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Reconveyance

The transfer of title back to the borrower after the secured debt has been paid in full.

The SAFE Act is designed to

"The SAFE Act is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators."

A borrower is putting 20% cash down on a $200,000 purchase and gives a $5,000 earnest money deposit. How much will they need to bring to closing if their closing fees equal $10,000?

45000

The Deed of Trust is the security instrument that names the lender, the borrower, the trustee and makes reference to the: a) note b) mortgage c) mortgagor d) purchase agreement

Which agency only offers guaranteed loans? a) FHA b) VA c) Conventional loans d) FNMA

b. Additional terms - The advertisement then must also conspicuously state:

(1) the amount and percentage of the down payment (2) the terms of repayment, which must reflect the repayment obligations over the full term of the loan, including any balloon payment (3) the "annual percentage rate" using that term, and, if the rate may be increased after consummation, clearly state that fact.

1) full documentation (full doc) requires

1) full documentation (full doc) requires the borrower to fully document all assets, liabilities and income,

2) partial documentation (lite doc), requires

2) partial documentation (lite doc), requires only partial documentation when the borrower shows an unusually low risk profile,

Conventional Conforming Loan Back End/Front End

28 /36

USDA Back/End

29/41

3) Alternative documentation (ALT-A),

3) Alternative documentation (ALT-A), allows for lite or stated income and expanded LTV's or expanded credit criteria.

Conforming Loan FHA Back/End

31/43

If a licensed Mortgage Loan Originator lets their license lapse for specified period they must retake the NMLS tests. What is that time period? a) 15 Days b) 30 Days c) 90 Days d) 5 Years

5 Years MLOs who let their license lapse do not have to retake the NMLS test for 5 years. After 5 years, the MLO will have to meet all of the requirements as if they were a new applicant.

A state licensed and registered MO share in which of the following to meet SAFE Act requirements? a) background check, company sponsorship, and a unique identifier b) background check, 20 hours of pre-licensing edcuation, unique identifier, surety bond c) background check only d) the requirements are different for a state licensed MLO and a registered MLO

Agencies developed a policy statement addressing attributes of predatory lending to include collateral based lending, loan flipping, or engaging in fraud or deception to conceal the true nature of the loan origination. Which Interagency Policy statement defined this? a) Interagency Policy Statement on Non-Traditional Products b) Interagency Policy Statement on Discrimination in Lending c) Interagency Policy Statement on Predatory Lending d) Interagency Policy Statement on Subprime Lending

All of the following are covered by RESPA, except: a) a mobile home b) a single family residence c) a duplex d) a manufactured home permanently affixed to real estate

All the following loan attributes would qualify as a Qualified Mortgage, except: a) Negative Amortization b) Higher Priced Mortgage Loan c) Balloon Loan d) Pre-Payment Penalty

Borrower, Jerry Summers, gave East Coast Lenders, Inc. permission to use electronic signatures for his home loan. During the process, Jerry decided that he didn't care for the electronic disclosures and signatures. Jerry withdrew his consent. Which of the following statements is most true? a) The disclosures Jerry has already signed electronically do not have to be re-executed b) All new disclosures will have to be executed in writing c) Jerry can't withdraw his permission without cancelling the loan d) The electronic format is only one option for Jerry to use. He cannot mix and match all the way through the process at his discretion.

Disparate Impact is also known as: a) The "Effects Test" b) The rule of 78s c) Discrimination in policy d) Discrimination in deed

In regard to mortgage fraud, all of the following are true, except: a) The FTC, FBI, NMLS, and HUD all have investigative authority b) Mail fraud can carry up to $1 million in fines and up to 30 years imprisonment c) Mailing documents that contain false statements and material misstatements can land a person in jail for 30 years d) Intentionally malicious schemes involving multiple people paid to participate is one example of "Fraud for Profit"

Jerry took an application from the Goldbergs for a loan to purchase a new home. The Goldbergs could not get approved because of some past credit issues. During the loan process, Jerry found out that the Goldbergs had been shopping for a swimming pool. Jerry referred them to his friend, Constance, at "Pools For You." Constance sold them a pool and sent Jerry a check for $100. Can Jerry accept the check? a) Yes. It is not tied to a Real Estate transaction and therefore is not prohibited by RESPA. b) Yes. It is found money and times are tough. c) No. It violates RESPA because Jerry gathered the information during the processing of a loan. Even though the loan wasn't done, Jerry can't take a referral fee. d) No. It is unethical for Jerry to accept money from an automobile dealer

Mortgae Loan Originator, John, ran a very successful ad in the local newspaper. The MAP Rule requires John's company to keep copies of his ad for how long? a) 24 months b) 36 months c) 60 months d) The MAP Rule does not require records to be kepts

Mortgage Broker Janice took an application on Monday. However, her PC was broken down. She cannot get it reparied until next week. What is Janic's best option to fill out her initial disclosures? a) Fill them out by hand and place them in the mail or hand delivery them by Thursday. b) Use a free online program to fill them out. c) Ask a friend for the use of their PC. d) Tell her customers that they will need to wait to complete the application until her PC is repaired.

The Commissioner, Supervisor or Director's enforcement authority does not allow the state regulator to :a) order a licensee to consolidate non-profitable offices b) immediately issue cease and desist orders c) decline to renew a license d) deny or suspend licenses

The E-Sign Act, which provides validity for electronic signatures, requires which of the following: a) The consumer must affirmatively consent to using an electronic method for signing and cannot have withdrawn their consent b) The consumer must provide a scanned image of their legal signature c) The consumer must provide a written document containing their signature agreeing to use an electronic signature d) Electronic signatures may only be used when consumers cannot physically attend a real estate closing

The Red Flags Rule is based on which law? a) The Fair and Accurate Credit Transactions Act b) Equal Credit Opportunity Act c) The Gramm-Leach-Bliley Act d) The Truth in Lending Act

The note rate is: a) the contract interest rate agreed to on the promissory note b) the note "sent from the underwriter to the closing attorney" c) the note affixed "to the adjustment period" d) a factor of the index plus the interest rate

The penalties associated with willfully failing to follow the provisions of the Truth in Lending Act are: a) Could be fined up to $5,000 or imprisoned up to one year, or both, plus civil monetary penalties b) Could be fined up to $10,000 for each occurrence and do community service c) Will have to correct the disclosures and send an apology d) Will have to refund the origination fee and pay up to $100,000 in fines

The renewal period for state licensing falls during what time period of the year: a) November 1 through December 31 b) September 1 through December 31 c) Once you have completed CE d) There is no formal renewal period

Under the TRID Rule, Good Faith is a determination of: a) Accuracy b) Intent c) Precison d) Commitment

What can be added to a self-employed borrower's income? a) Depreciation b) Two years of average income c) P & L statement d) 4506-T information

What cost directly effects the APR on a loan? a) Subsequent Appraisal Fees b) Home Inspection Costs c) Title company document prep fee d) Real Estate Agent fees

What happens if a lender credit is disclosed on the Loan Estimate, but the service for which the credit was listed is no longer needed at closing? a) The credit must be provided to the borrower as a "general credit" at closing or the lender must find a way to cure the discrepancy to maintain "Good Faith" b) The originator may now book that credit as profit c) The credit should not be listed in the closing documents d) The loan must be redisclosed

What is Redlining? a) Avoiding lending in a certain area b) Targeting an area due to low income c) Discrimination based on national origin d) Allowing the borrower to move in prior to closing

What is an easement? a) A right of way to use a part of another person's property for a new drive way b) A property survey line c) Subdivision boundaries d) Elevation certificate

What is it called when a lender can require a loan to be bought back under a tablefunding agreement? a) Recourse b) Non-recourse c) Conveyance d) Re-conveyance

Which of the following is primarily concerned with enforcing economic sanctions levied by the US Government: a) OFAC b) FinCEN c) The US Treasury Department d) The Federal Reserve Board

Which of the following is true of VA loans? a) There is no monthly mortgage insurance b) You have to pay MIP upfront and monthly c) You have to provide a VOD d) The borrower was dishonorably discharged

Which of the following would be considered a Higher Priced Mortgage Loan if the APOR is 6%? a) 0.0775 b) 0.07 c) 0.065 d) 0.06

Your borrower plans to purchase a second home for a purchase price of $175,000.00 and finance 80% loan-to-value. The appraisal comes in at $185,000.00. They will also finance a second mortgage for 10%. After their 10% downpayment, what is their combined loan-to-value? a) 0.9 b) 0.85 c) 0.8 d) 0.1

Which document can the borrower sign before it has been fully completed? a) Verification of Employment b) The acknowledgment of the appraisal c) Verification of receipt of funds d) The 1003

A Borrowers are warned not to sign any document that is not completely filled out. The Verification of Employment is an exception since the borrower's employer must complete it after the borrower has authorized the verification with his or her signature.

Deed of Trust

A security instrument that transfers certain rights and conveys tile to a third party (trustee) until the loan is repaid.

Due on Demand (Acceleration Clause)

Also known as, an "acceleration clause" in a contract when a lender can demand repayment of the loan balance in full if contractual obligations are not met (i.e. in the case of default by the borrower).

4496 09/27/20 21:02:31Subprime borrowers can be defined by all of the following except: a) At least 2, 30 day lates on a mortgage in the last yea b) An equity position of 90% c) A bankruptcy with in the last five years d) A debt ratio over 50%

5209 09/26/20 13:32:27Concerning the Settlement Provider List of Services for Which You Can Shop, all of the following are true, except: a) You may place it on your letterhead, but you must use the conent of the form developed by the CFPB b) It is provided with the Closing Disclosure c) It must be on a separate sheet of paper d) At least one reasonably available provider for each required service be disclosed

All of the following are included in a back-end debt ratio except: a) Car loan b) Medical Bill payment c) Mortgage payment d) Child support obligation

All of the following are true of FinCEN, except: a) they are a division of the US Treasury b) they do not regulate the mortgage industry c) they supply analytical support to the law enforcement d) they are concerned with record keeping

Barry is buying a four-unit apartment building as part of his retirement plan to own six investment properties. What type of approach will be used by the appraiser to determine the property's value? a) commercial approach b) income approach c) investment approach d) able to be leased occupancy approach

For first-lien, Higher Priced Mortgage Loans that are covered by the HPML Appraisal Rule, the disclosure requirements overlap with which Rule? a) The Qualified Mortgage Rule b) The ECOA Valuations rule c) The RESPA Appraisal Requirements d) None - There is no overlap

How many times can you retake a SAFE MLO Test Component before you have to wait 6 months to retest? a) 1 retake b) 2 retakes c) 3 retakes d) 4 retakes

If a borrower is a sole proprietor, how do you verify their income?a) Look at the last two years W-2's and past 30 day's pay stubs b) Review the borrower's schedule C and add back depreciation c) You can verify the income by reviewing 12 month's bank statements d) It would be best to put the borrower in a stated income loan to avoid having to ask them for income documents

In the application, borrower Donnie expresses to his MLO that he has inherited his father's $300,000 house. The will is probated, but the title to the house has not yet been transferred. Donnie would like his newly inherited house to be included in hisassets during the application process for his new home. He intends to rent the inherited property and also wants to count the potential rent toward his income. Donnie says he has 12 cancelled checks and a new executed lease from a roommate who will rent the inherited house. The Mortgage Loan Originator sees that Donnie has a lot of debt and the inherited house could help his balance sheet and strengthen the loan for the underwriter. Which of the following best describes the situation? a) This is OK. Nobody checks additional properties. The Mortgage Loan Originator should close the loan. b) This could be asset fraud. The Mortgage Loan Originator should ask for clear title to the father's house if it is going to be used as an asset. c) This could be income fraud. d) This could be occupancy fraud.

In which document would you find the disclosure of Year 1's escrowed property costs? a) Both the Loan Estimate and the Closing Disclosure b) The Closing Disclosure c) The Loan Estimate d) It is in a separate disclosure, not on either the LE or the CD

Prohibited acts enumerated in the CSBS State Model SAFE Act include all of the following, except? a) Failure to truthfully account for monies belonging to the borrower b) To keep records on an encrypted hard drive c) To require insurance coverage exceeding the replacement costs of the improvements to the property d) To collect or attempt to collect any charge or fee prohibited by the Act

The 10% variance (tolerance) may apply to all of the following except: a) Recording fees b) The Origination fee c) The Title Search fee d) A Pest Inspection fee

The 10% variance (tolerance) may apply to all of the following except: a) The Home Inspection fee b) The Origination fee c) The Settlement Charges d) A Pest Inspection fee

The Commissioner or Director's Authority over MLO's and their companies include all of the following, except? a) Deny, suspend or revoke licenses b) Require additional NMLS approved education c) Impose fines d) Order restitution to consumers

The minimum prelicensing education requirements of the SAFE Act require: a) 3 hours of federal law, 10 hour of electives (can include state specific content), 3 hours of ethics, 2 hour of non-traditional mortgage product guidance, and 2 hours of state specific law b) 3 hours of federal law, 12 hours of electives (can include state specific content), 3 hours of ethics, and 2 hours of non-traditional mortgage product guidance c) 3 hours of federal law, 4 hours of ethics, 10 hours of electives (can include state specific content), and 3 hours of non-traditional mortgage product guidance d) 3 hours of federal law, 2 hours of ethics, 12 hour of electives (can include state specific content), and 3 hour of non-traditional mortgage product guida

What form is required to be obtained if the veteran wants a spouse to sign on their behalf for a VA loan? a) a third-party authorization form b) a specific power of attorney c) a durable power of attorney d) an approved relative form

What is Reverse Redlining? a) Avoiding lending in a certain area b) Targeting a specific area c) Telling a borrower not to buy a home in a certain area d) Allowing the borrower to move in prior to closing

What is the maximum seller concession for FHA loans? a) 0 b) 0.06 c) 0.03 d) 0.02

When someone rescinds a refinance loan, how long does a creditor have to refund all of the consumer's money? a) 7 days b) 20 days c) 30 days d) 45 days

Which disclosures does the Know Before You Owe initiative (the TRID Rule) require to be given at closing? a) The Truth in Lending Act and the CD b) The Initial Escrow Statement and the CD c) The final LE Disclosure and the CD d) The LE and the Servicing Disclosure

Which of the following is not one of the Federal Banking Agencies listed in the CSBS Model Legislation? a) The Board of Governors of the Federal Reserve System b) The Director of the Department of Housing and Urban Development c) The Director of the Office of Thrift Supervision d) The National Credit Union Administration

Which of the following is not true under the provisions of the Gramm-Leach-Bliley Act regarding the differences between consumers and customers: a) if a consumer elects to opt-out from additional solicitations, the financial institution must honor the request b) a consumer's relationship travels with the ownership of the servicing rights c) a customer must receive an annual privacy notice for the duration of the customer relationship d) a customer relationship is a continuing relationship with a consumer

Which of the following is part of the Qualified Mortgage Rule: a) All appraisals must be done within 120 days of closing b) Any discounts points charged in excess of 2 must be counted in the points and fees c) The consumer must be granted an additional 3 business days to rescind the loan d) Consumers must attend homeownership counseling

Which of the following is true of surety bonds? a) MLOs must obtain at least a $10k bond b) Mortgage Company's surety bonds cover the MLOs c) The Branch Manager must fill out an application for a surety bond d) Servicers don't need bonding

You are currently working with borrowers who are considering loan products which have non-traditional mortgage terms. Which of the following best describes the actions you should take: a) close the loan quickly b) take extra time and care when explaining the risks and terms to the borrower c) explain to the borrower your personal feelings about how these types of loan products should be outlawed d) treat this loan and these borrowers just like any other

What is Ginnie Mae? a) a rural housing insurance program b) a guarantor of GNMA mortgage backed securities c) an agency dedicated to rural and urban low cost housing d) a mortgage lender

Correct: b

All the following are banned by HOEPA, except: a) Late fees larger than 4 percent of your regular payment b) Fees for paying off a high cost loan early c) Fees for loan modifications d) Balloon feature

Another word for Mortgagor .a) lender b) co-borrower c) mortgage banker d) borrower

CRAs must respond to a dispute within: a) 3 days b) 7 days c) 10 days d) 30 days

All of the following are characteristics of construction loans, except: a) The bank will distribute draws after inspection b) The balance increases after each draw c) There is usually a second settlement after construction is completed to put the permanent financing in place d) The loan is based on fully amortized payments for three years

4919 09/26/20 21:55:38When a mortgage advertisement provides attractive terms and credit features, it is: a) baiting and switching b) inducing and coercing c) triggering the disclosure of additional information d) deceiving and triggering

5531 09/29/20 11:23:32Jason applies for a refinance loan with MLO Stephen at ABC Mortgage Bankers. Stephen assists him in completing a loan application and assesses his qualifications. Jason reviews his credit and sees that he has a lower score due to a few late payments on his accounts in the last 12 months, in addition to his high DTI. There are limited options, but Stephen determines he can offer him two loan options. Jason proceeds with selecting a fixed rate loan at 7%. This is a fixed rate loan with a 40 year term and a balloon feature after 15 years. Which of the following statements is true? a) Jason is a subprime borrower. b) Jason should not take the loan because of the high rate and the risk fo the balloon feature. c) This is a Non-QM loan. d) This is a 360/180 subprime loan product

A borrower is buying a home for $300k and the appraisal comes in at $290k. If they finance 95% LTV, what would their new loan amount be? a) 285000 b) 290000 c) 275500 d) 300000

A creditor forcing a sale of an asset for non-payment of a loan is called: a) deed-in-liu of foreclosure b) short sale c) foreclosure d) cure

According to TRID, none of the following are subject to an unlimited tolerance level, except: a) fees to record the mortgage b) fees to originate the loan c) realtor commissions d) fees to transfer title from one owner to another

All of the following are included on an AfBA, except: a) Percentage of ownership b) That the borrower has the right to choose their title company c) A mortgagee clause d) The cost

Consumer protections provided by RESPA's Section 10 state: a) a lender may not charge a consumer more than the actual cost of a bona fide third-party service b) an originating party may not receive compensation both from the lender and the consumer c) a consumer may not be required to pay more than two month's cushion into their escrow account d) a professional friend of the consumer is allowed to provide appraisal services as long as they are property licensed by the state

Feature of a loan where there is upfront payment to temporarily offset lower payments in the first two years of a loan: a) Temporary Buydown b) Discount Point c) 2-1 Buydown d) Permanent Buydown

Freddie Mac's Automated Underwriting System is called: a) Fannie Mae b) Ginnie Mae c) Loan Prospector d) Desktop Underwriter

How much will a seller contribute with a 6% concession on a loan of $150,000 and a home purchase amount of $170,000? a) 9000 b) $$4,500.00 c) 10200 d) 7500

If a borrower finances 95% loan-to-value, how much can the seller contribute to the closing costs? a) 6% of the loan amount b) 3% of the loan amount c) 3% of the purchase price d) 6% of the purchase price

If a borrower has a 401k loan, what should the MLO do? a) Leave it off of the application b) Include it in the front-end ratio and obtain documentation c) Get a statement from the borrower d) No action is required

If a lender refers a borrower to an affiliated title company, they must give the borrower: a) A discount b) A warning c) An AfBA d) Time limit to decide

In the rules set by the Homeowners Protection Act, disclosures for high-risk loans must inform the borrower of the following: a) the loan is not suitable for the borrower at risk and they should seek more appropriate financing b) the loan is a high-cost loan and the consequences for early pay-off c) the PMI will automatically be terminated at the mid-point of the amortization as long as the payments are current at that time d) the lender will send a disclosure detailing the terms of the loan and the consumer has three business days to review the disclosure before settlement

Loan origination fees are: a) always paid directly to the broker b) paid to the originator by the borrower c) a profit to the lender d) split equally between the MLO, Processor, and Underwriter

Loans exceeding the limits of Fannie Mae and Freddie Mac are known as: a) Alt-A b) Sub-prime c) Jumbo d) Non-traditional

None of the following assets can be verified, except: a) mattress mone yb) sweat equit yc) 401K/IRA d) appraised gold and jewelry

RESPA limits the: a) amount you can charge on a 3rd party fee b) number of times you can re-disclose your rate c) amount a lender can hold in escrow d) number of days you have to decline a loan

Regarding an application for licensing as a mortgage loan originator, the applicant shall furnish to the NMLS, information concerning the applicant's identity including: a) a driver's license or passport b) background check, 20 hours of pre-licensing education, unique identifier, surety bond c) fingerprints for submission to the FBI and any other government agency, personal history, authorization to pull credit, information to any administrative, civil, or criminal findings. d) fingerprints for submission to the FBI, credit report, and resume

Stephanie Smith applied for a loan with Allied Mortgage. She informed the MLO that her credit score was not very high. The MLO completed filling out the loan application and pulled credit which revealed a 30 day mortgage late, two 60 day late credit card payments, and a repossessed car in the last 24 months. Which of the following would apply? a) Stephanie is considered high-risk b) Stephanie's loan should be denied for delinquent past credit c) Stephanie is considered a sub-prime borrower d) Stephanie should be able to qualify for a conventional conforming loan

The Carrigan's have a conventional loan with PMI coverage. Which of the following is not true concerning disclosures required by the HPA: a) A written initial amortization schedule is required b) A written notice setting forth the borrower's MI cancellation and termination rights must be given c) That on lender paid mortgage insurance the Carrigan's may have a refund coming if they pay all of their notes on time d) If the Carrigan's loan is a high risk loan, they must be notified that their MI will be terminated at the midpoint of the amortization period, provided

The SAFE Act permits the employer to provide CE to their licensees in all of the following circumstances, except: a) The employer is an approved education provider b) The courses and company are approved by the NMLS c) The employer is not an approved NMLS education provider d) The employer is approved by the NMLS but the instructor is an affiliate

The law that prohibits discrimination in lending on the basis of receipt of public assistance is: a) The Real Estate Settlement Procedures Act b) The Truth in Lending Act c) The Equal Credit Opportunity Act d) The Fair Credit reporting Act

The loan limit set for FHA loans is: a) Dependent on the county of the subject property .b) $510,400 c) Dependent on the county and its median income d) Follows the conventional loan limits set by Fannie Mae and Freddie Mac

The marketing department of a local mortgage company does not send mail pieces to four distinct zip codes because they have a policy of refusing to originate in those specific areas as they are known to have high concentrations of minorities. This practice is known as: a) Segregation b) Disparate Impact c) Redlining d) Neighborhood Stripping

The mission of the Consumer Financial Protection Bureau is defined around what three objectives a) Education, Legislation, and Study b) Reporting, Enforcement, and Study c) Empower, Enforce, Educate d) Bureaucracy, Redundancy, and Publication

The prepayment penalty threshold on High-Cost Loans is: a) more than 1% and more than 24 months after consummation or account opening b) more than 1.5% and more than 24 months after consummation or account opening c) prepayment penalties are not permitted on high-cost loans d) more than 3% and more than 60 months after consummation or account opening

To generate leads, if you advertise a loan product or interest rate which you do not intend to make generally avaialable it is?a) Bait advertising b) A legal and ethical transaction c) A Unfair and Deceptive Acts and Practice d) Timely disclosure

To meet the minimum reserve requirement for Fannie mae, lenders must obtain which of the following to document and verify those reserves. a) Full bank statements and W2's b) Tax returns and VOE c) Full bank statements and VOD d) Paystubs and VOD

Under Reg B, it is prohibited to discriminate based upon: a) Race, color, income, marital status, familial status or religion b) Race, color, disability, age, marital status or sex c) Race, color, national origin, religion, age, marital status or sex d) Race, color, national origin, religion, or birth date

Under TILA's advertising rules for trigger terms, which example does not require more information? a) "Low down payment!" b) "ARM loans with a low start rate!" c) "Come to a free first time homebuyer seminar!" d) "Loans with a fixed rate for the first 3 years!"

What is a COFI and where does it originate? a) Conference of Financial Intelligence, Washington b) Costal Office of Flood Investigation, Florida c) 11th District Cost of Funds Index, San Francisco d) Coalition of Financial Institutions, North Carolina

Which of the following disclosures is not required by the E-Sign Act? a) How to request and receive paper copies of all documents b) Whether consent applies to one transaction or to categories of documents c) 268 bit encryption of the signature d) A list of computer compatible hardware and software

Which of the following is most true regarding TRID's timing of disclosures: a) a creditor shall provide the CD within three days of the receipt of an application b) the lender must redisclose the LE when the APR becomes inaccurate by more than 1/8% c) creditors must provide the initial LE within three business days of application and at least seven business days prior to loan consummation d) consumers may waive their right to receive a copy of the credit report three days before closing in cases of a bona fide emergency

Who is the primary Federal agency in charge of regulating non-depositories? a) The Federal Trade Commission b) The Department of Housing and Urban Development c) The Consumer Financial Protection Bureau d) State Regulators

All of the following are protections under the Home Ownership and Equity Protection Act except: a) No balloon terms of less than five years b) Prepayment penalties cannot remain in effect for more than 36 months c) No "due on demand" payments after default or negative amortization d) ARMs must be 3/1 with caps of 2/6 and a start rate of 3.5%

Title Insurance protects against: a) Issues that have just occurred b) Issues that occurred in the past c) Issues that may occur in the future d) Issues that are deemed fraudulent

Correct: b

There are two standards which are employed in mortgage lending, UDAP and UDAAP. The difference between the two is: a) The inclusion of "Abusive" b) The "Fairness" standard c) The "Deceptive" standard d) All of the above

Correct: a

The Deed of Trust is: a) a security instrument b) a transfer of title c) a promissory instrument d) a trustee both deeded and recorded

Correct: a The Deed of Trust is the security instrument that transfers certain rights to a trustee until the loan is repaid (in a title theory state).

James is a licensed MLO for Granite Mortgage, Corp. He took an application from the Turner family who wanted to purchase a home. When James received the sales contract and the cancelled earnest money check, he saw that the earnest money was deposited tendays prior to the sales contract. Which of the following statements best describes James' position? a) There could be many reasons why this is the case. James should ignore the discrepancy. b) A simple check with the real estate agent can clear this up. c) James should stop the process and file a Suspicious Activity Report with FinCEN. d) This is an indicator that there may be fraud in the contract. James should investigate further.

Correct: b

It is customary when underwriting a loan to analyze a borrower's "capacity" in order to? a) define the most suitable loan product b) determine if the borrower is capable of paying back the loan c) determine risk and price the interest rate d) guide the borrower into the right loan term

Correct: b An underwriter is concerned with the borrower's capacity to repay the loan by considering the borrower's income, job stability and debt load in order to ensure the sustainability of the loan.

Loan Commitments are issued by: a) The MLO b) The Lender c) The Originator d) The Loan Servicer

Correct: b Only the creditor or lender may make a commitment to issue a loan.

1231 09/26/20 21:55:37How many months after a business relationship has been established are you allowed to call a customer if their phone number listed on the Do-Not-Call Registry? a) 3 months b) 18 months c) 24 months d) 36 months

Correct: b Telemarketers are provided the right by the FTC to call a customer with whom they have an established business relationship. They may call this customer 18 months from the last purchase, delivery or payment even if their phone number is on the Do Not Call Reigistry.

The acronym VOR stands for: a) Verification of Residence b) Verification of Rent c) Verification of Reconciliation d) Verification of Residency

Correct: b The Verification of Rent form is also called a VOR.

A mortgage lender licensed exclusively in the state of New York is making outbound telemarketing calls all across the state to expand its business to both potentially new and existing customers. In the event this company violates a Do-Not-Call provision.Which federal agency would enforce punitive action? a) SEC b) FTC c) FCC d) OFAC

Correct: c

Another word for Mortgagee. a) trustee b) borrower c) lender d) creditor

Correct: c

A first time buyer is: a) a natural person that has never previously owned a home b) an individual or association buying their first property c) a natural person having no ownership in the previous three years d) a person who was never listed on a deed to a previous property

Correct: c An individual is to be considered a first-time home buyer who (1) is purchasing the security property; (2) will reside in the security property as a principal residence; and (3) had no ownership interest (sole or joint) in a residential property during the three-year period preceding the date of the purchase of the security property. In addition, an individual who is a displaced homemaker or single parent also will be considered a first-time home buyer if he or she had no ownership interest in a principal residence (other than a joint ownership interest with a spouse) during the preceding three-year time period.

1865 09/26/20 13:32:27Your borrower has a $25,000 HELOC behind a first mortgage loan that they want you to refinance. The borrower wants to pay down the home equity line of credit to $5,000 and leave the full line open. Assuming there is equity to do so, what documentation will the new lender require from the creditor that holds the HELOC in order to meet the borrower's request? a) lien disclaim letter b) quitclaim release c) letter of subordination d) statutes of lien subordination

Correct: c Mortgage lien priority is established by the date and time of recordation. In order for a new first mortgage to be recorded in a superior lien position in front of an existing second mortgage, the second lien holder must issue permission to the new first mortgage company with a "Letter of Subordination" stating they will maintain a subordinate lien position and allow the new mortgage to take first lien position.

In an investigation state regulators have the authority to interview each of the following, except: a) Customers b) Unlicensed company officers c) Family members d) Independent contractors

Correct: c State regulators have access to such books and records and interview the officers, principals, mortgage loan originators, employees, independent contractors, agents, and customers of the licensee, individuals or persons subject to the SAFE Act concerning their individual or person subject to this Act concerning their business.

Which disclosure notifies the borrower that, at their own cost, they can obtain and use an alternate appraisal? a) The Loan Estimate b) The CD c) Both the LE and the CD d) The HPML Appraisal Disclosure

Correct: c The Dodd-Frank Act mandated that both the Loan Estimate and the Closing Disclosure contain a notice to the borrower that they, "can pay for an additional appraisal for your [their] use at your [their] own cost".

The name of the anti-discrimination policy statement which was signed by ten Federal agencies in the 1990s was: a) The Anti-discrimination Policy Act (APA) b) The More-Bidwell Anti-Discrimination Policy c) Interagency Policy Statement on Discrimination in Lending d) The Equal Credit Opportunity Act

Correct: c The Interagency Policy Statement on Discrimination in Lending was one of the watershed doctrines in the 1990's. It established that discrimination in lending did occur and pointed to the effects of discrimination.

TILA controls the content of which disclosures? a) The LE, the TIL Disclosure, and the HUD-1 b) The Servicing Disclosure, the CD and the TIL Disclosure c) The LE and the CD d) The Affiliated Business Arrangement (ABA) Disclosure, the Servicing Disclosure, the CD, the Right to Rescind, and the TIL Disclosure

Correct: c The Know Before You Owe (TRID) Rule requires certain disclosures to be given to consumers. Two of the disclosures are the Loan Estimate form and the CD

Except for this, Fannie Mae has "standard eligibility" and "enhanced eligibility" requirements, referred to as: a) full documentation b) partial documentation c) ALT-A documentation d) Whole Doc

Correct: d

One of the benefits of FHA loans is not: a) they are more liberal underwriting guidelines b) the loans are assumable c) the total borrower investment can be as little as 3.5% d) that it is a government loan

Correct: d

A 2/28 sub-prime ARM often has multiple types of risk inherent in the loan provisions, except: a) high prepayment penalties that extend beyond initial adjustment b) low introductory rates with very high caps and short adjustment periods c) no escrows for the payment of property taxes and insurance d) a note that balloons before 5 years

Correct: d 2/28 ARMs are typically fixed for the first two years then adjusts monthly or every 6 months thereafter. Risk layering occurs when the lender has multiple features in one loan and extends the loan at very high LTVs and does not fully document the borrower's ability to repay the fully indexed rate.

E & O insurance is carried by the abstractor in order to? a) defray the costs of title litigation b) provide additional protections for lenders c) mitigate the risks for lender's title insurance d) protect against mistakes in the title search

Correct: d An abstractor will carry Errors and Omissions Insurance in order to protect themselves against mistakes that may occur in the title search process.

The major concerns of the Interagency Guidance on Nontraditional Mortgage Risks include all of the following, except: a) Payment shock b) Negative amortization c) Prudent lending practices d) Conforming loans

Correct: d Equity protections and the consumer's ability to repay these loans were the agencies focus. The guidance was directed at nontraditional or exotic loan products both in the prime and subprime markets. The Interagency guidance on subprime loans deals with subprime mortgages separately.

Servicing mortgage loans includes all of the following, except: a) billing and collecting b) managing escrows c) administering foreclosures d) issuing loan commitments

Correct: d Loan servicing can be performed by the lending institution or be released to services that specialize in loan serving. Servicers operate, for profit and gain, performing billing and collection functions. Also, they manage escrow accounts and, in the event of foreclosure, work with the trustee to administer or mediate that process.

The Perry's originally took out a 30 year FHA loan of $153,900 on a purchase price of $162,000. Which statement best describes the Perry's situation 5 ? years later regarding the elimination of the monthly MIP now that the home is worth $174,000 and theprincipal balance of the loan is $138,330? a) They can eliminate the monthly MIP because it has been more than 5 years and the LTV is less than 80%. b) They can eliminate the monthly MIP because it has been more than 5 years; the LTV does not matter. c) The monthly MIP was canceled at 5 years because the Perry's made a full 5% down payment. d) The Perry's cannot eliminate the monthly MIP

Correct: d Loans with an original LTV greater than 90% require MIP to be collected for 30 years or until the end of the loan term, whichever is sooner. The Perry's original LTV was 95%.

The 2007 Interagency Policy Statement on Sub-prime Mortgage Lending was developed because of concerns that borrowers were not fully aware of the risks inherent with certain ARM products. Which of the following was not one of the characteristics described in the Statement? a) offering many of these features on top of one another and offering these loans to "at risk" sub-prime borrowers. b) limited or no documentation requirement c) prepayment penalties that extend beyond the initial fixed period d) interest rates which were higher than the APOR

Correct: d Sub-prime products with one or more of the following features present substantial risks to both consumers and lenders. These risks are increased if borrowers are not adequately informed, including the consumer's responsibility to pay taxes and insuranceif not included with their monthly housing payment. Sub-prime ARM product risks: 1) low initial payments based on a fixed introductory rate that expires after a short period and then adjusts to a variable rate (often 6 months) plus a margin for the remaining terms. 2) Very high or no limits on how much the payment amount or the interest rate may increase on reset dates. 3) Limited or no documentation of borrower's income. 4) Product features likely to result in frequent refinancing in order to maintain an affordable monthly payment; or 5) Substantial prepayment penalties and/or prepayment penalties that extend beyond the initial fixed interest period.Note: Risk layering is the predatory practice of layer

4567 09/27/20 21:02:31Finance charges include all: a) Fees for the credit report b) Fees for title work c) Fees charged by the mortgage company d) Fees charged by the mortgage company not paid in a cash transaction

4740 09/27/20 21:02:31Which of the following is not a minimum requirement for MLO license renewal: a) satisfy the annual CE requirements b) pay the renewal fees and submit a request for renewal c) maintain standards that were met for initial licensing d) Renew the required surety bond

A borrower takes out a loan that is a 7/1 hybrid and they have caps of 3/2/6. If the starting rate is 5%, what would be the highest interest rate the loan could go up to? a) 0.07 b) 0.08 c) No limit d) 0.11

A mortgage that permits an agreement between the buyer and the seller that allows for the buyer to take over mortgage payments from the seller. a) Assignment b) Acceleration c) Blanket Mortgage d) Assumption

Carl is a licensed MLO for Veteran's Home Loan Co. Carl took an application from Freda Lane. Freda is a single mother who receives child support from her ex-husband. Freda does not want to disclose her alimony or child support. Without this income, Carlcan't get her approved. Can Carl force Freda to give him this information? a) No. Child support can't be counted as income anyway. b) Yes. The lender has the right to verify income .c) Yes. All income has to be disclosed on a 1003 application. d) No. The Equal Credit Opportunity Act gives Freda the right not to disclose receipt of alimony or child support.

Characteristics of a subprime loan include: a) Foreclosure and bankruptcy 7 years ago b) 30 days late on a credit card in the last 12 months and a 30 day late payment on a car loan 3 years ago c) 680 credit score and two 30 day credit card late payments 36 months ago d) 52% DTI, and three 30 day late payments on credit card accounts in the last 12 months

Fraud can result from all of the following, except: a) Actions b) Words c) Non-Disclosure of information d) A Servicer

How would you best describe how to determine a downpayment on a house? a) Divide the value by the purchase price b) Multiply the combined loan-to-value by the appraised value c) Subtract the amount of seller concessions from the purchase price d) Divide the loan amount by the value of the property

If a borrower buys a home for $98,000 and finances $90,000, how much can the seller contribute towards the closing costs? a) 2700 b) 5880 c) 4500 d) 2940

If a business ever has an action against its bond, what action is the regulator likely to take? a) To obtain a new bond or to renegotiate the remaining level to the required amount b) to require the business to pay all recourse of the penal sum c) require the licensee to operate under a probationary order for a minimum of one year d) immediately, upon recovery of any action, order the licensee to cease and desist

Loan underwriters are required to be licensed by the SAFE act when: a) they are only conduction clerical or support duties b) when they are talking terms and conditions with the applicant c) underwriters are never required to be licensed because they do not speak with the applicant d) they are not under direct supervision of a state licensed or registered MLO

Mr. and Mrs. Callohan received their annual escrow analysis and a $45 overage was discovered. Within how many days is the servicer required to refund the $45? a) 15 business days b) 30 calendar days c) 45 calendar days d) no refund is required

New Horizons Lending Co. determined that borrower Darcy White has committed Fraud for Housing/Property. What is the protocol? a) Ms. White can rescind the loan b) New Horizons still has to fund the loan c) The MLO can retake her application with the correct information d) New Horizons can accelerate the loan

Once you explain to the borrower that their answers are voluntary, what questions are you able to ask them when completing the URLA? a) Race and Religion b) Race and Income c) Race and Marital Status d) Race and Sex

The Deed of Trust or Security Instrument is the document that does not: a) convey legal title to a third-party until the loan is repaid b) contain a legal description of the property c) spells out the actions that the trustee may take if the borrower defaults d) convey ownership of the property to the lender

The cycle of the loan where approval takes place. a) funding b) origination c) processing d) underwriting

What do you call an appraisal that uses the revenue(s) produced by comparable rental properties to arrive at a value? a) Sales Comparison or Market Approach b) A Drive-By Appraisal c) Cost Approach d) Income Approach

What is/are the USDA's maximum debt ratio(s)? a) 28/36 b) 31/43 c) 41 total d) 29/41

What percentage of a retirement account can be used for reserves? a) 0.1 b) 0.25 c) 1.25 d) 0.6

Which is not a characteristic of a Payment Option ARM? a) the borrower can choose to pay interest only b) an ARM loan that allows the consumer to choose from several payment options c) the minimum payment can result in negative amortization d) may not be paid as a fully amortized loan

Which of the following is considered the URLA? a) Form 1004 b) Form 2106 c) Form 1030 d) Form 65

Which of the following laws have specific rules which address the retention and/or destruction of business records: a) FACTA b) ECOA c) GLBA d) All of these

Which primarily offers guaranteed loans: a) FNMA b) FHA c) FHLMC d) USDA

MAP Rule? Regulation? Purpose? Applies to?

Mortgage Acts and Practice Rule Regulation N Purpose: Prohibit misrepresentation in advertising of mortgage credit products Applies To: Financial Institutions

Assignment of a Mortgage

Document that transfers a mortgage obligation from the original lender to an assigned third party (i.e. another lender).

VA Back/End

None 41%

Title insurance is often required by whom? a) the lender b) the borrower c) the lender and the borrower d) no one, it is illegal to force someone to get title insurance

No Tolerance Limitation

Prepaid Interest Amounts Placed into an escrow account amounts paid to third-party service providers selected by the consumer, but not referred by the creditor on services the consumer was permitted to shop; and fees for services not required by the creditor, such as home inspections in a purchase

10% cumulative tolerance (2)

Recording Fees Fees charged by non-affiliated thrid-parties, referred by the creditor, for which the consumer was permitted to shop

What is it called when a seller contributes money for closing by way of a loan? a) Seller help b) Concession c) Seller carry back d) Seller contribution

Seller carry back

FHA Insured Loan Program

The FHA Insured Loan Program has many benefits for low-to-moderate income borrowers that do not meet conventional guidelines. A few of them are: more loose and forgiving underwriting standards, the borrower only has a 3.5% minimum down payment, debt ratios for manual underwriting are 31/43, up-front MIP is based upon LTV, not credit score, cash-out refinances up to 85% LTV, loan limits vary by county across the country.

Non-Recourse

The Lender or Broker is protected from the requirement to buy back loans except in cases of fraud or misrepresentation.

Zero Tolerance (4)

The creditor's/brokers charges charges for services by an affiliate of the creditor transfer taxes charges for services the creditor does not permit the consumer to shop (e.g. credit, appraisal)

Deed

The formal written document that, when executed and delivered, conveys title to real property, which transfers the ownership of that property from one person to another.

Conveyance

The transfer of ownership or interest in real lender from one person to another by a document such as a deed, or deed of trust.

Triggering Terms - If any of the following terms are promoted in an advertisement set forth in (a) then the advertisement shall meet the requirements defined in (b) as follows:

a. (1) the amount or percentage of any down payment (2) the number of payments or period of repayment (3) the amount of any payment (4) the amount of any finance charge.

ECOA affords consumer protections from: a) the time the loan is originated to the closing b) consumer contact through loan servicing c) advertising to application d) the application to the closing

If a loan is assumed, who is primarily responsible for the payments? a) The original borrower b) The new borrower c) The originator d) The lender

The regulation which limits borrower Debt to Income ratios to 43% is? a) The Truth in Lending Act b) The Qualified Mortgage Rule c) The Equal Credit Opportunity Act d) The Far and Accurate Credit Transactions Act.

All of the following require redisclosure, except: a) Rate lock b) The Customer gives you an Intent to Proceed c) The borrower requests that you increase the loan amount d) The appraised value is different than the customer estimated

b The fact that an appraisal comes in at a different value than the customer estimated does not cause a redisclosure in and of itself. If the loan has to be reworked so that the customer qualifies, or if the customer requests an increase in credit, then the loan must be redisclosed.

According to Reg X, the mortgage servicing statement is required in all of the following transactions, except: a) a primary residence purchase b) an option ARM used in a purchase c) a HELOC, second, or third lien loan d) a refinance on a primary residence

After closing on a refinance of a rental property, who is required to sign the rescission notice? a) Just the renters b) All owners on title c) Rescissions do not apply on a rental property d) Both the owners on title and the tenants

All of the following are included on an Adverse Action Notice except: a) The reason for the denial b) The ECOA statement c) The Notice of Right to Receive a Copy of the Appraisal Report d) The source of information used to make the decision

Discrimination always: a) Is intentional b) Is a result of biased policies c) Treats a protected class in a way that disadvantages them d) Is clear and obvious

Evidence of ownership. a) Deed of Trust b) Deed c) Title d) Ownership in Severalty

If a borrower's appraisal comes in low and a lender charges them a higher rate, that is considered: a) Legal and unethical b) Illegal and ethical c) Legal and ethical d) Illegal and unethical

If a fraudster uses the US Postal Service to defraud a bank's mortgage customers, what is the potential fine? a) 10000 b) 5000 c) $1 million and up to 30 years in prison d) $10,000.00 and a year in prison

To generate leads, if you advertise a loan product or interest rate which you do not intend to make generally available it is? a) Bait advertising b) A legal and ethical transaction c) A Unfair and Deceptive Acts and Practice d) Timely disclosure

What are the allowable debt ratios on a USDA-RD purchase money loan? a) 43% total debt ratio b) 28% over 36% c) 29% over 41% d) 31% over 45%

Which mortgage loan type prohibits the origination of a Balloon Mortgage? a) a Conforming Loan b) a Construction Loan c) a High-Cost Loan d) a Bridge Loan

Which of the following best describes the types of loans covered by Regulation B: a) residential real property of one to four units b) loans secured by a first and/or subordinate lien, including all government loans c) all credit transactions including credit cards, auto loans, mortgage loans, business and personal lines of credit d) all mortgage loans made by federally regulated lenders

Which of the following is not a threshold for determining High Cost Loans: a) APR b) points and fees c) discount points d) prepayment penalties

ECOA affords consumer protections from a) the time the loan is originated to the closing b) consumer contact through loan servicing c) advertising to application d) the application to the closing

consumer contact through loan servicing

VA requires residual income requirements based on the applican'ts region of the county in which they live and household family size. Residual income is defined as: a) Net income less federal, state, and local income tax deductions and monthly housing expenses b) Gross income less state and local income tax c) Net income d) Gross income less debts, federal, state, and local income tax deductions and monthly housing expenses

Which of the following is true of a borrower who only has 5 months to pay on an auto loan: a) The debt will count toward the front end ratio b) You must count the debt in the back end debt ratio c) The auto loan will be counted in the credit utilization ratio d) You do not have to count the debt in the ratio

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