Real Estate Lending Laws Quiz

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Questions and Answers

What information cannot be requested from individual credit applicants?

Spouse's employment status (correct)

Residency status

Marital status

Dependent children count

In evaluating applications, which statement accurately reflects the treatment of public assistance income?

It must be considered equally with other sources of income. (correct)

It can only be considered if full disclosure is provided.

It is preferentially evaluated if from a long-term source.

It must be disregarded in favor of regular employment income.

Which of the following inquiries is a lender prohibited from making?

How many dependent children the borrower has

Borrower's employment status

If the borrower has marital plans (correct)

Borrower's credit history

What is the required approach for evaluating income from part-time employment?

It must be evaluated like other forms of income. Signup and view all the answers

Which of the following statements about alimony and child support income is true?

It should be evaluated the same way as other income if reported. Signup and view all the answers

What is the maximum punitive damage allowed in individual lawsuits under the Act?

$10,000 Signup and view all the answers

Which of the following is a requirement regarding adverse action notices?

They must include reasons for the credit denial. Signup and view all the answers

What must lenders consider when determining a borrower's qualification for special loan programs?

Marital status and number of dependents Signup and view all the answers

What constitutes a referral in the context of settlement services?

Verbal or written action intended to influence a borrower's choice Signup and view all the answers

When is the Affiliated Business Arrangement Disclosure required to be provided?

At the time of referral to an affiliated business or at application Signup and view all the answers

What is considered an affiliate relationship according to the content?

More than 1% ownership in a settlement service provider by the referrer Signup and view all the answers

Which act was established to prevent discrimination in housing?

The Fair Housing Act Signup and view all the answers

Which of the following is NOT a prohibited basis for discrimination under the Equal Credit Opportunity Act?

History of bankruptcy Signup and view all the answers

What must lenders avoid doing in their advertising as per prohibited practices?

Making statements that discourage applications on a prohibited basis Signup and view all the answers

What are the implications of the Fair Housing Act amendments for familial status?

It makes it unlawful to discriminate against families regardless of children’s age Signup and view all the answers

Which group is specifically mentioned as being protected from discrimination in lending?

Disabled individuals Signup and view all the answers

Study Notes

Referral Definition and Disclosures

A referral is any action, verbal or written, meant to influence a borrower's choice of business provider or settlement service.
If a lender has ties with a settlement service provider, an Affiliated Business Arrangement Disclosure is needed at application or when referring to the affiliated business.
This disclosure tells borrowers about shared ownership or other relationships between the lender/broker and a potential third-party service provider (e.g., title company).
An affiliate relationship exists when a person or company referring business holds more than 1% ownership in a settlement service provider.

Fair Housing and Equal Credit Opportunity

The Fair Housing Act prohibits discrimination in housing based on protected characteristics (race, color, national origin, religion, sex, familial status, disability).
The Equal Credit Opportunity Act (ECOA) prevents discrimination in lending.
Prohibited bases for discrimination include race, color, religion, national origin, sex, marital status, age (if able to contract), and public assistance income source.
Lenders can't make statements discouraging applications based on prohibited characteristics.
Lenders cannot ask about a spouse's/former spouse's information for individual credit applications.
Lenders may ask about dependents and marital status for certain loan programs when needed for qualification.
Inquiry about health issues is prohibited.
Income from alimony, child support, or separate maintenance can be reported and evaluated as other income.
Applicants aren't obligated to disclose such income sources, and lenders cannot discriminate against them for doing so.
Credit extensions cannot be restricted or offered preferentially based on a protected characteristic.
Adverse action notifications have specific timing and content requirements.
Compliance recordkeeping and electronic communication requirements are in place.
Penalties for violations, including punitive damages, are outlined.

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Description

Test your knowledge on referral definitions, disclosures, and fair housing provisions. This quiz covers essential laws, including the Fair Housing Act and the Equal Credit Opportunity Act, to ensure compliance in real estate transactions.