TRID: Loan Estimate & Closing Disclosure: practice questions

At the annual escrow analysis the servicer does not yet know next year's property tax bill. How may it estimate the disbursement?

1. On any amount it chooses, provided it refunds any surplus the next year
2. On twice last year's charge, to protect the account against a shortage
3. On last year's charge, or last year's raised by up to the latest CPI change ✓
4. It may not estimate; it must wait until the tax bill has been issued

Why: 12 CFR 1024.17(c)(7): "If the charge is unknown to the servicer, the servicer may base the estimate on the preceding year's charge, or the preceding year's charge as modified by an amount not exceeding the most recent year's change in the national Consumer Price Index for all urban consumers (CPI, all items)."

Source: 12 CFR 1024.17(c)(7)

On the Loan Estimate's Comparisons table, what does the Total Interest Percentage (TIP) show?

1. Total interest over the loan term as a share of the loan amount ✓
2. The interest rate after any adjustable-rate changes are applied
3. The cost of credit over the term, expressed as a yearly rate
4. Interest paid in the first five years as a share of all payments

Why: 12 CFR 1026.37(l)(3) defines the TIP as the total amount of interest the consumer will pay over the life of the loan, expressed as a percentage of the amount of credit extended. The APR, the cost of credit expressed as a rate, is a separate row under 1026.37(l)(2).

Source: 12 CFR 1026.37(l)(3)

A borrower asks to see the Closing Disclosure the day before closing, while a few figures are still being finalised. What must the creditor allow?

1. Nothing, since it has already met the 3-day delivery rule
2. A copy only once every figure is finally confirmed
3. Inspection of it as far as completed, on that day ✓
4. Inspection of the seller's figures, but not her own

Why: 12 CFR 1026.19(f)(2)(i) requires the creditor to permit the consumer to inspect the disclosures, completed to set forth the items then known, during the business day immediately preceding consummation. Items relating only to the seller's transaction may be omitted.

Source: 12 CFR 1026.19(f)(2)(i)

An annual escrow analysis finds a shortage of less than one month's escrow payment. Which of these may the servicer NOT do?

1. Allow the shortage to exist and do nothing about it
2. Require the borrower to repay it within 30 days
3. Require repayment in equal parts over 12 months
4. Require repayment of the shortage over 6 months ✓

Why: 12 CFR 1024.17(f)(3)(i): for a shortage of less than one month's payment the servicer may (A) allow it to exist, (B) require repayment within 30 days, or (C) require repayment "in equal monthly payments over at least a 12-month period". Six months is shorter than the rule allows.

Source: 12 CFR 1024.17(f)(3)(i)

By when must the consumer receive the Closing Disclosure?

1. No later than three business days before closing ✓
2. No later than seven business days before closing
3. No later than one business day before closing
4. At the closing table, before any document is signed

Why: 12 CFR 1026.19(f)(1)(ii)(A) requires the creditor to ensure the consumer receives the Closing Disclosure no later than three business days before consummation, subject to the exceptions listed there. Timeshare transactions need only receipt by consummation (1026.19(f)(1)(ii)(B)).

Source: 12 CFR 1026.19(f)(1)(ii)(A)

A consumer waits 14 business days after receiving the Loan Estimate before saying she wants to proceed. The creditor set no longer expiry period. What may the creditor now do?

1. Nothing; the original estimates bind it indefinitely
2. Only raise charges the consumer was allowed to shop for
3. Issue a revised estimate with higher charges if needed ✓
4. Only raise charges by up to 10 percent in aggregate

Why: Under 12 CFR 1026.19(e)(3)(iv)(E), expiration is a permitted reason for revision when the consumer indicates an intent to proceed more than 10 business days (or any longer period the creditor specifies) after the Loan Estimate is provided. The creditor may then use revised estimates for good-faith purposes.

Source: 12 CFR 1026.19(e)(3)(iv)(E)