CMP - Certified Mortgage Processor Mortgage Compliance and Regulations Questions and Answers

Question 1

Under the TILA-RESPA Integrated Disclosure (TRID) rule, how soon must a mortgage processor ensure the Loan Estimate (LE) is delivered or placed in the mail after receiving a complete application?

Accepted Answer

Within 3 business days

Answer

The TRID rule mandates that the Loan Estimate must be provided to the consumer no later than three business days after the creditor or mortgage broker receives the consumer's complete application. A complete application is defined by the submission of six key pieces of information: the consumer's name, income, Social Security number, the property address, an estimate of the property's value, and the mortgage loan amount sought.

Question 2

A real estate agent refers a client to a specific mortgage lender. To show gratitude, the lender's processor arranges for a gift basket worth $200 to be sent to the agent. Which regulation is most likely violated in this scenario?

Accepted Answer

Real Estate Settlement Procedures Act (RESPA)

Answer

Section 8 of the Real Estate Settlement Procedures Act (RESPA) prohibits giving or accepting a 'thing of value' in exchange for the referral of settlement service business. The gift basket is considered a 'thing of value,' and providing it in exchange for a client referral constitutes an illegal kickback.

Question 3

Which of the following is NOT a protected class under the Equal Credit Opportunity Act (ECOA)?

Accepted Answer

Credit Score

Answer

The Equal Credit Opportunity Act (ECOA) prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or because an applicant receives income from a public assistance program. While a credit score is a critical factor in determining creditworthiness, it is not a protected class under ECOA. Lenders are permitted to use it as a basis for their lending decisions, provided it is used in a non-discriminatory manner.

Question 4

A borrower's appraisal comes in lower than expected, which changes their eligibility for the loan program they initially applied for. This necessitates a change in loan terms and costs. According to TRID, what is this event an example of?

Accepted Answer

A valid changed circumstance

Answer

A valid changed circumstance under TRID is an event that affects the borrower's eligibility for the loan or alters the terms or costs associated with the mortgage transaction. A lower-than-expected appraisal is a perfect example of new information specific to the transaction that can affect the borrower's eligibility, allowing the lender to issue a revised Loan Estimate with updated costs.

Question 5

According to the Home Mortgage Disclosure Act (HMDA), which of the following pieces of information is a lender required to collect and report on the Loan/Application Register (LAR)?

Accepted Answer

The applicant's race, ethnicity, and sex

Answer

HMDA requires financial institutions to collect, report, and disclose data about mortgage applications and originations. This includes demographic information about the applicant, such as their race, ethnicity, and sex, to help identify potential discriminatory lending patterns.

CMP - Certified Mortgage Processor Practice Test

CMP - Certified Mortgage Processor Practice Test

CMP - Certified Mortgage Processor Mortgage Compliance and Regulations Questions and Answers