Federal mortgage lending regulations including TILA, RESPA, and the SAFE Act tested on the national mortgage loan originator exam.
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- What does SAFE Act stand for?
- Secure and Fair Enforcement for Mortgage Licensing Act
- In what year was the SAFE Act enacted?
- 2008
- What is TILA?
- Truth in Lending Act, a federal law requiring clear disclosure of credit terms and costs to consumers
- What is RESPA?
- Real Estate Settlement Procedures Act, a federal law regulating how mortgage loan originators handle closing disclosures and settlement practices
- Under the SAFE Act, who must be licensed as a loan originator?
- Any employee or independent contractor who takes residential mortgage loan applications or offers/negotiates loan terms
- What are the three main pre-licensing education requirements under the SAFE Act?
- Twenty hours of federal requirements, eight hours of state-specific requirements, and two hours of elective training
- How many hours of continuing education must SAFE Act-licensed originators complete annually?
- Eight hours minimum, consisting of three hours federal, two hours state-specific, and three hours elective
- What does TILA require lenders to disclose?
- The finance charge, Annual Percentage Rate (APR), payment schedule, and terms of the loan in writing
- When must the Loan Estimate be provided under TILA?
- Within three business days of loan application
- What is the definition of APR under TILA?
- The Annual Percentage Rate, the yearly cost of credit including interest and certain other charges
- How long does a borrower have to rescind a closed-end credit transaction under TILA?
- Three business days from the date of the transaction or when disclosure is delivered, whichever is later
- What is the primary purpose of RESPA?
- To ensure that borrowers receive accurate, timely information about settlement costs and to eliminate kickbacks in real estate transactions
- Does RESPA allow steering borrowers to a particular title insurance company?
- No, RESPA prohibits steering borrowers to affiliated title companies
- What is an affiliated business arrangement (ABA) under RESPA?
- An arrangement in which a settlement service provider refers business to an affiliated entity in which it has a financial interest
- Under RESPA, are kickbacks and referral fees permitted?
- No, RESPA prohibits kickbacks and unearned referral fees for referrals of settlement services