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Question 1 of 6

1. Question
Repayment Ability Verification

Under the HPML rules, what must creditors do when determining a borrower’s repayment ability?
- A. Use a mandatory maximum debt-to-income ratio
- B. Verify income and assets relied upon for repayment ability, with no required DTI maximum
- C. Rely solely on stated income
- D. Base qualification only on credit score
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Question 2 of 6

2. Question
Prepayment Penalty – Payment Changes

When are prepayment penalties prohibited under the final rule?
- A. When the borrower has a fixed-rate loan
- B. When payments can change during the four-year period following consummation
- C. Only when the loan is subordinate-lien
- D. Only for investment properties
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Question 3 of 6

3. Question
Prepayment Penalty Limit

For higher-priced mortgage loans where prepayment penalties are allowed, what is the maximum permitted penalty period?
- A. 6 months
- B. 1 year
- C. 2 years following consummation
- D. 5 years following consummation
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Question 4 of 6

4. Question
Escrow Requirements

Under the final rule, what is required regarding escrow accounts for HPML first-lien mortgages?
- A. Escrows are optional at consummation
- B. Creditors must establish escrow accounts but may allow cancellation after 12 months at their discretion
- C. Borrowers may demand escrow cancellation at any time
- D. Escrows are prohibited for condominium units
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Question 5 of 6

5. Question
Evading HPML Rules

What practice is prohibited to prevent creditors from evading HPML rules?
- A. Offering loans without discount points
- B. Structuring closed-end mortgage loans as open-end credit lines to avoid HPML requirements
- C. Offering interest-only features
- D. Charging lender-paid broker fees
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Question 6 of 6

6. Question
Escrow Requirement – Regulation Z

What does Regulation Z (12 CFR 1026.35(b)), as amended by the Dodd-Frank Act, require for higher-priced mortgage loans?
- A. Mandatory ability-to-repay using a 43% DTI cap
- B. Mandatory escrow accounts for first-lien HPMLs secured by a principal dwelling
- C. Mandatory interest-rate caps for all HPMLs
- D. Mandatory prepayment penalties on fixed-rate HPMLs
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