Mortgage Mortgage Federal Mortgage-Related Laws Questions and Answers 3

Question 1

What is the maximum period a lender can require a borrower to maintain a PMI escrow cushion under the Homeowners Protection Act?

Accepted Answer

Two months

Answer

Under the HPA, lenders may require up to a two-month cushion in escrow accounts for PMI payments.

Question 2

Under the Dodd-Frank Act, what is the maximum debt-to-income ratio generally permitted for a Qualified Mortgage (QM)?

Accepted Answer

43%

Answer

The Dodd-Frank Act's Ability-to-Repay rule generally sets a 43% DTI cap for loans to qualify as Qualified Mortgages under the general QM definition.

Question 3

Which federal law established the Consumer Financial Protection Bureau (CFPB) with authority over mortgage lending regulations?

Accepted Answer

Dodd-Frank Wall Street Reform and Consumer Protection Act

Answer

The Dodd-Frank Act of 2010 created the CFPB and granted it broad supervisory and enforcement authority over consumer financial products, including mortgages.

Question 4

Under the Truth in Lending Act, a borrower's right of rescission on a refinance of their primary residence lasts how many business days?

Accepted Answer

Three business days

Answer

TILA provides borrowers with a three-business-day right of rescission on refinance transactions involving their principal dwelling.

Question 5

The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) requires which of the following?

Accepted Answer

Mortgage loan originators to be registered or licensed through the NMLS

Answer

The SAFE Act mandates that all mortgage loan originators be either state-licensed or federally registered through the Nationwide Multistate Licensing System (NMLS).

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Mortgage Mortgage Federal Mortgage-Related Laws Questions and Answers 3