quiz 4

Which of the following persons would be a candidate for Subprime lending? Borrower with a DTI exceeding 43% Borrower with a weak credit profile Borrower receiving public assistance income Borrower with less than 2 months reserves

Borrower with a weak credit profile

What is Regulation V? Gramm-Leach Bliley Act Bank Secrecy Act Telephone Consumer Protection Act Fair Credit Report Act

Fair Credit Report Act

Who are Red Flags enforced by? Consumer Financial Protection Bureau Federal Bureau of Investigation Federal Trade Commission Conference of State Bank Supervisors

Federal Trade Commission

If a property is designated to be located in a flood zone, how long does the borrower need to maintain flood insurance? For the first 3 years of the loan For the first 10 years of the loan Until the loan is paid down to 60% loan-to-value or lower For the life of the loan

For the life of the loan

Which of the following does not affect the funding fee? For a surviving spouse from a veteran who was disabled in service How long of a term of service for the veteran Loan to value If the entitlement was previously used

How long of a term of service for the veteran

Continuing education must be completed: Twice a year In the same year as license renewal Within the previous 2 years If a licensee fails a NMLS approved test

In the same year as license renewal

The borrower obtained evidence of income directly from their employer and provides this documentation to the MLO. What should the MLO do? Obtain evidence of the income with a V.O.D. from the borrower's bank Call the borrower's bank and verify the information with a V.O.E. Have the bank printout bank statements to confirm the direct deposits Inform the borrower that the lender needs to obtain a V.O.E. directly from their employer

Inform the borrower that the lender needs to obtain a V.O.E. directly from their employer

Which of the following is an acceptable service that a MARS provider would offer? The MARS provider setting up a payment option plan for bi-weekly installments The MARS provider maintaining all contact with the lender to renegotiate the mortgage The MARS provider assisting a borrower to renegotiate the loan terms with their lender The MARS provider assisting the borrower with re-acquiring the title to their property

The MARS provider assisting a borrower to renegotiate the loan terms with their lender

What is the finance charge? The actual cost of credit as a dollar amount The settlement costs that include all pre-paid items The settlement costs that exclude all 3rd party fees The cost of credit expressed as yearly rate

The actual cost of credit as a dollar amount

If a borrower obtained a construction loan, what will happen once the construction is complete? The borrower is required to obtain a conventional loan from another lender The loan has to be paid in full without any further financing The borrower may obtain a "take-out loan" from a lender when the Certificate of Occupancy confirms that the property is inhabitable The loan will automatically convert to construction-permanent financing

The borrower may obtain a "take-out loan" from a lender when the Certificate of Occupancy confirms that the property is inhabitable

Which of the following is NOT an acceptable thing for an MLO to say to an appraiser? "You forgot to account for the three car garage." "I believe you neglected the improvements in the kitchen." "Can you please tell me why the value came back so low?" "Don't forget to account for the specified minimum value for this property.

"Don't forget to account for the specified minimum value for this property.

The maximum fine that can be imposed against a licensee for a single violation is: $10,000 $15,000 $25,000 $50,000

$25,000

A borrower is purchasing a property for $300,000 which is valued at $320,000. The seller is contributing 6% seller concessions to the borrower. The closing costs are $9,200 for the loan. How much seller concessions can the borrower receive? $18,000 $20,280 $6,000 $9,200

$9,200

Per RESPA and TILA, which of the following changes in APR would require the re-disclosure of the APR on an updated Closing Disclosure delivered prior to consummation? 1/6 1% 1/8 1% 1/10 1% 1/18 1%

1/6 1%

If an MLO fails a state licensing exam 3 consecutive times, he must wait how long before he can retake it? 30 days 60 days 90 days 180 days

180 days

Which of the following would be classified as a Higher-Priced Mortgage Loan? A loan with a term less than 15 years A loan where the interest rate is 8% or higher 1st lien of $100,000 where the APR is 1% higher than the national average of interest rates 1st lien of $100,000 where the APR is 1.75% higher than the national average of interest rates

1st lien of $100,000 where the APR is 1.75% higher than the national average of interest rates

How many hours of pre-education must a MLO complete 8 hours including 2 hours of ethics 10 hours including 2 hours of non-traditional mortgage products 12 hours including 3 hours of federal law 20 hours including 3 hours of ethics

20 hours including 3 hours of ethics

How many consecutive times may an individual take the National SAFE Exam without having to wait a longer period? 2 times 3 times 4 times 5 times

3 times

What is the max amount of seller concessions allowed on a conventional loan? 0% 2% 4% 6%

6%

What would be defined as a referral? If someone is paying someone else to do a service A 3rd party real estate agent recommends someone to a certain lender Lender pays an appraiser for a property inspection report Lender pays Title company for a Title report

A 3rd party real estate agent recommends someone to a certain lender

What is the difference between a Consumer and a Customer? A consumer applies for a loan and a customer only inquires about a loan A consumer only inquires about a loan and a customer applies for a loan A consumer requires an opt-out of privacy sharing notice and a customer does not A consumer is involved in a single transaction with an institution and a customer has an on-going relationship with an institution

A consumer is involved in a single transaction with an institution and a customer has an on-going relationship with an institution

Which of the following would best describe a Safe Harbor Qualified Mortgage? No longer than 33 years No longer than 40 years APR exceeding the APOR by more than 2% for 1st lien more than $100,000 APR within 3.5% of the APOR for a 2nd lien lower than $100,000

APR within 3.5% of the APOR for a 2nd lien lower than $100,000

Which of the following best describes a real estate appraiser? An individual who is licensed or certified by the state agency where the subject property is located An individual who can offer an official appraisal certification An individual who has a minimum of 5 years experience assessing real estate values An individual who is licensed by the American Association of Real Estate Appraisers

An individual who is licensed or certified by the state agency where the subject property is located

Which of the following is grounds for denial? Any felony within the last 7 years Any traffic violation within the last 6 months Late payments on a mortgage 4 years ago Failure to complete 3 hours of Ethics Continuing Education

Any felony within the last 7 years

How often can a state regulatory agency subject a licensee to investigations and examinations? As often as deemed necessary Once every 2 years No more than once per year Only when a licensee does not pay his renewal fees

As often as deemed necessary

Which of the following may be an indicator of mortgage fraud? Borrower lives on the same street as the property they are inquiring to purchase Borrower lives in their principal dwelling owned by their parents Borrower uses their middle name rather than their first name Borrower has a hyphenated-last name

Borrower lives on the same street as the property they are inquiring to purchase

With MARS, which of the following is allowed? Informing the borrower that they need not speak with their lender An attorney licensed in another state charging upfront fees for services Charging a fee once a written agreement is obtained between the borrower and their lender Disclosing specific savings for mortgage assistance relief services

Charging a fee once a written agreement is obtained between the borrower and their lender

If an MLO is not yet licensed or have temporary authority, what can they do? Negotiate rates and fees with borrowers Take a complete application Clerical and support duties Obtain documentation from the borrower to make a qualifying decision

Clerical and support duties

Which of the following is NOT part of the duties of an MLO: Clerical and support duties Offer and negotiate terms of a mortgage loan transaction Take mortgage loan applications Represents himself to the public to be able to negotiate rates and terms of mortgage loans

Clerical and support duties

Which of the following is NOT an acceptable action of an MLO? Disclose all details of a mortgage loan transaction Request a new appraisal after improvements have been made Collect fees for best effort attempts to close a loan Delay the settlement of a loan at the request of a borrower

Collect fees for best effort attempts to close a loan

The sales comparison or market data appraisal report is acceptable for all of the following mortgage loans except: 10 year conforming loan 360/180 balloon 2/1 buy down Construction loan

Construction loan

If a state does not have legislature in place that meets the minimum requirements for MLO licensure, who is responsible for implementing one? Conference of State Bank Supervisors Consumer Financial Protection Bureau American Association of Residential Mortgage Regulators

Consumer Financial Protection Bureau

Which of the following is an accurate description of regulation P? Standards on acceptable practices of Mortgage Assistance Relief Services Detection and reporting requirements of terrorism with the USA Patriot Act Consumer protection of privacy with the Gramm-Leach Bliley Act Restrictions on solicitation activities with the Telephone Consumer Protection Act

Consumer protection of privacy with the Gramm-Leach Bliley Act

One purpose of the SAFE Act was to: Have one centralized location for fingerprinting Create policies to ensure consumer protection in mortgage loan transaction Make sure that MLO's are safe in the workplace Ensure that all MLO's have at least a college degree

Create policies to ensure consumer protection in mortgage loan transaction

Which of the following impacts the borrower's ability to repay? Credit report Assets Marital status Equity

Credit report

Per Reg. N, what is required to be included with any advertising? Disclosure of all available loan products to the customer Disclosure of any non-traditional loan features A statement indicating that the mortgage company is a correspondent lender A statement indicating that the mortgage company's principal office is outside the state

Disclosure of any non-traditional loan features

Which of the following is not an authority of a state regarding the issuance of licenses? Report violations to the NMLS Establish minimum FICO scores Exam the books and records of licensees Administer oaths and affirmations

Establish minimum FICO scores

Per HMDA, what information needs to be provided on the 1003? Social security number, date of birth, and gender Borrower's name, employment, and income Ethnicity, date of birth, and gender Ethnicity, race, and gender

Ethnicity, race, and gender

Amy and Greg are trying to refinance for a better rate. The appraisal has to come in at $400,000 to be able to get the desired rate. Unfortunately, the appraisal comes back at $350,000. What should the MLO do? Let the customers know that their loan application will be denied if they cannot provide more assets. Try to speak with the appraiser to obtain a more favorable appraisal report Inform the customers about the impact on pricing from the appraisal Order another appraisal

Inform the customers about the impact on pricing from the appraisal

Which of the following does a state regulatory agency not have the authority to do? Issue cease and desist orders Issue civil monetary penalties Issue license approvals and denials Issue criminal penalties

Issue criminal penalties

When is the VA funding fee refundable? It is non-refundable It is non-refundable if the loan has been paid off in 3 years Non-refundable if there is an outstanding balance after 5 years It's always refundable

It is non-refundable

What must be provided to the borrower during a face-to-face application? Closing Disclosure Escrow statement Title report Loan Estimate

Loan Estimate

Which of the following is not listed on the Credit Report? Marital status Employment Credit score Address

Marital status

Which of the following is not a financial requirement that a state could require? A minimum net worth Payment into a state fund A surety bond Minimum FICO score

Minimum FICO score

How many days prior to loan consummation must the Loan Estimate be provided to the borrower? Must be received 3 calendar days prior to consummation Must be received 3 business days prior to consummation Must be received 4 calendar days prior to consummation Must be received 4 business days prior to consummation

Must be received 4 business days prior to consummation

All continuing education courses must be approved by who: NMLS HUD IRS State Regulatory Agency

NMLS

Which of the following can an Underwriter who works for a depository institution not do? Negotiate rates and fees Obtain a MLO's signature after approval Request clarification on an issue on credit Request an additional appraisal to address inconsistencies

Negotiate rates and fees Obtain a MLO's signature after approval

If a customer purchases a home for $230,000 with a 5% down payment, their loan will have monthly mortgage insurance premium (MIP). If 2 years later, the customer pays $20,000 extra towards the principal balance, when will the monthly mortgage insurance premium be terminated? Immediately Within 1 year Within 2 years Never

Never

All of the following are exempt from the Higher Priced Mortgage Loan rules except: Construction loans Home Equity Lines of Credit (HELOC) Non-owner occupied transactions Principal dwelling transactions

Principal dwelling transactions

Which of the following would be a violation of RESPA section 8? Coercion of the borrower to use specific a title company Paying a referral fee Receiving a referral fee Structuring a relationship with the affiliated business

Receiving a referral fee

The appraiser contracts with a sole-proprietor borrower that is trying to obtain a home loan. If the MLO discovers this, what should the MLO do? Report the discovery to the police as a possible fraud Inform the appraiser that this is illegal Report it to the lender Decline the loan application

Report it to the lender

A home loan company discovered that a borrower submitted several loan applications on a couple of different properties with several lenders. What should the company do in this situation? Notify the borrower that his/her act is considered fraud Report it to the Credit Bureaus Report it to the lenders Report it to the MLO

Report it to the lenders

Which of the following is true about a Reverse Annuity Mortgage? Reverse Annuity Mortgages cannot be refinanced Reverse Annuity Mortgages can only be refinanced if the borrower has maintained the loan for at least 3 years Reverse Annuity Mortgages can only be refinanced if both original borrowers remain on the new loan Reverse Annuity Mortgages may be refinanced into a Home Equity Conversion Mortgage

Reverse Annuity Mortgages may be refinanced into a Home Equity Conversion Mortgage

Which of the following does not apply to construction loans? Draws Reverse annuity payments Interest only payments Interim financing

Reverse annuity payments

A borrower is purchasing a property for $250,000 that is valued at $275,000. The lender is requiring a $20,000 down payment to obtain a loan for $230,000. If the seller is offering 3% seller concessions and the closing costs are $6200, how much down payment will the borrower be responsible for providing? The borrower will need to provide $12,500 for the down payment The borrower will need to provide $7500 for the down payment The borrower will need to provide $26,200 for the down payment The borrower will need to provide $20,000 for the down payment

The borrower will need to provide $20,000 for the down payment

Who is the primary regulator of any mortgage institution? The Consumer Financial Protection Bureau The Federal Deposit Insurance Corporation Conference of State Bank Supervisors The state agency with principal supervisory responsibility for financial institutions

The state agency with principal supervisory responsibility for financial institutions

Which of the following may require a MLO to file a Suspicious Activity Report? The property the borrower is looking to purchase is a significant distance from where they work There was a large sum of money deposited into the borrower's bank account 2 days before consummation The borrower's credit report shows there was recently a large increase of spending on their credit cards The borrower's immigration status recently changed within the last 2 years

There was a large sum of money deposited into the borrower's bank account 2 days before consummation

Which of the following is required with e-documents? They must be encrypted with a code They must be maintained in the file They must be made available for future replication They must be available for the borrower and lender for future review

They must be maintained in the file

Which of the following is required of a licensee in every state? Written approval from the CFPB Authorization from the IRS The company must be licensed in all 50 states They require a surety bond, recovery fund or specific net worth.

They require a surety bond, recovery fund or specific net worth.

What is the primary purpose of the Truth in Lending Act? To provide consumers with protection against unlawful distribution of their non-public personal information To ensure that lenders exercise fair lending practices to all socio-economic and ethnic groups To ensure creditors disclose the terms of consumer credit through statements and fair advertising in a standardized manner To hold consumers and lenders responsible for the accuracy and integrity of all loan processing documentation

To ensure creditors disclose the terms of consumer credit through statements and fair advertising in a standardized manner

Which of the following is an objective of the Dodd-Frank act? To ensure timely and accurate disclosure of settlement costs in residential loans To deter terrorism and money-laundering To prevent identity theft To prevent MLO steering to unfavorable loan products

To prevent MLO steering to unfavorable loan products

The borrower's loan application is in underwriting, but the MLO discovers that the borrower will be in a new job position that will be making less income. What must the MLO do? Report it to the lender Call the borrower Verify the borrower's employment with the employer Cancel the loan application

Verify the borrower's employment with the employer

When can an Underwriter ask about the income of a borrower's spouse? When the borrower gives permission to add the spouse to the loan When the subject property is in a community property state When the MLO needs more income to qualify the loan When the spouse is on title to the property

When the borrower gives permission to add the spouse to the loan

If a loan is considered a Higher Priced Mortgage Loan it will be required to have an initial escrow account except: When the customer expresses they do not want an escrow account When the customer's down payment is at least 10% When the lender operates in a rural or underserved area and maintains the loan in their portfolio When the condominium or planned unit development Homeowner's Association master policy includes the yearly taxes for the property

When the lender operates in a rural or underserved area and maintains the loan in their portfolio

If a Loan Estimate is changed, when must a revised Loan Estimate be sent to the customer? Within 3 calendar days of the change Within 3 business days of the change Within 7 business days of the change No Loan Estimate is required until consummation

Within 3 business days of the change