Module 1 NMLS exam QUESTIONS WITH ANSWERS

Module 1 NMLS exam QUESTIONS WITH |\ |\ |\ |\ |\ |\




ANSWERS


What are the penalties for violation of RESPA/Section 8 -
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CORRECT ANSWERS ✔✔Section 8 of RESPA prohibits referral fees
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and other forms of kickbacks/fee splitting. Penalties include fines
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of up to 10,000 and up to one year in prison
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Disclosures due within three business days of loan application - |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


CORRECT ANSWERS ✔✔Loan Estimate |\ |\ |\




Your Home Loan Toolkit: A Step By Step Guide
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CHARM Booklet |\




Variable-rate program disclosures |\ |\




Home equity plan disclosures
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Notice of Right to Receive an Appraisal Report
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What can result in a 1,000,000 fine and 30 years in prison? -
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CORRECT ANSWERS ✔✔Acts of mortgage fraud |\ |\ |\ |\ |\




Definition of the term "creditor" - CORRECT ANSWERS ✔✔The
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Equal Credit Opportunity Act (ECOA), the Fair Credit Reporting Act
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(FCRA), and the Fair and Accurate Credit Transactions Act
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(FACTA) all use the same definition for creditor. A creditor is any
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person who regulary extends, renews, or continues credit. Loan
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originators, lenders, and other mortgage progessionals are |\ |\ |\ |\ |\ |\ |\


included in this definition. |\ |\ |\

,Transactions reported under HMDA.. - CORRECT ANSWERS |\ |\ |\ |\ |\ |\ |\


✔✔Purchases
Refinances
Home improvement loans |\ |\




Pre-qualifications must also be reported, along with their |\ |\ |\ |\ |\ |\ |\ |\


disposition


When a borrowers LTV reaches 80%... - CORRECT ANSWERS
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✔✔He/she is permitted to request discontinuation of PMI. The
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Homeowners Protection Act sets the requirements for |\ |\ |\ |\ |\ |\ |\


discontinuation of PMI. It is at the lenders discretion to permit |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\


discontinuation - the borrower must be current on payments |\ |\ |\ |\ |\ |\ |\ |\




An initial privacy notice is due.. - CORRECT ANSWERS ✔✔At the
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time that a customer relationship is established. the Gramm-
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Leach Bliley Act requires financial institution (including mortgage
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brokers) to provide and intial privacy notice " not later than when
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you establish a customer relationship..." The initial privacy notice
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should also be accompanied by the opt-out noitce
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HMDA requires loan originators to... - CORRECT ANSWERS
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✔✔Request information on and applicants race, ethnicity, and |\ |\ |\ |\ |\ |\ |\ |\


sex. The applicant may decline to answer, in which case the loan
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originator must make a best guess based on visual observation.
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This information is necessary to meet the reporting requirements
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of HMDA |\




A permissible purpose is required... - CORRECT ANSWERS
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✔✔When obtaining a credit report. Under FCRA, lenders and
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mortgage progessionals must provide the consumer reporting
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, agency with a certification of permissible purpose in order to pull
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credit. Loan qualification is considered a permissible purpose.
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The Gramm-Leach Bliley Act does not protect... - CORRECT
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ANSWERS ✔✔Publicly-available information. This includes
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information that can be found in government real estate records,
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information available from the phonebook, and information |\ |\ |\ |\ |\ |\ |\


included on a public unrestricted website.
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The loan estimate must be provide... - CORRECT ANSWERS ✔✔No
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later than 3 business days after receiving a completed
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application. |\




No later than 7 business days prior to consummation
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The Closing Disclosure must be provided... - CORRECT ANSWERS
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✔✔At least three business days prior to consummation
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Exemptions under ECOA - CORRECT ANSWERS ✔✔Although ECOA |\ |\ |\ |\ |\ |\ |\


prohibits inquires about protected personal characteristics,
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mortgage professional are permitted to ask HMDA questions.
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Inquires about protected characteristics may also be used to
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determine the eligibility for special-purpose credit, such as
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assistance programs through non- profits. |\ |\ |\ |\




The purpose of the Homeowners Protection Act is.. - CORRECT
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ANSWERS ✔✔The Homeowners Protection Act was enacted to
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facilitate the cancellation of private mortgage insurance (PMI).
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Borrowers can request cancellation when their loan reaches 80%
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loan-to-value (20% equity), but the law requires automatic |\ |\ |\ |\ |\ |\ |\ |\


discontinuation of PMI at 78% LTV (22% equity) |\ |\ |\ |\ |\ |\ |\