Download MLO SAFE NMLS Test Practice Questions with Complete Solutions: Latest Update and more Exams Nursing in PDF only on Docsity!
MLO SAFE NMLS safe test practice
questions with complete solution latest
update
Taking advantage of ill-informed consumers through excessively high fees, misrepresented loan terms, frequent refinancing that does not benefit the borrower and other prohibited acts is called __________________________.
- correct answer ✔Predatory Lending. RESPA-Real Estate Settlement Procedures Act - correct answer ✔The Federal Statute that deals with the settlement of residential mortgage loans. RESPA's section 9 Prohibits - correct answer ✔Home sellers from requiring home buyers to purchase title insurance from a particular company providing title services. The Dodd-Frank Act modifies ECOA to require a creditor to furnish a copy of an appraisal developed in connection with a first mortgage_____________________ and absolutely not later than ________ business days prior to closing. - correct answer ✔upon completion and 3 business days TIL (Truth In Lending Disclosure) & GFE (Good Faith Estimate) - correct answer ✔Per the Dodd Frank Act, a single disclosure form combines these 2 statements. Per the Dodd-Frank Acvt, to be a "qualified mortgage" total points and fees may not exceed ________% of the total loan amount. - correct answer ✔3% (three percent)
Per a provision of the Dodd-Frank Act mortgage lenders are to determine that a borrower has a reasonable ability to repay a loan. Does this provision apply to all loans or just owner occupied loans? - correct answer ✔All loans, whether owner occupied or not. A loan subject to HOEPA allows prepayment penalties for the first ______ years of the loan. - correct answer ✔2 (two) years Per the Dodd-Frank Act an abusive act would include which of the following:
- One that materially interferes with the consumers ability to understand the product or service.
- One that take unreasonable advantage of a consumers' lack of understanding.
- One that takes unreasonable advantage of the consumer's reasonable reliance on the MLO. - correct answer ✔All three would be considered abusive acts. Per the Dodd-Frank Act if an MLO receives compensation directly from a consumer, up to how much additional compensation may be received from a lender in the same transaction? - correct answer ✔$0.00, dual compensation is not allowed. Compensation must be borrower paid or lender paid. What kinds of reasons are necessary for a lender to take adverse action with regard to a borrower? - correct answer ✔Specific reasons. Adverse action means ______________________. - correct answer ✔A denial or revocation of credit. Also, a change in the terms of an existing credit arrangement or a refusal to grant credit in substantially the amount or terms requested.
When must the Servicing Disclosure Statement be provided to the borrower? - correct answer ✔Within 3 (three) Business Days of the Application. Any party involved in a federally covered loan that submits fraudulent information is subject to a fine of up to $___________ and up to __________years in prison. - correct answer ✔$1,000,000 (one million dollars), 30 years in prison Per RESPA, an escrow cushion is limited to a maximum of _________ of the annual payments and surpluses over $_____must be refunded within ________ days. - correct answer ✔1/6th (2 months), $50 (fifty dollars), 30 (thirty) days. A seller takes back a $100,000 PMM @ 5.5% interest. This straight note will balloon after 10 years of payments. How much is the balloon payment? - correct answer ✔$100,000 + interest for the last month. A straight note (term mortgage) is a non-amortizing interest only mortgage. The balloon would include the entire principal plus the last month's interest, as interest is paid in arrears. FNMA conforming debt ratios equal ______/________. - correct answer ✔28%, maximum housing expense/36% maximum total obligations HOEPA stands for ___________________________. - correct answer ✔Home Ownership and Equity Protection Act. RESPA applies to what type of properties? - correct answer ✔1-4 Unit Residential Properties
On a conventional mortgage loan, who makes the final decision regarding approval, denial or counter offer? - correct answer ✔The Underwriter The Civil Rights Act of 1866, prohibited public and private racial discrimination in any property transaction and was expanded in 1968 in which act? - correct answer ✔The Civil Rights Act of 1968, also known as Title VIII of the Civil Rights Act , Also known as Title VIII, Also Known as The Fair Housing Act Of the following, which is not required to be disclosed on the TIL statement? The (1) APR, (2) Note Rate, (3) Finance Charge, (4) Amount Financed or (5) Total of Payments - correct answer ✔The note rate is NOT required. Which act of 1968 provides guidelines and restrictions regarding the financing, selling and renting of real property? - correct answer ✔The Civil Rights Act of
- AKA, The Civil Rights Act, AKA Title VIII, AKA The Fair Housing Act Which act prohibits asking questions regarding child bearing intentions or birth control practices? - correct answer ✔ECOA/Regulation B, the Equal Credit Opportunity Act Based on objective criteria regarding the condition and value of the property or area, may a lender deny loans in neighborhoods where property values are declining? - correct answer ✔YES, loans can be denied in a geographic area, but not for discriminatory reasons relative to the population of the area. A teaser rate occurs in an ARM when the starting rate is less than the _____________. - correct answer ✔Fully indexed rate. Per ECOA, is it true that while a lender must consider reliable alimony, child support or separate maintenance payments as income, the applicant is not
How often does the external Do Not Call list get updated? - correct answer ✔Every 3 months or 90 days. What does VA stand for? - correct answer ✔The Department of Veteran's Affairs The three functions of a direct endorser include ______________ , __________________ and ________________. - correct answer ✔Originate, underwrite and close loans. What is the down payment requirement on a VA guaranteed loan? - correct answer ✔0, Zero. There is no down payment required. The APR is also know at the _____________ rate. - correct answer ✔Effective rate. The term of a loan effects the APR. The longer the term the ______________ the APR. - correct answer ✔Lower. Business days exclude ________________ and _________________. - correct answer ✔Sundays and Federal Holidays. Per the TILA the three business days Right of Rescission applies to the _____________________ of a ______________________ dwelling. - correct answer ✔The refinance of a primary residence. GLBA stand for the ________________. - correct answer ✔GRAMM- LEACH-BLILEY ACT
A "qualified" mortgage is one with points and fees not exceeding ______________% of the loan amount, do not have terms that exceed __________________ year and do not result in _________________ amortization. - correct answer ✔3%, 30 years and negative amortization On qualified mortgages, prepayment penalties are prohibited except for some _____________ loans. - correct answer ✔Fixed rate With regard to a credit score, the Dodd-Frank Act amended the FCRA to require creditors to provide the score to a consumer at $ ______________ cost. - correct answer ✔$0, no charge From a banks perspective, the term that describes depositors withdrawing their funds is _______________________. - correct answer ✔Disintermediation What is a 360/180 loan? - correct answer ✔This loan would require payments as if amortized over 30 years but will become due or balloon in 15 years. In a fully amortizing loan the principle portion of the payment ____________________ and the interest portion _________________. - correct answer ✔Principle portion increases and interest portion decreases. The name of the loan used to complete construction is a ______________________. - correct answer ✔Gap Loan (sometimes bridge loan).
The Red Flag Rules were created by the FTC pursuant to FACTA. They are primarily concerned with ______________________. - correct answer ✔Identity Theft The Federal Fair Housing Act of 1968 prohibits discrimination in residential credit but ____________________ is not protected. - correct answer ✔Age The HMDA enacted by Congress in 1975 is also known as Regulation ______________. - correct answer ✔C, The Home Mortgage Disclosure Act, Regulation C The HMDA deals with institutions with over $________________ in assets. - correct answer ✔$10,000,000; Ten Million Dollars A __________________ disclosure is required to be provided to the borrower when the referring provider has greater than 1% ownership interest in the business being referred. - correct answer ✔AfBA, Affiliated Business Arrangement Disclsoure An annual escrow analysis is required by which Federal Law? - correct answer ✔RESPA governs all settlement costs including the collection and disbursement of escrows. The loan product that utilizes an interest rate that remains the same for the life of the loan is called ___________________. - correct answer ✔A fixed rate mortgage What is the name of the Act that entitles a consumer to a free copy of their credit report if credit is denied based on information from their report? - correct answer ✔FCRA, The Fair Credit Reporting Act
What type of loan would commonly use an extended rate lock? - correct answer ✔A new construction loan. While banks remain the largest source of investment funds their increased participation in long term home mortgage lending is possible because of a change in federal banking regulations. What is that change? - correct answer ✔Reserve requirements have been reduced and first lien home mortgages at less than 80% LTV are in the lowest risk category. The banks increased participation in these loans still leave funds available for other loans and investments. The adjustable component use to compute the note rate on an ARM is called the _____________________. - correct answer ✔Index According to USDA Rural Development Programs a small town can include up to ________________ people. - correct answer ✔20,000 people What kind of buy down would reduce the note rate? - correct answer ✔A permanent buy down. The SAFE act is a key element of (the) _______________________. - correct answer ✔HERA, Housing and Economic Recovery Act of 2008 A Real Estate Company accepted and distributed flyers from a Mortgage Company to Prospective Clients. Which Law(s) if any have been violated and by who? - correct answer ✔No laws have been violated by any party. (per RESPA, there was no agreement to provide referrals or something of value)
disclosure of origination fees but does not set the maximum fee that can be charged. Per the Dodd-Frank Act does a "qualified mortgage" provide a "safe harbor" regarding compliance with the ability-to-repay requirement? - correct answer ✔Yes Relative to the Do-Not-Call registry a company may call a consumer for up to __________________________ months after the consumer makes an inquiry or submits an application to the company. - correct answer ✔3 Months There are three (3) groups of laws under the CFPB includig 1. financial disclosure, 2. privacy, protection and consumer identification and 3. __________________________. - correct answer ✔3. Prohibition of Predatory Lending The 3/7/3 Rule is a provision of the _______________ Act related to required disclosures and waiting periods. - correct answer ✔TILA, Truth in Lending Act The illegal practice of inducing owners to sell their homes by suggesting that the ethnic or racial composition of the neighborhood is changing is called _____________________________. - correct answer ✔Blockbusting The borrower's ability to pay a loan is referred to as _________________________. - correct answer ✔Capacity The Fair Housing Act of 1968 protects against discrimination based on race, color, religion, sex, national origin, disability and __________________________. - correct answer ✔Familial Status
Which law requires that all mortgage loan originators pass a national licensing exam? - correct answer ✔The SAFE Act, The Secure and Fair Enforcement for the mortgage licensing act of 2008. Two sources of funds that may be used for a down payment on an FHA insured loan include ___________ and _______________. - correct answer ✔(1) A gift from a family member and (2) down payment assistance grant The documents issues by the VA which state the value of the subject property based on an approved appraisal is called the _______________________. - correct answer ✔CRV, Certificate of Reasonable Value or NOV, Notice of Value Instead of notifying a borrower with the actual details of adverse action taken within 30 days of the loan application, the lender notified the borrower that he has the right to request the actual details. Is that acceptable per ECOA's guidelines? - correct answer ✔Yes, When adverse action is taken, actual details or the right to those details has to be disclosed within 30 days of application. The borrower can request specific reasons within 60 days. Broker A has a client and Broker B has access to a loan product that will satisfy the clients needs. A and B Brokers decide to share the brokerage fee. Accordingly, B pays A a referral fee. Has either Broker violated any law? If so, which law and who committed the violation? - correct answer ✔Both Brokers A and B have violated Section 8 of RESPA. Per the Real Estate Settlement Procedures Act one cannot give or receive a thing of value in exchange for a referral. Why is it not acceptable to post privacy policies in a prominent location in an office? - correct answer ✔Federally mandated disclosures must be made directly to the consumer so that the consumer has a copy of the notice.
SRP stands for ____________________________. - correct answer ✔Service Release Premium Supervisory agencies, through the (FFIEC) Federal Financial Institutions Examination Council compile _____________ data in the form of individual disclosure statements for each institution. - correct answer ✔Loan, the number of loans applied for and made Telling a buyer that they would not be comfortable in particular neighborhood for racial reasons is called _________________ and is a violation of _____________________. - correct answer ✔Steering, the Fair Housing Act Two discriminatory reasons for denying a loan include a borrower's permanent disability and a borrower living in a economically depressed area. Which of the tow violate ECOA? - correct answer ✔The Equal Credit Opportunity Act prohibits redlining. That is, the refusal to lend in specific area for discriminatory reasons. Other Federal Acts but ECOA deal with the discrimination based on disability. Balance in the Real Estate market occurs when there are slightly more ____________________ available than _______________. - correct answer ✔More properties that available buyers Which Act includes Red Flag rules? - correct answer ✔FACTA. The Fair and Accurate Credit Transaction of 2003. Any non-government loan is a ___________________ loan. - correct answer ✔Conventional
According to investor guidelines, state law, and federal law it is illegal to improperly influence the independent judgement of an appraiser. It is also considered a form of mortgage ________________. - correct answer ✔Fraud How should you respond to a borrower who suggests they will be submitting false documents in order to qualify for a loan? - correct answer ✔Refuse to take the loan application. (suspected fraud makes the refusal justifiable) For a fee, a Real Estate Broker offers a Mortgage Company the contact information of the people attending an Open House. Has anyone violated RESPA and if so, who? - correct answer ✔Only the Real Estate Broker by offering referrals in exchange for something of value is a RESPA violation. However, had the Mortgage Company accepted that would also be in violation of RESPA. The SAFE act is title V of _________________________. - correct answer ✔HERA, The Housing and Economic Recovery Act. Providing that payments are made on time, the HPA requires that PMI is automatically terminated at __________% loan to value. - correct answer ✔78% MIP is required on all _________________ loans. - correct answer ✔FHA insured The mortgage clause that facilitates a change in lien position, generally from superior to inferior is called a(n) ______________________ clause. - correct answer ✔Subordination
Chapter 7 bankruptcy will continue to be reported on the borrower's credit for a period of _____________ years. - correct answer ✔10 years. A loan with a 2/1 buydown will cost the borrower 2.625 points at closing. The loan amount is $157,000. Compute the cost of the points. - correct answer ✔$4,121.00. $157,000 X 2.625% = $4,121. A high cost loan under the Dodd-Frank Act exceeds the APOR by 6.5% for a 1st mortgage. A high priced loan in a first lien priority exceeds the APOR by ______________? - correct answer ✔1.5% What is the name of the Act that allows the consumer to "freeze" their credit to prevent information from showing on their credit report? - correct answer ✔FACTA, The Fair Credit Reporting Act of 2003 What does the GLBA restrict? - correct answer ✔The (GLBA) Gram-Leach- Bliley Act restricts the selling or sharing personal information with non- affiliated third parties. What must an institution do as dictated by the Red Flag Rule? - correct answer ✔The institution must create a written identity theft protection program. The VA debt ratio is _______________%. - correct answer ✔41%, VA only considers a total obligations ratio The income that a Rural Development Loan considers is the ___________________________. - correct answer ✔AMI, the area median income
Whether intentional or negligent, the misrepresentation or concealment of materials facts is unethical and considered to be _______________________________. - correct answer ✔Fraud Under Regulation Z, regarding a principal residence, how long is the rescission period for a (1) refinance , a (2) HELOC and a (3) purchase? - correct answer ✔1. 3 business days 2. 3 business days. 3. 0-None for a purchase After an annual escrow analysis a lender discovers that a borrower, delinquent with payments, has an excess of $450 in his escrow account. Must the excess be returned to the borrower? When? - correct answer ✔No, if the borrower is delinquent with payments, the lender is not required to return any excess escrow. FACTA modifies FCRA regarding ________________ __________________.
- correct answer ✔FACTA requires the disclosure of the credit score. Regarding the GLBA and the Do-Not-Call registry, violations are $_______________________ per incident. - correct answer ✔$16, The required down payment on an FHA loan is __________% of the lesser of the sales price of the property or appraised value. - correct answer ✔3.5% The Truth in Lending Act (TILA) is implemented by regulation ____________________. - correct answer ✔Regulation Z There is an extended right of rescission period of ___________ years if the borrower is not properly notified of his/her right to rescind. - correct answer ✔Three years
