Section 1 Lesson 5

A mortgage lender located in a metropolitan statistical area (MSA) originates hundreds of home purchase and home improvement loans each year. The lender is informed that it must submit annual reports detailing its lending activity to its federal supervisory agency. Which federal regulation imposes this reporting requirement?

A lender receives applications throughout the year. Some loans are approved and funded, some are denied, and others are withdrawn by applicants before a decision is made. Which transactions must generally be included in the lender’s HMDA reporting?

During a compliance examination, a regulator reviews the information reported on a lender’s HMDA Loan/Application Register. Which borrower and property information would the regulator expect to find?

A lender is preparing its HMDA submission for loans originated, purchased, denied, or withdrawn during the previous calendar year. By what date must the lender generally submit the information to its supervisory agency?

A compliance officer asks an employee which reporting format is used to submit HMDA data. Which response is correct?

A lender originates a first-lien home purchase loan with an APR that exceeds the applicable Treasury yield by 3.25 percentage points. Under HMDA reporting requirements, what action must the lender take?

A lender originates a subordinate-lien dwelling-secured home improvement loan with an APR that exceeds the applicable Treasury yield by 4.75 percentage points. What is the HMDA rate-spread reporting requirement?

When determining whether a loan meets the HMDA rate-spread reporting threshold, which Treasury yield must the lender use?

After a lender submits HMDA data to its supervisory agency, which entity processes the information on behalf of the FFIEC member agencies and HUD?

FAIR CREDIT REPORTING ACT

A mortgage lender wants to obtain credit information from a consumer reporting agency while evaluating a loan application.

What must the lender obtain from the applicant before requesting the consumer report?

FAIR CREDIT REPORTING ACT

A lender denies a mortgage application based on information obtained from a consumer reporting agency.

What must the lender advise the applicant?

FAIR CREDIT REPORTING ACT

A consumer is denied a mortgage loan and wants a copy of the consumer report that was used in the credit decision.

When may the consumer request the report free of charge?

A borrower wants to review the information being reported about them by the major credit bureaus. Under current law, how may the borrower obtain free copies of their credit reports?

A consumer asks a mortgage lender for a copy of the credit report obtained during the loan application process. What may the lender do?

In September 2018, the CFPB updated two model disclosures under the Fair Credit Reporting Act. Why were those disclosures revised?

A consumer believes someone may attempt to obtain credit using stolen personal information. Which right was expanded under the Economic Growth, Regulatory Relief, and Consumer Protection Act?

What is the primary purpose of a national security freeze?

When a consumer receives the Summary of Consumer Rights or the Summary of Consumer Identity Theft Rights required by the FCRA, what additional notice must also be included?

A consumer wants to understand their rights to obtain and dispute information in consumer reports and to obtain credit scores. Which disclosure provides this information?

A consumer contacts a credit reporting agency because the consumer believes he or she is a victim of identity theft. Which updated disclosure addresses the consumer’s identity theft rights?

Congress changed the minimum period that nationwide consumer reporting agencies must include an initial fraud alert in a consumer’s file. What is the current minimum duration?

A lender receives a credit application and notices that an initial fraud alert appears on the applicant’s credit file. What does this alert require the lender to do?

A compliance manager is reviewing the effective date for the security freeze right, the related notice requirement, and the change in duration for initial fraud alerts. What effective date did Congress set?

A lender denies a consumer employment based in whole or in part on the consumer’s credit report. Which updated FCRA model form must be provided along with a copy of the credit report?

A consumer asks why Congress enacted the Fair Credit Reporting Act (FCRA). Which response is most accurate?

Which of the following is considered a consumer reporting agency under the FCRA?

A consumer’s application for insurance is denied because of information contained in a consumer report. Under the FCRA, what must the consumer be told?

A lender denies a consumer’s loan application based on information contained in a credit report. What must the lender provide to the consumer?

A consumer wants to review all information maintained by a consumer reporting agency. What FCRA right allows this?

A consumer reporting agency requests proof of identity before releasing a file disclosure. Is this permitted?

Which consumer is entitled to a free file disclosure under the FCRA?

A consumer is unemployed and expects to apply for employment within the next 60 days. Under the FCRA, what right does the consumer have?

How often is every consumer entitled to receive a free disclosure from each nationwide credit bureau upon request?

A consumer wants to know the numerical summary used to evaluate creditworthiness. What may the consumer request?

In which situation may a consumer receive credit score information at no charge?

A consumer identifies inaccurate information on a credit report and files a dispute with the consumer reporting agency. What is the agency generally required to do?

A consumer reporting agency determines that information in a consumer’s file is inaccurate and cannot be verified. What must generally occur?

A loan officer denies a mortgage application based in part on information contained in a credit report. Under the FCRA, what must the borrower be provided?

A mortgage underwriter discovers a collection account that is more than eight years old on a borrower’s credit report. What FCRA concern may exist?

A lender requests a consumer report while evaluating a mortgage application. Why is this permissible?

A mortgage company wants to obtain a consumer report on a job applicant for a loan processor position. What is generally required?

A borrower receives a prescreened mortgage offer in the mail. What must the solicitation include?

A borrower places a security freeze on a credit file and then applies for a mortgage. What effect could this have?

A loan originator attempts to pull a credit report but learns the borrower has a security freeze. What is generally required before the report can be released?

During mortgage underwriting, an initial fraud alert appears on the borrower’s credit file. What must the lender do?

A borrower who is not an identity theft victim places a fraud alert on a credit file. How long does the initial fraud alert generally remain?

A borrower proves identity theft occurred and requests enhanced protection. What alert may be placed on the file?

IDENTITY THEFT PROTECTION

Why might a consumer receive information about remedying the effects of identity theft?

IDENTITY THEFT PROTECTION

How may a consumer place a fraud alert in his or her file with nationwide consumer reporting agencies?

IDENTITY THEFT PROTECTION

How long does an initial fraud alert generally remain in a consumer’s file?

IDENTITY THEFT PROTECTION

What additional documentation must a consumer generally provide to request an extended fraud alert?

IDENTITY THEFT PROTECTION

Under the Fair Credit Reporting Act, when does a consumer have the right to receive a free copy of information in his or her file because of suspected fraud or identity theft?

FAIR CREDIT REPORTING ACT

Under the Fair Credit Reporting Act, when does a consumer have the right to receive a free copy of information in his or her consumer report because of suspected fraud or identity theft?

FAIR CREDIT REPORTING ACT

What is the purpose of placing a security freeze on a consumer credit report?

IDENTITY THEFT PROTECTION ACT

What consumer protection benefit allows individuals to review unauthorized activity that may result in identity theft?

IDENTITY THEFT PROTECTION ACT

What limitation applies to credit account numbers printed on store receipts?

IDENTITY THEFT PROTECTION ACT

How does the national fraud alert system simplify the reporting process for consumers?

IDENTITY THEFT PROTECTION ACT

What responsibility does the Act place on lenders and creditors regarding fraudulent activity?

IDENTITY THEFT PROTECTION ACT

What special protection is available for military personnel on active duty?

A mortgage company originates residential mortgage loans and maintains borrower accounts after closing. During a compliance audit, management argues that the company’s Identity Theft Prevention Program is unnecessary because identity theft rarely occurs. Which statement is most accurate?

A loan officer receives a mortgage application containing identification documents that appear altered and inconsistent with information contained in the credit report. How should this situation be viewed under the Red Flags Rule?

A mortgage lender creates an Identity Theft Prevention Program but fails to establish procedures for identifying suspicious activity during the loan application process. Which program requirement is missing?

A mortgage processor notices that a Social Security number submitted on an application belongs to a deceased individual. What should the lender’s Identity Theft Prevention Program require?

A regional mortgage company copies the identity theft program of a national bank without considering its own operations, staffing, or loan volume. Why could this create a compliance issue?

A mortgage company identifies several new fraud schemes involving synthetic identities but never updates its Identity Theft Prevention Program. What requirement is being violated?

A mortgage lender adopts an Identity Theft Prevention Program, but senior management never reviews or approves it. Which requirement has likely been overlooked?

A mortgage company assigns responsibility for the Red Flags Program entirely to a temporary employee with no management oversight. Why could this be problematic?

A lender has a written Identity Theft Prevention Program but never trains loan officers, processors, or underwriters. During an examination, what concern is most likely to be raised?

A mortgage lender outsources portions of the application process to a third-party service provider. What responsibility does the lender retain under the Red Flags Rule?

A mortgage servicer maintains thousands of active mortgage accounts. Under its Identity Theft Prevention Program, when should these accounts be monitored for potential identity theft?

A loan processor receives a notice from a consumer reporting agency indicating possible fraud activity associated with a mortgage applicant. How should this notice generally be classified?

While attempting to pull a borrower’s credit report, a loan officer discovers that a credit freeze has been placed on the applicant’s file. Under the Identity Theft Program, how should this situation generally be viewed?

A mortgage lender receives an address discrepancy notice from a consumer reporting agency while processing a loan application. What should the lender recognize?

A mortgage servicer notices unusual payment activity on an existing loan account, including unexpected account changes and suspicious transaction patterns. How should this activity generally be treated?

A loan processor receives identification documents that appear altered and inconsistent with other application documents. What should the processor recognize?

During verification, an underwriter discovers that the borrower’s personal identifying information conflicts with information obtained from independent third-party sources. How should this situation generally be classified?

A mortgage company’s fraud detection software identifies that an applicant’s Social Security number has previously been associated with known fraud activity. What should this trigger under the Identity Theft Program?

A loan processor detects a potential Red Flag during the mortgage application process. According to the Identity Theft Program, what should generally occur first?

A mortgage lender adopts a Red Flags Identity Theft Prevention Program but never assigns responsibility for administering the program. During a compliance examination, regulators ask who oversees implementation and updates. Why could this be a concern?

A mortgage company designates its Compliance Director as the administrator of its Identity Theft Prevention Program. Which responsibility would typically fall under this role?

A mortgage lender provides annual Red Flags training to loan officers but excludes processors and underwriters because they do not meet with borrowers directly. Why might this create a compliance issue?

A compliance manager is uncertain whether certain support staff should attend identity theft training. What is the recommended approach?

A mortgage company uses temporary employees during peak refinance periods. What should management consider regarding Identity Theft Prevention Program training?

A mortgage lender outsources credit report processing to a third-party vendor. What responsibility does the lender retain under the Identity Theft Prevention Program?

A third-party mortgage processing vendor informs a lender that it maintains its own Identity Theft Prevention Program. How should the lender generally view this situation?

A mortgage lender relies on an outside loan origination software provider that claims to have a Red Flags Program. What is the most prudent compliance practice?

A mortgage lender fails to comply with Identity Theft Prevention Program requirements and is cited by regulators. What is the maximum civil penalty referenced on this page?

A lender regularly obtains consumer reports and fails to comply with address discrepancy requirements. What penalty could apply?