct answer: A mortgage company offering marketing services agreements (MSAs) that provide fair market value compensation
Marketing services agreements (MSAs) are permissible under RESPA Section 8 only when compensation reflects fair market value for actual marketing services rendered.
Question 2: The Ability-to-Repay (ATR) rule requires lenders to consider how many specific underwriting factors before originating a mortgage?
- 6
- 8 (Correct answer)
- 10
- 12
Correct answer: 8
The ATR rule requires lenders to consider 8 specific underwriting factors including income, assets, employment, credit history, monthly payment, and debt obligations.
Question 3: Which regulation implements the Home Mortgage Disclosure Act (HMDA) and requires lenders to collect and report loan data?
- Regulation B
- Regulation C (Correct answer)
- Regulation X
- Regulation Z
Correct answer: Regulation C
Regulation C implements HMDA and requires covered lenders to collect, record, and report data about mortgage applications and originations.
Question 4: A lender charges a borrower 3.5% in points and fees on a $200,000 conventional mortgage. How does this compare to the QM fee cap?
- It is within the QM cap of 5%
- It exceeds the QM cap of 3% (Correct answer)
- It is exactly at the QM cap of 3.5%
- It is within the QM cap of 3% because points are excluded
Correct answer: It exceeds the QM cap of 3%
The Qualified Mortgage points-and-fees cap is 3% for loans of $100,000 or more, so 3.5% exceeds the threshold and would disqualify QM status.
Question 5: Under the Equal Credit Opportunity Act (ECOA), how long must a lender retain records of credit applications?
- 12 months
- 25 months (Correct answer)
- 36 months
- 60 months
Correct answer: 25 months
ECOA/Regulation B requires creditors to retain records of credit applications and related actions for 25 months for consumer credit.
Question 6: The Homeownership and Equity Protection Act (HOEPA) applies to high-cost mortgages. Which of the following is a HOEPA trigger for a first-lien loan?
- APR exceeds APOR by more than 5.5 percentage points
- APR exceeds APOR by more than 6.5 percentage points (Correct answer)
- Points and fees exceed 4% of total loan amount
- Prepayment penalty exceeds 2% in first year
Correct answer: APR exceeds APOR by more than 6.5 percentage points
For first-lien mortgages, HOEPA is triggered when the APR exceeds the Average Prime Offer Rate (APOR) by more than 6.5 percentage points.
Question 7: Which federal agency has primary supervisory authority over non-bank mortgage companies under the Dodd-Frank Act?
- Federal Reserve Board (FRB)
- Office of the Comptroller of the Currency (OCC)
- Consumer Financial Protection Bureau (CFPB) (Correct answer)
- Federal Deposit Insurance Corporation (FDIC)
Correct answer: Consumer Financial Protection Bureau (CFPB)
The CFPB has primary supervisory and enforcement authority over non-depository mortgage companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
CMPS Regulatory Compliance & Lending Guidelines 2
Under RESPA Section 8, which of the following is NOT considered a prohibited kickback?