Multiple Choice
Identify the letter of the choice that best
completes the statement or answers the question.
|
|
|
1.
|
Which federal law requires a lender to inform the borrower as to the annual
percentage rate on a loan?
a. | Real Estate Settlement and Procedures act (RESPA) | c. | Equal Credit Opportunity
Act | b. | Truth-In-Lending Act (REGULATION Z) | d. | Interest Reporting
Act |
|
|
|
2.
|
All of the following are part of the ANNUAL PERCENTAGE RATE on a loan
EXCEPT:
a. | Service charges | c. | Attorney's fees | b. | Loan origination fees | d. | Discount points |
|
|
|
3.
|
A broker runs the following ad in a local
newspaper: "Four bedroom, 3 bath home in Soaring Hawk location. $30,000 down and get a 9% loan
with payments of $766 per month. The ad is a violation of which of the following laws: a. | RESPA | c. | Truth-In-Lending | b. | Equal Credit Opportunity
Act | d. | Fair-and-Truthful
Advertising Act |
|
|
|
4.
|
Under Truth-In-Lending, if a broker advertises a property with an assumable loan
he/she must:
a. | State the finance charge as an annual percentage rate | c. | Give the current rate of interest
in the marketplace | b. | Provide the newspaper with all the data about
the loan | d. | Keep the details
of the loan on file in his office |
|
|
|
5.
|
Which of the following would be regulated by Truth-In-Lending?
a. | A commercial loan to construct an apartment building | c. | A loan on a single-family house
with more than 4 payments | b. | A farm loan | d. | An investment
loan |
|
|
|
6.
|
If a broker advertises a property as having an "Assumable Variable Rate
Loan with a range of 8% to 11 %". It would be a violation of Truth-In-Lending (Regulation Z)
because:
a. | The sale price was not given | c. | Adjustable loans are not
assumable | b. | The ad must state "Annual Percentage Rate" after the interest
rate | d. | The interest range is
too wide |
|
|
|
7.
|
Which of the following are regulated by Regulation Z?
a. | Maximum interest rates on consumer loan | c. | Maximum time a contract can
run | b. | Consumer installment loans (Car Loans) | d. | Closing costs charged at
settlement |
|
|
|
8.
|
A real estate broker has placed the following ad in a local newspaper: "Only $95,000 buys this beautiful, two story, four
bedroom, three bath home. Make a small down payment and assume a low-interest rate loan with a 9
percent annual percentage rate."
Under the Truth-In-Lending Act the above ad
would be: a. | Not permitted because the term annual percentage rate must be abbreviated
APR | c. | Not permitted because the "9 percent annual percentage rate is a
"trigger" item | b. | Not permitted because the "cash"
price of $95,500 is a "trigger" term | d. | Permitted |
|
|
|
9.
|
Truth-In Lending establishes limits on which of the following?
a. | The rate of interest the bank can charge on a mortgage loan | c. | The maximum number
of days the borrower has to exercise his right of recision | b. | The length of time a
borrower can take to pay back a loan | d. | The total closing costs to be charged by a lender |
|
|
|
10.
|
A local newspaper ran an ad
for Star Realty concerning a property listed with the broker-owner.
"Purchase this beautiful property today with no
closing fees, no loan discount points, and no appraisal necessary on a 7% conventional
loan."
Which statement in this ad is a violation of Truth-In-Lending? a. | No appraisal necessary | c. | No fees or loan discount points | b. | Purchase the
property today | d. | 7%
conventional loan |
|
|
|
11.
|
Under Truth-In-Lending the annual percentage rate shows:
a. | The True Cost of Credit | c. | Interest and
penalties | b. | Interest charges only | d. | Debt Service |
|
|
|
12.
|
Which of the following loans are covered by Truth-In-Lending (Regulation
Z)?
a. | A rancher borrows $30,000 from the bank | c. | A corporation borrows $50,000 to
paint it's buildings | b. | A person borrows $5,000 from a friend to buy a
car | d. | A homeowner gets a
second mortgage on his residence |
|
|
|
13.
|
All of the following are covered by the Truth-In-Lending Act
EXCEPT:
a. | A car loan of more than 5 payments | c. | A home equity
loan | b. | A loan than places a 2nd mortgage on a residence | d. | A loan to buy a pet
store |
|
|
|
14.
|
A broker runs an ad in a local newspaper for a property at $124,500 with only
$4,000 down. Must she provide any additional information?
a. | Yes, because the price is a "trigger" item | c. | Yes, because the down payment is a
trigger item. | b. | No, because the price and the down payment are not trigger items | d. | No, because the price is less than
$125,000 |
|
|
|
15.
|
Which of the following statements in an ad would require full disclosure
according to Truth-In-Lending?
a. | Low monthly payments | c. | FHA and VA financing available on variable rate
loans | b. | Easy credit to qualified borrowers | d. | Only 5% down on FHA
loans |
|
|
|
16.
|
A borrower must be told the APR to:
a. | Require interest to be charged on an annual basis | c. | Eliminate
discrimination | b. | Allow borrowers to compare the true cost of credit | d. | Guarantee the borrower the lowest rate of
interest |
|