Mortgage Federal Lending Regulations Questions and Answers

Question 1

A mortgage loan originator gives a real estate agent a $50 gift card for each referral that results in a closed loan. Which federal regulation is being violated?

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 $50 gift card is considered a 'thing of value' given for a referral.

Question 2

Under the TILA-RESPA Integrated Disclosure (TRID) rule, which of the following events would require a new 3-day waiting period for the Closing Disclosure?

Accepted Answer

The annual percentage rate (APR) becomes inaccurate.

Answer

According to the TRID rule, a new three-business-day waiting period is triggered only by specific significant changes: 1) the APR becomes inaccurate, 2) the loan product changes, or 3) a prepayment penalty is added. Other changes can be addressed with a revised Closing Disclosure provided at or before consummation without a new waiting period.

Question 3

A loan applicant is denied a mortgage. According to the Equal Credit Opportunity Act (ECOA), which of the following actions is the lender required to take?

Accepted Answer

Provide a written statement of the specific reasons for the denial.

Answer

The Equal Credit Opportunity Act (ECOA), implemented by Regulation B, requires creditors to provide an applicant with a notification of the action taken. If the action is an adverse one (like a denial), the notice must provide a statement of the specific reasons for the decision or disclose the applicant's right to request the reasons.

Question 4

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

Accepted Answer

Disability Status

Answer

While the Fair Housing Act prohibits discrimination based on disability, the Equal Credit Opportunity Act (ECOA) does not list disability as a protected class. ECOA's protected classes are race, color, religion, national origin, sex, marital status, age, and receipt of public assistance income.

Question 5

A consumer is refinancing their primary residence with a new lender. Under the Truth in Lending Act (TILA), they have a right to rescind the loan. How long is this rescission period?

Accepted Answer

3 business days after closing

Answer

The Truth in Lending Act (TILA), through Regulation Z, gives borrowers a three-business-day right of rescission for certain mortgage transactions, including the refinance of a principal dwelling. This allows the borrower to cancel the transaction for any reason within three business days following consummation.

Mortgage Practice Test

Mortgage Practice Test

Mortgage Federal Lending Regulations Questions and Answers