CMC Federal Regulations and Compliance Questions and Answers

Question 1

A mortgage consultant places an advertisement that reads: 'Incredibly low monthly payments! Only $1,200 per month for your dream home. Call now!' Under the Truth in Lending Act (TILA), what additional information MUST be included in this advertisement?

Accepted Answer

The amount or percentage of the down payment, the terms of repayment, and the Annual Percentage Rate (APR).

Answer

The Truth in Lending Act (TILA), implemented by Regulation Z, requires that if an advertisement contains a 'triggering term,' such as a specific payment amount, it must also clearly and conspicuously disclose other key terms of the loan. These required disclosures include the amount or percentage of the down payment, the full terms of repayment (like the number of payments or the loan term), and the Annual Percentage Rate (APR).

Question 2

A loan applicant from a protected class under the Fair Housing Act believes they were discriminated against because they were offered a higher interest rate than other similarly qualified applicants. Which of the following is NOT a protected class under the federal Fair Housing Act?

Accepted Answer

Source of Income

Answer

The federal Fair Housing Act prohibits discrimination in housing-related transactions, including mortgage lending, based on seven protected classes: race, color, religion, national origin, sex, disability, and familial status. While some state or local laws may offer protection based on source of income, it is not a protected class under the federal Fair Housing Act.

Question 3

A mortgage company receives a completed loan application from a consumer on Monday, June 1st. According to the TILA-RESPA Integrated Disclosure (TRID) rule, what is the latest date the company must deliver or place the Loan Estimate in the mail?

Accepted Answer

Thursday, June 4th

Answer

The TRID rule requires creditors or mortgage brokers to provide the Loan Estimate to the consumer no later than three business days after receiving the consumer's completed loan application. Counting from Monday, June 1st, the third business day would be Thursday, June 4th.

Question 4

Under the Equal Credit Opportunity Act (ECOA), a lender must notify an applicant of its credit decision within 30 days of receiving a completed application. If the decision is an adverse action, which of the following must the notice contain?

Accepted Answer

A statement of the specific reasons for the action taken or a disclosure of the applicant's right to request the reasons.

Answer

When taking adverse action on a consumer credit application, ECOA (Regulation B) requires creditors to provide the applicant with a written notification. This notice must include a statement of the specific reasons for the denial or a disclosure that the applicant has the right to request the specific reasons within 60 days. It must also include the creditor's name and address and an ECOA notice.

Question 5

A title company representative offers a mortgage consultant a flat fee of $200 for every client they refer who closes a loan with that title company. This arrangement is a violation of which federal regulation?

Accepted Answer

Real Estate Settlement Procedures Act (RESPA)

Answer

Section 8 of the Real Estate Settlement Procedures Act (RESPA) prohibits giving or accepting a fee, kickback, or anything of value in exchange for referrals of settlement service business involving a federally related mortgage loan. The $200 fee for a referral is a classic example of an illegal kickback.

(CMC) Certified Mortgage Consultant Practice Test

(CMC) Certified Mortgage Consultant Practice Test

CMC Federal Regulations and Compliance Questions and Answers