Which of the following statements regarding the Fair Credit Reporting Act is true

1) The purpose of the Equal Credit Opportunity Act (ECOA) is which of the following:​

A.    To protect the credit history of consumers.
B.    To minimize discrimination in the obtaining of credit.
C.    To ensure that all consumers have an equal opportunity to obtain credit.
D.    To help consumers fight the growing crime of identity theft.

answer

The correct answer is C.This is the purpose of ECOA.

2) ECOA is also known as which of the following:​

A.    Regulation B.
B.    Regulation C.
C.    Regulation X.
D.    Regulation Z.​

answer

The correct answer is A. Remember “BECOA.”

3) ECOA is enforced by which federal agency:

A.    FBI.
B.    CFPB.
C.    HUD.
D.    FRB.​

answer

The correct answer is B. Yes, ECOA is implemented by the Consumer Financial Protection Bureau, but each financial institution falls under the authority of its respective regulatory agency.

4) All of the following are true statements about ECOA, except:​

A.    It was originally passed in 1969 to prohibit lending discrimination on the basis of sex or marital status.
B.    It requires credit bureaus to maintain separate credit files on married spouses, if requested.
C.    It applies to any creditor who regularly extends credit, and mortgage brokers who arrange financing.
D.    It allows credit applicants to file discrimination complaints or bring a civil lawsuit for alleged discrimination.

answer

The correct answer is A. ECOA was actually passed in 1974. The balance of the statement is true.

5) According to ECOA, which of the following is an MLO prohibited from doing:​

A.    Telling a loan applicant that he does not qualify for a loan.
B.    Submitting a loan application to a lender when he/she doesn’t believe the applicant will be approved.
C.    Discouraging a potential borrower from applying for a loan based on their membership in a protected class.
D.    Sending out an Adverse Action notice after an applicant has been turned down.

ANSWER

The correct answer is C. Yes, to advise a potential borrower not to even apply based on age or any of the other protected classifications would be a violation of ECOA.

6) According to ECOA, protected classifications include all of the following, except:

A.    Sex.
B.    Age.
C.    Disability.
D.    Race.​

ANSWER

The correct answer is C. Yes, disability is a protected classification of the Fair Housing Act, but not ECOA.

7) According to ECOA, protected classifications include all of the following, except:

A.    Color.
B.    Sexual orientation.
C.    Religion.
D.    National origin.

ANSWER

The correct answer is B. Yes, sexual orientation is not a protected classification of ECOA.

8) According to ECOA, it is okay for an MLO to ask about marital status in all of the following situations, except:

A.    Joint application.
B.    The couple has been married less than one year.
C.    The applicant is relying on their spouse’s income or alimony to qualify.
D.    It is a community property state, and the loan is secured by property in that state.

ANSWER

The correct answer is B. Yes, this is irrelevant.

9) According to ECOA, when the MLO is inquiring about marital status, the one term that should not be used is which of the following:

A.    Married.
B.    Divorced.
C.    Unmarried.
D.    Single.

ANSWER

The correct answer is B. Yes, the term unmarried includes divorced, single, and widowed.

10) According to ECOA, which of the following sources of income can be discounted or refused when an applicant applies for a loan:

A.    Overtime, if consistent.
B.    Public assistance income.
C.    Regular alimony and child support.
D.    None of the above.

ANSWER

The correct answer is D. None of these sources can be discounted or refused.

11) According to ECOA, creditors must notify applicants of a lending decision within what time frame?

A.    Within 21 days of filing a completed application.
B.    Within 30 days of filing a completed application.
C.    Within 30 business days of filing a completed application.
D.    Within 45 days of filing a completed application.

12) When a loan application is approved, which of the following is issued by the creditor:

A.    A Commitment Letter.
B.    A Letter of Congratulations.
C.    Loan Documents.
D.    Escrow Papers.

13) According to ECOA, if a loan application is incomplete, which of the  following is issued by the creditor:

A.    A  Rebuke Letter.
B.    A Notice of Incomplete Application.
C.    Tentative Loan Documents.
D.    Temporary Escrow Papers.

14) According to ECOA, when a loan application is declined, which of the following is issued by the creditor:

A.    A Letter of Decline.
B.    A Failure Notice.
C.    A Statement of Adverse Action.
D.    A Notice of Deficiency.

answer

The correct answer is C. It includes reasons for the decline, as well as contact information for all three major credit reporting agencies.

15) According to ECOA, borrowers have the right to request a copy of the appraisal report used in the decision-making process within what time frame?

A.    30 days.
B.    60 days.
C.    90 days.
D.    120 days.

answer

The correct answer is C. This is so the creditor cannot use the appraisal report as the reason for the decision to decline.

16) The purpose of the Home Mortgage Disclosure Act (HMDA) is which of the following:​

A.    To prohibit discriminatory practices of institutional lenders.
B.    To establish a quota of mortgage loans in particular metropolitan statistical areas (MSAs).
C.    To discover discriminatory practices.
D.    To regulate the percentages of mortgage loans made in a lender’s geographic area of influence.​

answer

The correct answer is C. HMDA does not regulate, prohibit, or establish quotas.

17) HMDA is enforced by which of the following federal agencies:

A.    CFPB.
B.    FTC,
C.    HUD.
D.    FBI.

answer

The correct answer is A. Yes, HMDA is enforced by the Consumer Financial Protection Bureau.

18) HMDA is also known as which of the following:

A.    Regulation V.
B.    Regulation B.
C.    Regulation C.
D.    Regulation X.​

answer

The correct answer is C. The acronym for this law is usually pronounced HUMDA, so just remember CHUMDA.

19) HMDA applies to all of the following covered properties, except:

A.    Home purchase.
B.    Home improvement loan.
C.    Subordinate lien financing.
D.    New construction.

answer

The correct answer is D. Yes, HMDA applies to one-to-four family residential properties, but not for vacant land, new construction, or loans that are sold as part of a pool for servicing.

20) Regulation C of HMDA requires lending institutions to submit a report to their supervisory agencies. This report is called which of the following:

A.    SARs report.
B.    LAR.
C.    MAR.
D.    PAR.​

answer

The correct answer is B. LAR stands for Loan/Application Register.

21) Financial institutions must submit their report to their supervisory agencies regarding loans and applications how often and when:

A.    Bi-monthly starting in January of each year.
B.    Bi-annually starting in January of each year.
C.    Once a year every March.
D.    At the end of every year in December.

22) All of the following are true regarding the issue of race and ethnicity for the Loan Application Register, except:
​
A.    MLOs must ask the applicant for this information.
B.    If the applicant declines to provide this information on the phone or Internet, the information need not be provided.
C.    If the applicant is in the presence of the MLO and declines to answer these questions, the MLO must provide information as to the race and ethnicity as well as can be determined.
D.    If the applicant declines to provide this information, their lack of cooperation could be held against them in the application for the loan.

answer

The correct answer is D. It is their right to decline to provide this information and will not be held against them in the loan process.

23) The Fair Credit Reporting Act (FCRA) is also known as which of the following:

A.    Regulation B.
B.    Regulation C
C.    Regulation V
D.    Regulation Z.

answer

The correct answer is C. This is a statement of fact. Some remember it by substituting a V for the F. Vair Credit Reporting Act.

24) The Fair Credit Reporting Act (FCRA) deals withal of the following issues, except:

A.    Deceptive and unfair practices in lending.
B.    Access to credit information.
C.    The rights of debtors.
D.    The responsibilities of creditors.

answer

The correct answer is A. Choice A would apply more for the Home Ownership and Equity Protection Act (HOEPA).

25) The Fair Credit Reporting Act (FCRA) accomplishes all of the following, except:​

A.    Gives consumers access to their own credit information.
B.    Requires periodic evaluation of compliance.
C.    Allows consumers to seek damages for violations of their rights.
D.    Provides additional rights for  identity theft victims and active duty military personnel.

answer

The correct answer is B. Yes, this answer choice does not apply.

26) Under the FCRA, consumers are entitled to a free copy of their credit file under which of the following circumstances:

A.    The consumer becomes a victim of identity theft and a fraud alert was placed in their credit file.
B.    The credit file contains inaccurate information as a result of fraud.
C.    The consumer is on public assistance or is unemployed.
D.    All of the above.

answer

The correct answer is D. Yes, all of these are reasons that the consumer could obtain a free copy of their credit file.

27) Consumers are entitled to a free copy of their credit report under all of the following circumstances, except:

A.    When the consumer was a victim of identity theft and a fraud alert was placed in their credit file.
B.    When the credit file contains inaccurate information as a result of fraud.
C.    When the consumer is on public assistance or is unemployed.
D.    When the information in the credit file resulted in a Notice of Incomplete Application.

answer

The correct answer is D. A Statement of Adverse Action would trigger a free copy of their credit report, but not a Notice of Incomplete Application.

28) Which of the following agencies publishes guides for consumers that explain all of their rights under FCRA:

A.    FRB.
B.    CFPB.
C.    HUD.
D.    FBI.

answer

The correct answer is B. The CFPB offers many publications and tools that assist the public.

29) Additional rights a consumer has under FCRA include which of the following:

A.    Request their credit score.
B.    Dispute incomplete or inaccurate information.
C.    Limit prescreened offers.
D.    All of the above.

answer

The correct answer is D. Yes, all of these are covered under FCRA.

30) According to the FCRA, credit reporting agencies may not report outdated negative credit information. How long may a Chapter 7 bankruptcy remain on the report?

A.    Three (3) years.
B.    Five (5) years.
C.    Seven (7) years.
D.    Ten (10) years.​

answer

The correct answer is D. A Chapter 7 BK is a full liquidation of debts and may remain on the credit report for 10 years.

31) According to the FCRA, credit reporting agencies may not report outdated negative credit information. How long may a Chapter 11 bankruptcy remain on the report?

A.    Three (3) years.
B.    Five (5) years.
C.    Seven (7) years.
D.    Ten (10) years.

answer

The correct answer is C. This chapter of bankruptcy is a reorganization of debt and may remain on the report for seven years.

32) According to the FCRA, what is the time limit a credit reporting agency may report a criminal conviction?

A.    Five (5) years.
B.    Seven (7) years.
C.    Ten (10) years.
D.    There is no time limit for a criminal conviction.

answer

The correct answer is D. While a bankruptcy is a serious event, a criminal conviction has more serious consequences than a bankruptcy.

33) According to the FCRA, which of the following is true regarding a credit reporting agency limiting access to a consumer’s credit file:

A.    A credit reporting agency would be overstepping its bounds to limit access to a consumer’s credit file.
B.    A credit reporting agency may not give out a consumer’s credit file to anyone without the written consent of the consumer.
C.    A credit reporting agency may not give out a consumer’s credit file to a prospective employer without the written consent of the consumer.
D.    The FCRA does not specify which parties are considered to have a valid need to request a consumer’s credit file.

answer

The correct answer is C. The FCRA does specify which parties are considered to have a valid need to request a consumer’s credit file.

34) The Fair and Accurate Credit Transaction Act (FACTA) is a 2003 amendment to which of the following laws:

A.    FCRA.
B.    ECOA.
C.    HMDA.
D.    HOEPA.

answer

The correct answer is A. Yes, the Fair Credit Reporting Act.

35) FACTA was enacted to fight primarily which of the following crimes:

A.    Redlining.
B.    Mortgage fraud.
C.    Identity theft.
D.    Predatory lending.

answer

The correct answer is C. Yes, and to help the consumer dispute inaccurate credit information.

36) Which of the following URLs will result in a free copy of the consumer’s credit report for the consumer:

A.    www.freecreditreport.com.
B.    www.annualcreditreport.com.
C.    www.gratiscreditreport.com.
D.    www.nochargecreditreport.com.

answer

The correct answer is B. There are other sources, but of this list, B is the only correct answer.

37) Which of the following statements best describes consumers’ rights based on FACTA:

A.    FACTA allows consumers applying for credit to receive the Home Loan Applicant Credit Score Information Disclosure notice, which explains their rights.
B.    FACTA requires that consumers applying for credit receive the Home Loan Applicant Credit Score Information Disclosure notice, which explains their rights.
C.    FACTA allows consumers a three day right of rescission on all loans.
D.    FACTA requires that consumers receive a three day right of rescission on all loans.  

38) Which of the following are things a consumer can do to combat identity theft thanks to FACTA:

A.    Request that the first five digits of their Social not be included in the credit report they receive.
B.    Place a credit freeze so no one can apply for credit using their information.
C.    Place a fraud alert with the credit bureau.
D.    Any and all of these can be done by the consumer.

answer

The correct answer is D. These are all consumer protection measures that can be taken thanks to the provisions of FACTA.

39) Which of the following are requirements of creditors according to FACTA:

A.    Contact the consumer named on the account when running a credit report with a fraud alert.
B.    Print no more than five digits of a credit card number on any receipt at a point of sale transaction.
C.    Assess the validity of change of address requests.
D.    All of the above.

answer

The correct answer is D. Yes, these are precautions a creditor must take.

40) All of the following are requirements that FACTA places on businesses to ensure effective security and disposal of sensitive personal consumer information, except:

A.    Burn or shred papers.
B.    Destroy or erase electronic files.
C.    Ball it up and double bag it in a trash bag.
D.    Place all pending loan documents in locked desks, cabinets, or storage rooms.

answer

The correct answer is C. Disposal methods must preclude reconstruction of the information.

41) Section 114 of FACTA—Red Flag Rules—apply to which of the following:

A.    Federal and state chartered banks and credit unions.
B.    Non-bank lenders.
C.    Any person who requests a consumer report.
D.    All of the above.

answer

The correct answer is D. Yes, this also includes mortgage brokers and any person who regularly participates in a credit decision, including setting terms of credit. Any person requesting a consumer report is included here because this person is required by law to reasonably verify the identity of the subject of a consumer report in the event of a notice of address discrepancy.

42) Red flags as noted in FACTA generally fall into  one of the following categories, except:

A.    Alerts, notifications, or warnings from a consumer reporting agency.
B.    Straw buyers involved in a transaction.
C.    Suspicious activity relating to a covered account.
D.    Notices from consumers or law enforcement authorities about possible identity theft.

answer

The correct answer is B. Straw buyers are not usually the problem with identity theft or inaccurate credit information.

43) The National Do Not Call Registry is under the oversight of which of the following federal agencies:

A.    FBI.
B.    HUD.
C.    FTC.
D.    FRB.​

answer

The correct answer is C. Yes, this is the agency that manages the Do Not Call Registry.

44) Which of the following agencies enforce the National Do Not Call Registry:

A.    FTC.
B.    FCC.
C.    State law enforcement officials.
D.    All of the above.​

answer

The correct answer is D. Yes, all of these enforce the National Do Not Call Registry.

45) The National Do Not Call Registry applies to all of the following, except:
​
A.    Any plan, program, or campaign to sell goods or services through interstate phone calls.
B.    Telemarketers who solicit consumers on behalf of third party sellers.
C.    Sellers who provide goods or services to consumers in exchange forpayment.
D.    Political organizations seeking to promote their  positions or raise money.

46) All of the following are exempt from the restrictions of The National Do Not Call Registry, except:

A.    Political organizations.
B.    Telephone surveyors.
C.    Telemarketers representing third party sellers.
D.    Charities.

answer

The correct answer is C. This is the only “for profit” caller listed here.

47) All of the following are required of companies because of The National Do Not Call Registry, except:

A.    Companies must keep national lists of customers and prospects updated every 30 days.
B.    Companies may not call a consumer after 31 days of the consumer being placed in the registry.
C.    Companies must keep an updated internal list of customers.
D.    Pay a fine for violation of the restrictions of the registry.

answer

The correct answer is A. Actually, the lists must be updated every 90 days.

48) Triniton, Inc. has two violations of The National Do Not Call Registry. What is the maximum total of their fines?

A.    $8,000.
B.    $16,000.
C.    $32,000.
D.    $100,000.​

answer

The correct answer is C. $16,000 x 2 = $32,000.

49) Which of the following is true regarding The National Do Not Call Registry:

A.    A telemarketer or seller may call a consumer with whom it has an established business relationship for up to one year after the consumer’s last purchase, delivery, or payment, even if the consumer’s number is on The National Do Not Call Registry.
B.    A telemarketer or seller may call a consumer with whom it has an established business relationship for up to one year after the consumer’s last purchase, delivery, or payment, unless the consumer’s number is on The National Do Not Call Registry.
C.    A telemarketer or seller may call a consumer with whom it has an established business relationship for up to eighteen months after the consumer’s last purchase, delivery, or payment, even if the consumer’s number is on The National Do Not Call Registry.
D.    A telemarketer or seller may call a consumer with whom it has an established business relationship for up to eighteen months after the consumer’s last purchase, delivery, or payment, unless the consumer’s number is on The National Do Not Call Registry.

answer

The correct answer is C. Yes, 18 months if there is an EBR, even if the consumer’s phone number is on The National Do Not Call Registry.

50) Regarding the company’s internal do not call list, which of the following is true:

A.    If a consumer is on a company’s internal do not call list, the company can still call for up to eighteen months if there is an EBR.
B.    If a consumer is on a company’s internal do not call list, the company cannot call even if there is an EBR.
C.    If a consumer is on a company’s internal do not call list, the company cannot call 31 days after it discovers the consumer’s number on the list.
D.    If a consumer is on a company’s internal do not call list, the company can still call if there is an EBR with the consumer.

answer

The correct answer is B. Being on the company’s internal do not call list trumps everything.

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