CRU Documentation & Legal Requirements 2 — Questions and Answers
Question 1: Under RESPA, within how many business days must a lender provide a Loan Estimate to a borrower after receiving a completed loan application?
- 1 business day
- 3 business days (Correct answer)
- 5 business days
- 7 business days
Correct answer: 3 business days
RESPA/TRID requires the Loan Estimate to be delivered or placed in the mail no later than 3 business days after receiving a completed application.
Question 2: Which federal law requires lenders to collect and report data on mortgage applications by race, gender, and income to identify potential discriminatory lending patterns?
- Fair Housing Act
- Equal Credit Opportunity Act
- Home Mortgage Disclosure Act (HMDA) (Correct answer)
- Community Reinvestment Act (CRA)
Correct answer: Home Mortgage Disclosure Act (HMDA)
HMDA requires covered lenders to collect, report, and publicly disclose loan-level data to help identify potential discriminatory lending patterns.
Question 3: A borrower's Closing Disclosure must be received at least how many business days before loan consummation under TRID?
- 1 business day
- 2 business days
- 3 business days (Correct answer)
- 5 business days
Correct answer: 3 business days
TRID mandates the borrower receive the Closing Disclosure at least 3 business days before loan consummation to allow time for review.
Question 4: Which document replaced the HUD-1 Settlement Statement and Truth-in-Lending disclosure for most closed-end residential mortgage transactions after October 3, 2015?
- Uniform Residential Loan Application (URLA)
- Loan Estimate and Closing Disclosure (Correct answer)
- Good Faith Estimate (GFE)
- Itemization of Amount Financed
Correct answer: Loan Estimate and Closing Disclosure
TRID (the TILA-RESPA Integrated Disclosure rule) replaced the GFE and HUD-1 with the Loan Estimate and Closing Disclosure forms.
Question 5: Under the Equal Credit Opportunity Act (ECOA), a lender must provide a written notice of adverse action within how many days of receiving a completed application?
- 15 days
- 30 days (Correct answer)
- 45 days
- 60 days
Correct answer: 30 days
ECOA requires lenders to notify applicants of adverse action (denial, counteroffer, etc.) within 30 days of receiving a completed application.
Question 6: Which section of RESPA prohibits the payment of kickbacks or referral fees for the referral of settlement service business?
- Section 6
- Section 8 (Correct answer)
- Section 10
- Section 12
Correct answer: Section 8
RESPA Section 8 prohibits giving or receiving any fee, kickback, or thing of value for the referral of settlement service business.
Question 7: The Right of Rescission under the Truth in Lending Act (TILA) allows borrowers to cancel which type of transaction within 3 business days?
- Purchase money mortgages on a primary residence
- Refinances and home equity loans on a primary residence (Correct answer)
- Investment property loans
- Construction loans on new homes
Correct answer: Refinances and home equity loans on a primary residence
TILA's right of rescission applies to non-purchase refinances and home equity loans secured by the borrower's primary residence, not purchase money mortgages.
CRU Documentation & Legal Requirements 2
Under RESPA, within how many business days must a lender provide a Loan Estimate to a borrower after receiving a completed loan application?