P3-37 quiz

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Question 1 of 8

1. Question
What should communications with consumers include when describing nontraditional mortgage products?
- A) Only promotional benefits with no mention of risks
- B) Clear and balanced information about benefits and risks, including payment shock and negative amortization
- C) Only interest rate disclosures required at consummation
- D) Only monthly payment examples with no additional explanation
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Question 2 of 8

2. Question
Why is timely and balanced communication important for consumers using nontraditional mortgage products?
- A) It helps consumers make decisions only after they close on the loan
- B) It provides useful information at key decision points and helps reduce confusion and complaints
- C) It allows institutions to avoid providing disclosures under Truth-in-Lending
- D) It ensures that all consumers choose the lowest payment option
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Question 3 of 8

3. Question
Which risk is reduced for institutions when they communicate clearly and fairly with consumers about nontraditional mortgage products?
- A) Risk of lower market share
- B) Risk of legal issues, consumer complaints, and customer confusion
- C) Risk of reduced loan production
- D) Risk of employee turnover in mortgage operations
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Question 4 of 8

4. Question
Which laws govern disclosures and communications for nontraditional mortgage products?
- A) Equal Credit Opportunity Act only
- B) Truth-in-Lending Act (Reg Z), Section 5 of the FTC Act, and other fair lending laws
- C) Only federal securities laws
- D) Only the Real Estate Appraisal Reform Act
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Question 5 of 8

5. Question
Which statement about liability is correct when a loan is sold or securitized?
- A) Institutions are relieved of all liability after a loan is sold
- B) Securitization eliminates obligations under TILA and RESPA
- C) Sale or securitization does not eliminate potential liability for violations committed at origination
- D) Liability shifts entirely to the investor purchasing the loan
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Question 6 of 8

6. Question
Which federal act prohibits unfair or deceptive acts or practices?
- A) Real Estate Settlement Procedures Act (RESPA)
- B) Truth-in-Lending Act (TILA)
- C) Section 5 of the Federal Trade Commission Act (FTC Act)
- D) Home Mortgage Disclosure Act (HMDA)
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Question 7 of 8

7. Question
Which statement best describes required advertising and disclosure rules under Regulation Z?
- A) They apply only when a loan is delinquent
- B) They govern disclosures in advertisements, with applications, before consummation, and when interest rates change
- C) They apply only to fixed-rate loans
- D) They apply only during loan servicing
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Question 8 of 8

8. Question
What is a recommended practice when institutions promote nontraditional mortgage products?
- A) Provide minimal information to keep marketing materials simple
- B) Provide information designed to help consumers make informed decisions when selecting and using these products
- C) Focus exclusively on affordability features
- D) Avoid discussing payment shock or negative amortization
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