ECOA & HMDA

ECOA (Equal Credit Opportunity Act)

Prohibits credit discriminations based on specific personal characteristics

Fair Housing Act (FHA)

Prohibits housing-related discriminations

HMDA (Home Mortgage Disclosure Act)

Requires lenders to report data about mortgage applications to detect discrimination. Data reporting law essentially.

What are the ECOA protected classes?

Race, Color, Religion, National Origin, Sex, Marital Status, Age, Receipt of public assistance.

ECOA Notice of Action taken within

30 days of receiving a completed application

What are the FHA protected classes?

Race, Color, National Origin, Religion, Sex, Familial Status, and Disability

HMDA loan data on which classes?

Race, ethnicity, sex, income, loan type, property location to identify discriminatory lending patterns

What is the Loan/Application Register (LAR)?

record of application info lenders must submit. Must be submitteed to CFPB by 3/1 each year

A borrower applies for a loan and is denied. The lender must notify the borrower of the action taken within how many days?

30

Which protected class is unique to the Fair Housing Act?

Familial Status

When is LAR data due each year?

3/1

What is the penalty for violating the FCRA (Fair Credit Reporting Act?)

Potential civil penalties and prison time

What were the two original protected classes under the ECOA in 1974?

Sex and marital status

Under the SAFE Act, which entity oversees MLO licensing?

NMLS

Which is not included in the 4 C’s of underwriting?

Credit

Capacity

Collateral

Commitment

Commitment

Which of the following is not one of the initial six items of information needed for a complete mortgage loan application?

Names of all the borrowers

Borrower’s martial status

Gross monthly income of the borrower

Loan amount sought

Borrower’s marital status

According to TILA, when a triggering term appears in an advertisement for a mortgage loan, the ad must also disclose the following information?

The term of the loan

the annual percentage rate

The amount of the payment

all of the above

all the above

Which legislative act, passed in 2008, established minimum standards for mortgage loan originators’ licensing and registration?

Dodd-Frank Wall Street Reform and Consumer Protection Act

Housing and Economic Recovery Act (HERA)

Secure and Fair Enforcement for Mortgage Lice sensing Act (SAFE)

TILA

SAFE ACT

A homebuyer currently receives public assistance for their living expenses but will be starting a full-time, salaried position within the next two weeks. Given the circumstances, which of the following would be considered a violation of the ECOA?

The lender encouraging the borrower to wait until their new job starts before they submit their application

Asking the borrower detailed questions about their public assistance status during the application process

Requiring the borrower to provide a letter from their future employer confirming their new job before processing the application

None of the above

The lender encouraging the borrower to wait until their new job starts before they submit their application.

The FHA prohibits discrimination against all of the following classes except:

familial status

religion

age

national origin

Age

Which federal agency oversees the regulation of Fannie Mae and Freddie Mac

Department of Housing and Urban Development (HUD)

Federal Reserve System (FED)

Federal Housing Finance Agency (FHFA)

Consumer Financial Protection Bureau (CFPB)

FHFAW

which of the following is a key requirement outlined in “The Statement on Subprime Mortgage Lending,” issued by the Federal Reserve in 2007?

Encourage lenders to offer subprime mortgages with variable interest rates

Reducing the minimum credit score requirements for subprime mortgage applicants

Promoting the use of teaser rats in subprime mortgage advertisements

Verifying and documenting borrower income, assets, and liabilities

Verifying and documenting borrower income, assets, and liabilities.

How many hours of continuing education does the SAFE Act require MLOs to have?

8

12

24

40

8

Which of the following is an example of predatory lending in mortgage finance?

Offering competitive interest rates based on the borrower’s credit score

Charging excessive fees and points that inflate the cost of the loan

Providing transparent loan terms and conditions to the borrower

Allowing borrowers to choose from various mortgage products to suit their financial needs

Charging excessive fees and points that inflate the cost of the loan

Which legislative act prohibits redlining in mortgage lending?

ECOA

FHA

SAFE ACT

HERA

FHA

Someone who purchases property or obtains a loan on behalf of another person to conceal the true buyer’s identity or financial situation, often for fraudulent purposes, is referred to as a (n)

Proxy buyer

investment trust buyer

Bon a fide buyer

Straw buyer

Straw buyer

Which of the following is not an example of predatory lending in mortgage finance?

Charging excessive fees and points that inflate the cost of the loan

Misleading borrowers about the terms and conditions of the loan

Offering competitive infested rates based on the borrower’s creditworthiness

Requiring borrowers to purchase unnecessary insurance products

Offering competitive interest rates based on the borrower’s creditworthiness.

A mortgage finance strategy that involves taking out two mortgages at the same time to eliminate the need for PMI when the borrower is making a down payment less than 20% is known as:

Loan stacking

Equity skimming

Conforming Loan modification

Piggyback financing

Piggyback financing

What do caps on ARMs primarily limit?

How much the interest rate or monthly payment can change over time

The maximum loan amount a borrower can qualify for

The number of years before the mortgage must be refinanced

The total amount that can be financed

How much the nearest rate or monthly payment can change over time

What is the primary purpose of Regulation V under the Fair Credit Reporting Act (FCRA)?

To set interest rate limits for mortgage loans based on borrower’s credit scores

To ensure the accuracy and fairness of consumer credit reporting by lenders.

To mandate the maximum loan-to-value ration for mortgage transactions

To establish guidelines for down payment requirements in mortgage applications

To ensure the accuracy and fairness of consumer credit reporting by lenders

What is a loan workout in the context of banking and finance?

A process where a borrower takes out a new loan to pay off an existing loan at a lower interest rate

An agreement between a lender and borrower to modify terms of an existing loan to prevent default

A financial strategy where a borrower refinances their mortgage with a higher balance than what they currently owe so they can access their equity

A government program providing subsidies to borrowers facing financial difficulties

An agreement between a lender and borrower to modify terms of an existing loan to prevent default

Borrower Jeannie is a salaried employee and is paid bi-weekly in the amount of $5,384.62. What is her monthly qualifying income?

$10,398.80

$10,769.24

$11,666.67

$12,833.34

$11.66.67

What distinguishes a balloon mortgage from a traditional fixed-rate mortgage?

Balloon mortgages have adjustable interest rates, while fixed-rate mortgages have consistent interest rate throughout the loan term

Balloon mortgages allow borrowers to make interest-only payments for the first few years of the loan, unlike fixed-rate mortgages whose payments consists interest plus principal

In a balloon mortgage, the portion of the monthly payment allocated to the principal balance increases gradually over time, whereas in a fixed-rate mortgage, this allocation remains consistent throughout the loan term.

Balloon mortgages require a large final payment at the end of the loan term, whereas fixed-rate mortgages do not because they are fully amortized.

Balloon mortgages require a large final payment at the end of the loan term, whereas fixed-rate mortgages do not because they are fully amortized

On a closing disclosure for a real estate transaction, what distinguishes accrued expenses from prepaid expenses?

Accrued expenses are costs incurred before the closing date but not yet paid, while prepaid expenses are costs paid in advance by the seller for services or obligations that extend beyond the closing date.

Accrued expenses are costs that have been paid in advance by the seller, while prepaid expenses are costs incurred but not yet paid, while prepaid expenses are costs paid in advance by the seller for services or obligations that extend beyond the closing date.

Accrued expenses are costs that have been paid in advance by the seller, while prepaid expenses are costs incurred but not yet paid.

Accrued expenses are costs paid by the buyer prior to the closing date and allocated to future periods, while prepaid expenses are costs already incurred and paid by the seller up to the closing date.

Accrued expenses are future costs that are included in the loan amount and will be paid off over time, while prepaid expenses are costs paid upfront and included in the closing costs.

Accrued expanse are costs incurred before the closing date but not yet paid, while prepaid expenses are costs paid in advance by the seller for services or obligations that extend beyond the closing date.

Which of the following tasks requires a mortgage Loan Originator (MLO) license?

Advising clients on real estate investment strategies

Conducting credit cheks for potential borrowers

Negotiating loan terms and conditions with lenders

All of the above

All of the above