FREE Mortgage Loan Originator Trivia Questions and Answers

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Which of the following is done by TILA?

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The Truth in Lending Act (TILA) regulates the disclosure of interest rates and finance charges associated with consumer credit transactions. TILA is a federal law in the United States that aims to promote transparency and fairness in consumer lending by ensuring that borrowers receive clear and accurate information about the terms and costs of credit.

Which of the following is another name for HOEPA:

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The Home Ownership and Equity Protection Act (HOEPA) is also commonly referred to as "Section 32" loans. This is because HOEPA is a section of the Truth in Lending Act (TILA) and is specifically outlined as Section 32 in the statute.

All of the following are included as finance charges, per TILA, with the exception of:

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According to the Truth in Lending Act (TILA), among the options you provided, "Seller’s points" are generally not included as part of the finance charge.
Seller's points are payments made by the seller of the property to the lender to reduce the interest rate charged to the borrower. These points are sometimes referred to as "negative points" because they have the effect of lowering the borrower's interest rate and, consequently, their monthly mortgage payments.

All of the following are considered business and commercial use under TILA, with the exception of:

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Under the Truth in Lending Act (TILA), the terms "business" and "commercial use" encompass various types of transactions that are not primarily for personal, family, or household purposes.

All of the following are included in the TILA definition of credit, with the exception of:

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Under the Truth in Lending Act (TILA), the definition of "credit" includes a variety of transactions involving the extension of credit or loans. However, it does not specifically exclude transactions for any amount less than $1 million dollars.

All of the following on the typical prime offer rate are accurate in accordance with the 2009 TILA amendment, with the exception of:

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Among the options you provided, the statement "The average prime offer rate includes data used for a construction loan" is not true regarding the 2009 amendment to the Truth in Lending Act (TILA).
The average prime offer rate (APR) is a significant concept introduced by the 2009 amendment to TILA, and it is used as a benchmark to determine whether a loan is considered a higher-priced mortgage loan (HPML). The APOR is not intended to include data used for construction loans.

Data on the average prime offer rate do not apply to any of the loans listed below, with the exception of:

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The average prime offer rate (APOR) data applies to various types of loans, including loans used to purchase homes. APOR is a benchmark interest rate used to determine whether a loan meets the criteria for being considered a higher-priced mortgage loan (HPML). HPMLs have certain regulatory requirements, including additional appraisal requirements.

Which of the following entities carries out the Home Ownership and Equity Protection Act's (HOEPA) enforcement?

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The Home Ownership and Equity Protection Act (HOEPA) is enforced by the Consumer Financial Protection Bureau (CFPB). HOEPA is a federal law designed to address predatory lending practices and protect consumers from unfair and deceptive practices in certain high-cost mortgage transactions.

What TILA standard distinguishes a company or commercial loan from owner-occupancy?

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Under the Truth in Lending Act (TILA), one of the tests that is commonly used to distinguish owner-occupied properties from business or commercial properties is the "14-day rule." If the owner intends to occupy the property for more than 14 days within a year, the property is generally considered owner-occupied for the purposes of TILA regulations.

Which of the following information types would the Loan Estimate also contain, in addition to interest rates, APR, and other costs:

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The Loan Estimate includes these and numerous other pertinent data, such as late payment and prepayment clauses, as well as the number, sum, and timing of installments planned to fulfill the debt.

When multiple interest rates are in effect during the loan's term, how must the MLO publish the APR?

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There is typically only one Annual Percentage Rate (APR) disclosed on the Truth in Lending Act (TILA) required disclosures, even if different interest rates apply during the term of the loan.
The APR is designed to provide borrowers with a standardized measure of the true cost of credit, taking into account both the nominal interest rate and certain fees and charges associated with the loan. It's important for borrowers to have a consistent and comparable way to understand and compare the overall cost of credit when considering different loan offers.

According to TILA, revealing which of the following will typically inform customers of the true cost of borrowing money:

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Under the Truth in Lending Act (TILA), the standard way to inform consumers of the true cost of borrowing money is by disclosing the Annual Percentage Rate (APR). The APR is a standardized measure that takes into account not only the nominal interest rate but also certain fees and costs associated with the loan.

In a loan transaction, all of the following are accurate, with the exception of:

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A finance charge is defined as the cost of credit expressed in dollars and cents, representing the total amount that a borrower will pay for the privilege of borrowing funds, including interest and certain fees associated with the loan. The finance charge is a specific monetary amount that is disclosed to borrowers on the Truth in Lending Act (TILA) required disclosures.

What does it imply when TILA clauses talk about a creditor giving credit to a consumer?

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When provisions of the Truth in Lending Act (TILA) refer to a "creditor extending credit to a consumer," it generally means that the regulations and requirements outlined in TILA apply to transactions involving individuals or consumers as borrowers, rather than transactions involving companies or business entities.

All of the following fees would be exempt from the finance charge, with the exception of:

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According to the Truth in Lending Act (TILA), among the options you provided, "Appraisal review fees" are typically not excluded from the finance charge.
Appraisal review fees are fees charged for reviewing and evaluating an appraisal report to ensure its accuracy and compliance with industry standards. In many cases, these fees are considered part of the cost of obtaining the loan and are included in the finance charge for disclosure purposes under TILA.

According to TILA, the payment summary table for ARMs must contain all of the information below, with the exception of:

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The payment summary table helps borrowers understand how the interest rate changes may impact their monthly payments over time. However, it typically does not include information about the "minimum and easiest payment" in the first five years of the loan.

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