Ethics/USC (Sim Exam 5/9, 5/13 (#1), 5/17, 5/21, 5/22, 5/28, 6/3, 6/10, 6/11, 6/22, 6/28, 7/4)

All state-licensed mortgage loan originators must pass the National SAFE Mortgage Loan Originator Test that includes a national component and a uniform state (UST) content component. The UST content component is ___% of the exam.

13

For license renewal, a mortgage loan originator is required to complete a minimum of ____ hours of continuing education on the topic of federal law.

3

To be eligible to receive temporary authority to act as a state-licensed MLO, Sierra must have either been registered in NMLS as an MLO continuously during the one-year period preceding the application submission or licensed as an MLO continuously during the ___-day period preceding the date of application.

30

What is the maximum penalty for committing the federal crime of mortgage fraud?

30 years in prison and $1,000,000 fine

A borrower has a ____ -day grace period after servicing transfer, should a payment accidentally go to the former creditor.

60

Which of the following persons must hold a mortgage industry license?

A person who negotiates terms of a residential mortgage loans in the primary market.

Which situation is least likely to be an example of predatory lending?

ABC Mortgage Co. offers a subprime loan to Mark, who is coming out of bankruptcy.

A loan originator who discovers in the process of verification that a borrower has underreported his current debt obligations and is not able to meet his monthly loan obligations should refuse to process the loan based on the

Ability to Repay Rule.

Which of the following is NOT a mandate by the Federal Trade Commission?

Advertisements must have a time period listed for a fixed-rate loan advertised.

_______ is the advertising of a mortgage product that the creditor does not provide or does not intend to sell.

Bait & switch

What entity has federal rulemaking authority for the SAFE Act?

Consumer Financial Protection Bureau

The Fair Housing Act requires a lender to use what term in any advertisement broadcast over the airwaves?

Equal Housing Lender

The Fair Housing Act requires what to be posted in all institutions where mortgage loans are made?

Equal Housing Opportunity House logo

What federal legislation prohibits the free exchange of nonpublic information between consumers' creditors?

Gramm-Leach-Bliley Act

When advertising for mortgage loans, which is not considered a situation requiring disclosure of all of the details of the loan as part of the advertisement?

It includes the statement, "Terms to fit your budget."

All of these examples illustrate an individual not engaged in the business of a "loan originator" except

Kirk provides financing for the sale of multiple properties he owns repeatedly and with habitualness.

The Fresh Start Company is anxious to work with homeowner, Julia, to obtain a loan modification that will help her to avoid a foreclosure. Fresh Start asks Julia for an advance fee to start the process. Which has Fresh Start violated?"

MARS Rule

The Equal Credit Opportunity Act, designed to limit discrimination in credit transactions, includes which restriction?

No questions can be asked about income not offered to help repay the loan.

Mortgage broker Rick is working with customer Jill. Rick recommends that she get a thorough home inspection and recommends Ace Inspections. Do you think that Rick can accept a $50 referral fee from Ace if Jill hires them?

No, a mortgage broker can never accept a fee or rebate for expenditures by his customer.

Anderson Mortgage Company has decided to outsource its loan processing activities to Total Processing, Inc. Pursuant to their agreement, Anderson pays Total $300 per file when the loan closes and nothing for files that do not close. Is this a violation of RESPA?

No, it is not a violation of RESPA to pay someone for services performed.

Of these, who must have a mortgage loan originator (MLO) license?

Sandy, who is paid a fee for taking mortgage loan applications for a licensed mortgage broker

Which of the following documents should be signed at closing if the creditor intends to transfer the servicing of the mortgage loan at any time subsequent to funding?

Servicing Disclosure Statement

Which statement about a loan originator advertising to solicit mortgage business is false?

The loan originator may advertise exclusively in his or her own name.

Which of the following is correct regarding third-party processing companies?

They are not required to be licensed as a mortgage broker.

Cynthia works as a loan processor for a registered mortgage broker and is therefore exempt from needing a loan originator license. As part of her job, she communicates with customers on the phone to obtain information when the broker is working with other clients. Occasionally, Cynthia counsels customers about residential loan rates and terms. Are any of her activities a violation?"

Yes, communicating with customers about loan rates and terms requires her to be licensed.

Which of the following is NOT a method that a state can use to meet the requirement under the SAFE Act that each state's MLO regulatory authority have a financial protection option in place?

a HUD federal protection fund

Wishing Well Mortgage Company, a licensed residential mortgage lender, has one principal location in the state. Which other business location is considered a branch and therefore is required to be licensed by the state regulatory authority as a residential mortgage lender branch office?

a leased office suite in a law office in which applications and fees for mortgage loans for Wishing Well Company are distributed and received from consumers

Licensed loan originator Susan may

accept a fee for originating a mortgage loan on her employer's behalf.

In order to ensure a loan closes, a mortgage loan originator conceals the fact that the down payment is made with borrowed funds. This could be considered

actual fraud.

Mortgage broker Susan was helping her brother get a mortgage. She knew that he would be retiring in three months, resulting in a significant decrease in income, but chose to ignore that fact so that he could get his loan. This might be considered an example of

actual fraud.

To comply with Regulation Z, lenders must disclose

annual percentage rate.

A nontraditional loan is defined by the SAFE Act as

any loan other than a 30-year fixed rate loan.

According to the Appraisal Independence Rule, a creditor who has information about appraiser misconduct must file a report with the

appropriate state licensing authority.

Mortgage broker Lily places an ad indicating a 5% interest rate for qualified applicants. Marshall meets the criteria to qualify at that rate, but Lily talks him into a less appropriate product, which results in a higher fee for her. This might be an example of what sort of tactic?

bait and switch

The Privacy Rule requires that financial institutions provide the consumer with a Consumer Privacy Policy

before disclosing information to non-affiliated third parties.

Surrender of an individual license does not affect the licensee's

civil or criminal liability for acts committed prior to the surrender.

An instructor of an approved continuing education course is

eligible to receive credit for annual continuing education requirements.

The Fair Housing Act requires the use of what slogan by creditors in all broadcast advertising?

equal housing lender

Each state's regulatory authority must establish procedures for

examining records of loan originators.

The state regulatory authority may suspend a loan originator license if the licensee has

failed to remit his renewal fee by the annual deadline.

Which situation is considered grounds for suspension or revocation of a mortgage lender's license?

failure to pay annual fees owed

Intentional or negligent misrepresentation or concealment of material facts is unethical and may be an example of

fraud.

Which industry insider would be the one most likely to file a falsified deed?

government worker

After investigating an advertising violation against the High Dollar Mortgage Company, the State Regulatory Authority notifies High Dollar in writing of the disapproval of a particular print ad they have been using. To be in compliance, as a first step, High Dollar Mortgage Company must

immediately cease publication of the disapproved print advertisement.

Under the protections offered by Equal Credit Opportunity Act (ECOA), when qualifying a potential borrower for a forward mortgage, a lender may not consider that the borrower

is a senior citizen

RESPA does not prohibit

lender payment of a fee to an appraiser.

Melissa intentionally tells her mortgage broker from whom she's trying to secure a home loan that she receives $1,200 each month in child support, though it's really only $800. This is an example of

material misstatement.

Alice's loan applicant calls her late in the evening before the closing, informing her he is being laid-off the following Monday. All the loan papers are at the title company and the Closing Disclosure is approved. The buyer still wants the home. Alice decides to let the loan close; otherwise, the buyer would be homeless. What type of fraud is this?

material omission

MLO Brady failed to disclose a loan's prepayment penalty to a consumer in a local publication. This would be considered

misleading advertising.

MLO Rob needs the Patriot Act form signed but cannot reach the borrower. The borrower is someone Rob has known since high school and is quite sure he is not a terrorist. Rob cuts and pastes the borrower's signature into the form and scans it to his email. What type of fraud is this?

misrepresentation

If a licensed mortgage loan originator is convicted of a felony, who is responsible for reporting this information to the NMLS?

mortgage loan originator

Which change of information must be communicated by the mortgage loan originator in writing directly to the state regulatory authority rather than entered through the NMLS system?

name change

When is it acceptable to discourage a borrower from making a formal loan application due to the fact that the borrower receives public assistance?

never

Joan is applying for a loan with mortgage loan originator Amber's company. Prior to closing, Amber is permitted to charge Joan and collect an upfront fee for

obtaining a credit report.

A licensed MLO who terminates his affiliation with an employing mortgage broker but wishes to resume working as a mortgage loan originator in the near future may NOT

originate loans during the time he is not affiliated with an employing entity.

The HOEPA places limitations on ______that may lock consumers into loans that may not be, or are no longer, in their best interest.

prepayment penalties

What type of illegal mortgage scheme involves collusion among the seller, buyer, appraiser, and lender/broker, in which the property is purchased at a low price, appraised at an inflated price, and then resold at a much higher price?

property flipping

The state regulatory authority would most likely suspend or revoke an MLO license for failure to

provide proper disclosures to a borrower.

Per the NMLS, the individual that represents a company and may be required to meet specific requirements BEST defines a

qualified individual.

Temporary authority to act as a loan originator permits which of the following to originate loans while completing any state-specific requirements for licensure?

qualified state-licensed MLOs seeking licensure in another state

Of these industry insiders, who is most likely to have been involved in preparing a fraudulent sales contract?

real estate agent

Which topic is NOT required as part of the 20 hours of a mortgage loan originator applicant's pre-licensing education?

real estate concepts

An individual's act is "for compensation or gain" when that individual

receives something of value.

According to the Gramm-Leach-Bliley Act, which would not be considered nonpublic personal information and, therefore, is not protected?

recorded mortgages

A lender who refuses to make loans on property in certain neighborhoods is demonstrating the discriminatory practice of

redlining

A minority applicant applies to a mortgage company for a home loan and is refused based on the reputation of the minority neighborhood for a high number of foreclosures. This is an example of what illegal practice?

redlining

A mortgage lending company refuses to make loans for homes in a minority neighborhood. This is an illegal action called

redlining.

Whose signature is most commonly forged in a deed scam?

seller

Which of these is not considered an appropriate reason to decline a loan file under ECOA?

source of incomes

In submitting a license application through the NMLS, which of following term is used as a company's indication that the individual will conduct business under a specific license/registration for the company?

sponsorship

A real estate agent believes that his Hispanic client would probably prefer to live in a more diverse neighborhood and so he only shows her homes where there is a higher concentration of residents from Guatemala. This agent is guilty of

steering.

Which of the following business activity is defined by the NMLS as completing the mortgage loan application and supporting documentation for underwriting for an application your company did not take from the borrower?

third party mortgage loan processing

Seller Dan knows that he has an outstanding lien on his property, so he pays one of the parties to the transaction to ignore it. Who did Dan most likely involve in his mortgage fraud scheme?

title company

Which mortgage industry insider is least likely to be involved in a fraud scheme using inflated property values?

title company officer

If any triggering terms are used in an ad, which fact is exempt from the disclosure requirement?

total closing costs

Under the SAFE Act, each state has the authority to

write state-specific rules or regulations or adopt procedures related to licensing of persons covered under this Act.