SAFE - Certified Secure and Fair Enforcement Mortgage Loan Originator TILA and RESPA Regulations Questions and Answers

Question 1

A borrower receives a Closing Disclosure on Tuesday.
Two days later, on Thursday, the lender discovers the loan product is changing from a fixed-rate to a variable-rate mortgage.
According to TILA/RESPA regulations, what is the impact of this change?

Accepted Answer

The loan cannot close until three business days after the borrower receives a revised Closing Disclosure.

Answer

The loan can close as scheduled as long as the borrower receives a revised Closing Disclosure at the closing table.

Answer

The closing must be delayed by at least one business day to account for the change.

Answer

The loan can proceed as planned because changes in loan product do not require a new waiting period.

Question 2

Under RESPA Section 10, what is the maximum cushion that a lender can require a borrower to maintain in an escrow account?

Accepted Answer

An amount equal to one-sixth of the total estimated annual disbursements.

Answer

An amount equal to three months of escrow payments.

Answer

An amount equal to one month of escrow payments.

Answer

An amount equal to one-quarter of the total estimated annual disbursements.

Question 3

In a real estate-secured transaction, which of the following is generally EXCLUDED from the finance charge calculation under the Truth in Lending Act (TILA)?

Accepted Answer

Bona fide and reasonable title insurance fees.

Answer

Loan origination fees paid to the creditor.

Answer

Points paid by the borrower to reduce the interest rate.

Answer

Fees charged by a mortgage broker.

Question 4

A home seller's purchase contract requires the buyer to use a specific title insurance company that is owned by the seller's brother. The buyer will pay for both the owner's and lender's title policies. This practice is a violation of which federal regulation?

Accepted Answer

RESPA Section 9

Answer

TILA Section 32 (HOEPA)

Answer

RESPA Section 8

Answer

TILA Section 36 (Loan Originator Compensation)

Question 5

For the purposes of the right of rescission under TILA, how is a 'business day' defined?

Accepted Answer

All calendar days except Sundays and federal legal holidays.

Answer

Any day the creditor's offices are open for business.

Answer

Monday through Friday, excluding federal legal holidays.

Answer

All calendar days including Sundays, but excluding federal legal holidays.

Question 6

A loan is determined to be a Higher-Priced Mortgage Loan (HPML) because its APR exceeds the Average Prime Offer Rate by the applicable threshold. Under TILA, what is generally required for this type of loan?

Accepted Answer

An escrow account for property taxes and homeowner's insurance must be established and maintained for at least five years.

Answer

The borrower must receive special high-cost mortgage counseling from a HUD-approved counselor.

Answer

A second appraisal must be obtained if the property was recently sold at a lower price.

Answer

The loan must have a mandatory three-day right of rescission, regardless of property type.

A borrower receives a Closing Disclosure on Tuesday.Two days later, on Thursday, the lender discovers the loan product is changing from a fixed-rate to a variable-rate mortgage.According to TILA/RESPA regulations, what is the impact of this change?

A borrower receives a Closing Disclosure on Tuesday.
Two days later, on Thursday, the lender discovers the loan product is changing from a fixed-rate to a variable-rate mortgage.
According to TILA/RESPA regulations, what is the impact of this change?