Finance
The federal 'Dodd-Frank Act' (2010) created the Consumer Financial Protection Bureau (CFPB) to:
AA. Only regulate stock markets
BB. Protect consumers in financial transactions, including oversight of mortgage lending, TRID disclosures, and enforcement of consumer protection laws✓ Correct
CC. Set mortgage interest rates
DD. Only regulate commercial banking
Explanation
The Dodd-Frank Wall Street Reform and Consumer Protection Act created the CFPB to consolidate consumer financial protection functions. The CFPB oversees mortgage lending, issues rules (like TRID), and enforces consumer protection laws including RESPA, TILA, ECOA, and HMDA.
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Key Terms to Know
Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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