Cfpb II: B; Mortgage Servicing Pg 1 - 31
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Mortgage Servicing Audit Quiz
Questions and Answers
- 1.
A servicer may service loans on behalf of itself or an affiliate.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
A servicer can indeed service loans on behalf of itself or an affiliate. This means that a company or entity can handle the administrative tasks and responsibilities related to loan servicing, such as collecting payments, managing escrow accounts, and handling customer inquiries, either for its own loans or for loans belonging to a related company or entity. This arrangement allows for centralized loan servicing operations and can provide efficiency and cost savings for the entities involved.Rate this question:
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- 2.
Servicers must comply with various laws to the extent that the law applies to the particular servicer and its activities: (WHICH IS INCORRECT)
- A.
RESPA
- B.
TILA
- C.
GFE
- D.
EFTA
- E.
HPA
- F.
FCRA
Correct Answer
C. GFEExplanation
The GFE (Good Faith Estimate) is not a law, but rather a document that lenders are required to provide to borrowers under the Real Estate Settlement Procedures Act (RESPA). The GFE provides an estimate of the costs associated with obtaining a mortgage loan. While servicers must comply with RESPA, TILA, EFTA, HPA, and FCRA, the GFE is not a law that they need to comply with.Rate this question:
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- 3.
The Fair Debt Collection Practices Act (FDCPA) governs foreclosure activities conducted by third-party collection agencies, as well as servicer collection activities if the servicer acquired the loan when it was already in default.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The explanation for the given correct answer, which is False, is that the Fair Debt Collection Practices Act (FDCPA) does not specifically govern foreclosure activities. The FDCPA primarily regulates the activities of third-party collection agencies and does not directly apply to servicer collection activities, even if the loan was acquired in default. Foreclosure activities are typically governed by state laws and regulations.Rate this question:
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- 4.
The Fair Credit Reporting Act (FCRA) requires servicers that furnish information to consumer reporting agencies to ensure the accuracy of data placed in the consumer reporting system.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The Fair Credit Reporting Act (FCRA) mandates that servicers who provide information to consumer reporting agencies must guarantee the correctness of the data included in the consumer reporting system. This means that these servicers are obligated to ensure that the information they provide is accurate and reliable. Therefore, the statement "True" is correct, as it accurately reflects the requirement imposed by the FCRA.Rate this question:
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- 5.
Which Act requires servicers within the scope of coverage to provide privacy notices and limit information sharing.
- A.
TILA
- B.
ECOA
- C.
GLBA
- D.
FCRA
Correct Answer
C. GLBAExplanation
The correct answer is GLBA. The Gramm-Leach-Bliley Act (GLBA) requires servicers within its scope of coverage to provide privacy notices and limit information sharing. This act was enacted in 1999 and aims to protect the privacy of consumers' personal financial information held by financial institutions. It requires financial institutions to inform their customers about their information-sharing practices and give them the opportunity to opt-out of sharing their information with third parties. The GLBA also imposes certain safeguards to ensure the security and confidentiality of customers' nonpublic personal information.Rate this question:
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- 6.
Servicer credits payments toward principal and interest before it applies payments to fees and other charges.
- A.
Sometimes
- B.
All the time
- C.
Never
Correct Answer
B. All the timeExplanation
The given statement suggests that the servicer always credits payments towards principal and interest before applying them to fees and other charges. This means that whenever a payment is made, the servicer will first allocate the amount towards reducing the outstanding principal balance and paying off the interest accrued on the loan. Only after these obligations are met, any remaining amount will be used to cover fees and other charges associated with the loan. Therefore, the correct answer is "All the time".Rate this question:
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- 7.
Under the FDCPA, a “debt collector” is defined as any person who regularly collects, or attempts to collect, consumer debts for another person or institution or uses some name other than its own when collecting its own consumer debts, with certain exceptions.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The given statement is true. According to the Fair Debt Collection Practices Act (FDCPA), a "debt collector" is defined as any person who regularly collects or attempts to collect consumer debts for another person or institution, or uses a different name when collecting its own consumer debts. This definition includes individuals or companies who engage in debt collection activities on a regular basis.Rate this question:
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- 8.
An examination of whether a servicer’s loss mitigation program results in adverse impact on the basis of a protected class is not a concern for the servicer.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false because it is important for a servicer to examine whether their loss mitigation program results in adverse impact on the basis of a protected class. This is because it is illegal to discriminate against individuals based on protected characteristics such as race, gender, or religion. If a servicer's loss mitigation program disproportionately harms individuals from a particular protected class, it could be considered discriminatory and a violation of fair housing laws. Therefore, it is crucial for servicers to ensure that their programs do not result in adverse impact on protected classes.Rate this question:
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- 9.
To complete a disparate impact analysis of a servicer’s loss mitigation program, and determine whether a facially neutral policy or practice that has an adverse effect on a protected class meets a legitimate business need that cannot reasonably be achieved by a less discriminatory alternative, the auditor will need to see if there was a cost incurred to the government.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The explanation for the given correct answer is that the auditor does not need to see if there was a cost incurred to the government in order to complete a disparate impact analysis of a servicer's loss mitigation program. The analysis focuses on whether a facially neutral policy or practice has an adverse effect on a protected class and if there is a legitimate business need that cannot be achieved through a less discriminatory alternative. The cost incurred to the government is not a factor in this analysis.Rate this question:
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- 10.
Determine whether information provided to consumers about loss mitigation alternatives is....
- A.
Timely, in a 10 pica type, available on the internet
- B.
Clear, prominent and readily understandable
- C.
Presented in person by a licensed individual
- D.
Approved by Fannie Mae
Correct Answer
B. Clear, prominent and readily understandableExplanation
The correct answer is clear, prominent and readily understandable. This means that the information provided to consumers about loss mitigation alternatives should be easily comprehensible and noticeable. It should be presented in a way that is clear and easy to understand, ensuring that consumers are able to make informed decisions about their options.Rate this question:
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- 11.
If there are consumer complaints or other indications that the servicer is not providing customers with accurate information throughout the process, evaluate the servicer’s practices in the following areas: Which one is the least correct.
- A.
Determine whether the servicer provides adequate methods for consumers to contact it for information about the loss mitigation process, and timely responds to those contacts.
- B.
Determine whether the servicer adequately documents its contacts with consumers regarding loss mitigation. Appropriate documentation of oral contacts includes the dates of communications, names of contact person(s), and a summary of the conversation.
- C.
Determine whether the servicer has procedures in place to ensure all paperwork is collected and tracked in an efficient and reliable manner.
- D.
If the servicer represents to consumers that it is accessible for intake of loss mitigation requests, including if it represents that it has a “single point of contact” system in place, evaluate whether consumers can readily access the servicer’s representatives and obtain complete responses.
- E.
If the servicer denies the customer’s application for loan modification, determine whether it provides the customer with timely notice of rejection as well as the rationale.
Correct Answer
E. If the servicer denies the customer’s application for loan modification, determine whether it provides the customer with timely notice of rejection as well as the rationale.Explanation
The explanation for this answer is that the question asks for the "least correct" statement, meaning that all of the other statements are correct. The other statements evaluate different aspects of the servicer's practices in providing accurate information, adequate methods for contact, documentation of contacts, and efficient paperwork collection and tracking. However, the statement about providing timely notice of rejection and the rationale is not directly related to the servicer's practices in providing accurate information throughout the process.Rate this question:
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- 12.
Determine whether the servicer discloses all fees associated with modifications in a timely, prominent, and understandable manner.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is true because it states that the servicer discloses all fees associated with modifications in a timely, prominent, and understandable manner. This means that the servicer provides clear and easily accessible information about any fees that may be involved in the modification process. By doing so, borrowers can make informed decisions and understand the financial implications of the modifications.Rate this question:
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- 13.
Evaluate the servicer’s training programs for employees involved in the loan modification process.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement "Evaluate the servicer's training programs for employees involved in the loan modification process" is true. This means that the training programs for employees who handle loan modifications should be assessed or reviewed. This evaluation helps ensure that the training provided is effective and sufficient for employees to properly handle the loan modification process. By evaluating the training programs, any weaknesses or areas for improvement can be identified and addressed, leading to better performance and outcomes in loan modifications.Rate this question:
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- 14.
Determine whether the servicer discloses any material negative consequences that may occur as a result of a completed loan modification (e.g., decreased credit score, income tax implications if principal reduction is offered, and any increase in monthly payment amount).
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The correct answer is True. This means that the servicer does disclose any material negative consequences that may occur as a result of a completed loan modification. This is important for borrowers to be fully informed about the potential impacts of modifying their loan, such as a decreased credit score, income tax implications, and any increase in monthly payment amount. By disclosing these consequences, borrowers can make an informed decision about whether to proceed with the loan modification.Rate this question:
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- 15.
Determine whether the servicer discloses any rescheduling of payments that may occur under an existing obligation in a clear, prominent, and understandable manner.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The explanation for the correct answer is that it is important for the servicer to disclose any rescheduling of payments in a clear, prominent, and understandable manner. This ensures transparency and allows the borrower to be fully aware of any changes to their payment schedule. By disclosing this information clearly and prominently, the servicer is providing the borrower with the necessary information to make informed decisions about their financial obligations.Rate this question:
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- 16.
If the servicer is offering short sales as a loss mitigation tool, determine whether it provides clear, timely disclosures to the customer about the process.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The correct answer is true because if a servicer is offering short sales as a loss mitigation tool, it is important for them to provide clear and timely disclosures to the customer about the process. This helps ensure transparency and allows the customer to make informed decisions regarding their options.Rate this question:
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- 17.
Determine whether the servicer has foreclosed on any customers paying on a trial modification agreement, permanent modification agreement, forbearance agreement, or other similar agreement as allowed by CFPB.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The correct answer is False. This means that the statement "Determine whether the servicer has foreclosed on any customers paying on a trial modification agreement, permanent modification agreement, forbearance agreement, or other similar agreement as allowed by CFPB" is not true. In other words, the servicer has not foreclosed on any customers who were paying on these types of agreements.Rate this question:
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Quiz Review Timeline +
Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
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Current Version
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Jun 24, 2024Quiz Edited by
ProProfs Editorial Team -
Apr 08, 2013Quiz Created by
Ticia McGee
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