FREE NMLS Federal Mortgage-Related Laws Questions and Answers

Question 1

A borrower is refinancing their primary residence. According to the Truth in Lending Act (TILA), how many copies of the Notice of Right to Rescind must each borrower with an ownership interest in the property receive?

Accepted Answer

Two copies

Answer

Regulation Z, which implements TILA, requires that for a transaction that is subject to the right of rescission, each consumer with an ownership interest in the property must be given two copies of the notice of the right to rescind. This ensures the borrower is fully aware of their right to cancel the transaction within three business days.

Question 2

Under the Real Estate Settlement Procedures Act (RESPA), which of the following is NOT a required disclosure to the borrower?

Accepted Answer

Annual Percentage Rate (APR) Disclosure

Answer

While RESPA (Regulation X) governs the disclosure of settlement costs and requires the Loan Estimate, Closing Disclosure, and Annual Escrow Statements, the disclosure of the Annual Percentage Rate (APR) is a primary requirement of the Truth in Lending Act (TILA), implemented by Regulation Z.

Question 3

A mortgage loan originator asks a loan applicant about her plans to have more children in the future. This question is a violation of which federal law?

Accepted Answer

Equal Credit Opportunity Act (ECOA)

Answer

The Equal Credit Opportunity Act (ECOA), or Regulation B, prohibits discrimination in any aspect of a credit transaction. It is illegal for a creditor to inquire about an applicant's family status or childbearing intentions, as this could be used to discriminate.

Question 4

A borrower applies for a loan on Monday, June 1st. According to the TILA-RESPA Integrated Disclosure (TRID) rule, what is the latest day the lender can provide the Loan Estimate to the borrower?

Accepted Answer

Thursday, June 4th

Answer

The TRID rule requires creditors to deliver or place in the mail the Loan Estimate no later than the third business day after receiving the consumer's application. Counting from Monday (day zero), the third business day would be Thursday.

Question 5

Which of the following is the primary purpose of the Home Mortgage Disclosure Act (HMDA)?

Accepted Answer

To require lenders to report data to help identify potential discriminatory lending patterns.

Answer

The Home Mortgage Disclosure Act (HMDA), implemented by Regulation C, requires many financial institutions to collect, report, and disclose information about mortgages. This data is used to help determine whether financial institutions are serving the housing needs of their communities and to identify possible discriminatory lending patterns.

(NMLS) National Mortgage Licensing System Practice Test

(NMLS) National Mortgage Licensing System Practice Test

FREE NMLS Federal Mortgage-Related Laws Questions and Answers