NMLS SAFE ACT MLO Exam - Ethics and Fraud
The Privacy Rule of the Gramm-Leach-Bliley Act C. annually as long as the relationship continues.
requires that financial institutions provide the consumer
with a Consumer Privacy Policy disclosure
A. each time the servicing is transferred.
B. each time the policy is revised.
C. annually as long as the relationship continues.
D. at closing only.
Which of the following is true of a dual contract? C. It defrauds the lender providing the funds for the purchase of the property.
A. It deprives the seller of receipt of the full price of the Explanation:
property. A dual contract is an instrument that states a sales price higher than the actual
B. It deprives third parties of their proper fees. sales price in an effort to obtain a larger loan from a lender or lending
C. It defrauds the lender providing the funds for the institution or for the purpose of misinforming a governmental agency or some
purchase of the property. other reason.
D. It is usually used so the real estate agent may earn a
higher commission.
Which law ensures that some borrowers have the right A. Regulation Z
of rescission for three business days after a loan
contract is signed? Explanation:
The Truth in Lending Act (TILA) of 1968 is a United States federal law and
A. Regulation Z designed to protect Consumers in credit by requiring clear key terms of the
B. Regulation X lending arrangement and all costs. is legal in Title I of the Consumer Credit
C. Title VIII Protection Act, as amended. The regulations implementing the statute, which
D. Equal Credit Opportunity Act are known as "Regulation Z", are codified at 12 CFR Part 226. Most of the
specific requirements imposed by TILA are found in Regulation Z, so a
reference to the requirements of TILA usually refers to the requirements
contained in Regulation Z, as well as the statute itself.
Which is LEAST LIKELY to be an example of illegal D. purchasing and remodeling a house and selling it for quick profit
flipping?
Explanation:
A. an inflated appraisal Purchasing and remodeling a house and then selling it for a quick profit is the
B. a series of sales and quick resales good side of flipping, which is perfectly legal. The illegal side of flipping is
C. a group of sellers and buyers changing ownership of when colluding parties profit from the sale of property with an inflated
one property among them appraisal that supports a loan. It may involve a series of sales and quick resales,
D. purchasing and remodeling a house and selling it for with one property and a group of sellers and buyers changing ownership
quick profit among them.
, NMLS SAFE ACT MLO Exam - Ethics and Fraud
Under the USA Patriot Act, which of the following is D. Credit card number
NOT obtained by a mortgage broker from a borrower
for customer identification purposes?
A. Alien identification number
B. Passport number
C. Taxpayer identification number
D. Credit card number
Which of the following is true of property flipping? C. It involves making a purchase and a quick resale at a profit.
A. It is illegal. Explanation:
B. It does not apply to a situation where the owner fixes Property flipping occurs when a buyer resells (flips) a property, shortly after he
up a property and sells it shortly after acquiring it. has purchased it, for a much higher price than he paid. Flipping is legal when it
C. It involves making a purchase and a quick resale at a is the result of making a wise investment, purchasing a property in need of work
profit. and then fixing it up, or being able to take advantage of a seller who had to sell
D. It is illegal when used to take advantage of a seller at a below market price, perhaps because he was facing foreclosure.
who had to sell below market price because he was
facing foreclosure.
Being convicted of a crime demonstrates A. A lack of competency to act as a mortgage banker
A. A lack of competency to act as a mortgage banker
B. Standard practice for a mortgage banker.
C. None of the other options are correct
D. An honest mistake.
Yo
Which of the following statements is true regarding a B. A broker can collect fees for services so long as they are disclosed to the
broker's relationship with a borrower? borrower before being provided.
A. A broker is obligated to reveal material facts which A mortgage broker creates an agency relationship with the borrower in all
might affect the borrower so long as they do not cases and, as a result, must carry out all lawful instructions given by borrowers
conflict with his own interests. and disclose to borrowers all material facts of which it has knowledge, which
B. A broker can collect fees for services so long as they might reasonably affect the borrower's rights, interests, or ability to receive
are disclosed to the borrower before being provided. intended benefits from the residential mortgage loan. A mortgage broker can
C. A broker is obligated to carry out all of a borrower's contract for and collect fees for services rendered that are disclosed to the
instructions, regardless of legality. borrower before providing the services.
D. A mortgage broker creates an agency relationship
with a borrower only if the contract between them
explicitly states this.
A mortgage broker realizes that his customer will not D. Straw buyer
qualify for the loan, so he convinces her to apply using
her mother's identity and financial data. Even though A straw purchase is any purchase whereby the purchaser is knowingly acquiring
the mother does not know that her information was an item or service for someone who is, for whatever reason, unable to
used, she could be considered a purchase the item or service themselves.
A. co-mortgagor.
B. mock purchaser.
C. secret signer.
D. Straw buyer
, NMLS SAFE ACT MLO Exam - Ethics and Fraud
Which is LEAST LIKLEY to be an indicator of predatory D. requiring mortgage insurance
lending?
Requiring mortgage insurance does not indicate predatory lending.
A. charging excessive prepayment penalties
B. increasing interest charges on late loan payments
C. falsifying loan documents
D. requiring mortgage insurance
The federal Fair Housing Act is also known as D. Title VIII.
A. the State Civil Rights Law. The federal Fair Housing Act of 1968 is also known as Title VIII of the Civil Rights
B. the Civil Rights Act of 1866. Act.
C. the ECOA.
D. Title VIII.
It is unethical for a mortgage broker to provide in loan C. identity of a prior customer to obtain loan for a customer unable to qualify
documentation the on their own.
A. current occupancy of the property. It is unethical and a common example of loan documentation fraud for a
B. employment history of a client. mortgage broker to use identities of prior customers to obtain loan for
C. identity of a prior customer to obtain loan for a customers unable to qualify on their own.
customer unable to qualify on their own.
D. Social Security number of a client.
Which of the following credit terms may be included in B. "10% annual percentage rate"
an advertisement for real estate without further
disclosure? The APR (annual percentage rate) is the cost of credit that consumers pay,
expressed as a simple annual percentage. If the ad only states the APR, then
A. "$300 monthly payment" other disclosures are not necessary.
B. "10% annual percentage rate"
C. "$5,000 down payment"
D. "5 years to repay"
Some common types of legal transactions that require A. All of the other options require appraisals
appraisals are:
The above items all require an appraisal.
A. All of the other options require appraisals
B. Income tax casualty losses, estate or inheritance tax,
and property settlement upon divorce.
C. Damage lawsuits, loan foreclosures, and security for
bail bonds.
D. Company liquidation or merger, capital gains tax
basis, and loan foreclosures.
The Privacy Rule of the Gramm-Leach-Bliley Act C. annually as long as the relationship continues.
requires that financial institutions provide the consumer
with a Consumer Privacy Policy disclosure
A. each time the servicing is transferred.
B. each time the policy is revised.
C. annually as long as the relationship continues.
D. at closing only.
Which of the following is true of a dual contract? C. It defrauds the lender providing the funds for the purchase of the property.
A. It deprives the seller of receipt of the full price of the Explanation:
property. A dual contract is an instrument that states a sales price higher than the actual
B. It deprives third parties of their proper fees. sales price in an effort to obtain a larger loan from a lender or lending
C. It defrauds the lender providing the funds for the institution or for the purpose of misinforming a governmental agency or some
purchase of the property. other reason.
D. It is usually used so the real estate agent may earn a
higher commission.
Which law ensures that some borrowers have the right A. Regulation Z
of rescission for three business days after a loan
contract is signed? Explanation:
The Truth in Lending Act (TILA) of 1968 is a United States federal law and
A. Regulation Z designed to protect Consumers in credit by requiring clear key terms of the
B. Regulation X lending arrangement and all costs. is legal in Title I of the Consumer Credit
C. Title VIII Protection Act, as amended. The regulations implementing the statute, which
D. Equal Credit Opportunity Act are known as "Regulation Z", are codified at 12 CFR Part 226. Most of the
specific requirements imposed by TILA are found in Regulation Z, so a
reference to the requirements of TILA usually refers to the requirements
contained in Regulation Z, as well as the statute itself.
Which is LEAST LIKELY to be an example of illegal D. purchasing and remodeling a house and selling it for quick profit
flipping?
Explanation:
A. an inflated appraisal Purchasing and remodeling a house and then selling it for a quick profit is the
B. a series of sales and quick resales good side of flipping, which is perfectly legal. The illegal side of flipping is
C. a group of sellers and buyers changing ownership of when colluding parties profit from the sale of property with an inflated
one property among them appraisal that supports a loan. It may involve a series of sales and quick resales,
D. purchasing and remodeling a house and selling it for with one property and a group of sellers and buyers changing ownership
quick profit among them.
, NMLS SAFE ACT MLO Exam - Ethics and Fraud
Under the USA Patriot Act, which of the following is D. Credit card number
NOT obtained by a mortgage broker from a borrower
for customer identification purposes?
A. Alien identification number
B. Passport number
C. Taxpayer identification number
D. Credit card number
Which of the following is true of property flipping? C. It involves making a purchase and a quick resale at a profit.
A. It is illegal. Explanation:
B. It does not apply to a situation where the owner fixes Property flipping occurs when a buyer resells (flips) a property, shortly after he
up a property and sells it shortly after acquiring it. has purchased it, for a much higher price than he paid. Flipping is legal when it
C. It involves making a purchase and a quick resale at a is the result of making a wise investment, purchasing a property in need of work
profit. and then fixing it up, or being able to take advantage of a seller who had to sell
D. It is illegal when used to take advantage of a seller at a below market price, perhaps because he was facing foreclosure.
who had to sell below market price because he was
facing foreclosure.
Being convicted of a crime demonstrates A. A lack of competency to act as a mortgage banker
A. A lack of competency to act as a mortgage banker
B. Standard practice for a mortgage banker.
C. None of the other options are correct
D. An honest mistake.
Yo
Which of the following statements is true regarding a B. A broker can collect fees for services so long as they are disclosed to the
broker's relationship with a borrower? borrower before being provided.
A. A broker is obligated to reveal material facts which A mortgage broker creates an agency relationship with the borrower in all
might affect the borrower so long as they do not cases and, as a result, must carry out all lawful instructions given by borrowers
conflict with his own interests. and disclose to borrowers all material facts of which it has knowledge, which
B. A broker can collect fees for services so long as they might reasonably affect the borrower's rights, interests, or ability to receive
are disclosed to the borrower before being provided. intended benefits from the residential mortgage loan. A mortgage broker can
C. A broker is obligated to carry out all of a borrower's contract for and collect fees for services rendered that are disclosed to the
instructions, regardless of legality. borrower before providing the services.
D. A mortgage broker creates an agency relationship
with a borrower only if the contract between them
explicitly states this.
A mortgage broker realizes that his customer will not D. Straw buyer
qualify for the loan, so he convinces her to apply using
her mother's identity and financial data. Even though A straw purchase is any purchase whereby the purchaser is knowingly acquiring
the mother does not know that her information was an item or service for someone who is, for whatever reason, unable to
used, she could be considered a purchase the item or service themselves.
A. co-mortgagor.
B. mock purchaser.
C. secret signer.
D. Straw buyer
, NMLS SAFE ACT MLO Exam - Ethics and Fraud
Which is LEAST LIKLEY to be an indicator of predatory D. requiring mortgage insurance
lending?
Requiring mortgage insurance does not indicate predatory lending.
A. charging excessive prepayment penalties
B. increasing interest charges on late loan payments
C. falsifying loan documents
D. requiring mortgage insurance
The federal Fair Housing Act is also known as D. Title VIII.
A. the State Civil Rights Law. The federal Fair Housing Act of 1968 is also known as Title VIII of the Civil Rights
B. the Civil Rights Act of 1866. Act.
C. the ECOA.
D. Title VIII.
It is unethical for a mortgage broker to provide in loan C. identity of a prior customer to obtain loan for a customer unable to qualify
documentation the on their own.
A. current occupancy of the property. It is unethical and a common example of loan documentation fraud for a
B. employment history of a client. mortgage broker to use identities of prior customers to obtain loan for
C. identity of a prior customer to obtain loan for a customers unable to qualify on their own.
customer unable to qualify on their own.
D. Social Security number of a client.
Which of the following credit terms may be included in B. "10% annual percentage rate"
an advertisement for real estate without further
disclosure? The APR (annual percentage rate) is the cost of credit that consumers pay,
expressed as a simple annual percentage. If the ad only states the APR, then
A. "$300 monthly payment" other disclosures are not necessary.
B. "10% annual percentage rate"
C. "$5,000 down payment"
D. "5 years to repay"
Some common types of legal transactions that require A. All of the other options require appraisals
appraisals are:
The above items all require an appraisal.
A. All of the other options require appraisals
B. Income tax casualty losses, estate or inheritance tax,
and property settlement upon divorce.
C. Damage lawsuits, loan foreclosures, and security for
bail bonds.
D. Company liquidation or merger, capital gains tax
basis, and loan foreclosures.
