Mortgage Federal Laws and Regulations Questions and Answers

Question 1

A mortgage loan originator gives a real estate agent a $100 gift card for each referred client who closes a loan. Which federal law is being violated?

Accepted Answer

Real Estate Settlement Procedures Act (RESPA)

Answer

Section 8 of RESPA prohibits giving or receiving any fee, kickback, or thing of value in exchange for the referral of settlement service business. The $100 gift card is a 'thing of value' given specifically for the referral, which is a direct violation.

Question 2

Under the Equal Credit Opportunity Act (ECOA), which of the following characteristics is NOT a prohibited basis for denying credit?

Accepted Answer

Credit History

Answer

ECOA prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, or because an applicant receives public assistance income. Lenders are, however, permitted and expected to evaluate an applicant's credit history and creditworthiness when making a lending decision.

Question 3

A borrower is applying for a mortgage for their primary residence. According to the Truth in Lending Act (TILA), which of the following is a key disclosure the lender must provide to the borrower within three business days of receiving the application?

Accepted Answer

The Loan Estimate

Answer

The Truth in Lending Act (TILA), through Regulation Z, requires lenders to provide applicants with a Loan Estimate within three business days of receiving a mortgage application. This document provides a detailed estimate of the loan terms and settlement costs.

Question 4

The Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act requires state-licensed mortgage loan originators to complete a minimum of how many hours of pre-licensing education?

Accepted Answer

20 hours

Answer

The SAFE Act mandates that prospective state-licensed MLOs complete at least 20 hours of NMLS-approved pre-licensing education. This education must include specific hours on federal law, ethics, and non-traditional mortgage products.

Question 5

Which of the following federal laws requires lenders to collect and report data about mortgage loan applications, including applicant demographic information, for the purpose of identifying potential discriminatory lending patterns?

Accepted Answer

Home Mortgage Disclosure Act (HMDA)

Answer

The Home Mortgage Disclosure Act (HMDA) requires financial institutions to collect, report, and disclose data about mortgage applications. This data, which includes applicant ethnicity, race, sex, and income, is used to help determine whether lenders are serving the housing needs of their communities and to identify discriminatory lending patterns.

Mortgage Practice Test

Mortgage Practice Test

Mortgage Federal Laws and Regulations Questions and Answers