MLO SAFE NMLS SAFE TEST
PRACTICE QUESTIONS
Taking,advantage,of,ill-
informed,consumers,through,excessively,high,fees,,misrepresented,loan,terms,,frequent,r
efinancing,that,does,not,benefit,the,borrower,and,other,prohibited,acts,is,called,________
__________________.,-,ans-✔✔Predatory,Lending.
RESPA-Real,Estate,Settlement,Procedures,Act,-,ans-
✔✔The,Federal,Statute,that,deals,with,the,settlement,of,residential,mortgage,loans.
RESPA's,section,9,Prohibits,-,ans-
✔✔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,i
n,connection,with,a,first,mortgage_____________________,and,absolutely,not,later,than,
________,business,days,prior,to,closing.,-,ans-✔✔upon,completion,and,3,business,days
TIL,(Truth,In,Lending,Disclosure),&,GFE,(Good,Faith,Estimate),-,ans-
✔✔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.,-,ans-✔✔3%,(three,percent)
Per,a,provision,of,the,Dodd-
Frank,Act,mortgage,lenders,are,to,determine,that,a,borrower,has,a,reasonable,ability,to,re
pay,a,loan.,Does,this,provision,apply,to,all,loans,or,just,owner,occupied,loans?,-,ans-
✔✔All,loans,,whether,owner,occupied,or,not.
,A,loan,subject,to,HOEPA,allows,prepayment,penalties,for,the,first,______,years,of,the,loa
n.,-,ans-✔✔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,ser
vice.,
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.,-,ans-✔✔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,add
itional,compensation,may,be,received,from,a,lender,in,the,same,transaction?,-,ans-
✔✔$0.00,,dual,compensation,is,not,allowed.,Compensation,must,be,borrower,paid,or,lend
er,paid.
What,kinds,of,reasons,are,necessary,for,a,lender,to,take,adverse,action,with,regard,to,a,bo
rrower?,-,ans-✔✔Specific,reasons.
Adverse,action,means,______________________.,-,ans-
✔✔A,denial,or,revocation,of,credit.,Also,,a,change,in,the,terms,of,an,existing,credit,arrang
ement,or,a,refusal,to,grant,credit,in,substantially,the,amount,or,terms,requested.
Per,Regulation,B,,Lenders,should,retain,certain,records,for,_____________,months.,-,ans
-✔✔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.,-,ans-✔✔APOR,
(,Average,Prime,Offer,Rate),,8.5%
Regulation,C,is,known,as,________________________.,-,ans-
✔✔HMDA,,The,Home,Mortgage,Disclosure,Act.
What,is,the,purpose,of,HMDA?,-,ans-
✔✔The,HMDA,determines,whether,financial,institutions,are,serving,the,housing,needs,of,t
heir,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?,-,ans-
✔✔If,there,are,no,kickback,or,referral,fees,and,the,service,provider,is,an,attorney,,credit,re
porting,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,st
atement,not,less,than,________,days,before,the,transfer,occurs.,-,ans-✔✔Servicer,,15,
(fifteen),days.
,An,individual,who,fails,the,MLO,written,exam,3,times,must,wait,_________,months,to,reta
ke,the,exam.,-,ans-✔✔6,(Six),Months
Per,RESPA,,an,annual,escrow,statement,is,required,to,______________.,-,ans-
✔✔determine,shortages,and,surpluses,in,the,escrow,account.
When,must,the,Servicing,Disclosure,Statement,be,provided,to,the,borrower?,-,ans-
✔✔Within,3,(three),Business,Days,of,the,Application.
Any,party,involved,in,a,federally,covered,loan,that,submits,fraudulent,information,is,subjec
t,to,a,fine,of,up,to,$___________,and,up,to,__________years,in,prison.,-,ans-
✔✔$1,000,000,(one,million,dollars),,30,years,in,prison
Per,RESPA,,an,escrow,cushion,is,limited,to,a,maximum,of,_________,of,the,annual,paym
ents,and,surpluses,over,$_____must,be,refunded,within,________,days.,-,ans-✔✔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?,-,ans-
✔✔$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,l
ast,month's,interest,,as,interest,is,paid,in,arrears.
FNMA,conforming,debt,ratios,equal,______/________.,-,ans-
✔✔28%,,maximum,housing,expense/36%,maximum,total,obligations
HOEPA,stands,for,___________________________.,-,ans-
✔✔Home,Ownership,and,Equity,Protection,Act.
RESPA,applies,to,what,type,of,properties?,-,ans-✔✔1-4,Unit,Residential,Properties
On,a,conventional,mortgage,loan,,who,makes,the,final,decision,regarding,approval,,denial
,or,counter,offer?,-,ans-✔✔The,Underwriter
The,Civil,Rights,Act,of,1866,,prohibited,public,and,private,racial,discrimination,in,any,prope
rty,transaction,and,was,expanded,in,1968,in,which,act?,-,ans-
✔✔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,-,ans-
✔✔The,note,rate,is,NOT,required.
, Which,act,of,1968,provides,guidelines,and,restrictions,regarding,the,financing,,selling,and,
renting,of,real,property?,-,ans-
✔✔The,Civil,Rights,Act,of,1968.,AKA,,The,Civil,Rights,Act,,AKA,Title,VIII,,AKA,The,Fair,Ho
using,Act
Which,act,prohibits,asking,questions,regarding,child,bearing,intentions,or,birth,control,pra
ctices?,-,ans-✔✔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?,-,ans-
✔✔YES,,loans,can,be,denied,in,a,geographic,area,,but,not,for,discriminatory,reasons,relat
ive,to,the,population,of,the,area.
A,teaser,rate,occurs,in,an,ARM,when,the,starting,rate,is,less,than,the,_____________.,-,an
s-✔✔Fully,indexed,rate.
Per,ECOA,,is,it,true,that,while,a,lender,must,consider,reliable,alimony,,child,support,or,sep
arate,maintenance,payments,as,income,,the,applicant,is,not,required,to,disclose,such,inco
me?,-,ans-
✔✔Yes,,it,is,true.,Only,income,intended,to,be,used,for,qualifying,has,to,be,disclosed,and,v
erified.
Of,the,following,,who,make,a,flood,zone,determination?,
1.,The,Lender
2.,The,Appraiser
3.,The,Surveyor
4.,The,Underwriter,-,ans-✔✔2.,The,Appraiser,makes,the,flood,zone,determination.
Force-placed,insurance,protects,the,_________________.,
a.,Lender
b.,borrower
c.,both,-,ans-✔✔a.,lender
FHA,requires,mortgage,insurance,on,all,loans,for,a,period,of,______________,years.,-,an
s-✔✔5,(five),years.
A,property,sells,for,
$300,000,and,requires,a,20%,down,payment.,The,origination,fee,will,be,two,points.,How,m
uch,is,the,origination,fee?,-,ans-✔✔$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.,-,ans-
✔✔Negative.,Increasing,the,principal,balance,,usually,because,of,not,paying,sufficient,int
erest,which,then,is,added,to,the,principal,balance,of,the,loa.
PRACTICE QUESTIONS
Taking,advantage,of,ill-
informed,consumers,through,excessively,high,fees,,misrepresented,loan,terms,,frequent,r
efinancing,that,does,not,benefit,the,borrower,and,other,prohibited,acts,is,called,________
__________________.,-,ans-✔✔Predatory,Lending.
RESPA-Real,Estate,Settlement,Procedures,Act,-,ans-
✔✔The,Federal,Statute,that,deals,with,the,settlement,of,residential,mortgage,loans.
RESPA's,section,9,Prohibits,-,ans-
✔✔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,i
n,connection,with,a,first,mortgage_____________________,and,absolutely,not,later,than,
________,business,days,prior,to,closing.,-,ans-✔✔upon,completion,and,3,business,days
TIL,(Truth,In,Lending,Disclosure),&,GFE,(Good,Faith,Estimate),-,ans-
✔✔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.,-,ans-✔✔3%,(three,percent)
Per,a,provision,of,the,Dodd-
Frank,Act,mortgage,lenders,are,to,determine,that,a,borrower,has,a,reasonable,ability,to,re
pay,a,loan.,Does,this,provision,apply,to,all,loans,or,just,owner,occupied,loans?,-,ans-
✔✔All,loans,,whether,owner,occupied,or,not.
,A,loan,subject,to,HOEPA,allows,prepayment,penalties,for,the,first,______,years,of,the,loa
n.,-,ans-✔✔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,ser
vice.,
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.,-,ans-✔✔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,add
itional,compensation,may,be,received,from,a,lender,in,the,same,transaction?,-,ans-
✔✔$0.00,,dual,compensation,is,not,allowed.,Compensation,must,be,borrower,paid,or,lend
er,paid.
What,kinds,of,reasons,are,necessary,for,a,lender,to,take,adverse,action,with,regard,to,a,bo
rrower?,-,ans-✔✔Specific,reasons.
Adverse,action,means,______________________.,-,ans-
✔✔A,denial,or,revocation,of,credit.,Also,,a,change,in,the,terms,of,an,existing,credit,arrang
ement,or,a,refusal,to,grant,credit,in,substantially,the,amount,or,terms,requested.
Per,Regulation,B,,Lenders,should,retain,certain,records,for,_____________,months.,-,ans
-✔✔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.,-,ans-✔✔APOR,
(,Average,Prime,Offer,Rate),,8.5%
Regulation,C,is,known,as,________________________.,-,ans-
✔✔HMDA,,The,Home,Mortgage,Disclosure,Act.
What,is,the,purpose,of,HMDA?,-,ans-
✔✔The,HMDA,determines,whether,financial,institutions,are,serving,the,housing,needs,of,t
heir,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?,-,ans-
✔✔If,there,are,no,kickback,or,referral,fees,and,the,service,provider,is,an,attorney,,credit,re
porting,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,st
atement,not,less,than,________,days,before,the,transfer,occurs.,-,ans-✔✔Servicer,,15,
(fifteen),days.
,An,individual,who,fails,the,MLO,written,exam,3,times,must,wait,_________,months,to,reta
ke,the,exam.,-,ans-✔✔6,(Six),Months
Per,RESPA,,an,annual,escrow,statement,is,required,to,______________.,-,ans-
✔✔determine,shortages,and,surpluses,in,the,escrow,account.
When,must,the,Servicing,Disclosure,Statement,be,provided,to,the,borrower?,-,ans-
✔✔Within,3,(three),Business,Days,of,the,Application.
Any,party,involved,in,a,federally,covered,loan,that,submits,fraudulent,information,is,subjec
t,to,a,fine,of,up,to,$___________,and,up,to,__________years,in,prison.,-,ans-
✔✔$1,000,000,(one,million,dollars),,30,years,in,prison
Per,RESPA,,an,escrow,cushion,is,limited,to,a,maximum,of,_________,of,the,annual,paym
ents,and,surpluses,over,$_____must,be,refunded,within,________,days.,-,ans-✔✔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?,-,ans-
✔✔$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,l
ast,month's,interest,,as,interest,is,paid,in,arrears.
FNMA,conforming,debt,ratios,equal,______/________.,-,ans-
✔✔28%,,maximum,housing,expense/36%,maximum,total,obligations
HOEPA,stands,for,___________________________.,-,ans-
✔✔Home,Ownership,and,Equity,Protection,Act.
RESPA,applies,to,what,type,of,properties?,-,ans-✔✔1-4,Unit,Residential,Properties
On,a,conventional,mortgage,loan,,who,makes,the,final,decision,regarding,approval,,denial
,or,counter,offer?,-,ans-✔✔The,Underwriter
The,Civil,Rights,Act,of,1866,,prohibited,public,and,private,racial,discrimination,in,any,prope
rty,transaction,and,was,expanded,in,1968,in,which,act?,-,ans-
✔✔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,-,ans-
✔✔The,note,rate,is,NOT,required.
, Which,act,of,1968,provides,guidelines,and,restrictions,regarding,the,financing,,selling,and,
renting,of,real,property?,-,ans-
✔✔The,Civil,Rights,Act,of,1968.,AKA,,The,Civil,Rights,Act,,AKA,Title,VIII,,AKA,The,Fair,Ho
using,Act
Which,act,prohibits,asking,questions,regarding,child,bearing,intentions,or,birth,control,pra
ctices?,-,ans-✔✔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?,-,ans-
✔✔YES,,loans,can,be,denied,in,a,geographic,area,,but,not,for,discriminatory,reasons,relat
ive,to,the,population,of,the,area.
A,teaser,rate,occurs,in,an,ARM,when,the,starting,rate,is,less,than,the,_____________.,-,an
s-✔✔Fully,indexed,rate.
Per,ECOA,,is,it,true,that,while,a,lender,must,consider,reliable,alimony,,child,support,or,sep
arate,maintenance,payments,as,income,,the,applicant,is,not,required,to,disclose,such,inco
me?,-,ans-
✔✔Yes,,it,is,true.,Only,income,intended,to,be,used,for,qualifying,has,to,be,disclosed,and,v
erified.
Of,the,following,,who,make,a,flood,zone,determination?,
1.,The,Lender
2.,The,Appraiser
3.,The,Surveyor
4.,The,Underwriter,-,ans-✔✔2.,The,Appraiser,makes,the,flood,zone,determination.
Force-placed,insurance,protects,the,_________________.,
a.,Lender
b.,borrower
c.,both,-,ans-✔✔a.,lender
FHA,requires,mortgage,insurance,on,all,loans,for,a,period,of,______________,years.,-,an
s-✔✔5,(five),years.
A,property,sells,for,
$300,000,and,requires,a,20%,down,payment.,The,origination,fee,will,be,two,points.,How,m
uch,is,the,origination,fee?,-,ans-✔✔$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.,-,ans-
✔✔Negative.,Increasing,the,principal,balance,,usually,because,of,not,paying,sufficient,int
erest,which,then,is,added,to,the,principal,balance,of,the,loa.
