NMLS Exam 2 Questions with Verified Correct
Answers
Which of the following statements accurately describes the scope of HOEPA?
A.The provisions of HOEPA apply to first-lien loans where the home securing the loan is
located in a neighborhood targeted by subprime lenders
B.The provisions of HOEPA apply to first- and subordinate-lien transactions that are secured
by a borrower's principal residence
C.The provisions of HOEPA apply to subordinate-lien loans when the home securing the loan
is either owner occupied or non-owner occupied
D.The provisions of HOEPA apply only to first-lien loans that are secured by a borrower's
principal residence
B.The provisions of HOEPA apply to first- and subordinate-lien transactions that are secured by a
borrower's principal residence
All of the following methods can be used by an originator to detect fraudulent documents,
except:
A. Verifying that the purchase price is not greater than the average for the area
B. Check paystubs for watermarks or fraud prevention patterns
C. Track chain of custody of all verifications
D. Compare earnings claims to public databases for industry and region
A. Verifying that the purchase price is not greater than the average for the area
A mortgage lender that is conducting telemarketing to generate business will not violate the
Telemarketing Sales Rule by calling which of the following individuals?
a borrower who contacted the lender three months ago to ask about interest rates for
refinances.
The risk of a balloon mortgage may be minimized by including a:
conditional refinance provision
Do HELOCs have right of rescission?
, YES, if on primary residence
Are front end housing ratios considered for a USDA loan? If yes what's the limit?
Yes, USDA loans use a front-end ratio of 29%.
The types of high-cost mortgages that may be subject to HOEPA include all of the following:
Refinances, HELOCs, Loans to purchase a new home. DOES NOT COVER reverse mortgages
Dodd Frank Act widened scope of HOEPA mortgages
Which federal agency responsible for enforcing violations of TILA?
FTC or CFPB
What loans fall under the ATR?
refis, first lien on a home, vacation homes. Does NOT cover open-ended loans or HELOCS
Encumbrance
a burden or impediment (on title)
Reconveyance
process of releasing a lien on a property after it has been satisfied
In the practice of table funding, what is used to protect the lender against fraudulent activity?
Buy-back provisions
The Barrows applied for a loan to buy a small duplex in a suburb of Springfield. However,
shortly after they received the Loan Estimate from their lender, a tornado swept through
Springfield and severely damaged the home they are purchasing, requiring construction and
repairs. Under these circumstances:
The previous Loan Estimate still applies
The transaction is void
The Barrows must reapply
A revised Loan Estimate may be issued
A revised Loan Estimate may be issued
What is true regarding ATR standards for consideration of borrower repayment ability? Is
there a threshold?
General ATR standards require a consideration of DTI ratio and residual income; there is no DTI
threshold or minimum required residual income
Answers
Which of the following statements accurately describes the scope of HOEPA?
A.The provisions of HOEPA apply to first-lien loans where the home securing the loan is
located in a neighborhood targeted by subprime lenders
B.The provisions of HOEPA apply to first- and subordinate-lien transactions that are secured
by a borrower's principal residence
C.The provisions of HOEPA apply to subordinate-lien loans when the home securing the loan
is either owner occupied or non-owner occupied
D.The provisions of HOEPA apply only to first-lien loans that are secured by a borrower's
principal residence
B.The provisions of HOEPA apply to first- and subordinate-lien transactions that are secured by a
borrower's principal residence
All of the following methods can be used by an originator to detect fraudulent documents,
except:
A. Verifying that the purchase price is not greater than the average for the area
B. Check paystubs for watermarks or fraud prevention patterns
C. Track chain of custody of all verifications
D. Compare earnings claims to public databases for industry and region
A. Verifying that the purchase price is not greater than the average for the area
A mortgage lender that is conducting telemarketing to generate business will not violate the
Telemarketing Sales Rule by calling which of the following individuals?
a borrower who contacted the lender three months ago to ask about interest rates for
refinances.
The risk of a balloon mortgage may be minimized by including a:
conditional refinance provision
Do HELOCs have right of rescission?
, YES, if on primary residence
Are front end housing ratios considered for a USDA loan? If yes what's the limit?
Yes, USDA loans use a front-end ratio of 29%.
The types of high-cost mortgages that may be subject to HOEPA include all of the following:
Refinances, HELOCs, Loans to purchase a new home. DOES NOT COVER reverse mortgages
Dodd Frank Act widened scope of HOEPA mortgages
Which federal agency responsible for enforcing violations of TILA?
FTC or CFPB
What loans fall under the ATR?
refis, first lien on a home, vacation homes. Does NOT cover open-ended loans or HELOCS
Encumbrance
a burden or impediment (on title)
Reconveyance
process of releasing a lien on a property after it has been satisfied
In the practice of table funding, what is used to protect the lender against fraudulent activity?
Buy-back provisions
The Barrows applied for a loan to buy a small duplex in a suburb of Springfield. However,
shortly after they received the Loan Estimate from their lender, a tornado swept through
Springfield and severely damaged the home they are purchasing, requiring construction and
repairs. Under these circumstances:
The previous Loan Estimate still applies
The transaction is void
The Barrows must reapply
A revised Loan Estimate may be issued
A revised Loan Estimate may be issued
What is true regarding ATR standards for consideration of borrower repayment ability? Is
there a threshold?
General ATR standards require a consideration of DTI ratio and residual income; there is no DTI
threshold or minimum required residual income
