Section 1 Lesson 6

1. Question

BANK SECRECY ACT

A loan officer receives a $15,000 cash deposit from a borrower to be used toward a home purchase. What federal reporting requirement is triggered?

A) A Suspicious Activity Report (SAR) must always be filed.
B) A Cash Transaction Report (CTR) must be completed.
C) No report is required if the borrower provides identification.
D) The funds must be returned to the borrower.

2. Question

A compliance manager asks which federal agency administers the Bank Secrecy Act and Anti-Money Laundering requirements. Which answer is correct?

A) CFPB
B) HUD
C) FinCEN
D) FHA

3. Question

A mortgage company receives a large wire transfer from an overseas account to fund a property purchase. Why does the Bank Secrecy Act require financial institutions to monitor these types of transactions?

A) To determine property values
B) To identify significant movements of money and monitor suspicious activity
C) To establish loan pricing
D) To determine FHA eligibility

4. Question

MONEY LAUNDERING

A mortgage company receives a $12,000 cash down payment from a borrower who cannot provide any verifiable source for the funds. Which concern is most applicable?

A) RESPA violation
B) ECOA violation
C) Potential money laundering activity
D) Predatory lending

5. Question

A borrower arrives at closing with $15,000 in cash intended for a down payment. What reporting requirement may apply?

A) No reporting requirement applies
B) A Suspicious Activity Report must automatically be filed
C) A Cash Transaction Report (CTR) may be required because the cash exceeds $10,000
D) The funds must be refused

6. Question

A mortgage compliance officer is explaining the Money Laundering Control Act of 1986 to new employees. Which statement is correct?

A) The Act made money laundering a federal crime
B) The Act eliminated CTR requirements
C) The Act applies only to banks
D) The Act regulates appraisals

7. Question

STRUCTURING

A bank employee knowingly assists a customer in avoiding CTR filing requirements by splitting a $20,000 cash transaction into several smaller deposits. Which law may be violated?

A) Truth in Lending Act
B) Fair Credit Reporting Act
C) Money Laundering Control Act
D) Equal Credit Opportunity Act

8. Question

A borrower attempts to make two separate cash deposits of $6,000 on consecutive days to fund a mortgage transaction. The borrower explains that he wants to avoid government reporting requirements. What potential issue does this raise?

A) Loan flipping
B) Predatory lending
C) Structuring transactions to evade CTR reporting
D) HMDA reporting violations

9. Question

A loan officer believes a borrower’s $12,000 cash contribution is legitimate because it came from a recent vehicle sale. Does this eliminate the lender’s reporting obligations?

A) Yes, because the funds appear legitimate
B) Yes, if the borrower signs a statement
C) No, CTR requirements still apply when applicable
D) No, but only if the borrower is self-employed

10. Question

An underwriter learns that a borrower is attempting to use funds known to have originated from illegal drug trafficking to purchase a home. Which concept under the Money Laundering Control Act is most directly implicated?

A) Fair Housing
B) Qualified Mortgage
C) Specified Unlawful Activity (SUA)
D) RESPA

11. Question

A mortgage company employee discovers suspicious cash activity connected to a loan transaction but decides not to report it because the borrower is a long-time customer. Why could this create a compliance issue?

A) Reporting obligations apply regardless of the customer relationship
B) Long-time customers are exempt from BSA requirements
C) Reporting is required only for first-time borrowers
D) Only banks must comply with AML rules

12. Question

A real estate closing professional receives funds from a purchaser and must verify the individual’s identity before completing the transaction. Which law specifically expanded these requirements?

A) RESPA
B) HMDA
C) Anti-Drug Abuse Act of 1988
D) Equal Credit Opportunity Act

13. Question

A borrower attempts to avoid financial reporting requirements by providing several smaller payments rather than one large payment. What was one purpose of the Anti-Drug Abuse Act’s $3,000 threshold?

A) To increase FHA loan limits
B) To make it more difficult for criminals to conceal money through smaller transactions
C) To reduce mortgage interest rates
D) To eliminate cash transactions

14. Question

A compliance officer explains that strict adherence to anti-money laundering procedures helps reduce criminal activity in mortgage transactions. Which statement best supports this position?

A) Compliance is a key deterrent to money laundering and related crimes
B) Compliance only applies to banks
C) Compliance is optional for mortgage companies
D) Compliance eliminates underwriting requirements

15. Question

A mortgage lender is reviewing anti-money laundering procedures and wants to understand the primary purpose of the Annunzio-Wylie Anti-Money Laundering Act. Which statement is most accurate?

A) It eliminated BSA enforcement requirements
B) It strengthened Bank Secrecy Act sanctions and enforcement
C) It repealed CTR requirements
D) It created RESPA

16. Question

A lender receives a wire transfer intended to fund a mortgage closing. Which requirement established by the Annunzio-Wylie Act applies to this transaction?

A) Verification and recording of wire transfers
B) Immediate filing of a CTR
C) Automatic loan denial
D) Secondary market disclosure

17. Question

A mortgage company’s compliance manager discovers suspicious activity involving unexplained funds being transferred into a borrower’s account shortly before closing. Which reporting tool is specifically associated with the Annunzio-Wylie Act?

A) Loan Estimate
B) HMDA-LAR
C) Suspicious Activity Report (SAR)
D) Closing Disclosure

18. Question

A federal task force is created to coordinate anti-money laundering enforcement efforts among federal, state, and local authorities in areas where money laundering activity is especially prevalent.

Which legislation authorized this type of cooperative enforcement effort?

A) Money Laundering and Financial Crimes Strategy Act of 1998
B) Annunzio-Wylie Anti-Money Laundering Act of 1992
C) Anti-Drug Abuse Act
D) Money Laundering Control Act of 1986

19. Question

A mortgage company employee discovers a pattern of transactions that may indicate money laundering. The company’s AML policy requires escalation to the compliance department for review. Why is this procedure important?

A) It eliminates underwriting requirements
B) It replaces borrower verification requirements
C) It prevents credit reports from being ordered
D) It creates a process for referring suspicious activity to appropriate authorities

20. Question

During a state examination, regulators ask a mortgage lender to demonstrate how it detects and monitors potential money-laundering activity. What will regulators most likely review?

A) Marketing materials
B) Internal AML controls and monitoring procedures
C) Property appraisals
D) Loan pricing exceptions

21. Question

A mortgage company’s AML training program focuses only on compliance officers and excludes loan officers and processors who regularly handle borrower funds documentation. Why could this be a problem?

A) Training applies only to executives
B) Processors are exempt from AML requirements
C) AML training should be reviewed and enhanced throughout the organization
D) Loan officers are not involved in fraud prevention

22. Question

A lender’s AML audit reveals that employees identify suspicious activity but no formal process exists for documenting or escalating concerns. What weakness is most evident?

A) Missing internal controls for reporting suspicious activity
B) Inadequate HMDA reporting
C) Lack of appraisal reviews
D) Insufficient RESPA disclosures

23. Question

A mortgage lender updates its AML procedures after regulators identify new money-laundering risks in residential real estate transactions. Which principle of the MLSA is best reflected by this action?

A) Elimination of internal controls
B) Reduced employee training
C) Elimination of suspicious-activity reporting
D) Continuous review and enhancement of anti-money laundering efforts

24. Question

A mortgage loan officer receives a request from a local marketing company seeking a list of current borrowers and their contact information. The marketing company has no relationship with the lender. Under GLBA, what is the most appropriate response?

A) Provide the information because borrowers are customers
B) Sell the information if compensation is received
C) Provide only the borrowers' names
D) Do not disclose the information because nonpublic personal information is protected

25. Question

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) Financial institutions must provide consumers with privacy notices explaining information-sharing practices
B) Financial institutions must permanently block all information sharing with third parties
C) Financial institutions must provide free annual credit monitoring services to all customers
D) Financial institutions must disclose all customer records to federal regulators upon request

26. Question

A processor asks why mortgage companies are subject to GLBA privacy requirements. What is the primary purpose of the law?

A) To regulate mortgage interest rates
B) To establish underwriting standards
C) To protect the privacy of consumer information
D) To regulate appraisals

27. Question

A lender shares borrower information with a credit reporting agency as part of the loan underwriting process. Which statement is most accurate?

A) The lender is prohibited from sharing information with any third party
B) Sharing information with a CRA may be permissible for legitimate business purposes
C) Sharing information with a CRA always requires separate borrower authorization
D) Credit reporting agencies are exempt from privacy laws

28. Question

A mortgage company contracts with a vendor to assist in marketing mortgage products offered jointly with another financial institution. Under GLBA, what condition must generally exist before borrower information is shared?

A) The vendor must agree to use the information only for the permitted purpose and maintain confidentiality
B) The information becomes public once a loan application is submitted
C) No restrictions apply if the vendor is compensated
D) The vendor may freely sell the information to affiliates

29. Question

A mortgage lender considers selling its borrower database to unrelated companies for additional revenue. Which statement is most accurate?

A) This is encouraged under GLBA
B) This is permissible if the borrower has a mortgage
C) GLBA generally prohibits using nonpublic personal information in this manner
D) Selling borrower information is required for compliance

30. Question

A compliance auditor asks a mortgage lender to demonstrate how borrowers are informed about the company’s information-sharing practices. What document should the lender provide?

A) Loan Estimate
B) Closing Disclosure
C) Adverse Action Notice
D) Privacy Notice

31. Question

A borrower asks why the lender provided a privacy notice at application. What is the best explanation?

A) The notice establishes the interest rate
B) The notice explains the lender's information-sharing practices and privacy protections
C) The notice replaces RESPA disclosures
D) The notice verifies employment

32. Question

PRIVACY POLICY DISCLOSURES

A borrower opens a new mortgage account with a financial institution. The institution does not share customer nonpublic personal information with outside companies.

What privacy disclosure obligation still applies?

A) The institution is exempt from providing a privacy notice because no information is shared
B) The institution must provide all customers with a privacy notice regardless of whether nonpublic personal information is shared
C) The institution must provide a privacy notice only if requested by the borrower
D) The institution must wait until the first annual review before providing the notice

33. Question

PRIVACY POLICY DISCLOSURES

A lender is establishing a new customer relationship but believes providing the privacy notice immediately would substantially delay the customer’s transaction.

When may the institution provide the initial privacy notice after the relationship is established?

A) Only after the first annual account review
B) Never, because the notice must always be provided before the transaction begins
C) Within a reasonable time after the customer relationship is established if the customer agrees
D) Only after obtaining approval from a federal regulator

34. Question

PRIVACY POLICY DISCLOSURES

A financial institution plans to share a borrower’s nonpublic personal information with a non-affiliated third party outside the permitted exceptions.

What must the institution generally provide before sharing the information?

A) A mandatory arbitration disclosure only
B) An opt-out notice, a reasonable method to opt out, and a reasonable amount of time to opt out before disclosure
C) A copy of the borrower’s complete credit file
D) Immediate disclosure without customer notification if the information is accurate

35. Question

PRIVACY POLICY DISCLOSURES

A consumer maintains a long-term relationship with a financial institution that continues for several years.

What ongoing disclosure requirement generally applies throughout the relationship?

A) The institution must provide a new Loan Estimate every year
B) The institution must obtain annual written authorization to maintain the account
C) The institution must provide an annual notice containing the full privacy notice for as long as the customer relationship lasts
D) The institution must resend the original credit application annually

36. Question

A loan officer explains the company’s privacy practices to a borrower over the telephone but never provides a written privacy notice. Why is this a compliance concern?

A) Privacy notices cannot be provided solely through an oral explanation
B) Telephone disclosures replace all written notices
C) Privacy notices are required only after closing
D) Privacy notices apply only to banks

37. Question

A mortgage broker wants to share borrower information with a third party. Which type of information is protected by GLBA?

A) Public property tax records
B) Nonpublic personal information
C) Recorded deeds only
D) MLS listings

38. Question

A lender sells a list of former borrowers to a marketing company. What additional requirement may apply under the Gramm-Leach-Bliley Act?

A) The lender may be required to provide a privacy disclosure notice
B) No disclosure is required because the loans have closed
C) The lender must file a Suspicious Activity Report
D) The lender must obtain HUD approval

39. Question

Which of the following businesses is most likely covered by the Safeguards Rule?

A) A grocery store that accepts cash only
B) A public library
C) A city parks department
D) A mortgage brokerage company

40. Question

A borrower receives a privacy notice stating that the lender may share information unless the borrower directs otherwise.

This reflects which privacy approach under the Gramm-Leach-Bliley Act?

A) Mandatory consent
B) Opt-in
C) Opt-out
D) Prior authorization

41. Question

A lender shares borrower information with an unrelated company for purposes outside the mortgage transaction. What may be required?

A) No action
B) Appropriate privacy disclosures
C) Immediate loan denial
D) A new appraisal

42. Question

A lender sends borrower information to an appraiser to complete a mortgage transaction. How is this sharing generally viewed?

A) Unauthorized marketing
B) A privacy violation
C) Sharing in the ordinary course of the transaction
D) Identity theft

43. Question

A wholesale lender requests borrower information needed to complete a mortgage transaction. Which statement is most accurate?

A) This is prohibited
B) This always requires borrower opt-in
C) This is marketing activity
D) This is generally permitted in the ordinary course of the transaction

44. Question

A mortgage company sells borrower information to a marketing company. Why is this different from sharing information with an appraiser?

A) Marketing is generally not considered part of the ordinary course of the transaction
B) Marketing companies are financial institutions
C) Appraisers are exempt from privacy laws
D) There is no difference

45. Question

A borrower receives a privacy notice and chooses not to restrict information sharing. Under GLBA, what generally applies?

A) Information can never be shared
B) GLBA operates primarily as an opt-out law
C) Written consent is always required first
D) Sharing becomes a criminal offense

46. Question

A loan officer relocates to a state that requires affirmative borrower consent before information may be shared. What type of law is this?

A) Opt-out law
B) Privacy safe harbor
C) Opt-in law
D) HMDA law

47. Question

A mortgage company shares borrower information only with parties necessary to complete transactions and does not share information with marketers. Which privacy notice may be appropriate?

A) No privacy notice
B) Adverse Action Notice
C) Closing Disclosure
D) Simplified Privacy Policy Notice

48. Question

A mortgage broker includes a signature line on a privacy notice provided to a borrower. Which statement is correct?

A) Federal law requires the borrower to sign the notice
B) The signature is required only for refinance transactions
C) The signature is optional but may help demonstrate compliance
D) The signature is required only if information is shared with third parties

49. Question

A loan originator agrees over the telephone to help a consumer obtain a mortgage loan, but the consumer has not yet completed a loan application. When must the privacy notice be provided?

A) Only after underwriting approval
B) When the loan closes
C) Within 30 days after closing
D) When the originator agrees to look for a mortgage loan

50. Question

A mortgage company has been working with a borrower for 14 months because of construction delays. What privacy notice requirement applies?

A) No additional notice is required
B) The borrower must receive an annual privacy notice
C) A new loan application must be completed
D) A new credit report must be obtained

51. Question

Which individual must receive the privacy notice?

A) Only applicants who close on a loan
B) Only borrowers whose information is shared with marketers
C) Anyone for whom the originator takes an application or agrees to broker a loan
D) Only borrowers obtaining conventional financing

52. Question

A mortgage broker first establishes a business relationship with a consumer during a telephone conversation. How should the privacy notice be delivered?

A) It may be delivered verbally only
B) It must be mailed immediately
C) It may wait until loan closing
D) It must be posted on the company website

53. Question

Which delivery method satisfies the privacy notice requirements described on this page?

A) Posting the notice on a website only
B) Text message delivery only
C) Hard-copy delivery to the client
D) Social media notification

54. Question

A mortgage company had customers before July 1, 2001. What privacy notice requirement applied to those customers?

A) No notice was required
B) Notice was required only if a loan closed
C) Notice was required only if information was sold
D) The company was required to provide the privacy notice to existing customers

55. Question

Under the 2018 amendments to the privacy rule, a financial institution may qualify for an exemption from the annual privacy notice requirement if:

A) It has fewer than 100 customers
B) It originates only residential mortgages
C) It has not changed its privacy policies and disclosures and meets certain information-sharing limitations
D) It obtains annual customer signatures

56. Question

A lender continues to share nonpublic personal information only as previously disclosed and has not changed its privacy practices since providing the last privacy notice. Under the 2018 rule, what may be true?

A) The lender may not need to provide an annual privacy notice
B) The lender must provide quarterly privacy notices
C) The lender must obtain a new signed authorization each year
D) The lender must stop sharing information

57. Question

Which statement best describes the relationship between the annual notice rule and the 2018 exception?

A) The annual notice is always required even when the institution meets the 2018 exception.
B) The 2018 exception may eliminate the annual notice duty only when the institution meets both conditions in the rule.
C) The 2018 exception applies only when the borrower is denied credit.
D) The 2018 exception applies only to website notices and never to hard-copy notices.

58. Question

A consumer wants to reduce unwanted telemarketing calls and registers both a home phone and a cell phone number with the National Do-Not-Call Registry.

What is the primary purpose of the Registry?

A) To block all incoming calls automatically
B) To allow consumers to identify numbers that telemarketers may not call
C) To require all businesses to stop making telephone calls
D) To prevent lenders from contacting existing customers

59. Question

Once a consumer’s telephone number is placed on the National Do-Not-Call Registry, how long does it remain there?

A) Five years
B) Ten years
C) Until the consumer removes it or service is discontinued
D) Indefinitely unless renewed every year

60. Question

A mortgage company uses telemarketing to contact prospective borrowers.

How often must the company update its call lists by removing numbers appearing on the National Do-Not-Call Registry?

A) Every 7 days
B) Every 31 days
C) Every 60 days
D) Every 90 days

61. Question

A consumer tells a mortgage company representative, “Do not call me again.”

How long must the company’s internal Do-Not-Call list honor that request?

A) One year
B) Three years
C) Five years
D) Ten years

62. Question

During a telemarketing call, which information must the solicitor provide?

A) Only the company website
B) Only the loan officer's first name
C) The solicitor's name, the entity represented, and contact information
D) The consumer's credit score

63. Question

A telemarketer places a solicitation call but intentionally blocks all Caller ID information.

Which requirement may have been violated?

A) RESPA disclosure requirements
B) Caller ID transmission requirements
C) ECOA notification requirements
D) HMDA reporting requirements

64. Question

A company uses a prerecorded message to solicit mortgage business from residential telephone numbers.

Which statement is generally correct?

A) Such calls are always permitted
B) Such calls are prohibited when made using artificial voices or recordings
C) Such calls are permitted if made after 9:00 p.m.
D) Such calls are permitted if the company is licensed

65. Question

A telemarketer sends prerecorded advertising messages to cell phones.

Which statement is most accurate?

A) The practice is generally prohibited
B) The practice is allowed if the call lasts less than one minute
C) The practice is allowed on weekends
D) The practice is allowed if Caller ID information is transmitted

66. Question

A company uses an autodialer that simultaneously occupies multiple lines at a hospital emergency communications center.

Why is this problematic?

A) It violates appraisal independence requirements
B) It violates restrictions on autodialed or prerecorded calls to emergency numbers and multiple-line businesses
C) It violates HMDA reporting requirements
D) It violates flood insurance regulations

67. Question

Which additional marketing practice is prohibited under related provisions discussed on this page?

A) Sending Loan Estimates electronically
B) Providing annual privacy notices
C) Sending unsolicited advertising faxes
D) Conducting customer satisfaction surveys

68. Question

TELEMARKETING SALES RULES

A telemarketer places an unsolicited call to a consumer residence at 10:30 p.m. local time without prior consent. Why could this violate federal telemarketing regulations?

A) Telemarketing calls may only be made between 10:00 a.m. and 5:00 p.m.
B) Calls to residences are prohibited after 9:00 p.m. local time without prior consent
C) Telemarketers may call only on weekends
D) Telemarketing calls are prohibited unless the consumer is already a customer

69. Question

Without a consumer’s prior consent, during which hours may a telemarketer generally call a residence?

A) 7:00 a.m. to 10:00 p.m.
B) 8:00 a.m. to 9:00 p.m.
C) 9:00 a.m. to 8:00 p.m.
D) 8:00 a.m. to 10:00 p.m.

70. Question

A consumer signed a written agreement authorizing a mortgage company to contact them regarding financing opportunities. What effect does this agreement have?

A) The company may place solicitation calls under the written agreement exception.
B) The company is exempt from all telemarketing laws.
C) The consumer is automatically removed from the Do-Not-Call Registry.
D) The company is no longer required to maintain records.

71. Question

A borrower closed a loan with a lender 12 months ago and is listed on the National Do-Not-Call Registry. May the lender generally contact the borrower?

A) No, because DNC registration always prohibits calls.
B) No, because the relationship ended at closing.
C) Yes, but only if the borrower signs a new application.
D) Yes, because an established business relationship exists.

72. Question

RETENTION OF TELEMARKETING RECORDS

A telemarketing company undergoes a regulatory audit concerning solicitation activities conducted 18 months earlier. How long must telemarketing records generally be retained?

A) 6 months
B) 12 months
C) 18 months
D) 24 months

73. Question

RETENTION OF TELEMARKETING RECORDS

A telemarketing company allows employees to use fictitious names during solicitation calls. What requirement applies to the use of fictitious names?

A) Fictitious names may not be used under any circumstances
B) Multiple employees may share the same fictitious name if approved by management
C) Each fictitious name must be traceable to only one specific employee
D) Employees may change fictitious names daily without documentation

74. Question

A consumer wishes to place their phone number on the National Do-Not-Call Registry. Which method is specifically identified?

A) Visit www.donotcall.gov or call 1-888-382-1222.
B) Contact the CFPB directly.
C) File a complaint with HUD.
D) Contact the local mortgage regulator.

75. Question

How long must a seller or telemarketer generally retain records relating to telemarketing activities?

A) 12 months
B) 18 months
C) 36 months
D) 24 months

76. Question

Which of the following records must be retained under telemarketing recordkeeping requirements?

A) Advertising only
B) All of the above record categories including scripts, customer and purchase records
C) Employee records only
D) Purchase records only

77. Question

Which employee information must a telemarketer retain?

A) Employee compensation only
B) Employee tax returns
C) Employee name and last known home address and telephone number
D) Credit reports

78. Question

A telemarketing company allows employees to use fictitious names. What additional requirement applies?

A) Each fictitious name must be traceable to one specific employee.
B) Employees may share the same fictitious name.
C) FTC approval is required.
D) Fictitious names may only be used for inbound calls.

79. Question

A mortgage company maintains brochures, scripts, customer purchase records, and employee records for two years after creation. Which requirement is the company attempting to satisfy?

A) HMDA reporting requirements
B) Privacy notice requirements
C) Flood insurance documentation requirements
D) Telemarketing record retention requirements

80. Question

TCPA VIOLATIONS

A solicitor violates the Telephone Consumer Protection Act during a mortgage solicitation campaign. A consumer brings a claim directly against the solicitor for the violation.

What damages may the individual generally recover?

A) $50 per violation or actual damages, whichever is lower
B) $500 to $1,500 for each violation, or actual monetary loss, whichever is higher
C) Only the actual monetary loss proven by the consumer
D) A maximum of $100 total for all violations

81. Question

DO-NOT-CALL VIOLATIONS

A telemarketer violates the Do-Not-Call provision of the Telemarketing Sales Rule by placing prohibited calls to consumers.

What penalty may apply for each prohibited call?

A) Up to $500 per campaign
B) Up to $1,500 total regardless of the number of calls
C) Up to $50,120 per call
D) Only a written warning for the first year

82. Question

A first-time homebuyer only has 5% for a down payment and is seeking a conventional loan.

How does PMI make this transaction possible?

A) PMI eliminates underwriting requirements
B) PMI allows financing up to about 95% or higher with special programs
C) PMI replaces appraisal requirements
D) PMI guarantees resale value

83. Question

A borrower refinances and the new loan-to-value is calculated at 79%.

How does this affect PMI?

A) PMI must remain for two years
B) PMI is required because it is a refinance
C) PMI is not required because LTV is 80% or lower
D) PMI is optional

84. Question

A borrower has been paying PMI for several years. The loan balance now equals 78% of the original property value.

What should occur regarding PMI?

A) PMI must continue for the full loan term
B) PMI may be canceled only upon borrower request
C) PMI premiums will be canceled
D) PMI converts to FHA MIP

85. Question

A mortgage company reviews a regulation governing mortgage advertising. Which federal agency oversees this Act?

A) Federal Trade Commission (FTC)
B) Department of Housing and Urban Development (HUD)
C) Consumer Financial Protection Bureau (CFPB)
D) Federal Housing Finance Agency (FHFA)

86. Question

A lender publishes a mortgage advertisement and later removes it from circulation. How long must the lender generally retain records of the advertisement?

A) 12 months from the first publication date
B) 18 months from the last publication date
C) 36 months from the last publication date
D) 24 months from the last date of the communication

87. Question

A mortgage advertisement includes an example of a specific loan program with stated credit terms. Which requirement applies to the advertisement?

A) The example may be hypothetical and unavailable.
B) The advertisement must include all terms applicable to the example, and the terms must actually be available.
C) The advertisement may omit material terms if space is limited.
D) The example may be based on future projected rates.

88. Question

A lender advertises a finance charge rate in a mortgage advertisement. What additional disclosure is required?

A) The APR must be stated using the term Annual Percentage Rate or APR
B) The lender's NMLS number only
C) The total amount financed
D) The borrower's projected payment history

89. Question

Which lending rate is considered the primary rate that may be advertised?

A) Note rate
B) Prime rate
C) Discount rate
D) APR

90. Question

A mortgage advertisement displays “7.00% Interest Rate” in large print and “7.125% APR” in smaller print. Why could this be problematic?

A) Interest rates may never be advertised.
B) APR must not be less conspicuous than the interest rate.
C) APR is optional when the interest rate is shown.
D) Only APR may appear in mortgage advertising.

91. Question

A lender advertises an adjustable-rate mortgage with a low introductory interest rate. What additional information must be included?

A) The lender's annual revenue
B) The borrower's future credit score
C) A statement that the interest rate may change during the loan term
D) The appraised value of the property

92. Question

A mortgage advertisement contains a triggering term. What is the likely consequence?

A) The advertisement must disclose additional credit terms.
B) The advertisement becomes exempt from disclosure requirements.
C) The advertisement must be approved by HUD.
D) The advertisement may omit the APR.

93. Question

TRIGGERING TERMS IN ADVERTISING

A mortgage advertisement states:

“Only 5% Down Required!”

Why is this statement considered a triggering term under federal advertising rules?

A) Because any reference to mortgage financing automatically requires regulatory approval
B) Because the amount or percentage of a down payment is considered a triggering term
C) Because only APR disclosures are considered triggering terms
D) Because down payment information may never appear in mortgage advertisements

94. Question

TRIGGERING TERMS IN ADVERTISING

A lender publishes the following advertisement:

“30-Year Mortgage
Payments Under $1,400 Per Month”

Which additional disclosure must generally also appear in the advertisement?

A) The annual percentage rate (APR) and repayment terms
B) The lender annual earnings statement
C) The borrower estimated closing date only
D) The seller property tax information

95. Question

TRIGGERING TERMS IN ADVERTISING

A mortgage company advertises:

“Low Introductory APR Available!”

However, the advertisement fails to disclose that the APR may increase after consummation of the loan.

What federal advertising issue exists?

A) Introductory APRs are prohibited in mortgage advertisements
B) APR disclosures are optional if payments are not shown
C) If the APR may increase after consummation, that fact must also be disclosed
D) APR adjustments may remain confidential until closing

96. Question

TRIGGERING TERMS IN ADVERTISING

A mortgage advertisement does not specifically state the repayment term but provides enough information for a consumer to easily calculate the repayment structure.

Why could additional disclosures still be required?

A) Additional disclosures are required only when triggering terms are stated exactly as defined by regulation
B) Triggering terms apply only to printed advertisements
C) Additional disclosures are required even if a triggering term may be readily determined from the advertisement
D) Consumers are prohibited from calculating repayment terms independently

97. Question

PROHIBITED REPRESENTATIONS

A mortgage advertisement states:

“Your monthly payment covers all interest owed each month and your loan balance will never increase.”

In reality, unpaid interest may be added to the loan balance under the loan terms.

Why could this advertisement violate federal law?

A) Mortgage lenders are prohibited from discussing monthly payments in advertisements
B) The advertisement may materially misrepresent how interest and loan balances are calculated
C) Loan balance increases may never occur under adjustable-rate loans
D) Advertisements are not required to accurately describe interest calculations

98. Question

PROHIBITED REPRESENTATIONS

A lender advertises:

“Absolutely No Fees Guaranteed!”

However, the borrower is later charged origination and processing fees at closing.

Why could this advertisement violate federal regulations?

A) Fees may only be disclosed verbally
B) Mortgage advertisements are prohibited from mentioning fees
C) The advertisement may materially misrepresent the existence or amount of fees associated with the mortgage product
D) Closing costs are exempt from federal advertising regulations

99. Question

Prohibited Representations

A mortgage advertisement states, “Free Credit Disability Insurance Included,” even though the borrower must pay an additional monthly premium for the coverage.

Which prohibited representation has likely occurred?

A) Misrepresentation regarding additional products or features associated with the mortgage
B) Misrepresentation regarding taxes and insurance
C) Misrepresentation regarding default provisions
D) Misrepresentation regarding payment schedules

100. Question

Prohibited Representations

A lender advertises a mortgage payment of $1,500 per month but fails to disclose that property taxes and homeowners insurance are not included.

Which prohibited representation may have occurred?

A) Misrepresentation regarding prepayment penalties
B) Misrepresentation regarding taxes or insurance obligations
C) Misrepresentation regarding minimum payments
D) Misrepresentation regarding default risk

101. Question

Prohibited Representations

A loan officer tells a borrower, “This loan has absolutely no penalties,” despite a contractual prepayment penalty provision.

Which prohibited representation is illustrated?

A) Misrepresentation regarding loan type
B) Misrepresentation regarding available cash proceeds
C) Misrepresentation regarding prepayment penalties
D) Misrepresentation regarding payment timing

102. Question

Prohibited Representations

An adjustable-rate mortgage advertisement prominently states “FIXED RATE LOAN” even though the interest rate adjusts after three years.

Which prohibited representation may have occurred?

A) Misrepresentation regarding interest rate variability
B) Misrepresentation regarding taxes and insurance
C) Misrepresentation regarding default provisions
D) Misrepresentation regarding available credit

103. Question

Prohibited Representations

An advertisement compares a one-year introductory payment to a hypothetical payment that would exist for the entire 30-year loan term.

Which prohibited representation may be involved?

A) Misrepresentation regarding mortgage type
B) Misrepresentation regarding payment comparisons
C) Misrepresentation regarding cash available to the borrower
D) Misrepresentation regarding default

104. Question

Prohibited Representations

A lender advertises a negatively amortizing loan as a “fully amortizing mortgage.”

Which prohibited representation may have occurred?

A) Misrepresentation regarding taxes and insurance
B) Misrepresentation regarding prepayment penalties
C) Misrepresentation regarding the type of mortgage product
D) Misrepresentation regarding default risk

105. Question

Prohibited Representations

A reverse mortgage advertisement guarantees that every borrower will receive $100,000 in cash proceeds, regardless of qualifications.

Which prohibited representation may have occurred?

A) Misrepresentation regarding payment timing
B) Misrepresentation regarding available cash or credit
C) Misrepresentation regarding taxes and insurance
D) Misrepresentation regarding loan type

106. Question

Prohibited Representations

A reverse mortgage advertisement states, “No payments will ever be required,” without disclosing circumstances that could trigger obligations under the loan.

Which prohibited representation may have occurred?

A) Misrepresentation regarding prepayment penalties
B) Misrepresentation regarding interest rate adjustments
C) Misrepresentation regarding required or minimum payments
D) Misrepresentation regarding taxes

107. Question

Prohibited Representations

A lender advertises that a borrower can never default on a reverse mortgage, even if property taxes and insurance are not paid.

Which prohibited representation may have occurred?

A) Misrepresentation regarding available credit
B) Misrepresentation regarding mortgage type
C) Misrepresentation regarding payment schedules
D) Misrepresentation regarding the potential for default

108. Question

Prohibited Representations

A mortgage advertisement states, “Use this loan to eliminate all your credit card debt forever,” even though the borrower will remain legally obligated for the debt unless it is paid in full.

Which prohibited representation may have occurred?

A) Misrepresentation regarding debt reduction or debt forgiveness
B) Misrepresentation regarding government affiliation
C) Misrepresentation regarding refinancing approval
D) Misrepresentation regarding counseling services

109. Question

Prohibited Representations

A lender mails advertisements displaying an eagle seal and wording that implies the program is sponsored by a federal agency, even though no government affiliation exists.

Which prohibited representation may have occurred?

A) Misrepresentation regarding the source of the communication
B) Misrepresentation regarding the right to remain in a dwelling
C) Misrepresentation regarding government affiliation or endorsement
D) Misrepresentation regarding pre-approval status

110. Question

Prohibited Representations

A solicitation is designed to appear as though it was sent by the consumer’s current mortgage servicer, when it was actually sent by an unrelated lender.

Which prohibited representation may have occurred?

A) Misrepresentation regarding refinancing eligibility
B) Misrepresentation regarding the source of the communication
C) Misrepresentation regarding debt restructuring
D) Misrepresentation regarding counseling qualifications

111. Question

Prohibited Representations

A reverse mortgage advertisement states, “You can stay in your home forever under all circumstances.”

Why could this statement be misleading?

A) It misrepresents available counseling services.
B) It misrepresents debt forgiveness opportunities.
C) It misrepresents the consumer's right to remain in the dwelling.
D) It misrepresents loan modification approval.

112. Question

Prohibited Representations

A mail solicitation states, “Congratulations! You are guaranteed approval for our mortgage program.”

Which prohibited representation may have occurred?

A) Misrepresentation regarding government sponsorship
B) Misrepresentation regarding the likelihood of obtaining a mortgage product
C) Misrepresentation regarding debt elimination
D) Misrepresentation regarding counseling services

113. Question

Prohibited Representations

A company advertises, “Your loan modification has already been approved,” before reviewing the consumer’s financial information.

Which prohibited representation may have occurred?

A) Misrepresentation regarding the likelihood of obtaining a refinancing or modification
B) Misrepresentation regarding government affiliation
C) Misrepresentation regarding property occupancy rights
D) Misrepresentation regarding communication sources

114. Question

Prohibited Representations

A mortgage assistance company advertises that its advisors are licensed housing counselors, but none possess the qualifications claimed.

Which prohibited representation may have occurred?

A) Misrepresentation regarding debt forgiveness
B) Misrepresentation regarding mortgage approval
C) Misrepresentation regarding counseling services or expert advice
D) Misrepresentation regarding reverse mortgage occupancy rights

115. Question

A mortgage provider states that its loan program is a government benefit, even though the product is not sponsored by or affiliated with any government program. What has been misrepresented?

A) The timing of a required payment
B) The consumer's ability to receive counseling
C) The association of the mortgage product with a government benefit or program
D) The existence of a loan prepayment penalty

116. Question

A mortgage advertisement states that the provider is affiliated with a national housing organization, even though no relationship exists. What has been misrepresented?

A) The consumer's right to obtain a refinance
B) The source of tax and insurance payments
C) The availability of a prepayment penalty waiver
D) The provider's association or affiliation with another organization

116 graded questions

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