SAFE Ethical Practices & Fair Lending 2

Question 1

Under the Equal Credit Opportunity Act (ECOA), a lender must notify an applicant of adverse action within how many days of receiving a completed application?

Accepted Answer

30 days

Answer

ECOA requires creditors to notify applicants of adverse action within 30 days of receiving a completed credit application.

Question 2

A mortgage loan originator who steers a borrower to a higher-cost loan product when the borrower qualifies for a lower-cost product is engaging in:

Accepted Answer

Predatory steering

Answer

Predatory steering occurs when an MLO directs borrowers to more expensive loan products than they qualify for, often to earn higher compensation.

Question 3

Which federal law prohibits discrimination in residential real estate transactions based on race, color, national origin, religion, sex, familial status, or disability?

Accepted Answer

Fair Housing Act

Answer

The Fair Housing Act prohibits discrimination in the sale, rental, and financing of housing based on seven protected classes.

Question 4

An MLO accepts an expensive gift from a real estate agent in exchange for referrals. This arrangement most likely violates:

Accepted Answer

RESPA's anti-kickback provisions

Answer

RESPA Section 8 prohibits kickbacks, referral fees, or unearned fees in connection with federally related mortgage loan transactions.

Question 5

Under HMDA, lenders are required to collect and report data on mortgage applications primarily to:

Accepted Answer

Identify potential discriminatory lending patterns

Answer

HMDA data is used by regulators and the public to identify potential discriminatory lending patterns and ensure fair access to credit.

(SAFE) Certified Secure and Fair Enforcement Mortgage Loan Originator Practice Test

(SAFE) Certified Secure and Fair Enforcement Mortgage Loan Originator Practice Test

SAFE Ethical Practices & Fair Lending 2