NMLS TEST QUESTIONS.

Quiz Questions Module 1 1. A customer with an excellent credit score submits a loan application. When does ECOA require that the applicant be advised of the status of the application? a. Within 30 days i. Page 250 under “Disclosure Terms” 2. The penalties for paying or accepting an illegal referral fee are: a. Fines of up to $10,000 and up to one year in prison i. As previously mentioned, RESPA and Regulation X are intended to keep consumers informed of settlement costs and to prevent mortgage lenders from obtaining unearned fees. There are various practices prohibited by RESPA and Regulation X, including those related to referral fees and fee-splitting, as well as sham affiliated business arrangements. Whether unearned fees are the result of fee-splitting, kickbacks, or the use of sham affiliated business arrangements to exchange referral fees, the penalties are severe. Each violation of these prohibitions may lead to criminal penalties of up to $10,000 and/or imprisonment for up to one year. (Page 12) 3. The amount of the down payme v v v nt, the amount of the finance charge, or the number of payments needed are all examples of _______________ under TILA. a. Trigger terms i. Trigger terms for open-end mortgages, such as home equity plans include references to any of the following: ▪ Finance charge ▪ Other charges, such as late payment charges, title, appraisal, and credit report fees (Official Interpretations to §1026.32(b)(1)(iii)-1) ▪ Taxes imposed on the credit transaction, and ▪ Payment terms of the home equity plan (Page 49) 4. Finance charges always include which of the following? a. Mortgage broker fee i. a mortgage broker’s fees are always included in the finance charge, even if the lender does not require the use of the broker’s services and does not retain a portion of the charge (page 32) 5. According to fair lending laws, which of the following may loan applicants be asked to disclose for HMDA data collection purposes? a. Their Race i. The Home Mortgage Disclosure Act (HMDA) is a federal fair lending law that was enacted with the goal of discouraging redlining. HMDA accomplishes this by monitoring the mortgage lending practices of depository and non-depository institutions. Data about loan applicants is collected, and that data is used to determine whether financial institutions are sufficiently meeting the borrowing and depositing needs of the communities in which they are located. The first step in this process involves inquiries by loan officers and originators regarding the personal characteristics of credit applicants. Therefore, in every credit transaction that is secured by a dwelling, creditors are obligated to request information on the applicant’s ethnicity, race, sex, marital status, and age (Page 22) This study source was downloaded by from CourseH on :22:24 GMT -06:00 6. The Loan Originator Compensation Rule Defines compensation to include all of the following, except: a. Payments collected by a mortgage company for services other than loan origination services i. The Rule defines compensation to include salaries, commissions, and any other financial or similar incentives (12 C.F.R. §1026.36(a)(3)). The meaning of the term is very broad, and can include bonuses, awards, services, trips, and similar benefits. The term also includes fees charged and retained by an originator, regardless of the label that the originator may give to the charge. The Rule excludes any payments that are collected by loan originator organizations for services other than loan origination services (Page 63) 7. HOEPA was enacted as a part of: a. TILA (Page 28) 8. HOEPA would not apply to: a. A bridge loan to finance construction i. Refinances continue to be subject to HOEPA. Today’s version of HOEPA is therefore applicable to most transactions involving loans that are secured by a consumer’s principal dwelling. The only types of transactions that are exempt from the provisions of HOEPA are: ▪ Reverse mortgage loans ▪ Bridge loans used to finance the initial construction of a dwelling ▪ Loans originated by a housing finance agency and for which the agency is the creditor ▪ Loans originated by the USDA (RHS loans) (Page 61) 9. There is a ____ accuracy tolerance for amounts stated on the Loan Estimate and the actual closing costs if the consumer is allowed to shop for his/her own settlement service provider. a. 10% i. Creditors have a 10% tolerance for discrepancies between estimated and actual closing costs if consumers do not pay the creditor or one of its affiliates for settlement services and are allowed to shop for their own services. A consumer is allowed to shop for his or her own settlement services if the creditor permits the consumer to select the provider of that service, subject to reasonable requirements (Page 71) 10. XYZ Mortgage Company just mailed a Closing Disclosure to a consumer. The waiting period prior to closing will begin: a. The third business day after the Closing Disclosure is mailed i. Disclosures for home equity plans, as well as the informational brochure “What You Should Know about Home Equity Lines of Credit,” are due at the time an application is provided to a consumer (12 C.F.R. §1026.40(b)). If a loan originator meets with a consumer in person, the disclosures are due immediately. If a consumer applies via telephone or through an intermediary agent or broker, the disclosures must be delivered within three business days. (Page 40) 11. Closed-end loans with rates that exceed the average prime offer rate, but are not high enough to trigger protections under HOEPA, are known as: a. Higher-priced mortgage loans