Prepare for the NMLS SAFE Mortgage Loan Originator (MLO) exam with these practice questions and answers. This guide covers federal mortgage regulations, ethics, loan origination, and fair lending practices.
Q: Which would not be considered a RESPA violation?A. You pay for all the advertising for your favorite real estate agent to keep the referrals coming inB. Your favorite lender gives you a travel mug with their logo on itC. You rent space in a title company office below market value for the convenience of letting them handle your loansD. Your primary lender takes you on a weekend golf trip if you close 10 loans in a month with them
Answer: B
Q: The Consumer Financial Protection Bureau was created by theA. Federal Reserve ActB. Federal Home Loan Bank ActC. National Housing ActD. Dodd-Frank Wall Street Reform and Consumer Protection act
Answer: D
Q: Which regulation encourages financial institutions to help meet the credit needs of their communities, including low and moderate income neighborhoods, consistent with safe and sound lending practices?A. CRAB. HOEPAC. RESPAD. TILA
Answer: A
Q: According to ECOA, A borrower can request a copy of the appraisal report used in the decision process within how many days of a credit decision?A. 15B. 30C. 60D. 90
Answer: D
Q: ECOA is a law that ensuresA. Borrowers are showing how much they will pay for credit in dollars in percentagesB. Financial institutions provide funding for low income and moderate income housingC. Lenders make a credit available with fairness and without discriminationD. Settlement procedures are regulated so buyers can compare the cost of services
Answer: C
Q: A convertible ARM allows a borrower to changeA. From an adjustable rate mortgage to a fixed rate mortgageB. The index on which the interest rate is basedC. The margin when interest rates riseD. The rate cap when interest rates fall
Answer: A
Q: HOEPA is an addendum to what law?A. ECOAB. FCRAC. RESPAD. TILA
Answer: D
Q: The relationship between the cost of borrowing in the total amount financed, represented as a percentage, is known asA. An ARMB. The APRC. A discount pointD. The note rate
Answer: B
Q: While underwriting a loan file, you calculate this formula: PITI divided by income. What have you just determined?A. Housing expense ratioB. Loan to value ratioC. Stable monthly income ratioD. Total debt to income ratio
Answer: A
Q: The definition of a complete application includes all of the following except theA. Address of the subject propertyB. Gross monthly incomeC. Name of the borrowerD. Most recent two months bank statements
Answer: D
Q: TILA Requires creditors to maintain records that they compiled with the disclosure requirements for how many years?A. OneB. TwoC. ThreeD. Four
Answer: B
Q: A borrower has a stable monthly income of $4,000 and recurring debts of $600. If he’s getting an FHA loan, what’s the maximum monthly payment for which he would qualify?A. $1054B. $1120C. $1240D. $1462
Answer: B
Q: Which law allows a consumer who has had her credit card used by an identity thief to place a freeze on her credit report?A. CRAB. ECOAC. FACTAD. SAFE ACT
Answer: C
Q: You are pre-qualifying a borrower for a purchase loan. She has debt equaling $950 each month and gross monthly income totaling $5,200 each month. What is the maximum qualifying house payment, including principal, interest, taxes and insurance on a conventional loan?A. $590B. $922C. $1000D. $1456
Answer: B
Q: Under the FCRA, consumers do NOT have the right toA. Dispute in accurate information in writing and demand the information to be removed from the credit reportB. Inspect information on the credit reportsC. Receive a free copy of they are credit report even if they have not applied for creditD. Require a bankruptcies be removed from their credit report after five years, if credit has been reestablished
Answer: D
Q: You are refinancing a $200,000 mortgage with a pre-payment penalty of six months of interest at 6.5%. How much is the pre-payment penalty?A. $1083B. $2500C. $6500D. $13,000
Answer: C
Q: A borrower reports his income of $40,000 for rental properties. How much of that should be considered when applying for a mortgage loan?A. $40,000B. $32,000C. $30,00D. $20,000
Answer: C
Q: The maximum LTV on a rural development loan isA. 75%B. 80%C. 90%D. 100%
Answer: D
Q: During the application process, an MLO asks if the borrower is widowed, he is violating which law?A. ECOAB. Fair HousingC. FCRAD. RESPA
Answer: A
Q: Which two federal regulations have the most pertinent disclosure requirements related to loan times?A. CRA and FCRAB. ECOA and FACT ActC. ECOA and RESPAD. TILA and RESPA
Answer: D
Q: which scenario best describes a land contract?A. A seller keeps the existing loan and continues to pay on it while giving the buyer another loanB. A buyer takes over primary liability for the loan of a seller usually implying no change in loan termsC. A vendee makes payments to the Vendor in exchange for the right to occupy, use, and enjoy the property. No deed or title transfers unit at all, or a specified portion of, payments have been made.D.A seller leases the property to the buyer with the provision that all part of the rent payments be applied to if the tenant decides to buy before the lease expires
Answer: C
Q: A lender learns that a real estate agent encouraged an appraiser to hit a specific value for a property. The lenderA. Can use the appraisal and close the loan only if the appraised value means the loan will not exceed 80% LTVB. Can use the appraisal and close the loan if the lender can document that the appraisal does not materially misrepresent the valueC. Cannot close the loan under any circumstancesD. Must obtain a different appraisal in order to close the loan
Answer: B
Q: Borrower A has a $100,000 30-year loan at 5%. Borrower B has a $100,000 15-year loan at 5.5%. At the end of their respective loan terms, who will have paid more principal?A. Borrower AB. Borrower BC. Both borrowers would pay the same amount of principleD. It’s impossible to tell since either could pay off the loan sooner
Answer: C
Q: MDIA ACT is part of which larger regulation?A. RESPAB. TILAC. ECOAD. HERA
Answer: B
Q: Identify which attribute is not considered illegal discrimination in granting credit under the equal credit opportunity actA. RaceB. ColorC. Income levelD. Source of income
Answer: C
Q: Which he would not be considered a finance charge and would not be part of the APR calculation?A. Discount pointsB. Escrow deposit for property taxesC. Mortgage insuranceD. Origination fee
Answer: B
Q: Which law requires lenders to disclose consumer credit costs related to adjustable rate mortgages?A. ECOAB. RESPAC. TILAD. Title VIII
Answer: C
Q: According to the fair credit reporting act, which situation does not entitle someone to a free copy of his credit report?A. An applicant was refused credit due to insufficient incomeB. A consumer is on public assistance or is unemployedC. A consumer was a victim of identity theft and a fraud alert was inserted in the credit fileD. The credit file contains in accurate information as a result of fraud
Answer: A
Q: What federal law prohibits making a loan to a customer without verifying the customer’s ability to repay the loan?A. CRAB. HMDAC. HOEPAD. RESPA
Answer: C
Q: A bank receives a change of address request from a consumer. What requires the bank to follow up with her to verify the validity of the request?A. Federal reserveB. Red flag rulesC. Safe actD. Truth in lending act
Answer: B
Q: In order to comply with HMDA, which is not a question a loan originator may ask a borrower?A. Marital statusB. National originC. RaceD. Religion
Answer: D
Q: What type of mortgage allows personal property to be included in the property sale and financed together with the loan?A. Bridge mortgageB. Equity participation mortgageC. Package mortgageD. Wraparound mortgage
Answer: C
Q: Total debt to income ratio is the relationship between the borrower’sA. Total monthly debt obligation and gross monthly incomeB. Equity in the home and the amount of the loanC. Monthly housing costs and other debt obligationsD. Stable monthly income and the area mean income
Answer: A
Q: A second mortgage loan that allows the borrower to obtain multiple advances of funds Up to an approved amount is known as aA. Biweekly mortgageB. Bridge loanC. HELOCD. Installment second mortgage
Answer: C
Q: Which of the following types of income will not require additional information, such as likelihood that it will continue, to determine if the income can be used to qualify the borrower?A. AlimonyB. DisabilityC. SalaryD. Unemployment
Answer: C
Q: The equal credit opportunity act is a law that requires the lender to provide a borrower a reason for rejection of credit in writing within how many days of loan application?A. 3B. 15C. 30D. 10
Answer: C
Q: Which document is not required at closing?A. Loan estimateB. Closing disclosureC. Initial escrow statementD. Promissory note
Answer: A
Q: According to the Fair Credit Reporting Act, when is a consumer entitled to a free copy of his credit score assuming there has been no fraud?A. Once a yearB. When he has been turned down for creditC. When he is on public assistanceD. A consumer has no right to a free copy of his credit score under FCRA
Answer: D
Q: The Home Owner Equity Protection Act is also known asA. Section 30B. Section 31C. Section 32D. Section 33
Answer: C
Q: At closing, who issues a clear to close?A. LenderB. Mortgage brokerC. Real estate brokerD. Title agency
Answer: A
Q: A consumer with a loan for closed end credit may exercise his or her right to rescindA. If he or she collects the signatures of all other parties with an ownership interest in the propertyB. Until midnight on the third business day after signing the lending agreementC. Until midnight on the first business day after signing the lending agreementD. Only if he or she has a loan contract that explicitly provides for the right to rescind
Answer: B
Q: Which of the following is intended to ensure that consumers are provided with information on the nature and costs of the settlement process?A. FCRAB. HPAC. HOEPAD. RESPA
Answer: D
Q: A lender has how many days to notify the borrower of an underwriting decision?A. Three daysB. Ten daysC. 30 daysD. 45 days
Answer: C
Q: In which federal law would you find the definition of a nontraditional loan?A. Homeowners equity protection actB. Real estate settlement procedures actC. Secure and fair enforcement of mortgage licensing actD. Truth in lending act
Answer: C
Q: A “jumbo” loan is also known as a(n)A. Conforming loanB. FHA loanC. Non-conforming loanD. Subprime loan
Answer: C
Q: Which would be considered a toxic feature under the qualified mortgage rule definition?A. Adjustable rateB. Defeasance clauseC. Interest only paymentsD. Short term
Answer: C
Q: A mortgage loan, typically a second mortgage, that has a predetermined maximum loan amount, has an adjustable rate, can be borrowed against and paid off as needed, and has an interest only minimum monthly payment, is known as aA. HELOCB. Installment second mortgageC. Reverse mortgageD. Revolving mortgage
Answer: A
Q: Stan is considering a simultaneous second loan. Each of these are risk mitigating factors that might help him get this loan exceptA. High housing expense ratioB. High credit scoreC. Low LTVD. Low debt to income ratio
Answer: A
Q: The difference between the index and the interest rate charged to the borrower with an ARM is known as theA. CapB. DiscountC. MarginD. Note rate
Answer: C
Q: Which element of an ARM is a statistical report that is a generally reliable indicator of the approximate change in the cost of money and may be used to adjust interest rates?A. DiscountB. IndexC. MarginD. Prime rate
Answer: B
Q: A reverse mortgage must be repaid if the home is unoccupied by the borrower for how long?A. Three consecutive monthsB. Six consecutive monthsC. 12 consecutive monthsD. 18 consecutive months
Answer: C
Q: Which factor is not taken into consideration when determining the mortgage amount for an HECM?A. The age of the youngest borrowerB. Credit history of the borrowerC. Current interest rateD. Lesser of appraised value or FHA insurance limit
Answer: B
Q: If any triggering terms are used in an ad, which of the following must be present?A. Amount or percentage of down paymentB. APRC. Terms of repaymentD. Total closing costs
Answer: B
Q: Which of these is not included as a protected class by the federal fair housing act?A. National originB. RaceC. ReligionD. Sexual orientation
Answer: D
Q: A for-profit MLO who claims to be a counselor in an ad about loan modification would be in violation of what law?A. Fair and accurate credit transaction actB. Fair lending actC. Home ownership and equity protection actD. Truth in lending act
Answer: D
Q: Which regulation ensures that some borrowers have the right of rescission for three business days after a loan contract is signed?A. Regulation BB. Regulation XC. Regulation ZD. Title VIII
Answer: C
Q: To address the problem of property flipping, appraisers must analyze the transfer history of a property for the previousA. Three monthsB. One yearC. 18 monthsD. Three years
Answer: D
Q: What federal legislation requires the term equal housing lender to be used in any advertisement that is broadcast over the airwaves?A. Equal credit opportunity actB. Fair credit reporting actC. Fair housing actD. Truth in lending act
Answer: C
Q: When calculating the debt ratio, the calculation that best represents the front ratio is monthlyA. Debt divided by gross monthly incomeB. Debt divided by net monthly incomeC. Housing debt divided by gross monthly incomeD. Housing debt divided by net monthly income
Answer: C
Q: The UFMIP is charged on what type of mortgage loans?A. Conforming loans sold to GNMAB. FHA loansC. Subprime loans sold to FNMAD. VA loans
Answer: B
Q: In a loan closing, hypothecation occurs. This is described asA. Assigning the mortgage from the broker to the lenderB. Assigning the mortgage from the broker to the lenderC. The transfer of title through the deedD. Using property as collateral without surrendering use or possession of it
Answer: D
Q: All of these are required of the state regulatory authority exceptA. Approve or deny mortgage loan originator license applicationsB. Approve pre-licensing and continuing educational course offerings and course providersC. Establish procedures for appropriate enforcement or disciplinary actionsD. Examine or investigate licensees in a systematic manner based on identified risk factors or on a periodic schedule
Answer: B
Q: The purpose of the property appraisal is toA. Set the market price of a propertyB. Determine the gross rent multiplierC. Determine the actual income a property will produceD. Assess the adequacy of collateral for a mortgage transaction
Answer: D
Q: Which practice is illegal under the MLO compensation rule?A. A mortgage broker company receives compensation from the lender on a transactionB. A mortgage banking firm pays the commission to it’s MLOs for a closed the loanC. A mortgage broker company receives compensation from both the creditor and the consumer on a transaction that is then used to pay a commission to the MLOD. Mortgage bank receives a dividend check from a title company in which it has an ownership interest
Answer: C
Q: How long must ECOA records be kept?A. Six monthsB. 25 monthsC. 12 monthsD. 48 months
Answer: B
Q: What must condominium association’s deal with respect to property insurance?A. They must ensure each unit in the amount of the separate units purchase priceB. They do nothing;each individual condominium owner is responsible for its own unitC. They are required to keep a blanket policy that protects the entire structureD. The common areas only require insurance
Answer: C
Q: Someone who performs unsupervised mortgage related duties is calledA. Loan originatorB. Loan processorC. Independent contractorD. Registered loan originator
Answer: C
Q: Of the terms listed, which is the best description of a 2-1 loan?A. A buydown loanB. An ARM loanC. A growing equity mortgageD. A reverse mortgage
Answer: A
Q: Under federal law, which of the following actions taken on an application would not require a written notice to the applicant?A. The application is approvedB. The application is deniedC. The creditor issues a counter offer to the applicantD. The file is incomplete and the creditor needs more information to decision the file
Answer: A
Q: In describing an adjustable rate mortgage loan with caps of 5/1/6, which of the following statements is accurate?A. The initial interest rate on the loan is 5%B. The highest that the interest rate on the loan can be is 6%C. At the first adjustment. The interest rate will only adjust to 5%D. At the first adjustment period, the interest rate may not only increase more than 5% over the initial rate
Answer: D
Q: Which of the following terms can be used to describe a balloon loan?A. Partially amortizing loanB. Fully amortizing loanC. Negatively amortizing loanD. ARM loan
Answer: A
Q: The Federal home loan Bank system FHLB providesA. Residential mortgage loans directly to qualified borrowersB. Federal loan guarantees to member lendersC. Advances to financial institutions for residential mortgage loansD. Free appraisals for FHA approved residential mortgage loans
Answer: C
Q: HOEPA Loans are part of which larger regulation?A, ECOAB. HMDAC. TILAD. RESPA
Answer: C
Q: The rate that is used to amortize the mortgage loan and determine the monthly loan payment is known as theA. Annual percentage rateB. Discounted rateC. Indexed rateD. Note rate
Answer: D
Q: Which document does the VA use to determine the amount of a veteran’s entitlement?A. COEB. CRVC. DD-214D. URUR
Answer: A
Q: A partially amortized mortgage requires aA. Balloon paymentB. Due on sale clauseC. Junior lienD. Partial release
Answer: A
Q: Is defined as any mortgage product other than a 30 year fixed rate mortgageA. Piggy back loanB. Subordinate lienC. Non-traditional mortgageD. Non-conventional mortgage
Answer: C
Q: Which of the following may be considered an appraisal red flag?A. An appraiser’s resume shows substantial experience in the areaB. Property owner and property seller are not the sameC. Appraisal is dated after the sales contractD. Comparables are located within 1 mile of the subject
Answer: B
Q: The generally excepted appraisal standards in the United States are known asA. ASBB. USASBC. USPAPD. FinCEN
Answer: C
Q: Which of the following is true regarding preparation and delivery of the closing disclosure?A. The borrower is ultimately responsible for ensuring he receives the closing disclosureB. Creditors may not use settlement agents to provide the closing disclosure on their behalfC. The creditor is ultimately responsible for ensuring that the borrower receives the closing disclosureD. The settlement agent is ultimately responsible for ensuring that the borrower received the closing disclosure
Answer: C
Q: If a consumer submits a complaint about a mortgage lender to the CFPB, the lender has how many days to respond before the CFPB publishes a complaint in it’s public complaint database and pursues a potential investigationA. SevenB. TenC. TwentyD. Fifteen
Answer: D
Q: What is Freddie Mac’s automated underwriting system called?A. Desktop OriginatorB. Underwriter assistantC. Loan product advisorD. AUS
Answer: C
Q: A loan with a fixed rate at the start that will adjust regularly after a certain period is commonly referred to as aA. Traditional ARMB. Nontraditional ARMC. Hybrid ARMD. Option ARM
Answer: C
Q: The general acceptable front and housing ratio for a USDA loan isA. 29%B. 28%C. 31%D. Front and ratios are not considered for USDA loans
Answer: A
Q: The intention of the safeguards rule is toA. Required disclosures regarding use of personal information by third partiesB. Prohibit lenders from sharing account numbers if they share customer’s informationC. Restrict the sharing of non-public personal information between non-affiliated financial institutionsD. Ensure the protection of personal information through an effective security program
Answer: D
Q: A balloon loan is defined asA. A loan that has a specific amortization But matures prior to the time it fully amortizedB. A loan that has a specific amortization period But is due at a specific time prior to maturityC. A loan who’s final payment is smaller than the previous periodic paymentsD. A loan which matures on a date after amortization
Answer: A
Q: The process of releasing a lien on a property is calledA. DelieningB. Title restorationC. EncumbranceD. Reconveyance
Answer: D
Q: The minimum standards for license renewal include all but which of the following?A. Continuing to meet the minimum standards for license insuranceB. A production report for all licensed originatorsC. Satisfaction of annual continuing education requirementsD. Payment of renewal fees
Answer: B
Q: The Browns have rescinded their loan transaction, informing their lender of their decision by mail, they are entitled to a full refund withinA. 10 daysB. 20 daysC. 30 daysD.60 days
Answer: B
Q: What is not required for a VA loan?A. Certificate of eligibilityB. Mortgage insurance premiumC. Primary residenceD. Total debt ratio
Answer: B
Q: The implementing regulations for the MAP rule are known asA. Regulation NB. Regulation ZC. Regulation CD. Regulation X
Answer: A
Q: Housing counselors must generally be approved byA. The CFPBB. The Office of Financial Education.C. HUDD. The NMLS
Answer: C
Q: The underwriting process:A. Evaluate a borrower for loan approvalB. Uses ratios and other criteria to approve a borrowerC. Evaluate collateral for deficiencies and borrowers for solvencyD. Examines whether the collateral and applicant mean lender guidelines
Answer: D
Q: Advantages of VA loans include all of the following exceptA. 100% financingB. More lenient underwriting requirementsC. No closing costsD. No prepayment payment
Answer: C
Q: Loan products that tempted consumers to misrepresent their loan qualifications during the lending boom included all but which of the following?A. No-doc loansB. Stated income loansC. low-doc loansD. Prime loans
Answer: D
Q: The right to resend a loan applies to which of the following transactionsA. A transaction for a home equity line of credit secured by a principal residenceB. A transaction involving a loan to purchase a principal residenceC. A refinancing of credit with the same creditor that made the loan being refinancedD. A transaction for the refinance of a home that is secured by a vacation home
Answer: A
Q: On which section of the application would a borrower be asked to attest to issues that could impact repayment ability, such as outstanding judgments, financial obligations, or delinquencies on other debts?A. Section 1B. DeclarationsC. Assets and liabilitiesD. Information for government reporting
Answer: B
Q: With a credit or revise is a loan estimate, it must deliver the revised disclosure to the loan applicantA. No later than seven business days prior to consumptionB. No later than four business days prior to consummationC. On the same date that he delivers the closing disclosureD. At the same time that the revisions are made
Answer: B
Q: Income derived from a rental property would be entered in what section of the URLA?A. Employment informationB. Assets and liabilitiesC. Monthly income and combined housing expense informationD. Borrower information
Answer: C
Q: Helena receives a completed application for a 30 year fixed rate mortgage loan. Which of the following must be provided at least seven business days prior to consummation?A. A closing disclosureB. A charm bookletC. A URLAD. A loan estimate
Answer: D
Q: If a first time home buyer wishes to use his VA loan privilege for the first time and is not planning to make a down payment, what is the amount of his funding fee?A. 2.3%B. 3.3%C. 1.5%D. 1.25%
Answer: A
Q: Which of the following fraud scheme involves the seller’s signature on the deed being forged and the real homeowner is not even aware that the property is being fraudulently transferredA. Bait and switchB. Air loanC. Equity skimmingD. Deed scam
Answer: D
Q: Which of the following deals most specifically with representations made in Mortgage advertisingA. Regulation XB. HMDAC. MAP ruleD. E-sign act
Answer: C
Q: Which of the following document specifies that a property is being used as security in the event of non-payment of a debt?A. Promissory noteB. MortgageC. ForeclosureD. TIL disclosure
Answer: B
Q: On the loan estimate, which piece of data tells applicants how much they will pay in interest over the life of the loan as a percentage of the loan amount?A. APRB. TIPC. Finance chargeD. None of the above
Answer: B
Q: At what equity position will PMI automatically cancel for a conforming loan, assuming the borrower has made all payments in a timely manner?A. 78%B. 60%C. 22%D. 50%
Answer: C
Q: If you are someone who enters application information into an automated underwriting system and lack the authority to approve an applicant for a loan, you are considered to be aA. Mortgage loan originatorB. Independent contractorC. Loan underwriterD. Clerk
Answer: A
Q: In general, what is the maximum total debt to income ratio for borrowers who won an FHA loan absent any compensating factorsA. 31%B. 35%C. 43%D. 48%
Answer: C
Q: Impersonating someone else in an attempt to obtain their personal financial information is calledA. Stepping inB. ShadowingC. Spear-phishingD. Pre-texting
Answer: D
Q: What information does the mortgage call report MCR contain?A. Applications, solicitations, and advertisementsB. The amount that loan originators pay into a state recovery fundC. All transactions originated, closed or denied in a given quarterD. All applications filed by a licensee within the past year
Answer: C
Q: The lender’s title policy is often paid for by the borrower and protectsA. The lender in case of borrower defaultB. The borrower in case the lender improperly foreclosures on a propertyC. The borrower in case the seller does not have the legal right to sell the propertyD. The lender against existing liens and defects on title that were not discovered during the initial title search
Answer: D
Q: In general, what is the best way to verify a borrower’s rental income?A. Review the leases on the propertyB. Review data depicting the average rental rates in the areaC. Obtain copies of the borrowers tax forms, including Schedule ED. Confirm rental payments through two months of bank statements
Answer: C
Q: In general, how is the rate on an adjustable rate mortgage calculated at adjustment?A. By adding the index and the marginB. By subtracting the index from the marginC. By adding the margin to the fully indexed rateD. By reviewing government mandated rates from HUD
Answer: A
Q: Under the CFPB, the following groups are identified as types of consumer and protection laws exceptA. Credit authorization and securityB. Financial disclosureC. Privacy protection and consumer identificationD. Prohibition of predatory lending
Answer: A
Q: According to HOEPA, which of the following must be established for a higher priced loan?A. Escrow account for taxes and insurance paymentsB. Mortgage insurance ensuring the lender against defaultC. Principal and interest paymentD. Term life insurance policy payable to the lender in the event of borrower’s death
Answer: A
Q: On a USDA 502 loan, the household income cannot exceed what percentage of the AMI?A. 100%B. 115%C. 200%D. 29%
Answer: B
Q: What is the maximum that a lender can charge for the costs and services for originating a VA loan?A. 1%B. 2%C. 3%D. 4%
Answer: A
Q: Which of the following provides a borrower with an opportunity to change from an ARM to a fixed rate loan?A. Conforming loanB. Conversion optionC. Hybrid ARMD. Standard ARM
Answer: B
Q: In recent years, which of the following phony methods have not been used by borrowers to get out from under a bad mortgage condition?A. ArsonB. Buy and bailC. Mortgage refinanceD. Short sale fraud
Answer: C
Q: When a seller provides all or part of the financing for the borrower in order to finance a purchase transaction, it is known asA. For sale by ownerB. Seller carry backC. Seller concessionsD. Seller Self financed
Answer: B
Q: Which section of the URLA contains questions which, depending on the applicant’s answer, could result in immediate rejection of the application?A. Information for government monitoring purposesB. DeclarationsC. Details of the transactionD. Acknowledgment and agreement
Answer: B
Q: It is ethical for a mortgage broker to offer a loan at a rate higher than the best rate available to the borrowerA. NeverB. Only when the borrower is unaware and will likely not knowC. If the lender agrees to subsidize the broker feesD. If the borrower chooses the rate in order to secure a borrower credit for closing costs
Answer: D
Q: Nationwide multi state licensing system and registry seeks to accomplish all of the following objectives exceptA. Provide uniform license applications and reporting requirements for state licensed originatorsB. Provide comprehensive training and facilitate responsible behavior to expand the subprime mortgage market placeC. Provide increased accountability and tracking of loan originatorsD. Facilitate the collection and disbursement of consumer complaints on behalf of state and federal mortgage regulators
Answer: B
Q: Negative AmortizationA. Describes the results of a defaultB. Occurs when the mortgage payment is not sufficient to pay the interest currently dueC. Occurs when a borrower pays only interest due each monthD. Defers principle
Answer: B
Q: All of the following are TILA required disclosures exceptA. CHARM bookletB. Notice of adverse actionC. Right to riscindD. Loan estimate
Answer: B
Q: Which of the following features would be permitted for a non-qualified mortgage, but not for a qualified mortgageA. A term of 15 yearsB. And adjustable interest rateC. A debt to income ratio of 43%D. An interest only payment
Answer: D
Q: Statements in advertising that may lead a consumer to incorrectly assumed that a mortgage product or company is directly endorsed by the federal government are in violation of which law?A. Regulation AB. Regulation ZC. Regulation BD. Regulation X
Answer: B
Q: The process of pooling together similar types of loans to create mortgage backed securities for sale in the secondary financial markets is calledA. DiversificationB. CapitalizationC. SecuritizationD. Collateralization
Answer: C
Q: Equity is defined asA. The difference between the fair market value of a property and the current balances of any liensB. The difference between the appraised value and the purchase priceC. The relationship between the value of the house in the borrowers assetsD. The balance of any liens divided by the proposed value of a new loan
Answer: A
Q: And a mortgage transaction subject to RESPA that is secured by the consumer’s dwelling, a loan estimate must be delivered or mailed within three business days after receipt of a written application and no later thanA. Three business days before the transaction is consummatedB. The fifth business day before the transaction is consummatedC. The seventh business day before the transaction is consummatedD. The date the transaction is consummated
Answer: C
Q: What is the tolerance allowed for variances in the APR disclosure required by the Truth in Lending Act in a regular transaction?A. 1%B. .125%C. .25%D. $200
Answer: B
Q: Which of the following would convey a property?A. Deed riderB. Warranty deedC. NoteD. Deed of trust
Answer: B
Q: With respect to FHA Laois, the FHAA. Guarantees the loans thereby protecting the lenderB. acts as the lenderC. Issuers private mortgage insuranceD. Insures the loans, thereby protecting the lender
Answer: D
Q: If a borrower’s reserve account for taxes and insurance is found to be short or deficient by an amount in excess of one month’s worth of deposits, which of the following is true?A. The escrow account will be canceledB. The lender can require the borrower to make up the shortage over the next 12 monthsC. The lender can require the borrower to make up the shortage over the next six monthsD. The borrower must remit a shortage to the lender with a 90 days notice of the shortage
Answer: B
Q: Combining stated income with a non-traditional mortgage product is an example ofA. Risk optimizationB. Risk premiumC. Risk layeringD. Risk enhancement
Answer: C
Q: Which of the following is not a factor when calculating the VA funding fee?A. The loan to value ratioB. The borrower’s veteran statusC. The number of discount points chargedD. Whether the loan is for a purchase or refinance transaction
Answer: C
Q: In addition to meeting the debt to income ratio requirements, which of the following is also used to qualify a veteran for a VA loan?A. Residual income testB. Character testC. Asset based testD. Kobayashi Maru test
Answer: A
Q: In order to meet the guidelines for a qualified mortgage, and loan cannot have total points and fees that exceedA. 2% of the loan amountB. 6.5% of the loan amountC. 5% of the loan amountD. 3% of the loan amount
Answer: D
Q: A loan on which of the following properties would not be subject to the requirements of RESPAA. A duplex the owner stays in one side and rents the other unitB. A three unit property used as a primary residenceC. Vacant land on which the buyer is going to build a new single-family homeD. A single-family residence to be used as an investment property
Answer: D
Q: A first lien mortgage loan is covered under HOEPA if the loan’s APR exceeds the average prime offer rate by more thanA. 3%B. 6.5%C. 8.5%D. 5%
Answer: B
Q: Which of the following documents is recorded with the county to notify the public of the lender’s security interest in the subject property?A. The noteB. The lien establishment riderC. The mortgageD. The closing disclosure
Answer: C
Q: HPA Does not apply toA. Conventional loansB. Tandem mortgagesC. Fixed rate loansD. FHA loans
Answer: D
Q: Under TRID rule, which of the following fees is considered a zero tolerance fee and cannot increase between the loan estimate and closing disclosure?A. Appraisal feeB. Title search feeC. Home inspection feeD. Attorney fee
Answer: A
Q: A state might require a loan originator to obtain surety bond in order toA. Protect an employer against losses caused by the loan originator’s fraudulent or dishonest actionsB. Transfer of the risk of a loss from one entity to another through the use of insuranceC. Provide a way to come and see those who are financially impacted by a loan originator’s errors or misconductD. Identify, assess and prioritize the type of risk that the loan originator it might need to cover
Answer: C
Q: What is the formula for the debt to income or back end ratio?A. Index plus marginB. Monthly PITI divided by gross monthly incomeC. Gross monthly income divided by monthly PITID. All reoccurring monthly debts divided by gross monthly income
Answer: D
Q: For the purposes of providing the borrower a loan estimate, all of the following pieces of information are necessary to constitute an application exceptA. The borrowers nameB. The borrowers date of birthC. The borrowers estimate of value for the propertyD. The loan amount
Answer: B
Q: According to the TRID Rule , if the closing disclosure is emailed to borrowers, when are they deemed to have received it if there is no further communication from themA. The day it was sentB. Next business day after it was sentC. Three business days after it was sentD. Seven business days after it was sent
Answer: C
Q: In order to avoid CFPB intervention, an entity that has authority over loan originators in a state must meet all of the following standards exceptA. Require Allstate licensed loan originators to obtain a unique identifier number with the NMLSB. Require that loan originators have a surety bond or minimum net worthC. Have a process for streamlining the licensing process to reduce the regulatory burdenD. Have a system to assess civil penalties against non-licensed loan originators
Answer: C
Q: How grossed up can alimony payments be to apply for a loan?A. Grossed up by 20%B. Grossed up by 25%C. Grossed up by 15%D. Grossed up by 10%
Answer: B
Q: Which is the largest secondary market participant?A. Federal home loan mortgage corporationB. Federal housing administrationC. Federal national mortgage associationD. Government national mortgage association
Answer: C
Q: Which act requires mortgage lenders to give consumers information about obtaining their credit report when they are turned down for a loan?A. ECOAB. FCRAC. RESPAD. TILA
Answer: B
Q: Which statement about FHA insured loans is falseA. FH a loans are intended for low income first time homebuyersB. FHA loans have less stringent qualifying standardsC. FH a loans require low down paymentsD. FH a offers an adjustable rate mortgage
Answer: A
Q: Which of the following correctly describes entities that have obligations under the fair credit reporting act?A. CRAs, Experian, and FHAB. FHFA, CRAs, and furnishers of information to CRAsC. CRAs. Furnishers of information to CRAs, and users of consumer reportsD. Users of consumer reports and lenders regulated by REPSA and TILA
Answer: C
Q: After a borrower allows the assumption of his or her VA loan, he or she may use his or her VA loan privilege again only afterA. Five years have passedB. The home is sold to a new ownerC. The original VA loan is satisfiedD. The original VA loan is moved from his or her Into the name of the assuming borrower
Answer: C
Q: The most commonly used type of reverse mortgage is known as aA. Proprietary loanB. Home equity conversion mortgageC. Single purpose conforming mortgageD. Interest only loan
Answer: B
Q: UFMIP is paidA. In full when the loan reaches maturityB. At the end of each year of the loan termC. In full at the time of closingD. At the end of each month
Answer: C
Q: Mortgage loan originator Thomas has excepted a loan application for a dwelling that is a mobile home not permanently affixed to the land. Does this mobile home meet the requirements necessary for it to be considered a security for a residential mortgage loan?A. Yes, a dwelling includes a structure whether it is attached to real property or notB. No, dwellings must be attached to real propertyC. No, mobile homes are classified as personal property not real propertyD. Yes, as long as the real property upon which the mobile home will be located is in the borrowers name, the loan may be a residential mortgage loan
Answer: A
Q: Which of the following is true of the loan estimate?A. It should only be used for reverse mortgagesB. It replaces the HUD-1 settlement statement and the final TIL disclosureC. It replaces the GFE and the earlier TIL disclosure for most transactionsD. It always is identical to the closing disclosure
Answer: C
Q: Which of the following types of mortgages typically carries two different types of mortgage insurance?A. VAB. ConventionalC. SubprimeD. FHA
Answer: D
Q: Which is NOT a function of the secondary markets?A. Moderate effects of local real estate marketsB. Cycles provide lenders with money to make more loansC. Serve as a depository for consumer assetsD. Standardize underwriting guidelines
Answer: C
Q: Which legislation designates federal privacy protection and consumer identification requirements under CFPB?A. ECOAB. FACTAC. HOEPAD. TILA
Answer: B
Q: Which of the following legislation that designates requirements that prohibit predatory lending under CFPBA. Fair credit reporting actB. Secure and fair enforcement of mortgage licensing actC. Fair credit reporting actD. Truth in lending act
Answer: B
Q: Which law requires MLO’s to provide borrowers with a loan estimate of closing costs?A. FCRAB. HMDAC. RESPAD. TILA
Answer: D
Q: The closing disclosure disclosed all of the following exceptA. Assumption of the mortgage loanB. Escrow account informationC. Negative amortization featuresD. Rate lock information
Answer: D
Q: The total amount of interest a consumer will pay over the loan term As a percentage of the loan amount is referred to as theA. Annual percentage rateB. Interest plus PMI chargesC. Total finance chargeD. Total interest percentage
Answer: D
Q: Delivering the closing disclosure to the borrower is the responsibility of theA. CreditorB. MLOC. Mortgage brokerD. Settlement agent
Answer: A
Q: Delivering the closing disclosure to the seller is the responsibility of theA. CreditorB. MLOC. Mortgage brokerD. Settlement agent
Answer: D
Q: The borrower’s IOU is theA. MortgageB. NoteC. Loan to value ratioD. Wquity
Answer: B
Q: A 203 (k) is aA. FHA home rehabilitation loanB. Loan originator retirement planC. Truth in lending disclosureD. Yield spread premium
Answer: A
Q: The three business day waiting period requirement applies to a corrected closing disclosure when all of the following occur exceptA. The addition of a pre-payment penalty to the loanB. Changes to the loan productC. Changes to the loans APRD. Clerical errors made it to the closing disclosure
Answer: D
Q: A higher priced loan is one thatA. Has an APR greater than 6.5%B. Includes finance charges greater than 5% of the loan amountC. Is known as a section 32 loanD. Uses the average prime offer rate as an index
Answer: D
Q: The SAFE act defines a loan originator as a natural person whoA. Offers or negotiates terms of a residential mortgageB. Processes a mortgage loan under the direction of a mortgage bankerC. Takes a residential mortgage loan applicationD. Both A and C
Answer: D
Q: Which statement is true about interest rate buy downs on FHA loans?A. Borrowers may qualify at the buydown rateB. Borrowers must qualify at the note rateC. FHA does not allow builder paid buydownsD. FHA does not allow seller paid buy downs
Answer: B
Q: The HUD rule on equal access to housing states that a creditor is prohibited from denying a borrower credit because ofA. AgeB. Family statusC. RaceD. Sexual identity
Answer: D
Q: When can the real estate taxes be disregarded for the purpose of determining debt ratios?A. When the borrower pays an escrow waiver feeB. When the borrower will be paying these taxes directly without escrowsC. When the LTV is below 80%D. Real estate taxes can never be disregarded when determining debt ratios
Answer: D
Q: When calculating the debt ratio, the calculation that best represents the front ratio is monthlyA. Debt divided by gross monthly incomeB.Debt divided by net monthly incomeC. Housing debt divided by gross monthly incomeD. Housing debt divided by net monthly income
Answer: C
Q: Which of the following forms is known as form 1003?A. Truth in lending disclosureB. Operating income statementC. Closing disclosureD. Uniform residential loan application
Answer: D
Q: For sole proprietor ship, income, expenses, and taxable profits are reported onA. IRS form 1065B. Schedule C on IRS form 1040C. IRS form 1120D. Schedule E from IRS form 1040
Answer: B
Q: In determining an applicant’s qualifications, rental income can be documented fromA. Schedule C and tax return for the past two yearsB. Form 1099C. Schedule E and a federal tax return for the past two yearsD. A copy of deposit slips showing deposit of rent received from a current tenant renting based on a verbal rental agreement
Answer: C
Q: A borrower who has just completed a professional degree PhD, but has no work history, would have to wait how long before adequate employment history is established?A. Six monthsB. 12 monthsC. 24 monthsD. As soon as any probationary period with the employer expires
Answer: D
Q: What law prohibits discrimination in the sale and rental of residential property on the basis of race, color, religion, handicap, sex, familial status or national origin?A. Community reinvestment actB. Equal credit opportunity actC. Fair housing actD. Homeowners equity protection act
Answer: C
Q: The privacy rule requires that financial institutions provide the consumer with a consumer privacy policy disclosureA. Annually as long as the relationship continuesB. At closing onlyC. Each time the policy is revisedD. Each time the servicing is transferred
Answer: A
Q: A consumer calls to ask about a loan product. How does TILA require you to quote an interest rate to him?A. The annual percentage rate onlyB. The APR as well as the interest rateC. The interest rate onlyD. TILA does not address the quoting of interest rates
Answer: B
Q: A wraparound mortgageA. Allows the borrower to redo or expand alone on an existing propertyB. Allows homeowners to finance expensive purchases or pay off credit card debtC. Occurs between the termination of one mortgage and the beginning of the nextD. Occurs when a new mortgage plus an existing mortgage is structured as a single obligation
Answer: D
Q: Loans that are not backed by government insurance or guarantees are calledA. PrimeB. A gradeC. ConventionalD. Subprime
Answer: C
Q: An FHA insured loan is an example ofA. Alternative financingB. Conventional financingC. Government financingD. Seller financing
Answer: C
Q: Which type of loan would never have mortgage insurance?A. An FHA loan with a 20% down paymentB. A conforming loan with a 10% down paymentC. A VA loan with nothing downD. A jumbo loan with 15% down
Answer: C
Q: Which is a disclosure that RESPA requires creditors to give to customers at the time of the mortgage loan closing?A. Loan estimateB. Closing disclosureC. Mortgage servicing disclosure statementD. Settlement costs and you booklet
Answer: B
Q: Which disclosure is required by TILA and itemizes potential closing costs for the borrower?A. Loan estimateB. Settlement costs and you bookletC settlement service providersD. Closing disclosure
Answer: A
Q: Under RESPA, what is the maximum finethat can be imposed for each instance of a kickbackA. $5000B. $7000C. $10,000D. $15,000
Answer: C
Q: The closing disclosure is a uniform settlement disclosure created following the requirements ofA. ECOAB. US Patriot ActC. TILAD. RESPA
Answer: C
Q: The fair credit reporting act is enforced byA. FHAB. Federal trade commissionC. ECOAD. NAR
Answer: B
Q: A limit on the amount of interest or loan fees a creditor may charge is imposed byA. TILAB. RESPAC. State usury lawsD. Fair lending laws
Answer: C
Q: Seven years is the maximum length of time information can be reported on a credit report according to the fair credit reporting act except forA. CollectionsB. Criminal convictionsC. Mortgage accountsD. Low payments on a credit card
Answer: B
Q: XYZ mortgage company just mailed a closing disclosure to a consumer. The waiting period prior to closing will beginA. On the date that the closing disclosure is mailedB. The next business day after the closing disclosure is mailedC. The third business day after the closing disclosure is mailedD. The day on which the company received a completed, signed loan application
Answer: C
Q: As a result of the housing and economic recovery act of 2008, Congress created _____ for oversight of the GSEsA. FNMAB. FINCENC. FHLMCD. FHFA
Answer: D
Q: Homeownership counseling is required for which of the followingA. Fixed rate qualified mortgagesB. High cost mortgagesC. FHA loansD. Negative amortization loans
Answer: C
Q: Which of the following might raise a red flag during the underwriter’s review of the appraisal?A. Photos that appear to show the address of the property on the mailboxB. Dated prior to the sales contractC. Affective age of the property aligns with that of comparablesD. Completion notice is dated after the original appraisal
Answer: B
Q: A revised loan estimate may be provided if an applicant waits more than how many days after the creditor provides a loan estimate before indicating an intent to proceed?A. Three business daysB. 10 business daysC. Five daysD. 24 hours
Answer: B
Q: A Mortgage which is amortized for a longer period than the actual term of the loan can be best described as aA. Balloon mortgageB. Hybrid ARMC. Graduated payment mortgageD. Fixed period ARM
Answer: A
Q: In which federal law would you find the definition of a nontraditional loan?A. HOEPAB. RESPAC. SAFE ActD. TILA
Answer: C
Q: The term “20 basis points” expressed as a percentage is:A. 0.02%B. 0.2%C. 2.00%D. 20.00%
Answer: B
Q: According to the truth in lending act, which of the following fees is excluded from the calculation of the annual percentage rate?A. Hazard insuranceB. Wire transferC. Prepaid interestD. Mortgage insurance premiums
Answer: A
Q: Yield spread premium is defined asA. Fees paid by borrowers to lenders for lowering the note rate on their loan transactionB. Fees split between service providers for sharing settlement responsibilitiesC. And amount paid by the lender to a third-party originator for locking a borrowers interest rate at a rate higher than parD. Income available to a settlement service provider who has entered into unaffiliated legitimate business arrangement
Answer: C
Q: MIP is mandatory when a loan is…A. An FHA loanB. A non conforming loanC. A VA loanD. A conforming loan with a down payment of 20% or less
Answer: A
Q: The Federal Housing AdministrationA. Securitizes loansB. Makes loansC. Guarantees loansD. Insurance loans
Answer: D
Q: The cost of funds index is traditionally used to determine interest rates on what type of loans?A. 15 and 30 year fixed rate programsB. Rate adjustments on adjustable rate programsC. Home equity lines of creditD. Reverse mortgages
Answer: B
Q: Which of the following pieces of personal information is a borrower asked to provide voluntarily on the loan application?A. Sex and ageB. Marital status and ageC. Race and sexD. Race and marital status
Answer: C
Q: The agency whose primary purpose is the prevention of discrimination and evaluating a credit applicationA. ECOAB. HUDC. NARD. HMDA
Answer: A
Q: On the loan estimate, the limit for negative amortization is expressed asA. A dollar amountB. A percentageC. A rangeD. An annual percentage of the loan balance
Answer: A
Q: According to the truth in lending act, which of the following fees is included in the calculation of the annual percentage rate?A. Title insuranceB. Recording feesC. Closing agent chargesD. Appraisal fee
Answer: C
Q: According to the truth in lending act, what change from the annual percentage rate is generally considered as accurate during disclosures?A. 1/8%B. 1/4%C. 1/2%D. 1/16%
Answer: A
Q: When are you consumer is preapproved for a line of credit and can use this line freely, making repeat transactions, and can pay it off at any time without closing the line, this is an example ofA. Subordinate lienB. Reverse mortgageC. Revolving debtD. Mortgage
Answer: C
Q: Which of the following is true with regard to TILA disclosures?A. Disclosure rules differ depending on whether the credit being offered is open end or closed endB. Everyone with ownership interest receives rescission noticesC. Special disclosures are required for adjustable rate mortgagesD. Rules for disclosure are the same whether credit is open end or closed end
Answer: D
Q: Mortgage loan originator Janine is assisting a borrower in obtaining a residential mortgage loan. Her assistance may include all of the following exceptA. Providing advice on loan termsB. Preparing loan packagesC. Making a loan commitmentD. Collecting information on behalf of the consumer
Answer: C
Q: The VA has stated that loans made in compliance with VA standards and guaranteed or insured by the VA areA. Small creditor qualified mortgagesB. Safe harbor qualified mortgagesC. Non-qualified mortgagesD. Exempt from qualified mortgage standards
Answer: B
Q: The amount of income left over after that is subtracted is calledA. Residual incomeB. Debt ratioC. Discretionary spendingD. Debt inverse
Answer: A
Q: For the purposes of issuing a revised loan estimate, change the circumstances that affect estimated settlement charges must result in a change to those charges of more thanA. 5%B. 1%C. Any amountD. 10%
Answer: D
Q: Safe harbor qualified mortgages offer a safe harbor fromA. Liability for TRID rule violationsB. Liability for ATR rule violationsC. Liability for ECOA violationsD. Liability for HOEPA violations
Answer: B
Q: According to TILA- RESPA rule, A member of a trust with liability for a mortgage loanA. Can only rescind a transaction with express state regulation permissionB. Is not permitted the right to riscind a transactionC. Must be provided the right to riscindD. Will no longer have the right to riscind a transaction but may petition for a reconsideration pending specific circumstances
Answer: C
Q: If a borrower becomes delinquent with the mortgage payment, and mortgage servicer must attempt to reestablish contact within how many days of a missed payment?A. 15B. 30C. 36D. 45
Answer: C
Q: An MLO is required to provide how many loan options to a consumer at the time of inquiry for each type of transaction in which the consumer expresses an interest?A. TwoB. ThreeC. FourD. Five
Answer: B
Q: Adequacy and stability of a borrower’s income should be considered and not it’sA. DeductibilityB. Payment methodC. SourceD. Taxation
Answer: C
Q: Which is one of HMDA’s and regulations C’s primary purposes?A. Add clarification and additional consumer protections with amendments to the fair housing actB. Add regulation prohibiting title and appraisal fraud in the industryC. Help determine whether financial institutions are serving their communities housing needsD. Help determine whether regulator enforcement actions are effective
Answer: C
Q: Suspicious activity report must be filed within how many days?A. Three daysB. Ten daysC. Fifteen daysD. Thirty days
Answer: D
Q: Which of the following is not a characteristic that defines a subprime borrower based on the subprime guidance?A. One or more 60 day delinquencies in the past 24 monthsB. Two or more 30 day delinquencies in the past 12 monthsC. Judgment, foreclosure, repossession, or charge off in the prior 24 monthsD. Bankruptcy in the last 10 years
Answer: D
Q: Which of the following is not a recognized index used for an ARM loan?A. COFIB. FHAC. LIBORD. MTA
Answer: B
Q: What documentation must be submitted by lenders in order to provide data requiring pursuant to HMDA?A. BARB. CRAC. LARD, STA
Answer: C
Q: Which of the following is a class under ECOA but not under the fair housing act?A. AgeB. HandicapC. RaceD. Religion
Answer: A
Q: Which of the following would best describe the VA?A. Privately owned institutionB. Privately owned guaranteeing institutionC. Governmental lending institutionD. Governmental guaranteeing institution
Answer: D
Q: Which of the following types of loans are assumable?A. FHMAB. VAC. USDAD. FHLMA
Answer: B
Q: What are the factors that allow for higher ratios on loans over 90% LTV?A. A higher substantial net worthB. Potential for increased earningsC. An energy efficient homeD. All of the above
Answer: D
Q: For a conventional conforming loan, what is the most that the seller can contribute?A. 12%B. 4%C. 5%D. 6%
Answer: D
Q: What was established in 1932 as a cooperative to finance housing in local communities?A. Federal home loan mortgage corporationB. Federal home loan BanksC. Federal housing finance agencyD. Government national mortgage association
Answer: B
Q: Which statement about loan origination fees on a loan estimate is false?A. The fee cannot change unless there is a changed circumstanceB. The fee includes services performed by or on behalf of the MLOC. Lender and mortgage broker fees for the same transaction must be itemizedD. Origination fees must be expressed as a lump sum
Answer: C
Q: The new loan estimate does not apply to all real estate loans. All of the following loan types are exempt from new disclosures exceptA. Home equity lines of creditB. Home equity loansC. Reverse mortgagesD. Timeshare loans
Answer: B
Q: According to the truth in lending act, a borrower on a refinance transaction to whom the APR has not been properly disclosed has the right to rest in the loan forA. Three business daysB. 30 daysC. One yearD. Three years
Answer: D
Q: Of these settlement charges, which is allowed to show a 10% tolerance between the loan estimate in the actual charge at closing?A. Charge for the interest rate chosen when lockedB. Government recording chargesC. Origination feeD. Transfer taxes
Answer: B
Q: Which statement is true about interest rate by downs on FHA loans?A. A borrower may qualify at the buydown rateB. A borrower must qualify at the note rateC. The FHA does not allow builder paid buy downsD. The FHA does not allow seller paid buy downs
Answer: B
Q: Which of the following borrowers is best suited for an HECM?A. A borrower who needs money for several home-improvement projectsB. A 62-year-old borrower who Just cashed in a 401(k) for a down paymentC. A borrower who was disabled during service for the militaryD. A 65 year old borrower without a mortgage who would like to supplement his income
Answer: D
Q: ECOA applies to the extension of credit for:A. Loans secured by a first or subordinate lien on residential propertyB. Residential, business, commercial, and agricultural loansC. Business, commercial, and agricultural loansD. All credit other than government loans
Answer: B
Q: In the absence of cups, adjustments on an ARM loan would be determined solely byA. The indexB. The marginC. The fully indexed rateD. The lifetime rate
Answer: C
Q: A state licensed loan originator isA. Licensed by the NMLSB. Not an employee of a depository institutionC. Identified by the unique identifier of his or her employerD. An employee of a subsidiary which is owned or controlled by a depository institution
Answer: B
Q: A balloon rider, a pre-payment penalty rider and a second home rider may all be part ofA. A title insurance policyB. A deed of trustC. A noteD. A power of attorney agreement
Answer: B
Q: How many total hours of ethics are required at minimum for continuing education?A. ThreeB. EightC. TwoD. Eleven
Answer: C
Q: Intentionally targeting borrowers in poor or underserved areas with expensive high cost loans is considered illegal underA. ECOAB. HPAC. HOEPAD. RESPA
Answer: C
Q: What action must a creditor take if it is discovered that the APR is outside of the range of tolerance?A. Provide disclosure of the corrected discrepancy and wait three business days before closingB. Keep records of the discrepancy for three yearsC. Adjust the APR and close the loan as scheduledD. Restart the seven business day waiting period after the new disclosure has been made
Answer: A
Q: A loan originator has not maintained a state loan originator license for five years. However, during the last three years of that five-year period, she was employed as a registered loan originator with a bank. Is she required to retake the licensing test when she decides to apply for a new state license?A. Yes, she must retake the test because she had not maintained a license for over five yearsB. No, her time as a registered loan originator is not counted as part of the time her license has not been maintainedC. No, once passed, an applicant does not have to take the test againD. Yes test results are only valid in the year they are taken
Answer: B
Q: One advantage of VA loans that is not commonly available in transactions for conventional mortgages is that they areA. Interest freeB. Available to loan applicants regardless of DTI ratiosC. AssumableD. Not funded by private lenders
Answer: C
Q: To combat income related mortgage fraud, lenders require a review of the income provided to the IRS. What document authorizes the lender to obtain income transcript from the IRS?A. 1003 and verification of incomeB. 4506-TC. Schedule 15D. URAR
Answer: B
Q: A note is the borrower’s promise to repay a debtA. TrueB. False
Answer: A
Q: A note should be signed by the payeeA. TrueB. False
Answer: B
Q: Items on the Loan Estimate that have no tolerance restrictions for change include all of the following EXCEPTA. Hazard insuranceB. Periodic interestC. Private mortgage insuranceD. Property taxes
Answer: C
Q: Under the SAFE act, the state regulatory authority is responsible for the following minimum requirements exceptA. Enforcement of SAFE act regulationsB. Establishment of monetary assessment penalty process for individuals who practice as MLO’s without a licenseC. Maintenance of records and enforcement of violations for public accessD. Registration of all MLOs in the NMLS
Answer: C
Q: Under ECOA, which of the following would be considered a prohibited basis question on a mortgage application?A. Are you required to pay alimony or child support?B. What is your annual income?C how many children do you have?D. Are you married, and married or separated?
Answer: C
Q: Which of the following statements is accurate?A. The mortgage loan originator must provide the loan estimate to the borrower within three business days of applicationB. The mortgage loan originator must provide the HUD -1settlement statement to the borrower one day prior to closing if the borrower requests itC. The mortgage loan originator must notify applicants of the decision on the credit application within 30 days from the application dateD. All of the above
Answer: C
Q: All of the following are TILA required disclosures exceptA. CHARM BookletB. Notice of Adverse ActionC. Right to RescindD. Loan estimate
Answer: B
Q: What is the most common type of mortgage fraud?A. Application fraudB. White fraudC. Fraud for propertyD. Fraud for profit
Answer: C
Q: Which of the following would be used in calculating APR?A. Mortgage commissionB. Mortgage insurance premium MIPC. Real estate commissionD. Tax proration
Answer: B
Q: The cost of funds index is traditionally used to determine interest rates on what type of loans?A. Home equity lines of creditB. Reverse mortgagesC. Rate adjustments on adjustable rate programsD. 15 and 30 year fixed rate
Answer: C
Q: The Federal Housing AdministrationA. Makes loansB. Insures loansC. Guarantees loansD. Securitizes loans
Answer: B
Q: What is the minimum length of FHA MIP?A. Three yearsB. Five yearsC. Ten yearsD. The life of the loan
Answer: D
Q: When is the servicing disclosure provided to the borrowerA. Within three business days after applicationB. Seven business days prior to closingC. 30 calendar days after closingD. Anytime after
Answer: A
Q: Loan originator compensation records must be retained for at leastA. One yearB. Two yearsC. Three yearsD. Five years
Answer: C
Q: Which of the following best describes the federal limitation on the shortest adjustment period Allowed on an ARM?A. No limitB. One monthC. Three monthsD. Six months
Answer: A
Q: A mortgage broker originates and closes a mortgage loan, but it is funded by the lender who is purchasing the loan from the originating broker. This is an example ofA. Warehouse lendingB. Mortgage brokeringC. Table fundingD. Wholesale lending
Answer: C
Q: Which of the following is least likely to be considered non-public personal information?A. Borrowers home phone numberB. Employers phone numberC. Borrowers job titleD. Borrowers income
Answer: B
Q: 189/360 loan is considered aA. Adjustable rate mortgageB. Pay-optionC. Hybrid mortgageD. Balloon mortgage
Answer: D
Q: For an FHA loan, how much may the seller contribute towards the borrower’s closing costs?A. NothingB. 6% of the sales priceC. 3% of the sales priceD. 3% of the loan amount
Answer: B
Q: The number one ethical problem cited in surveys of professionals and Managers isA. False or misleading representation of products or services in marketing advertising or salesB. Lack of sufficient disclosuresC. Inaccuracies in lack of documentation and handling client customer fundsD. Deliberate attempt at fraud and misrepresentation in face-to-face meetings
Answer: A
Q: What does the FHA do with respect to mortgage lending?A. Federal housing authorityB. Federal housing agencyC. Federal housing associationD. Federal housing administration
Answer: D
Q: The APR factors in the effects of all of the following expenses exceptA. Hazard insurance premiumB. Processing feeC. Origination feeD. Mortgage insurance premium
Answer: A
Q: After meeting with the borrowers to complete a loan application, you return to your office and order a tri-merged credit report. Now that you have a report, what loan disclosure must do you now prepare and mail/give to them?A. Notice to home loan applicantB. Credit authorization consentC. Denial letterD. Rapid rescore
Answer: A
Q: Which law requires the lender to collect borrower information for first mortgages and home improvement loans?A. HEOPAB. TILAC. ECOAD. HMDA
Answer: D
Q: A yield spread premium is disclosed on what document?A. TIL disclosureB. Good faith estimateC. Servicing disclosureD. Rescission disclosure
Answer: B
Q: Which is the primary law that affects mortgage loan closingsA. TILAB. ECOAC. RESPAD. HMDA
Answer: C
Q: If you are a seller, it is acceptable to require the use of a specific title providerA. If the requirement pertains to the sellers own policy onlyB. If the other service provider is an affiliateC. As long as you provide the borrower with the appropriate disclosure within three business days of the loan applicationD. Only if the service provider is licensed
Answer: A
Q: RESPA Imposes requirements about or prohibits all of the following exceptA. Legal kickbacks and referral feesB. The loan origination feeC. The amount of prepaidsD. Information that must be disclosed to the borrower at the loan application or within three business days of the application
Answer: B
Q: The following two disclosures are required by RESPA is applicableA. 1003 and AfBAB. LE and AfBAC. 1003 and 1008D. Borrower’s signature and GFE
Answer: B
Q: When is a loan not subject to RESPA?A. When it’s and primary residenceB. When it’s a secondary residenceC. The the property is on 25 acres or lessD. When the property will be used for commercial purposes
Answer: D
Q: The CHARM booklet was prepared byA. The CFPBB. HUDC. FHAD. The federal reserve board
Answer: D
Q: If a home is purchased with an FHA owner occupied loan, what type of FHA refinancing can the borrower use to refinance?A. FNHMAB. USFAC. IRRRLD. Streamline
Answer: D
Q: Define business day under the truth in lending act for the three day right of rescissionA. Monday through Friday except a federally related holidaysB. Monday through Saturday except federally related holidaysC. Monday through Saturday except legal public holidaysD. Any day of the mortgage company is open for business
Answer: C
Q: Which of the following is responsible for determining the need for flood insurance?A. The appraiserB. The title companyC. The loan officerD. The lender
Answer: A
Q: Which of the following are functions of FACTA?A. To improve consumer access to credit informationB. To improve resolution of consumer disputes with credit agenciesC. To prevent identity theft and restore credit history to victims of identity theftD. All of the above
Answer: D
Q: When is it legal and/or acceptable for the loan originator to provide the consumer with a copy of his or her credit report?A. NeverB. When the customer pays for itC. When the customer requests itD. When contracts with the credit reporting agency do not prohibit it
Answer: D
Q: Who provides the annual escrow account disclosure statement?A. The mortgage loan originatorB. The brokerC. The title companyD. The servicing lender
Answer: D
Q: If an advertisement contains trigger terms, what then must be disclosed?A. The APRB. APR and payment amountC. Interest rate, term, balance and APRD. Interest rate, closing costs, and APR
Answer: C
Q: What is the penalty for red flag noncompliance?A. $5000 per incidentB. $2500 per incidentC. $10,000 per incidentD. $3500 per incident
Answer: D
Q: Which of the following entities oversees MDIA?A. CFPBB. HUDC. State attorneys generalD. Department of veteran affairs
Answer: A
Q: Which of the following under RESPA, could not provide settlement services for the loan and purchase of an owner occupied propertyA. Someone who holds a power of attorneyB. The lender originating the loanC. A licensed escrow officerD. A licensed attorney
Answer: A
Q: On the loan estimate what must be included on page 1?A. All borrowers and their addressesB. All borrowers and their childrenC. All borrowers and their Social Security numbersD. All borrowers and their income
Answer: A
Q: The APR includes all fees that are required in order to get the loan. Not included isA. Title insuranceB. Daily interest chargeC. MIP or PMID.Origination fee
Answer: A
Q: You are working on a file referred to you by a realtor. The realtor calls you to see if there’s going to be any problem getting the customer qualified. The realtor wants to know what the borrower’s credit scores are before presenting the offer. The most appropriate course of action is toA. Refer the realtor to the borrowerB. Never disclose the borrowers information to a realtorC. Obtain permission from the borrower to disclose the informationD. Tell the realtor the credit score
Answer: A
Q: On a uniform residential loan application you initially disclose a rate of 5% to the customer but are floating that rate. Over the next few days, rates improve and you have the option to lock the customer in at a rate of 4.75% and earn the same compensation. This behavior would be consideredA. Illegal and unethicalB. Legal and ethicalC. Illegal but ethicalD. Legal but unethical
Answer: B
Q: You just closed a loan with a customer and would like to take them out to dinner to celebrate their new home purchase. Midway through the meal, you realize paying for your clients meals may be considered a violation of RESPA. You shouldA. Ask the client to pay for your mealB. Proceed it’s OK for you to pay for their mealsC. Ask your clients to pay for their mealsD. Pay only if the meal is under $25 which is allowed
Answer: B
Q: You pull credit on a husband and wife. It turns out their debt to income ratio is too high. You notice the majority of the debt belongs to the husband. You also note that the wife has enough income to qualify on her own. You remove the husband from the loan submit the file and receive approval. This action isA. Legal but unethicalB. Illegal but ethicalC. Illegal and unethicalD. Legal and ethical
Answer: D
Q: Reporting of suspected loan fraud should be done at this level of governmentA. CountyB. StateC. FederalD. City
Answer: B
Q: The homeowners protection act states that when a loan to value falls below 78% PMI is to beA. ExtendedB. CancelledC. TerminatedD. Dropped
Answer: C
Q: PUD is the acronym forA. Planned unit developmentB. Primary utility disclosureC. Preliminary uniform disclosureD. Planned urban development
Answer: A
Q: Which of the following statements about VA loans is true?A. A veteran can have two or more VA loans in place simultaneouslyB. A veteran must pay off a previous VA loan before he can obtain a second VA loanC. Once a veteran uses his loan benefit, the benefit goes awayD. Veterans can use their benefit to get a loan to purchase a personal residence a maximum of two times
Answer: A
Q: FH a loan limits change from time to time and are based on theA. Average selling price of homes in a countyB. FNMA maximums -20%C. Average income level of the countyD. FHA median house prices
Answer: D
Q: Which type of loan application requires a residual income analysis to be performed?A. FHA loanB. Jumbo loanC. VA loanD. Conventional
Answer: C
Q: The borrower wants to get an FHA loan, but I judgment appears on the credit report. Which of the following represents how the judgment will be treated?A. As long as the judgment was over one year ago, it has no bearingB. With a letter of explanation the borrower may be approved for the loanC. The judgment must be paid in full before the borrower can get an FHA loanD. If the judgment was over two years ago it will have no bearing
Answer: C
Q: When a loan is immediately being sold onto the secondary market, the responsibility of funding belongs to theA. BorrowerB. Secondary lenderC. Primary lenderD. Seller
Answer: C
Q: An interest rate at PAR would beA. The interest rate before any feesB. The interest rate with no YSPC. The rate charged by banks to their best customersD. The rate quoted in radio advertising to induce clients to call but which will require a discount points
Answer: B
Q: What type of loan never requires monthly mortgage insurance?A. 100% VA loanB. 80% FHAC. 90% conventionalD. 80% jumbo loan
Answer: A
Q: The lender discloses the pre-payment penalty on which of the following documents?A. The 1003B. The loan estimateC. ECOA disclosureD. The trust deed and the trust deed note
Answer: B
Q: A section 203K loan is aA. FHA loanB. VA loanC. FNMA LoanD. Reverse mortgage
Answer: A
Q: What type of fraud scheme usually includes a get rich quick real estate seminar?A. ChunkingB. RedliningC. ChurningD. Illegal property flipping
Answer: A
Q: Which law promotes informed shopping by requiring the disclosure of settlement services to the borrower?A. Regulation CB. Regulation BC. RESPAD. TILA
Answer: C
Q: What federal law created the idea of a qualified mortgage?A. ECOAB. RESPAC. Dodd-FrankD. TILA
Answer: C
Q: The lender discloses the pre-payment penalty on which of the following documents?A. The 1003B. The loan estimateC. ECOA disclosureD. The trust deed and the trust deed note
Answer: B
Q: A section 203K loan is aA. FHA loanB. VA loanC. FNMA LoanD. Reverse mortgage
Answer: A
Q: What type of fraud scheme usually includes a get rich quick real estate seminar?A. ChunkingB. RedliningC. ChurningD. Illegal property flipping
Answer: A