RESIDENTIAL LENDING COMPLIANCE CERTIFICATION
EXAMINATION COMPLETE QUESTIONS WITH VERIFIED
ANSWERS AND DETAILED SOLUTIONS
TABLE OF CONTENTS
Section Domain Approx. Page
Questions Reference
1 Federal Mortgage-Related 48 Page 2
Laws
2 Mortgage Loan Origination 54 Page 8
Activities
3 General Mortgage 40 Page 14
Knowledge
4 Ethics 36 Page 19
5 Uniform State Content 22 Page 23
SECTION 1: FEDERAL MORTGAGE-RELATED LAWS (48 Questions)
1. A mortgage loan originator is taking an application for a closed-end,
residential mortgage loan. The borrower provides their name, income,
Social Security number, property address, estimated 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 the TILA-RESPA Integrated Disclosure (TRID) rule,
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.
2. Under the Home Mortgage Disclosure Act (HMDA) and Regulation
C, which of the following institutions is required to collect and report
data on mortgage applications?
A. A credit union with less than $10 million in assets.
B. A for-profit mortgage lender that originated 25 closed-end mortgage
loans in each of the two preceding years.
C. A bank that makes loans for agricultural purposes only.
D. A lender that only originates reverse mortgages.
Answer: B
Rationale: Under the current HMDA rules, the threshold for reporting
closed-end mortgage loan data is 25 loans in each of the two preceding
calendar years. Many small credit unions and certain agricultural
lenders are exempt.
3. Which of the following actions is prohibited under Section 8 of the
Real Estate Settlement Procedures Act (RESPA)?
,A. Paying a fee to a mortgage broker for services actually rendered.
B. Giving a gift of nominal value to a real estate agent for a referral.
C. Paying a fee for the referral of settlement service business.
D. Charging a borrower for the appraisal of the property.
Answer: C
Rationale: RESPA Section 8 explicitly prohibits the payment or receipt of
any fee, kickback, or thing of value for the referral of settlement service
business incident to a federally related mortgage loan.
4. A lender denies a loan application. Under the Equal Credit
Opportunity Act (ECOA) and Regulation B, what is the maximum time
the lender has to notify the applicant of the adverse action?
A. 10 days.
B. 15 days.
C. 30 days.
D. 45 days.
Answer: C
Rationale: Regulation B requires creditors to notify applicants of action
taken within 30 days of receiving a completed application. For a
counteroffer, the applicant has 90 days to accept or reject it.
5. Which of the following fees is NOT considered a finance charge
under the Truth in Lending Act (TILA)?
A. Interest paid on the loan.
B. A loan origination fee.
, C. A fee for a credit report.
D. A fee for a title examination.
Answer: D
Rationale: A title examination fee is a settlement service charge that is
bona fide and not a finance charge if it is a third-party fee that is not
required by the creditor as a condition of the loan. Interest, origination
fees, and credit report fees are typically considered finance charges.
6. Under the Home Ownership and Equity Protection Act (HOEPA),
what is the definition of a high-cost mortgage?
A. A loan with an APR that exceeds the average prime offer rate by
more than 6.5% for a first lien.
B. A loan with total points and fees exceeding 5% of the total loan
amount.
C. A loan with a prepayment penalty exceeding 2% of the loan amount.
D. A loan that is primarily for personal, family, or household purposes.
Answer: A
Rationale: HOEPA defines a high-cost mortgage, in part, as a loan where
the APR exceeds the average prime offer rate by more than 6.5% for a
first-lien loan, or 8.5% for a subordinate-lien loan. There are also points-
and-fees and prepayment penalty triggers.
7. A lender is required to provide a "Notice of Right to Rescind" for
which of the following transactions?
EXAMINATION COMPLETE QUESTIONS WITH VERIFIED
ANSWERS AND DETAILED SOLUTIONS
TABLE OF CONTENTS
Section Domain Approx. Page
Questions Reference
1 Federal Mortgage-Related 48 Page 2
Laws
2 Mortgage Loan Origination 54 Page 8
Activities
3 General Mortgage 40 Page 14
Knowledge
4 Ethics 36 Page 19
5 Uniform State Content 22 Page 23
SECTION 1: FEDERAL MORTGAGE-RELATED LAWS (48 Questions)
1. A mortgage loan originator is taking an application for a closed-end,
residential mortgage loan. The borrower provides their name, income,
Social Security number, property address, estimated 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 the TILA-RESPA Integrated Disclosure (TRID) rule,
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.
2. Under the Home Mortgage Disclosure Act (HMDA) and Regulation
C, which of the following institutions is required to collect and report
data on mortgage applications?
A. A credit union with less than $10 million in assets.
B. A for-profit mortgage lender that originated 25 closed-end mortgage
loans in each of the two preceding years.
C. A bank that makes loans for agricultural purposes only.
D. A lender that only originates reverse mortgages.
Answer: B
Rationale: Under the current HMDA rules, the threshold for reporting
closed-end mortgage loan data is 25 loans in each of the two preceding
calendar years. Many small credit unions and certain agricultural
lenders are exempt.
3. Which of the following actions is prohibited under Section 8 of the
Real Estate Settlement Procedures Act (RESPA)?
,A. Paying a fee to a mortgage broker for services actually rendered.
B. Giving a gift of nominal value to a real estate agent for a referral.
C. Paying a fee for the referral of settlement service business.
D. Charging a borrower for the appraisal of the property.
Answer: C
Rationale: RESPA Section 8 explicitly prohibits the payment or receipt of
any fee, kickback, or thing of value for the referral of settlement service
business incident to a federally related mortgage loan.
4. A lender denies a loan application. Under the Equal Credit
Opportunity Act (ECOA) and Regulation B, what is the maximum time
the lender has to notify the applicant of the adverse action?
A. 10 days.
B. 15 days.
C. 30 days.
D. 45 days.
Answer: C
Rationale: Regulation B requires creditors to notify applicants of action
taken within 30 days of receiving a completed application. For a
counteroffer, the applicant has 90 days to accept or reject it.
5. Which of the following fees is NOT considered a finance charge
under the Truth in Lending Act (TILA)?
A. Interest paid on the loan.
B. A loan origination fee.
, C. A fee for a credit report.
D. A fee for a title examination.
Answer: D
Rationale: A title examination fee is a settlement service charge that is
bona fide and not a finance charge if it is a third-party fee that is not
required by the creditor as a condition of the loan. Interest, origination
fees, and credit report fees are typically considered finance charges.
6. Under the Home Ownership and Equity Protection Act (HOEPA),
what is the definition of a high-cost mortgage?
A. A loan with an APR that exceeds the average prime offer rate by
more than 6.5% for a first lien.
B. A loan with total points and fees exceeding 5% of the total loan
amount.
C. A loan with a prepayment penalty exceeding 2% of the loan amount.
D. A loan that is primarily for personal, family, or household purposes.
Answer: A
Rationale: HOEPA defines a high-cost mortgage, in part, as a loan where
the APR exceeds the average prime offer rate by more than 6.5% for a
first-lien loan, or 8.5% for a subordinate-lien loan. There are also points-
and-fees and prepayment penalty triggers.
7. A lender is required to provide a "Notice of Right to Rescind" for
which of the following transactions?
