PrepL Regulatory Compliance 3 — Questions and Answers
Question 1: Which federal law requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a loan application?
- TILA
- RESPA
- TRID (TILA-RESPA Integrated Disclosure) (Correct answer)
- HMDA
Correct answer: TRID (TILA-RESPA Integrated Disclosure)
TRID, which integrates TILA and RESPA disclosure requirements, requires lenders to provide a Loan Estimate within three business days of receiving a mortgage application.
Question 2: A property manager who accepts a kickback from a maintenance contractor without the owner's knowledge is violating:
- Anti-trust laws
- Fiduciary duty and RESPA (Correct answer)
- Only state licensing law
- The Equal Credit Opportunity Act
Correct answer: Fiduciary duty and RESPA
Accepting undisclosed kickbacks violates the property manager's fiduciary duty to the owner and may also violate RESPA's prohibition on kickbacks for settlement services.
Question 3: The Home Mortgage Disclosure Act (HMDA) primarily requires lenders to:
- Offer loans to all applicants regardless of creditworthiness
- Collect and report data on mortgage loan applications (Correct answer)
- Provide a three-day right of rescission on all mortgages
- Disclose all settlement costs before closing
Correct answer: Collect and report data on mortgage loan applications
HMDA requires covered lenders to collect, report, and disclose data about their mortgage lending activity to help identify discriminatory patterns.
Question 4: A licensee must report a change of business address to the state licensing authority within:
- 7 days
- 10 days
- 30 days (Correct answer)
- 60 days
Correct answer: 30 days
Most states require licensees to notify the licensing authority of any address change within 30 days to ensure the authority can maintain accurate contact records.
Question 5: Which of the following actions would constitute a violation of antitrust laws in real estate?
- A broker setting their own commission rates
- Two competing brokers agreeing to charge the same commission rates (Correct answer)
- A broker offering a commission lower than the local average
- A franchised broker following the franchisor's recommended commission schedule
Correct answer: Two competing brokers agreeing to charge the same commission rates
Price-fixing between competitors—including agreement on commission rates—is a per se violation of the Sherman Antitrust Act.
Question 6: Under Regulation Z (Truth in Lending Act), the Annual Percentage Rate (APR) must be disclosed because:
- It equals the interest rate on the loan
- It reflects the true cost of credit including fees (Correct answer)
- It is required only for adjustable-rate mortgages
- It determines the borrower's monthly payment
Correct answer: It reflects the true cost of credit including fees
The APR includes the interest rate plus certain fees and costs, giving borrowers a standardized measure of the true cost of credit for comparison shopping.
Question 7: A real estate licensee who advertises property in a way that indicates a preference for buyers of a particular religion is violating:
- Only state real estate licensing law
- The Fair Housing Act (Correct answer)
- The Civil Rights Act of 1866 only
- No law, as advertising is protected speech
Correct answer: The Fair Housing Act
The Fair Housing Act prohibits discriminatory advertising that indicates a preference, limitation, or discrimination based on religion or other protected classes.
PrepL Regulatory Compliance 3
Which federal law requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a loan application?