Deck 11: The Loan and the Consumer

Question 1

Regulation Z deals with

A) annual percentage rates.
B) escrow fees.
C) truth-in-lending.
D) statue of frauds.

Answer 1

C
Regulation Z deals with truth in lending.

Question 2

In analyzing a mortgage loan application, a lender considers all EXCEPT

A) job stability.
B) income adequacy.
C) credit rating.
D) sales price.

Answer 2

D
In analyzing a mortgage loan application, a lender does not consider sales price.

Question 3

Generally, before a lender will approve a loan, the borrower must

A) have sufficient funds for the down payment.
B) sign a statement if the borrower intends to occupy the property.
C) both a and b. .
D) neither a nor b

Answer 3

C
The lender would require both.

Question 4

Which of the following loans would be exempt from the disclosure requirements of the truth-in-lending laws?

A) Commercial loans
B) Personal property loans in excess of $25,000
C) Financing extended to corporations
D) Consumer loans to natural persons

Question 5

Truth in lending laws were created primarily to protect

A) consumers.
B) lenders.
C) beneficiaries.
D) mortgagees.

Question 6

Penalties for violation of the truth-in-lending laws include

A) a fine of up to $5,000 and/or imprisonment for up to 1 year.
B) penalties up to twice the amount of the finance charge up to a maximum of $1,000.
C) Court costs, attorney fees, and actual damages.
D) all of the above.

Question 7

According to regulation Z, which of the following would be allowed without further disclosure in an advertisement to sell a residence?

A) Easy 11% mortgage assumption
B) Take over an 11% loan
C) Assume an 11% annual percentage rate mortgage
D) Assumable 11% loan

Question 8

Regulation Z requires a lender to disclose

A) interest charges expressed as dollars and percent.
B) dollar amount of any finance charge.
C) APR as a dollar amount.
D) all charges only as a percent.

Question 9

Truth in lending laws require a lender to provide figures for all EXCEPT

A) loan amount.
B) interest rates.
C) maintenance costs.
D) annual percentage rate.

Question 10

Which of the following would be most important to a lender qualifying an individual for a residential mortgage loan?

A) Borrower's regular income
B) Overtime income
C) Spouse's part-time income
D) Pest and dry rot report

Question 11

When advertising, a lender must disclose the

A) cost of appraisal.
B) annual percentage rate.
C) closing costs.
D) cost of the title search and title insurance.

Question 12

Under the truth in lending act, the cost of credit extended must be expressed as an

A) actual percentage rate.
B) approximate percentage rate.
C) annual percentage rate.
D) average percentage rate.

Question 13

All of the following are important to a mortgage lender when determining whether or not to make a real estate loan EXCEPT

A) the needs of the borrower.
B) the borrower's income.
C) the appraisal.
D) child support payments.

Question 14

Which of the following contains a trigger term under Regulation Z and requires further disclosure?

A) "Assumable VA loan"
B) "Buy for less than $600 a month"
C) "Cash price, only $79,500"
D) "Rent for only $499 per month"

Question 15

Which of the following loans would be exempt from the disclosure requirements of the truth-in-lending laws?

A) An unsecured personal loan of $3,000
B) An educational loan from a commercial bank
C) A second mortgage loan on a residence
D) A $30,000 loan for the purchase of a $40,000 automobile

Question 16

The Truth in Lending Act covers credit extended for a

A) business or commercial transaction.
B) large apartment building.
C) mobile home which is used as a residence.
D) loan secured by a car valued at $30,000.

Question 17

Which of the following do lenders of home loans consider the most important in their analysis of a loan application?

A) Age, sex, race, and marital status of the borrower
B) Location and age of the collateral
C) Job stability, income adequacy and credit rating of the borrower
D) Ethnic and business balance of collateral's neighborhood

Question 18

When borrowing money to buy a home, the borrower has the right of rescission

A) within three business days, including Saturday.
B) within three business days, not counting Saturday.
C) within three years.
D) at no time.

Question 19

With regard to truth in lending laws, which of the following is legally permissible to advertise, without further explanation?

A) Only $1,000 down payment
B) Less than $500 per month
C) 11% interest loan
D) APR 10% assumable

Question 20

A borrower does not have the right, under the truth-in-lending laws, to rescind a credit transaction

A) for a consumer loan on personal property.
B) for the acquisition of the borrower's principal dwelling.
C) both a and b.
D) neither a nor b.

Question 21

Truth in lending laws require a lender to provide figures for loan amount, interest rates, and annual percentage rate.

Question 22

When considering loan applications, lenders like to see

A) very little use of credit cards.
B) good repayment records.
C) derogatory information.
D) information at least seven years old.

Question 23

The right of individuals to inspect their file at a credit bureau is found in the

A) Truth-in-Lending Act.
B) Fair Credit Reporting Act.
C) Regulation Z.
D) Federal Consumer Credit Protection Act.

Question 24

Regulation Z deals with annual percentage rates.

Question 25

According to regulation Z, easy 11% mortgage assumption would be allowed without further disclosure in an advertisement to sell a residence.

Question 26

When advertising, a lender must disclose the closing costs.

Question 27

Truth-in-lending laws were created primarily to protect lenders.

Question 28

Under the truth in lending act, the cost of credit extended must be expressed as an actual percentage rate.

Question 29

In analyzing a mortgage loan application, it is illegal for a lender to consider

A) job stability.
B) marital status.
C) income adequacy.
D) credit rating.

Question 30

The Truth in Lending Act covers credit extended for a loan secured by a car valued at $30,000.

Question 31

The Federal Equal Credit Opportunity Act protects borrowers from discrimination based on

A) handicap status.
B) familial status.
C) sexual preference.
D) marital status.

Question 32

With regard to truth in lending laws, "Only $1,000 down payment" is legally permissible to advertise, without further explanation.

Question 33

The Fair Credit Reporting Act gives individuals several rights EXCEPT

A) correct any errors on their report.
B) inspect their file at a credit bureau.
C) delete any reference to bankruptcy.
D) make explanatory statements to supplement the file.

Question 34

"Buy for less than $600 a month" contains a trigger term under Regulation Z and requires further disclosure.

Question 35

Which of the following ratios of monthly payment to monthly income would be preferred by a residential lender?

A) 25%
B) 55%
C) 65%
D) 75%

Question 36

When making a mortgage loan application, borrowers are protected from discrimination based on marital status by the

A) Fair Credit Reporting Act.
B) Fair Housing laws.
C) Equal Credit Opportunity Act.
D) Real Estate Settlement Procedures Act.

Question 37

Regulation Z requires a lender to disclose the dollar amount of any finance charge.

Question 38

Which of the following is given consideration in evaluation of a loan application?

A) Race
B) Marital status
C) Sex
D) Income adequacy

Question 39

A lender can legally discriminate in loan terms based on the applicant's

A) religion.
B) marital status.
C) race or skin color.
D) intention to occupy (or not occupy) the mortgaged property.

Question 40

The APR is

A) usually lower than the interest rate.
B) made up of the interest rate combined with the other costs of the loan.
C) both a and b.
D) neither a nor b.

Question 41

The federal Equal Credit Opportunity Act prohibits discrimination based on age, sex, marital status and ____________________.

Question 42

When borrowing money to buy a home, the borrower has the right of rescission.

Question 43

When making a mortgage loan application, borrowers are protected from discrimination based on marital status by the Fair Credit Reporting Act.

Question 44

When considering loan applications, lenders like to see good ____________________ records.

Question 45

The borrower's income, the appraisal, and the needs of the borrower are important to a mortgage lender when determining whether or not to make a real estate loan.

Question 46

Borrower's regular income would be most important to a lender qualifying an individual for a residential mortgage loan.

Question 47

The Federal Equal Credit Opportunity Act protects borrowers from discrimination based on sexual preference.

Question 48

The practice of lenders to refuse to make loans in certain areas regardless of the quality of the structure or the borrower's ability to repay the loan is called ____________________.

Question 49

The borrower's assets that are in cash or readily convertible into cash are called ____________________ assets.

Question 50

A borrower has a limited right of ____________________ in a credit transaction.

Question 51

The _________________________ is the total dollar amount the credit will cost the borrower over the life of the loan.

Question 52

____________________ loans have risk-based pricing and rates are not quoted.

Question 53

The Fair Credit Reporting Act gives individuals the right to correct any errors on their report, inspect their file at a credit bureau and delete any reference to bankruptcy.

Question 54

In analyzing a mortgage loan application, a lender considers job stability, income adequacy and sales price.

Question 55

In analyzing a mortgage loan application, it is illegal for a lender to consider marital status.

Question 56

Job stability, income adequacy and credit rating of the borrower are the most important factors that a lender considers in analyzing a loan application.

Question 57

A residential lender would prefer the lowest possible payment to income ratio.

Question 58

If an applicant is purchasing a home as a(n)____________________, the lender will be more cautious because, during periods of high vacancy, the property may not generate enough income.

Question 59

In evaluating the borrower's life insurance, the ____________________ is the amount of money the policy holder would receive if the policy were surrendered to the insurance company.

Question 60

As well as a borrower's assets, the lender will evaluate the borrower's ____________________.

Question 61

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
the ratio of the amount of the loan to the appraised value of the property

Question 62

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
assets that may require months to sell and convert to cash

Question 63

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
federal regulations that implement the enforcement of the Truth-in-Lending Act

Question 64

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
the amount of money the policyholder would receive if the policy was surrendered to the insurance company

Question 65

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
scoring system applied to a list of subjective factors that are relative in evaluating credit risks

Question 66

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
transactions that are exempt from the lending disclosure requirement

Question 67

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
a report reflecting the creditworthiness of a borrower by showing past credit history

Question 68

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
the market value of a property less the debt against it

Question 69

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
refusal to make a real estate loan based solely on the location of the property

Question 70

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
loans that have risk-based pricing and are typically categorized from "A" to "F"

Question 71

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
federal law giving an individual the right to inspect his or her file with the credit bureau and correct any errors

Question 72

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
credit information used in advertising that requires additional credit disclosures

Question 73

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
assets that are in cash or are readily convertible to cash in a few days

Question 74

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
a federal law that requires certain disclosures when extending or advertising credit

Question 75

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
the annual percentage rate as calculated under the federal Truth-in-Lending Act by combining the interest rate with other costs of the loan

Question 76

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
the total amount the credit will cost over the life of the loan

Question 77

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
the right that gives borrowers three days to back out after signing loan papers

Question 78

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
popularly known as the Truth-in-Lending Act

Question 79

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
funds that are presently in the borrower's checking or savings accounts or available from the sale of the borrower's present property

Question 80

Choose the one most appropriate answer for each.
a.APR
k.liquid assets
b.cash value
l.loan-to-value ratio
c.credit report
m.redlining
d.credit scoring
n.Regulation Z
e.equity
o.right to rescission
f.exempt transactions
p.settlement funds
g.Fair Credit Reporting Act
q.subprime loans
h.Federal Consumer Credit Protection Act
r.Truth-in-Lending Act
i.finance charge
s.TILSRA
j.illiquid assets
t.trigger term
Truth-in-Lending Simplification and Reform Act