Apply Origination Compliance Rules - Nationwide Multistate Licensing System NMLS

1. What is the aggregate tolerance for the "$10\%$ bucket" charges from LE to CD?

   Total increase limited to $10\%$ in the aggregate. TRID permits limited aggregate increases for charges not under lender control, balancing flexibility and protection.

2. Which action is prohibited before a Loan Estimate is delivered: collecting fees other than what?

   Only a bona fide credit report fee may be imposed. TRID restricts pre-disclosure fees to protect consumers from costs before receiving loan estimates.

3. Which document must be provided at least $3$ business days before consummation under TRID?

   Closing Disclosure (CD). TRID requires this to allow consumers adequate time to review final loan terms and closing costs before commitment.

4. Identify the correct action: borrower requests a revised LE due to a changed circumstance. What must occur?

   Issue revised LE within $3$ business days of learning of the change. TRID requires prompt revisions for accuracy when circumstances change estimates significantly.

5. What is the maximum time after application that a Loan Estimate generally must be delivered or mailed?

   Within $3$ business days of application. Regulation Z mandates this timeline to ensure borrowers receive timely estimates of loan costs and terms.

6. Find the compliance issue: charging an "application fee" before delivering the Loan Estimate. What is the rule?

   Prohibited; only a bona fide credit report fee may be charged before the LE. TRID prohibits such fees to ensure borrowers receive disclosures before financial commitment.

7. What is required under the Equal Credit Opportunity Act regarding applicants on a dwelling-secured loan?

   Collect government monitoring information (GMI) for HMDA/Reg B where applicable. ECOA and HMDA require GMI collection to monitor and prevent discrimination in housing-related lending.

8. Identify the three items that trigger an "application" for TRID timing purposes.

   Consumer name, income, and SSN (to obtain credit report). These items form part of the six-piece definition that initiates TRID disclosure obligations under Regulation Z.

9. Which federal law requires an appraisal copy to be provided promptly and no later than $3$ business days before closing?

   ECOA Valuations Rule (copy of appraisals/valuations). The ECOA Valuations Rule ensures applicants can review and challenge property valuations for fairness.

10. Which CD changes require a new $3$-business-day waiting period before consummation?

    APR increase beyond tolerance, prepayment penalty added, or loan product changes. These material changes under TRID necessitate additional review time to protect borrower interests.

11. What is the maximum time to provide an adverse action notice after taking adverse action under ECOA?

    Within $30$ days of receiving a completed application. ECOA mandates this timeline to ensure prompt notification of credit denials and reasons for fairness.

12. Which federal law requires lenders to provide a Loan Estimate and Closing Disclosure for most closed-end consumer mortgages?

    TILA-RESPA Integrated Disclosure (TRID). TRID implements TILA and RESPA requirements to standardize and simplify mortgage disclosures for consumer protection.

13. Which RESPA rule limits how much a servicer can require as an escrow cushion?

    Escrow cushion limited to $\frac{1}{6}$ of annual escrow disbursements (about $2$ months). RESPA limits escrow reserves to prevent excessive funds retention while covering potential shortfalls.

14. Identify the required waiting period: CD is delivered in person on Monday. When is the earliest consummation day?

    Thursday (after $3$ business days: Tue, Wed, Thu). TRID mandates a 3-business-day review period post-CD receipt before consummation can occur.

15. Identify the general QM/ATR rule: what must the creditor make a reasonable, good-faith determination about?

    Borrower ability to repay (ATR) the loan according to its terms. The ATR rule under TILA requires verification to prevent loans that borrowers cannot afford.

16. What are the remaining three items that complete the $6$-item TRID application definition?

    Property address, estimated value, and loan amount sought. These complete the six items defining an application, triggering the Loan Estimate delivery requirement under TRID.

17. What must be provided when a credit score is used in connection with a mortgage application?

    Credit score disclosure (including key factors and score range). FCRA requires this transparency to inform applicants about credit score impacts on loan decisions.

18. Which federal law governs adverse action based on consumer reports and requires risk-based pricing notices?

    Fair Credit Reporting Act (FCRA). FCRA promotes accuracy, fairness, and privacy in consumer credit information usage.

19. Which federal law requires a privacy notice and allows consumers to opt out of certain information sharing?

    Gramm-Leach-Bliley Act (GLBA) Privacy Rule. GLBA safeguards consumer financial privacy by regulating sharing of nonpublic personal information.

20. Which ECOA notice is required when an application is incomplete and the creditor needs more information?

    Notice of incompleteness (specifying needed items and deadline). ECOA requires this to give applicants opportunity to supply missing information and complete the process.

21. Which law requires flood insurance for certain loans secured by buildings in SFHAs and mandates flood notices?

    Flood Disaster Protection Act (FDPA) and related flood notice rules. FDPA mandates insurance and notices to mitigate flood risks for properties in special flood hazard areas.

22. What is the minimum waiting period after early TILA disclosures for a high-cost mortgage under HOEPA?

    At least $3$ business days before consummation. HOEPA provides cooling-off periods for high-cost loans to protect vulnerable borrowers from predatory terms.

23. Which law prohibits kickbacks and unearned fees for settlement service referrals in federally related mortgage loans?

    RESPA Section $8$. RESPA Section 8 prevents conflicts of interest and inflated costs from referral-based compensation.

24. What is the general tolerance for zero-tolerance fees on a Loan Estimate compared to the CD?

    $0$ tolerance (may not increase, except permitted changes). Zero-tolerance items under TRID prevent lenders from increasing certain fees, ensuring estimate accuracy.

Study these flashcards