Mortgage Lending Regulations Quiz

Test 1

• The maximum percentage limit on the total obligation DTI ratio for a general qualified mortgage is 28%
• Under ECOA, lenders must provide the reason for denial within 30 days.
• A fraud scheme that involves "get rich quick" real estate seminars is generally categorized as illegal property flipping
• Eligibility for a mortgage loan originator license application may be denied for various reasons, including a license revocation, felony conviction, foreclosure, or seriously delinquent accounts.
• The Federal Credit Reform Act (FCRA) was enacted to improve access to credit information.
• Consumers are entitled to a free copy of their credit score annually
• An owner-occupied refinance transaction is one of the scenarios where the right of rescission applies.

Test 2

• An attorney performing multiple settlement services who earns fees for their work violates RESPA
• An employer paying employees for referrals violates RESPA
• An MLO leasing space in a real estate office at above market rates violates RESPA
• The proration amount for the June 1st rent paid was $300
• HMDA was developed to address redlining
• Steering and predatory lending were issues HMDA addressed
• MLOs must disclose actions requiring a "Yes" response in their disciplinary actions
• The MU4R disclosure requires official documentation to be uploaded as a PDF

Test 3

• The industry standard for gross percentage adjustment in a residential property appraisal is 10%
• A buydown is a situation where borrowers pay a fee to temporarily have a lower interest rate, but the rate eventually increases to the agreed fixed rate
• The correct answer for the time Omar has to rescind his loan given he wasn't provided the right to rescind the information, is Omar now has 3 years to rescind his loan
• The 7-year rule applies to FHA Standard underwriting when considering a repurchase after a Chapter 13 bankruptcy.
• The conventional mortgage's back end DTI ratio for a manually underwritten loan is 28%
• There is a need to disclose a housing counseling on high cost loans.
• Asking about intentions relating to childbearing is an invalid question during a loan application.

Test 4

• A borrower can have a loan with an LTV of 95%, and if 5% is paid down, then the PMI will either remain the same or decrease
• In HOEPA terms, the “cooling off” period is three business days prior to closing
• After the Great Recession, and per FHA Standard underwriting, a person who had a Chapter 13 bankruptcy would need to wait 7 years before they could repurchase a home again.
• The time allowed to dispute inaccurate credit information is 60 days
• An MLO's responsibility is to provide a copy of the credit report to the borrower at the borrower's request.
• The back-end DTI on a manually underwritten conventional loan cannot exceed 43%
• The calculation of Angela's interest rate at 6 months after a 1/1 ARM with caps of 2/2/8 would be 6%.

Test 5

• The process of issuing a notice of the right to rescind must be provided twice, and to all owners involved on the property.
• An initial escrow account statement must be given within 45 calendar days of settlement in accordance with RESPA.
• An MLO must be licensed to discuss specifications of particular loan products, detailed information & collect other necessary information for the application for a potential borrower
• An underwriter is looking at the borrower's credit inquiries for the past 12 months
• A violation of TRID would involve disclosing all Zero and 10% Tolerance costs on a loan estimate, except Escrows, Realtor fees, and Discount Points.

Test 6

• Fines, cease and desist orders and the refusal of a license renewal are acceptable actions for a regulatory authority.
• The business income generated by a sole proprietorship is calculated using Schedule C.
• The list of federal banking agencies would not include the director of the office of credit compliance.
• The funding fee for a VA loan with a 10% downpayment would be 2.15%
• You have 60 days to correct a nonnumeric error in the Closing Disclosure.
• Acquisition cost would be $231,200 given the contract terms, and fees.
• If an appraisal review is needed because the appraiser requests it, that is the situation in which the consumer is able to be charged an appraisal review fee.
• The 7-year rule to wait before re-purchasing a home after experiencing a mortgage-related issue like a foreclosure or bankruptcy is a valid consideration.
• Lender Liability fraud includes debts that don't match up with the documentation on file, borrowers not informing the lender about a property, and failing to disclose the details about their credit or finance status in relation to the property.
• Asking about a borrower's ability to bear children during an application is considered forbidden.

Test 7

• Practices, age and dependents can be questioned in a mortgage application if a co-borrower isn't involved.
• Inquiries of the borrower, with regards to marital status (married/unmarried/separated/divorced) are permissible, but doing so without a co-borrower isn't possible
• Funds, for closing costs, that have not been vested before the transaction date are not a permissible source of funding.
• An adverse action needs to be notified to a borrower within 30 days.
• The borrower would be required to pay the full amount of the interest calculated from the 15th of the month, to the 1st of the next month. This is also a higher price mortgage
• FHA financing disallows the usage of a gift as the source of a down payment.
• Veteran's purchasing homes are given a funding fee, the fee's amount is dependent on the down-payment.
• It is acceptable for an MLO to offer a counter-offer, but notification of the adverse action should be within 30 days per Regulation Z.

Test 8

• The pre-licensing education requirement for a mortgage loan originator is at least 10 hours.
• If a lender disregards the ECOA when making applicant decisions based on factors the law prohibits, that's considered disparate treatment.
• Federal laws like the Bank Secrecy Act/Anti-Money Laundering Act (BSA/AML) and the Gramm-Leach-Bliley Act require annual employee training.
• TILA mandates a lender provide a lender credit or table funding if the loan's closing costs exceed the amount the borrower was prepared to pay.
• A violation of the Fair Housing Act includes discouraging a prospective borrower from applying for a loan, and to not require a credit approval or appraisal
• The Dodd-Frank Act made steering and compensation provisions more transparent.
• An application to a lender is permissible to query a borrower, about their credit, but not their birth control policies.