NMLS Test Questions
Which of the following is true concerning income with an FHA loan? Borrowers may state income on any FHA loan Income is not verified on FHA loans Income must always be verified Borrowers may only state income on an FHA ARM loan
Income must always be verified
What are the two parts of ARM's?
Index - Cost Margin - Profit
An adjustable rate mortgage has two components to it, the index and the margin. After closing which of these can change?
Index only
Index + Margin =
Interest Rate
What is the national Conventional Loan Limit?
$484,350
If the amount in the trust fund exceeds___million, the additional fee will be discontinued and cannot be imposed until the fund is reduced to below $1 million.
$5 million
A person was purchasing an income property which was scheduled to close and fund on June 25th. Rent of $1800 was paid for the month of June on the 1st. What was the buyer's proration amount?
$360 1800/30 days of the month = 60 per day 60x24 days = 1440 1800-1440=360
After the crisis of the Great Recession according to FHA underwriting when can a borrower repurchase again after a foreclosure?
3yrs from the credit report date
The final LE must be received by the borrower how many days before consummation?
4 business days
The last revision and disclosure of a loan estimate can be made how many days before consummation?
4 days
How many days prior to consummation or closing is the final Loan Estimate required to be provided to the borrower?
4 days consummation or closing
VA Loans only have one ratio, which is:
41%
After the crisis of the Great Recession according to Conventional underwriting when can a borrower repurchase again after a short sale?
4yrs from the credit report date
On an FHA residence loan, the borrower must occupy the premises within how many days after closing?
60 days
The borrower's credit report cannot show a late mortgage payment for transferred loans for:
60 days
How many days do you have to correct a non-numeric clerical error on the Closing Disclosure?
60 days after consummation
If an amount paid by a borrower exceeds tolerance threshold a refund is due the borrower no later than:
60 days after consummation
How old does a borrower have to be to qualify for a reverse mortgage?
62
Which of the following would disqualify an individual from licensure? An administrative action involving fraud in another state A low credit score A felony 20 years ago
An administrative action involving fraud in another state
CLTV ratio Combined Loan to Value
An amount in addition to the Loan to Value, which simply represents the first position mortgage or loan as a percentage of the property's value. = Aggregated principle balances of ALL loans/purchase price
When the borrowers pay a fee to get a lower interest rate, but the interest rate will not remain at that level for the life of the loan, but over time will raise to the quoted fixed rate. What is this called?
Buy down fee
When must all licensees have submitted their license for renewal?
By December 31st every year
How does the cost approach determine value on a property?
By calculating the dollar amount to rebuild the home
HMDA is implemented as what Regulation?
C
Which disclosure do you need for an ARM loan?
CHARM booklet
What federal legislation prohibits the exchange of information between consumer creditors under certain criteria?
Gramm-Leach-Bliley Act
ECOA and FHA prohibit discrimination. What law tracks discrimination?
HMDA
Lenders submit Loan/Application Registers in order to comply with what law?
HMDA
What law requires the lender to collect borrower information for first mortgages and home improvement loans?
HMDA
Which law tracks possible discriminatory practices?
HMDA (Home mortgage disclosure act)
RESPA requires that all mortgage loan compensation be disclosed in which of the following documents?
HUD-1 Statement
FHA (Federal Housing Administration) loans fall under the control and guidelines of:
HUD/CFPB
What amounts do escrow accounts generally hold?
Hazard Insurance and Taxes
According to the Truth-in-Lending Act (TILA), which of the following fees is EXCLUDED from the calculation of the annual percentage rate? Hazard insurance Wire Transfer Prepaid interest Mortgage insurance premiums
Hazard insurance
What determines lien priority?
If it's recorded first, second etc.
Endorsements do not include:
liens
When a lender in the primary mortgage market sells loans to the secondary market in groups of loans that are similar in quality and size, it is referred to as a:
loan pool.
According to Reg. Z, the borrower's automatic right to rescind the loan within 3 business days does not apply to:
loans to purchase or build the borrower's residence.
The Real Estate Settlement Procedures Act does not apply to:
loans used to finance the purchase of 25 acres or more.
Interest rates for an FHA loan are set by:
market forces and/or negotiation between lender and borrower.
The best appraisal method to be used for a single family residence would be:
market, sales or comparison approach.
On the application, property tax is entered in the amount that will be paid:
monthly.
If a sheriff's sale is held, the document that dictated the foreclosure sale was a:
mortgage
A person, who brings a borrower and lender together, is knows as a:
mortgage broker.
A person, who functions as an intermediary between a lender and a borrower, is known as a:
mortgage broker.
The entity that services a loan, basically takes on the duties of the:
mortgagee
RESPA pertains to:
the loan process.
Your customer owns several rental properties, one-third of which have a Negative Net Lease. Therefore, you can conclude that:
the rents are equal to or less than the mortgage amount due each month.
According to the Truth-in-Lending Act (TILA), the term "refinance" applies to:
the satisfaction of an existing obligation and its replacement by a new obligation.
Why is only a portion of the rental income counted? All of the follow answers are correct except: To allow for vacancy To allow for repairs To allow for advertising of an empty rental unit All renters leave the rental in great condition and all pay on time as agreed.
All renters leave the rental in great condition and all pay on time as agreed.
ALTA is the acronym for
American Land Title Association.
What are the payment options on an Option ARM?
Amortized over 30 years; amortized over 15 years; interest only; or negative amortization
Fannie Mae would require mortgage insurance on which of the following loans? An 83% LTV conventional loan A 96.5% FHA loan An 80% LTV first mortgage and 20% LTV second mortgage equaling a 100% LTV loan A 100% VA loan
An 83% LTV conventional loan
An ARM's risks and rewards are:
An ARM starts out lower and may increase over time
What is a hybrid ARM?
An ARM with fixed and Adjustable features
Who of the following is in violation of the Section 8 provisions of RESPA? An attorney who also earns fees for performing multiple settlement services An employer who pays her employees for referrals A real estate broker who pays a cooperating real estate broker for a referral An MLO who leases office space in a real estate office at an above market amount
An MLO who leases office space in a real estate office at an above market amount
What does a loan originator use to determine the estimated value of a property based on analytical comparison of similar property sales?
An appraisal
If a trust deed is recorded, which of the following is true?
An encumbrance is created.
An interest rate at PAR would be?
An interest rate with no YSP (yield spread premium)
When a trust deed (or deed of trust) is recorded, which of the following is true?
An lien is created
After the crisis of the Great Recession according to VA underwriting when can a borrower repurchase again after a Chapter 13 bankruptcy?
1yr into the payout on a case by case basis
Borrower information must go back at least how many years?
2 years
Commercial Communications must be kept for how long?
2 years
How long must a borrower have had their second job for it to be considered qualifying income?
2 years
How long must a creditor or servicer retain the Escrow Closing Notice and the Post-Partial Payment Policy disclosure?
2 years
How many years of income is generally required to qualify for a mortgage?
2 years
Previous employment information is gathered if the borrower has not been at their current employment for at least:
2 years
A mortgage loan originator is required to keep a record of compliance with TILA for how many years?
2 years Under TILA, it is required that lenders keep documentation that they have complied with TILA for 2 years. Other disclosures like the Closing Disclosure must be kept for 5 years.
The VA Funding Fee on less than a 5% down payment purchase is:
2.15%
What is the funding fee for an active duty veteran or a veteran who has not previously used his/her entitlement and who is not putting down a down-payment (2019)?
2.15%
Which of the following is an example of a subprime loan? 2/28 3/1 5/1 7/1
2/28
If a borrower rescinds a loan, the creditor is required to return any money and property within _____ calendar days after the borrower remits the rescission notice.
20
If the borrower exercises their right to rescind, the creditor is required to return all money within how many days?
20 days
The borrower's gross monthly income is $5,000. The new mortgage loan will reduce his monthly payment to only $1,000 per month. The borrower will still owe a car payment of $350 and a student loan payment of $250. The borrower also has a cell phone bill of $90 per month. What is the borrower's new Housing Ratio?
20% 1000/5000
What gross percentage of variance on an appraisal report is tolerable when evaluating comparables?
25
What is the housing ratio for a borrower who makes $24,000 a year with a payment amount of $560?
28% 24000/12=2000 560/2000=.28
When a file is being manually underwritten, the Fannie/Freddie maximum qualifying ratios are:
28/36.
What are FHA's automated underwriting qualifying ratios?
29/41
After the crisis of the Great Recession according to VA underwriting when can a borrower repurchase again after a foreclosure?
2yrs from the credit report date
The acronym QM stands for:
Qualified Mortgage
After the crisis of the Great Recession according to VA underwriting when can a borrower repurchase again after a short sale?
2yrs from the credit report date
After the crisis of the Great Recession according to Conforming and High Balance when can a borrower repurchase again after a Chapter 13 bankruptcy?
2yrs from the discharge date
After the crisis of the Great Recession according to FHA High Balance when can a borrower repurchase again after a Chapters 7 and 11 bankruptcy?
2yrs seasoning
A loan greater than $100,000 is not considered a qualified mortgage (QM) if the points and fees paid by the consumer exceed what percent (%) of the total loan amount?
3
All books, accounts, and records must be maintained for__years from the date of "original entry".
3
CD must be provided the borrower how many days before consummation?
3 business days
The borrower has the right to cancel a written agreement without penalty within ___ business days of signing the agreement:
3 business days
The loan estimate must be disclosed to the borrower within how many days from the "application"?
3 business days
HOEPA's additional disclosure requirement means disclosures must be given:
3 business days before consummation
A loan officer must make a disclosure public within how many business days?
3 days
The Closing Disclosure must be provided at least ____ business days prior to consummation.
3 days
When must the Home Loan Toolkit be provided to the borrower?
3 days after application The Home Loan Toolkit must be provided 3 days after application on purchase transaction per the TILA-RESPA Integrated Disclosure Rule.
MDIA requires the appraisal be given to borrowers:
3 days before settlement.
How many Divisions and Bureaus does the FL-OFR have?
3 divisions and 1 bureau (4)
As part of a mortgage loan originator applicants pre-licensing education, how many hours must be focused on federal law?
3 hours An applicant for a mortgage loan originator license is required to take at least 20 hours of pre-licensing education. That education must include 3 hours of federal law, 3 hours of ethics, and 2 hours of education on the nontraditional mortgage product marketplace.
A potential borrower calls you for rates and programs. Assume that they are on the DNC Registry. You are allowed to call them back for what period of time?
3 months
If the Right of Recession is not provided to the borrower(s), the Right to Rescind expires when?
3 years after Consummation
What is the minimum down payment for a conventional loan?
3%
An active duty service person, or a veteran obtaining his/her second VA loan would pay what amount for the VA funding fee if they have less than a 5% down payment (2019)?
3.30%
Carlisle currently has an ARM and his ARM is going to adjust for the first time. The margin on his ARM is 2.25 and his ARM is tied to the LIBOR, and it's currently sitting at 1.25. What would be his interest rate if it adjusted today?
3.50% 2.25+1.25
A SAR must be filed no later than ___ calendar days after the date of the initial detection of the issue:
30
The Equal Credit Opportunity Act is a law that requires the lender to provide the borrower a reason for denial within how many days of loan application?
30
The FCRA allows a consumer to dispute inaccurate credit information. How many days are allowed for an incorrect item to be investigated?
30
Within __ days of receipt the FL-OFR will review each loan originator application and inform the applicant of any request for additional information required to complete its review
30
A decision must be made on a loan application within:
30 days
If the file is inactive, for borrower non-performance a declination letter must be sent within?
30 days
Under FCRA, if the decision for a denial of adverse action is info from a credit report that decision must be communicated to the borrower within: (fair credit reporting act)
30 days
What are the qualifying ratios on an FHA loan when manually underwritten?
31/43
What is the conventional mortgage back end DTI ratio?
36%
Daniel is looking to qualify his borrower for a conventional loan. He is attempting to determine the borrower's back-end debt-to-income ratio. What is the maximum back-end DTI ratio that Daniel can use on a conventional loan?
36% The maximum back-end DTI ratio for a conventional loan is 36%. The maximum front end is 28%.
According to the Qualified Mortgage Rule, what is the maximum percentage limit on the total obligation debt to income ratio for a qualified mortgage?
43% The Qualified Mortgage Rule specifies that the maximum total obligation debt to income ratio is 43% for a loan to be considered a QM loan.
Which form allows the lender to verify your client's tax returns?
4506-T
After the crisis of the Great Recession according to Conventional underwriting when can a borrower repurchase again after a Chapter 7 bankruptcy?
4yrs from the credit discharge date
After the crisis of the Great Recession according to Conforming and High Balance underwriting when can a borrower repurchase again after a Chapter 7 bankruptcy?
4yrs from the discharge date
A licensed MLO who becomes unlicensed for a period of ____ years or more is required to take the test again.
5
The borrower wants to get an FHA loan, but a judgment appears on the credit report. Which of the following represents how the judgment will be treated?
The judgment must be paid in full before the borrower can get an FHA loan.
Who sets the margin on an ARM?
The lender
What are FHA loan limits based on?
The lesser of the sales price or appraised value after the down payment and before upfront mortgage insurance
Which of the following is used on a conventional loan to calculate the LTV?
The lower value of either the Purchase Price or Appraised Value
A mortgage company is giving a borrower an FHA 1-year ARM. Which of the following is true?
The margin never changes.
A mortgage company is giving a borrower an FHA 1-year ARM. Which of the following is true? There is no maximum for changes to the index. The margin never changes. The loan is funded by HUD. The index can only change a max of 1% per year.
The margin never changes.
Which of the following is the best definition of "reserves"?
The money still in the borrower's account after down payment and all closing costs are paid
A borrower has an Interest Only mortgage loan and wishes to make the minimum monthly payments required. If the homeowner decides to payoff the loan at the end of the loan term, what will the homeowner be required to pay?
The original loan amount
If original loan amounts, ending maturity dates and interest rates are the same for two loans. The first loan is an interest-only loan and the other loan is fully amortized. Knowing that, which of the following is true? The first loan will have a lower interest cost. The other loan will have a balloon payment. The other loan will have higher monthly payments. The first loan will be paid off quicker because it is interest only payments.
The other loan will have higher monthly payments.
The Office will consider the person's disciplinary history for the past ____ years in determining an appropriate penalty and may impose a more severe penalty when the disciplinary history includes past violations.
5
Hugo is looking to refinance his current property. He currently pays $1200 a month on his home. He also pays $500 a month in child support, $200 for his cell phone, $300 for his student loans, $150 for his credit cards and $200 for his car insurance. Hugo makes $4000 a month gross. What is Hugo's total debt ratio?
53% 1200+500+300+150=2150 2150/4000=05375 If Huge pays $1200 for his house, $500 in child support, $300 for student loans and $150 on credit cards he has a total debt payment of $2150. To determine then how much his total debt ratio is he would need to divide his monthly income of $4000 by $2150 to get 53%. Keep in mind this question gives you more information than you need.
FHA allows seller concessions. What is the maximum amount of seller concessions allowed on an FHA loan?
6%
Seller concessions for a minimum down payment FHA loan are?
6%
What is the note rate for a $150,000 loan with a 2/1 buy down when the borrowers start with a payment rate of 4% for 12 months; then 5% for another 12 months; then 6% for the rest of the payment term?
6%
On an FHA annually adjusting ARM, assume that the starting rate was 5%; the margin is 2.5%; the index in 6 months is 3%; the index in 12 months is 3.5%; the index in 18 months is 3.25%. What is the borrower's interest rate in 18 months?
6.00% 5% + 1 year = 6
A TRID defined application constitutes how many pieces of borrower-provided information?
6: The consumer's name. The consumer's income. The consumer's social security number to obtain a credit report. The property address. An estimate of the value of the property and. The mortgage loan amount sought.
What is the percentage of rental income that can be counted?
75%
What is the HCLTV (HTLTV) assuming a $200,000 value, a $100,000 first mortgage loan, and a $50,000 Home Equity Line of Credit second mortgage with a drawn amount of $30,000?
75% 150000/200000
What is the loan-to-value ratio if the loan amount is $93,750, the appraised value is $125,000 and the sales price is $130,000?
75% 93750/125000
How is rental income calculated when the borrower owns rental properties other than the subject property?
75% of the income less the PITI. If the net is positive, include as income; if the net is negative, include as a monthly debt
Mortgage insurance is required by the lender, based on risk, credit score, length of the loan, fixed or variable and the LTV. The cost for PMI will vary, depending upon these factors. Which of the LTVs below would not be used for determining the cost of mortgage insurance? 85.01-90% 78-80.00% 80.01-85% 90.01-95%
78-80.00%
After the crisis of the Great Recession according to Conventional underwriting when can a borrower repurchase again after a foreclosure?
7yrs from the credit report date
How many hours of continuing education must a licensed mortgage loan originator take?
8
Part of the renewal process is doing continuing education; how many hours is an MLO required to take per the S.A.F.E. Act?
8 hours
Using an ARM with Caps at 5/2/6 and a starting rate of 4%. If rates were going "sky high". What would the rate be at the first adjustment?
9%
According to Fannie/Freddie guidelines, how long is a credit report good for?
90 days
Fully indexed Rate
= Index + margin
Maximum interest rate adjustment cap
= start rate + interest rate payment cap
What type of loan never requires monthly mortgage insurance? A 100% VA loan An 80% FHA loan A 90% LTV conventional loan An 85% LTV jumbo loan
A 100% VA loan
Anna is looking to purchase a new home. She lives in a small town of under 20,000 people. What loan program would be a good option for her?
A USDA loan Anna lives in a rural area, therefore, she would likely qualify for a USDA loan, and it should be something that a mortgage loan originator should present to her.
Trevor just received a promotion at work that is going to require him to move across the country. What type of loan might Trevor use to help him between selling his previous home and buying his new home?
A bridge mortgage A bridge mortgage is used to bridge the gap between one mortgage and another mortgage. Trevor is a good example because he needs to move quickly and purchase his new home but he also has to sell his current home.
What would generally start an investigation into the possibility of UDAAP violations?
A complaint to the regulator/state
What is the additional step that must be taken as a loan processor?
A completed Declaration of Intent to Engage Solely in Loan Processing.
At closing, which would not be a standard trust deed rider? An ARM rider A compliance agreement rider A planned unit development rider A graduated payment mortgage rider
A compliance agreement rider
A ___ loan conforms with Fannie Mae or Freddie Mac guidelines
A conforming loan
Title is transferred from one party to another through which of the following?
A conveyance
The only fee charge before a borrower receives their LE is a fee for:
A credit report
When would a subordination agreement be appropriate?
A first mortgage is being refinanced and doesn't want to lose priority to an existing 2nd mortgage.
Which of the following best describes Fannie Mae?
A government-sponsored enterprise that purchases loans
Which of the following best describes Freddie Mac?
A government-sponsored enterprise that purchases loans from the primary market
Joanna is looking to purchase a property for $750,000. What type of loan would Joanna need to receive?
A jumbo loan A jumbo loan is any loan with a loan amount that exceeds the government lending limits, currently that limit is $417,000.
A _______ is an individual for compensation or gain or in the expectation of compensation or gain takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan.
A mortgage loan originator
Borrowers who qualify for conforming loans would be referred to as:
A paper borrowers.
The best definition of a prorated charge that the lender requires to be paid in advanced is called:
A pre-paid
Which of the following is NOT true concerning SRP? The Lender that services the loan does not receive the SRP. Brokers do not get the SRP. Brokers may receive an SRP. Lenders get the SRP when the loan is sold.
Brokers may receive an SRP.
Which organization helps develop model legislation applicable to the administration and regulation of mortgage lending?
CSBS/AARMR
Page 3 of the CD includes which two summaries?
Calculating Cash to Close and Summaries of Transactions
A COE in a VA loan is a:
Certificate of Eligibility
CRV is the acronym for:
Certificate of Reasonable Value
What is a CRV?
Certificate of Reasonable Value (VA appraisal)
When performing the sales comparison approach, what does "adjusting properties" involve?
Changing the comparables to make them more like the subject property
What type of bankruptcy provides for complete liquidation of the debtors debt?
Chapter 7
Which of the following sources of income would NOT be allowed on a conforming conventional loan? Salary income when the borrower has worked for only 6 months Social Security income Income from a rental property that has been owned only 2 years Child support received for a 16 year old child
Child support received for a 16 year old child
The sale of properties at artificially inflated prices, pitched as investment opportunities is called:
Chunking
What type of fraud scheme usually includes a "get rich quick" real estate seminar?
Chunking
Repeated refinancing done in a relatively short period of time is called:
Churning
Travis is a mortgage loan originator, and he primarily does refinances for borrowers. He has a borrower, Steve, who calls him once a year to refinance and every time Travis refinances his property even though Steve does not need to refinance. Travis does this to make sure that he receives the fees for the refinance. What would this be considered?
Churning Refinancing a loan over and over again solely for the purpose of obtaining the fees from the loan would be considered churning.
Which was the first major legislation to directly affect equal rights to ownership of real property?
Civil Rights Act
Which of the following is responsible for the accurate disbursements of all funds due to and from all parties in a mortgage transaction?
Closing Attorney, settlement or escrow agent
On which two documents would a Pre-Payment Penalty be disclosed?
Closing Disclosure and Loan Estimate
Up to 30 days after consummation, creditors are permitted to issue revised ____ only in certain situations such as when changed circumstances result in increased charges.
Closing Disclosures
When a borrower asks for an FHA loan, which of the following is false concerning the borrower's credit? Collections will not affect the credit score If the credit score is less than 640, the borrower may still get a loan With excellent credit, the borrower will not get a better mortgage rate If the borrower has credit issues, but can convince an underwriter of credit worthiness, s/he may still get a loan
Collections will not affect the credit score
Which of the following financial institutions originates the largest amount of residential mortgage loans without necessarily using its depositors' funds?
Commercial banks
If a borrower is a commissioned employee and required to provide tax returns, how does the lender calculate income from the tax returns?
Commissioned income less schedule 2106 expenses
A phrase that represents attractive features of a mortgage loan are called:
Triggering terms
Generally speaking, Housing ratios include all of the following except: Principle Interest Taxes Utilities
Utilities
Which type of loan application requires a residual income analysis to be performed?
VA loan
The Truth in Lending Act is also a part of the:
Consumer Credit Protection Act
The loan officer suspects the social security number in an FHA application is incorrect, what must he/she do?
Contact the Social Security administration to verify it.
PMI, or Private Mortgage Insurance, would be used for which of the following loans?
Conventional loans
What type of appraisal takes the cost of rebuilding the property, plus the cost of the land the property is on and subtracts any depreciation to determine a value of the property?
Cost Approach
Land is given as a separate value in which of the following appraisal methods?
Cost approach
The notice to home loan applicant entitles the borrower to receive their:
Credit scores (NOT credit report)
Depending on the severity of a violation and the repetition of the specific violations, the Office can impose all the following penalties except: Administrative Fine Revocation of License Criminal Charges Suspension of License
Criminal Charges
What form is used in order to verify an honorable discharge?
DD 214
Which of the following does a standard Freddie/Fannie credit report contain? A statement regarding future credit worthiness of a borrower Credit inquiries from insurance companies Payment amounts only for reported debts Debts a person may owe
Debts a person may owe
All licensees must renew their license annually by _____.
December 31st
When you order an Insurance binder on a borrower's loan file, the one-page sheet that summarizes all the insurance information is known as the:
Declaration page.
The document that conveys ownership of real property from one person to another is known as the:
Deed
A lien is released by which of the following documents?
Deed of Re-conveyance
If the borrower is self-employed, generally speaking, what can be added to the income?
Depreciation
Fannie Mae uses the AUS _____.
Desktop Underwriter
What is the name of Fannie Mae's automated underwriting system?
Desktop Underwriter
Whenever the loan is an ARM, Federal regulations require which of the following?
Disclosure of the index used
If the policy of a mortgage company is to lend $150,000 or more and all the minority owned homes are worth $100,000 or less, this is called:
Disparate Impact
A lender has a policy that they never lend less than $70,000 because they can't make any money off of loans lower than $70,000. What would this be considered:
Disparate Impact Disparate Impact is generally when a lender has a policy that inadvertently affects a specific group. In this situation, the lender never lends less than $70,000 because they can't make a profit but it is inadvertently discriminating against anyone with a loan amount less than $70,000.
A lender has a policy that only individuals between the age of 25-45 can receive home loans of over $200,000. What would this be considered:
Disparate Treatment Disparate Treatment is occurring when a lenders policy specifically discriminates against a specific group of people. In this situation, this policy only allows someone between the age of 25-45 to receive a loan over $200,000 which means that they will be denying anyone younger than 25 or older than 45 from receiving a loan over $200,000 even if they qualify for it.
The way to compute LTV would be?
Divide the loan amount by the value of the property.
Under what circumstances would it be possible to consider capital gains as income for a Fannie Mae or Freddie Mac loan?
If the borrowers can verify a minimum of two years income on their tax returns and still own the asset
Generally speaking, which loan does not require mortgage insurance?
If the combined loan to value is 90%, and the LTV is less than 80%
In which situation would it be most likely that a lender will reject a property? If the effective age is unduly old If the condition is marked "fair" by the appraiser If the market value exceeds the costs to rebuild If the net adjustments on the comparable were 5%
If the condition is marked "fair" by the appraiser
A borrower with an FHA loan sells the property on contract and transfers the title. Under which circumstance is this acceptable?
If the loan is assumable
Charging upfront fees to assist a borrower from foreclosure is:
Illegal under the mortgage assistance relief services rule
Hank just received an appraisal fee from his borrower. What type of account should Hank put this appraisal fee until it is paid to the appraiser?
In an escrow account
How does an ARM adjust?
Index plus the margin
Which of the following is true of an ARM? Index rate + margin = ARM rate Initial rate + margin = ARM rate ARM rate + margin = index rate Margin + cap = ARM rate
Index rate + margin = ARM rate
Total debt to income ratios include all of the following except: Court ordered payment Insurances such as Medical and Car Car Payment House Payment
Insurances such as Medical and Car
The Acronym IRRRL means:
Interest Rate Reduction Refinance Loan
If an advertisement contains TRIGGER TERMS, what must then be disclosed?
Interest rate, term, balance, and APR
In which order is the borrower's mortgage payment disbursed?
Interest, principal, escrow
Which of the following is not a type of appraisal? Sales Comparison Approach Income Approach Cost Approach Investment Approach
Investment Approach There are three types of appraisals, the income approach, the cost approach and the sales comparison approach.
Can the lender require credit life and disability insurance on a mortgage loan?
No, never
Will the borrower's rent payment be shown on the Proposed column of the loan application?
No, we don't show rent as we only do mortgage loans
FHA allows loans on all property types except:
Non Owner Occupied
Which of the following would keep you from getting an FHA loan? Not having a down payment No college education Not having a spouse Self-employment
Not having a down payment
Which of the following is an example of UDAAP? Sending solicitations after mortgage paid Removing a lien after payoff Not releasing mortgage liens after paid Showing reconveyance of a lien after payoff
Not releasing mortgage liens after paid
To transfer an FHA case number, FHA will allow the originating lender to charge how much?
Nothing, unless it has been underwritten by the DE underwriter
After initial disclosures and the borrower has given you their Intent to Proceed what other initial disclosure do you need to send the borrower?
Nothing, unless there is a Change of Circumstance
The borrower right to rescind the loan is disclosed in the:
Notice of Right to Cancel
After meeting with the borrowers to complete a loan application, you return to your office and order a Tri-Merged credit report. Now that you have a credit report, what Loan Disclosure must you now prepare and mail (or give) to them?
Notice to Home Loan Applicant
MOST states open the license renewal period starting on which date?
November 1
Logan wants to buy an investment property but knows that he will get better terms on the loan if he tells the lender that this is his primary residence. What type of fraud would Logan be committing?
Occupancy Fraud
The only "traditional mortgage" in America today is:
Only a 30 year term with a fixed rate
Home Owner Association (HOA) dues are disclosed:
Only after the fee is known
When can the consumer be charged an appraisal review fee?
Only if the review fee is disclosed on the Loan Estimate
Can borrowers lose their home with a reverse mortgage?
Only if they fail to meet their obligations to the mortgage company
What is the Commissioner looking for when they are looking at an applicant's credit report?
Open tax liens or judgements
A loan originator may keep the:
Origination Fee
If the loan is assumable or has a late payment feature can both be found on which page of the CD?
Page 4
Discount points would only be used if the interest rate offered to the borrower were which of the following?
Par or anything below par
If the borrower fails to pay property taxes and/or insurance, what can the lender do?
Pay these costs and add the amount to the loan balance
With an ARM, what happens to a borrower's payments if the index increases?
Payments go up
The "caps" are adjustments in years, percentages or both? (ARMs)
Percents
When is the funding on a residential construction loan made?
Periodically, as the home is being built
What are the terms of the "cooling off" period if a loan falls under HOEPA?
Three business days prior to closing
The legal link between a person who owns property and the property itself is the:
Title Title is the legal link between a person who owns a property and the property itself. The deed is the document that conveys ownership in a property between people.
Which of the following would fall into the 10% cumulative tolerance category if the consumer were allowed to shop? Origination Fee Title Insurance Fee Underwriting Fee Processing fee
Title Insurance Fee
What is the purpose of the Red Flags Rule?
To detect and prevent identity theft
The cost approach of an appraisal is used for all of the following EXCEPT: To determine the cost of income, on a rental property insurance. new construction. remodel.
To determine the cost of income, on a rental property
What is the primary purpose of the primary market?
To originate loans
What is the purpose of title insurance?
To provide coverage for the lender or owner
T of F: The FL-OFR is the state regulatory authority in FL?
True
T or F: A Loan Officer should present the borrower with multiple loan product options
True
T or F: A servicer is an entity that collects borrower's payment, they are considered a servicer if they collect these payments for 4 or more months.
True
T or F: It is prohibited to engage in any transaction which operates to take from any person on a mortgage transaction.
True
T or F: The FL-OFR will look and see if there are any past violations and use that as a potential mitigating factor when determining penalties.
True
T or F:Anyone offering loan modification cannot get paid upfront.
True
With a self-employed borrower we must collect:
Two years personal and business tax returns
If a borrower wants to do a Rate/Term refinance loan and is still in the process of paying off a Chapter 13 bankruptcy, in order to do this loan you will need to:
obtain signed approval from the customer's bankruptcy court judge.
"Seller Concessions," as relates to the mortgage business are:
offers by sellers to contribute to the closing costs of the buyer.
Negative amortization happens when the:
payment is less than the required interest amount and the loan balance increases.
On a conforming purchase loan transaction, the maximum percent a seller can contribute under "Seller Contributions" is determined by:
the LTV on the purchase loan.
When an ARM loan is obtained, additional disclosures to the borrower include all the following EXCEPT: a loan program disclosure. the balance in the lender's trust account. a $10,000 loan historical example. a handbook explaining Adjustable Rate Mortgages.
the balance in the lender's trust account.
As it relates to a loan and after foreclosure, the right of redemption is the right of:
the borrower to redeem their property during the redemption period.
A lender will not accept a double contract because:
the loan would be closed and funded based on misrepresentations to the lender.
During the term of a fully amortized loan which of the following is true? the monthly amount going to principle increases the monthly amount going to interest increases the monthly payment amount going to principal decreases the principal balance increases
the monthly amount going to principle increases
For income from alimony and child support to be recognized as income, the remaining term of such income must exceed:
three years.
If the borrowers wanted to be sure that the interest rate available at the time of their application would be the same when they closed on their home purchase, they would want:
to "lock" their interest rate.
Why was the MAP Rule created?
To prohibit misrepresentation of the terms of a mortgage product
Which of the following statements best describes Form 1008?
Transmittal summary
An affiliated business arrangement must be given if there is what percent of an ownership interest?
1%
How much is 1 discount point?
1% of the loan amount
How many units can a residential mortgage have before it becomes commercial?
1-4 units
LTV ratio Loan to value
$ borrowed/property value (appraisal)
Aggregate escrow requires that the borrower have which of the following? $0 in the account or no more than 2 months impounds in reserves $0 in account, or no more than 1 month impound in reserves No more than 1% of the principal balance of the loan maximum in the impound account$100 and no impound reserves
$0 in the account or no more than 2 months impounds in reserves
What is the range for administrative fines for an A level fine?
$1,000 - $3,500
Calculate the borrower's maximum housing payment if the qualifying ratios are 28/36, the husband's income is $48,000 per year, and the wife makes $2,500 per month?
$1,820 48000/12=4000+2500=6500 6500x.28=1820
Under RESPA what is the dollar fine that can be imposed for each instance of a referral fee kickback or unearned fee?
$10,000
Penalties for RESPA violations are:
$10,000 and up to 1 year in jail
On an interest-only loan of $216,000, 30 years, at 7.25% interest, how much interest would be paid in nine months?
$11,745.00 216000*.0725=15660 15660/12=1305 1305*9=11745
You are wondering what the total amount of interest your borrowers will pay on their 30 year fixed rate loan--if they kept that loan for its full 30 years. On the TIL you calculate the Amount Financed to be $145,000. Your customers P&I payment is $975.00 per month. Based on this information, what will be the amount of interest your customer will pay over the 30 year period?
$206,000 (30 years = 360 months 360x975=351000 351000-145000=206000)
What is the reinstatement fee for a branch office that fails to renew their license on time?
$225
An exemption of more than $______ is not allowed to any one person or on anyone dwelling house:
$25,000
A buyer had made an earnest money payment of $5,000. Later the buyer pays an additional $2,000 to be credited at closing on a property with a sale price of $160,000. If the required down payment is 20%, how much additional money will the buyer need to provide toward the down payment at closing?
$25,000 (160000*.2=32000 32000-5000-2000=25000)
The maximum loan origination fee that can be charged on a mortgage loan that exceeds $5,000 is:
$250 plus 10% of the entire mortgage loan
To obtain a servicing endorsement on a mortgage lender license, the mortgage lender must maintain a net worth of ____.
$250,000
What is the range for administrative fines for a B level fine?
$3,500 - $7,500
What is the penalty for Red Flag non-compliance?
$3,500 per incident
Gregory's loan is $125,000. For it to be considered a qualified mortgage, the points and fees cannot exceed what amount?
$3,750 For a loan to be considered a qualified mortgage the points and fees on it cannot exceed 3%. 3% of $125,000 is $3,750.
The borrowers want a conventional loan for a $150,000.00 new home purchase. They do not want to pay for mortgage insurance. They have enough money to put down, but want to put the minimum down required that would allow for no mortgage insurance. What amount would be needed for the down payment?
$30,000.00 (150000x.20)
What is the total cost of initial licensure as a mortgage loan originator in FL?
$300.25
A mortgage company telemarketer has been accused of inappropriately calling two consumers on the National Do Not Call Registry. What is the maximum fine the company could face for this violation?
$32,000
Hannah is purchasing a new property. The taxes on her new home are $1200 a year and the hazard insurance on her new home are $1400 a year. How much can the lender collect at closing to start Hannah's escrow account?
$432 RESPA allows for the lender to collect 2 months of escrow payments at closing to begin the process of building up the escrow account. In this situation, Hannah will pay $100 a month for her taxes and $116 a month for her hazard insurance. To determine 2 months, it would be $200 and $232 and add them together for a total of $432 for two months.
After the crisis of the Great Recession according to FHA Standard underwriting when can a borrower repurchase again after a Chapter 13 bankruptcy?
1yr from the credit discharge date
Property is held as either leasehold or:
Fee simple
COFI is the acronym for:
Cost of Funds Index.
LIBOR is the acronym for:
London Inter-bank Offered Rate.
What entity is responsible for the enforcement of BSA/AML?
FinCEN
FHA loans can be obtained by:
anyone
What is the maximum back-end ratio on an FHA loan?
0.43 (43%)
If a mortgage loan originator (MLO) consummates a loan while his license is suspended or revoked, the loan is:
valid but the MLO violated the law.
When an FHA mortgage loan amount is at 95% LTV and has a term longer than 15 years the mortgage insurance premium:
will be required for the life of the loan.
Liza is purchasing a new home. The purchase price of the home is $200,000. She has put down $2,000 in earnest money. If she is receiving FHA financing, how much more will she need for her down payment?
$5,000 FHA requires a minimum of 3.5% down. 3.5% of $200,000 is $7,000. The $2,000 earnest money will be put towards that $7,000 so Liza will need $5,000 more to meet the down payment requirement.
The buyers purchased a home for $175,900. They put 10% down, and were charged an origination fee of 1% and discount points of 2.5%. How much money did the buyers have to bring to cover the origination fee and discount points?
$5,540.85 175900*.10=17590 175900-17590=158310 158310*.01=1583.10 1583.10*3.5=5540.85
The borrower is putting 10% down on a $180,000 sales price. She is paying 2.5 discount points and a 1% origination fee. What is the total of the origination fee and discount points she is paying?
$5,670 1 discount point = 1% of mortgage 180,000x.10 = 18000 180,000-18,000=162,000=mortgage amount 162,000x.01=1620 1620x2.5=4050 1% origination fee 1620+4050 discount point price = 5670.
When filling out the loan application, amounts entered should be rounded to the nearest:
$50
What is the initial application fee for a mortgage lender license?
$500
A person convicted of an aggravated white collar crime may pay a fine of _____.
$500,000
What is the range for administrative fines for a C level fine?
$7,500- $10,000
Scenario 3: Laura and Jim are looking to refinance their home. Laura makes $65,000 a year plus she works a second job (which she has been doing for 5 years) at $12.00 an hour for 10 hours a week. Jim is on Social Security and makes a nontaxable $1980 a month. What is their monthly income? (Hint: don't forget to gross up the nontaxable income)
$8,411.67 12*10*52 = 6240 65000 1980*1.25*12 = 29700 29700+65000+6240=100940/2 = 8411.67
A borrower wants a Cash Out refinance for 80% LTV on a house that appraises for $250,000. The borrower has a first mortgage of $87,000 and a second for $25,000. Closing costs will equal $3,000. How much cash is available for the borrower to receive?
$85,000 250,000 x .8 = 200,000 - 87,000 - 25,000 = 85,000
Scenario 2: Kyle and Vivian are going to purchase their new home together. Kyle makes $55,000 a year and Vivian makes $26.50 an hour at 40 hours a week. What is their monthly income?
$9,176.66 (26.50*40)*52 weeks/yr =55,120 55,120+55,000= 9176.66
Scenario 3: Ginger and Horace are looking to refinance their current home. Ginger makes $15.50 an hour at 40 hour a week and Horace makes $80,000 a year. Their monthly mortgage payment is $1,000 and their liabilities total $500 a month. What is their gross monthly income? What is their front end and back end DTI ratios?
$9,353.34. Front end DTI: 11 percent, back end DTI: 16 percent 15.50*40*52 = 32240+80000=112240/12=9353.34 Front: 1000/9353.34=.106 Back: 1000+500/9353.34=.16
Allie is looking to purchase a new property. She currently makes $3,200 a month gross. What would be the maximum payment she could have on her new property?
$992 To determine the maximum amount that Allie can pay on her mortgage, all you need to determine is her housing debt to income ratio, since Allie does not have any debts, she'll need to fit into the smallest ratio. 31% of $3,200 is $992.
If the APR on a fixed rate loan increases from the initially disclosed rate by more than which of the following, an additional waiting period is triggered before the loan can close?
.125 percent
Which of the following would be considered a passing score on the National Test Component with the UST? .72 .7 .75 .69
.75
The following two disclosures are required by RESPA, if applicable:
.LE and AfBA
VA loans require how much of a down payment?
0%
What is the required down payment on a USDA loan?
0%
The initial guarantee fee on a USDA loan is ____.
0.01 (1%)
The term "20 basis points" expressed as a percentage is:
0.20%
The borrowers are purchasing a house with a sales price of $300,000 they put 30% as a down payment. If they paid $3,150 in points, how many points does that represent?
1.5 One point costs 1 percent of your mortgage amount (or $1,000 for every $100,000)
How much is charged for the up front mortgage insurance on an FHA loan (2012)?
1.75%
The UFMIP on a 30-year FHA loan (as of June 2012-2013) is? (upfront mortgage insurance premium)
1.75%
What is the amount of FHA's UMIP (2012)?
1.75%
The estimate closing costs on the mortgage loan disclosed either on the Good Faith Estimate or Loan Estimate are good for:
10 days
According to the Fair Credit Reporting Act, a bankruptcy could remain on a credit report for how long?
10 years
TRID tolerances on a list of providers that the borrower can shop from, have a cumulative tolerance of:
10%
In the CD section titled, "Services Borrower Did Shop For" what is the tolerance for items where the borrower used a service provider from the Lender disclosed list?
10% cumulative
COFI is an Index used in which district?
11th District
Long term debts are those that have payments remaining for more than: (please note, this question is referring to long term debts, not whether it counts toward DTI)
12 months.
Scenario 2: Holly and James are looking to purchase their first home, they make a total of $5,600 a month in gross monthly income. Their proposed monthly payment is $670 for their new home, they also have a credit card with a monthly payment of $75, student loans of $230 a month and cell phone and utilities payments of $223 a month. What is their housing expense DTI?
12 percent 670/5600=0.119
Non-taxable incomes like social security get grossed up by
125% (multiply by 1.25)
According to RESPA, a lender making a purchase loan may collect how many months of hazard insurance at settlement?
14 months
If a homestead is outside a municipality the individual can claim the homestead exemption of a property on up to ____acre(s).
160
A mortgage loan originator must be at least ___ years of age.
18
A borrower's name is on the National Do Not Call list. At what point after the loan closes and is sold to another company must the MLO stop contacting the borrower to solicit new business?
18 months
If the borrower's monthly gross income was $6,000 and the monthly housing expense was: first mortgage payment, $900; monthly property tax $110; monthly hazard insurance $28; and monthly mortgage insurance $60, what is the housing ratio or front end ratio?
18.30% 900+110+28+60/6000=.183
The Projected Payments section will have columns based on:
Fixed generally two columns
A construction loan is:
A short term loan to build a home
Michael does not have enough money to put 20% down on his conventional loan to avoid PMI but really can't afford the payment with the additional cost. Instead of looking for the additional money to put down in cash, Michael contacts a second lender who lends him the additional money he needs to put the 20% down. That second lender and the loan Michael receives is never disclosed to the 1st lender. What would that second loan be considered?
A silent second Obtaining a second loan for the purpose of avoiding PMI or for avoiding paying anything out of pocket and then not disclosing it to the mortgage company doing the first lien would be considered a silent second.
Genevieve wants to buy a home, but her credit score took a tank after her divorce. Her brother, Donald has a great credit profile, though, and she asks him to apply for a loan for her. Genevieve promises Donald that she will pay the mortgage. What would Donald be considered?
A straw buyer Donald would be considered a straw buyer because Genevieve is using his credit profile and his identity for the purpose of obtaining a loan
What is true about a VA loan regarding 2nd loans?
A veteran can have two or more VA loans in place simultaneously.
What is the section that the borrower signs is called?
Acknowledgement and Agreement
Lola is working on a loan for her sister, Joan. She knows Joan is currently receiving child support, and Joan has authorized Lola to use that income to qualify her. Lola also knows that her nephew is 17 years old, and once he turns 18, Joan's child support payment will drop dramatically. Lola decides to indicate on the 1003 that Joan's oldest child 14 instead of 17 to help Joan qualify for the loan. This would be considered:
Actual Fraud In this situation, Lola is committing actual fraud because she is aware that she is doing it. If Lola were unaware of the fraud but reasonably should have known it was occurring then, it would have been considered negligence.
An ABA is a(n):
Affiliated Business Arrangement
Fraudsters targeting people they know at church is called:
Affinity fraud
What type of scheme is usually occurring when there is a nonexistent property?
Air Loan An Air Loan scheme is occurring when there is a nonexistent property or nonexistent borrower. It is exactly what it sounds like, a loan full of air.
Standard endorsements on title insurance don't cover which of the following?
Air hazards
What is a red flag? Alerts and warnings from the credit bureau Suspicious documents Social Security numbers which are inconsistent All of the above
All of the above
Which of the following would be considered a prohibited practice? Directly defrauding a borrower Engaging in a deceptive practice Obtaining a property by fraud All of the above
All of the above
Which of the following is included in the calculation of a borrower's credit score? Payment history Amounts owed Credit mix All of the above are included
All of the above are included
Services or products for which costs shall be estimated, but which are not required to be included in the loan origination fee which include the following: Appraisal fee Pest inspection fee Survey All of the above are not required to be included in the loan origination fee
All of the above are not required to be included in the loan origination fee
Which of the following is a prohibited practice? To act as an MLO without a current license To act as a mortgage broker without a license To act as a mortgage lender without a license All of the above are prohibited
All of the above are prohibited
Which of the following would be considered compensation based upon a term of a loan? Higher compensation based upon the interest rate being above 5% Higher compensation based upon the loan having a prepayment penalty Higher compensation based upon using the same title company All of the above are prohibited
All of the above are prohibited
Advertising a "fixed payment" leads a borrower to think that they will have a:
Fixed interest rate
Which of the following is considered adverse credit history? A personal bankruptcy 5 years in the past An outstanding tax lien A satisfied collection All of the above
An outstanding tax lien
The borrower may receive a copy of their annual credit report free of charge from:
Annual Credit Report .com
How often must the borrower receive an escrow statement?
Annually
What is the definition of a business day for the Loan Estimate disclosure?
Any day on which the creditor's offices are open to the public for carrying out substantially all of its business functions
With an FHA loan, which of the following is true concerning qualifying ratios? -Automated underwriting may approve a borrower with ratios higher than 29/41 -A borrower with a very high credit score may get a loan with 55% debt ratio -A borrower with a very low credit score can only borrow to a 31% debt ratio -The maximum ratios in any circumstance are 31/43
Automated underwriting may approve a borrower with ratios higher than 29/41
What law requires that a cash transaction of more than $5,000 be reported?
BSA/AML The Bank Secrecy Act/Anti-Money Laundering (BSA/AML) specifically deals with cash transaction and the detection of money laundering. Within its scope; there is a requirement that any cash transaction of more than $5,000 must be reported. It also requires that if there is any suspicious activity that it be reported to FinCEN in the form of a SAR (Suspicious Activity Report).
What is an amortized loan that has a final payment due earlier than the term to fully pay off the loan called?
Balloon loan
The practice of getting people to sell their homes at bargain prices by suggesting that certain ethnic groups are going to move into the area is nicknamed:
Blockbusting
Renee is a real estate broker working for a property developer. She has been going door-to-door discussing with homeowners in a certain area the possibility of them selling. She often tells these homeowners that there has been an increase of Latinos moving into the area and that they really should move now before their property values drop because of this influx of lower income individuals. This would be considered:
Blockbusting 'A real estate agent attempting to get people to sell their home by using racially motivated reasons would be considered blockbusting.
Under a trust deed and note, what interests do the borrower and lender hold in the property which is used as collateral?
Borrower - legal title, Lender - a lien
What are the Fannie Mae and Freddie Mac guidelines regarding an investment property?
Borrower must have 6 months reserves
What form do you give to the borrower(s) to sign that authorizes the MLO to order a credit report?
Borrowers Signature Authorization
Which of the following is true concerning title insurance? Borrowers must pay for a lender's policy. Borrowers must pay for a lender's and an owner's policy. Borrowers must pay for an owner's policy. Borrowers do not pay for title insurance, sellers always pay for it.
Borrowers must pay for a lender's policy.
Which of the following are not considered under RESPA changed circumstances? Acts of God, war, disaster, or other emergency Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems. New information particular to the borrower or transaction that was not relied on in providing the GFE Borrowers name spelled incorrectly
Borrowers name spelled incorrectly
Which of the following would be considered a clerical or support duty? The collection of the application from the borrower The collection of tax documents from the borrower The analysis of the borrower's credit report Both b and c would be considered clerical or support duties
Both b and c would be considered clerical or support duties
Under which of the following circumstances would a repurchase, or buyback, NOT happen? The borrowers never made any payments. The borrowers are in default within the first few months. During the term of the loan the borrowers were late on a few payments. The secondary lender discovered fraud in the application.
During the term of the loan the borrowers were late on a few payments.
Under which federal legislation does the consumer have the right to receive a copy of the appraisal report on a dwelling that is to be used as collateral for a loan?
ECOA
Which federal law prohibits someone from inquiring about childbearing?
ECOA ECOA or Regulation B, specifically deals with discrimination in credit transactions. ECOA prohibits discrimination based upon 7 protected classes, but it also prohibits inquiring about a person's childbearing, child rearing, or spouse. It also prohibits a lender from requiring a person receiving alimony, child support or separate maintenance from being disclosed.
Which of the following does NOT directly influence interest rates? Early payoffs Foreclosure Fraud Federal Reserve Bank
Early payoffs
What is the amount of money that VA guarantees called?
Entitlement
Borrower(s) may decide to disclose income from child support or alimony. If disclosed, which federal law requires that it be considered in the loan approval process?
Equal Credit Opportunity Act
The lender is requiring repairs on the home to be completed. Those repairs can be done after the loan closes by including them in a(n):
Escrow Holdback.
What do we call it when the loan will not be fully funded until further conditions are met?
Escrowed funding
What is the general accuracy requirement for any amounts listed on the LE?
Estimates must be made in Good Faith.
How often must a lender perform an escrow account analysis to ensure that excess funds are not being kept?
Every year on the loan
Which federal law restricts the use of credit reports and requires accuracy on credit report?
FACTA The Fair and Accurate Credit Transaction Act specifically was put into place to allow consumers access to credit information, improve consumer access to credit information, help with the resolution of consumer disputes and help with the prevention and detection of identity theft. FACTA requires the "Notice to Home Loan Applicant" disclosure. This disclosure discloses the borrowers credit score to the borrower, score factors, ranges of scores, date score computed and is provided solely by the credit reporting agency.
What loan requires an upfront mortgage insurance fee?
FHA
What type of mortgage requires upfront mortgage insurance and monthly mortgage insurance?
FHA Only one type of loan requires upfront mortgage insurance and monthly mortgage insurance, and that is FHA. They are known for short as UFMIP and MMI. Conventional loans require PMI or Private Mortgage Insurance (it is private because it is provided by privately own mortgage insurance companies while FHA's mortgage insurance is provided by FHA) on loans with LTV's over 80%. VA loans require funding fees and USDA loans require guarantee fees.
A Section 203K loan is a:
FHA Loan A Section 203K loan is an FHA rehabilitation mortgage used to by homebuyers to purchase properties in need of rehabilitation.
What is the main difference between FHA and Conventional loan programs?
FHA insures the lender against losses
Mortgage Insurance Premium (MIP) would be used for which of the following loans?
FHA loans
UFMIP or Mortgage Insurance Premium would be used for which of the following loans?
FHA loans
Can FHA loans can be used for investment or non-owner occupied transactions?
FHA loans are meant for Owner Occupied transactions
FHA loan limits change from time to time, and are based on the:
FHA median house prices.
FHAct is the acronym for:
Fair Housing Act
What are strawbuyers?
Fake buyers who do not intent on occupying the property
T or F: A title insurance policy protects the borrower, and not the lender.
False
T or F: An administrative action involving fraud in another state would not be disqualifying for licensure.
False
T or F: An example of a white-collar crime is murder.
False
T or F: Applicants for MLO licensure must be at least 21 years old and have a college degree.
False
T or F: Contract loan processors do not work outside of the office.
False
If the borrower is giving you an application, you must kick out a loan estimate within 5 business days.
False - 3 days
FmHA is the acronym for:
Farmers Home Administration
The CHARM booklet was prepared by:
Federal Reserve Board
Are State-specific disclosures replaced by the new Loan Estimate and Closing Disclosure?
Federal disclosures never replace state specific disclosures
Which is the only fee that can be charged before a loan estimate is disclosed?
Fee for a Credit Report
The Loan Estimate after disclosure must be kept for how long?
For 3 years after disclosure
The Closing Disclosure must be kept for how long?
For 5 years after disclosure
An MLO cannot request or collect information about an applicant's race, color, religion, national origin or sex except:
For HMDA purposes (home mortgage disclosure act)
Seller's Closing Disclosures not prepared by the creditor must be kept:
For five years
If required, the borrower must retain flood insurance for how long?
For the life of the loan
If the borrower's homeowner's insurance lapses, the lender will obtain:
Forced place insurance
Schemes that take advantage of borrowers who are in the process of foreclosure or about to go into foreclosure are called:
Foreclosure Rescue schemes
If a loan officer were to take a loan application Tuesday at 1:00 p.m., what is the last day that the good faith estimate must be mailed or disclosed?
Friday before midnight
Scenario 1: Jack and Jill are looking to purchase their first home and we need to discover what their debt-to-income ratios are. Jack makes a gross income of $4,567 a month while Jill makes a gross monthly income of $3,200. Jack and Jill have a mortgage payment of $750 a month. They also have credit card payments of $50 and $25 a month, they have two car payment one for $111 (which will be paid off in 6 months) and $256. They also pay $120 for their cell phone and make a monthly contribution to their 401K of $1,200. What is their front end and back end DTI?
Front end DTI: 9.6 percent, back end DTI: 14 percent Front: 750/7767 = .096 Back: (750+50+25+256)/7767 = .139 DO not include debts that will be paid off within next 10 months. DO not include entertainment, utilities, contributions, food, etc.
The loan estimate replaced which disclosures in residential loan transactions?
GFE and TIL (Good Faith Estimate & Truth In Lending Disclosure)
Loan modification schemes have all of the following except: Give cash back Failure to execute promises Charge upfront fees Claim they have assisted a high number of borrowers
Give cash back
The Homeowners Protection Act of 1998 does which of the following?
Gives borrowers the right to cancel or terminate PMI
All of the following count as part of the history for employment except? Going to school to receive degree or certification Having served in the military and working in the same related field Part-time, or seasonal work for two years Going from W2 employment to Commission sales
Going from W2 employment to Commission sales
All of the following count as part of the history for employment except? Part-time, or seasonal work for two years Having served in the military and working in the same related field Going from W2 employment to Commission sales Going to school to receive degree or certification
Going from W2 employment to Commission sales
A yield spread premium is disclosed on which document?
Good faith estimate
Under what federal legislation, is a lender required to allow a borrower to opt-out of having their nonpublic personal information disclosed to a third party?
Gramm-Leach-Bliley The Gramm-Leach-Bliley Act has three parts to it including the Opt-Out Rule that requires a lender to allow the borrower to opt-out of having their information shared with a third party
What is not included in the APR calculations?
Hazard/Fire insurance premium
Which types of loan are governed by HOEPA?
High Cost Loans The Home Ownership and Equity Protection Act (HOEPA, or Section 32) governs specifically high-cost home loans only. HOEPA falls under TILA and sets out requirements for how to discover whether a loan is a high cost and what steps need to be taken if a loan is determined to be high cost.
Section 35 of TILA governs what type of loan?
Higher priced Section 35 of TILA governs higher priced loans, not to be confused with Section 32, which covers high cost loans.
On Form 1003 Section X: Information for Government Monitoring Purposes is used in order to comply with which federal law?
Home Mortgage Disclosure Act
What is the name of the law which covers the cancellation and termination of private mortgage insurance?
Homeowner's Protection Act
Which federal law allows borrowers to request PMI cancellation when their LTV reaches 80%?
Homeowners Protection Act The Homeowners Protection Act is all about Private Mortgage Insurance (PMI). It specifies that a borrower can request PMI be taken off of their loan at 80% LTV but that it must be removed when the borrower's LTV at 78%
HOEPA also adds what requirement?
Homeownership counseling
One purpose of the Fair and Accurate Credit Transaction Act is to prevent
Identity theft
What benefit does private mortgage insurance provide to the borrower?
It allows borrowers to pay less of a down payment than might otherwise be required.
Which of the following is not true about the Dodd-Frank Act: It created the CFPB It prohibits unfair lending practices It expanded consumer protection on high-cost mortgages It created the NMLS
It created the NMLS The Dodd-Frank Act was responsible for the creation of the Consumer Financial Protection Bureau with a specific aim to deal with unfair lending practices and expand consumer protections.
Which of the following is the most correct concerning a trust deed? It must be signed by the borrower and the lender in order to make it legally enforceable. It encumbers the borrower's title to the real estate. It conveys title to the property. It allows the lender to occupy the premises.
It encumbers the borrower's title to the real estate.
The Fair Housing Act is the same as ECOA with one addition:
It includes disability
All of the following are true about the FTC Red Flags Rule except: The penalty for noncompliance is $3,500 Protect sensitive personal data It is enforced by the CFPB Require the implementations of a written plan to detect and prevent industry theft
It is enforced by the CFPB The FTC Red Flags Rule is enforced by the Federal Trade Commission. The FTC Red Flags Rule was specifically put into place to help with the prevention and detection of identity theft and falls under FACTA. It requires lenders to implement a written plan to detect and prevent identity theft, and if a lender fails to comply with this, they can be penalized $3,500
How does rate charged for PMI for a 90% loan compare to that for a 95% loan?
It is lower
How does aggregate adjustment benefit the borrower?
It protects against escrow overages
Which of the following is true about title insurance? It protects neither the borrower nor the lender It protects the borrower It protects the lender It protects the seller
It protects the lender
Which of the following describes completely the manner in which title will be held?
Joint tenants with full rights of survivorship
Another way to refer to non-conforming loans would be:
Jumbo
What do you call a loan that exceeds Fannie/Freddie loan limits?
Jumbo
When FNMA or FHLMC loan limits are exceeded, the loan is considered to be ___________.
Jumbo
For a property purchased for $225,000 with a first mortgage loan amount of $150,000, and a HELOC for 25,000 the LTV and CLTV are?
LTV 66% / CLTV 77% 150000/225000=.66 175000/225000=.77
According to HMDA what must be forwarded to the regulator by March 1 of each year?
Loan Application Register (LAR)
The lender discloses the prepayment penalty on which document?
Loan Estimate
MLOs are all paid the same amount per loan, which prevents steering, this is known as:
Loan Originator Compensation Rule
What is the name of Freddie Mac's automated underwriting system?
Loan Prospector
A discount point is calculated as being 1% of what?
Loan amount
You are doing a refinance loan for your borrowers non-owner occupied property. You look at the property profile and see that the site address and your customers' address are different. What action should you take?
No action required
Borrowers must receive the new Closing Disclosure form:
No later than three business days before consummation
A ___ means an individual who, directly or indirectly, solicits or offers to solicit a mortgage loan, accepts or offers to accept an application for a mortgage loan, negotiates or offers to negotiate the terms or conditions of a new or existing mortgage loan on behalf of a borrower or lender, or negotiates or offers to negotiate the sale of an existing mortgage loan to a noninstitutional investor for compensation or gain. The term includes an individual who is required to be licensed as a loan originator under the S.A.F.E. Mortgage Licensing Act of 2008. The term does not include an employee of a mortgage broker or mortgage lender whose duties are limited to physically handling a completed application form or transmitting a completed application form to a lender on behalf of a prospective borrower.
Loan originator
Which of the following must have an MLO license? Lola, who is working as an independent contractor underwriter and is underwriting loans June, who is working as an attorney and negotiating terms on a loan for her client as part of her job as an attorney Jackson who is negotiating the terms of a loan on his primary residence William, who extends credit solely on timeshare plans
Lola, who is working as an independent contractor underwriter and is underwriting loans
During the mortgage meltdown, some HELOCs experienced this change:
Lower line of credit limit
Which rule mandates disclosure to consumers that mortgage relief providers have no connection to any government program or agency?
MARS Rule
Borrower's names can vary based on:
Maiden or married names
HMDA reports are due to the regulator by which of the following dates?
March 1st
Which of the following borrowers would be a good fit for a reverse mortgage? Margaret who is 63 years old and owes only $10,000 on her current mortgage Janet, who is 50 years old and owns her house, outright Saul who is 62 years old and owes $100,000 on his home Howard who is 66 years old and just purchased his home 3 years ago
Margaret who is 63 years old and owes only $10,000 on her current mortgage Margaret is the best candidate in this situation because she owes very little on her home and she is over 62 years of age. Janet is too young for a reverse mortgage, Howard though old enough owes too much on his home for a reverse mortgage to work for him and Saul is in the same boat as Howard.
What are the two factors that make up an ARM?
Margin and Index
What two pieces of information is needed to determine what an adjusted interest rate will be on an adjustable rate mortgage?
Margin and Index To determine the adjusted interest rate on an adjustable rate mortgage you need the margin and the index because the newly adjusted interest rate will be determined by adding the index and the margin together. You will then have to be sure that if there are any caps on the loan that it does not exceed those caps.
What would the lender use to compute the adjustment on an ARM loan?
Margin and Index before the loan is locked, the index after the loan is locked and the rate caps
If appraising a 10 year old residential home, what is the best approach to determine value?
Market value
What are the marital options to list under marital status?
Married, Unmarried and Separated
Adverse credit information would include all the following except: Foreclosure Tax Lien Medical collect Personal bankruptcy
Medical collect
Define "Business day" under the Truth in Lending Act for the three day right of rescission.
Monday through Saturday except legal public holidays
Which of the following is NOT an acceptable form of down payment? Saving a bonus received from work at a credit union Cash saved from paychecks deposited in a bank Gift from Parents Money saved at home
Money saved at home
What are ethics?
Moral principles that govern a person's behavior
A ____ is a type of asset-backed security that is secured by a mortgage or collection of mortgages.
Mortgage Backed Security
Which of the following would NOT be an acceptable trust deed rider? A condo rider An ARM rider A PUD rider Mortgage insurance rider
Mortgage insurance rider
When obtaining hazard insurance, the lender will require a special clause to be inserted into the policy covering them from any loss. This is called?
Mortgagee clause
On an appraisal what are the maximum allowed adjustment percentages?
Net 15% and Gross 25%
Which is not included in debt-to-income ratio? Netflix monthly fee MI on an FHA loan HOA dues not included in the house payment Credit card debt
Netflix monthly fee
Can LOs receive extra compensation based on a loan's interest rate?
No
In order for the loan to be in a QM safe harbor, it is presumed that the loan met which requirements?
The Ability To Repay requirements
PUD is the acronym for:
Planned Unit Development.
Unscrupulous actions by a lender to entice and harm a borrower is called:
Predatory
PR is the generally accepted acronym for:
Preliminary Title Report
Total Loan Costs includes all of the following except: Origination Charges Services you Can Shop For Services You Cannot Shop For Prepaids
Prepaids
What does PITI represent?
Principle, Interest, Property Taxes and Insurance
The mortgage loan you submitted to the Lender has been approved. However, there are some conditions that the Lender requires before the loan docs will be sent to the closing office. These conditions are referred to as:
Prior to doc
______ is insurance for conventional loans that protect the lender from loss in the even of default by the borrower.
Private Mortgage Insurance
When an individual is collecting documents for the purpose of completing the loan file, what are they considered to be doing to the loan?
Processing The processor is responsible for obtaining information to aide in the underwriting process. They are responsible for requesting information from the borrower or third parties.
Which of the following documents would contain the details about the loan amount, payment, when payments are due, late penalty, interest rate, etc.?
Promissory note
Which of the following circumstances would disqualify the use of income generated from a basement apartment in qualifying for a Freddie/Fannie loan? Property was appraised as a single-family dwelling The property is zoned for 2-4 units LTV is calculated as a 2-unit property The apartment was vacant for 4 months
Property was appraised as a single-family dwelling
Refinance loans can be used for all of the following except: Cash out finance Purchasing a new home Rate and term finance Consolidating debts
Purchasing a new home
A Mortgage Servicing Disclosure Statement is required by what law?
RESPA
Which is the primary law that affects mortgage loan closings?
RESPA
Which law promotes informed shopping by requiring the disclosure of settlement services to the borrower?
RESPA RESPA specifically deals with settlement services, it's right in its name, the Real Estate Settlement Procedures Act (Regulation X). RESPA was put into place in 1974 and in its lifetime has expanded its protections of consumers to include requirements regarding kickbacks, referrals, fee-splitting and unearned fees, as well as setting limits on escrow accounts.
HMDA requires the lenders to obtain which of the following information for each borrower?
Race and Sex
All of the following Acts are part of Reg Z except: Consumer Credit Protection Act. Truth In Lending Act. Mortgage Disclosure Improvement Act. Real Estate Settlement Procedures Act.
Real Estate Settlement Procedures Act.
All of the following are considered liquid assets except: Real estate Bonds Cash Stocks
Real estate
What fee is not included in the Loan Estimate?
Real estate broker fee
Which disclosure, required to be sent three days after application, indicates to the borrower whether or not the servicing of their loan may be sold or transferred?
The Mortgage Servicing Disclosure
A minority borrower is refused a loan because the neighborhood that they have chosen has a high number of foreclosures. This is an example of what illegal practice?
Redlining
What is an unethical practice where a financial institution makes it difficult for residents of poor neighborhoods to borrower money?
Redlining
The Right of Recession pertains to which type of transaction?
Refinance Transactions
Which of the following would NOT be a purpose of a "cash-out refinance"? Increase the amount of the existing first mortgage and provide cash to the borrower Refinance at a lower interest rate, reducing the monthly payments; and increase the balance to provide immediate cash Refinance at a lower loan amount, by providing a significant amount of cash to make up the difference Pay off a second mortgage with the cash
Refinance at a lower loan amount, by providing a significant amount of cash to make up the difference
ECOA is also known as which Regulation?
Reg B
The Mortgage Acts and Practices Act is also known as:
Reg N
FCRA is also known as which Regulation? (fair credit reporting act)
Reg V
TILA is also known as Regulation:
Reg Z
The HOEPA is which Reg.?
Reg. Z
The Truth in Lending Act does which of the following? Requires all loan applications be made in person Prevents advertising FHA financing to the exclusion of Conventional Regulates advertising regarding interest rates Requires a closing cost breakdown on residential loans
Regulates advertising regarding interest rates
Which federal law prohibits mortgage relief service providers from requiring an advance fee before the provider has obtained and the borrower has accepted a written offer from the borrower's lender or servicer?
Regulation O The Mortgage Assistance Relief Services Rule (MARS Rule) or Regulation O specifically prohibits a mortgage assistance relief provider from requiring an upfront fee or advance fee. The provider cannot receive compensation from the borrower until the borrower has received and accepted a written offer from their mortgage servicer.
Which two regulations require timely disclosures be provided to the borrower within three business days of a 1003?
Regulation X and Regulation Z
Which law prohibits MLOs from influencing an appraiser to overstate the value of a home in order to get a closed-end loan on the borrower's primary residence approved?
Regulation Z
The 3/7/3 Rule is associated with which law or regulation?
Regulation Z (or TILA - truth in lending act)
HOEPA is an addendum of:
Regulation Z.
The USA Patriot Act does what:
Requires identification on all mortgage transactions Requires that creditors verify a borrower's identity
Which of the following is not a HOEPA trigger test? Rescission Test Points and Fees Test Prepayment penalty Test APR Test
Rescission Test The three tests that a loan must go through to determine whether it is a high-cost home loan are the APR Test, the Points and Fees Test, and the Prepayment Penalty Test. If a loan fails any of these tests, then it is considered to be high cost and the lender must then follow the requirements under HOEPA in handling that loan.
A HECM is also more commonly known as a:
Reverse Mortgage
Which of the following transactions is not governed by the new TRID Rules? A reverse mortgage A closed-end second mortgage A purchase money transaction A refinance transaction
Reverse Mortgage All transactions except reverse mortgages and HELOCs require the new TRID disclosures. HELOCs and Reverses are still required to use the GFE, TIL, and HUD-1.
TRID applies to all mortgage loans except:
Reverse Mortgages
There is a lender working in a large metropolitan area, but currently, they are targeting a low-income neighborhood and charging more for their loans because the individuals in the area are mostly African American. This would be considered:
Reverse Redlining Reverse Redlining is the opposite of Redlining. It is drawing a red line around an area and then going into the area and taking advantage of those individuals by charging them higher fees for their loans.
A HECM is what type of loan:
Reverse mortgage
Which of the following situations would be considered a prohibited act or practice? Eileen, a mortgage loan originator, provides an additional appraiser comparables with the hopes that the appraiser might change the value on her borrower's appraisal Laurie, an independent contract processor, renews her mortgage loan originator license Tyler discusses with a borrower particular rates and terms that they qualify for Riley, working as a processor for a mortgage lender, discusses specific options for locking a borrowers loan
Riley Riley is not a licensed mortgage loan originator and yet he is acting as a mortgage loan originator by discussing specific options for interest rates with the borrower. Riley is guilty of unlicensed activity and can face repercussions for his actions.
The ____ Act was responsible for the creation of the modern-day licensing of mortgage loan originators.
SAFE
The term "unmarried" may be defined to include all of the following except:
Same-sex Marriage
Business income is derived from a sole proprietorship and is calculated on which of the following tax forms?
Schedule C
If the borrower is self-employed, what does the lender look for on the tax returns for income?
Schedule C and non-cash expenditures including depreciation
In qualifying the income of a sole proprietor borrower, the originator should consider which of the following to be most important?
Schedule C net income plus non-cash expenses and depreciation
Higher priced mortgage loans are covered under which section of TILA?
Sec 35
Where, in the TILA is the explanation for higher-priced loans located?
Section 35
Kickbacks, referral fees and unearned fees are a violation of which section of RESPA? (Real Estate Settlement Procedures Act)
Section 8
The Lender Credit section of the LE and CD can be found where?
Section J
In a typical mortgage loan, what are the mortgage note and the property called?
Security instrument/collateral
The Loan Estimate must be sent:
Sent within 3 business days of the application
SRP stands for:
Service Release Premium.
Which disclosure is due within 3 business days of application?
Servicing Disclosure
The borrower applies for a loan and asks about tax impacts. Which of the following should be told to the borrower by the MLO?
Speak with a tax advisor for tax deductibility.
A SISA loan is a:
Stated Income/Stated Asset Loan
Putting a borrower into a sub-prime loan or a loan the borrower does not deserve is called:
Steering
Andrew's borrower wants to refinance his home and Andrew has put together some great options. Of those options, Andrew wants his borrower to chose the ARM option because his company is giving bonuses to everyone who sells an ARM. Andrew pressures his borrower into choosing that options. Andrew is guilty of what?
Steering Andrew is steering this particular borrower into a program specifically because it benefits Andrew more. This is considered steering and is an illegal practice. The Loan Originator Compensation Rule specifically prohibits what is occurring in this situation because Andrew is receiving compensation based upon a term of the loan, in this case, the fact that the loan is an adjustable rate mortgage.
If a home is purchased with an FHA owner-occupied loan, what type of FHA refinance can the borrower use to refinance?
Streamline
An Alt-A or Alt Doc loan would be considered a type of:
Subprime mortgage An Alt-A or Alt Doc loan would be considered a subprime mortgage. An example would be a NINA (No Income, No Asset loan).
Net worth is determined by:
Subtracting Liabilities from Assets
A loan's APR must be disclosed to the consumer on the:
TIL Statement.
Section 32 which covers high cost loans is part of which federal law?
TILA
Under what law does the Ability to Repay Rule fall under?
TILA Ability to Repay falls under TILA or Regulation Z. Also under TILA is the QM Rule, Loan Originator Compensation Rule, HOEPA and Section 35 loans.
Which law promotes informed use of credit by requiring the disclosure of the APR to the borrower?
TILA TILA requires the disclosure of the borrower's APR and thus promotes informed use of credit. TILA was put into place in 1968, and is also know as Regulation Z, over the course of its lifetime, TILA has been expanded its protection of consumers and its requirements for disclosure of pertinent information regarding a borrower's transaction.
TRID stands for:
TILA, RESPA Integrated Disclosure (Truth in Lending Act and Real Estate Settlement Procedures Act)
The total amount of interest that the borrower will pay over the loan term as a percentage of the loan amount is called:
TIP
The Home Owners Protection Act covers what?
That homeowners with PMI can remove the mortgage insurance once the mortgage balance reaches 78% LTV
A triggering term would include all of the following except: That now would be the best time to buy The down payment amount or percentage The monthly payment The interest rate
That now would be the best time to buy
The ATR Rule was meant to do what in underwriting? (Ability to repay)
That the borrower had the ATR
In all advertising of interest rates what must always be included?
The APR
If the borrower has questions about their loan and wanted to file a complaint they could contact?
The CFPB
Which of the following is not an ARM of GLBA? The Safeguard Rule The Opt-Out Rule The Disposal Rule The Pretexting Rule
The Disposal Rule
What law allows for e-signatures as long as the borrower gives permission?
The Electronic Signatures in Global and National Commerce Act The Electronic Signatures in Global and National Commerce Act or the E-Sign Act was created to allow electronic signatures to become the same as ink signatures and allow for the mortgage lenders and brokers to use electronic signatures on their transactions so long as the borrower has given permission for them to be used.
What is the FL-OFR looking for when they are looking at an applicant's criminal background check?
The FL-OFR is looking to see if the applicant has any felonies in the past 7 years AND the FL-OFR is looking to see if the applicant has any criminal history at all
Who is the regulatory authority responsible for the oversight of mortgage loan originators?
The Florida Office of Financial Regulations
Information for Government Monitoring means?
The Government Monitors HMDA information (Home Mortgage Disclosure Act)
In which situation is there no monthly mortgage insurance for the life of the loan on a FHA Mortgage? The LTV is more than 89.99% and the loan is a 30 year term The LTV is less than 78% and the loan 15 years or less There is always monthly mortgage insurance on a 15 year loan The LTV is 80% and the borrowers have paid for at least 3 years
The LTV is less than 78% and the loan 15 years or less
Mortgage Insurance protects whom?
The Lender
Price gouging occurs when:
The Lender can get away with charging high fees, points and costs
What are two of the most important documents that the borrower signs at settlement?
The Loan Note and the Deed of Trust
All MLOs are required to list what on the 1003?
The MLOs Unique Identifier
What entity was created by CSBS and AARMR for the purpose of licensing and registering mortgage loan originators?
The NMLS The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators were responsible for the creation of the NMLS (Nationwide Mortgage Licensing System and Registry). The NMLS is a database that holds information for mortgage licensing and provides the channel between licensees and state regulatory authorities.
What is the document that obligates the borrower on a loan?
The Promissory Note
All of the following changes are because of The Dodd-Frank Wall Street Reform and Consumer Protection Act except? The Consumer Financial Protection Bureau (CFPB) The definition of a Qualified Mortgage (QM) The Ability to Repay Rule (ATR) The Red Flag Rule (RFR)
The Red Flag Rule (RFR)
Which of the following is not required by HOEPA? The APR The Loan amount The Right of rescission on a refinance The Right to receive a copy of seller information
The Right to receive a copy of seller information
What law was created in response to the attacks of September 11, 2001 and requires that a financial institution require customer identification during a transaction?
The US Patriot Act
The mortgage loan application is also known as the:
The Uniform Residential Loan Application URLA or 1003 or Form 65
Which of the following would not require a redisclosure of the CD and start the 3 day wait time over? Addition of a pre-payment penalty The adjustment of a fee to bring it into compliance A change in APR above .125 on a fixed rate A change in APR above .250 on an ARM
The adjustment of a fee to bring it into compliance
Regarding a balloon loan, which is the most correct? The balloon is disclosed to the client on the HUD-1 settlement statement. The balloon is disclosed to the client on the insurance documentation. The balloon is disclosed to the client on the Trust Deed. The balloon is disclosed on the Note and the Trust Deed Rider.
The balloon is disclosed on the Note and the Trust Deed Rider.
Using Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corp.) guidelines, what is true if a borrower is purchasing a non owner-occupied 2-4 unit property?
The borrower must have six months PITI in the bank
Who determines the manner in which the title will be held?
The borrower with help from their legal advisor
The application is meant to be filled out by:
The borrower with the lender's assistance
Approval of a reverse mortgage application will be largely based on which of the following?
The borrower's equity
The borrower must meet USDA income eligibility guidelines. This means:
The borrower's income cannot exceed 115% of median income
For the purpose of complying with HMDA rules, a mortgage loan originator must ask all of the following questions except? The borrower's sex The borrower's marital status The borrower's race The borrower's ethnicity
The borrower's marital status
MLOs should always act in the best interest of:
The consumer
RESPA was created to help borrowers understand what part of the loan?
The costs
What is a mortgage or trust deed?
The document that creates a lien against the property
Which of the following is true about the index used in an ARM?
The index rate can change on the loan after settlement
Which of the following is true concerning Service Release Premium (SRP)? Loan term is a factor of the SRP Type of loan does not affect the SRP The interest rate is a factor of the SRP There is no such thing as SRP
The interest rate is a factor of the SRP
What can you tell a borrower about a 7/1 ARM? The interest rate may go up only 1% each year for 7 years. The interest rate is locked for the first year and may only go up 7% over the life of the loan. The interest rate may only go up 7% over the life of the loan starting the 1st year. The interest rate is fixed for the first 7 years then is a variable interest rate.
The interest rate is fixed for the first 7 years then is a variable interest rate.
The FL-OFR is:
The state regulatory authority in FL responsible for the oversight of MLOs
Servicing transfers from old and new servicing companies must include:
The toll-free telephone number
Which best describes the housing ratio?
The total cost of all housing expenses divided by the borrowers gross monthly income The housing ratio is simply figuring out how much the borrower pays for their house and dividing it by their gross monthly income to determine the percentage of their income that goes to their housing expenses.
What is the legal amount that an ARM can increase in one year?
There is no legal amount
Which is true regarding FHA loans? There is no prepayment penalty The prepayment penalty is .5% of the note The loan can be prepaid after 5 years with no penalty The prepayment penalty is 6 months of interest
There is no prepayment penalty
The borrower refinances a loan on a Pizza shop. Under the Truth in Lending Act how long will he have to change his mind after he signs the refinance loan papers?
There is no right of rescission it is an exempt transaction
Travis is disclosing an origination fee of $1200 on the initial Loan Estimate. What is the maximum that origination fee can change between the Loan Estimate and the Closing Disclosure?
There is zero tolerance, and it cannot change at all
The borrowers wanted to expedite the home-buying process so they got a pre-approval. Which statement best describes their situation? They may or may not get the loan from the lender who gave the pre-approval. they will get the loan, but the interest rate may be different than originally quoted. They will definitely get the loan if they paid a non-refundable deposit to the lender. They will not get the loan, but now know what they qualify for.
They may or may not get the loan from the lender who gave the pre-approval.
How does the secondary market help lenders?
They purchase loans.
Which of the following would disqualify an individual from obtaining a license as an MLO? They were convicted of a felony 10 years ago They were convicted of a felony 10 years ago involving money laundering They were convicted of a felony involving drunk driving None of the above would disqualify an application based upon financial
They were convicted of a felony 10 years ago involving money laundering
A violation of Florida Statutes Chapter 697.08 regarding Equity Skimming is a ______.
Third Degree Felony
Scenario 1: Tyler and Erin are looking to purchase their first home. Tyler makes $23.50 an hour and works on average 40 hours per week. Erin makes $21.50 an hour and works 40 hours of regular time and 5 hours of overtime a week. How much income do each of them make in any given month? (Hint: to calculate income for overtime, you'll need to do the hourly rate by .5 for time and a half)
Tyler: $4,073.33, Erin: $4,425.42 23.50*40*52/12=4073.33 21.50*40*52=44720 21.50+10.75*40*52=8385 8385+44720/12=4425.42
Which form is used most frequently for residential appraisals?
URAR
What does the acronym UDAAP stand for?
Unfair, Deceptive or Abusive Acts or Practices
What is the maximum penalty for providing false information on a federally related loan?
Up to $1,000,000 fine and jail time
The acronym UFMIP means:
Upfront Mortgage Insurance Premium
FHA Loan Limits are:
Vary depending on the County
Which of the following would NEVER require mortgage insurance?
Veterans' Affairs loans
How much money is required for fire insurance on a refinance at settlement?
Whatever is needed to renew coverage when the insurance expires
What is a balloon mortgage?
When the final payment of a mortgage is significantly higher than proceeding payments to payoff the loan
In selling a home which has an FHA loan, when can the FHA loan be assumed?
When the loan documents say the FHA loan is assumable
When do you give an ARM disclosure?
When the rate may change at any time in the life of the loan.
You want to open a mortgage brokerage and have talked to several lenders. Before you started doing business with them, what would you need to have?
Wholesale broker agreements
Which of the following is true concerning the YSP? YSP is credit to the borrower. YSP is the same for every lender. YSP is what a broker will pay for originating a loan below par. Banks are not allowed to receive a YSP.
YSP is credit to the borrower.
The booklet that the CFPB requires after application is called:
Your home loan toolkit
On page 2 of the CD, the section entitled "Services the Borrower Did Not Shop For" includes fees that have what type of tolerance?
Zero tolerance
Which of the following flood zones require flood insurance?
Zone A
A discount point is best described as a charge that the borrower pays to:
a lender to decrease the interest rate on a mortgage loan.
A loan officer creates a marketing plan to make between 2k and 4k per loan. His cousin calls, he agrees to do the 300k loan for .75% commission. This is:
legal and ethical because he is within his marketing plan.
Private Mortgage Insurance is required on conforming 1st mortgage loans when the Loan-To-Value is:
above 80%.
The purpose of the Closing Disclosure is to
account for all money involved in the transaction.
When using the comparison approach, the appraiser is attempting to:
adjust the comparable to the subject property.
What is the period between rate changes in an ARM called?
adjustment period
Some lenders and investors were willing to make subprime loans because:
lenders could charge higher rates for the added risk.
A bank, insurance company, savings and loan association, thrift or any lending institution whose loan is regulated by law, is usually known as:
an institutional lender.
A yield spread premium occurs when:
an interest rate is charged above the par rate and is a credit to the borrower.
RESPA requires disclosure to the consumer of:
any affiliated business arrangement (AfBA).
You can pay off a FHLMC/FNMA loan without a penalty:
any time during the life of the loan.
A 360/180 best describes what type of loan?
balloon
When doing an appraisal, the appraiser, unless specifically instructed otherwise, will consider the financial part of the transaction to be:
cash or cash equivalent.
The Patriot Act requires loan originators to:
check all gift donors against the known terrorist list.
Regulation Z requires:
computation and disclosure of the APR to the borrowers.
On an FHA loan, the discount points can be paid:
either by the borrower and/or the seller.
What prevents a party from having clear title?
encumbrance
The SAFE Act:
establishes minimum standards for licensing and registering of mortgage loan originators .
When purchasing a non-owner occupied property, the top ratio uses the:
expense of the property being purchased.
Under FHA loan rules, effective June 2013, loans beginning at 90% LTV or more will pay an annual mortgage insurance premium (MIP):
for the life of the loan.
A requirement in the Dodd-Frank Act requires qualified mortgages (QM) to have/to be:
fully amortizing.
An MLO referred his pre-approved borrower to a real estate company that both he and his partner own. According to RESPA the MLO must:
give full disclosure to the borrower at or prior to the time the referral is made.
The main difference between FHA and VA is that VA:
guarantees the loan whereas FHA insures the loan.
When an MLO accepts any third party fee from a borrower, the funds should be placed:
in an escrow account.
A state law that requires payment of interest on an escrow account is:
in direct violation of RESPA and would therefore be overturned in court,
When there is a clause in a mortgage that requires the borrower to pay an extra fee if the loan is paid off early, it is known as a:
prepayment penalty.
When a loan is immediately being sold onto the secondary market, the responsibility of "funding" belongs to the:
primary lender.
Late payments are based on
principle and interest only
The purpose of Fannie Mae and Freddie Mac is to:
provide a source of funds to the primary market mortgage lenders.
The purpose of a Market Conditions Addendum is to:
provide the lender/client with a clear and accurate understanding of the market trends and conditions prevalent in the subject neighborhood.
The amount of homeowners insurance required by the lender is the lesser of the loan amount or:
replacement cost.
The borrower knows that he has derogatory credit. He convinces his brother who has better credit and income to apply. The brother of the borrower is considered a(n):
straw buyer.
A borrower who qualifies for B, C or D paper or less favorable terms and interest rates is referred to as a:
subprime borrower.
An alternative documentation loan is a type of:
subprime loan.
The Homeowners Protection Act states that when a loan-to-value falls below 78% PMI is to be:
terminated
The relationship between the loan amount and the total amount financed, represented as a percentage, is known as:
the APR.
The responsibility of financial institutions to meet both the deposit and credit needs of the community, including the needs of low-income families, is called?
the Community Reinvestment Act.
