Section 1 Lesson 1

A newly licensed mortgage loan originator begins working for a small independent mortgage company and assumes that federal mortgage regulations primarily apply only to banks because banks are routinely audited by federal regulators.

Which statement best reflects mortgage compliance requirements?

A mortgage lender develops internal compliance procedures for residential mortgage lending operations but focuses only on federal laws while ignoring state-specific mortgage regulations.

Why is this approach problematic?

A borrower applies for financing to construct a new primary residence. The lender originates a construction loan with a three-year term and informs the borrower that once construction is completed, the loan may automatically convert into permanent financing without requiring a separate refinance transaction.

The loan officer tells the borrower that RESPA disclosures are unnecessary because construction loans are considered temporary financing.

Which statement best reflects RESPA requirements?

A mortgage company closes a residential mortgage loan in its own name but simultaneously assigns the loan to another lender that provided the actual funding for the transaction. The mortgage broker claims the transaction qualifies as a secondary market transfer exempt from RESPA.

How is this transaction generally treated under RESPA?

A borrower seeks financing secured by a 30-acre parcel of land containing a single-family dwelling. The borrower intends to use the property as a personal residence and argues that RESPA disclosures should apply because residential property is involved.

Which statement best reflects RESPA applicability?

A borrower applies for a loan secured by a one-to-four family residential investment property. The borrower states that the proceeds will be used entirely for business expansion purposes and argues that the transaction is automatically exempt from RESPA because it is a business-purpose loan.

Which statement best reflects RESPA applicability?

A lender originates a mortgage loan secured by vacant land. At closing, the borrower signs documentation confirming that loan proceeds will be used within 18 months to construct a single-family residence on the property.

How is this transaction generally treated under RESPA?

A borrower assumes an existing federally related mortgage loan. Under the loan documents, the lender has no contractual right to approve or deny the assuming borrower.

Which statement best reflects RESPA applicability?

A borrower converts an adjustable-rate mortgage into a fixed-rate loan under conversion provisions already contained within the original mortgage instrument. The lender charges a conversion fee, but no new promissory note is executed.

How is this transaction generally treated under RESPA?

A mortgage loan originator prepares a training presentation discussing historical mortgage disclosure forms and incorrectly states that creditors still provide borrowers with a Good Faith Estimate for federally related mortgage loans.

Which statement best reflects current disclosure requirements?

A lender requires a borrower to use a specific settlement service provider for required mortgage-related services and requires the borrower to pay part of the provider’s fee.

Under TRID requirements, what information must the Loan Estimate include?

A mortgage lender offers borrowers a discounted package of settlement services through affiliated providers. Borrowers are informed that they may either use the package or independently select their own settlement service providers. The discounted package price is lower than the combined market price of the individual services, and the lender does not recover the discount through increased charges elsewhere in the transaction.

Under RESPA requirements, how is this arrangement generally treated?

A lender informs borrowers that they will receive a lower interest rate only if they use a particular affiliated title company selected by the lender. Borrowers who choose a different title company are charged higher settlement costs and lose the pricing incentive.

Why could this arrangement trigger RESPA required-use concerns?

During a RESPA compliance examination, regulators determine that a title company maintained a business account with a mortgage lender and also had an outstanding line of credit with the lender during the previous 12 months.

Why may this relationship require affiliated business arrangement disclosure analysis?

A mortgage lender repeatedly directs borrowers to use the same appraisal company for federally related mortgage loans over the course of the previous year.

Which statement best reflects RESPA relationship standards?

A mortgage lender refers borrowers to a settlement service company owned by the lender’s spouse.

Under RESPA affiliated business arrangement rules, why would this relationship likely qualify as an associate relationship?

A mortgage lender enters into an informal understanding with a settlement service provider under which the lender expects to receive future financial benefits from referring borrowers to that provider.

Why may this arrangement create RESPA affiliated business relationship concerns?

A lender requires the borrower to use a settlement service provider selected from a lender-approved pool of providers. At the time the Loan Estimate is issued, the lender has not yet selected the specific provider but maintains a controlled list of approved companies.

Under TILA-RESPA requirements, how may the lender properly disclose this information?

A creditor maintains an approved list of settlement service providers for required title services. The creditor issues a Loan Estimate before selecting the final title company and plans to identify the exact provider later on the Closing Disclosure.

Which statement best reflects disclosure requirements?

A borrower applies for a residential mortgage loan and is permitted to shop for certain settlement services, including pest inspection and survey services. During processing, the lender verbally advises the borrower to “find any provider you want” but never provides a written list of available providers.

During a compliance audit, regulators question whether the lender satisfied TILA-RESPA disclosure requirements.

Which statement best reflects the lender’s obligations?

A lender issues a written settlement service provider list for home warranty and survey services. The document contains only one provider for each service and does not disclose estimated fee ranges for the services offered.

A compliance officer reviews the file and determines the disclosure is incomplete.

Why?

A creditor permits a borrower to shop for title and pest inspection services but fails to clearly identify which settlement services are required by the creditor versus which services are optional.

During a regulatory examination, auditors determine that the borrower could not reasonably determine which services required lender approval.

Which statement best reflects the 2017 TILA-RESPA Rule requirements?

A borrower applies for a refinance transaction with no seller involved. At the time the Loan Estimate is prepared, the creditor has already completed its own internal valuation of the property. The borrower also provides an estimated property value that is higher than the creditor’s estimate.

Under TILA-RESPA requirements, which value should the creditor disclose on the Loan Estimate?

A creditor prepares a Loan Estimate for a refinance transaction involving payoff of an existing mortgage lien and several unsecured consumer debts being consolidated into the new loan.

How are these payoff amounts generally disclosed under TILA-RESPA requirements?

A borrower reviewing a Loan Estimate notices that the disclosed loan amount differs from the actual amount the borrower expects to receive at closing after prepaid fees and adjustments are deducted.

Which statement best explains how the Loan Amount is disclosed under TILA-RESPA requirements?

A mortgage loan contains several scheduled payment adjustments that will occur during the same calendar year because of interest-rate and payment changes permitted under the loan terms.

How must these payment changes generally be disclosed on the Loan Estimate?

A first-time homebuyer receives the CFPB Home Loan Toolkit from a mortgage lender during the application process. The borrower asks why the Toolkit was created and how it relates to the mortgage disclosure process.

Which statement best reflects the purpose of the Home Loan Toolkit?

A mortgage loan originator explains to borrowers that the CFPB Home Loan Toolkit replaced an older HUD publication previously used during the mortgage application process.

Which publication was replaced by the Home Loan Toolkit?

A borrower applies for a purchase-money residential mortgage loan on Monday morning. The lender plans to deliver the Home Loan Toolkit electronically later in the week. On Wednesday afternoon, before the booklet is delivered, the lender denies the application based on credit history.

Under CFPB requirements, which statement best reflects the lender’s obligations regarding the Home Loan Toolkit?

A mortgage broker receives a residential mortgage application and provides the applicant with a list of homeownership counseling organizations obtained from the CFPB-approved database. The lender later questions whether an additional counseling list must also be delivered separately.

Which statement best reflects the lender’s obligations under Regulation X Section 1024.20?

A lender receives an application for a conventional purchase-money mortgage loan on Tuesday. The loan is not a reverse mortgage or timeshare transaction. During file review, an auditor asks when the lender was required to provide the list of homeownership counseling organizations.

Which statement best reflects the lender’s timing requirements?

A compliance officer discovers that a lender provided a borrower with a homeownership counseling organization list that had been downloaded from the CFPB database approximately 90 days earlier.

Why could this create a compliance issue?

A mortgage broker receives a loan application from a borrower and provides the required list of homeownership counseling organizations during the initial application process. The lender later asks whether it must separately provide another counseling list to remain compliant.

Which statement best reflects regulatory requirements?

A lender plans to provide the required list of homeownership counseling organizations electronically through a secure borrower portal rather than by mail.

Under Regulation X requirements, how may the lender generally provide the counseling list?

A borrower submits a mortgage application on Monday but withdraws the application on Wednesday morning before the three-business-day disclosure period expires.

What are the lender’s obligations regarding the homeownership counseling organization list?

A borrower applying for a conventional mortgage loan asks the loan officer when the Mortgage Servicing Transfer Disclosure will be provided because the borrower remembers receiving a separate disclosure form during a previous mortgage transaction several years ago.

Which statement best reflects current disclosure requirements?

A borrower applies for a reverse mortgage transaction and reviews the Loan Estimate disclosures. The borrower asks whether a separate Servicing Transfer Disclosure Statement is still required for reverse mortgages.

Which statement best reflects current requirements?

A mortgage servicer sells servicing rights for a residential mortgage loan effective July 1. The transferor servicer mails a servicing transfer notice to the borrower on June 10.

Under Regulation X servicing transfer rules, how is this timing generally treated?

A mortgage loan servicing transfer is scheduled to occur next month. The transferor and transferee servicers decide to send borrowers a single combined servicing transfer notice before the transfer becomes effective.

Under Regulation X, when may combined servicing transfer notices satisfy disclosure requirements?

A borrower timely mails a mortgage payment to the former servicer within 30 days after servicing rights are transferred to a new servicer. The former servicer receives the payment after the transfer effective date.

Under Regulation X servicing transfer protections, which statement best reflects the borrower’s rights?

After a servicing transfer becomes effective, a borrower accidentally sends a mortgage payment to the former servicer instead of the new servicer.

Under Regulation X requirements, what must the former servicer generally do with the payment?

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 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 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 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 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?

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 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 mortgage servicer implements new compliance procedures designed to improve oversight of borrower accounts, document servicing actions, and ensure proper handling of mortgage servicing obligations under Regulation X.

Which statement best reflects the purpose of mortgage servicing policy and procedure requirements?

A mortgage servicer transfers servicing rights for a borrower’s loan to another servicer. Several months later, regulators request copies of servicing records and documentation relating to actions previously taken on the borrower’s account.

Under Regulation X record retention requirements, how long must mortgage servicing records generally be maintained?

A mortgage servicer reviews a borrower’s file and notices that the homeowner’s hazard insurance policy appears to have lapsed. Before beginning force-placed insurance procedures, the servicer conducts an internal review to determine whether there is reliable evidence showing that coverage is no longer active.

Why is this review important under Regulation X requirements?

A mortgage servicer determines that a borrower’s hazard insurance policy may have expired and plans to assess force-placed insurance charges against the borrower’s account.

Under Regulation X, what must the servicer generally do before assessing those charges?

After sending the initial force-placed insurance notice to a borrower, a mortgage servicer prepares to continue the force-placed insurance process because no evidence of coverage has yet been received.

Under Regulation X timing requirements, what additional notice must generally be provided?

A mortgage servicer sent both the required initial and reminder notices regarding force-placed hazard insurance. Before assessing insurance charges, the servicer reviews the file one final time to determine whether proof of continuous insurance coverage has been received from the borrower.

Under Regulation X, when may the servicer generally proceed with force-placed insurance charges?

A borrower becomes delinquent on a residential mortgage loan after losing employment. The mortgage servicer’s collection department mails several late payment notices but never attempts to speak directly with the borrower regarding available foreclosure alternatives. Forty-two days after delinquency began, the borrower files a complaint with regulators alleging the servicer failed to discuss available assistance options before foreclosure activity intensified.

During the investigation, regulators focus on the servicer’s early intervention obligations under Regulation X.

Which statement best reflects the servicer’s responsibilities?

A borrower falls behind on mortgage payments after a medical emergency. The servicer delays sending any written delinquency correspondence because collection personnel believe the borrower is already aware of the missed payments.

Fifty days after delinquency began, the borrower claims the servicer failed to provide required foreclosure-prevention information in writing.

Which statement best reflects Regulation X servicing requirements?

A borrower files bankruptcy protection after becoming delinquent on a mortgage loan. At the same time, the borrower’s attorney submits a written FDCPA cease-communication request to the mortgage servicer. The servicer later questions whether certain written delinquency notice requirements still apply under Regulation X.

Which statement best reflects the applicable exemptions?

A mortgage servicer receives repeated CFPB complaints from borrowers stating they are transferred between multiple departments whenever they request assistance regarding delinquency or foreclosure alternatives. Borrowers report they cannot consistently reach anyone familiar with their loan status or prior discussions.

Regulators determine the servicer failed to maintain proper continuity-of-contact procedures.

Which statement best reflects Regulation X requirements?

A delinquent borrower receives a written notice explaining available foreclosure alternatives. When the borrower later calls the servicer for assistance, no individual servicing representative has been assigned to the account, and multiple employees provide conflicting information regarding available options.

During a compliance review, regulators question whether the servicer maintained adequate borrower assistance procedures.

Which statement best reflects Regulation X requirements?

A borrower contacts the servicing representative assigned to assist with a delinquent mortgage account. During the conversation, the representative cannot explain available loss mitigation options, does not understand the foreclosure timeline, and refuses to answer questions regarding application status.

The borrower later files a complaint alleging the assigned personnel were not properly equipped to provide required assistance.

Which statement best reflects Regulation X continuity-of-contact standards?

A borrower submits a complete loss mitigation application 52 days before a scheduled foreclosure sale. The servicer places the application into a processing queue but does not review the file for completeness for several weeks because foreclosure activity is already underway.

During a regulatory examination, auditors question whether the servicer complied with Regulation X loss mitigation requirements.

Which statement best reflects the servicer’s obligations?

A borrower submits a loss mitigation application 60 days before a scheduled foreclosure sale. Ten business days later, the borrower still has not received any acknowledgment from the servicer regarding whether the application is complete or whether additional documentation is required.

Which statement best reflects Regulation X timing requirements?

A borrower submits a loss mitigation application before foreclosure sale. The servicer sends a generic acknowledgment letter confirming receipt but does not explain whether additional documents are needed to complete the application.

During a CFPB review, examiners determine the acknowledgment notice was insufficient.

Why?

A mortgage servicer receives a borrower’s complete loss mitigation application 52 days before a scheduled foreclosure sale. The servicer reviews the file but evaluates the borrower for only one repayment option even though additional investor-approved foreclosure alternatives may also be available.

During a CFPB examination, regulators question whether the servicer properly evaluated the borrower under Regulation X.

Which statement best reflects the servicer’s obligations?

A borrower submits a complete loss mitigation application 45 days before a scheduled foreclosure sale. Thirty-five days later, the borrower still has not received any written notice explaining whether the servicer will offer any foreclosure alternatives.

Why could this violate Regulation X requirements?

A borrower submits an incomplete loss mitigation application, but despite repeated requests from the servicer for additional documents, the borrower fails to provide the missing information for several months. The servicer later evaluates the incomplete file and offers a limited foreclosure alternative.

Under Regulation X, why may this be permissible?

A mortgage servicer offers a borrower a short-term forbearance arrangement allowing the borrower to temporarily suspend partial mortgage payments for five months while recovering from a financial hardship. The borrower questions whether the servicer may extend this option before the loss mitigation application is fully complete.

Which statement best reflects Regulation X requirements?

A borrower applies for a permanent loan modification program but receives a denial notice from the servicer containing only a generic statement that the application “did not qualify.”

During a regulatory review, examiners determine the denial notice was insufficient under Regulation X.

Why?

A servicer denies a borrower’s loss mitigation application after applying investor waterfall criteria and a net present value calculation. The denial notice informs the borrower that the application was denied but fails to explain the investor criteria used or the actual reasons the borrower did not qualify.

Which statement best reflects Regulation X disclosure requirements?

A borrower submits a complete loss mitigation application 95 days before a scheduled foreclosure sale. After reviewing the application, the servicer offers the borrower a foreclosure alternative and requests a decision.

Under Regulation X, how long must the borrower generally be given to accept or reject the option?

A borrower submits a complete loss mitigation application 50 days before a scheduled foreclosure sale. The servicer evaluates the file and offers a repayment alternative but gives the borrower only three days to respond before proceeding toward foreclosure.

Why could this violate Regulation X requirements?

NONPUBLIC PERSONAL INFORMATION

A consumer asks why a financial institution cannot freely share personal financial information with outside companies.

What is the primary purpose of the federal privacy protections regarding nonpublic personal information?

GRAMM-LEACH-BLILEY ACT (GLBA)

A compliance examiner reviews whether a financial institution properly informed consumers about how customer information may be shared with other parties.

What requirement was established under the Gramm-Leach-Bliley Act and Regulation P?

A second mortgage lender initiates foreclosure proceedings against a borrower who has defaulted on multiple mortgage obligations secured by the same property. The first mortgage servicer later joins the existing foreclosure action even though the borrower has not yet reached 120 days delinquent on the first mortgage loan.

The borrower later alleges the senior servicer violated Regulation X foreclosure restrictions.

Which statement best reflects the applicable rule?

A borrower submits a complete loss mitigation application 58 days before a scheduled foreclosure sale after foreclosure proceedings have already begun. The servicer reviews the application and determines the borrower is not eligible for any investor-approved foreclosure alternatives. A written denial notice explaining the borrower’s ineligibility is mailed, but the borrower never files an appeal.

Several weeks later, the servicer schedules the foreclosure sale.

Which statement best reflects Regulation X requirements?

A borrower receives several investor-approved foreclosure alternatives after submitting a complete loss mitigation application more than 37 days before a scheduled foreclosure sale. After discussing the options with financial advisors, the borrower formally rejects every alternative offered by the servicer.

The servicer later resumes foreclosure activity.

Why may this action comply with Regulation X?

A borrower enters into a loan modification agreement after foreclosure proceedings have already begun. Six months later, the borrower again defaults by failing to make required payments under the modification agreement.

The servicer then resumes foreclosure proceedings without offering additional foreclosure alternatives.

Which statement best reflects Regulation X requirements?

A mortgage broker enters into an arrangement with a local title company under which the title company pays the broker a “marketing bonus” for every borrower referred for closing services. The payments are not tied to any actual settlement services performed by the broker and are based solely on the number of referrals generated each month.

During a CFPB investigation, regulators conclude the arrangement violates RESPA Section 8.

Which statement best explains why?

A settlement service provider charges borrowers a document preparation fee and later shares a portion of that fee with another company that performed no actual settlement services in connection with the transaction. Internal emails show the payment was made primarily because the company referred borrowers to the settlement provider.

Regulators later determine the arrangement violated RESPA Section 8.

Why?

A mortgage lender repeatedly provides expensive sporting event tickets and vacation incentives to a real estate brokerage whose agents consistently refer borrowers to the lender. Although no written referral contract exists, regulators observe that the incentives increase whenever referral volume rises.

During a RESPA investigation, the lender argues there was never a formal agreement requiring referrals.

Which statement best reflects RESPA’s treatment of referral agreements?

A title company repeatedly provides “consulting fees” to a mortgage broker over several years. The payments increase substantially whenever the broker sends higher volumes of settlement business to the title company. During a CFPB examination, the title company claims the fees were simply goodwill payments and not evidence of a referral arrangement.

Why could regulators still determine a RESPA violation occurred?

A mortgage lender owns 15% of a title company that regularly handles closings for the lender’s borrowers. Loan officers consistently encourage applicants to use the title company during the loan process. During a RESPA compliance audit, regulators review whether this arrangement qualifies as an affiliated business arrangement.

Which statement best describes one of the elements required for a controlled or affiliated business arrangement under RESPA?

A real estate broker repeatedly directs homebuyers to a specific escrow company partially owned by the broker’s business partner. Borrowers are told that using the escrow company will help the transaction move faster, and most customers follow the recommendation.

Regulators later investigate whether the broker affirmatively influenced the selection of a settlement service provider.

Which action would satisfy the referral component of a controlled business arrangement?

A mortgage company refers borrowers to an affiliated appraisal management company owned by one of its principals. During a CFPB examination, investigators discover that borrowers were never given written disclosure explaining the ownership relationship or estimated settlement charges.

Which disclosure requirement applies when a controlled business arrangement exists?

A borrower applying for a federally related mortgage loan is informed that the lender prefers to use its affiliated title company for settlement services. However, the borrower wants to select another title provider. The loan officer states that using another company may delay approval.

During a RESPA review, regulators question whether the borrower was properly informed of their rights.

Which statement correctly reflects the disclosure requirement for affiliated business arrangements?

A borrower contacts the mortgage servicer after noticing that no annual escrow account statement was received for the prior year. The borrower claims they cannot verify how much money was collected and disbursed for property taxes and insurance premiums.

During a RESPA servicing review, regulators examine whether the servicer complied with escrow account disclosure requirements.

Which statement best reflects the servicer’s obligations regarding annual escrow statements?

A mortgage servicer completes an escrow account year on December 31 but does not send the borrower an escrow account statement until mid-February. The borrower later files a complaint alleging the statement was not provided within required timeframes.

Which statement correctly reflects RESPA timing requirements for escrow account statements?

A borrower reviews an annual escrow account statement and notices that the document lists only the current escrow balance without detailing how much was collected or paid during the year for taxes and insurance.

Regulators later determine the statement was incomplete.

Which item is specifically required to appear on an annual escrow account statement?

A borrower questions why the monthly mortgage payment recently increased. The servicer explains that escrow account adjustments were made but fails to identify how much of the payment is allocated toward escrow deposits.

During a compliance examination, auditors review the contents of the annual escrow statement.

Which statement best reflects required escrow statement disclosures?

At closing, a lender collects a large escrow deposit from the borrower that substantially exceeds anticipated tax and insurance obligations. The borrower later questions whether the lender exceeded RESPA escrow limitations.

Which statement best reflects RESPA limits on escrow account collections at settlement?

A borrower reviews the initial escrow disclosure and notices the lender collected an additional reserve amount beyond projected taxes and insurance payments. The borrower asks whether RESPA permits any additional escrow cushion.

Which statement correctly describes the allowable escrow cushion?

A borrower alleges the mortgage servicer improperly increased monthly escrow deposits beyond projected tax and insurance obligations. Regulators review whether the servicer exceeded permissible monthly escrow collection limits.

Which statement best reflects RESPA limitations on monthly escrow deposits?

A borrower’s mortgage loan is performing as agreed, and the servicer plans to terminate the escrow account because the loan balance has dropped below the required threshold. The borrower later claims they were not given sufficient advance notice before the escrow account was closed.

Which statement correctly reflects the timing requirement for escrow account cancellation notices?

A borrower’s escrow account was originally established because of repeated loan delinquencies. After the borrower becomes current, the servicer closes the escrow account without providing the standard escrow cancellation notice.

During a compliance review, regulators determine the servicer may qualify for an exemption.

Which situation is exempt from the escrow account cancellation notice requirement?

A creditor sends an escrow cancellation notice informing the borrower that the escrow account will close but fails to explain the reason for the closure. The borrower later complains that the disclosure was incomplete.

Which information must be included in the escrow account cancellation notice?

A servicer closes a borrower’s escrow account and informs the borrower that future property tax and insurance obligations will become the borrower’s direct responsibility. However, the borrower argues the disclosure did not adequately explain those obligations.

Which statement must be included in the escrow cancellation disclosure?

A borrower receives an escrow cancellation notice that includes a “Cost to You” section showing a processing fee charged for closing the escrow account. During a RESPA audit, regulators review whether the disclosure was properly itemized.

Which statement correctly reflects disclosure requirements for escrow closure fees?

A borrower receives an escrow account cancellation notice explaining that the account may remain open if requested before a stated deadline. The notice also includes a telephone number for additional information regarding future property tax obligations.

Which disclosure category requires this information?

A borrower reviews the final Closing Disclosure and notices a separate fee labeled “Closing Disclosure Preparation and Delivery Fee.” The lender explains that the fee covers administrative costs associated with preparing federally required disclosures.

During a RESPA compliance review, regulators question whether the charge is permissible.

Which statement correctly reflects RESPA requirements regarding disclosure preparation fees?

A settlement company removes a prohibited “TILA Disclosure Preparation Fee” from the itemized closing costs but increases a separate “General Administrative Closing Fee” by the same amount. The borrower later alleges the company attempted to indirectly recover prohibited disclosure fees.

Which statement best reflects RESPA’s position regarding indirect disclosure charges?

A creditor originates a closed-end consumer loan secured by a cooperative housing unit in a state where cooperative interests are not classified as real property. The lender questions whether integrated TILA-RESPA disclosures are still required.

Which statement correctly reflects the 2017 TILA-RESPA Rule regarding cooperative units?

A trust established for estate planning purposes applies for consumer mortgage credit. The lender questions whether Regulation Z disclosures are required because the borrower is technically a trust rather than an individual.

Which statement correctly reflects the 2017 TILA-RESPA Rule regarding certain trusts?

A borrower questions a document copying fee charged at closing. The settlement agent explains that the fee relates to copying and preparing loan documents other than federally prohibited disclosure forms.

Which statement correctly reflects RESPA fee limitations?

During a CFPB audit, regulators request copies of RESPA-related loan documents from a mortgage lender. The lender destroyed the files two years after loan consummation, believing no further retention requirement applied.

Which statement correctly reflects RESPA document retention requirements?

A lender transfers servicing rights to another institution and later destroys copies of completed Closing Disclosures four years after consummation. During a regulatory examination, auditors determine the lender failed to comply with applicable retention requirements.

Which statement correctly reflects Closing Disclosure retention requirements?