SAFE Exam
Under RESPA what is the dollar fine that can be imposed for each instance of a referral fee kickback or unearned fee?
$10,000
A mortgage company telemarketer has been accused of inappropriately calling two consumers on the National Do Not Call Registry. What is the maximum fine the company could face for this violation?
$43,792
If the APR on a fixed rate loan increases from the initially disclosed rate by more than what, an additional waiting period is triggered before the loan can close?
.125%
After the crisis of the Great Recession according to VA underwriting when can a borrower repurchase again after a Chapter 13 bankruptcy?
1 Year
After the crisis of the Great Recession according to FHA Standard underwriting when can a borrower repurchase again after a Chapter 13 bankruptcy?
1 year after Foreclosure
Upfront Mortgage Insurance Premiums are calculated at what percent of the base loan amount:
1.75%
The estimate of closing costs on the mortgage loan disclosed on the Loan Estimate are good for?
10 Days
A borrower takes out an FHA mortgage for 15 years. Their loan amount is $560,000. Their LTV will be 90%. How long will they have MIP?
11 years
After the crisis of the Great Recession according to VA underwriting when can a borrower repurchase again after a Chapter 7 bankruptcy?
2 years after bankruptcy
Under TILA, a lender is considered to have regularly offered credit if they extend more than how many times in the preceding calendar year:
25 times
A revised Loan Estimate must be provided by when?
3 business days after revision
How many business days after a mortgage loan application does a mortgage loan originator have to mail the Loan Estimate to the borrower?
3 days
HOEPA loans require homeownership counseling; a list of housing counselors must be sent to the borrower. What is the timeline for sending that disclosure to the borrower?
3 days after receiving application
What are the terms of the "cooling off" period if a loan falls under HOEPA?
3 days prior to closing
After the crisis of the Great Recession according to FHA underwriting when can a borrower repurchase again after a short sale?
3 years
After the crisis of the Great Recession according to FHA underwriting when can a borrower repurchase again after a foreclosure?
3 years after foreclosure
If a borrower puts less than 10% down on a Conventional Loan, what is the maximum amount of seller concessions allowed?
3%
ECOA requires the appraisal be given to borrowers:
30 Days before Settlement
A lender has how many business days to notify the borrower of an underwriting decision?
30 days
The FACTA allows a consumer to dispute inaccurate credit information. How many days are allowed for an incorrect item to be investigated?
30 days
The back-end DTI on a manually underwritten conventional loan cannot exceed
36%
After the crisis of the Great Recession according to Conventional underwriting when can a borrower repurchase again after a Chapter 7 bankruptcy?
4 Years
Final LE must be received no later than
4 business days before closing
After the crisis of the Great Recession according to Conventional underwriting when can a borrower repurchase again after a short sale?
4 years
Serviced is required to disclose a initial escrow account statement within...
45 days of Settlement
Under ECOA, How long can you take to disclose the Adverse Action Notice?
60 days of receiving lenders notification
After the crisis of the Great Recession according to Conventional underwriting when can a borrower repurchase again after a foreclosure?
7 years after forclosure
When a trust deed (or deed of trust) is recorded, which of the following is true?
A Lien is created
If original loan amounts, ending maturity dates and interest rates are the same for two loans. The first loan is an interest-only loan and the other loan is fully amortized. Knowing that, what is true?
A fully amortizing loan will always have a higher payment than an interest-only loan because on the fully amortizing loan the borrower is paying towards principal and interest while on the interest-only loan the borrower is only paying the interest.
What rules fall under the TILA umbrella?
Ability to Repay, Quality mortgage, HOEPA, HPML, LO Compensation
What is the name of the interest due the Note holder upon the receipt of the payment.
Accrued interest
HMDA requires lenders to request what information from applicants in a face to face interview for home mortgage loans?
Applicants Race
What is not a finance charge in a residential mortgage loan?
Appraisal Fee
What is a form of compensation a mortgage broker earns when originating a residential mortgage loan he funds through a mortgage lender?
Broker Premium
When borrowers keep their cash tips at home, the mortgage industry calls this
Cash on hand
Surrender of an MLO license does not affect the MLO's:
Civil or criminal liability for acts committed prior to the surrender.
A borrower wants to purchase a second home and tells you that they intend to rent the property out when they are not living in it. You have reviewed their financial information and realize that the borrower would qualify for financing if the property is classified as a second residence. However, if the property is classified as an investment property, the borrower is unlikely to qualify. What should you do?
Classify property as an investment property
The act of transferring ownership interest in a property from one party to another is termed...
Conveyance
Land is given as a separate value in which of the following appraisal methods?
Cost Approach
The NMLS will not charge fees for
Criminal Background
What borrower asset may be used to secure cross-collateralized funds for closing?
Cross collateralization is the act of using an asset that's collateral for an initial loan as collateral for a second loan. In a situation with a mortgage that would be using the same house to collateralize two loans - so a first mortgage and second mortgage.
Which federal law created the CFPB?
Dodd-Frank
MLO Joan is working with Borrower Yolanda. Yolanda is very obviously pregnant. Joan asks Yolanda how many kids she's planning on having, this would be a violation of:
ECOA (Equal Credit Opportunity act)
What federal law requires the Notice of Adverse Action?
ECOA Reg B
Under which federal legislation does the consumer have the right to receive a copy of the appraisal report on a dwelling that is to be used as collateral for a loan?
ECOA, 3 business days before consumation
Main purpose of RESPA
Educate borrowers on the cost of their loan & eliminate kickbacks that inflate costs of loans
Your SAFE Act education courses are reported to your NMLS record by...
Education provider
How often must a lender perform an escrow account analysis to ensure that excess funds are not being kept?
Every Year on the Loan
If a borrower currently has an FHA loan and they are looking to refinance their home to lower their interest rate, what type of loan might you suggest to them?
FHA Streamline. FHA Streamline is a standard FHA refinance product.
Under ECOA, an MLO cannot ask about the borrower's race, color, national origin, or sex, except to
Fill out HMDA requirements
What can you tell a borrower about a 7/1 ARM?
Fixed Rate for 7 years then adjusts after 7 year term
The borrower uses his home's equity for a mortgage loan for business purposes. The borrower will use $80,000 to buy restaurant equipment. This loan will be:
Generally, RESPA does not cover commercial or business loans but because the collateral in this situation is a home then it would be covered by RESPA.
Why was Regulation Z enacted?
Give borrowers disclosures regarding the APR on a transaction and to protect consumers
If you have a borrower who is currently doing their residency at a local hospital and is going to be going into private practice within the next 3 years, what type of loan might you suggest to that borrower?
Graduated Payment Loan
Lenders submit Loan/Application Registers in order to comply with what law?
HMDA (Home Mortgage Disclosure Act)
On Form 1003 Section X: Information for Government Monitoring Purposes is used in order to comply with which federal law?
HMDA Reg C
Section 32 of TILA is also known as?
HOEPA (Home Owners Equity Protection Act)
One purpose of the Fair and Accurate Credit Transaction Act is to prevent:
Identity Theft
What federal rule regulates mortgage assistance providers?
MAR's Rule. Reg O
An affiliated business arrangement must be given if there is what percent of an ownership interest?
More than 1% ownershi[
Is a referral fee ever allowed?
NEVER
When a borrower has no housing payment history in the last 24 months, the MLO should...
Obtain a letter of explanation from borrower
A fee charged to the borrower by lenders to cover such costs as preparation of documents and other services provided by the primary lender and computed as a percentage of the loan is known as:
Origination Fee
A lender may keep the
Origination Fee
When mortgage loan originators review a borrower's bank statements, they are looking for:
Ownership and large deposits
A Mortgage Servicing Disclosure Statement is required by what law?
RESPA
What law made HUD-1 Obsolete?
RESPA
What law regulates escrow Accounts?
RESPA
What Law, Reg, and section requires serviced to let borrower know their loan is being transferred to another servicer?
RESPA, Reg X section 6
A borrower is looking to obtain conventional financing for a refinance, the appraisal comes in lower than expected and the borrower no longer qualifies for conventional financing. They want to go ahead and proceed with FHA financing; the lender would have to what
Re-Disclose the loan estimate within 3 days of the changed circumstance
What is not a purpose of a cashout refinance transaction?
Refinance at a lower loan amount, by providing a significant amount of cash to make up the difference
Bait and switch act is prohibited under what law?
SAFE act
A consumer could claim that in originating the mortgage a creditor did not make a reasonable and good faith determination of repayment ability, and that you therefore violated the ATR Rule. If a court finds that the loan met the QM requirements and was not higher-priced, the consumer would lose the claim. Following QM requirements allow the lender what:
Safe Harbor
In qualifying the income of a sole proprietor borrower, the originator should consider which of the following to be most important?
Schedule C net income plus non-cash expenses and depreciation
HOEPA is also known as?
Section 32
HOEPA is an addendum of:
Section 32 of TILA Reg Z
Which part of RESPA prohibits kickbacks and any other form of valuable compensation for referring a potential borrower to a certain lender or service provider?
Section 8
Dodd-Frank defines an unfair act or practice as
Something that causes or is likely to cause substantial injury to consumers
An alternative documentation loan is a type of:
Subprime
What is a 1008 Form?
Summarizes key data from the loan application
MLOs are required to be covered by a
Surity Bond
Section 32 which covers high cost loans is part of which federal law?
TILA (Truth in Lending Act)
If two people are married, how do they likely hold title?
Tenancy by the Entirety
The Fair and Accurate Credit Transaction Act requires the borrower be given a disclosure. What does the disclosure inform the consumer of?
The borrower's credit scores and explains the use and importance of credit scores
Josh, an MLO, is working with Javier. Josh knows that HOEPA requires a specific disclosure on all federally related transactions, what is not true about that disclosure?
The disclosure must be sent 3 days prior to consummation
Purpose of TILA
To Protect consumers from predatory Lending
When is a Notice of Adverse action required when the borrower applies for a loan?
Under ECOA, 30 days
Who is allowed to make a credit decision on a borrower's credit request?
Underwriter
What Loans are often assumable?
VA and FHA
If an underwriter needs to verify a borrower's down payment, what might they request the processor order?
VOD, Verification of Deposit
How much money is required for fire insurance on a refinance at settlement?
What ever is needed to renew the applicationc
When is it legal for the loan originator to provide the consumer with a copy of his/her credit report?
When the MLO's contract with the credit reporting agency does not prohibit it
When are the funds disbursed for an owner-occupied residential refinance?
When the right of rescission expires
A yield spread premium occurs when:
YSPs are paid to the broker for giving a borrower a higher interest rate on a loan in exchange for lower up-front costs generally paid in origination fees, broker fees or discount points.
Who may engage in loan origination activities without a license?
if they work for a lender or another licensee
If a Mortgage Loan Originator (MLO) cannot close a loan, he/she can refer the loan to another MLO who can close the loan. Can the referring MLO receive a referral fee?
no, Against Respa Section 8
To pull a borrower's credit, federal law requires the MLO...
obtain written or online permission from all borrowers
The purpose of a Market Conditions Addendum is to:
provide the lender/client with a clear and accurate understanding of the market trends and conditions prevalent in the subject neighborhood
Regulation Z applies to all:
residential real estate mortgage transactions
One of the acknowledgments in the signature section of the 1003 loan application, signifies that:
the borrower represents that all information contained in the form is the truth.
