National and UST Mortgage Practice
Exam 5 Questions and Answers Graded
A+
Which of the following inquiries is considered lawful when asked for the purposes
of credit approval as governed by ECOA?
A. Years on the job
B. Race
C. Marital status
D. Age - Correct answer-The answer is: A. years on the job. ECOA protects against
discrimination in credit transactions. Asking how many years someone has been at
their job is not considered discriminatory. It is a gauge of income stability.
The first step in the closing process is:
A. Rescission
B. Funding
C. Application
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,D. Steering - Correct answer-The answer is: B. funding. The first step in the
closing process is funding. This occurs when the lender wires funds to the title
company or closing attorney. Once the closing has occurred, the title company is
authorized to release funds to the parties (disbursement). Depending on state law
and the type of transaction, disbursement could occur at closing or several days
later
For ARMS characterized by figures like "3/1," "5/1," "7/1," or "10/1," the first
number represents _____, and the second number represents _____.
A. The start rate; the periodic cap
B. The locked term; the adjustment frequency
C. The initial cap; the periodic cap
D. The locked term; the adjustment cap - Correct answer-The answer is: B. the
locked term; the adjustment frequency. ARMS are often named for their features.
In other words, a 3/1 ARM is locked for three years, and then adjusts annually each
year thereafter. The first number represents the locked term and the second number
represents the adjustment frequency.
Creditors must make a(n) _____ of a borrower's ability to repay a loan.
A. Probable, estimated determination
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, B. Reasonable estimation
C. Absolute guarantee
D. Reasonable, good faith determination - Correct answer-The answer is: D.
reasonable, good faith determination. Creditors must make a reasonable, good faith
determination of a borrower's ability to repay a loan.
What was the first law that Congress enacted to combat predatory lending?
A. TILA
B. Fair Housing Act
C. HOEPA
D. RESPA - Correct answer-The answer is: C. HOEPA. The Home Ownership and
Equity Protection Act (HOEPA) was enacted in 1994 and was the first legislation
specifically created to combat the practice of predatory lending.
The FCRA places all of the following limitations on the inclusion of negative
information in credit reports, EXCEPT:
A. A limit on bankruptcies that are more than ten years old
B. A limit on accounts placed for collection that are more than seven years old
C. A limit on tax liens that are more than seven years old
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
Exam 5 Questions and Answers Graded
A+
Which of the following inquiries is considered lawful when asked for the purposes
of credit approval as governed by ECOA?
A. Years on the job
B. Race
C. Marital status
D. Age - Correct answer-The answer is: A. years on the job. ECOA protects against
discrimination in credit transactions. Asking how many years someone has been at
their job is not considered discriminatory. It is a gauge of income stability.
The first step in the closing process is:
A. Rescission
B. Funding
C. Application
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,D. Steering - Correct answer-The answer is: B. funding. The first step in the
closing process is funding. This occurs when the lender wires funds to the title
company or closing attorney. Once the closing has occurred, the title company is
authorized to release funds to the parties (disbursement). Depending on state law
and the type of transaction, disbursement could occur at closing or several days
later
For ARMS characterized by figures like "3/1," "5/1," "7/1," or "10/1," the first
number represents _____, and the second number represents _____.
A. The start rate; the periodic cap
B. The locked term; the adjustment frequency
C. The initial cap; the periodic cap
D. The locked term; the adjustment cap - Correct answer-The answer is: B. the
locked term; the adjustment frequency. ARMS are often named for their features.
In other words, a 3/1 ARM is locked for three years, and then adjusts annually each
year thereafter. The first number represents the locked term and the second number
represents the adjustment frequency.
Creditors must make a(n) _____ of a borrower's ability to repay a loan.
A. Probable, estimated determination
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, B. Reasonable estimation
C. Absolute guarantee
D. Reasonable, good faith determination - Correct answer-The answer is: D.
reasonable, good faith determination. Creditors must make a reasonable, good faith
determination of a borrower's ability to repay a loan.
What was the first law that Congress enacted to combat predatory lending?
A. TILA
B. Fair Housing Act
C. HOEPA
D. RESPA - Correct answer-The answer is: C. HOEPA. The Home Ownership and
Equity Protection Act (HOEPA) was enacted in 1994 and was the first legislation
specifically created to combat the practice of predatory lending.
The FCRA places all of the following limitations on the inclusion of negative
information in credit reports, EXCEPT:
A. A limit on bankruptcies that are more than ten years old
B. A limit on accounts placed for collection that are more than seven years old
C. A limit on tax liens that are more than seven years old
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
