Subordination Clause - ANSWER A clause in which the holder of a mortgage permits a
subsequent mortgage to take priority. Subordination is the act of yielding priority.
Banks with less than 10 billion in assets are not - ANSWER Typically examined by CFPB
unless poses risks to consumers
Function of the CFPB - ANSWER 1) providing financial education
2) complaints from consumers
3) enforce laws pertaining to discrimination
Which income cannot be considered for a loan - ANSWER Educational military bene-
fits bc short term
Preliminary Title Report - ANSWER A search of liens, encroachments, easements, and
any recorded documents in the county records in order to issue title insurance.
Full Title Report - ANSWER All information of a preliminary title report plus all trans-
fers of ownership over 30 years or more
ARM x/y/z; define x, y, and z - ANSWER x- Max amount rate can change after first ad-
just
y- max amount rate can change after each subsequent adjust
z-max adjust over life of loan
1
,A Loan servicer is required to send an initial notice to a borrow at least how many days be-
fore forced-place insurance is put into effect - ANSWER 45 days
Which loan products are Qualified Mortgages - ANSWER Loans guaranteed by Fannie
Mae and Freddie Mac
Standard due date and grace period for mortgage payments - ANSWER First on the
month with 15 day grace period
Primary purpose of USA Patriot Act - ANSWER Prevent and Punish terrorist acts in US
and the world; requires financial institutions to report potential money laundering and re-
trieve stolen assets
What are the Penalties under CFPB act for 2025 - ANSWER Tier 1: $7,217
Tier 2: $36,083
Tier 3: $1,443,275
Considered civil, not criminal
What loan programs qualify as assumable? - ANSWER RD- Rural Development
VA- Veterans Administration
FHA- Federal Housing Agency
Which loan programs are not assumable? - ANSWER Conventional - Fannie Mae/Fred-
die Mac
NMLS- An institution may not: - ANSWER Terminate a PENDING employment record.
They may terminate confirmed ones but not ones in pending.
Unsecured loans are loans that: - ANSWER Have no collateral and may not be used for
reserves
2
,Gifts letter must include: - ANSWER Source of the gift
Truth in Lending Act ensures: - ANSWER Requires all lenders have uniform sets of dis-
closures
Right to rescind
Minimum standards for most residential loans secured by dwelling
What is the minimum required down payment on a second home (non primary residence)? -
ANSWER 10%
What is the general required down payment for a conventional loan? - ANSWER Gen-
erally, 5% unless a first-time home buyer (3%). On investment properties, it can range from
15% - 25% based on # of units
Typical length of a contruction loan? - ANSWER 1 year / 12 months
Fraud alerts can be triggered by? - ANSWER Victims of fraud, not those who commit
fraud.
ARM x/y; Define x and y - ANSWER x - initial fixed term of the initial rate
y - length between subsequent adjustments after initial
Define Redlining - ANSWER Denying Financial services based on race/ethnicity of an
area or neighborhood.
Define Reverse Redlining - ANSWER Per ECOA; is predatory lending and intentionally
lending to residential areas that represent people with more credit risk and giving them sub-
prime options.
3
, The Community Reinvestment Act of 1977 - ANSWER Pass by Congress to reduce dis-
criminatory credit practices against low-income neighborhoods.
# of housing agencies that must be listed on the housing counseling disclosures? - AN-
SWER 10
CFPB Loan Originator Rule(s): - ANSWER Prohibit Compensation based on terms of a
mortgage.
Provide consistent background check requirements.
Provide requirements for licensing and registration.
The Promissory Note includes: - ANSWER -Borrower/lender names
-Amount of debt
-Interest rate
-Repayment terms
-Security instrument
-Due Dates
Examples of Finance Charges - ANSWER Interests, Points, Loan Processing Fee
(Cost of consumer credit, imposed by the creditor)
HUD key business areas - ANSWER Healthcare Facilities, Multifamily Housing, Housing
Counseling.
Purpose of PMI (Private Mortgage Insurance) - ANSWER Protect the lender if a bor-
rower defaults on the morgage
SAFE MLO tests results expires after: - ANSWER 5 years.
4
subsequent mortgage to take priority. Subordination is the act of yielding priority.
Banks with less than 10 billion in assets are not - ANSWER Typically examined by CFPB
unless poses risks to consumers
Function of the CFPB - ANSWER 1) providing financial education
2) complaints from consumers
3) enforce laws pertaining to discrimination
Which income cannot be considered for a loan - ANSWER Educational military bene-
fits bc short term
Preliminary Title Report - ANSWER A search of liens, encroachments, easements, and
any recorded documents in the county records in order to issue title insurance.
Full Title Report - ANSWER All information of a preliminary title report plus all trans-
fers of ownership over 30 years or more
ARM x/y/z; define x, y, and z - ANSWER x- Max amount rate can change after first ad-
just
y- max amount rate can change after each subsequent adjust
z-max adjust over life of loan
1
,A Loan servicer is required to send an initial notice to a borrow at least how many days be-
fore forced-place insurance is put into effect - ANSWER 45 days
Which loan products are Qualified Mortgages - ANSWER Loans guaranteed by Fannie
Mae and Freddie Mac
Standard due date and grace period for mortgage payments - ANSWER First on the
month with 15 day grace period
Primary purpose of USA Patriot Act - ANSWER Prevent and Punish terrorist acts in US
and the world; requires financial institutions to report potential money laundering and re-
trieve stolen assets
What are the Penalties under CFPB act for 2025 - ANSWER Tier 1: $7,217
Tier 2: $36,083
Tier 3: $1,443,275
Considered civil, not criminal
What loan programs qualify as assumable? - ANSWER RD- Rural Development
VA- Veterans Administration
FHA- Federal Housing Agency
Which loan programs are not assumable? - ANSWER Conventional - Fannie Mae/Fred-
die Mac
NMLS- An institution may not: - ANSWER Terminate a PENDING employment record.
They may terminate confirmed ones but not ones in pending.
Unsecured loans are loans that: - ANSWER Have no collateral and may not be used for
reserves
2
,Gifts letter must include: - ANSWER Source of the gift
Truth in Lending Act ensures: - ANSWER Requires all lenders have uniform sets of dis-
closures
Right to rescind
Minimum standards for most residential loans secured by dwelling
What is the minimum required down payment on a second home (non primary residence)? -
ANSWER 10%
What is the general required down payment for a conventional loan? - ANSWER Gen-
erally, 5% unless a first-time home buyer (3%). On investment properties, it can range from
15% - 25% based on # of units
Typical length of a contruction loan? - ANSWER 1 year / 12 months
Fraud alerts can be triggered by? - ANSWER Victims of fraud, not those who commit
fraud.
ARM x/y; Define x and y - ANSWER x - initial fixed term of the initial rate
y - length between subsequent adjustments after initial
Define Redlining - ANSWER Denying Financial services based on race/ethnicity of an
area or neighborhood.
Define Reverse Redlining - ANSWER Per ECOA; is predatory lending and intentionally
lending to residential areas that represent people with more credit risk and giving them sub-
prime options.
3
, The Community Reinvestment Act of 1977 - ANSWER Pass by Congress to reduce dis-
criminatory credit practices against low-income neighborhoods.
# of housing agencies that must be listed on the housing counseling disclosures? - AN-
SWER 10
CFPB Loan Originator Rule(s): - ANSWER Prohibit Compensation based on terms of a
mortgage.
Provide consistent background check requirements.
Provide requirements for licensing and registration.
The Promissory Note includes: - ANSWER -Borrower/lender names
-Amount of debt
-Interest rate
-Repayment terms
-Security instrument
-Due Dates
Examples of Finance Charges - ANSWER Interests, Points, Loan Processing Fee
(Cost of consumer credit, imposed by the creditor)
HUD key business areas - ANSWER Healthcare Facilities, Multifamily Housing, Housing
Counseling.
Purpose of PMI (Private Mortgage Insurance) - ANSWER Protect the lender if a bor-
rower defaults on the morgage
SAFE MLO tests results expires after: - ANSWER 5 years.
4
