Module 1, Part A Quiz

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  1. The penalties for paying or accepting an illegal referral fee are:
    Fines of up to $10,000 and up to one year in prison. Violations of RESPA’s Section 8 – which prohibits kickbacks, referrals and illegal fee splitting – are subject to the most severe penalties under the federal statute.
  2. Yield spread premium is disclosed to the borrower:
    On the GFE and Settlement Statement. According to RESPA, the yield spread premium, paid by the lender to the loan originator for originating a loan at an interest rate higher than par, must be disclosed on the Good Faith Estimate and the HUD-1 Settlement Statement.
  3. An aggregate escrow analysis is used to do which of the following?
    Prevent escrow overages. Section 10 of RESPA requires an aggregate escrow analysis to ensure that borrower’s are not being forced to maintain any surplus in their escrow accounts. The law limits the escrow cushion to 1/6th of the annual payments (two months) during any one month and surpluses over $50 must be refunded within 30 days.
  4. A lender has an affiliated business arrangement with a third party service provider. Under what circumstances can the lender require a borrower to use the services in a loan transaction?
    If there is no kickback or referral fees and the service provider is an attorney, credit reporting agency or appraiser. In most cases, it is a violation of RESPA to require a borrower to use a particular service provider. The exception is that lenders may require the use of a particular attorney, credit reporting agency or appraiser.
  5. The disclosure requirements of RESPA would apply to which of the following loans?
    A loan to purchase a duplex and rehabilitate it into a single family dwelling. RESPA regulations apply to federally regulated mortgage loans. Properties of more than 25 acres and those used for commercial and agricultural purposes are exempt.
  6. Which of the following scenarios would violate Section 8 of RESPA?
    A title company pays a mortgage broker $100 per client for referral of settlement business. Section 8 of RESPA prohibits giving or accepting fees for referral of settlement business. Mortgage professionals may charge reasonable fees for performing services however at no time may they give or accept anything of value for referral of business.
  7. A borrower may request a copy of the HUD-1 how many days prior to settlement?
    1. The HUD-1 Settlement Statement shows the actual settlement costs for the loan. It is due at the time of closing, but the borrower may request a copy one day prior to settlement.
  8. When a borrower uses a mortgage broker to originate his or her loan, who is initially responsible for providing the Good Faith Estimate?
    The mortgage broker. Mortgage brokers are responsible for providing the GFE when they are originating a loan. Although the lender may also provide a GFE, the broker is still responsible to provide a GFE whether or not a lender has been selected.
  9. You have taken a loan application from a customer with an excellent credit score. When should you advise him about the status of his application?
    Within 30 days. The Equal Credit Opportunity Act requires creditors to provide a Notice of Action Taken within 30 days following a credit application. If the loan application is denied, ECOA also requires a Notice of Adverse Action. The Fair Credit Reporting Act also supports this requirement when the application is denied due to information found on an applicant’s credit report.
  10. Mr. Jones’ loan application has been denied and you provide him with an Adverse Action Notice as required by ECOA. Which of the following pieces of information would NOT be included on the notice?
    His credit score. ECOA requires disclosure of the reason for credit denial and a description of the credit requested. If the denial is based on the credit it report, ECOA also requires disclosure of the CRA information. FACTA requires disclosure of the credit score, but ECOA does not.
  11. According to fair lending laws, which of the following are you permitted to ask loan applicants?
    Their race. ECOA permits mortgage professionals to ask a loan applicant to voluntarily provide his/her race (and other demographics) for the purposes of meeting HMDA’s reporting requirements. Questions about religion and childbearing intentions are prohibited.
  12. What must be provided to a borrower if his/her loan application is turned down due to the credit score not meeting lender guidelines?
    Adverse action notice. The Equal Credit Opportunity Act requires that an adverse action notice is sent to an applicant if the loan application is denied. The notice must be provided in writing within 30 days of the denial.
  13. Which of the following fees in not included on the Good Faith Estimate?
    Real Estate Broker Fees. Fees paid by the Seller are NOT included on the GFE.  Typically, the Seller pays the cost of the Real Estate Agents, and therefore, these fees would NOT be included on the estimate of fees paid by the buyer.
  14. When is the Servicing Disclosure Statement provided to the borrower?
    Three business days after application. As part of the RESPA disclosures, the Servicing Disclosure Statement, which tells the borrower whether it’s likely their loan will be serviced, sold, or transferred, is due within 3 business days of application.
  15. An initial Servicing Transfer Notice must be provided to a borrower, at least _____ days prior to the transfer of servicing of the loan?
    15. Section 6 of Regulation X, which deals with loan servicing, requires a servicer to inform a borrower AT LEAST 15 days prior to the transfer of servicing.
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Module 1, Part A Quiz

Module 1, Part A Quiz
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