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Sam Slezee was found to be providing mortgage loan origination services without a state license. A temporary order to cease and desist engaging in such activities was issued against Sam. While under the order, Sam completed three transactions. What is the maximum fine a state licensing agency may impose on him? $25,000 $50,000 $75,000 $100,000
The answer is $75,000. The maximum amount of penalty for each act or omission is $25,000. Each violation or failure to comply with any directive or order of the state licensing authority is a separate and distinct violation.
Conforming loan guidelines generally include DTI ratios of: 26% / 38% 31% / 43% 28% / 41% 28% / 36%
The answer is 28% / 36%. The standard conforming DTI ratios for Fannie Mae and Freddie Mac are 28% (housing) and 36% (total debt).
Businesses that conduct telemarketing are required to access the Do-Not-Call Registry every _____ in order to maintain an updated database of people on the Do-Not-Call List. 31 days 60 days 3 months 45 days
The answer is 31 days. A business must update its Do-Not-Call data every 31 days to remain compliant.
If a borrower selects a mortgage loan covered by HOEPA, he or she: Can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan after submitting a written request that is signed by the parties entitled to the waiting period and which describes the emergency and consent to the waiver Cannot waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan Can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan with the creditor's approval Can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan after signing a preprinted lender-provided form which states that the credit is needed to meet a bona fide personal emergency
The answer is Can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan after submitting a written request that is signed by the parties entitled to the waiting period and which describes the emergency and consent to the waiver. If a borrower selects a mortgage loan covered by HOEPA, he/she can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan after submitting a written request that is signed by the parties entitled to the waiting period and which describes the emergency and consent to the waiver.
What was the first law that Congress enacted to combat predatory lending? TILA Fair Housing Act HOEPA RESPA
The answer is HOEPA. The Home Ownership and Equity Protection Act (HOEPA) was enacted in 1994 and was the first legislation specifically created to combat the practice of predatory lending.
Before accepting a loan that is a high-cost mortgage, borrowers must complete counseling with a counselor approved by: CFPB HUD FTC HOEPA
The answer is HUD. Before accepting a loan that is a high-cost mortgage, borrowers must complete counseling with a counselor approved by HUD.
The Nationwide Multistate Licensing System and Registry was developed and is maintained by: The FHFA and CFPB The CSBS and AARMR The CFPB and CSBS The AARMR and CFPB
The answer is The CSBS and AARMR. The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) are the two organizations responsible for creating and implementing the NMLS.
In a transaction for a fixed-rate mortgage to finance a home purchase, the loan applicant should receive: The CHARM Booklet Your Home Loan Toolkit: A Step-by-Step Guide What You Should Know about Home Equity Lines of Credit The Consumer Handbook on Fixed-Rate Mortgages
The answer is Your Home Loan Toolkit: A Step-by-Step Guide. In a transaction for a fixed-rate mortgage to finance a home purchase, the loan applicant should receive Your Home Loan Toolkit: A Step-by-Step Guide.
A lender is trying to lure customers with advertisements for "Minimum Monthly Payments to Meet Any Budget!" This advertisement must also include an equally prominent statement in close proximity which alerts consumers that: The loan may not be paid off by the end of the loan term The loan is only advised for borrowers with a short-term interest in the dwelling used to secure the loan The borrower should seek homeownership counseling prior to applying for the loan A balloon payment may result from minimum periodic payments
The answer is a balloon payment may result from minimum periodic payments. The advertisement must include a statement that a balloon payment may result from minimum periodic payments.
The FCRA places all of the following limitations on the inclusion of negative information in credit reports, EXCEPT: A limit on bankruptcies that are more than ten years old A limit on accounts placed for collection that are more than seven years old A limit on tax liens that are more than seven years old A limit on bankruptcies that are more than seven years old
The answer is a limit on bankruptcies that are more than seven years old. Most negative information that is more than seven years old is not included in a credit report; however, bankruptcies may be reported for up to ten years.
The responsibilities of a loan servicer include: Disbursing escrow funds, managing trust accounts, and adjudicating foreclosure proceedings Sending closing documents, collecting escrow funds, and obtaining loan funds for clients Accepting payments, disbursing escrow funds, maintaining records, and managing delinquent accounts Accepting applications, disbursing interest and principal, and maintaining origination records
The answer is accepting payments, disbursing escrow funds, maintaining records, and managing delinquent accounts. Loan servicers handle many tasks, including accepting payments, disbursing escrow funds, maintaining records, and managing delinquent accounts.
A conditional refinance provision might be a feature of what type of loan? Option ARM 15-year fixed Interest-only ARM Balloon
The answer is balloon. A balloon loan may be eligible for refinance if it carries a conditional refinance provision. This means the loan may qualify for refinance if certain conditions are met, including: borrower must live in the house; no second liens in place; must be current and not have been late in 12 months; new rate cannot exceed 5% over the note; docs must be signed and fees paid.
An originator's unique identifier must be shown on all but which of the following documents? Business signage Mortgage loan applications Advertisements Business cards
The answer is business signage. The unique identifier of any person originating a residential mortgage loan must be clearly shown on all residential mortgage loan application forms; solicitations or advertisements, including business cards or websites; and any other documents as established by rule, regulation, or order of the state licensing agency (MSL.210).
An underwriter examines title documents for issues that may cloud the title or affect marketability. All of the following are items that may affect title, except: Easements Land locks Leaseholds Completion notice
The answer is completion notice. A completion notice is required of an appraiser, typically to document the completion of new construction prior to closing a loan on the property. Easements, land locks, and leaseholds are all examples of title issues that may affect marketability or cloud title.
All of the following may be considered employment red flags, except: Credit history is missing entirely Paystub check numbers that are out of sequence or do not correspond with payroll dates W-2s that are handwritten and may not include a company logo Social Security Numbers on the application which do not match those on the income documents
The answer is credit history is missing entirely. Missing credit history is a credit report red flag, not an employment red flag.
Underwriting of non-qualified mortgages must compute periodic payments that: Include consideration of periodic rate caps Do not take periodic rate caps into consideration Do not take lifetime rate caps into consideration Include consideration of the value of the dwelling as a borrower asset
The answer is do not take periodic rate caps into consideration. Underwriting of non-qualified mortgages must compute periodic payments that do not take periodic rate caps into consideration.
When dealing with third-party service providers, banks and nonbanks must establish risk management programs that include all but which of the following elements? Conducting due diligence to assess the service providers' ability to comply with the law Entering contracts with service providers that include enforceable consequences for failing to comply with the law Establishing compensation programs that withhold payment for services until the service provider can demonstrate compliance with the law Reviewing the service provider's employee training programs, particularly for those employees that have direct contact with consumers
The answer is establishing compensation programs that withhold payment for services until the service provider can demonstrate compliance with the law. Establishing compensation programs to withhold payment for services is not a required element of a risk management program.
Which form of fraud is most prevalent involving borrowers in the mortgage process? Falsified applications Foreclosure rescue scams Identity theft Straw sellers
The answer is falsified applications. Applications using fraudulent information are the most common type of mortgage fraud involving borrowers. Inconsistent information is present in over 35% of cases.
The first step in the closing process is: Rescission Funding Application Steering
The answer is funding. The first step in the closing process is funding. This occurs when the lender wires funds to the title company or closing attorney. Once the closing has occurred, the title company is authorized to release funds to the parties (disbursement). Depending on state law and the type of transaction, disbursement could occur at closing or several days later.
Qualifying ratios consist of which two separate calculations? Housing expense ratio and total debt ratio Loan-to-value ratio and qualifying income ratio Loan-to-value ratio and housing expense ratio Total debt ratio and qualifying income ratio
The answer is housing expense ratio and total debt ratio. Qualifying ratios consist of the housing expense ratio and the total debt ratio.
After an escrow account is established for an HPML, it: May not be canceled Will cancel automatically in five years after consummation unless the borrower is in default May be cancelled at the borrower's request five years after consummation if the borrower is not currently delinquent or in default and the loan balance is less than 80% of the original value of the home securing the loan Will cancel automatically in five years after consummation if the unpaid principal balance is less than 80% of the original value of the home securing the loan
The answer is may be cancelled at the borrower's request five years after consummation if the borrower is not currently delinquent or in default and the loan balance is less than 80% of the original value of the home securing the loan. After an escrow account is established for an HPML, it may be cancelled at the borrower's request five years after consummation if the borrower is not currently delinquent or in default and the loan balance is less than 80% of the original value of the home securing the loan.
This is defined as the intentional perversion of the truth for the purpose of inducing another person or entity to rely on it in order to part with something or surrender a legal right. Mortgage fraud Industry insider fraud Identity theft Predatory lending
The answer is mortgage fraud. Mortgage fraud is defined as the intentional perversion of the truth for the purpose of inducing another person or entity to rely on it in order to part with something or surrender a legal right.
When a creditor revises a Loan Estimate, it must deliver the revised disclosure to the loan applicant: No later than seven business days prior to consummation On the same date that it delivers a Closing Disclosure No later than four business days prior to consummation At the same time that the revisions are made
The answer is no later than four business days prior to consummation. When a creditor revises a Loan Estimate, it must deliver the revised disclosure to the applicant no later than four business days prior to consummation.
Frank Stein is a loan originator for a county housing finance agency whose function is to help meet the affordable housing needs of the residents of the state. Is Frank required to be licensed under the S.A.F.E. Act? He is not required to be licensed if he is registered Yes, all loan originators must be licensed He must be licensed only if he represents he can and will perform the services of a mortgage loan originator No, he is exempt from the requirement to be licensed
The answer is no, he is exempt from the requirement to be licensed. A state is not required to license an individual who is an employee of a federal, state, or local government agency or housing finance agency who acts as a loan originator in the course of his/her employment.
The GLB Act gives loan applicants the ability to opt out of the sharing of their nonpublic personal information with: Third-party settlement service providers Affiliates of the creditor Affiliates and nonaffiliates of the creditor Nonaffiliates of the creditor
The answer is nonaffiliates of the creditor. Loan applicants may opt out of the sharing of their nonpublic personal information with nonaffiliates.
Servicers are required to respond to a _____ from a borrower within five days. Loan application Qualified written request Request for servicing transfer Notice of rescission
The answer is qualified written request. Servicers are required to respond to a qualified written request from a borrower within five days.
A balloon mortgage that includes a conditional refinance provision allows the borrower to: Request that the loan be refinanced and converted to a 30-year fixed-rate loan Rescind the transaction if the loan becomes too expensive Request modification of the terms of the loan when it reaches maturity Refinance the loan if he or she is in default
The answer is request modification of the terms of the loan when it reaches maturity. A balloon mortgage that includes a conditional refinance provision allows the borrower to request modification of the terms of the loan when it reaches maturity.
Which of the following claims, if used in an advertisement, is not a violation of Regulation Z or the MAP Rule? Using images, such as American eagles and flags, to suggest that a loan is offered through a federal program Using language to suggest that the loan is from the borrower's current lender Stating that a borrower can take advantage of an opportunity to refinance an ARM with a fixed-rate loan Claiming that a borrower will not have to make mortgage loan payments anymore
The answer is stating that a borrower can take advantage of an opportunity to refinance an ARM with a fixed-rate loan. Regulation Z and the Map Rule prohibit misleading practices. These prohibitions do not include advertising the availability of refinances from adjustable- to fixed-rate products, unless the ad includes misleading or inaccurate information in the benefits of a refinance.
Government monitoring information regarding applicant demographics is found where? The HUD-1 The 1003 The broker agreement The 4506-T
The answer is the 1003. Government monitoring information (or HMDA info) is found on the application, or 1003.
A loss payee clause protects whom? The lender in the event the property is damaged by fire or other risks The borrower from losing all of his/her investment The lender in the event the borrower defaults on the loan The borrower by using mortgage insurance to offset interest rate adjustment
The answer is the lender in the event the property is damaged by fire or other risks. The loss payee clause in a hazard insurance policy protects the lender's investment in the event that the collateral is damaged by fire or other risks. This means that if there is a fire or other loss, the lender is paid first to cover its investment.
When a mortgage or deed of trust contains a power of sale clause: The lender can sell the home at its discretion A judge must enter an order of foreclosure before the home can be sold The lender may foreclose without first obtaining a court order The lender is made whole for losses by MIP
The answer is the lender may foreclose without first obtaining a court order. When a mortgage or deed of trust contains a power of sale clause, the lender is authorized to sell the property through foreclosure steps without having to obtain a court order first. This is known as a non-judicial foreclosure.
Annual PMI is determined by multiplying: The loan amount and the interest rate The mortgage insurance rate and the number of months in a year The interest rate and the number of months in a year The loan amount and the mortgage insurance rate
The answer is the loan amount and the mortgage insurance rate. Annual PMI is determined by multiplying the loan amount and the mortgage insurance rate.
Which of the following entities or individuals is responsible for determining financial responsibility requirements for state-licensed originators, lenders, or brokers? The NMLS The state regulator The governor The legislature
The answer is the state regulator. The NMLS consolidates and makes licensing records available to state regulators to use for licensing decisions.
