RESIDENTIAL LENDING COMPLIANCE CERTIFICATION
EXAMINATION COMPLETE QUESTIONS AND DETAILED
SOLUTIONS LATEST UPDATE THIS YEAR JUST RELEASED
1. Under the Real Estate Settlement Procedures Act (RESPA), which of
the following is considered a "federally related mortgage loan"?
A. A loan for the purchase of a commercial office building.
B. A loan secured by a first lien on a residential property with one to
four family units.
C. A loan for the purchase of agricultural land exceeding 25 acres.
D. A temporary construction loan with a term of less than one year.
Answer: B
Rationale: RESPA defines a federally related mortgage loan as a loan
secured by a first or subordinate lien on residential real property,
including individual units of condominiums and cooperatives, designed
principally for the occupancy of from one to four families.
2. A mortgage loan originator is required to provide a Loan Estimate to
a consumer. Under TRID, what is the maximum number of business
days after receiving the application that the Loan Estimate must be
delivered or placed in the mail?
A. 1 business day.
B. 3 business days.
C. 5 business days.
D. 7 business days.
,Answer: B
Rationale: Under the TILA-RESPA Integrated Disclosure (TRID) rule, the
creditor must provide the Loan Estimate within three business days of
receiving the consumer's application.
3. Under the Equal Credit Opportunity Act (ECOA) and Regulation B,
which of the following is a permissible factor for a creditor to consider
when evaluating a loan application?
A. The applicant's receipt of public assistance income.
B. The applicant's marital status.
C. The applicant's credit history.
D. The applicant's national origin.
Answer: C
Rationale: ECOA prohibits discrimination based on race, color, religion,
national origin, sex, marital status, age, or receipt of public assistance
income. Credit history is a permissible, non-discriminatory factor in
underwriting.
4. A borrower is applying for a loan that is subject to the Home
Ownership and Equity Protection Act (HOEPA). What is one of the
triggers that makes a loan a high-cost mortgage?
A. The loan's APR exceeds the average prime offer rate by more than
3.5 percentage points for a first-lien loan.
B. The loan's total points and fees exceed 5% of the total loan amount.
C. The loan includes a prepayment penalty that exceeds 2% of the loan
,amount.
D. The loan is a purchase money mortgage for a primary residence.
Answer: B
Rationale: A loan is considered a high-cost mortgage under HOEPA if
the total points and fees exceed 5% of the total loan amount (for loans
of $20,000 or more), or if the APR exceeds the average prime offer rate
by certain thresholds.
5. Under the Fair Credit Reporting Act (FCRA), what must a lender do
when it takes adverse action based on information contained in a
consumer report?
A. Provide the consumer with a copy of the consumer report.
B. Provide the consumer with a notice that includes the name, address,
and phone number of the credit reporting agency.
C. Provide the consumer with a risk-based pricing notice.
D. Provide the consumer with a copy of the lender's underwriting
guidelines.
Answer: B
Rationale: Under FCRA, when adverse action is taken based on a
consumer report, the lender must provide the consumer with a notice
that includes the name, address, and telephone number of the
consumer reporting agency that furnished the report.
6. Which of the following is a protected class under the Fair Housing
Act?
, A. Source of income.
B. Marital status.
C. Familial status.
D. Credit score.
Answer: C
Rationale: The Fair Housing Act prohibits discrimination in housing and
residential real estate-related transactions based on race, color, religion,
sex, handicap, familial status, or national origin. Source of income and
marital status are not protected under the federal Fair Housing Act.
7. A mortgage loan originator is taking an application for a closed-end
residential mortgage loan. The consumer provides their name,
income, Social Security number, property address, estimated property
value, and requested loan amount. According to TRID, what is the next
required action?
A. Provide the Closing Disclosure within three business days.
B. Provide the Loan Estimate within three business days.
C. Obtain a written appraisal before any disclosures are provided.
D. Send an adverse action notice within ten days.
Answer: B
Rationale: Under TRID, these six pieces of information constitute a
completed application. This triggers the requirement to provide the
Loan Estimate within three business days. The Closing Disclosure is
provided later, closer to consummation.
EXAMINATION COMPLETE QUESTIONS AND DETAILED
SOLUTIONS LATEST UPDATE THIS YEAR JUST RELEASED
1. Under the Real Estate Settlement Procedures Act (RESPA), which of
the following is considered a "federally related mortgage loan"?
A. A loan for the purchase of a commercial office building.
B. A loan secured by a first lien on a residential property with one to
four family units.
C. A loan for the purchase of agricultural land exceeding 25 acres.
D. A temporary construction loan with a term of less than one year.
Answer: B
Rationale: RESPA defines a federally related mortgage loan as a loan
secured by a first or subordinate lien on residential real property,
including individual units of condominiums and cooperatives, designed
principally for the occupancy of from one to four families.
2. A mortgage loan originator is required to provide a Loan Estimate to
a consumer. Under TRID, what is the maximum number of business
days after receiving the application that the Loan Estimate must be
delivered or placed in the mail?
A. 1 business day.
B. 3 business days.
C. 5 business days.
D. 7 business days.
,Answer: B
Rationale: Under the TILA-RESPA Integrated Disclosure (TRID) rule, the
creditor must provide the Loan Estimate within three business days of
receiving the consumer's application.
3. Under the Equal Credit Opportunity Act (ECOA) and Regulation B,
which of the following is a permissible factor for a creditor to consider
when evaluating a loan application?
A. The applicant's receipt of public assistance income.
B. The applicant's marital status.
C. The applicant's credit history.
D. The applicant's national origin.
Answer: C
Rationale: ECOA prohibits discrimination based on race, color, religion,
national origin, sex, marital status, age, or receipt of public assistance
income. Credit history is a permissible, non-discriminatory factor in
underwriting.
4. A borrower is applying for a loan that is subject to the Home
Ownership and Equity Protection Act (HOEPA). What is one of the
triggers that makes a loan a high-cost mortgage?
A. The loan's APR exceeds the average prime offer rate by more than
3.5 percentage points for a first-lien loan.
B. The loan's total points and fees exceed 5% of the total loan amount.
C. The loan includes a prepayment penalty that exceeds 2% of the loan
,amount.
D. The loan is a purchase money mortgage for a primary residence.
Answer: B
Rationale: A loan is considered a high-cost mortgage under HOEPA if
the total points and fees exceed 5% of the total loan amount (for loans
of $20,000 or more), or if the APR exceeds the average prime offer rate
by certain thresholds.
5. Under the Fair Credit Reporting Act (FCRA), what must a lender do
when it takes adverse action based on information contained in a
consumer report?
A. Provide the consumer with a copy of the consumer report.
B. Provide the consumer with a notice that includes the name, address,
and phone number of the credit reporting agency.
C. Provide the consumer with a risk-based pricing notice.
D. Provide the consumer with a copy of the lender's underwriting
guidelines.
Answer: B
Rationale: Under FCRA, when adverse action is taken based on a
consumer report, the lender must provide the consumer with a notice
that includes the name, address, and telephone number of the
consumer reporting agency that furnished the report.
6. Which of the following is a protected class under the Fair Housing
Act?
, A. Source of income.
B. Marital status.
C. Familial status.
D. Credit score.
Answer: C
Rationale: The Fair Housing Act prohibits discrimination in housing and
residential real estate-related transactions based on race, color, religion,
sex, handicap, familial status, or national origin. Source of income and
marital status are not protected under the federal Fair Housing Act.
7. A mortgage loan originator is taking an application for a closed-end
residential mortgage loan. The consumer provides their name,
income, Social Security number, property address, estimated property
value, and requested loan amount. According to TRID, what is the next
required action?
A. Provide the Closing Disclosure within three business days.
B. Provide the Loan Estimate within three business days.
C. Obtain a written appraisal before any disclosures are provided.
D. Send an adverse action notice within ten days.
Answer: B
Rationale: Under TRID, these six pieces of information constitute a
completed application. This triggers the requirement to provide the
Loan Estimate within three business days. The Closing Disclosure is
provided later, closer to consummation.
