Question 1

Which statement about a credit bureau named in an FCRA adverse action notice is correct?

Accepted Answer

An FCRA adverse action notice must state that the consumer reporting agency did not make the adverse decision and cannot explain why the decision was made. The lender remains responsible for the underwriting decision.

Question 2

Which best describes the purpose of FCRA in mortgage lending?

Accepted Answer

The Fair Credit Reporting Act promotes accuracy, fairness, and privacy of information in consumer reporting files. It governs how consumer reports are obtained, used, disclosed, and corrected.

Question 3

What is the primary purpose of HMDA reporting?

Accepted Answer

HMDA is designed to provide data that help show whether financial institutions are serving community housing needs and to assist in identifying possible discriminatory lending patterns. Regulation C implements HMDA.

Question 4

A mortgage application is denied based on information in a consumer report. Under FCRA, the applicant must generally receive notice of:

Accepted Answer

When adverse action is taken based on a consumer report, FCRA generally requires notice of the CRA's name, address, and phone number, plus the consumer's right to a free report within 60 days and the right to dispute inaccurate information. The CRA did not make the credit decision.

Question 5

A borrower finds an error on a credit report that affected underwriting. Under FCRA, the borrower has the right to:

Accepted Answer

FCRA gives consumers the right to dispute the accuracy or completeness of information in their consumer reports. The CRA and furnisher must investigate the dispute under FCRA procedures.

Question 6

An MLO shares a borrower's full credit report with an unrelated party that has no permissible purpose. Which law is most directly implicated?

Accepted Answer

FCRA limits access to consumer reports to entities with a permissible purpose. Sharing a full report with an unrelated party without a permissible purpose raises serious FCRA and privacy concerns.

Question 7

A lender wants to stop collecting demographic data because it feels uncomfortable. Under HMDA and related fair-lending monitoring requirements, that is:

Accepted Answer

HMDA and related monitoring requirements require covered institutions to collect and report specified demographic information. The purpose is monitoring and fair-lending oversight, not discriminatory underwriting.

Question 8

An examiner reviews a lender's HMDA data and sees a pattern of denials concentrated in a protected community. HMDA is useful here because it:

Accepted Answer

HMDA data do not automatically prove discrimination, but they are a powerful tool for identifying patterns that may warrant further investigation. Regulators often use HMDA as a fair-lending screening tool.

Question 9

Which action would most likely violate the Fair Housing Act in mortgage lending?

Accepted Answer

The Fair Housing Act prohibits discrimination in mortgage lending based on protected characteristics or proxies for them. Charging worse terms because of neighborhood demographics may raise redlining or disparate-treatment concerns.

Question 10

A lender recommends a high-cost refinance that strips a borrower's equity without clear benefit. Which federal law most directly addresses this type of abusive high-cost lending?

Accepted Answer

HOEPA is aimed at abusive high-cost mortgage lending, including practices associated with equity stripping. The law adds special disclosures and restrictions for covered high-cost loans.

Other Federal Laws Practice Questions

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