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24 Cards in this Set
- Front
- Back
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The CFPB often enforcing TILA regulation. Which entity is in charge of implementing TILA? A) HUD B) state regulator for the applicable jurisdiction C) CFPB D) FDIC |
- The CFPB |
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When was TILA enacted? A) 2004 B) 1994 C) 2008 D) 1968 |
1968 |
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A key purpose of TILA is to: A) standardize forms used by lenders for credit determination B) ensure correct & sufficient disclosure of lending terms & costs C) limit access to private consumer data D) protect borrowers from discriminatory lending practices |
B - ensure correct & sufficient disclosure of lending terms & costs |
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HOEPA contributed to protecting consumers from: A) misleading advertising of mortgage loan terms B) predatory lending practices with relation to higher priced mortgages C) paying an MLO for assistance with obtaining a mortgage loan while the MLO was simultaneously being compensated by the lender D) misunderstanding the complex pricing inherent to ARMs |
- B - predatory lending practices with relation to higher priced mortgages |
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A creditor delivers the Loan Estimate & aims to close the loan immediately. One constraint the creditor will have in closing the loan is: A) coordinating a lawyer to perform closing 7 days after delivery B) receiving authorization from an applicant to close the loan by the coming Saturday C) closing the loan in less than 7 business days without making a mistake in processing the loan D) waiting a minimum of 7 business days before closing |
- D MDIA - The Mortgage Disclosure Improvement Act (an amendment to TILA - July 2008, effective from 7/30/2009) requires that creditors wait 7 business days after they provide the early TIL disclosures (either in person, electronically or by mail, fax etc.) To borrower before closing the loan |
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Which law is arguably one of the most important US consumer protection laws regarding borrowing? A) Truth in Lending Act TILA B) Fair Credit Reporting Act FCRA C) Consumer Protection Act CPA D) Home Ownership & Equity Protection Act HOEPA |
A - TILA As implemented by Reg Z, became effective in 7/1969. It is one of the most important US consumer protection laws with regard to borrowing. TILA laws & regulations are generally aimed at protecting consumers, borrowers & creditors |
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Subpart E of TILA specifically includes rules related to: A) Reg X B) HOEPA defined loans C) all amendments to TILA D) unsecured loans |
HOEPA defined loans Subpart E includes coverage of: (a) HOEPA amendments - not all (b) requires certain disclosures for closed-end loans (c) provides limitations for closed-end loans that have rates or fees above specified amounts (d) prohibits specific acts & practices if the mortgage is subject to HOEPA (e) higher-priced mortgages (f) prohibits specific acts & practices for closed-end higher-priced mortgages (g) prohibits specific acts & practices when extending credit secured by a dwelling |
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How may the loan estimate be provided to the borrower? A) by email B) in person C) by regular mail D) both B&C |
D - in person & by regular mail |
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If there has been a change of circumstance to the loan estimate, how long does the creditor have to make a revision? A) 3 business days B) 5 business days C) 1 month D) any time before the loan closes |
A - 3 business days |
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If there are multiple creditors, which name is used on the loan estimate? A) all B) first alphabetically C) the creditor completing the loan estimate D) no creditor names are required |
The creditor completing the Loan Estimate |
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Which of the following does not need to be disclosed in the loan estimate? A) loan amount B) borrower's credit score C) initial interest rate D) monthly principal & interest rate |
B - borrower's credit score |
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The projected payments table must include: A) the amount of mortgage insurance B) estimated taxes, unless paid with escrow funds C) borrower's income history D) none of the above |
- the amount of mortgage insurance |
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The estimated amount of cash the consumer will be expected to pay at closing is shown in which of the following documents? A) estimated cash to close B) estimated closing costs C) total closing costs D) all of the above |
D - all of the above |
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What is the dollar amount used to calculate the APR? A) the interest payment B) precomputed expenses C) the finance charge D) the amount financed |
The finance charge is by definition the dollar amount used to calculate the APR. The finance charge is the cost of consumer credit as a dollar amount. It includes any charge payable directly or indirectly by the consumer & imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit. It does not include any charge of a type payable in a comparable cash transaction. A higher finance charge leads to a higher APR. The interest paid by the borrower on an on-going basis, mostly with each monthly payment, would be once clear finance charge. The loan origination fee charged by the MLO upfront is also a key part of all finance charges |
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For mortgages, part 1026.19 requires that the TILA disclosure be made _ ________ ____ after the MLO receives the borrower's completed application. |
3 business days This is an important date. MDIA helps clarify that business days are days when the MLOs office is open to the public food carrying on substantially all of its business functions |
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The notice of the right to rescind must include all of the following EXCEPT: A) the applicable penalty B) how to rescind C) the effects of rescission D) the date when rescission expires |
A The notice of the right to rescind must include the manner in which to do so, the effects of such a decision as well as the day when rescission expires. No penalties are charged if a consumer decides to rescind a mortgage |
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If a face amount of a note is $100k & the full finance charge is disclosed, which of the following would violate TILA? A) finance charge was overstated by $50 B) understated by $75 C) understand by $250 D) overstated by $1250 |
C Over statements are not violations Under statements are a violation if over $100 The percentage rules apply to rescission rights. The disclosed finance charge and other disclosures affected by the disclosed finance charge (including the amount financed and the annual percentage rate) are considered accurate if the amount disclosed as the finance charge is either understated by no more than $100 or is greater than the amount required to be disclosed |
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The loan estimate is not required for which loan? |
Commercial Loan types covered for the TILA disclosure, MDIA, further extended what types of mortgages are subject to the TILA early disclosure requirement. In the past, the TILA disclosure requirement applied to any residential mortgage covered by RESPA or any mortgage extended to finance a purchase of the borrower's dwelling or to finance an initial construction of a borrower's dwelling. Now, the TILA disclosure covers "any extension of credit secured by the dwelling of a consumer" Effectively including refinance mortgage & home equity loans. Additionally, the TILA disclosure is now required whether or not the dwelling is the borrower's principal dwelling |
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What is the difference between the note rate and the APR? A) both rates are nearly identical for all loan types except that the note rate does not change throughout the loan while the APR will B) with respect to ARMs, the note rate is used to calculate interest payments for the first year. After that, annual payments are calculated using the APR. C) the note rate is the interest rate applied to the principal. The APR takes into account all fees & charges associated with a loan D) the note rate is the rate used to calculate the maximum DTI a borrower can have for a specific loan program, while the APR is the final rate approved by the underwriter |
The note rate is just the interest rate applied to the unpaid balance of the loan. APR is a rate that takes into account all fees & charges associated with a loan. |
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A borrower completed the loan application on the 10th of the month. When is the earliest the transaction can close? A) 7 business days after the date that the TILA disclosure & GFE is delivered B) 5 C) 3 D) 1 week |
7 - for loans subject to MDIA, the 7 business day waiting period begins when the disclosure is mailed to the borrowers or if delivered electronically is deemed delivered. HELOCs are excluded from this requirement |
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A borrower refinancing a primary residence can rescind a transaction within how many days after consummation of the transaction? A) 7 days B) 1 week C) 3 business days D) 5 business days |
3 - consumers have 3 business days after consummation of the transaction to evaluate a transaction and terminate the agreement without any further financial obligation. |
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A borrower threatens to sue because the MLO understated the finance charge by $200. What is one possible outcome of this situation? A) legal damages of $200 B) it is determined that there is no violation because the understatement is less than $500 C) legal damages of $400 D) the finance charge is recalculated & any remaining balance is funded by the lender |
Legal damages of $400 - mortgages secured by a dwelling (closed-end credit only): The disclosed finance charge is considered accurate if it is not understated versus the actual financial charge by more than $100. If inaccurate, the MLO must re-disclose at least 3 days before consummation of the transaction. |
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In calculating the Total Estimated Monthly Payments on the Loan Estimate, which insurance payment is not added to the Principal + Interest Payment? A) escrow B) life C) private mortgage D) mortgage |
Life Total Estimated Monthly Payment = (principal + interest) + (estimated taxes + escrow insurance) + private mortgage insurance + mortgage insurance |
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Which of the following is an accurate statement in connection with an extension of credit secured by the real property? A) credit report, pest inspections, and appraisal fees are not included in the APR calculation. B) credit report & precomputed interest amounts are included in the APR calculation C) broker, admin, or service fees are not included in the calculation of the APR D) discount points, document preparation, & finders fees are not included in the calculation of the APR. |
C - ??? |
