20 Hour SAFE Assessment
What is the biggest difference between a co-borrower and a cosigner? A co-signer only has ownership rights to the property. A co-borrower does not have to sign any documents at closing. Co-borrowers and co-signers are the same. A co-signer is responsible for the debt but does not have ownership rights.
A co-signer is responsible for the debt but does not have ownership rights.
If the seller's concession on a USDA loan exceeds 6%, what is required? A letter from the seller explaining why It must be tied to a lender rebate A comment from the appraiser explaining why a greater amount is needed. Nothing is required
A comment from the appraiser explaining why a greater amount is needed.
Which of the following BEST describes a conventional conforming loan? A conventional conforming loan is a traditional 30-year fixed principal and interest home loan. A conventional conforming loan requires a down payment substantially lower than non-conventional loans. A conventional conforming loan is only for clients who have FICO scores of 720 or higher. A conventional conforming loan is not guaranteed or insured by the government but does conform to the standards set by Fannie Mae and Freddie Mac.
A conventional conforming loan is not guaranteed or insured by the government but does conform to the standards set by Fannie Mae and Freddie Mac.
The various mortgage programs have unique requirements for appraisals done for their loans. Regarding VA loans, these require which of the following in addition to the appraisal? A Certificate of Reasonable Value (CRV) A Residual Value Addendum The 1004-MC (Market Conditions Report) An Individual Condominium Report
A Certificate of Reasonable Value (CRV)
The Hybrid ARM is: An ARM that allows the borrower to have 3 different payment options An ARM that combines the features of a fixed rate mortgage and an ARM The period in which the loan becomes fully amortizing An unpopular ARM type that is no longer available in the marketplace
An ARM that combines the features of a fixed rate mortgage and an ARM
Regulation X governs: Construction loans secured by real property Federally-regulated mortgage loans secured by residential property Unsecured bridge loans Mobile homes secured by personal property
Federally-regulated mortgage loans secured by residential property
What are the three types of Conventional Conforming Loans? Fixed Rate, EEM, ARMs Reverse, Refinance, and HELOC Fixed Rate, Hybrid ARM, and Super Conforming 503c, 242, and 513 Energy Efficient Mortgages
Fixed Rate, Hybrid ARM, and Super Conforming
A mortgage product that does not allow for a modification of the annualized rate of interest is BEST described as which of the following? Shared appreciation mortgage Graduated payment mortgage Collateralized mortgage obligation Fixed-rate mortgage
Fixed-rate mortgage
What is the best definition of a person or individual who places clients with lenders? A broker A processor An appraiser An underwriter
broker
Kelly has a loan amount of $150,000. She has an interest rate of 6%. The taxes she will pay for this year are $2,400. Her HOI payment each month is $120. What will her mortgage payment be?
$1,070
When asked to provide her weekly earnings, Ashley tells the loan officer that she makes $1,250 a week. Actually, she only makes $ 1,150 a week. Ashley then provides pay stubs that she has modified by editing her weekly salary. What is the potential punishment for fraud in this case? 30 years in prison and/or a $1 million fine. This would not be fraud considering it involves only a few hundred dollars per month. The possibility of life in prison. Mortgage fraud carries a maximum penalty of a $10,000 fine.
30 years in prison and/or a $1 million fine.
Leah has applied for a refinance on her property, which has been valued at $235,000. She currently has a home equity line of credit with a $47,000 maximum limit, and she owes $25,850. She has applied for another mortgage of an additional $164,500. Using this information, what is Leah's HCLTV?
90%
Acts or practices in which the mortgage loan originator deceives the consumer is an example of: Federal laws put in place to protect the public A deceptive practice A Mortgage Broker Common behavior
A deceptive practice
Which of the following actions does a mortgage loan originator NOT need to do annually? An unfair practice A delusional practice A deceptive practice An abusive practice
A delusional practice
What is the difference between a person and a natural person? -There is no difference in these two terms. -A person solely includes an individual human and a natural person is another name for a corporation. -A person could include a corporation, a partnership, or even a natural person, while a natural person is just a single human. -A natural person is the term used to signify a borrower before they close their loan and a person is the term for the borrower after they close their loan.
A person could include a corporation, a partnership, or even a natural person, while a natural person is just a single human.
Jason has opened a new credit card account with a credit card company. He was provided an Initial Privacy Disclosure and an Opt-Out Notice. He did not take the time to read it until later in the afternoon. The Gramm-Leach-Bliley Act specifies that a consumer must be given what amount of time to opt-out before personal financial information is disclosed to a third party? Seven business days 90 days A reasonable opportunity 30 days
A reasonable opportunity
Erika is a member of the National Guard and has been called to serve overseas. Which of the following fraud alerts would be the most appropriate given her circumstances? Extended Fraud Alert One-Call Fraud Alert Military On Call Alert Active Duty Alert
Active Duty Alert
Regulation X only applies to which of the following? John's loan that will cover his down payment on the new home he is purchasing, while waiting for his existing home to sell Alan's duplex that he purchased to have an extra unit available for his elderly mother Karen's temporary loan to build her custom dream home Harold's new party store business
Alan's duplex that he purchased to have an extra unit available for his elderly mother
According to the E-SIGN Act, what must a mortgage loan originator disclose? The hardware and software requirements needed Whether any single signature is for multiple pages or documents A borrower can choose to receive paper copies All available choices
All available choices
Examinations are an important part of the mortgage industry because it allows regulators to do what? Review the financial standards of lenders Review whether or not the company is in compliance with applicable state and/or federal law Review individual licenses and renewals All available choices
All available choices
Which of the following is an example of a settlement cost? Charge to pull the credit report Real Estate Broker Fee Fees associated with title work All choices are settlement costs
All choices are settlement costs
Total Debt to Income considers: All of the borrower's debt obligations Origination Fees and other closing costs All of the borrower's non-cancellable debt obligations Only the housing costs
All of the borrower's non-cancellable debt obligations
The following is an example of a person not required to be licensed: An individual who works for a non-depository MLO Independent Contractors A Mortgage Broker An individual who performs only real estate brokerage activities
An individual who performs only real estate brokerage activities
During which point in the MLO Timeline does the MLO initially pull the borrower's credit report? Pre-Application Underwriting Application Processing
Application
When lending to a potential client, it is of utmost importance to ensure their method of repayment is legitimate. If a person puts funds into their bank account for a short period of time to temporarily inflate their accounts and improve their potential to qualify, this is called what? Income fraud Collusion accessory Sub-standard documentation Asset fraud
Asset fraud
Which type of mortgage is set as if it is amortized over 30 years, but has a loan feature that requires the loan be paid in full earlier than a 30-year amortization schedule would otherwise dictate? Balloon mortgage Open-end mortgage Interest-only mortgage Reverse mortgage
Balloon mortgage
A loan originator's license can be denied for which of the following reasons? Failing to score at least an 80% on the written test Being convicted of a DUI 5 years ago Completing education requirements through an NMLS-approved course Being convicted 8 years ago of a felony involving money laundering
Being convicted 8 years ago of a felony involving money laundering
The State Model was written by the: Conference of State Bank Supervisors (CSBS) Dodd Frank Act CFPB Real Estate Procedures Act
Conference of State Bank Supervisors (CSBS)
Which of the following terms specifically refers to a loan that is NOT obtained through a program of the federal government? Non-conventional loan Traditional loan Conventional loan Conforming loan
Conventional loan
Private Mortgage Insurance (PMI) insures the lender against losses if the borrower defaults. PMI may be required if the mortgage loan amount exceeds 80% of the collateral's value. Which of the following loans could require PMI? USDA loans Conventional loans FHA loans VA loans
Conventional loans
According to Federal Law, at the Application phase of the MLO Timeline, the consumer becomes a: Borrower Client Customer Mortgagee
Customer
Jacob the mortgage broker is looking to set up his own loan shop. He wants to make sure he's compliant with Federal Law in all regards. To ensure he's following the Red Flags Rule, Jacob must do which of the following? Detect patterns and practices of money laundering Detect patterns and practices of identity theft Create guidelines to identify discriminatory practices Have procedures in place to document adverse actions
Detect patterns and practices of identity theft
MLOs are the front line against fraud and fraud schemes, so they need to always be on the lookout for fraudulent activity. Which of the following is NOT a borrower fraud method described in the Processing section? Conspiracy Licit censure Modified documentation Verbal
Licit censure
To be eligible for Temporary Authority, an MLO must meet at least which two conditions? -Employed by a state-licensed mortgage company in the application state and registered as an MLO continuously during the 30 day period prior to applying -Employed by a state-licensed mortgage company in the application state and licensed as an MLO continuously during the 30 day period prior to applying -Employed by a federally-licensed mortgage company in the application state and licensed as an MLO continuously during the 30 day period prior to applying -Employed by a federally-licensed mortgage company in the application-state and registered as an MLO continuously during the one year period prior to applying
Employed by a state-licensed mortgage company in the application state and licensed as an MLO continuously during the 30 day period prior to applying
Fannie Mae and Freddie Mac are examples of: Public companies with a private purpose State entities that ensure monies are available to lend Government Sponsored Enterprises that have a public purpose A regulator who has authority at a Federal and State level
Government Sponsored Enterprises that have a public purpose
When does ECOA state that it is okay to deny a loan based on the age of the applicant? When the applicant is under the age of 21 years old. If someone under the age of 62 applies for a reverse mortgage. If an applicant is 80 years of age or older. Cases involving anyone over the age of 18 years old.
If someone under the age of 62 applies for a reverse mortgage.
Patrick is a 25-year-old young professional who is applying for his first mortgage loan. When John, his MLO, reaches Section 8 of the URLA, he asks Patrick several questions regarding his ethnicity, race, and gender. Patrick politely refuses. What does ECOA say his MLO, John, is required to do next? Nothing Explain to Patrick that his loan will be denied since he refused to answer the questions. If they are meeting face-to-face, John must answer the questions based on visual observations and Patrick's surname. Add a note to the Continuation Sheet to let the underwriter know that Patrick refused to answer the questions.
If they are meeting face-to-face, John must answer the questions based on visual observations and Patrick's surname.
Which of the following is NOT a common FHA loan program? EEM GNND KMFD GEM
KMFD
If a homeowner loses their hazard insurance, a lender may force place insurance upon the homeowner. Why would a lender want to make sure there's insurance covering the home? Lenders are allowed to place this upon the borrower, because it also covers the homeowner's belongings, not just the home. Lenders cannot force insurance upon borrowers. Lenders make more money by charging this insurance to the borrower. Lenders stake in the transaction is the collateral, so it's important this is protected in case of a disastrous event.
Lenders stake in the transaction is the collateral, so it's important this is protected in case of a disastrous event.
The Secure and Fair Enforcement for Mortgage Licensing Act requires the licensing and registration of professionals that engage in mortgage-related activity. Which of the following individuals are required only to register with the NMLS? Mortgage broker Loan underwriter who works independently Contracted loan processor Mortgage loan originator employed by a credit union
Mortgage loan originator employed by a credit union
When calculating Interest Only Payments, you will need to: Multiply the loan amount and the interest rate to get the annual interest, then divide by 12. Divide the Principle then multiply the Interest Rate. Multiply the loan amount and divide the interest rate. Subtract the number of payments made then divide the amount by the number of years left in the term of the loan.
Multiply the loan amount and the interest rate to get the annual interest, then divide by 12.
The NMLS stands for the:
Nationwide Mortgage Licensing System and Registry
Jasmine and Noelle are applying for a new traditional mortgage loan. Two weeks after receiving the Loan Estimate there was a changed circumstance. This resulted in an increase of 1/16 of 1% of the APR. What waiting period before closing is required after the applicants receive a new LE? None, this doesn't trigger redisclosure. They would have to wait an additional three business days. They would have to wait an extra seven business days. It is still determinant upon the amount of the down payment.
None, this doesn't trigger redisclosure.
The purpose of the Consumer Financial Protection Bureau is to: -Let consumers know about the fees to get a mortgage -Provide transparency into the mortgage process -Oversee and enforce the regulations of the Dodd-Frank Act -Protect customers from bad loans
Oversee and enforce the regulations of the Dodd-Frank Act
Which of the following is considered the BEST definition of a margin? -Part of an adjustable rate mortgage added by the lender that does not change during the term of the loan. This is generally the broker's profit. -A variable rate of interest that can change during the term of the loan. This is generally the lender's profit. -Part of an adjustable rate mortgage added by the lender that does not change during the term of the loan. This is generally the lender's profit. -Part of a fixed rate mortgage added by the real estate agent that does not change during the term of the loan. This is generally the lender's profit.
Part of an adjustable rate mortgage added by the lender that does not change during the term of the loan. This is generally the lender's profit.
The Intent to Proceed is required at what phase of the MLO Timeline: When the consumer is shopping for a mortgage The Application phase At the closing table During the servicing phase
The Application phase
The role of a mortgage loan originator does NOT include which of the following? Performing only administrative tasks on a residential mortgage loan Helping a client obtain a residential mortgage loan Negotiating the terms of a residential mortgage loan Helping a client apply for a residential mortgage loan
Performing only administrative tasks on a residential mortgage loan
You are an MLO. Your client has just revealed they are terminally ill. What is your next course of action? Provide them with a Notice of Adverse Action, since this loan is now expedited. Provide them with a disclosure noting that their health status will require further supporting documentation. Make a note for the underwriter to consider this in the qualifying. Proceed with the loan and determine if they qualify based on their credit, DTI, and other similar factors.
Proceed with the loan and determine if they qualify based on their credit, DTI, and other similar factors.
The American Association of Residential Mortgage Regulators (AARMR) was established to: Let consumers know about increased accountability in the mortgage process. Serve as the single voice to Congress on behalf of state banks. Promote the exchange of information and knowledge between states regarding mortgage lending, servicing, and brokering. Protect Consumers from deceptive and unethical financial practices.
Promote the exchange of information and knowledge between states regarding mortgage lending, servicing, and brokering.
The following is an example of a Reverse Mortgage: Dual purpose reverse mortgages Home Equity Line of Credit Line of Credit Proprietary Reverse Mortgage
Proprietary Reverse Mortgage
All of the following are benefits of RESPA, EXCEPT Provides clients with clear disclosures as to the costs of closing and the ability to shop Protects lenders and service providers by disclosing excessive and unearned fees Protects consumers from excessive and unearned fees Ensures consumers will get information on pre-arranged business agreements
Protects lenders and service providers by disclosing excessive and unearned fees
Which of the following is NOT an example of a Tangible Net Benefit? Consolidation of debt Eliminating mortgage insurance Refinancing an existing mortgage with cash-out where cash-out amount is less than the closing costs incurred for the loan Lowering the monthly payment
Refinancing an existing mortgage with cash-out where cash-out amount is less than the closing costs incurred for the loan
Evelyn submitted her application for a mortgage. She is a single mother and proud of the work she has done to get herself into a position to buy a home. She has a 680 credit score, $20,000 saved for a down payment, and a 35% DTI ratio. She was surprised that her application was denied by Quickly Loans. She feels that she was discriminated against and would like to know what law protects her. Which of the following laws protects against discrimination in lending? Regulation X Regulation V Regulation B Regulation P
Regulation B
Aya's Loan Shop regularly advertises low interest rates, but no one has qualified for these interest rates in over 5 years. This could possibly be a violation of which of the following laws below? The FTC Safeguards Rule FCRA The E-Sign Act Regulation N
Regulation N
The State Authority has several responsibilities, which is NOT one? Provide information about licensees Issue cease and desist orders Remove and replace the CFPB within their state Enforce penalties
Remove and replace the CFPB within their state
On which Section of the URLA would you find information regarding ALL real estate the client owns?
Section 3
Which section of the URLA requires the MLO to ask government monitoring questions, but is voluntary for the borrower to answer? Section 4 Section 10 Section 8 The Continuation Sheet
Section 8
Jamie and Linda were preapproved for a home loan but need to find a realtor. Their MLO, Cynthia, refers them to Khalid. Cynthia tries to refer customers to Khalid because he gives nice gift cards in return for referrals. Which law has Cynthia violated? General Rules of TILA Regulation Z Fair Housing Act Section 8 of RESPA
Section 8 of RESPA
An Index used as an instrument that tracks the financial marketplace that lenders will start having to use in January 2022 is the: The London Rate Exchange Cost of Funds Index (COFI) Secured Overnight Financing Rate (SOFR) Worldwide Rate Exchange (WOR)
Secured Overnight Financing Rate (SOFR)
Examples of non-cancellable debts are: Monthly subscriptions to Netflix and Hulu Student loans, car notes, child support All utilities (ex. water, gas, electric) Cable, car insurance, renter's insurance
Student loans, car notes, child support
Which of the following actions does a mortgage loan originator NOT need to do annually? Submit mortgage call reports to the NMLS Provide reports and additional information at the request of state authorities Make available, upon request of a state licensing agency, all books and records relating to operations of the originator Submit mortgage call reports to the Consumer Financial Protection Bureau
Submit mortgage call reports to the Consumer Financial Protection Bureau
Which law or rule is designed to protect consumer's non-public information, such as their social security numbers and account balance information? The FTC Safeguards Rule FCRA The FCC Red Flags Rule The CIP
The FTC Safeguards Rule
Faby has several late payments recorded in her credit report, multiple revolving credit accounts, and a relatively short credit history. Which of the statements below is true? Her short credit history will damage her credit score the most. Faby's credit score should still be relatively high. Multiple revolving accounts have no impact on one's credit score. The history of late payments will most likely damage her credit score the most.
The history of late payments will most likely damage her credit score the most.
All of the following are characteristics of a fixed-rate mortgage, EXCEPT? The principal, interest, taxes and insurance payment will never change The principal and interest payment will never change The interest rate stays constant throughout the loan term Oftentimes the term will range from 10-30 years
The principal, interest, taxes and insurance payment will never change
The 4506-C is: Part of the URLA The form number for Appraisal reports The request to the IRS for a transcript of Tax Returns Documents collected by the processor
The request to the IRS for a transcript of Tax Returns
The purpose of RESPA is: To assist borrowers with making good decisions To help consumers to Know Before You Owe To ensure credit transactions are documented To help borrowers make informed decisions about costs of settlement
To help borrowers make informed decisions about costs of settlement
Under RESPA, kickbacks are prohibited. Why is this important? This identifies whether or not a borrower requires an origination fee This determines what property type is allowable This informs the loan originator what costs can be rolled into the loan This helps protect the consumer from excessive settlement costs
This helps protect the consumer from excessive settlement costs
What is a principal function of regulators in the mortgage lending industry? To promote efficiency of communication between the different government agencies To promote the variance in mortgage products made available within the lending industry To promote an imbalance between lenders and consumers To promote fairness and support stability within the financial system
To promote fairness and support stability within the financial system
Predatory lending and steering both fall under which of the following regulation(s)? UDAAPs HMDA MAP RESPA
UDAAPs
A loan application must be properly processed by several professionals in the mortgage industry. Which of the following individuals are ultimately responsible for determining a loan approval based on lender guidelines? Underwriter Settlement Agent Processor MLO
Underwriter
To fulfill a request for a mortgage loan, a standardized form must be used to collect the borrower's information. The 1003 is the form number designated for which of the following documents that this information is gathered on? Loan/Application Register Uniform Residential Loan Application Uniform Residential Appraisal Report Underwriting Transmittal Summary
Uniform Residential Loan Application
A funding fee of between .5% and 3.6% of the loan amount is required on which of the following program(s)? VA USDA Conventional Conforming Qualified
VA
For a mortgage loan originator license, which of the following does an applicant NOT need to meet in order to obtain a license? -Submit fingerprints and pass a national criminal history background check -Authorize the NMLS to obtain an independent credit report -Wait at least 6 months to retest after failing the test two times -Satisfy the 20-hour pre-licensing education requirements
Wait at least 6 months to retest after failing the test two times
Amortizing is BEST defined as which of the following? When a client has the same servicer and lender When a client makes extra payments towards their principal When a client makes interest-only payments, which allow them to pay off the loan sooner When a client makes a payment that covers enough principal and interest to pay off the debt according to a set schedule
When a client makes a payment that covers enough principal and interest to pay off the debt according to a set schedule
When must a Notice of Right to Receive an Appraisal be provided to a consumer so they can understand their rights in requesting a copy of the appraisal report? 3 business days prior to consummation Within 5 days of signed application Within 3 business days of completed application Within 3 business days of signed application
Within 3 business days of completed application
Sally the MLO has great news for her client Bill; he is approved for his new mortgage loan! Per ECOA, when must Sally provide Bill with a Notice of Action Taken? Within 30 days of application Within 90 days of application Within 30 days of Notice of Adverse Action Within 60 days of Notice of Adverse Action
Within 30 days of application