Federal Mortgage-Related Laws practice

All 6 free federal mortgage-related laws questions

1. The Real Estate Settlement Procedures Act (RESPA) and Regulation X apply to which class of transactions, apart from the stated exemptions?

   • A Federally related mortgage loans Correct
   • B Every loan a licensed originator handles Coverage turns on the loan being a federally related mortgage loan, not on who took the application.
   • C Loans secured by vacant land in every case A loan on vacant or unimproved property is exempt unless the proceeds put a structure or a manufactured home on that land within two years.
   • D Business purpose loans secured by a dwelling Credit extended primarily for a business, commercial or agricultural purpose is on the exemption list, whatever secures it.

   Regulation X applies the Real Estate Settlement Procedures Act to federally related mortgage loans and to nothing else, so a transaction that never falls in that class sits outside the rule unless an exemption or partial exemption says otherwise.

   Regulation X, 12 CFR s. 1024.5(a)

2. Section 8 of the Real Estate Settlement Procedures Act (RESPA) bars giving or accepting a thing of value under an agreement to do what?

   • A Refer settlement service business to a person Correct
   • B Set a price above the local market rate A high price on its own proves nothing under this section; the Bureau may investigate it, but pricing is not the agreement the section describes.
   • C Share an office with a settlement service provider Sharing premises is not the conduct the section names, which is an agreement that business will be referred.
   • D Advertise a settlement service to past clients Advertising to past clients involves no exchange of a thing of value for referrals, so the section does not reach it.

   The section bars any fee, kickback or other thing of value given or accepted under an agreement or understanding that settlement service business will be referred, and the agreement need not be written because a practice, pattern or course of conduct establishes one.

   Regulation X, 12 CFR s. 1024.14(b)

3. Which characteristic is a prohibited basis under the Equal Credit Opportunity Act (ECOA) and Regulation B?

   • A Income from a public assistance program Correct
   • B Familial status, such as children in the home Familial status is a Fair Housing Act basis and does not appear on the list of prohibited bases in Regulation B.
   • C Physical handicap or disability of the applicant Handicap is a Fair Housing Act basis; the list in Regulation B does not carry it.
   • D The applicant's occupation and length of employment Occupation and job tenure are ordinary underwriting facts and are not on the list at all.

   Regulation B lists race, color, religion, national origin, sex, marital status, age, income derived from a public assistance program, and the good faith exercise of a right under the Consumer Credit Protection Act, so public assistance income is a prohibited basis while handicap and familial status belong to the Fair Housing Act instead.

   Regulation B, 12 CFR s. 1002.2(z)

4. Which of the following is a dwelling under Regulation Z, whether or not it is attached to real property?

   • A A mobile home used as a residence Correct
   • B A six-unit apartment building The definition stops at four units, so a six-unit building is outside it.
   • C A vacant lot zoned for housing A dwelling is a residential structure, and bare land carries no structure.
   • D An office condominium unit The condominium unit has to be residential; an office unit is not used as a residence.

   Regulation Z defines a dwelling as a residential structure containing one to four units, attached to real property or not, and the term expressly includes a condominium unit, a cooperative unit, a mobile home and a trailer where it is used as a residence.

   Regulation Z, 12 CFR s. 1026.2(a)(19)

5. Which of the following transactions carries no right of rescission under Regulation Z?

   • A A loan to buy the consumer's principal dwelling Correct
   • B A home equity line on the principal dwelling A line of credit secured by the principal dwelling is rescindable, which is why the open-end rescission rules exist.
   • C A cash-out refinance with a different creditor A refinance with a different creditor is fully rescindable, and only a same-creditor refinance is limited.
   • D A second mortgage taken out for home repairs A second mortgage on the principal dwelling does not finance its acquisition, so the purchase-money exemption does not cover it.

   A residential mortgage transaction, meaning the loan that finances the acquisition or initial construction of the consumer's principal dwelling, is on the list of transactions the right to rescind does not reach, while a refinance with a new creditor, a home equity line and a second mortgage on that dwelling all carry the right.

   Regulation Z, 12 CFR s. 1026.23(f)(1)

6. How long does a creditor have to deliver or mail the Loan Estimate after receiving the consumer's application?

   • A No later than the third business day Correct
   • B No later than the seventh business day The seventh business day is the other Loan Estimate clock, measured backwards from consummation.
   • C No later than three calendar days The period is counted in business days, which for this disclosure excludes Sundays and the federal legal public holidays.
   • D No later than the next business day Nothing in the rule demands next-day delivery; the window is three business days.

   The creditor must deliver or place in the mail the Loan Estimate not later than the third business day after it receives the consumer's application, and the act that has to happen inside the window is delivery or mailing rather than the consumer's receipt.

   Regulation Z, 12 CFR s. 1026.19(e)(1)(iii)(A)