CRCM Consumer Protection Regulations 1 — Questions and Answers
Question 1: Under the Truth in Lending Act (TILA), the Annual Percentage Rate (APR) must be disclosed to allow consumers to:
- Negotiate a lower rate with the lender
- Compare the true cost of credit across different lenders (Correct answer)
- Determine their credit score impact
- Calculate their monthly insurance premium
Correct answer: Compare the true cost of credit across different lenders
The APR standardizes the cost of credit as an annualized rate, allowing consumers to meaningfully compare loan offers from different lenders.
Question 2: Regulation Z implements which federal consumer protection law?
- Fair Credit Reporting Act
- Truth in Lending Act (Correct answer)
- Electronic Fund Transfer Act
- Fair Debt Collection Practices Act
Correct answer: Truth in Lending Act
Regulation Z is the Federal Reserve's (and now CFPB's) implementing regulation for the Truth in Lending Act.
Question 3: Under the Real Estate Settlement Procedures Act (RESPA), a kickback paid for the referral of settlement service business is:
- Permissible if disclosed on the Closing Disclosure
- Prohibited (Correct answer)
- Allowed if under $500
- Required to be disclosed to the state regulator only
Correct answer: Prohibited
RESPA Section 8 prohibits kickbacks and unearned fees in connection with federally related mortgage transactions.
Question 4: The Servicemembers Civil Relief Act (SCRA) provides which protection to active duty military members?
- Eliminates all debt obligations during deployment
- Caps interest rates on pre-service debts at 6% during active duty (Correct answer)
- Requires banks to provide free checking accounts
- Waives all mortgage payments during overseas deployment
Correct answer: Caps interest rates on pre-service debts at 6% during active duty
The SCRA caps interest rates at 6% on debts incurred prior to active duty service for qualifying servicemembers.
Question 5: Under the Electronic Fund Transfer Act (EFTA), consumers have how many business days to report an unauthorized electronic fund transfer to limit liability to $50?
- 2 business days (Correct answer)
- 10 business days
- 30 days
- 60 days
Correct answer: 2 business days
Consumers must report unauthorized EFTs within 2 business days of learning of the loss to limit liability to $50.
Question 6: The Military Lending Act (MLA) caps the Military Annual Percentage Rate (MAPR) for most consumer credit products at:
- 18%
- 28%
- 36% (Correct answer)
- 50%
Correct answer: 36%
The MLA imposes a 36% MAPR cap on most consumer credit extended to covered servicemembers and their dependents.
CRCM Consumer Protection Regulations 1
Under the Truth in Lending Act (TILA), the Annual Percentage Rate (APR) must be disclosed to allow consumers to: