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P3-38 quiz

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Question 1 of 7

1. Question

A borrower contacts a lender to ask about mortgage options before submitting an application. The lender provides only minimal information and states that full details will be provided later in the process.

Which approach best reflects proper consumer communication under federal guidance?

A) Providing detailed product information only after the loan application is submitted
Correct Incorrect Correct answer

B) Providing clear and timely information when the consumer is shopping to help compare options
Correct Incorrect Correct answer

C) Providing disclosures only at closing as required by law
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D) Providing information only if the consumer specifically asks for it
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Question 2 of 7

2. Question

A lender prepares marketing materials for nontraditional mortgage products and wants to ensure compliance with federal guidance.

Why is it important that marketing materials provide clear and balanced information?

A) Because marketing materials replace Truth in Lending disclosures
Correct Incorrect Correct answer

B) Because consumers must understand costs, terms, features, and risks before selecting a loan
Correct Incorrect Correct answer

C) Because disclosures are only required in advertisements
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D) Because marketing materials eliminate the need for loan estimates
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Question 3 of 7

3. Question

A lender advertises a mortgage with a low initial payment but does not explain how payments may change over time.

Which regulatory concern does this raise?

A) Failure to disclose interest rate caps
Correct Incorrect Correct answer

B) Failure to explain payment shock
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C) Failure to provide underwriting standards
Correct Incorrect Correct answer

D) Failure to disclose prepayment penalties
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Question 4 of 7

4. Question

A lender wants to properly explain how a borrower’s payment may change over time.

Which of the following best illustrates appropriate disclosure of payment shock?

A) Stating that payments may increase without further explanation
Correct Incorrect Correct answer

B) Providing only the initial interest rate
Correct Incorrect Correct answer

C) Showing a hypothetical example of the maximum payment once caps are reached
Correct Incorrect Correct answer

D) Listing only the loan term and APR
Correct Incorrect Correct answer

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Question 5 of 7

5. Question

A borrower is considering a loan that allows negative amortization.

What must the borrower be told about this feature?

A) That negative amortization only affects interest calculations
Correct Incorrect Correct answer

B) That principal balances may increase and equity may decrease
Correct Incorrect Correct answer

C) That negative amortization is rare and unlikely
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D) That payments will always remain fixed
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Correct

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Question 6 of 7

6. Question

A lender explains that a borrower’s payment may change after an introductory period ends.

Why is this explanation required?

A) To meet advertising requirements
Correct Incorrect Correct answer

B) To comply with internal underwriting standards
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C) To help consumers understand when payment increases may occur
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D) To replace written disclosures
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Question 7 of 7

7. Question

A lender provides product descriptions in addition to required disclosures.

How do these descriptions function under federal guidance?

A) They replace required disclosures
Correct Incorrect Correct answer

B) They are optional and unrelated
Correct Incorrect Correct answer

C) They supplement required disclosures to improve consumer understanding
Correct Incorrect Correct answer

D) They are only required for adjustable-rate loans
Correct Incorrect Correct answer

Correct

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