Free Loan Officer : Finance, Insurance and Real Estate Questions and Answers

Question 1

All of the following, WITH THE EXCEPTION OF?, are examples of finance charges.

Accepted Answer

title insurance

Answer

Finance charges are the costs of credit, expressed as a dollar amount, that a consumer pays directly or indirectly to obtain credit. These typically include interest, loan processing fees, and points. Title insurance, while a closing cost, is generally considered a third-party charge for a service that protects the lender and borrower, rather than a direct cost of obtaining the credit itself, and is therefore not typically a finance charge under TILA.

Question 2

Except for, all of the following must be protected by HOEPA?

Accepted Answer

reverse mortgages

Answer

The Home Ownership and Equity Protection Act (HOEPA) provides special protections for "high-cost mortgages," which include certain closed-end home equity loans, purchase money mortgages, and refinances that exceed specific rate or fee thresholds. Reverse mortgages, however, are explicitly exempt from HOEPA's coverage due to their unique structure and purpose.

Question 3

What does "change of circumstance" NOT entail?

Accepted Answer

a change in the borrower's monthly income

Answer

A "change of circumstance" under TRID (TILA-RESPA Integrated Disclosure) rules allows a lender to revise a Loan Estimate and reset fee tolerances. These typically involve unforeseen events or new information affecting the loan, such as a disaster or the need for flood insurance. A change in the borrower's monthly income, while impacting qualification, is generally not considered a "change of circumstance" that permits a revised Loan Estimate for tolerance purposes, as income is part of the initial application assessment.

Question 4

The loan estimate must be delivered or mailed to the borrower as soon as a complete application has been received.

Accepted Answer

3 business days after receipt of the application

Answer

Under the TILA-RESPA Integrated Disclosure (TRID) rule, lenders are required to provide the Loan Estimate to the borrower within three business days of receiving a complete loan application. This ensures borrowers receive timely and transparent information about their loan terms and costs, allowing them to compare offers effectively.

Question 5

All of the following are protected by the Truth in Lending Act, EXCEPT?

Accepted Answer

it gives guidance to a lender on whether they should grant a loan to a borrower

Answer

The Truth in Lending Act (TILA) is primarily a disclosure law designed to protect consumers by requiring lenders to provide clear information about the costs and terms of credit. It sets minimum standards for residential loans and mandates uniform disclosures, but it does not provide guidance to lenders on underwriting decisions or whether to grant a loan; that falls under other regulations like ECOA and the lender's own policies.

Loan Officer Exam Practice Test

Loan Officer Exam Practice Test

Free Loan Officer : Finance, Insurance and Real Estate Questions and Answers