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CMB PREP 2024 QUESTIONS WITH COMPLETE SOLUTIONS!!
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CMB PREP 2024 QUESTIONS WITHCOMPLETE SOLUTIONS!!
Fair Housing Act of 1968 Answer - The federal law that prohibits discrimination in
housing based on race, color, religion, sex, handicap, familial status, and national
origin.
1. Part of the Civil Rights Act of 1968.
2. Applies to mortgages and home improvement loans.
Equal Credit Opportunity Act (ECOA - Reg B) Answer - A federal law that requires
lenders and other creditors to make credit equally available without discrimination on
the basis of race, color, religion, national origin, sex, marital status, age, receipt of
public assistance, or good faith exercise of any rights under the Consumer Credit
Protection Act.
1. Applies to every step in the loan process.
2. Purpose is to make credit equally available to all creditworthy customers.
3. Must notify if application is approved/denied within 30 days.
Real Estate Settlement Procedures Act - Reg X Answer - The Real Estate
Settlement Procedures Act (RESPA) was enacted by the U.S. Congress in 1975 to
provide homebuyers and sellers with complete settlement cost disclosures. RESPA
was also introduced to eliminate abusive practices in the real estate settlement
process, prohibit kickbacks, and limit the use of escrow accounts. RESPA is a
federal statute now regulated by the Consumer Financial Protection Bureau (CFPB).
To promote customer awareness of the nature and costs of closing a loan and to
protect consumers from unnecessarily high settlement costs caused by abusive
practices.
Truth in Lending Act - TILA/Reg Z Answer - Protects Borrowers against inaccurate
and unfair credit practices. It requires lenders to provide Borrowers with loan
disclosures of APR and very detailed information on loan payment, terms and costs
so they can compare and shop.
Governs right of rescission.
False Claims Act Answer - The False Claims Act, also called the "Lincoln Law", is
an American federal law that imposes liability on persons and companies who
,defraud governmental programs. It is the federal government's primary litigation tool
in combating fraud against the government.
Horses vs donkeys
What six pieces of information are needed for a complete application, triggering
RESPA? Answer - 1. Borrower's Name
2. Property Address
3. Social Security Number
4. Borrower's Income
5. Loan Amount
6. Estimated Property Value
Volker Rule Answer - The Volcker Rule prohibits banks from using their own
accounts for short-term proprietary trading of securities, derivatives, and commodity
futures, as well as options on any of these instruments.
Service Members Civil Relief Act Answer - A federal law designed to protect
persons in military service from loss of property when their ability to make the
payment has been affected by their entering military service
Home Mortgage Disclosure Act (HMDA - Reg C) Answer - The purpose is to identify
discriminatory loan patterns. Requires covered institutions to compile and disclose
data about applications they receive and the home purchase/improvement loans
they originate or purchase in a calendar year.
A federal law that requires lenders to annually disclose the number of loan
applications and loans in certain areas, thus eliminating the practice of "redlining."
Home Ownership and Equity Protections Act Answer - The Home Ownership and
Equity Protection Act (HOEPA) is a 1994 amendment to the Truth in Lending Act
(TILA) that protects consumers from predatory mortgage lending. The law requires
mortgage lenders to provide borrowers of "high-cost mortgages" with disclosures
about how much the loan will cost over its lifetime and the consequences of default.
In addition, the law requires that borrowers undergo pre-loan counseling and restricts
fees and penalties.
4 Types of CRT Answer - 1. Security Issuances - 56%. Refers to the publicly traded
STACR & CAS bonds.
2. Insurance/Reinsurance - 26%. This is CRT where risk is transferred to such
companies via an insurance contract. 3. Lender Risk Sharing - 18%. This is where a
seller of loans to the GSEs takes back via bilateral contract, some portion of the
associated credit risk for some period of time.
4. Senior/Subordinate - 0%. This is used very rarely & there were no transactions
during the firsy 6 months of 2019. It is only used on certain non-TBA mortgages.
Secured Overnight Financing Rate (SOFR) Answer - The SOFR is a broad measure
of borrowing cash overnight and is based on overnight transactions in the treasury
market. The SOFR is based on data from observable transactions (backward-
looking). Because the SOFR is based on overnight transactions, there is less
,uncertainty or chance of manipulation; and it is considered to have less risk. The
SOFR is a more accurate means of measuring the cost of borrowing money.
London Interbank Offered Rate Answer - The LIBOR which is based on estimated
borrowing rates (forward-looking) and is based on panel bank estimates.
Name the regulation that impacts the transition from LIBOR to SOFR AND describe
at least one compliance consideration for lenders. Answer - Compliance
considerations: Need to reference Regulation Z AND accurately describe at least
one compliance implication (e.g., consumer notification of a change to the contract
terms, limits on when the index can change, and requirements for selecting an
appropriate replacement index).
What do you do to prepare for the Civil Investigative Demand (CID)? Answer -
Activities to prepare for the CID: Institute a Legal Hold, Communicate with the CFPB,
Collect and review requested information and documents, File a motion to modify or
set aside the CID and Prepare your response.
If you are found in violation of discrimination during CID, what kind of penalties might
you face? Name at least two (2) penalties. Answer - Penalties could include:
Rescission or reformation of contracts, Refund of money or return of real property,
Restitution, Disgorgement or compensation for unjust enrichment, Payment of
damages or other monetary relief, Public notification regarding the violation, Limits
on the activities or functions of the person against whom the action is brought, and
Civil monetary penalties (which can go either to victims or to financial education).
Name three (3) benefits of eNotes. Answer - Improved convenience, quality control
and transaction speed; May be transferred from one holder to another nearly
instantaneously; Eliminated risk of lost notes; Is less expensive to create and
transmit than a paper promissory note; May be effectively protected against
undetected alteration; If managed in a properly designed information processing
system, eliminates uncertainty concerning the identity of the current person entitled
to enforce the eNote, and when that person first became entitled to enforce
Mortgage Electronic Registration System (MERS) Answer - MERS, which stands for
Mortgage Electronic Registration Systems, Inc., is a national electronic database that
tracks changes in mortgage servicing rights and beneficial ownership interests in
residential mortgage loans on behalf of its members. MERS serves as the
mortgagee in the land records for loans registered on the MERS® System and is a
nominee (or agent) for the owner of the promissory note.
What role does the MERS play with regard to eMortgages and eNotes? Answer -
The MERS eRegistry identifies the current Controller (holder) and Location
(custodian) of the Authoritative Copy of an eNote.
Explain what brought about the CFPB's "Know Before You Owe" initiative. Answer -
What brought it about (1 point): The Dodd-Frank Act required the CFPB to propose a
rule that combined and integrated the disclosures under the Truth in Lending Act
(TILA) and the Real Estate Settlement Procedures Act (RESPA). CFPB's efforts to
implement the rule became known as the "Know Before You Owe" initiative. The
, implementing rule came to be known as the TILA-RESPA Integrated Disclosures
(TRID) rule.
What is the purpose of SCRA? List two (2) protections it provides. Answer - The
purpose of the Servicemembers Civil Relief Act is to protect active members of the
armed forces so that they can focus their full attention on their military
responsibilities by postponing or suspending certain civil obligations.
Protections: SCRA reduces the interest rates for debts to 6%, and it protects against
default judgments, evictions, mortgage foreclosures, and repossession of property.
Name and describe two ways to hold title. Answer - 1. Tenants in common
• Two or more people hold title to real estate jointly, with equal or unequal
percentages of ownership.
• All aspects of the property are shared by the people named on the title.
• Each owner has the right to occupy and use the entire property.
• The interest percentage determines the financial ownership of the real estate.
2. Joint tenancy
• Two or more people hold title to real estate jointly, with equal rights to enjoy the
property during their lives.
• If one of the parties die, their rights of ownership pass to the surviving tenant(s).
• Tenants can enter into a joint tenancy at the same time, usually through a deed.
3. Community Property
• Ownership by spouses during their marriage. • Each spouse owns (or owes)
everything equally, regardless of who earned or spent the money.
• Each spouse gets an equal division of real estate property in the event of divorce
or death.
4. Tenancy by the entireties
• Owners are legally married.
• The couple is considered one person for legal purposes.
• This method conveys ownership to them as one person.
• Title transfers to the other in entirety if one of them dies.
5. Sole Ownership
• Ownership by an individual.
• Most commonly held by single men and women, and married men or women who
hold property apart from their spouse."
Name three (3) charges that are subject to zero tolerance on the Loan Estimate.
Answer - 1. Fees paid to the creditor
2. Fees paid to a mortgage broker
3. Fees paid to an affiliate of the creditor or a mortgage broker
4. Fees paid to an unaffiliated third party if the creditor did not permit the consumer
to shop for a third-party servicer provider for a settlement service
5. Transfer taxes
What is disparate treatment? Answer - Disparate treatment exists where the lender
treats similarly situated people are differently because of a prohibited factor. This
theory centers on the lender's intent. The existence of illegal disparate treatment
may be established either by statements revealing that a lender explicitly considered
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