Mortgage Loan Origination Activities practice

All 6 free mortgage loan origination activities questions

1. Apart from the stated exceptions, when is an estimated closing cost disclosed on the Loan Estimate treated as made in good faith?

   • A When the creditor used its best judgment Good faith is measured against what the consumer pays rather than against how careful the estimate was.
   • B When the increase stays under 10 percent The 10 percent cushion is one exception, for certain third-party services and recording fees, not the general test.
   • C When the consumer pays no more than the estimate Correct
   • D When the consumer signs the estimate A signature on an estimate changes nothing about whether the charge exceeded the amount disclosed.

   An estimated closing cost is in good faith only where the charge paid by or imposed on the consumer does not exceed the amount originally disclosed, and every tolerance above that baseline is a stated exception to it.

   Regulation Z, 12 CFR s. 1026.19(e)(3)(i)

2. How soon after receiving an application must the lender give the applicant the written list of homeownership counseling organizations?

   • A Within three business days of the application Correct
   • B Within seven business days of the application Seven business days is a waiting period before consummation and not the counseling list clock.
   • C At or before consummation Consummation is far too late, since the list exists to help the applicant get advice while the loan is being arranged.
   • D Within 30 days of the application Thirty days is the age limit on the data the list is drawn from, not the deadline for giving it out.

   The list must reach the applicant not later than three business days after a lender, mortgage broker or dealer receives the application, and the data behind it can be no older than 30 days when the list is handed over.

   Regulation X, 12 CFR s. 1024.20(a)(1)

3. May a creditor ask an applicant about permanent residency and immigration status in connection with a credit transaction?

   • A No, it is a prohibited basis National origin is the prohibited basis; immigration status is a separate question the rule allows.
   • B Only where the loan is government insured The permission is general and does not depend on the loan being insured or guaranteed.
   • C Yes, that inquiry is permitted Correct
   • D Only after the loan is approved Nothing holds the question back until approval, since it may be asked in connection with the transaction.

   The rule expressly permits a creditor to ask about the permanent residency and immigration status of an applicant or any other person in connection with a credit transaction, so the question is allowed even though national origin is a prohibited basis.

   Regulation B, 12 CFR s. 1002.5(e)

4. When a creditor considers a consumer's income or assets for the ability-to-repay determination, what is expressly left out?

   • A Income from a part-time second job Income from a second job is the consumer's income and can be counted where it is verified.
   • B Assets held in a retirement account Assets are on the list the creditor may consider, retirement savings included.
   • C Reasonably expected income from a signed offer Reasonably expected income is named in the rule alongside current income.
   • D The value of the dwelling securing the loan Correct

   The creditor must consider the consumer's current or reasonably expected income or assets other than the value of the dwelling that secures the loan, so a file underwritten on the collateral alone fails the requirement.

   Regulation Z, 12 CFR s. 1026.43(c)(2)

5. Before consummating a higher-priced mortgage loan secured by a first lien on the consumer's principal dwelling, what must the creditor establish?

   • A A reserve equal to six monthly payments The escrow rule sets no reserve measured in monthly payments.
   • B An escrow account for taxes and required insurance Correct
   • C A separate account for the appraisal fee The appraisal fee is a closing cost and has no account of its own.
   • D An escrow account, only where the borrower asks The account is required by the rule itself, and no request from the borrower is needed.

   A creditor may not extend a first-lien higher-priced mortgage loan on the consumer's principal dwelling unless an escrow account for property taxes and the mortgage-related insurance premiums it requires is established before consummation.

   Regulation Z, 12 CFR s. 1026.35(b)(1)

6. How long must a creditor keep each completed Closing Disclosure and the documents related to it?

   • A Two years Two years is the general retention period for the rest of the regulation's requirements.
   • B Three years Three years covers evidence of compliance with the disclosure rules other than the Closing Disclosure itself.
   • C Five years Correct
   • D Seven years No seven-year period appears in this record retention rule.

   Each completed Closing Disclosure and all documents related to it must be retained for five years after consummation, which is longer than the three-year and two-year periods the same rule sets for other records.

   Regulation Z, 12 CFR s. 1026.25(c)(1)(ii)(A)