NMLS SAFE EXAM QUESTIONS & ANSWERS 2024/2025

NMLS SAFE EXAM QUESTIONS & ANSWERS 2024/2025 Primary Mortgage Market - ANSWER-Where credit institutions originate loans C. The maximum the rate can increase over the life of the loan - ANSWER-When an ARM has rate caps of 5/2/6, the 6 refers to what? A. The maximum rate increase at the initial adjustment B. The start rate for the loan C. The maximum the rate can increase over the life of the loan D. The rate maximum the rate can decrease over the life of the loan B. The borrower qualified at the buydown rate - ANSWER-When utilizing a temporary buydown to lower the interest rate on a FHA loan, which of the following are correct A. The borrower qualified at the note rate B. The borrower qualified at the buydown rate C. The rate cannot be more than 2% below the note rate D. Seller or builder can pay the discount points to buydown the rate A. Age - ANSWER-All of the following are violations of the Fair Housing Act EXCEPT A. Age B. National Origin C. Disability D. Religion Encumbrance - ANSWER-Claim against property held by one who is not the legal owner Trigger Term - ANSWER-Advertised term that requires additional disclosures Advertising Disclosure - ANSWER-An advertisement must be presented "clearly and conspicuously" to keep from being deceptive, unfair, or otherwise violate a Commission rule Waving Right of Rescission - ANSWER-Extenuating circumstances such as "bona fide personal financial emergency Right of Rescission - ANSWER-Right that borrowers have to cancel a loan or line of credit with a lender within three days of closing Business Day - ANSWER-When creditors office is open to the public, a calendar working day except Sunday or a federal holiday Application - ANSWER-Financial information used for purposes of obtaining an extension of credit Disclosure - ANSWER-The act of making new information known FTC Federal Trade Commission - ANSWER-Mission is to promote consumer protection and eliminate and prevent anticompetitive business practices CFPB Consumer Financial Protection Bureau - ANSWER-Regulatory agency charged with overseeing financial products and services offered to consumers TILA Truth in Lending Act - ANSWER-Enacted 1968 promotes the informed use of consumer credit by requiring disclosures about terms and costs and standardizes the manner in which costs with borrowing are calculated and disclosed Per Diem Interest - ANSWER-Interest charged on a loan for one or more days Annual Interest Rate Formula - ANSWER-Principal (X) Interest Rate = Annual Interest Rate Interest Only Mortgage - ANSWER-Mortgage where the mortgagor is only required to pay off the interest that arises from the principal that is borrowed for a set period Permanent Buydown - ANSWER-Borrower chooses to pay additional "discount points" to buy down the interest rate for the life of the mortgage note 2/1 Buydown - ANSWER-Used on fixed rate loans over two years Set of two initial temporary-start interest rates that increase in stair-step fashion until a permanent interest rate is reached Discount Point - ANSWER-A form of pre-paid interest which effectively increases the yield on the loan above the amount of the stated interest rate CLTV Combined Loan to Value - ANSWER-An amount in addition to the Loan to Value, which simply represents the first position mortgage or loan as a percentage of the property's value LTV Loan to Value - ANSWER-Ratio of a loan to the value of an asset purchased PITI - ANSWER-Principal, Interest, Taxes, Insurance Refers to the components of a mortgage payment DIF - ANSWER-Housing to Debt Ratio that measures an individual's ability to manage monthly payment and repay debts Forbearance - ANSWER-Agreement between the lender and the borrower to delay foreclosure Loan Modification - ANSWER-A permanent restructuring of the mortgage where one or more of the terms of a borrower's loan are changed to provide a more affordable payment Foreclosure - ANSWER-Legal process to collect debt on mortgaged property Satisfaction of Mortgage Letter - ANSWER-Document generated and signed by a mortgage lender, acknowledging that the borrower has paid off the mortgage loan in full and the mortgage is not a lien on the property Subordination Agreement - ANSWER-When two mortgages are on a property, this specifies which mortgage takes precedence Payoff Statement - ANSWER-Provides homeowner proof the mortgage is paid off Constructive Note - ANSWER-Legal presumption that anything recorded in a public record can be known by anyone Actual Note - ANSWER-Direct knowledge that one has of the property Inquiry Note - ANSWER-Information that should compel a reasonable person to make further inquiries about some aspect of the property Title Record - ANSWER-Serves as a central repository of information about a parcel of land SRP Service Release Premiums - ANSWER-Payment received by lender after selling a loan Based on market value GNMA Government National Mortgage Association - ANSWER-Created in 1968, goal to expand affordable housing under HUD FNMA Federal National Mortgage Association - ANSWER-Created 1968 works with Fannie Mae to increase affordable lending FHA Federal Housing Administration - ANSWER-Insures banks real estate loans and charges borrowers a small premium HELOC Home Equity Line of Credit - ANSWER-A loan in which the lender agrees to lend a maximum amount within an agreed period and is also an open-ended mortgage transaction that is secured HECM Home Equity Conversion Mortgage - ANSWER-A FHA insured reverse mortgage that allows the conversion of equity in a home to cash Balloon Mortgage - ANSWER-A mortgage in which a large ....