CRU Regulatory Compliance & Legal Considerations 2 — Questions and Answers
Question 1: Under RESPA Section 8, which of the following practices is explicitly prohibited?
- Charging origination fees to borrowers
- Paying referral fees between settlement service providers (Correct answer)
- Disclosing affiliated business arrangements in writing
- Requiring escrow accounts for taxes and insurance
Correct answer: Paying referral fees between settlement service providers
RESPA Section 8 prohibits kickbacks and unearned referral fees exchanged between settlement service providers.
Question 2: Under TRID, the Loan Estimate must be delivered to the borrower within how many business days of receiving a complete loan application?
- 1 business day
- 3 business days (Correct answer)
- 5 business days
- 7 business days
Correct answer: 3 business days
TRID requires lenders to provide the Loan Estimate within 3 business days of receiving a complete application.
Question 3: Under TRID, a borrower must receive the Closing Disclosure at least how many business days before loan consummation?
- 1 business day
- 2 business days
- 3 business days (Correct answer)
- 5 business days
Correct answer: 3 business days
TRID mandates the Closing Disclosure be received at least 3 business days before consummation to give borrowers time to review final terms.
Question 4: Which RESPA section requires lenders to provide the Special Information Booklet (Settlement Costs booklet) to mortgage applicants?
- Section 4 (Correct answer)
- Section 5
- Section 6
- Section 8
Correct answer: Section 4
RESPA Section 4 requires lenders to provide the Special Information Booklet at or before the time of loan application.
Question 5: Under TILA, which of the following constitutes a valid 'changed circumstance' allowing a revised Loan Estimate?
- A lender's internal pricing policy change
- Information relied upon at application that later proves inaccurate (Correct answer)
- Market interest rate fluctuations
- The borrower's requested change in closing date
Correct answer: Information relied upon at application that later proves inaccurate
A valid changed circumstance under TRID includes discovering that information relied upon at application was inaccurate or incomplete.
Question 6: Under RESPA's affiliated business arrangement rules, a lender who refers a borrower to an affiliated settlement service provider MUST:
- Guarantee the affiliate offers the lowest market price
- Provide the borrower a written Affiliated Business Arrangement disclosure (Correct answer)
- Obtain prior written approval from HUD
- Reduce origination fees to offset any affiliate markup
Correct answer: Provide the borrower a written Affiliated Business Arrangement disclosure
RESPA requires a written Affiliated Business Arrangement (AfBA) disclosure whenever a referral is made to an affiliate, and the borrower must be free to use an alternative provider.
Question 7: Under TILA, the three-business-day right of rescission applies to which type of transaction?
- Purchase money mortgages on a primary residence
- Refinance loans secured by the borrower's primary dwelling (Correct answer)
- Home equity loans on investment properties
- Construction loans on vacant land
Correct answer: Refinance loans secured by the borrower's primary dwelling
TILA's rescission right applies to non-purchase refinance transactions secured by the borrower's principal dwelling.
CRU Regulatory Compliance & Legal Considerations 2
Under RESPA Section 8, which of the following practices is explicitly prohibited?