SAFE Regulatory Compliance & Consumer Protection 3 — Questions and Answers
Question 1: Under the Dodd-Frank Act, which entity has primary authority to examine non-depository mortgage originators for compliance with federal consumer financial laws?
- Federal Reserve Board
- Office of the Comptroller of the Currency (OCC)
- Consumer Financial Protection Bureau (CFPB) (Correct answer)
- Federal Deposit Insurance Corporation (FDIC)
Correct answer: Consumer Financial Protection Bureau (CFPB)
The CFPB has supervisory and examination authority over non-depository covered persons, including non-bank mortgage originators.
Question 2: A lender charges a borrower a higher interest rate because the borrower's income primarily comes from a public assistance program. This most likely violates which law?
- Real Estate Settlement Procedures Act
- Equal Credit Opportunity Act (Correct answer)
- Home Mortgage Disclosure Act
- Homeowners Protection Act
Correct answer: Equal Credit Opportunity Act
ECOA prohibits discrimination based on the fact that income derives from a public assistance program.
Question 3: Which rule requires mortgage servicers to make good-faith efforts to contact a borrower by the 36th day of delinquency?
- Regulation X early intervention provisions (Correct answer)
- Regulation Z ability-to-repay rule
- Regulation B adverse action requirements
- Regulation C HMDA reporting
Correct answer: Regulation X early intervention provisions
Regulation X (RESPA) requires servicers to make good-faith efforts to establish live contact with a delinquent borrower by day 36 of delinquency.
Question 4: What is the minimum waiting period between the delivery of the Closing Disclosure and consummation of a mortgage transaction under TRID?
- 1 business day
- 2 business days
- 3 business days (Correct answer)
- 5 business days
Correct answer: 3 business days
TRID requires borrowers to receive the Closing Disclosure at least three business days before consummation to review final loan terms.
Question 5: Under the SAFE Act, a state-licensed MLO who wants to temporarily conduct loan origination activities in a new state without a license is permitted to do so under which provision?
- Federal preemption rule
- Temporary authority to operate (TAO) (Correct answer)
- Reciprocity exemption
- De minimis exception
Correct answer: Temporary authority to operate (TAO)
The SAFE Act's Temporary Authority to Operate (TAO) allows state-licensed MLOs to conduct business in a new state while their license application is pending.
Question 6: Home Mortgage Disclosure Act (HMDA) data is collected primarily to help identify which of the following?
- Interest rate risk in mortgage portfolios
- Potential discriminatory lending patterns in communities (Correct answer)
- Prepayment speeds on mortgage-backed securities
- Insurance coverage gaps in underserved markets
Correct answer: Potential discriminatory lending patterns in communities
HMDA data enables regulators, public officials, and the public to identify possible discriminatory lending patterns and community investment needs.
Question 7: Which provision of the Gramm-Leach-Bliley Act requires mortgage companies to provide customers with a privacy notice explaining how their nonpublic personal information is shared?
- Safeguards Rule
- Financial Privacy Rule (Correct answer)
- Pretexting Protection
- Affiliate Sharing Rule
Correct answer: Financial Privacy Rule
The Financial Privacy Rule under GLBA requires financial institutions to give consumers a privacy notice and the opportunity to opt out of sharing with non-affiliated third parties.
SAFE Regulatory Compliance & Consumer Protection 3
Under the Dodd-Frank Act, which entity has primary authority to examine non-depository mortgage originators for compliance with federal consumer financial laws?