Loan Origination Exam 1 UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Higher-Priced Mortgage Loans (HPML) are defined as closed-end residential mortgage loans
secured by the consumer's principal dwelling with an APR that exceed the average prime offer
rate (APOR) for comparable transactions by: - CORRECT ANSWER - 2.5 percentage
points for a first lien jumbo residential mortgage loan.
The Truth-In Lending Act requires residential mortgage loan originators to make certain
"material disclosures" on loans subject to the Real Estate Settlement Procedures Act within
three: - CORRECT ANSWER - Business days after their receipt of a written application.
3. Lenders must report under the HMDA the applicant's ethnicity, race, and sex. When
conducting a face-to-face interview in which the applicant refuses to provide the required
HMDA information; the loan officer must provide the information based on: - CORRECT
ANSWER - Appearance and surname.
4. An Affiliated Business Arrangement disclosure is required to be given to the consumer? -
CORRECT ANSWER - At or prior to the time of referral.
5. Under the TILA the consumer has a right of rescission in a credit transaction involving: -
CORRECT ANSWER - Refinance of a principle dwelling.
6. The Fair Credit Reporting Act allows consumers all of the following except: - CORRECT
ANSWER - Demand all references to bankruptcies be removed from their report after 5
years from the date of discharge.
7. Under ECOA, when is a disclosure concerning the applicant's right to obtain a copy of the
appraisal report due the consumer? - CORRECT ANSWER - Within three business day
after receipt of the written application.
,8. Under the Red Flags Rules, mortgage loan originators must develop a written program that
identifies and detects the warning signs of: - CORRECT ANSWER - Identity theft.
9. This booklet must be given to every applicant considering an Adjustable Rate Mortgage: -
CORRECT ANSWER - Consumer Handbook on Adjustable Rate Mortgages.
10. All of the following inquiries are considered discriminatory under ECOA except: -
CORRECT ANSWER - Immigration status
11. The Truth in Lending Act's advertising provisions require that if an advertisement promoting
"closed-end credit" contains a "triggering term," three specific disclosures must also be included
in the advertisement. Which of the following is not considered a "triggering term" under
Regulation Z? - CORRECT ANSWER - The annual percentage rate.
12. ECOA requires that a copy of the appraisal must be given to the applicant: - CORRECT
ANSWER - Promptly upon its completion or three business days before consummation.
13. The Homeowners Protection Act is a consumer protection law that requires servicers to: -
CORRECT ANSWER - Automatically discontinue PMI when the borrower reaches 78%
LTV as long as there are no late payments in the past 12 months.
14. Under the TILA, when a consumer rescinds a transaction, the security interest giving rise to
the right of rescission becomes void and: - CORRECT ANSWER - The consumer will no
longer be liable for any amount, including any finance charge.
15. Which of the following is not an event that would require a new waiting period for the
Closing Disclosure? - CORRECT ANSWER - Unexpected discoveries on a final walk-
through requiring a seller credit to the buyer.
16. In order to comply with ECOA, a Statement of Credit Denial, Termination, or Change form
must be retained by the creditor for at least: - CORRECT ANSWER - 25 months..
, 17. A transaction is a HOEPA high-cost mortgage if its APR (measured as of the date the interest
rate for the transaction is set) exceeds the Average Prime Offer Rate (APOR) for a comparable
transaction on that date by more than: - CORRECT ANSWER - 6.5 percentage points for
first-lien transactions $50,000 and above.
18. If an applicant is denied credit, the lender must give notice to the applicant. Within _____
days after receipt of a completed application for credit, a creditor shall notify the applicant of its
action on the application. - CORRECT ANSWER - 30 days.
19. The CFPB's Final Rule prohibits residential mortgage loan originator compensation be based
on which of the following? - CORRECT ANSWER - Interest rate of the mortgage loan.
20. RMLOs are required to file suspicious activity reports ("SAR") with the Financial Crimes
Enforcement Network (FinCen): - CORRECT ANSWER - No later than 30 calendar days
after the date of the initial detection.
21. Which of the following transactions are covered by the TILA-RESPA rule? - CORRECT
ANSWER - Construction-only loans.
22. A transaction is a HOEPA mortgage if its points and fees exceed the following threshold: -
CORRECT ANSWER - 5 percent of the total loan amount for a transaction with a loan
amount of $21,549 or more.
23. The Mortgage Acts and Practices Advertising Rule (MAP Rule) prohibits any material
misrepresentation, whether made expressly or by implication, in any commercial
communication, regarding any term of any mortgage credit product. The MAP Rule mortgage
lenders to maintain records of all advertisements for: - CORRECT ANSWER - 24 months.
24. According to the Truth in Lending Act, which of the following fees is excluded from the
calculation of the annual percentage rate? - CORRECT ANSWER - Attorney fee.
25. What landmark legislation represents a sweeping restructuring of United States financial
regulation in response to the worst financial crisis in the United States since the Great
ACTUAL Exam Questions and CORRECT
Answers
Higher-Priced Mortgage Loans (HPML) are defined as closed-end residential mortgage loans
secured by the consumer's principal dwelling with an APR that exceed the average prime offer
rate (APOR) for comparable transactions by: - CORRECT ANSWER - 2.5 percentage
points for a first lien jumbo residential mortgage loan.
The Truth-In Lending Act requires residential mortgage loan originators to make certain
"material disclosures" on loans subject to the Real Estate Settlement Procedures Act within
three: - CORRECT ANSWER - Business days after their receipt of a written application.
3. Lenders must report under the HMDA the applicant's ethnicity, race, and sex. When
conducting a face-to-face interview in which the applicant refuses to provide the required
HMDA information; the loan officer must provide the information based on: - CORRECT
ANSWER - Appearance and surname.
4. An Affiliated Business Arrangement disclosure is required to be given to the consumer? -
CORRECT ANSWER - At or prior to the time of referral.
5. Under the TILA the consumer has a right of rescission in a credit transaction involving: -
CORRECT ANSWER - Refinance of a principle dwelling.
6. The Fair Credit Reporting Act allows consumers all of the following except: - CORRECT
ANSWER - Demand all references to bankruptcies be removed from their report after 5
years from the date of discharge.
7. Under ECOA, when is a disclosure concerning the applicant's right to obtain a copy of the
appraisal report due the consumer? - CORRECT ANSWER - Within three business day
after receipt of the written application.
,8. Under the Red Flags Rules, mortgage loan originators must develop a written program that
identifies and detects the warning signs of: - CORRECT ANSWER - Identity theft.
9. This booklet must be given to every applicant considering an Adjustable Rate Mortgage: -
CORRECT ANSWER - Consumer Handbook on Adjustable Rate Mortgages.
10. All of the following inquiries are considered discriminatory under ECOA except: -
CORRECT ANSWER - Immigration status
11. The Truth in Lending Act's advertising provisions require that if an advertisement promoting
"closed-end credit" contains a "triggering term," three specific disclosures must also be included
in the advertisement. Which of the following is not considered a "triggering term" under
Regulation Z? - CORRECT ANSWER - The annual percentage rate.
12. ECOA requires that a copy of the appraisal must be given to the applicant: - CORRECT
ANSWER - Promptly upon its completion or three business days before consummation.
13. The Homeowners Protection Act is a consumer protection law that requires servicers to: -
CORRECT ANSWER - Automatically discontinue PMI when the borrower reaches 78%
LTV as long as there are no late payments in the past 12 months.
14. Under the TILA, when a consumer rescinds a transaction, the security interest giving rise to
the right of rescission becomes void and: - CORRECT ANSWER - The consumer will no
longer be liable for any amount, including any finance charge.
15. Which of the following is not an event that would require a new waiting period for the
Closing Disclosure? - CORRECT ANSWER - Unexpected discoveries on a final walk-
through requiring a seller credit to the buyer.
16. In order to comply with ECOA, a Statement of Credit Denial, Termination, or Change form
must be retained by the creditor for at least: - CORRECT ANSWER - 25 months..
, 17. A transaction is a HOEPA high-cost mortgage if its APR (measured as of the date the interest
rate for the transaction is set) exceeds the Average Prime Offer Rate (APOR) for a comparable
transaction on that date by more than: - CORRECT ANSWER - 6.5 percentage points for
first-lien transactions $50,000 and above.
18. If an applicant is denied credit, the lender must give notice to the applicant. Within _____
days after receipt of a completed application for credit, a creditor shall notify the applicant of its
action on the application. - CORRECT ANSWER - 30 days.
19. The CFPB's Final Rule prohibits residential mortgage loan originator compensation be based
on which of the following? - CORRECT ANSWER - Interest rate of the mortgage loan.
20. RMLOs are required to file suspicious activity reports ("SAR") with the Financial Crimes
Enforcement Network (FinCen): - CORRECT ANSWER - No later than 30 calendar days
after the date of the initial detection.
21. Which of the following transactions are covered by the TILA-RESPA rule? - CORRECT
ANSWER - Construction-only loans.
22. A transaction is a HOEPA mortgage if its points and fees exceed the following threshold: -
CORRECT ANSWER - 5 percent of the total loan amount for a transaction with a loan
amount of $21,549 or more.
23. The Mortgage Acts and Practices Advertising Rule (MAP Rule) prohibits any material
misrepresentation, whether made expressly or by implication, in any commercial
communication, regarding any term of any mortgage credit product. The MAP Rule mortgage
lenders to maintain records of all advertisements for: - CORRECT ANSWER - 24 months.
24. According to the Truth in Lending Act, which of the following fees is excluded from the
calculation of the annual percentage rate? - CORRECT ANSWER - Attorney fee.
25. What landmark legislation represents a sweeping restructuring of United States financial
regulation in response to the worst financial crisis in the United States since the Great
