Loan Officer Consumer Protection and Fair Lending Flashcards
6 cards from real Loan Officer Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Loan Officer Consumer Protection and Fair Lending flashcards as text
What is the Community Reinvestment Act (CRA) primarily designed to do?
Answer: Encourage depository institutions to meet the credit needs of all communities, including low- and moderate-income areas
The CRA encourages depository institutions to meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound lending practices.
What does 'disparate impact' mean in fair lending law?
Answer: A neutral lending policy that disproportionately affects members of a protected class
Disparate impact occurs when a facially neutral lending policy or practice has a disproportionately negative effect on a protected class, even without discriminatory intent.
Which agency has primary enforcement authority over fair lending compliance for non-depository mortgage lenders?
Answer: CFPB
The Consumer Financial Protection Bureau (CFPB) has primary supervisory and enforcement authority over fair lending compliance for non-depository mortgage lenders and large banks.
Under Regulation B (ECOA), a lender must notify an applicant of a credit decision within how many days of receiving a completed application?
Answer: 30 days
Under Regulation B, lenders must notify applicants of a credit decision — approval, denial, or counteroffer — within 30 days of receiving a completed application.
If a mortgage lender denies a loan application, what must the adverse action notice include under ECOA?
Answer: The specific reasons for the denial or notice of the right to request the reasons
An adverse action notice under ECOA must state the specific reasons for denial or inform the applicant of their right to request those reasons within 60 days.
What is 'predatory lending' in the mortgage context?
Answer: Imposing unfair or abusive loan terms on borrowers, often targeting vulnerable populations
Predatory lending involves imposing unfair, deceptive, or abusive loan terms on borrowers, often targeting elderly, low-income, or minority borrowers with high fees and unsuitable products.