Mortgage Federal Laws and Regulations 4

Question 1

Under the Ability-to-Repay (ATR) rule, a lender must verify a borrower's income using:

Accepted Answer

Reasonably reliable third-party records

Answer

The ATR rule requires lenders to verify financial information using reasonably reliable third-party records such as tax returns, W-2s, and bank statements.

Question 2

The Servicemembers Civil Relief Act (SCRA) limits mortgage interest rates for active-duty servicemembers to a maximum of:

Accepted Answer

6%

Answer

The SCRA caps mortgage interest rates at 6% per year for obligations incurred before active-duty military service.

Question 3

A lender requires a borrower to use a specific title company owned by the lender's affiliate. Under RESPA, this is permissible only if:

Accepted Answer

An affiliated business arrangement (AfBA) disclosure is provided and use is not required

Answer

RESPA allows affiliated business arrangements only when the lender provides a written disclosure and does not require use of the affiliate.

Question 4

Under TILA, the Annual Percentage Rate (APR) differs from the interest rate because it includes:

Accepted Answer

Certain fees and costs of credit

Answer

The APR reflects the true cost of borrowing by incorporating the interest rate plus certain fees such as points and origination charges.

Question 5

Which act prohibits lenders from discriminating based on a neighborhood's racial composition, a practice known as redlining?

Accepted Answer

Fair Housing Act

Answer

The Fair Housing Act of 1968 prohibits discrimination in residential real estate transactions, including redlining based on neighborhood racial composition.

Mortgage Practice Test

Mortgage Practice Test

Mortgage Federal Laws and Regulations 4