CRU Regulatory Compliance & Legal Considerations

Question 1

What is the main goal of regulatory compliance in mortgage lending?

Accepted Answer

To protect consumer rights and promote fair lending

Answer

The main goal of regulatory compliance in mortgage lending is to safeguard consumers and ensure equitable practices across the industry. Regulations like TILA, RESPA, and ECOA aim to provide transparency, prevent predatory lending, and prohibit discrimination. This creates a more trustworthy and fair lending environment for all parties involved.

Question 2

Which law requires lenders to disclose the annual percentage rate (APR) to borrowers?

Accepted Answer

TILA

Answer

The Truth in Lending Act (TILA) is a federal law designed to promote the informed use of consumer credit by requiring disclosures about its terms and cost. Specifically, TILA mandates that lenders clearly disclose the annual percentage rate (APR) and other key loan terms to borrowers. This allows consumers to compare credit offers more effectively.

Question 3

Which regulation aims to eliminate discriminatory lending practices?

Accepted Answer

ECOA

Answer

The Equal Credit Opportunity Act (ECOA) is a federal law that prohibits creditors from discriminating against applicants on the basis of race, color, religion, national origin, sex, marital status, or age. Its purpose is to ensure that all consumers have an equal opportunity to obtain credit. Lenders must evaluate creditworthiness based on financial factors, not protected characteristics.

Question 4

What does RESPA stand for?

Accepted Answer

Real Estate Settlement Procedures Act

Answer

RESPA stands for the Real Estate Settlement Procedures Act. This federal law aims to protect consumers by requiring disclosures about the real estate settlement process and by prohibiting certain practices, such as kickbacks and unearned fees. It ensures borrowers receive timely information about the costs of their mortgage loan.

Question 5

What is the purpose of the Home Mortgage Disclosure Act (HMDA)?

Accepted Answer

To provide loan transparency and detect bias

Answer

The Home Mortgage Disclosure Act (HMDA) requires most financial institutions to report data about their mortgage lending activity. This data is used to identify potential discriminatory lending patterns and to ensure that lenders are serving the housing needs of their communities. HMDA promotes transparency and helps enforce fair lending laws.

(CRU) Certified Residential Underwriter Practice Test

(CRU) Certified Residential Underwriter Practice Test

CRU Regulatory Compliance & Legal Considerations