MLO Test Questions

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Under ECOA, entities making residential mortgage loans must maintain records or other data relating to those loans for how long? (A) 2 years (B) 25 months (C) 1 year (D) 5 years

(B) 25 months

How long is the Loan Estimate good from the initial time it is provided? (A) 3 days (B) 10 days (C) 7 days (D) 14 days

(B) 10 days RESPA

Telemarketers must maintain records of all activities and materials. How long must they be maintained? (A) 36 months (B) 24 months (C) 5 years (D) The lesser of 3 years or an audit date following a complaint

(B) 24 months

Which of the following is the maximum amount of the net adjustment value allowed on an appraisal? (A) 15% (B) 20% (C) 25% (D) 10%

(A) 15% 10% max Line item adjustment 15% max Net adjustment 25% max Gross adjustment

How long does a company have to place a customer on their internal Do Not Call list once the customer makes the request? (A) 30 days (B) 3 business days (C) 5 business days (D) 60 business days

(A) 30 days

Which of the following would not best describe a risk associated with a non-traditional mortgage loan? (A) A low fixed payment (B) An adjustable rate (C) Payment shock (D) Negative amortization

(A) A low fixed payment

Which of the following need NOT be included on the credit score disclosure? (A) Alternative consumer reporting agencies that may be used (B) The range of possible credit scores under the model used (C) The date the credit score was created (D) The consumer's current credit score

(A) Alternative consumer reporting agencies that may be used

What is the term used for monthly payments that pay principal and accrued interest of the loan, with a large payment at the end of the term to pay off the remaining balance? (A) Balloon Payment (B) Equity Stripping (C) Loan flipping (D) Subprime lending

(A) Balloon Payment

According to the Telemarketing Sales Rule and the FCC's TCPA rule, when may telemarketing calls be placed? (A) Between 8 am and 9 pm in the time zone being called (B) Between 8 am and 8 pm in the time zone being called (C) Between 9 am and 9 pm in the time zone being called (D) Between 9 am and 8 pm in the time zone being called

(A) Between 8 am and 9 pm in the time zone being called

Which of the following is the most common way that income is falsified? (A) Borrowers overstate income (B) Borrowers understate income (C) Borrowers don't use all the income they have to qualify (D) Borrowers use investment income to qualify

(A) Borrowers overstate income

A trigger term is used when advertising what type of credit plan? (A) Closed-end (B) Open-end (C) ARM (D) Auto loan

(A) Closed-end Reg Z

What Act works in conjunction with HMDA to ensure that all customers have equal access to credit and banking by institutions? (A) Community Reinvestment Act (B) Truth in Lending Act (C) Fair and Accurate Credit Transaction Act (D) Fair Credit Reporting Act

(A) Community Reinvestment Act The Community Reinvestment Act also works in conjunction with HMDA to ensure that all customers have equal access to credit and banking by institutions. Thus, one purpose of HMDA and Regulation C is to provide the public with information that will help show whether financial institutions are serving the housing credit needs of the neighborhoods and communities in which they are located.

Which of the following terms is associated with the transfer of title from one person to another? (A) Conveyance (B) Reconveyance (C) Subordination (D) Modification

(A) Conveyance

What law was amended to adopt the provisions for loan originator compensation? (A) The Truth in Lending Act (TILA) (B) The Real Estate Procedures Act (RESPA); specifically section 8 (C) The Equal Credit Opportunity Act (ECOA) (D) The Financial Institutions Reform, Recovery and Enforcement Act

(A) The Truth in Lending Act (TILA)

Is a broker considered responsible if he arranges co-signed mortgages or does it border on a predatory practice? (A) Cosigned mortgages are not considered predatory and the broker is right to facilitate the arrangement (B) Cosigned mortgages are more likely to become delinquent and not a recommended practiced for any broker (C) A broker should never be involved in arranging financing structures such as this. They are predatory (D) This is considered responsible but requires a contract addendum for the broker's actions in the capacity as a lender

(A) Cosigned mortgages are not considered predatory and the broker is right to facilitate the arrangement

Financial institutions are permitted to share information with other financial institutions for what purposes? (A) Counter-terrorism purposes and for anti-money laundering activities (B) Counter production and Money Market Activities (C) Safeguards and Disposal rules (D) None of the above

(A) Counter-terrorism purposes and for anti-money laundering activities

One purpose of the HMDA and Regulation C is to provide the public with information that will help show whether financial institutions are serving what component of the neighborhoods and communities in which they are located? (A) Ensuring that the housing credit needs of communities are met (B) Making sure that local banking needs of neighborhoods are met (C) Ensuring the real estate market remains liquid and affordable (D) Ensuring that housing counseling is made available to communities

(A) Ensuring that the housing credit needs of communities are met

Any institution the business of which is engaging in financial activities as described in section 4(k) of the Bank Holding Company Act is considered to be which of the following? (A) Financial Institution (B) Stock Brokerage (C) Brokerage Institution (D) Investment Corporation

(A) Financial Institution

Which of the following best describes the Home Mortgage Disclosure Act? (A) For HMDA to be effective it relies on the accurate and timely reporting from participating lenders (B) For HMDA to be effective it relies on strict quotas for MSAs (C) For HMDA to be effective, lenders must provide excess services to underserved communities (D) For HMDA to be effective, it must provide that certain disclosures go out to customers within three (3) days of application

(A) For HMDA to be effective it relies on the accurate and timely reporting from participating lenders

Which of the following best describes the importance of Ethics in the mortgage industry? (A) If a mortgage agent or company behaves unethically, it is not only the reputation of that agent or company that is harmed, but also the reputation of the mortgage industry as a whole. (B) If a mortgage agent or company behaves ethically, it is not only the reputation of that agent or company that is harmed, but also the reputation of the mortgage industry as a whole. (C) If a mortgage agent or company behaves unethically, it is not only the reputation of that agent or company that is helped, but also the reputation of the mortgage industry as a whole. (D) If a mortgage agent or company behaves unethically, it is only the reputation of that agent or company that is harmed.

(A) If a mortgage agent or company behaves unethically, it is not only the reputation of that agent or company that is harmed, but also the reputation of the mortgage industry as a whole.

If a mortgage loan originator commits fraud, who is affected? (A) If a mortgage loan originator commits fraud, it is not only the borrower that is harmed, but also the mortgage industry as a whole. (B) If a mortgage loan originator commits fraud, it is only the borrower that is harmed, but not the mortgage industry as a whole. (C) If a mortgage loan originator commits fraud, it is not the borrower that is harmed, but the mortgage industry as a whole. (D) If a mortgage loan originator commits fraud, it is neither the borrower that is harmed, nor the mortgage industry as a whole.

(A) If a mortgage loan originator commits fraud, it is not only the borrower that is harmed, but also the mortgage industry as a whole.

How did the Customer Identification Program (CIP) implemented by the Patriot Act, affect the mortgage industry? (A) Lenders must take required steps to insure the applicant is who he says he is and that he is not involved in terrorist activities (B) Lenders are now required to pull both a credit report and a Dunn and Bradstreet on every applicant (C) The program has imposed five (5) mandatory steps of customer identification throughout the mortgage process (D) The mortgage industry is required to file semiannual reports of the source of all funds provided in a mortgage transaction

(A) Lenders must take required steps to insure the applicant is who he says he is and that he is not involved in terrorist activities

Which of the following is not a risk associated with a Payment Option ARM loan? (A) Lower monthly payments (B) Negative amortization (C) Payment shock (D) Adjustable rate

(A) Lower monthly payments

How long must the Loan Estimate be valid for charges disclosed? (A) There is no time limit (B) 10 business days (C) 15 business days (D) 30 business days

(B) 10 business days

Which of the following is a included in the finance charge for TIL? (A) Mortgage broker fee (B) Wood destroying organism inspection (WDO) (C) Credit report fee (D) Seller paid discount points

(A) Mortgage broker fee

The Dodd-Frank Act minimum standards for mortgage loans have eliminated which of the following types of loans? (A) No Income Verification loans (NIV) (B) Adjustable rate loans (C) FHA and VA loans (D) Loans with prepayment penalties

(A) No Income Verification loans (NIV)

Which of the following are prepaid finance charges? (A) Origination and broker fees (B) Escrow waiver and settlement fees (C) Title insurance and real estate taxes (D) Real estate taxes and hazard insurance

(A) Origination and broker fees

Dodd-Frank introduced new appraisal independence regulations that require that on a higher- priced loan the appraiser does which of the following? (A) Physically performs a property visit of the interior of the property (B) Use comparable sales from no further away than two (2) miles from the subject (C) Not use comparable sales older than three (3) months from the loan application (D) Not include any bank foreclosure properties in his or her evaluation

(A) Physically performs a property visit of the interior of the property

HMDA was implemented within which of the following pieces of legislation? (A) Regulation C (B) Regulation B (C) Regulation X (D) Regulation Z

(A) Regulation C

Individuals wishing to evaluate how a geographic area is being serviced by the lending community should do which of the following? (A) Search the HMDA data available to the public for just that reason (B) Require the institutions to provide a report on its lending activity (C) Survey the geographic area to determine where homeowners have their mortgages (D) Search public records to determine how many mortgages have been assigned to particular institutions

(A) Search the HMDA data available to the public for just that reason Why?

The Truth-In-Lending Act compels creditors (or brokers acting as a creditor agent) to disclose which of the following to borrowers who are refinancing a primary residence? (A) That they are entitled to a three (3) day right of rescission period (B) That they are entitled to a home equity line of credit in lieu of a refinance (C) That if their payment increases more than point five percent (.5%) over their existing rate that it is considered a high cost loan (D) That they cannot refinance their loan again within a twelve (12) month period or it will be considered churning which is illegal

(A) That they are entitled to a three (3) day right of rescission period

A mortgage loan originators who uses his or her position with a mortgage broker to order a borrower's credit report is required to have which of the following before doing so? (A) The authorization by the borrower to order the credit report (B) To have completed a course covering both the mechanics and FCRA law governing the practice (C) The approval of the end lender who has the contract with the credit (D) Have provided a written disclosure to the borrower which, when signed by the borrower, defines what type of report to order

(A) The authorization by the borrower to order the credit report also known as the Legally permissible act

When mortgage loan originators receive the credit information from the credit reporting agency (CRA), they must provide what to the borrower? (A) The credit score and key factors of the report (B) A disclose the credit score and how the borrower can improve scores by ten percent (10%) (C) A disclosure on the costs and the required wait period before the consumer report can again be run (D) A listing of the institutions to whom the mortgage loan originator will be furnishing the information obtained

(A) The credit score and key factors of the report

The main purpose of the FTC Disposal Rule is to regulate which of the following? (A) The disposal of sensitive consumer report information and records (B) The reporting of credit transactions (C) The accuracy of credit reports (D) The registrations of loan officers

(A) The disposal of sensitive consumer report information and records

What is the primary purpose of ECOA? (A) To ensure all applicants have equal access to credit (B) To ensure credit information is reported equally (C) To require disclosure of closing costs (D) To require clear disclosure of credit terms

(A) To ensure all applicants have equal access to credit

Why was "business day" defined under MDIA as "when substantially all creditor functions are open for business"? (A) To maintain consistency with RESPA (B) To manage expectation with the USPS (C) To allow businesses to choose which definition best fits with their business model (D) All of the above were stated reasons for the two definitions

(A) To maintain consistency with RESPA

Which of the following is the primary purpose of the Red Flags Rule? (A) To prevent identity theft (B) Improve resolution of consumer disputes (C) Improve the accuracy of consumer records (D) Improve the processing time of credit reports

(A) To prevent identity theft

Which of the following is a condition that would make fraud more likely to occur in a mortgage company? (A) Weak oversight from management (B) A thriving market (C) Strong auditing (D) Trustworthy colleagues

(A) Weak oversight from management

Mortgage loan originators must provide the 'Your Home Loan Toolkit' booklet (either by hand delivery or mail) within how many business days after receiving the application from the potential borrower? (A) 2 days (B) 3 days (C) 4 days (D) 5 days

(B) 3 days

TILA requires two additional disclosures for Adjustable Rate Mortgages on a consumer's principal dwelling with a loan term greater than 12 months when the rate can change after the consummation of the loan. One disclosure is a booklet titled "Consumer Handbook on Adjustable Rate Mortgages." Choose the other required disclosure: (A) Right to convert to a fixed rate mortgage disclosure (B) A disclosure for every adjustable program in which the consumer expresses an interest (C) A disclosure describing every adjustable rate program offered to the consumer in the last 24 months (D) A disclosure comparing the applied for loan with 3 similar adjustable rate mortgages.

(B) A disclosure for every adjustable program in which the consumer expresses an interest

If you need to refinance a first mortgage and leave an existing second mortgage in place, you must have the second lien holder sign which document listed below? (A) An indemnification agreement (B) A subordination agreement (C) An absolution clause (D) A release of lien clause

(B) A subordination agreement (GMK)

If an institution determines that it is subject to the Red Flags Rule, it must create which of the following? (A) An audit program that insures the identity of each applicant (B) An Identity Theft Prevention Program (C) A revised HMDA program that provides for a personal ID check (D) A modified ATM system requiring proof of personal identity

(B) An Identity Theft Prevention Program

Which one of the following areas is not addressed by the agencies' guidance on nontraditional mortgage guidance? (A) Portfolio and risk management practices (B) Appraisal and fair market value practices (C) Loan terms and underwriting standards (D) Consumer protection

(B) Appraisal and fair market value practices

What were the biggest issues for a buyer with non-traditional mortgages? (A) Borrowers took shorter terms than realized (B) Borrowers did not understand payment terms (C) Borrowers had above market payment terms (D) Borrowers avoided payment shock

(B) Borrowers did not understand payment terms

Which of the following transactions are not covered under the TILA? (A) Personal and residential (B) Business and commercial (C) Business lending payable by a written agreement in more than four (4) installments (D) Residential and personal property

(B) Business and commercial

What entity provided guidelines and rules for ECOA? (A) HUD (B) CFPB (C) Federal Bank and Loan Board (D) Fannie Mae

(B) CFPB

FACTA was an update and amendment to which of the following? (A) RESPA (B) FCRA (C) Home Ownership Affordability and Stability (D) USA Patriot Act

(B) FCRA

Under GLB, mortgage lenders and brokers, check cashers, pay day lenders, and credit counselors are all examples of which of the following? (A) Depository Institutions (B) Financial Instituions (C) Regulatory Agencies (D) Banks

(B) Financial Instituions

What type of loan does not fit in the traditional Fannie Mae and Freddie Mac county loan limits? (A) Non Traditional (B) Jumbo (C) VA (D) USDA

(B) Jumbo

What is an overall system of beliefs or values which help to decide right and wrong, good and bad? (A) Ethics (B) Morality (C) Predatory lending (D) Rules to live by

(B) Morality

When is it acceptable to forge a borrower's signature on loan documents? (A) When it is in the best interest of time and ease for the borrower (B) Never. (C) When the borrower says it's okay (D) When it is office policy

(B) Never.

Which of the following represents a major consumer protection adopted in the Dodd-Frank Act? (A) No refinance note rate can be done in excess of two percent (2%) of the underlying loan (B) No loan will be made without the determination of the borrower's ability to repay (C) Lenders are required to offer three (3) different loan types to all consumers (D) Credit scoring is not an accurate measure of a consumer's performance and is disallowed in the credit evaluation

(B) No loan will be made without the determination of the borrower's ability to repay

What was a major concern of the industry regulators when they authored the Interagency Guidance for nontraditional mortgages? (A) Expanding lending (B) Risk layering (C) Mortgage loan originator licensing (D) Alternative documentation

(B) Risk layering NTMG

What is the Federal agency responsible for issuing and implementing regulations for TILA? (A) The USDA (B) The CFPB (C) The FTC (D) Fannie Mae

(B) The CFPB

Who does an inaccurate or fraudulent appraisal have the highest risk of causing loss to? (A) The borrower (B) The lender (C) The appraiser (D) The broker

(B) The lender

What is the primary objective of the Gramm-Leach Bliley Act? (A) To protect consumers by increasing the level at which consumer accounts are insured (B) The provisions of the Act restrict the disclosure of nonpublic customer information (C) To create a uniform encrypted mortgage loan application used for loans held for sale into the secondary market (D) The provisions of the law mandate that financial institutions collect only twenty three (23) base pieces of consumer information

(B) The provisions of the Act restrict the disclosure of nonpublic customer information

When is the creditor required to provide the initial Loan Estimate disclosure? (A) Twenty-four (24) hours of application (B) Three (3) business days of application (C) Three (3) business days of closing (D) Three (3) business days prior to closing

(B) Three (3) business days of application

What is the objective of the Dodd-Frank Act? (A) To stop foreclosures on a nationwide basis (B) To promote the financial stability of the US by improving accountability in the financial systems (C) To eliminate FHA and VA because they failed to provide sound mortgage programs (D) To place the oversight of financial institutions under the umbrella of the FBI and Attorney General of the US

(B) To promote the financial stability of the US by improving accountability in the financial systems

Charges such as title services, title insurance, and appraisal fee's may increase up to ____ percent from what was originally quoted to the borrower if the borrower chooses from a list of 3rd party provider vendors supplied by the lender? (A) .125% (B) 5% (C) 10% (D) 0%

(C) 10% (THE TRUTH IN LENDING ACT (REGULATION Z) 12 CFR 1026: WHAT CHARGES ARE SUBJECT TO A 10% CUMULATIVE TOLERANCE? (§ 1026.19(E)(3)(II)))

According to ECOA, how quickly must the appraisal be delivered to the borrower when they have waived the early disclosure and the loan is denied? (A) 3 days (B) 10 days (C) 30 days (D) 60 days

(C) 30 days If the applicant provides a waiver and the transaction is not consummated or the account is not opened, the creditor must provide these copies no later than 30 days after the creditor determines consummation will not occur or the account will not be opened

Which type of property or transaction is not covered or protected under RESPA? (A) Condominium (B) An owner-occupied duplex (C) 6 unit apartment complex (D) Home equity line of credit on residence

A borrower would be required to receive a CHARM booklet and ARM disclosure for all but which of the following scenarios? (A) Following application, a borrower chooses an adjustable rate loan product (B) A borrower floats in order to obtain the best interest rate and finally decides to lock in a 3/1 ARM (C) A borrower decides to lock in a on a 2-1 buydown program (D) During the processing period, the borrower switches from a 30 year fixed rate to a 5/1 ARM

Which of the following payments is the creditor or broker subject to in both individual and class action lawsuits for violations of the Truth-In-Lending Act? (A) Five hundred thousand dollars ($500,000) or one percent (1%) of the creditor's or broker's net worth (B) Fifty thousand dollars ($50,000) (C) Actual damages (D) A and C

What unethical practice is the Loan Estimate designed to reduce? (A) Redlining (B) Flipping (C) Bait and switch (D) Affinity fraud

If a borrower is denied a loan request due to the credit score not meeting lender's guidelines, what must be done next? (A) The borrower must be verbally informed (B) Mail a copy of credit with instructions to dispute scoring (C) Borrower must be sent a Notice of Adverse Action (D) Make a counter offer of loan terms

According to TILA, which of the following is required for an ARM? (A) SCIB (B) Only APR disclosed on TILA (C) CHARM Booklet (D) Fixed Rate Waiver

The practice of sneaking a burdensome provision into the loan contract without the borrower's knowledge is known as what? (A) Equity Stripping (B) Steering (C) Contract Knavery (D) Price Gouging

The Patriot Act broadened the scope of the 1970 Bank Secrecy Act to enhance which of the following objectives? (A) The monitoring of funds being wired throughout the country (B) Business lending and its subsequent financing of illegal activities (C) Enhanced focus on terrorist financing and money laundering (D) The national monitoring of tax free institutions

The Red Flags Rule was enacted as part of what other legislation? (A) TILA (B) HMDA (C) FACTA (D) RESPA

Which loan product allows for down payment of borrowers own funds, gift funds or housing authority grants? (A) Conventional (B) Construction (C) FHA (D) HELOC

Per Dodd-Frank Act, which of the following loan types may exempt a lender from income verification on a consumer's mortgage loan? (A) New FHA or VA loan (re-finance) (B) Conventional loan (C) FHA streamline refinance (D) Bank mortgages not held for sale in the secondary market

Federal National Mortgage Association is which of the following? (A) FEMA (B) FHLMC (C) Fannie Mae (D) Freddie Mac

Which of the following reasons best describes why Congress chose to adopt the provisions of HMDA? (A) Interest rates were approaching twelve percent (12%) and housing affordability was a problem (B) The provisions of the Civil Rights Act were not being properly implemented (C) Financial institutions had contributed to the decline of geographic areas by not providing financing (D) The legislation was adopted to complement the newly formed US Census Bureau

The FCRA limits the circumstances in which credit reporting agencies may furnish a consumer report. Which of the following best describes an instance in which it is acceptable for a credit reporting agency to furnish a report? (A) Upon the request of a lender (B) Upon the request of the local police department (C) In response to a court order or Federal Grand Jury Subpoena (D) Upon the request of a spouse of a consumer

How do public officials, attempting to manage the stability of neighborhoods and communities, rely on HMDA data? (A) It allows them to determine the changing income levels within the neighborhoods (B) It helps them follow and report changing real estate values within the communities (C) It helps them target public investments from the private sector into areas of need (D) It allows them to stay up to date on the unemployment rate of the community

Which of the following loss mitigation strategies is a permanent change in a borrowers loan terms in response to his long term inability to make his payments? (A) Forbearance (B) Refinance (C) Modification (D) Reconveyance

Since HMDA does not prohibit any specific activity of lenders, how does it provide accountability on the part of those required to comply? (A) It uses the threat of increase fees and fines for non compliance (B) Competition between financial institutions allows for the use of HMDA data and provides accountability (C) Public scrutiny is what HMDA relies upon for compliance and effectiveness (D) It relies on lenders finally realizing the income potential of servicing underserved areas

RESPA was put in place t accomplish all of the following except which of the following? (A) Limit amounts lenders required to be placed in escrows (B) Eliminate Referral fee's (C) Regulate Rates (D) Educate borrowers of settlement costs by requiring upfront disclosure of fee's

The Truth-In-Lending Act is interpreted by what regulation? (A) Reg B (B) REG X (C) Regulation Z (D) Don't Lie Act

What measures did the Dodd-Frank Act enact to eliminate predatory loan originator compensation practices? (A) The law prohibits compensation in any way being paid by the borrower (B) Prohibits the use of yield spread in any compensation calculation (C) Restricts compensation being paid to originator by any other source if the borrower in any way is paying fees that compensate the originator (D) Caps yield spread applied towards any compensation to one percent (1%)

(C) Restricts compensation being paid to originator by any other source if the borrower in any way is paying fees that compensate the originator

According to FACTA, in the event a financial institution furnishes negative information to a credit bureau for use on a consumer's report, which of the following must it also do? (A) Provide the credit bureau with any credit reports received from other bureaus within the last sixty (60) days (B) Provide the consumer with the contact information of three (3) dispute counselors (C) Send the consumer written notice of the negative information supplied within 30 days (D) Insure that the credit bureau reports the information to each of the credit repositories

All of the following are part of what the term "unmarried' listed on the 1003 would fall under except which of the following? (A) Single (B) Divorced (C) Separated (D) Widowed

According to the GLBA, this type of notice is given to consumers who are not customers, in lieu of full initial notice, when a financial institution does not intend to share or sell their nonpublic personal information about them. (A) Initial notice (B) Opt-Out notice (C) Short-form notice (D) Simplified notice

If a borrower is incapacitated for some reason, a representative may be appointed to take care of financial affairs. What is this representative called? (A) The borrower's attorney (B) The borrower's banker (C) The borrower's power of attorney (D) A notary

If a child misses payments on a loan co-signed by her parents, what is the assumed outcome? (A) The credit of the child will be damaged (B) The credit of the parents will be damaged (C) The credit of both the parents and the child will be damaged (D) The credit score of the parent will be reduced but only by 50% of that of the child because they are co-signers

Which of the following best describes the purpose of HMDA and Regulation C? (A) To ensure the proper distribution and availability of credit to underserved geographic rural areas and neighborhoods (B) To ensure the proper distribution and availability of credit to underserved geographic suburban areas and neighborhoods (C) To ensure the proper distribution and availability of credit to underserved geographic urban areas and neighborhoods (D) To ensure the proper distribution and availability of credit to underserved geographic all areas and neighborhoods

How long are records maintained on the Do Not Call Registry? (A) 5 years (B) 10 years (C) Until the number is cancelled, republished or it is removed by the client (D) 36 months

Which of the following best describes a borrower that provides a social security number that differs from what is provided on the loan application? (A) An illegal alien (B) Deceased (C) Using a false identity (D) An undercover police officer

Under which of the following circumstances must a creditor order a second appraisal under the new Dodd-Frank Act? (A) When the initial appraisal is twenty percent (20%) or greater off the value needed for the loan (B) When the initial appraisal was done by an appraiser unfamiliar with the area (C) When the seller acquired the property at a lesser value within the last six (6) months (D) When improvements greater than thirty percent (30%) of the value have been performed and included in the selling price

What is the maximum (tolerance) percentage that a settlement service selected by the originator can INCREASE according to the TRID rules? (A) 1/8th of a percent (B) 5% (C) 10% (D) 0%

(D) 0%

A creditor must notify an applicant of its intended action on an application within how many days after the application is received? (A) 60 days (B) 120 days (C) 90 days (D) 30 days

(D) 30 days

The USA Patriot Act requires that information collected be kept for at least how many years after the account closes? (A) 2 years (B) 3 years (C) 4 years (D) 5 years

(D) 5 years

What will the interest rate adjust to for the 1st time a borrowers ARM loan can adjust on 5/1 ARM with an initial rate of 3.25%, caps of 2/1/2, when at the time of the adjustment the index is 3% and the margin is 2.5%? (A) 5.5 (B) 6.25% (C) 4.25% (D) 5.25%

(D) 5.25% (how?)

What is the transfer period window dictated by federal law in which no late fees can be charged to a borrower who sends his or her payment to the original servicer, rather than the new one, before the payment's actual due date (including any grace period or late date allowed within the loan documents)? (A) 15 days (B) 30 days (C) 45 days (D) 60 days

(D) 60 days

For the initial disclosures, what is the definition of "business day"? (A) Any day other than Sundays and recognized legal holidays (B) Monday through Friday (C) Any day other than bank holidays (D) A day where the creditor is customarily open to the public for carrying on substantially all of the creditor's business functions

(D) A day where the creditor is customarily open to the public for carrying on substantially all of the creditor's business functions

Which of the following would not be considered a non-traditional mortgage? (A) A one (1) Year FHA ARM loan (B) A seven (7) year balloon mortgage (C) A payment option ARM loan (D) A thirty (30) year fixed rate loan

(D) A thirty (30) year fixed rate loan

When must the borrower notify the creditor of any intent to rescind on the loan? (A) By midnight of the third business day after consummation of the loan (B) By midnight of the third business day after the delivery of the right to rescind (C) By midnight of the third business day after the delivery of all disclosures (D) By midnight of the third business day of whichever comes LAST; the consummation of the loan, the delivery of the right to rescind or the delivery of all disclosures

(D) By midnight of the third business day of whichever comes LAST; the consummation of the loan, the delivery of the right to rescind or the delivery of all disclosures TILA

Which of the following is not typically an element of predatory lending? (A) Engaging in fraud or deception to conceal the true nature of the mortgage loan obligation, or ancillary products, from an unsuspecting or unsophisticated borrower (B) Making loans based predominantly on the foreclosure or liquidation value of a borrower's collateral rather than on the borrower's ability to repay the mortgage according to its terms (C) Inducing a borrower to repeatedly refinance a loan in order to charge high points and fees each time the loan is refinanced (D) Communicate to consumers, clear and balanced information about relative benefits and risks of the products offered

(D) Communicate to consumers, clear and balanced information about relative benefits and risks of the products offered

Which of the following general loan types does HMDA NOT require financial institutions to identify each calendar year? (A) Conventional (B) FHA-insured (C) VA-guaranteed (D) Construction loans

(D) Construction loans

Any non-public, personal information a customer offers to a financial institution (paper, electronic, or otherwise) that the institution or its affiliates handles or maintains. Is considered to be: (A) Confidential information (B) Safegaurded information (C) GLB information (D) Customer information

(D) Customer information

How often is a financial institution required to report data regarding its applications, origination, and purchases of home purchase loans, home improvement loans and refinancing? (A) Every 60 days (B) Every 6 months (C) Every 24 months (D) Every 12 months or annually

(D) Every 12 months or annually

Freddie Mac is also known as which of the following? (A) Federal National Mortgage Association (B) FNMA (C) FEMA (D) Federal Home Loan Mortgage Corporation

(D) Federal Home Loan Mortgage Corporation

Enforcement of the USA Patriot Act is done primarily by which of the following? (A) HUD (B) FDIC (C) FBI (D) FinCEN

(D) FinCEN

Which of the following is not a risk associated with nontraditional mortgages? (A) Risk layering (B) Negative amortization (C) Payment shock (D) Fixed rate loan

(D) Fixed rate loan

All of the following are protected classes of ECOA except? (A) Religion (B) Color (C) Gender (D) Handicap

(D) Handicap

A lender accepts a new computer from a title vendor in order to become more efficient in closing times. Which of the following is this considered? (A) Ethical and Legal (B) Legal but Unethical (C) Unethical but Legal (D) Illegal and Unethical

(D) Illegal and Unethical

Which of the following AUS is used by FHLMC? (A) DU (B) DO (C) LTV (D) LP

(D) LP Why?

Redlining is best defined by which of the following practices? (A) Deciding on bank branch locations based on deposit volume (B) Placing credit score limits on loans based on loan to value (C) The offering of seven (7) figure loans based on debt to income ratios (D) Making all or certain lending programs available based on geographic boundaries

(D) Making all or certain lending programs available based on geographic boundaries

Under TILA, which of the following is included in the finance charge calculation? (A) Seller paid points (B) Title insurance premium (C) County recording fee (D) Mortgage broker fee

(D) Mortgage broker fee

On which type of property would a rental analysis be done in conjunction with completing the appraisal of the property? (A) Single family owner occupied (B) Manufactured home (C) Second home (D) Non owner occupied investment property

(D) Non owner occupied investment property

The Real Estate Settlement Procedures Act (RESPA) is a Federal Statute that protects borrowers involved in using residential mortgage loans for the purchases of which of the following? (A) 1 to 4 family dwellings (B) Condominiums (C) Commercial real estate property (D) Only A and B

(D) Only A and B

Choose the liability that does not impact the debt ratio for qualification purposes. (A) 401k loan payment not reported on the credit report (B) Monthly child support payment (C) Annual payment of money borrowed against a life insurance policy (D) Signature loan from a credit union with 2 months remaining

(D) Signature loan from a credit union with 2 months remaining

Which of the following is not covered in FACTA? (A) Risk - based pricing notices (B) Disclosure of credit scores (C) Customer dispute resolution (D) Telemarketing/do not call

(D) Telemarketing/do not call

The FTC Disposal Rule requires that individuals who have contact with consumer information must dispose it properly. How does the Rule dictate disposal? (A) Consumer information must be disposed of in a "hired service" system which routinely removes the trash from the office (B) The only acceptable method under the Rule is the use of a shredding system (C) The Disposal rule requires that commercial disposal companies be employed (D) The Rule does not dictate the method but requires the individual to define the reasonable method

(D) The Rule does not dictate the method but requires the individual to define the reasonable method

Which of the following best describes "ethics"? (A) An overall system of beliefs or values which help us decide right and wrong, good and bad (B) Specific rules that tell us how to behave morally (C) The goal of good behavior (D) The actions we take and the decisions we make that reflect a system of beliefs

(D) The actions we take and the decisions we make that reflect a system of beliefs

Which of the following is NOT considered a precautionary measure that should be taken when dealing with a third party claiming to represent a non-present person in a real estate related transaction? (A) Never take instructions from a third person without a valid Power of Attorney document (B) Confirm the representative's instructions in writing (C) Examine the POA document carefully to find out exactly what ―power the representative has been given (D) The attorney of the borrower must be present with the POA

(D) The attorney of the borrower must be present with the POA

Dodd-Frank prohibits MLO compensation that varies bases on which of the following? (A) The loan originator's mortgage loan production volume (B) The mortgage loan amount (C) Salary with no additional compensation based on loan amount (D) The interest rate charged

(D) The interest rate charged

A copy of the Closing Disclosure can be used to verify the net proceeds from the sale of real estate. Which of the following could be a warning sign of a potential problem? (A) A reference is made to secondary financing (B) There is cash given to the borrower in the amount of three hundred dollars ($300) or less (C) The date of settlement is delayed (D) The sales price differs from the sales contract

(D) The sales price differs from the sales contract

Which of the following is NOT an example of a "red flag" for potential fraud? (A) Suspicious documents (B) Alerts, notifications or warnings from a consumer reporting agency (C) Suspicious personal identifying information (D) Usual use or regular activity related to accounts

(D) Usual use or regular activity related to accounts

Which of the following is NOT an example of fraud? (A) Shotgunning (B) Use of a straw buyer (C) Stated income loans (D) Silent seconds

?? d?

What is the AARMR

American Association of Residential Mortgage Regulators

What is the CSBS?

Conference of State Bank Supervisors

What is FACTA, Purpose?

Fair and Accurate Credit Transactions Act A working knowledge of FACTA enables individuals to know what their rights and obligations are in dealing with consumer credit reports.

If an unethical broker has a borrower sign a blank loan application, he is possibly trying to pull what scam?

Falsified Income, unverified income

FHLMC

Federal Home Loan Mortgage Corporation (Freddie Mac)

FNMA

Federal National Mortgage Association (Fannie Mae), an agency whose function is to stabilize the housing market by purchasing mortgages or providing mortgage money directly.

What is GLBA and Purpose purpose?

GRAMM-LEACH BLILEY ACT The privacy provisions of the GLBA restrict the disclosure of nonpublic customer information by financial institutions.

GNMA

Government National Mortgage Association (Ginnie Mae) Back all the Government loans - FHA, VA, USDA

GSE

Government Sponsored Enterprise

What is HMDA, The regulation, and purpose?

Home Mortgage Disclosure Act Reg C HMDA grew out of public concern over credit shortages in certain urban neighborhoods.

What is RESPA, Regulation, Purpose, and who has regulatory authority over it?

Real Estate Settlement Procedures Act Reg X a Federal Statute that protects borrowers involved in purchases, refinances, home improvement loans, home equity lines of credit, or any other federally related residential mortgage loans used in financing the purchase of 1-4 family dwellings, condominiums, or manufactured housing placed on a lot. The Consumer Financial Protection Bureau (CFPB) has regulatory authority for the enforcement of RESPA.

When can a mortgage broker inform an applicant that Federal law requires the broker to ask about the race, sex, marital status, and age by putting the information on a web site?

When the applicant consents and can access the information

What is it called when subprime products are pushed upon vulnerable or underserved groups for reasons other than credit quality? (A) Steering (B) Subprime lending (C) Reverse Redlining (D) Contract Knavery

Which of the following is NOT an example of fraud? (A) Shotgunning (B) Use of a straw buyer (C) Stated income loans (D) Silent seconds

FACTA requires that if a lender uses credit scores in making or arranging loans that it must provide certain information. Which of the following is not required? (A) The range of possible credit scores under the model used (B) If any factors adversely affected the consumer's score, up to 4 key factors that adversely affected the score (including inquiries) (C) Suggestions on how to improve credit scores (D) The date the credit score was created

When disclosing a prepayment penalty, what must we assume? (A) That the loan will prepay in three (3) years (B) That all payments have been made on time (C) That the loan will prepay immediately, when it is costliest (D) That the rate has remained constant

What is the only fee that can be collected in the first 3 business days of application when a Loan Estimate is delivered to the borrower? (A) Credit report fee (B) Appraisal fee, IF in compliance with HVCC (C) Application fee (D) No fee of any kind may be collected

(A) Credit report fee

Which of the following are defined as "business days" under TILA for rescission rights? (A) Every day except Sundays and Federal holidays (B) Every day - no exclusions (C) Every day excluding Sundays (D) There is no rescission period

(A) Every day except Sundays and Federal holidays

What two (2) distinct areas of fraud does the FBI investigate? (A) Fraud for profit and fraud for housing (B) Identity theft and straw buyers (C) Property flipping and churning (D) Identity theft and property flipping

(A) Fraud for profit and fraud for housing

Which of the following is not a sign of predatory lending? (A) Full disclosure of the loan terms (B) Credit insurance is tacked on w/o explanation (C) Equity will be lost in the home (D) The consumer is encouraged to sign over the deed to his house

(A) Full disclosure of the loan terms

If advertising a mortgage loan with a 6.99% APR under the TILA, what other information is required to be disclosed in the advertisement? (A) Monthly payments, down payment, and loan amount (B) Monthly payments need to be disclosed in the advertisement (C) Finance charges need to be disclosed in the advertisement (D) Payment period of the loan needs to be disclosed in the advertisement

(A) Monthly payments, down payment, and loan amount

Which best describes the difference between ethics and morality? (A) Morality is an overall system of beliefs or values which help us decide right and wrong, good and bad. The concept of morality is often set forth by society and can differ from one society to another. Ethics refers to the actions we take and the decisions we make that reflect that system of beliefs. (B) Morality is an overall system of beliefs or values which help us decide right and wrong, good and bad. The concept of morality is often set forth by society and can differ from one society to another. Ethics refers to the actions that others take and the decisions that they make that reflect that system of beliefs. (C) Ethics is an overall system of beliefs or values which help us decide right and wrong, good and bad. The concept of morality is often set forth by society and can differ from one society to another. Morality refers to the actions we take and the decisions we make that reflect that system of beliefs. (D) Ethics is an overall system of beliefs or values which help us decide right and wrong, good and bad. The concept of morality is often set forth by society and can differ from one society to another. Morality refers to the actions that others take and the decisions that they make that reflect that system of beliefs.

(A) Morality is an overall system of beliefs or values which help us decide right and wrong, good and bad. The concept of morality is often set forth by society and can differ from one society to another. Ethics refers to the actions we take and the decisions we make that reflect that system of beliefs.

How much must the APR change on a regular loan for the loan to be considered out of compliance? (A) More than 1/8th% on a regular loan (B) .0025% (C) .1% (D) $350 or 1/4th%, whichever is less

(A) More than 1/8th% on a regular loan

While trigger terms require disclosures do general advertising terms also require disclosure? (A) No if they do not refer to repayment period length or downpayment cost (B) Yes because they have to do with financing a home (C) Yes because they are designed to lure consumers towards a product based on financing features (D) Yes. Anytime general advertising terms are used for a product that is expensive enough to typically require financing it requires additional disclosures

(A) No if they do not refer to repayment period length or downpayment cost Why?

What activities does HMDA prohibit of lenders? (A) Redlining (B) Accepting deposits from lower socioeconomic areas (C) HMDA does not prohibit any specific activity of lenders (D) Establishing a quota system of mortgage loans to be made in any MSA

(A) Redlining As the name implies, HMDA is a disclosure law that relies upon public scrutiny for its effectiveness. It does not prohibit any specific activity of lenders, and it does not establish a quota system of mortgage loans to be made in any Metropolitan Statistical Area (MSA) or other geographic area as defined by the Office of Management and Budget.

The main purpose of the FTC Disposal Rule is to: (A) Regulate the disposal of sensitive consumer report information and records (B) Regulate the reporting of credit transactions (C) Regulate the accuracy of credit reports (D) Regulate the registrations of loan officers

(A) Regulate the disposal of sensitive consumer report information and records

Which of the following best represents the role of the Consumer Financial Protection Bureau? (A) Regulating consumer financial products and services (B) To eliminate subprime lending (C) To provide market tools to help consumers limit losses on stock investments (D) To insure that every consumer is properly educated about financial investments including stocks, bonds, mortgages, etc

(A) Regulating consumer financial products and services

What could happen to a MLO who assists a borrower or an appraiser in fraudulent activity? (A) The MLO could be indicted as a co-conspirator (B) The MLO is viewed as a victim (C) The MLO would be in no trouble as the appraiser is bound to behave ethically, not the MLO (D) If found guilty of fraud, the MLO would spend ten (10) years in prison and pay a hefty fine

(A) The MLO could be indicted as a co-conspirator

What happens if one of the multiple co-owners on a loan decides to exercise the right of rescission? (A) The action will apply to all of the parties borrowing (B) It will nullify the rescission capability for the other borrowers (C) It will remove liability for the loan from the other borrowers (D) Nothing, it is all or nothing. All co-owners must exercise the right of rescission simultaneously

(A) The action will apply to all of the parties borrowing

What does the APR represent in a mortgage transaction? (A) The actual cost in the form of an annual interest rate the borrower will pay for credit (B) The Annual Payment Rate (C) The actual cost the borrower will pay for the loan with all the interest added on to the loan balance (D) The Annual Payment Rate after the borrower files their taxes

(A) The actual cost in the form of an annual interest rate the borrower will pay for credit

Which of the following provides the best definition of the "average prime offer rate"? (A) The average rate on fixed and adjustable loans given to the lowest risk prime borrowers over a given timeframe (B) The rate charged when member banks of the Federal Reserve have to borrow money (C) The base or lowest rate at which a financial institution will make money available (D) The "par" rate on the mortgages offered to the public by an institution

(A) The average rate on fixed and adjustable loans given to the lowest risk prime borrowers over a given timeframe Study HMDA

Which of the following would be considered an acceptable reason to waive the three (3) business day waiting period after a material change and redisclousre? (A) The property secured by the loan will be offered up for sheriff's sale during the waiting period (B) The borrower has to attend a funeral out of town (C) The borrower has non-refundable tickets to a trip scheduled during the waiting period (D) If the loan funds after the first of the month, the borrower will owe more in interim interest

(A) The property secured by the loan will be offered up for sheriff's sale during the waiting period

Educational and state-required materials are not counted as advertisements, unless: (A) They combine educational or state required information with a sales pitch (B) They are run in a local paper with an add exceeding 1 inch x 2 inches in size (C) They reflect an outcome for attendance or purchase (D) They reflect historical results

(A) They combine educational or state required information with a sales pitch

Under the Dodd-Frank Act appraisal independence rules, is there a restriction for a lender attempting to break into a new market from paying an appraisal company 50% more than the customary charge to get good service? (A) Yes, the law dictates that fees be customary and reasonable for the geographic market (B) No, the appraisal companies can negotiate openly for the fees they collect (C) Yes, the new law establishes appraisal fee rates geographically across the country (D) No, the Dodd-Frank Act allows this for the first year in a new market to improve the housing market

(A) Yes, the law dictates that fees be customary and reasonable for the geographic market

If a borrower's DTI is 35% and his total debt is $800, with a monthly income of $7,500, what is his PITI? (A) $2,625 (B) $1,825 (C) $2,200 (D) $2,345

(B) $1,825 ($7,500*.35)-$800 = $1,825

A borrower must make a 10% down payment on a purchase transaction to qualify for the loan. The borrower made a $1,000 good faith deposit at the time of acceptance of the offer to purchase on a home sold for $172,000. The seller agreed to pay closing costs for up to 1% of the sales price. The buyer's closing costs totaled $2,100, and the broker is being paid one percent (1%) yield spread premium by the lender. How much more money does the buyer need to bring to closing? (A) $16,200 (B) $16,580 (C) $17,920 (D) $8,920

(B) $16,580 Down is 17,200 Seller contribution (-1720) Good Faith (-1000) Closing Costs +2100 17200 - 1720 - 1000 + 2100 = 16580

How many APRs are there for one (1) loan? (A) 2 APR's (B) 1 APR (C) 3 APR's (D) It depends on the risk of the loan

(B) 1 APR

Which of the following WILL NOT happen if fraud is found in a loan? (A) The interest rate will increase on the loan (B) The loan will be forgiven (C) The note is called due (D) The originator's company will have to repurchase the loan

(B) The loan will be forgiven

If a servicer receives a "qualified written request" from a borrower for information about an account, the servicer must research the borrower's inquiry and, when the servicer corrects, if necessary, or communicates the decision as to whether there is indeed an error, within how many business days after receiving the request? (A) 20 business days (B) 30-45 business days (C) 90 business days (D) 120 business days

(B) 30-45 business days

Which of the following best describes a 2nd mortgage loan? (A) A conventional mortgage that is conforming (B) A conventional mortgage that is non-conforming (C) A conforming loan that is non-conventional (D) A non-conforming loan that is non-conventional

(B) A conventional mortgage that is non-conforming WHY? Non-conforming because it is a Second Mortgage and that falls outside the Frannie Mae - Freddie Mac guidelines It is important to understand that a conforming loan can be a conventional loan but a conventional loan isn't always a conforming loan. Conventional loans can be fixed rate mortgages, adjustable rate mortgages, balloon mortgages, or hybrid loans. Almost any type of loan, if not issued, guaranteed or insured by a government entity, is considered a conventional loan.

The Truth in Lending Act requires two (2) additional disclosures for adjustable rate mortgages on a consumer's principal dwelling with a loan term greater than twelve (12) months when the rate can change after the consummation of the loan. One disclosure is a booklet titled "Consumer Handbook on Adjustable Rate Mortgages." Which of the following is the other required disclosure? (A) Right to convert to a fixed rate disclosure (B) A disclosure for every adjustable rate program that the consumer expresses an interest (C) A disclosure describing every adjustable rate program offered to the consumer in the 24 months (D) A HARM disclosure

(B) A disclosure for every adjustable rate program that the consumer expresses an interest Learn the disclosures

Choose the best definition for the Federal Housing Administration (FHA). (A) A division of the Federal Government that houses all disabled veterans (B) A federal agency within HUD that provides mortgage insurance for residential mortgages (C) An act that prohibits discrimination on the basis of race, sex, color, religion, national origin, familial status, or handicap (D) A federal agency which directs activity of the Federal Insurance Administration, and establishes terms of coverage and flood insurance rates

(B) A federal agency within HUD that provides mortgage insurance for residential mortgages

What do non-traditional mortgages usually provide to the borrower? (A) Lower risk to the borrower (B) A lower introductory payment (C) Lower interest rates (D) Lower, long-term payments

(B) A lower introductory payment

Which of the following does not include a refusal to extend additional credit under an existing credit arrangement where the applicant is either delinquent or in default or where additional credit would exceed a previously established credit limit? (A) Reverse action (B) Adverse action (C) Delinquency (D) Redlining

(B) Adverse action why

An individual who obtains or has obtained a financial product or service from a financial institution that is to be used primarily for personal, family, or household purposes, or that individual's legal representative is considered which of the following? (A) Seller (B) Consumer (C) Flipper (D) Contractor

(B) Consumer

What fees may be collected prior to the 3 business day waiting period? (A) Appraisal fee, as long as it goes to the appraiser at the door (B) Credit report fee (C) No fee may be collected before the three (3) day waiting period (D) Only reasonable, bona fide fees may be collected

(B) Credit report fee IF a credit report fee is charged, the fee must be "bona fide and reasonable in amount". The more specific definition of "business day" applies for purposes of determining the three (3) business-day period.

Any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who participates in the decision to extend, renew, or continue credit is which of the following? (A) Buyer (B) Creditor (C) Lender (D) Adjunct

(B) Creditor

Which of the following best describes a situation where a borrower commits fraud in order to purchase a home for his or her use? (A) Fraud for Profit (B) Fraud for Housing (C) Fraud for Assets (D) Fraud for Equity

(B) Fraud for Housing

Which of the following best describes the fundamental reasons for the creation of the Home Mortgage Disclosure Act? (A) HMDA grew out of public concern over certain limitations on interest rates (B) HMDA grew out of public concern over credit shortages in certain urban neighborhoods (C) HMDA grew out of public concern over credit overages for affluent neighborhoods (D) HMDA grew out of public concern over accurate reporting to credit bureaus

(B) HMDA grew out of public concern over credit shortages in certain urban neighborhoods WHY? what is the HMDA? Purpose of HMDA is to find lenders who are Redlining - Redlining is 'Failing to lend' to certain geographic areas or segments of the population. Reg - C

While a creditor/ broker does not have to advertise every single plan offered, it is unlawful to conceal what from consumers? (A) The popularity of the plan being offered with delinquency rates (B) More consumer friendly plans (C) The length of time the plan will be available (D) The geographic locations where the plan is available

(B) More consumer friendly plans

A vendor taking advantage of the consumer by charging unjustly high prices through fraud or lack of alternatives is called which of the following? (A) Unbundling (B) Price Gouging (C) Padding Recording Fees (D) Balloon Payment

(B) Price Gouging

Which of the following best describes the practice of purchasing a property then selling it very quickly for a higher price using an inflated appraisal? (A) Straw buyer scheme (B) Property flipping scheme (C) Churning scheme (D) Chunking scheme

(B) Property flipping scheme

What effect does the Dodd-Frank Act have on the Home Valuation Code of Conduct (HVCC)? (A) The HVCC will become more restrictive (B) The HVCC will no longer apply (C) Appraisers will be required to have a HVCC certification (D) The HVCC will only apply to FHA and VA loans

(B) The HVCC will no longer apply Dodd Frank repealed HVCC (Home Valuation Code of Conduct) and imposed Appraisal Independence, this resulted in Appraisal Management Companies (AMC)

If a lender turns a fraudulent file over to law enforcement authorities, a mortgage broker who submitted it could be arrested, tried and convicted. For committing loan fraud against the lender, what is the maximum sentence the broker could face? (A) Ten (10) years in prison or a fine up to $10,000.00 or both (B) Thirty (30) years in prison, a fine up to one million ($1,000,000.00) dollars or both (C) Twenty (20) years in prison, a fine up to fifty thousand dollars ($50,000.00) or both (D) Six (6) months in prison, a fine up to ten thousand dollars $10,000.00 or both

(B) Thirty (30) years in prison, a fine up to one million ($1,000,000.00) dollars or both

What is the task of the Bureau of Consumer Financial Protection within the Federal Reserve? (A) Its sole focus is the oversight of the federal deficit (B) To regulate consumer financial products and services in compliance with federal laws (C) To develop and implement plans for the liquidation of state chartered banks (D) To develop and administer licensing programs for any individual offering a financial product nationwide

(B) To regulate consumer financial products and services in compliance with federal laws

Which of the following must be reported to borrowers on the Loan Estimate as required under TILA (TRID)? (A) Lenders percentage of closed loans (LPCL) (B) Total Interest Percentage (TIP) (C) Payment address (D) Servicer's name

(B) Total Interest Percentage (TIP)

Which of the following is the maximum variance allowed for the APR disclosed on a regular loan? (A) .25% (B) .0125% (C) .125% (D) .025%

Evidence of compliance with the TRID disclosure rule must be retained for how many year(s) after the date of disclosure? (A) 1 year (B) 2 years (C) 3 years (D) 5 years

How many years must evidence of compliance with the TILA (TRID) be retained after the date of disclosure? (A) 1 year (B) 2 years (C) 3 years (D) 4 years

(C) 3 years As a general rule, a creditor must keep evidence of compliance with TILA regulations for, at least, three (3) years after the (Loan Estimate) disclosure date as well as record keeping of MLO compensation records as required under 12CFR§1026.36.

If the servicing lender assigns, sells, or transfers servicing rights to the loan to another servicer, who is required to send a notice of the transfer form? (A) The transferor (B) The transferee (C) Both the transferor and the transferee (D) The assigned required trustee for the bank who holds the escrow account

Which of the following would not be considered "publicly available information"? (A) Federal, State, or local government records (B) Widely distributed media (C) Consumer's account number (D) Disclosures to the general public required by Federal, State, or local law

What does the Truth in Lending Act require mortgage originators to disclose to the borrower? (A) A copy of the appraisal report if the borrower has paid for it (B) Estimated closing costs within ten percent (10%) of actual cost (C) Credit terms for the transaction (D) The average conforming interest rate for the previous month

No creditor may make a residential mortgage loan unless the creditor first does which of the following? (A) Establishes and maintains a net worth of a minimum of five hundred thousand dollars ($500,000) (B) Posts a surety bond with the federal government in an amount not less than one million dollars ($1,000,000) (C) Determines that the consumer has a reasonable ability to repay the loan according to its terms (D) Discloses to the borrower the contact information for the national consumer complaint center within the Bureau of Consumer Financial Protection

Selling a home without the borrower being given the opportunity to cure a defaulted loan is an example of which of the following? (A) Equity Stripping (B) Credit Insurance Packing (C) Foreclosure abuses (D) Chunking

Which is best described as the index rate prevailing at origination, plus the margin that will apply after the expiration of an introductory interest rate? (A) Note Rate (B) Annual Percentage Rate (C) Fully Indexed Rate (D) Teaser Rate

Which of the following loans is an example of Open- ended credit? (A) ARM (B) HECM (C) HELOC (D) GPM

Financial institutions should not report certain loan data. Which of the following is not on the excluded data list for a financial institutions reporting? (A) Loans on unimproved land (B) The purchase of mortgage loan servicing rights (C) Home improvement loans (D) Temporary financing (such as bridge or construction loans)

Which of the following does not affect a Veterans Funding fee? (A) Loan amount (B) Prior service (active/reserve) (C) Marital status (D) Prior use of entitlement

(C) Marital status A funding fee is an investment on behalf of the borrower to help defray the costs of insuring the loan. It is required by law. This fee is 2.30% with no down payment on initial use and a 3.60% for subsequent use of eligibility with no down payment. There are many factors that affect the amount of the fee, such as loan amount, type of service, and whether or not it's a subsequent use but marital status does not affect the funding fee. Funding fees are nonrefundable in a typical refinance or sale of a veterans' property.

Which of the following are NOT APR impacting fees? (A) Broker fee (B) Finder fee (C) Pest inspection fee (D) Settlement fee

ECOA protects borrowers based on: (A) Credit score (B) Geographic area (C) Physical characteristics (D) Disability

A lending arrangement where either a closed-end, second-lien, or a home equity line of credit (HELOC) is originated simultaneously with the first lien mortgage loan, typically in lieu of a higher down payment is commonly referred to as a: (A) Equity trade (B) Option loan (C) Piggyback (D) Cash out loan

What are the potential patterns, practices, or specific activities indicating the possibility of identity theft considered to be? (A) FACTA violations (B) FCRA violations (C) Red flags (D) ECOA

Which of the following would restrict the CRA from supplying prescreened consumer report information on a potential borrower? (A) Working for a licensed broker and not a licensed lender (B) Attempting to order the report to just determine if the borrower is credit worthy (C) The borrower had elected to opt out from being included on prescreened lists (D) The borrower had already allowed another mortgage loan originator to order the report

Which of the following is NOT typically included in mortgage product descriptions and advertisements to consumers? (A) Detailed information about costs, terms, features of the loan (B) Risks of the loan (C) The institution's history and reputation (D) Potential payment increased

What rescission period are borrowers who are refinancing a primary residence, entitled to and must be disclosed by lenders according to the TILA? (A) One (1) business day rescission period (B) Two (2) business day rescission period (C) Three (3) business day rescission period (D) Four (4) business day rescission period

What type of "terms" require disclosure of additional loan parameters? (A) Specific terms (B) Non-specific terms (C) Trigger terms (D) Stock terms

Which of the following items is not included in the 6 items considered to be an "application" requiring a lender to provide a Loan Estimate to a perspective borrower? (A) Property address (B) Social security number (C) Verification of deposit (D) All of the above are required for it to be considered an application under TRID

When can a creditor ask about an applicant's marital status? (A) When the information is used to determine whether credit is extended (B) Never, asking such a question is considered discrimination (C) When the information is not used to determine whether credit will be extended (D) This information does not matter and creditors should not ask

When can you discriminate against age? (A) When the person is collecting social security (B) When the person is 82 years old and is requesting a 30 year term (C) When the person is too young to sign the contract (D) No age discrimination ever

What is the maximum that a disclosed origination charge can INCREASE? (A) 10% (B) 5% (C) .125% (D) 0%

(D) 0%

How long does MIP stay on an FHA loan where a borrower puts 10% down at purchase? (A) 5 years (B) Lifetime (C) 7 years (D) 11 years

(D) 11 years Most FHA loans, regardless of LTV, have MIP for eleven (11) years. The only exceptions are loans with a greater than 90% LTV. In that case, the MIP is in effect until the end of the term (lifetime) or for the first 30 years, whichever occurs first.

(D) 1990's

At what equity position does PMI automatically terminate on a conventional loan? (A) 80% (B) 20% (C) 78% (D) 22%

(D) 22%

What form does an Appraiser use to certify construction is complete? (A) 1008 (B) 1004 (C) 4506T (D) 442

(D) 442

Assume you have a customer who has a fixed income and does not show any prospect of additional earnings in the next few years. Which of the following would be an appropriate product for this customer? (A) A 2/1 Buydown loan (B) A 5/1 ARM loan (C) A payment option loan (D) A 30 year fixed rate loan

(D) A 30 year fixed rate loan

The Bureau of Consumer Financial Protection will be under the direction of which of the following? (A) The Federal Reserve Board Chairman (B) The head of the US Treasury (C) The head of the Office of the Comptroller of the Currency (OCC) (D) A Director appointed by the President with advice and consent of the Senate

(D) A Director appointed by the President with advice and consent of the Senate

Which of the following best describes a "Straw Buyer"? (A) A buyer who is the victim of identity theft (B) A buyer who intends to purchase a property but does not intend to occupy it (C) A borrower who has not owned a primary residence in the past three years (D) A buyer who accepts a fee for his/her social security number and other personal information on a mortgage application

(D) A buyer who accepts a fee for his/her social security number and other personal information on a mortgage application *review these*

What is the definition of a "business day" as it relates to initial disclosures? (A) Any day other than Sundays and recognized Federal holidays (B) Monday through Friday (C) Any day other than bank holidays (D) A day where the creditor is customarily open to the public for carrying on substantially all the creditor's business functions

(D) A day where the creditor is customarily open to the public for carrying on substantially all the creditor's business functions

The Closing Disclosure used at settlement must conspicuously and clearly itemize all charges to the borrower and the seller in connection with the settlement, as well as indicating whether any title insurance premium included in the charges covers or insures which of the following? (A) The lender's interest in the property (B) The borrower's interest in the property (C) Both parties' interests in the property (D) All of the above

(D) All of the above

Regulation Z applies to entities that extend credit if which of the following conditions are met? (A) The credit is offered to consumers (B) The credit is subject to finance charge and payable in more than four installments (C) The credit is primarily for personal, family or household purposes (D) All of the above

(D) All of the above (The Truth in Lending Act (Regulation Z): Advertising Disclosures Requirements)

Which of the following is NOT a TILA or RESPA mandated disclosure? (A) Closing Disclosure (B) Loan Estimate (C) Mortgage Servicing Disclosure (D) An Adverse Action Statement

(D) An Adverse Action Statement Why

The Dodd-Frank appraisal independence provisions prohibit lenders from which of the following activities? (A) Providing a purchase agreement with an appraisal request order (B) Provide additional comparables chosen by the lender to the appraiser or appraisal company (C) Challenge comparables used on an appraisal (D) Compensate, coerce, bribe or intimidate an appraiser for appraisal firm to influence Value

(D) Compensate, coerce, bribe or intimidate an appraiser for appraisal firm to influence Value

What Act is the TILA a part of? (A) RESPA (B) Community Reinvestment Act (C) NVCC (D) Consumer Credit Protection Act

(D) Consumer Credit Protection Act The Truth in Lending Act (TILA) is a statute that requires creditors to disclose key terms and costs to consumers for credit transactions (e.g. a mortgage loan) through statements and fair advertising practices. TILA is part of the Federal Consumer Credit Protection Act.

Which of the following terms best describe a loan that would heighten the need for a borrower to rely on the sale of refinancing of a property once amortization begins? (A) Soft money loan (B) FHA loan (C) 125% piggybackloan (D) Hard money loan

(D) Hard money loan

Which one of the following is NOT a purpose of the Fair and Accurate Credit Transactions Act (FACTA)? (A) To prevent consumer identity theft (B) Improve resolution of consumer disputes (C) Improve the accuracy of consumer records (D) Improve the processing time of credit reports

(D) Improve the processing time of credit reports

When can you ask about religion under ECOA? (A) It is required for HMDA data reporting (B) When the borrower notes that he does not wish to furnish on 1003 (C) When there is a business purpose to ask (D) Never, under any circumstances

(D) Never, under any circumstances

What is it called when borrowers are charged above the legally set rate for example, for recording the mortgage transaction? (A) Price Gouging (B) Inflated Appraisal Cost (C) Unbundling (D) Padded Fees

(D) Padded Fees *FOR RECORDING* - 3rd party 'fee' - AKA padding fees *Excessive fees section

Which of the following is NOT required to be disclosed to the applicant when applying for an adjustable rate mortgage? (A) Frequency of changes in the APR (B) Possibility of changes in the payment amount over time (C) Index used to determine the ARM (D) Statement that the interest rate will be offered for the duration of the loan

(D) Statement that the interest rate will be offered for the duration of the loan

The Consumer Financial Protection Bureau was responsible for combining the disclosure information from which of the following two (2) laws? (A) TILA and ECOA (B) FCRA and ECOA (C) ECOA and RESPA (D) TILA and RESPA

(D) TILA and RESPA

Which of the following safeguards were NOT covered in FACTA? (A) Risk-Based Pricing Notice provisions (B) Disclosure of Credit Scores provisions (C) Customer Dispute Resolution provisions (D) Telemarketing/Do Not Call provision

(D) Telemarketing/Do Not Call provision THE FAIR AND ACCURATE CREDIT TRANSACTIONS ACT (FACTA) The TCPA (telephone consumer protection act) covers this one.

Which of the following legislation complements the efforts of HMDA? (A) RESPA (B) The Truth in Lending Act (TILA) (C) The Fair Credit Reporting Act (FCRA) (D) The Community Reinvestment Act (CRA)

(D) The Community Reinvestment Act (CRA) The Community Reinvestment Act also works in conjunction with HMDA to ensure that all customers have equal access to credit and banking by institutions. Thus, one purpose of HMDA and Regulation C is to provide the public with information that will help show whether financial institutions are serving the housing credit needs of the neighborhoods and communities in which they are located.

What is the responsibility of a mortgage loan originator who discloses to consumers inaccurate information provided to him or her by the credit bureau? (A) The mortgage loan originator is responsible to advise the consumer how to remedy the inaccurate information (B) The liability for this action is a fine up to one thousand dollars ($1,000) per occurrence (C) There is no liability but the mortgage loan originator must continue to provide free reports until such time that the inaccurate information is corrected (D) The mortgage loan originator cannot be held responsible for inaccurate information furnished by the credit bureau

(D) The mortgage loan originator cannot be held responsible for inaccurate information furnished by the credit bureau

The process that determines whether a loan applicant meets the necessary guidelines for qualification on a particular loan program is called what? (A) Credit verification (B) Risk evaluation (C) Quality control (D) Underwriting

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