practice 3
Per ECOA record retention rules, how many months should the information be maintained from the date the borrower was notified of credit action?
25
For a FNMA, 90% fixed loan, the generally accepted qualifying ratios are what?
28%/36%
Minimum pre-licensing educational requirements under the SAFE Act include all of the following, EXCEPT?
3 Hours State Law
"A limit on how much the interest rate or monthly payment can change, either at each adjustment or during the life of the mortgage." Which of the following terms best represents the preceding definition?
cap
"The required element of all contracts by which a legal right or promise is exchanged for the act or promise of another person." Which of the following terms is correct based on the preceding definition?
consideration
A sum of money given to bind the sale of real estate." Which of the following terms best represents the preceding definition?
earnest money
The scope of which regulation is to ensure that various financial institutions and other firms engaged in the extensions of credit exercise their responsibility to make credit available with fairness, impartiality, and without discrimination based on the basis of sex or marital status?
ecoa
Two minority loan applicants were told it would take several hours and require the payment of an application fee upfront to determine if they would qualify for a home mortgage loan and more than likely they will end up not qualifying anyway. Which law is being violated in this scenario?
ecoa
Which federal law ensured that each American has equal access to credit opportunities free from discrimination?
ecoa
Which loan will never have mortgage insurance?
A 100% LTV VA loan
Which federal law regulates credit reporting agencies like Experian, Equifax and Transunion and requires a creditor that denies credit to a borrower to provide access to a free credit report for a denial?
Fair Credit Reporting Act
Redlining is a violation of both
Fair Housing Act and ECOA
The Total Interest Percentage (TIP) is found on what two disclosures?
Loan Estimate and Closing Disclosure
Which of the following accurately portrays a loan-to-value calculation?
Loan amount divided by the lesser of property value or sales price
What information is always found on a credit report?
borrower's name and address
A borrower is placing a down payment of 15% on a 30-year FHA mortgage. For how long will the borrower pay MIP?
11 years
The most common appraisal form used in the industry and is generically referred to as a "full" appraisal is called what form?
1004
According to ECOA, if a group of borrowers wish to sue a lender through a class action lawsuit, what is the maximum penalty that can be assessed to a lender?
$500,000 or 1% of the creditor's net worth, whichever is less
You've completed an application for a fixed-rate mortgage to a borrower. The LE must be re-disclosed during processing if the APR fluctuates by more than what percent?
1/8 of 1%
All of the following are exempt from RESPA, EXCEPT?
4-unit dwelling
What is the minimum age for a reverse mortgage applicant?
62
What would the CLTV be for a transaction where the purchase price of the home is $165,000 and the appraised value is $154,000. The buyer is applying for a 1st mortgage in the amount of $123,200 and the seller is providing a seller carryback loan in the amount of $15,400.
90%
Which of the following would result in a violation of the CFPB's Regulation X?
A lender receiving funds from a settlement service provider for a business referral.
Foreclosure is BEST defined as which of the following?
A proceeding to distinguish all rights, title, and interest of the owners of a property in order to sell the property to satisfy a lien against it
According to RESPA, which of the following payments are acceptable?
A referral fee paid between employees of the same mortgage brokerage
Which of the following BEST describes an immediate family member?
A spouse, child, sibling, parent, grandparent, grandchild, stepparent, stepchild, stepsibling, adoptive relationship
According to the SAFE Act, conducting which of the following activities would require the person to be licensed?
Advising the borrower on interest rates
Eric is a broker who has had his own brokerage business for a couple years. In order to make sure he stays current on mortgage fraud trend, he routinely runs a self-test within his company. Quality control measures are required by which of the following laws?
All of the above
What does RESPA require the mortgage broker to provide to the borrower within 3 business days after the completed loan application, if mailed?
All of the above
According to TILA, if an advertisement for a specific loan states a payment amount, it also must include:
All of the answers
Reduced documentation loans still require what in regards to loan approval?
All of the answers
A borrower gives you their income and debt and asks what amount of they qualify for. Assuming you have decided which loan program best fits their needs, to calculate what loan amount they are able to repay you would need to know all of the following items, EXCEPT?
Amount of cash available to close
A mortgage loan originator is prohibited from engaging in all of the following interactions within the appraisal process, EXCEPT?
Asking an appraiser to consider appropriate property information
The minimum down payment for FHA loans is 3.50% of the lesser of which?
Appraised value or purchase price
According to RESPA, which of the following best describes the time frame required to provide the borrower the AfBA?
At the time the referral is made
Karen and Daniel have decided to list their home for sale. They have called on Randy the Realtor to come in and list the house. Randy has put together a proposal of a sale price for the home. He believes that by looking at the three most recent sales of homes in the area, as well as those listed, that the house should sell foraround $250,000. Randy's opinion of value was based off of?
Broker's price opinion
Which of the following assets may never be used for closing costs and down payment with FHA loans?
Cash advance on a credit card
The Truth In Lending Act (TILA or Regulation Z) regulates which of the following disclosure requirements?
Closing Disclosure, Right of Rescission, CHARM Booklet
Service Release Premium can best be described as:
Compensation paid to represent the value of the servicing rights for a loan
The Fair and Accurate Credit Transactions Act is overseen by who?
Consumer Financial Protection Bureau
A borrower wants to buy an investment property. He has a credit score of 700 and is a veteran. He is also looking to put as little down as possible. What type of loan should he use?
Conventional
HMDA was passed in Congress in response to a public concern over what?
Credit shortages in certain urban neighborhoods
When a mortgage broker acts as an agent for a bank in connection with a mortgage loan, the bank may delegate to the broker the obligation to perform the requirements of the bank's CIP rule. Relating to the Patriot Act, CIP is an acronym for which of the following?
Customer Identification Program
A discount point is BEST described as a charge the borrower pays to do what?
Decrease the rate on a mortgage loan below par
Donald contacts Mega Mortgage, a non-depository lender, regarding a refinance of the property he has lived in for the past 7 years. During the application process, Donald informs the mortgage loan originator that he is not a borrower or co-signer on the current mortgage, but that he has been making the payments on the mortgage for the past 7 years on behalf of his elderly mother and wishes to be added to the new loan and also to the title. When the MLO requests to speak with Donald's mother, Donald mentions that his mother is not physically or mentally capable of participating in the refinance. What should the MLO do?
Determine whether or not Donald has valid authority to continue with the loan
"A clause in a mortgage that states that if a mortgagor sells, transfers, or in any way encumbrances the property then the mortgagee has the right to implement a clause making the balance of the obligation due." Which of the following terms is correct based on the following definition?
Due-On-Sale Clause
Which of the following is most correct?
Each licensee must appear before the Bureau and give relevant testimony when summoned.
"The legal right that gives someone, other than the owner, access to the use of a property for specific purpose." Which of the following terms BEST represents the preceding definition?
Easement
Which of the following BEST describes a lender rebate?
Payment made by a lender when originating a loan with a higher than market interest rate which is used to offset costs for the borrower
A settlement agent must perform many tasks. Which is not one of them?
Funding the mortgage loan
Which imposes restrictions on lenders regarding the use of nonpublic personal information?
Gramm-Leach-Bliley Act
A borrower has an adjustable rate mortgage with the first year P&I payment of $2,259. Eight years later the P&I payment is $2,816. What best describes what happened?
Index value increased
According to TILA finance charges can be which of the following?
Interest + Mortgage Insurance + Prepaid Finance Charges
Why is the APR not the same as an interest rate?
It factors in the interest and other prepaid finance charges.
What three federally required disclosures must be provided within 3 business days of a receipt of a loan application by a mortgage broker for a purchase money loan?
LE, Homeownership Counseling Organizations List, Home Loan Toolkit
What does NMLS & R stand for?
Nationwide Multistate Licensing System and Registry
When must a mortgage broker provide a Notice of Action Taken to an applicant?
No later than 30 days after receipt of completed application for credit
You have a client that has qualified for a 30-year fixed-rate purchase money first lien mortgage on a secondary home. The client will be putting down 70,000 dollars. Their loan amount will be 230,000 dollars. A couple weeks before closing, it's determined the client requires a pest inspection, so you refer them to an affiliate. They ultimately decide not to choose this affiliate. Given this information, which disclosure will the client NOT get?
Notice of right to cancel PMI
Which of the following is NOT a violation of RESPA?
Payment for services actually rendered and in an amount consistent with the reasonable value of such services
When a mortgage broker willfully misleads a borrower in order to increase their profit, this is called what?
Predatory Lending
What does the "P" stand for in the PITI mortgage payment?
Principal
Which fee is not allowed to be charged to the borrower in an FHA loan?
Processing fee
Which of the following interactions with an appraiser would be considered appropriate?
Providing the sales contract to help ensure the appraiser has pertinent information regarding the property
Lenders are not allowed to provide the appraiser with any of the following, EXCEPT?
Purchase contract
A borrower has a right to cancel certain transactions in writing by midnight of the third business day following the later of the consummation of the transaction or delivery of notice of the right to cancel. The "cooling off" period between closing and the time that funds are disbursed is called what?
Right of Rescission
A residential mortgage loan is a loan for personal, family, or household use that is secured on a dwelling by a voluntary contract. Which of the following will not secure an interest in the property for a residential mortgage loan?
Sales contract
Which of the following is a Fannie Mae function?
Securitizing mortgage-backed securities in the secondary market
Which of the following documents is always signed at a home purchase closing when a new loan is involved?
Security instrument
The person who prepares the closing disclosures and helps the borrower make sure they know what they are signing is known as who?
Settlement agent
If the Director finds a mortgage loan originator is in violation of the law, they can issue a cease and desist order. All of the following may occur after the order, EXCEPT?
The Director can immediately revoke the loan originators license without a hearing.
Bob the broker has completed an application over the phone with Jane for a refinance on her primary home. During this process, Bob explained to Jane that she can sign the necessary documents in two different ways, either on his protected website or in paper copies that he can mail to her immediately. Which law's provisions require that Bob make this disclosure?
The Electronic Signatures in Global and National Commerce Act
How are the Conforming Loan Limits (CLLs) set every year?
The Federal Housing Finance Agency (FHFA) uses the October-to-October percentage increase/decrease in the average housing prices in the Monthly Interest Rate Survey to adjust the conforming loan limits for the subsequent year.
According to the record retention rules for RESPA, which of the following statements is correct?
The Mortgage Servicing Disclosure Statement must be retained for five years.
In accordance with ECOA, a creditor cannot inquire as to whether income is derived from public assistance unless what?
The creditor discloses to the applicant that such income need not be revealed and the applicant wants public assistance income to be considered by the creditor as a basis for payment of the credit requested.
In almost all mortgage fraud, who becomes the injured party?
The lender
Which of the following is PROHIBITED when making a loan agreement with a prospective borrower for the assistance in finding a mortgage loan?
The loan agreement requires the payment of a finder's fee prior to the consummation of the loan.
Which of the following is NOT true regarding the state regulatory authority in relation to the SAFE Act of 2008
The state authority may create laws to amend the SAFE Act.
Which of the following is true regarding the following statement in an advertisement: "lowest rates available for all credit types"?
This statement is considered a deceptive practice.
The annual completion of continuing education is essential to the maintenance of a mortgage loan originator license. Which of the following satisfies this requirement?
Three hours of federal law and regulations, two hours of ethics, two hours of training related to lending standards for the nontraditional mortgage product marketplace, and one hour of elective education
What is the purpose of the surety bond?
To act as insurance to pay fines or penalties that the lender is not able to pay on their own
During the application process with a new client, Bob the broker is about to ask the client about income. Which of the following questions or statements are permissible under ECOA?
To qualify you for the best loan possible, I need to know how much income you're planning on using, if any of it is related to child support or alimony, you don't need to let me know unless you're using it to qualify.
The Consumer Credit Protection Act produced which act?
Truth In Lending Act
Which of the following is true regarding USDA loans?
USDA loans allow individuals to build a home.
In which of the following situations can an MLO work with an unregistered or unlicensed mortgage broker or lender?
Under no circumstances
Under what circumstances is an independently contracted loan processor or underwriter NOT required to obtain a mortgage loan originators license?
Under no circumstances
When can the loan servicer charge for a loan escrow account statement?
Under no circumstances
When is the lender permitted to charge a fee for preparing a settlement statement?
Under no circumstances
Fannie Mae 1003 is the form number designated for the what?
Uniform Residential Loan Application (URLA)
What is the best way to describe an individual who acts completely as a volunteer when negotiating mortgage loan terms?
Unlicensed mortgage loan originator
When a Power of Attorney is executed it creates a legal relationship between the person signing and their authorized agent. The authorized agent is also commonly referred to as which of the following?
attorney-in-fact
A mortgage processor's role includes which of the following?
Verifying information from the initial application
Which of the following is NOT true regarding the responsibilities of the state regulatory authority?
the state authority can order a prison sentence upon a loan originator for compliance failure.
The illicit practice of an MLO collecting dual compensation is an abuse that coincides with which of the following terms?
Yield Spread Premium
Repayment of a mortgage debt with equal periodic payments of both principal and interest, calculated to retire the obligation at the end of a fixed period of time." Which of the following terms BEST encompasses the preceding definition?
amortization
The two parties to a real estate transaction that can receive a title insurance policy are the purchaser and who?
lender
"The unpaid interest which is added to the mortgage principal in a loan where the principal balance increases rather than decreases because the mortgage payments do not cover the full amount of interest due." Which of the following terms BEST represents the preceding definition?
ngative amortization
Jim has obtained approval for financing through Layla's Loan Shop. Jim puts an offer on a home. The seller refuses the offer due to concerns with the lender's ability to close the loan by the scheduled closing date. Which of the following laws is the seller violating?
none
"A limit on the amount a payment can be changed at the end of each payment adjustment period. It can be a percentage of the previous payment, a fixed dollar amount, or a specified change in the interest rate of which the payment was calculated. It does not have to be the same as an interest rate cap." Which of the following terms best represents the preceding definition
payment cap
What is the BEST way to describe the act of helping a broker conduct business regarding taking applications without a mortgage originator license?
prohibited
A "Certificate of Eligibility" is required for what loan?
va
