Test Bank Answer Key
Chapter 15 Government Regulation of Real Estate Closings
TRUE/FALSE
1. A loan made on a shopping center by a federal bank is subject to RESPA.
2. A loan to finance the purchase or transfer of 25 or more acres is exempt from RESPA.
3. The Uniform Settlement Statement (HUD–1) is required by the federal Truth–in–Lending Act.
4. The Uniform Settlement Statement (HUD–1) is required by RESPA.
5. The Truth-in-Lending Act places limitations on the amount of money a lender can escrow for
taxes and insurance.
6. RESPA places limitations on the amount of money a lender can escrow for taxes and insurance.
7. Kickbacks of less than $500 are permitted under RESPA.
8. Under RESPA a seller may require a certain title insurance company.
9. Unearned fees are prohibited under RESPA.
10. Violations of RESPA can impose both civil and criminal penalties.
11. A commercial loan secured by a shopping center is subject to Truth–in-Lending disclosures.
12. A commercial loan secured by a borrower’s home requires Truth–in-Lending disclosures.
13. Truth-in-Lending disclosures must be made within three days after the closing of the loan.
14. Truth-in-Lending disclosures must be made prior to the closing of the loan.
15. A loan to a corporation is subject to Truth–in-Lending.
16. A loan to a corporation is not subject to Truth–in–Lending.
17. The cost of credit in a dollar amount is known as the amount financed on a Truth–in-Lending
Disclosure Statement.
18. The cost of credit in a dollar amount is known as the finance charge on a Truth–in-Lending
Disclosure Statement.
19. The term amount financed on a Truth–in–Lending Disclosure Statement includes the loan
amount less prepaid finance charges.
20. The cost of credit as a yearly rate is known as the amount financed.
21. The cost of credit as a yearly rate is known as the annual percentage rate.
22. Loan discount points would be considered prepaid finance charges.
23. Truth-in-Lending Disclosure Statements must be signed by both the creditor and the borrower.
24. The total number of payments to be made must be disclosed on a Truth–in–Lending Disclosure
Statement.
25. A creditor must disclose on a Truth–in-Lending Disclosure Statement any charges imposed for
late payments.
26. RESPA provides for a right of rescission on certain loans.
27. Truth-in-Lending provides a right of rescission to a consumer when their principal dwelling is
encumbered by a loan.
28. On a loan secured by a principal residence of a husband and wife, both would have to agree to
rescind the transaction.
29. Truth-in-Lending provides that a creditor must only give one copy of the notice of right to
rescind to each consumer who is entitled to rescind the transaction.
30. A creditor must give four copies of the notice of right to rescind to a husband and wife whose
home is being secured by a loan.
31. The period to rescind a rescindable transaction is five business days.
32. The period to rescind a rescindable transaction is three business days.
33. Under no circumstances may a consumer waive the right to rescind a rescindable transaction.
34. If a transaction is rescinded, the security interest becomes void as of the time of rescission.
35. A loan, secured by a shopping center, which has a variable rate of interest is subject to the
ARM disclosure requirements.
36. An ARM disclosure must be made within three business days after a variable interest rate loan
is closed.
37. ARM disclosures must be made at the time an application form is provided to a consumer or
before the consumer pays a nonrefundable fee for the loan, whichever is earlier.
38. An adjustment notice under the ARM disclosure regulations must be sent at least once each
year during which an interest rate adjustment is made.
39. A variable rate that is tied to an index must be readily available and verifiable by the consumer.
40. A bank cannot use its own prime lending rate as an index for the adjustment in interest rate.
41. HOEPA regulates subprime commercial lending.
42. HOEPA regulates high interest-rate residential loans.
43. HOEPA permits a lender to charge a 5% fee in the event the loan is paid in full ahead of
schedule.
44. HOEPA prohibits any penalty or excess charge assessed against a borrower who pays the loan
in full ahead of schedule.