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MLO SAFE NMLS safe test practice
Questions and Answers (Latest Update)
GRADED A
Taking advantage of ill-informed consumers through excessively high fees, misrepresented loan terms, frequent refinancing that does not benefit the borrower and other prohibited acts is called __________________________. Predatory Lending. RESPA-Real Estate Settlement Procedures Act The Federal Statute that deals with the settlement of residential mortgage loans. RESPA's section 9 Prohibits Home sellers from requiring home buyers to purchase title insurance from a particular company providing title services. The Dodd-Frank Act modifies ECOA to require a creditor to furnish a copy of an appraisal developed in connection with a first mortgage_____________________ and absolutely not later than ________ business days prior to closing. upon completion and 3 business days TIL (Truth In Lending Disclosure) & GFE (Good Faith Estimate) Per the Dodd Frank Act, a single disclosure form combines these 2 statements.
Per the Dodd-Frank Acvt, to be a "qualified mortgage" total points and fees may not exceed ________% of the total loan amount. 3% (three percent) Per a provision of the Dodd-Frank Act mortgage lenders are to determine that a borrower has a reasonable ability to repay a loan. Does this provision apply to all loans or just owner occupied loans? All loans, whether owner occupied or not. A loan subject to HOEPA allows prepayment penalties for the first ______ years of the loan. 2 (two) years Per the Dodd-Frank Act an abusive act would include which of the following:
One that materially interferes with the consumers ability to understand the product or service.
One that take unreasonable advantage of a consumers' lack of understanding.
One that takes unreasonable advantage of the consumer's reasonable reliance on the MLO. All three would be considered abusive acts. Per the Dodd-Frank Act if an MLO receives compensation directly from a consumer, up to how much additional compensation may be received from a lender in the same transaction? $0.00, dual compensation is not allowed. Compensation must be borrower paid or lender paid. What kinds of reasons are necessary for a lender to take adverse action with regard to a borrower? Specific reasons.
Servicer, 15 (fifteen) days. An individual who fails the MLO written exam 3 times must wait _________ months to retake the exam. 6 (Six) Months Per RESPA, an annual escrow statement is required to ______________. determine shortages and surpluses in the escrow account. When must the Servicing Disclosure Statement be provided to the borrower? Within 3 (three) Business Days of the Application. Any party involved in a federally covered loan that submits fraudulent information is subject to a fine of up to $___________ and up to __________years in prison. $1,000,000 (one million dollars), 30 years in prison Per RESPA, an escrow cushion is limited to a maximum of _________ of the annual payments and surpluses over $_____must be refunded within ________ days. 1/6th (2 months), $50 (fifty dollars), 30 (thirty) days. A seller takes back a $100,000 PMM @ 5.5% interest. This straight note will balloon after 10 years of payments. How much is the balloon payment? $100,000 + interest for the last month. A straight note (term mortgage) is a non-amortizing interest only mortgage. The balloon would include the entire principal plus the last month's interest, as interest is paid in arrears.
FNMA conforming debt ratios equal ______/________. 28%, maximum housing expense/36% maximum total obligations HOEPA stands for ___________________________. Home Ownership and Equity Protection Act. RESPA applies to what type of properties? 1 - 4 Unit Residential Properties On a conventional mortgage loan, who makes the final decision regarding approval, denial or counter offer? The Underwriter The Civil Rights Act of 1866, prohibited public and private racial discrimination in any property transaction and was expanded in 1968 in which act? The Civil Rights Act of 1968, also known as Title VIII of the Civil Rights Act , Also known as Title VIII, Also Known as The Fair Housing Act Of the following, which is not required to be disclosed on the TIL statement? The (1) APR, (2) Note Rate, (3) Finance Charge, (4) Amount Financed or (5) Total of Payments The note rate is NOT required.
- The Underwriter
- The Appraiser makes the flood zone determination. Force-placed insurance protects the _________________. a. Lender b. borrower c. both a. lender FHA requires mortgage insurance on all loans for a period of ______________ years. 5 (five) years. A property sells for $300,000 and requires a 20% down payment. The origination fee will be two points. How much is the origination fee? $4,800, $300,000 X 20% = $60,000 down payment $300,000 X 80% LTV = $240,000, $240,000 X 2% = $4, HOEPA prohibits ____________________ amortization. Negative. Increasing the principal balance, usually because of not paying sufficient interest which then is added to the principal balance of the loa. How often does the external Do Not Call list get updated? Every 3 months or 90 days.
What does VA stand for? The Department of Veteran's Affairs The three functions of a direct endorser include ______________ , __________________ and ________________. Originate, underwrite and close loans. What is the down payment requirement on a VA guaranteed loan? 0, Zero. There is no down payment required. The APR is also know at the _____________ rate. Effective rate. The term of a loan effects the APR. The longer the term the ______________ the APR. Lower. Business days exclude ________________ and _________________. Sundays and Federal Holidays. Per the TILA the three business days Right of Rescission applies to the _____________________ of a ______________________ dwelling.
In a fully amortizing loan the principle portion of the payment ____________________ and the interest portion _________________. Principle portion increases and interest portion decreases. The name of the loan used to complete construction is a ______________________. Gap Loan (sometimes bridge loan). An interest only loan is also called a ________________ mortgage or ____________________ note. Term mortgage or a straight note The term that describes a banks gathering of funds from depositors for the sake of investing the combined funds is ________________. Intermediation Regulation B is also known as __________________________. ECOA, The Equal Credit Opportunity Act. Refusing to make a loan in a specific area to exclude a specific class of people is called _________________________. Redlining When inquiring about the marital status, what are the only three acceptable categories?
Married, unmarried or separted If an individual place a phone number on a Do-Not-Call list, how frequently does their entry have to be renewed to stay active? Never, per the Do-Not-Call Improvement Act of 2007 which amended the original Telemarketing Sales Rule According to FACTA, any person who regularly extends, renews or continues credit is a ______________________. Creditor A _________________ is someone who allows his/her name and personal details to be used to obtain a mortgage loan for a property he/she has no intention of inhabiting. Straw Buyer The Red Flag Rules were created by the FTC pursuant to FACTA. They are primarily concerned with ______________________. Identity Theft The Federal Fair Housing Act of 1968 prohibits discrimination in residential credit but ____________________ is not protected. Age The HMDA enacted by Congress in 1975 is also known as Regulation ______________. C, The Home Mortgage Disclosure Act, Regulation C
While banks remain the largest source of investment funds their increased participation in long term home mortgage lending is possible because of a change in federal banking regulations. What is that change? Reserve requirements have been reduced and first lien home mortgages at less than 80% LTV are in the lowest risk category. The banks increased participation in these loans still leave funds available for other loans and investments. The adjustable component use to compute the note rate on an ARM is called the _____________________. Index According to USDA Rural Development Programs a small town can include up to ________________ people. 20,000 people What kind of buy down would reduce the note rate? A permanent buy down. The SAFE act is a key element of (the) _______________________. HERA, Housing and Economic Recovery Act of 2008 A Real Estate Company accepted and distributed flyers from a Mortgage Company to Prospective Clients. Which Law(s) if any have been violated and by who? No laws have been violated by any party. (per RESPA, there was no agreement to provide referrals or something of value)
The FHA debt ratios are _____________/__________________. 31/43. 31% Primary Housing Expense (Front End Ratio) and 43% Total Obligations (Back End Ratio) The SAFE Act uses unique identifiers instead of _______________. Social Security Numbers Lenders report detailed loan information and demographic information because of which of the following acts?
- GLBA 2.HMDA 3.RESPA 4.TIlA HMDA, The Home Mortgage Disclosure Act Three people own a primary residence as joint owners with rights of survivorship. At the closing of their refinance, each was given a notice of the right to rescind. How of the three must exercise that right to cancel the funding? One, any one of the three can rescind and cancel the refinance transaction Section 8 of RESPA prohibits _____________________. Kickbacks for referrals. A refinance of the borrower's residence that closes on Monday will fund on _________________________. Friday (three business day right of rescission period ends after midnight on Thursday)
The borrower's ability to pay a loan is referred to as _________________________. Capacity The Fair Housing Act of 1968 protects against discrimination based on race, color, religion, sex, national origin, disability and __________________________. Familial Status Which law requires that all mortgage loan originators pass a national licensing exam? The SAFE Act, The Secure and Fair Enforcement for the mortgage licensing act of 2008. Two sources of funds that may be used for a down payment on an FHA insured loan include ___________ and _______________. (1) A gift from a family member and (2) down payment assistance grant The documents issues by the VA which state the value of the subject property based on an approved appraisal is called the _______________________. CRV, Certificate of Reasonable Value or NOV, Notice of Value Instead of notifying a borrower with the actual details of adverse action taken within 30 days of the loan application, the lender notified the borrower that he has the right to request the actual details. Is that acceptable per ECOA's guidelines? Yes, When adverse action is taken, actual details or the right to those details has to be disclosed within 30 days of application. The borrower can request specific reasons within 60 days.
Broker A has a client and Broker B has access to a loan product that will satisfy the clients needs. A and B Brokers decide to share the brokerage fee. Accordingly, B pays A a referral fee. Has either Broker violated any law? If so, which law and who committed the violation? Both Brokers A and B have violated Section 8 of RESPA. Per the Real Estate Settlement Procedures Act one cannot give or receive a thing of value in exchange for a referral. Why is it not acceptable to post privacy policies in a prominent location in an office? Federally mandated disclosures must be made directly to the consumer so that the consumer has a copy of the notice. We have an expert-written solution to this problem! All federal laws were enforced by the FTC and now the CFPB and possibly other agencies. The maximum penalty that can be imposed is incarceration for __________________ year(s) and a maximum fine of $___________________. 1 year and a $10,000 fine Per ECOA, what section of the 1003 must an originator complete, with or without the help of the borrower? Section X of the 1003 (section 10 of the 1003 loan application) What class is protected under Regulation B (ECOA) but, not under Regulation V (Fair Housing Act)? Age Monies paid by a lender to lower the cash out-of-pocket expenses for a borrower at closing, by raising the interest rate on the loan are called _________________. YSP, borrower credits
Two discriminatory reasons for denying a loan include a borrower's permanent disability and a borrower living in a economically depressed area. Which of the tow violate ECOA? The Equal Credit Opportunity Act prohibits redlining. That is, the refusal to lend in specific area for discriminatory reasons. Other Federal Acts but ECOA deal with the discrimination based on disability. Balance in the Real Estate market occurs when there are slightly more ____________________ available than _______________. More properties that available buyers Which Act includes Red Flag rules? FACTA. The Fair and Accurate Credit Transaction of 2003. Any non-government loan is a ___________________ loan. Conventional According to investor guidelines, state law, and federal law it is illegal to improperly influence the independent judgement of an appraiser. It is also considered a form of mortgage ________________. Fraud How should you respond to a borrower who suggests they will be submitting false documents in order to qualify for a loan? Refuse to take the loan application. (suspected fraud makes the refusal justifiable)
For a fee, a Real Estate Broker offers a Mortgage Company the contact information of the people attending an Open House. Has anyone violated RESPA and if so, who? Only the Real Estate Broker by offering referrals in exchange for something of value is a RESPA violation. However, had the Mortgage Company accepted that would also be in violation of RESPA. The SAFE act is title V of _________________________. HERA, The Housing and Economic Recovery Act. Providing that payments are made on time, the HPA requires that PMI is automatically terminated at __________% loan to value. 78% MIP is required on all _________________ loans. FHA insured The mortgage clause that facilitates a change in lien position, generally from superior to inferior is called a(n) ______________________ clause. Subordination Which regulation prohibits discrimination in a credit transaction? Regulation B of ECOA The interest rate charged by the Federal Reserve to its member banks is called the _____________ rate. Discount Rate
