Quantitative Techniques for Business – MGMT 2050 –
University of Manitoba – Complete Chapter Notes and
Formulas (Ch. 1–11)/ (MLO SAFE Test – NMLS Licensing
Exam – Practice Questions and Answers (2025 Update))
Taking advantage of ill-informed consumers through excessively high fees, misrepresented loan terms,
frequent refinancing that does not benefit the borrower and other prohibited acts is called
__________________________.
Predatory Lending.
RESPA-Real Estate Settlement Procedures Act
The Federal Statute that deals with the settlement of residential mortgage loans.
RESPA's section 9 Prohibits
Home sellers from requiring home buyers to purchase title insurance from a particular company
providing title services.
The Dodd-Frank Act modifies ECOA to require a creditor to furnish a copy of an appraisal developed in
connection with a first mortgage_____________________ and absolutely not later than ________
business days prior to closing.
upon completion and 3 business days
TIL (Truth In Lending Disclosure) & GFE (Good Faith Estimate)
Per the Dodd Frank Act, a single disclosure form combines these 2 statements.
Per the Dodd-Frank Acvt, to be a "qualified mortgage" total points and fees may not exceed ________%
of the total loan amount.
3% (three percent)
Per a provision of the Dodd-Frank Act mortgage lenders are to determine that a borrower has a
reasonable ability to repay a loan. Does this provision apply to all loans or just owner occupied loans?
All loans, whether owner occupied or not.
A loan subject to HOEPA allows prepayment penalties for the first ______ years of the loan.
2 (two) years
Per the Dodd-Frank Act an abusive act would include which of the following:
1. One that materially interferes with the consumers ability to understand the product or service.
2. One that take unreasonable advantage of a consumers' lack of understanding.
3. One that takes unreasonable advantage of the consumer's reasonable reliance on the MLO.
,All three would be considered abusive acts.
Per the Dodd-Frank Act if an MLO receives compensation directly from a consumer, up to how much
additional compensation may be received from a lender in the same transaction?
$0.00, dual compensation is not allowed. Compensation must be borrower paid or lender paid.
What kinds of reasons are necessary for a lender to take adverse action with regard to a borrower?
Specific reasons.
Adverse action means ______________________.
A denial or revocation of credit. Also, a change in the terms of an existing credit arrangement or a
refusal to grant credit in substantially the amount or terms requested.
Per Regulation B, Lenders should retain certain records for _____________ months.
25 Months
Because of the impact of the Dodd-Frank Act on a second mortgage, an APR that exceeds the ________
by more than _____% is the trigger that defines a high cost loan.
APOR ( Average Prime Offer Rate), 8.5%
Regulation C is known as ________________________.
HMDA, The Home Mortgage Disclosure Act.
What is the purpose of HMDA?
The HMDA determines whether financial institutions are serving the housing needs of their
communities. It also identifies patterns of discriminatory lending.
Under what circumstances can a lender with an Affiliated Business Arrangement require a borrower to
use a specific third party service provider?
If there are no kickback or referral fees and the service provider is an attorney, credit reporting agency
or appraiser the lender can require that the borrower uses the provider
If a transfer of servicing occurs, the _______________ must provide a servicing transfer statement not
less than ________ days before the transfer occurs.
Servicer, 15 (fifteen) days.
An individual who fails the MLO written exam 3 times must wait _________ months to retake the exam.
6 (Six) Months
Per RESPA, an annual escrow statement is required to ______________.
determine shortages and surpluses in the escrow account.
When must the Servicing Disclosure Statement be provided to the borrower?
,Within 3 (three) Business Days of the Application.
Any party involved in a federally covered loan that submits fraudulent information is subject to a fine of
up to $___________ and up to __________years in prison.
$1,000,000 (one million dollars), 30 years in prison
Per RESPA, an escrow cushion is limited to a maximum of _________ of the annual payments and
surpluses over $_____must be refunded within ________ days.
1/6th (2 months), $50 (fifty dollars), 30 (thirty) days.
A seller takes back a $100,000 PMM @ 5.5% interest. This straight note will balloon after 10 years of
payments. How much is the balloon payment?
$100,000 + interest for the last month. A straight note (term mortgage) is a non-amortizing interest only
mortgage. The balloon would include the entire principal plus the last month's interest, as interest is
paid in arrears.
FNMA conforming debt ratios equal ______/________.
28%, maximum housing expense/36% maximum total obligations
HOEPA stands for ___________________________.
Home Ownership and Equity Protection Act.
RESPA applies to what type of properties?
1-4 Unit Residential Properties
On a conventional mortgage loan, who makes the final decision regarding approval, denial or counter
offer?
The Underwriter
The Civil Rights Act of 1866, prohibited public and private racial discrimination in any property
transaction and was expanded in 1968 in which act?
The Civil Rights Act of 1968, also known as Title VIII of the Civil Rights Act , Also known as Title VIII, Also
Known as The Fair Housing Act
Of the following, which is not required to be disclosed on the TIL statement? The (1) APR, (2) Note Rate,
(3) Finance Charge, (4) Amount Financed or (5) Total of Payments
The note rate is NOT required.
Which act of 1968 provides guidelines and restrictions regarding the financing, selling and renting of real
property?
The Civil Rights Act of 1968. AKA, The Civil Rights Act, AKA Title VIII, AKA The Fair Housing Act
Which act prohibits asking questions regarding child bearing intentions or birth control practices?
, ECOA/Regulation B, the Equal Credit Opportunity Act
Based on objective criteria regarding the condition and value of the property or area, may a lender deny
loans in neighborhoods where property values are declining?
YES, loans can be denied in a geographic area, but not for discriminatory reasons relative to the
population of the area.
A teaser rate occurs in an ARM when the starting rate is less than the _____________.
Fully indexed rate.
Per ECOA, is it true that while a lender must consider reliable alimony, child support or separate
maintenance payments as income, the applicant is not required to disclose such income?
Yes, it is true. Only income intended to be used for qualifying has to be disclosed and verified.
Of the following, who make a flood zone determination?
1. The Lender
2. The Appraiser
3. The Surveyor
4. The Underwriter
2. The Appraiser makes the flood zone determination.
Force-placed insurance protects the _________________.
a. Lender
b. borrower
c. both
a. lender
FHA requires mortgage insurance on all loans for a period of ______________ years.
5 (five) years.
A property sells for $300,000 and requires a 20% down payment. The origination fee will be two points.
How much is the origination fee?
$4,800, $300,000 X 20% = $60,000 down payment
$300,000 X 80% LTV = $240,000,
$240,000 X 2% = $4,800
HOEPA prohibits ____________________ amortization.
Negative. Increasing the principal balance, usually because of not paying sufficient interest which then is
added to the principal balance of the loa.
How often does the external Do Not Call list get updated?
Every 3 months or 90 days.
What does VA stand for?
University of Manitoba – Complete Chapter Notes and
Formulas (Ch. 1–11)/ (MLO SAFE Test – NMLS Licensing
Exam – Practice Questions and Answers (2025 Update))
Taking advantage of ill-informed consumers through excessively high fees, misrepresented loan terms,
frequent refinancing that does not benefit the borrower and other prohibited acts is called
__________________________.
Predatory Lending.
RESPA-Real Estate Settlement Procedures Act
The Federal Statute that deals with the settlement of residential mortgage loans.
RESPA's section 9 Prohibits
Home sellers from requiring home buyers to purchase title insurance from a particular company
providing title services.
The Dodd-Frank Act modifies ECOA to require a creditor to furnish a copy of an appraisal developed in
connection with a first mortgage_____________________ and absolutely not later than ________
business days prior to closing.
upon completion and 3 business days
TIL (Truth In Lending Disclosure) & GFE (Good Faith Estimate)
Per the Dodd Frank Act, a single disclosure form combines these 2 statements.
Per the Dodd-Frank Acvt, to be a "qualified mortgage" total points and fees may not exceed ________%
of the total loan amount.
3% (three percent)
Per a provision of the Dodd-Frank Act mortgage lenders are to determine that a borrower has a
reasonable ability to repay a loan. Does this provision apply to all loans or just owner occupied loans?
All loans, whether owner occupied or not.
A loan subject to HOEPA allows prepayment penalties for the first ______ years of the loan.
2 (two) years
Per the Dodd-Frank Act an abusive act would include which of the following:
1. One that materially interferes with the consumers ability to understand the product or service.
2. One that take unreasonable advantage of a consumers' lack of understanding.
3. One that takes unreasonable advantage of the consumer's reasonable reliance on the MLO.
,All three would be considered abusive acts.
Per the Dodd-Frank Act if an MLO receives compensation directly from a consumer, up to how much
additional compensation may be received from a lender in the same transaction?
$0.00, dual compensation is not allowed. Compensation must be borrower paid or lender paid.
What kinds of reasons are necessary for a lender to take adverse action with regard to a borrower?
Specific reasons.
Adverse action means ______________________.
A denial or revocation of credit. Also, a change in the terms of an existing credit arrangement or a
refusal to grant credit in substantially the amount or terms requested.
Per Regulation B, Lenders should retain certain records for _____________ months.
25 Months
Because of the impact of the Dodd-Frank Act on a second mortgage, an APR that exceeds the ________
by more than _____% is the trigger that defines a high cost loan.
APOR ( Average Prime Offer Rate), 8.5%
Regulation C is known as ________________________.
HMDA, The Home Mortgage Disclosure Act.
What is the purpose of HMDA?
The HMDA determines whether financial institutions are serving the housing needs of their
communities. It also identifies patterns of discriminatory lending.
Under what circumstances can a lender with an Affiliated Business Arrangement require a borrower to
use a specific third party service provider?
If there are no kickback or referral fees and the service provider is an attorney, credit reporting agency
or appraiser the lender can require that the borrower uses the provider
If a transfer of servicing occurs, the _______________ must provide a servicing transfer statement not
less than ________ days before the transfer occurs.
Servicer, 15 (fifteen) days.
An individual who fails the MLO written exam 3 times must wait _________ months to retake the exam.
6 (Six) Months
Per RESPA, an annual escrow statement is required to ______________.
determine shortages and surpluses in the escrow account.
When must the Servicing Disclosure Statement be provided to the borrower?
,Within 3 (three) Business Days of the Application.
Any party involved in a federally covered loan that submits fraudulent information is subject to a fine of
up to $___________ and up to __________years in prison.
$1,000,000 (one million dollars), 30 years in prison
Per RESPA, an escrow cushion is limited to a maximum of _________ of the annual payments and
surpluses over $_____must be refunded within ________ days.
1/6th (2 months), $50 (fifty dollars), 30 (thirty) days.
A seller takes back a $100,000 PMM @ 5.5% interest. This straight note will balloon after 10 years of
payments. How much is the balloon payment?
$100,000 + interest for the last month. A straight note (term mortgage) is a non-amortizing interest only
mortgage. The balloon would include the entire principal plus the last month's interest, as interest is
paid in arrears.
FNMA conforming debt ratios equal ______/________.
28%, maximum housing expense/36% maximum total obligations
HOEPA stands for ___________________________.
Home Ownership and Equity Protection Act.
RESPA applies to what type of properties?
1-4 Unit Residential Properties
On a conventional mortgage loan, who makes the final decision regarding approval, denial or counter
offer?
The Underwriter
The Civil Rights Act of 1866, prohibited public and private racial discrimination in any property
transaction and was expanded in 1968 in which act?
The Civil Rights Act of 1968, also known as Title VIII of the Civil Rights Act , Also known as Title VIII, Also
Known as The Fair Housing Act
Of the following, which is not required to be disclosed on the TIL statement? The (1) APR, (2) Note Rate,
(3) Finance Charge, (4) Amount Financed or (5) Total of Payments
The note rate is NOT required.
Which act of 1968 provides guidelines and restrictions regarding the financing, selling and renting of real
property?
The Civil Rights Act of 1968. AKA, The Civil Rights Act, AKA Title VIII, AKA The Fair Housing Act
Which act prohibits asking questions regarding child bearing intentions or birth control practices?
, ECOA/Regulation B, the Equal Credit Opportunity Act
Based on objective criteria regarding the condition and value of the property or area, may a lender deny
loans in neighborhoods where property values are declining?
YES, loans can be denied in a geographic area, but not for discriminatory reasons relative to the
population of the area.
A teaser rate occurs in an ARM when the starting rate is less than the _____________.
Fully indexed rate.
Per ECOA, is it true that while a lender must consider reliable alimony, child support or separate
maintenance payments as income, the applicant is not required to disclose such income?
Yes, it is true. Only income intended to be used for qualifying has to be disclosed and verified.
Of the following, who make a flood zone determination?
1. The Lender
2. The Appraiser
3. The Surveyor
4. The Underwriter
2. The Appraiser makes the flood zone determination.
Force-placed insurance protects the _________________.
a. Lender
b. borrower
c. both
a. lender
FHA requires mortgage insurance on all loans for a period of ______________ years.
5 (five) years.
A property sells for $300,000 and requires a 20% down payment. The origination fee will be two points.
How much is the origination fee?
$4,800, $300,000 X 20% = $60,000 down payment
$300,000 X 80% LTV = $240,000,
$240,000 X 2% = $4,800
HOEPA prohibits ____________________ amortization.
Negative. Increasing the principal balance, usually because of not paying sufficient interest which then is
added to the principal balance of the loa.
How often does the external Do Not Call list get updated?
Every 3 months or 90 days.
What does VA stand for?
