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Question 1 of 7

1. Question
A mortgage servicer receives a borrower’s escrow payment for property taxes and homeowner’s insurance. Due to internal processing delays, the servicer fails to disburse the tax payment before the county penalty deadline, resulting in additional charges assessed against the borrower.

Under Regulation X escrow servicing requirements, which statement best reflects the servicer’s obligations?
- A) Escrow disbursements are considered timely if made within 30 days after the tax due date
- B) The servicer must make escrow payments on or before the deadline necessary to avoid penalties
- C) Escrow payments are required only for federally insured loans
- D) Servicers may delay escrow payments if sufficient funds remain in the account
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Question 2 of 7

2. Question
A borrower pays off a mortgage loan in full and later contacts the servicer regarding a remaining escrow balance that has not yet been refunded.

Under Regulation X escrow account requirements, what must the servicer generally do?
- A) The servicer may apply remaining escrow funds toward unrelated borrower obligations
- B) The servicer must return remaining escrow account funds within 20 business days after payoff unless credited to a new escrow account for a refinance transaction
- C) Escrow balances may be retained for 60 days following loan payoff
- D) Servicers are permitted to net remaining escrow funds against unpaid late charges
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Question 3 of 7

3. Question
A borrower submits a qualified written request alleging that the mortgage servicer improperly applied monthly payments and failed to properly credit the account. The servicer receives the notice on Monday.

Under Regulation X error resolution requirements, when must the servicer generally provide written acknowledgment of the error notice?
- A) Within five business days excluding holidays
- B) Within seven calendar days
- C) Within 15 business days
- D) Within 30 business days
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Question 4 of 7

4. Question
A mortgage servicer receives a borrower’s Notice of Error regarding servicing issues and begins investigating the matter. As the initial investigation period approaches expiration, the servicer determines additional time is necessary to complete the review.

Under Regulation X, how long does the servicer generally have to investigate and respond, and when may an extension apply?
- A) The servicer has 15 business days with no extension permitted
- B) The servicer has 30 business days and may extend the period up to 15 additional business days if written notice of the extension and reasons is provided before the original deadline expires
- C) The servicer has 60 calendar days with automatic extensions permitted
- D) The servicer must complete all investigations within seven business days regardless of complexity
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Question 5 of 7

5. Question
A borrower submits a Notice of Error claiming the mortgage servicer provided an inaccurate payoff amount needed to satisfy the loan balance.

Under Regulation X error resolution procedures, how quickly must the servicer generally respond?
- A) Within five business days
- B) Within seven business days excluding holidays
- C) Within 30 calendar days only
- D) Before the next scheduled mortgage payment due date
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Question 6 of 7

6. Question
After investigating a borrower’s Notice of Error, a mortgage servicer determines that servicing errors did occur and corrects the borrower’s account accordingly.

Under Regulation X requirements, which additional action must the servicer generally take?
- A) Notify only the consumer reporting agency of the correction
- B) Provide written notice to the borrower describing the correction, when it became effective, and contact information for further assistance
- C) Waive all future servicing fees for the borrower
- D) Suspend all future escrow payments until borrower confirmation is received
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Question 7 of 7

7. Question
A mortgage servicer investigates a borrower’s Notice of Error and concludes that no servicing error occurred.

Which statement best reflects the servicer’s obligations under Regulation X?
- A) The servicer may close the investigation without notifying the borrower
- B) The servicer must notify the borrower that no error occurred, explain the reasons for that determination, and provide contact information for further assistance
- C) The servicer must immediately report the borrower to consumer reporting agencies
- D) The servicer must automatically refer the dispute to arbitration
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