PrepL Regulatory Compliance 2 — Questions and Answers
Question 1: Under the Fair Housing Act, which of the following is NOT a protected class at the federal level?
- Race
- Source of income (Correct answer)
- National origin
- Familial status
Correct answer: Source of income
Source of income is not a federally protected class under the Fair Housing Act, though some states and localities have added it as a protected class.
Question 2: A licensee who discovers a latent defect in a property listed for sale is required to:
- Keep it confidential to protect the seller's interests
- Disclose it to prospective buyers (Correct answer)
- Only disclose it if the buyer specifically asks
- Notify the state licensing board immediately
Correct answer: Disclose it to prospective buyers
Licensees have a duty to disclose known material defects to prospective buyers, even if the seller prefers it not be disclosed.
Question 3: The Americans with Disabilities Act (ADA) requires that public accommodations be accessible. Which of the following is a public accommodation?
- Private single-family residence
- Real estate brokerage office (Correct answer)
- Residential rental unit in a private home
- Church operated exclusively for worship
Correct answer: Real estate brokerage office
A real estate brokerage office qualifies as a public accommodation under the ADA and must be accessible to people with disabilities.
Question 4: Which agency enforces the Real Estate Settlement Procedures Act (RESPA)?
- Federal Reserve Board
- Consumer Financial Protection Bureau (CFPB) (Correct answer)
- Department of Housing and Urban Development (HUD)
- Office of the Comptroller of the Currency
Correct answer: Consumer Financial Protection Bureau (CFPB)
The CFPB took over enforcement of RESPA from HUD following the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
Question 5: A broker who co-mingles client funds with personal or operating funds is guilty of:
- Conversion
- Commingling (Correct answer)
- Conversion and commingling
- Embezzlement only
Correct answer: Commingling
Commingling is the illegal practice of mixing client funds with the broker's personal or business funds, and is a violation distinct from conversion.
Question 6: Under the Equal Credit Opportunity Act (ECOA), a lender must notify an applicant of a credit decision within how many days?
- 15 days
- 30 days (Correct answer)
- 45 days
- 60 days
Correct answer: 30 days
ECOA requires creditors to notify applicants of a credit decision, including any adverse action, within 30 days of receiving a completed application.
Question 7: A seller's agent who also represents the buyer in the same transaction without full disclosure and consent from both parties is engaging in:
- Dual agency
- Undisclosed dual agency (Correct answer)
- Designated agency
- Sub-agency
Correct answer: Undisclosed dual agency
Undisclosed dual agency is illegal because it violates the agent's fiduciary duties to both clients who have not consented to the arrangement.
PrepL Regulatory Compliance 2
Under the Fair Housing Act, which of the following is NOT a protected class at the federal level?