SAFE Mortgage Loan Originator Test - National
Component with Uniform State Content with complete
solution
What does UST stand for?
Uniform State Test
Who does the CFPB protect?
The Consumer Financial Protection Bureau protects consumers in the financial
marketplace.
What does the CFPB do?
CFPB is now in charge of implementing and enforcing most of the provisions of federal
lending laws that relate to protecting consumers while they are shopping for, securing,
and paying off mortgages.
What is the purpose of RESPA? (3 things)
a.Protect consumers from excessive settlement costs and unearned fees
b.Limit the amount of funds that creditors can require consumers to deposit into escrow
accounts
c.Establish disclosures, policies, and procedures to facilitate timely communications
between loan servicers and consumers
Who is responsible for the enforcement of RESPA and for issuing implementing
regulations?
The CFPB
What are RESPA's regulations called?
Regulation X
Which 2 documents replaced RESPA's Good Faith Estimate and the Truth-in-
Lending Disclosure?
1.) Loan Estimate
2.) Closing Disclosure
What types of mortgages does RESPA cover?
"Federally-related mortgage loans," the requirements of RESPA apply to virtually every
home loan secured by a mortgage.
What type of loans does RESPA not pertain to?
a. Loans for business, commercial, or agricultural purposes
b. Temporary financing
c. Loans secured by vacant land
d. The sale of a loan into the secondary market
e. Loan conversions (same note - new terms)
Is compensating someone for a referral legal?
No!!!
,What is "borrower credit"?
Historically referred to as "yield spread premium" (YSP), the borrower credit is a fee
paid to the borrower by the lender when a loan is originated at a higher interest rate
than the lowest rate for which the borrower qualifies. The borrower credit is used to
subsidize closing costs, such as the origination or broker fee, because it is financed so
that out-of-pocket closing costs are "borrowed" from the lender.
What is a markup?
A unilateral increase in the cost of a settlement service and retention of the additional
fee by the party making the markup. The controversy over markups and their legality is
discussed in a subsequent course section. As a practice that may easily lead to
litigation, it is one that should not be used without obtaining legal advice.
What are the 5 disclosures required by RESPA?
1.) Loan Estimate
2.) Closing Disclosure
3.) Settlement Cost Information Booklet
4.) Mortgage Servicing Disclosure Statement
5.) Affiliated Business Arrangement Disclosure
Are creditors allowed to add their name to the cover of the Special Information
Booklet sent to borrowers?
Yes
Are they allowed to translate it into other languages?
Yes
Are they allowed to send it with other materials in a larger document?
No
For a loan with a co-borrower, must each applicant receive a Special Information
Booklet?
No, only one person has to receive.
After a loan application is submitted, how many business days later must a
borrower receive their Special Information Booklet?
3 days (for purchase only)
When is a Special Information Booklet not required to be sent? (3 answers)
1.) A refinance
2.) A closed-end loan secured by a subordinate lien
3.) A reverse mortgage loan
How long does RESPA require a lender to keep each Affiliated Business
Arrangement disclosure?
5 years
If a MLO recommends a particular settlement service provider over the phone, in
how many days must a borrower receive a disclosure in the mail?
3 business days
If a settlement service provider refers a loan applicant to an affiliated business for
settlement services, he or she must disclose the affiliated business
arrangement...?
At the time the referral is made.
On which document does the lender specify if he will service the loan or sell the
servicing to someone else?
, On the Loan Estimate
RESPA and Regulation X still impose a requirement on servicers to provide
notice to consumers of any assignment, sale, or transfer of servicing. How many
days before a switch, must a servicer disclose that a switch will occur?
15 days
How many months cushion can a servicer require a borrower to keep in his/her
escrow account?
one sixth of the estimated total annual disbursements = 2 months payments
If there is a surplus in excess of 2 months required disbursements in one's
escrow account by $45 dollars, must it be returned to the borrower?
No, it will be credited to next year. Only funds equal to or in excess of $50 must be
returned.
What are the 2 mandatory escrow account disclosures?
1.) the initial escrow statement and 2.) the annual escrow statement.
When is the initial escrow statement required to be given to the borrower, and
what must it include?
While this disclosure is typically given at settlement, the lender has 45 days from
settlement to deliver it. The initial escrow statement must show:
1.) The amount of the borrower's mortgage payment and the portion that is deposited
into the escrow account
2.) Itemized taxes, insurance, and other payments to be made from the escrow account
during the computation year
3.) The amount that the servicer has selected as a cushion
4.) A "trial running balance" (the accounting process used to reach target balances over
the course of a computation year)
When is the annual escrow statement required to be disclosed, and what must it
include?
This disclosure is due within 30 days of completion of the escrow account computation
year, and it must provide:
1.) An account history and a projection of the payments for the coming year
2.) A statement showing both last year's and the current year's monthly mortgage
payment, and the amount of the payment that is deposited into the escrow account
3.) The total amount paid both into and out of the escrow account for the past
computation year
4.) The escrow account balance at the end of the period and an explanation of how the
servicer is handling any surplus
5.) An explanation of how the borrower is to pay any deficiency
Component with Uniform State Content with complete
solution
What does UST stand for?
Uniform State Test
Who does the CFPB protect?
The Consumer Financial Protection Bureau protects consumers in the financial
marketplace.
What does the CFPB do?
CFPB is now in charge of implementing and enforcing most of the provisions of federal
lending laws that relate to protecting consumers while they are shopping for, securing,
and paying off mortgages.
What is the purpose of RESPA? (3 things)
a.Protect consumers from excessive settlement costs and unearned fees
b.Limit the amount of funds that creditors can require consumers to deposit into escrow
accounts
c.Establish disclosures, policies, and procedures to facilitate timely communications
between loan servicers and consumers
Who is responsible for the enforcement of RESPA and for issuing implementing
regulations?
The CFPB
What are RESPA's regulations called?
Regulation X
Which 2 documents replaced RESPA's Good Faith Estimate and the Truth-in-
Lending Disclosure?
1.) Loan Estimate
2.) Closing Disclosure
What types of mortgages does RESPA cover?
"Federally-related mortgage loans," the requirements of RESPA apply to virtually every
home loan secured by a mortgage.
What type of loans does RESPA not pertain to?
a. Loans for business, commercial, or agricultural purposes
b. Temporary financing
c. Loans secured by vacant land
d. The sale of a loan into the secondary market
e. Loan conversions (same note - new terms)
Is compensating someone for a referral legal?
No!!!
,What is "borrower credit"?
Historically referred to as "yield spread premium" (YSP), the borrower credit is a fee
paid to the borrower by the lender when a loan is originated at a higher interest rate
than the lowest rate for which the borrower qualifies. The borrower credit is used to
subsidize closing costs, such as the origination or broker fee, because it is financed so
that out-of-pocket closing costs are "borrowed" from the lender.
What is a markup?
A unilateral increase in the cost of a settlement service and retention of the additional
fee by the party making the markup. The controversy over markups and their legality is
discussed in a subsequent course section. As a practice that may easily lead to
litigation, it is one that should not be used without obtaining legal advice.
What are the 5 disclosures required by RESPA?
1.) Loan Estimate
2.) Closing Disclosure
3.) Settlement Cost Information Booklet
4.) Mortgage Servicing Disclosure Statement
5.) Affiliated Business Arrangement Disclosure
Are creditors allowed to add their name to the cover of the Special Information
Booklet sent to borrowers?
Yes
Are they allowed to translate it into other languages?
Yes
Are they allowed to send it with other materials in a larger document?
No
For a loan with a co-borrower, must each applicant receive a Special Information
Booklet?
No, only one person has to receive.
After a loan application is submitted, how many business days later must a
borrower receive their Special Information Booklet?
3 days (for purchase only)
When is a Special Information Booklet not required to be sent? (3 answers)
1.) A refinance
2.) A closed-end loan secured by a subordinate lien
3.) A reverse mortgage loan
How long does RESPA require a lender to keep each Affiliated Business
Arrangement disclosure?
5 years
If a MLO recommends a particular settlement service provider over the phone, in
how many days must a borrower receive a disclosure in the mail?
3 business days
If a settlement service provider refers a loan applicant to an affiliated business for
settlement services, he or she must disclose the affiliated business
arrangement...?
At the time the referral is made.
On which document does the lender specify if he will service the loan or sell the
servicing to someone else?
, On the Loan Estimate
RESPA and Regulation X still impose a requirement on servicers to provide
notice to consumers of any assignment, sale, or transfer of servicing. How many
days before a switch, must a servicer disclose that a switch will occur?
15 days
How many months cushion can a servicer require a borrower to keep in his/her
escrow account?
one sixth of the estimated total annual disbursements = 2 months payments
If there is a surplus in excess of 2 months required disbursements in one's
escrow account by $45 dollars, must it be returned to the borrower?
No, it will be credited to next year. Only funds equal to or in excess of $50 must be
returned.
What are the 2 mandatory escrow account disclosures?
1.) the initial escrow statement and 2.) the annual escrow statement.
When is the initial escrow statement required to be given to the borrower, and
what must it include?
While this disclosure is typically given at settlement, the lender has 45 days from
settlement to deliver it. The initial escrow statement must show:
1.) The amount of the borrower's mortgage payment and the portion that is deposited
into the escrow account
2.) Itemized taxes, insurance, and other payments to be made from the escrow account
during the computation year
3.) The amount that the servicer has selected as a cushion
4.) A "trial running balance" (the accounting process used to reach target balances over
the course of a computation year)
When is the annual escrow statement required to be disclosed, and what must it
include?
This disclosure is due within 30 days of completion of the escrow account computation
year, and it must provide:
1.) An account history and a projection of the payments for the coming year
2.) A statement showing both last year's and the current year's monthly mortgage
payment, and the amount of the payment that is deposited into the escrow account
3.) The total amount paid both into and out of the escrow account for the past
computation year
4.) The escrow account balance at the end of the period and an explanation of how the
servicer is handling any surplus
5.) An explanation of how the borrower is to pay any deficiency
