CFPB Mortgage Compliance Training (MCT) 4 Practice Test

These questions are part of the practice quiz. Start practicing

• What is the exception that lenders must disclose under TILA for certain loans that are not secured by the consumer's principal dwelling?
• What type of borrower verification is typically necessary for covered loans?
• In what scenario would a consumer loan amount need to be reviewed for compliance with points and fees?
• A servicer must issue a short year escrow statement within how many days of loan payoff?
• When must you provide early Truth in Lending disclosures for closed-end loans secured by a consumer's principal dwelling?
• Which of the following best describes a "qualified mortgage"?
• What does "APR" stand for in the context of mortgage lending as required by TILA?
• Which of the following is a potential consequence for lenders who do not comply with the ability-to-repay rule?
• What are "Non-QM loans"?
• What significant change was introduced by TRID regarding disclosure forms?
• If a consumer sends evidence of hazard insurance compliance, what must a servicer do within 15 days?
• What is the purpose of the Equal Credit Opportunity Act (ECOA)?
• What is a key requirement for loans categorized under the ability-to-repay rule?
• In the context of a mortgage, what does "default" mean?
• Which regulation assists government agencies in identifying possible discriminatory lending patterns?
• What is the primary purpose of the Expedited Funds Availability Act?
• What role does an "appraisal" play in the mortgage process?
• How many business days does XYZ have to investigate John’s unauthorized EFT?
• What is an essential component of Homeowners Protection Act regarding private mortgage insurance?
• What type of account would best meet Karen White's need for unlimited check-writing privileges and debit card access?
• What penalties can lenders face for non-compliance with CFPB regulations?
• What is the primary goal of the Home Ownership and Equity Protection Act (HOEPA)?
• Under TILA, for variable rate loans that are secured by the consumer's principal dwelling and have a term of one year or less, what must creditors disclose?
• What must a lender provide under the Mortgage Disclosure Improvement Act?
• How long must a servicer retain records documenting its actions related to a consumer's mortgage loan?
• The minimum penalty for early withdrawal on a certificate of deposit account is the equivalent of fourteen days' interest.
• What is the "Closing Process" in mortgage compliance?
• Which regulation applies to loans made to executive officers and related interests?
• A financial institution's advertisement offers totally free checking, but it charges a fee for writing over 10 checks. Is this considered a potential UDAAP?
• Which law requires disclosures about when funds will be available for withdrawal after a deposit?
• How does the CFPB enforce compliance among mortgage lenders?
• What is considered a "safe harbor" in mortgage compliance?
• Which type of QM can be originated by all creditors and is only originated during a transitional period?
• What is the primary focus of the ability-to-repay rule?
• Which type of loans are included under "covered loans"?
• To cancel PMI, what must the principal balance of the loan be as a percentage of the original value?
• Which of the following requires lenders to determine the location of a building and whether federal insurance is available?
• Which duty is performed during the servicing step of the lending process?
• Which of the following statements is true regarding UDAAP violations?
• In the context of mortgage compliance, what is the purpose of the RESPA?
• Which legislative act established the Consumer Financial Protection Bureau (CFPB)?
• According to federal regulations, which figure is critical in determining the Truth in Lending disclosure?
• What does the "20/20 rule" in mortgage compliance mandate?
• What is the main purpose of the Truth in Lending Act (TILA)?
• What does the "Ability to Repay" rule entail for lenders?
• What is the primary intent of the Fair Housing Act?
• What does the term "Qualified Mortgage" refer to?
• What does "loan underwriting" refer to?
• What is the significance of the "Loan Originator Compensation Rule"?
• Under the ability-to-repay rule, what financial aspect is critically evaluated?
• A financial institution is not required to give notice of a preauthorized EFT if the payor provides positive notice to the consumer that the transfer has been initiated. Is this statement true or false?
• What is the purpose of the "Loan Estimate"?
• When an entity sells servicing rights, when must it notify the loan servicer of a loan secured by property located in a special flood hazard area?
• What does the term "principal reduction" signify in loss mitigation?
• What does RESPA stand for?
• What does "dual tracking" refer to in mortgage servicing?
• In the "Five C's of Credit," which C represents the borrower's ability to repay the loan?
• Which characteristic applies to a mortgage loan?
• Which regulation prohibits kickbacks and referral fees?
• At least how many days prior to closing must the Closing Disclosure be provided to the borrower?
• Which of the following best defines a qualified mortgage (QM)?
• A loan of $20,000 or more meets the points and fees coverage test if the total points and fees exceed what percentage?
• What are "loss mitigation" options for borrowers experiencing difficulties?
• What is the primary goal of loss mitigation strategies?
• How frequently must mortgage lenders report their compliance with the Equal Credit Opportunity Act?
• What is a key requirement for a mortgage to qualify as a Qualified Mortgage (QM)?
• A change in terms notice is required when an institution increases consumer liability. Which of the following options is correct?
• In mortgage lending, what does the term "Redlining" refer to?
• What is the purpose of the Fair Housing Act?
• Which consumer financial laws are applicable to payday loans?
• What is the primary purpose of the Truth in Lending Act (TILA)?
• Which of the following would be considered a form of loss mitigation?
• The statutory framework for supervision of large depository institutions and their affiliates and for non-depository consumer financial service companies are largely the same. Is this statement true or false?
• Which regulation primarily governs the accessibility of financial disclosures to consumers?
• An oral stop-payment order for a preauthorized EFT becomes ineffective after how many days without written confirmation?
• When it comes to covered loans, what is a lender's primary responsibility?
• When is a Board of Directors or Principals meeting required?
• Deposits are both a source of funds and a liability for financial institutions.
• Which document typically outlines the costs associated with a mortgage loan?
• Which statement regarding the FDCPA is true?
• How many days does Domus Financial have to resolve an error if it provisionally credited the affected account?
• What responsibility does a loan servicer have regarding tax payments?
• Can a federally insured institution pay an interest rate higher than 5-1/4 % on a deposit account?
• What does "DTI" stand for in the context of mortgage lending?
• What is defined as a loan that meets specific underwriting standards to minimize default risk?
• Which regulation implements the Truth in Lending Act (TILA)?
• If an examiner identifies a potential FHAct violation, what should she do?
• Under TISA, if an institution states a bonus in an advertisement, what must be clearly and conspicuously stated?
• Which category of loans typically qualifies for easier compliance under the ability-to-repay rule?
• What is the significance of the "Prevention Rule" under the TILA?
• What defines the circumstances under which medical information can be used in making a credit decision?
• How does RESPA benefit consumers in the real estate settlement process?
• What are the CFPB's expectations for handling consumer complaints?
• How many days after a loan application must a Loan Estimate be provided to a borrower?
• What is a "Notice of Error" in mortgage servicing?
• The ATR rule does not apply to which of the following?
• Which of the following describes a "Loan Estimate"?
• What determines the interest rate a federally insured thrift can pay on an insured savings account?
• What is one major purpose of the UDAAP regulations?
• What is typically considered a red flag in mortgage lending?
• Why are Consumer Advisory Boards significant for the CFPB?
• Why is the Debt-to-Income ratio important in mortgage lending?
• If a borrower is denied credit, what must lenders typically provide?
• Under what condition must records regarding a mortgage loan be maintained for 12 months?
• What is the term used to describe when a borrower cannot repay a payday loan by a due date and the lender allows the borrower to modify the loan?
• What characterizes "covered loans" according to the ability-to-repay rule?
• Which type of loan is scheduled to be repaid in one year or less?
• What does the CFPB ensure regarding marketing service agreements?
• What is the consequence of forced closure on a Money Market Deposit Account (MMDA)?
• What does UDAAP stand for in the context of financial regulations?
• An account opened in the names of the partners or a trade name is indicative of which business structure?
• Which type of mortgage is considered a "high-cost mortgage" according to HOEPA?
• A transfer from a customer's account that occurs with their permission and from which they receive no benefit is considered unauthorized. Is this statement true or false?
• Can a financial institution be held responsible for a UDAAP violation by a third-party service provider?
• Which type of transaction is considered a covered transaction?
• What is meant by "marketing service agreements" in mortgage lending?
• What is the purpose of a "servicing transfer notice"?
• What is a penalty imposed by a financial institution for early loan termination often referred to?
• What does the process of "mortgage servicing" include?
• What action is required from a lender when a loan is sold on the secondary market?
• What is meant by "voluntary surrender" in mortgage compliance?
• A servicer is considered unable to disburse funds from a borrower's escrow account for hazard insurance if:
• Which of the following is privileged under the ECOA self-tests?
• Which is a prohibited practice involving a high-cost mortgage?
• What is a "FICO score" used for in mortgage applications?
• If a debit card is stolen and reported after 3 days, what is the maximum liability for unauthorized transactions?
• Does ECOA require the CFPB to refer matters to the DOJ when there is a pattern of discouragement or denial?
• What elements are included in the "integrated disclosures" required by the CFPB?
• In mortgage lending, what are "points"?
• What is one consequence of failing to comply with the mortgage disclosure requirements?
• What disclosures are mandated under the Home Mortgage Disclosure Act (HMDA)?
• What is a key feature of a Qualified Mortgage?
• How long does Adelaide Financial have to notify a customer following the resolution of an error that occurred with their checking account?
• What role do lenders play regarding covered loans?
• What must lenders do if a consumer's application for credit is denied?
• What is the result if an error is found in a consumer's account?
• Which scenario reflects "default" in a mortgage context?
• Why was the ability-to-repay rule implemented?
• A first lien mortgage secured by a principal dwelling that is $50,000 or more meets the APR test if the APR exceeds the average prime offer rate (APOR) by how many percentage points or more?
• What is the role of the CFPB in relation to mortgage compliance?
• Under TILA, if any finance charge or other charges are set forth in an advertisement, what must also be clearly stated?
• Which of the following best describes the intent of the ability-to-repay rule?
• What does the daily balance method calculate interest based on?
• Under Regulation Z, how many days does the entity that buys or takes assignment of the loan have to provide notice of sale or transfer to the borrower?
• Which regulation is known for enforcing the requirements of TILA?
• A customer has the right to request the documents the institution relied on in making the determination that an error did not occur. What is true about this statement?
• The Mortgage Servicing Rules require a servicer to establish policies to achieve which objective?
• Why is it important for lenders to conduct "self-assessments"?
• Which of the following items is a requirement for the initial interest rate adjustment notice for a closed-end ARM?
• Which step of the lending process involves signing forms?
• The new TILA advertising rules are highly technical but do not dictate the placement of individual words. Is this statement true or false?
• All depositories are required to report and adjust their reserve accounts to the Federal Reserve:
• What is the primary purpose of the Truth in Lending Act (TILA)?
• What UDAAP element is represented if XYZ Mortgage Company fails to protect consumer's personal information?
• What key factor must be present for a practice to be considered 'abusive' under UDAAP?
• What action can an institution take if a customer exceeds withdrawal limits for 3 consecutive months?
• What is one outcome of principal reduction options for borrowers?
• Regulation X - Real Estate Settlement Procedures Act requires certain disclosures to be provided within three business days of receiving an application:
• When must a servicer provide the initial escrow account statement?
• Which of the following actions is required when an adjustable-rate mortgage is established?
• Chloe has a step rate mortgage with payments of $1,354 for the first 2 years, $1,295 for the next 3 years, and $1,871 thereafter. What payment should be used to assess her ability to repay?
• Which of the following would NOT generally be considered a UDAAP violation?
• Which regulation limits the use and sharing of credit information and mandates disclosures to consumers?
• After receiving a payoff request, how long does a servicer usually have to provide the payoff statement?
• Which of the following organizations is responsible for implementing the Fair Credit Reporting Act?
• Which of the following is a purpose of the Fair Credit Reporting Act?
• If a loan officer offers an adjustable rate mortgage to a consumer, what must be ensured to avoid UDAAPs?
• When does a consumer receive an early disclosure under TILA?
• After a series of transfers, how long does XYZ Financial have to provide a statement for Thomas for the month of October?
• What is the primary purpose of the Consumer Financial Protection Bureau (CFPB) in mortgage compliance?
• Under TILA, an escrow account for a higher-priced mortgage loan must be established for which type of transaction?
• Which statement is true regarding flood insurance requirements for mortgages?
• In mortgage loans, what does "escrow" refer to?
• Which of the following statements is TRUE regarding the periodic statement requirements for closed-end mortgages?
• Which error resolution requirements apply when a consumer's access device is lost and unauthorized withdrawals were made?
• What is the definition of "Good Faith Estimate" in mortgage lending?
• Which entity's regulations ensure fair treatment in lending practices?
• Which of the following practices is required by the Equal Credit Opportunity Act (ECOA)?
• Which is a characteristic of a noncash item?
• What is the goal of the disclosures mandated by TILA?
• Which of the following is a requirement for all high-cost mortgage transactions?
• Which party is typically responsible for enforcing violations against UDAAP?
• What does the term "predatory lending" signify?
• Are MMDAs limited to a total of six covered transactions per month or statement period?
• How does the "Consumer Complaint Database" assist borrowers?
• What does the Fair Housing Act require institutions to do in their advertising?
• How often must a financial institution provide disclosures for annual percentage yield (APY) under TISA?
• Which of the following is NOT a characteristic of a mortgage loan?
• What distinguishes non-qualified mortgages (non-QMs) from qualified mortgages (QMs)?
• Which type of account is covered by the TISA?
• Which federal agency is responsible for overseeing fair lending and anti-discrimination laws in mortgage lending?
• How is a "grace period" defined?
• What is the maximum number of mortgage loans a small servicer may service?
• Consumers can dispute whether a debt is valid by sending you a written notice of the dispute within _____ days from the time of receipt of the initial written notice of the debt.
• Which law regulates the practices of mortgage originators and their conduct?
• Which of the following is NOT a reason for lenders to engage in compliance audits?
• Which of the following transactions is not a covered transaction under Reg D and may be unlimited in number?
• Which type of payment is explicitly covered by regulations regarding financial transactions?
• Which transaction meets the prepayment penalty coverage test and is therefore a high-cost mortgage?
• What does the term "escrow" refer to in the context of mortgages?
• After initial contact with a consumer, within how many calendar days must a debt notification letter be sent?
• What type of deposits does Regulation D not cover?
• Unlimited liability for an unauthorized EFT may apply if the consumer notifies their financial institution:
• What must lenders do if their advertising includes misspellings or inaccuracies regarding lending practices?
• What are the primary disclosures required by RESPA for a mortgage loan?
• Which of the following actions is typically involved in a covered transaction?
• Which entity oversees compliance with the CFPB's regulations?
• What happens to an account when the account holder exceeds the permissible number of transactions on an MMDA?
• In mortgage lending, what does the term "escrow account" refer to?
• What must borrowers demonstrate to qualify for a covered loan?
• What aspect of a mortgage loan does the term "escrow" encompass?