NMLS STANDARD EXAMS ANSWERS AND
QUESTIONS SET A+
✔✔Rescind Rules apply to: - ✔✔Credit transactions for existing homes i.e.:
Home equity loans
Home improvement loans
Refinances
✔✔Rescind Rules do not apply to: - ✔✔Purchase loans
Construction loans
Commercial loans
Loans on vacation or second homes
Refinancing by the same creditor
A transaction in which a state agency is a creditor
✔✔Rescind Rules provisions: - ✔✔Consumers may exercise the right to rescind until
midnight of the 3rd business day following loan consummation, delivery of the required
rescission notice, or delivery of all material disclosures, whichever occurs last.
Must provide 2 copies of a Notice of Right to Rescind to to each borrower
Rescinded by one is effective for all
✔✔Right to Rescind notice must disclose: - ✔✔The retention or acquisition of a security
interest in the borrower's dwelling
The consumer's right to rescind
How to exercise the right with a form to use with the creditor's address
The effects of rescission
The date on which the rescission period ends
All funds must be returned within 20 calendar days
✔✔Extended Right of Rescission - ✔✔Up to 3 years if the creditor fails to properly notify
consumers of the right to rescind
The creditor does not provide all parties on the title with required disclosures
,✔✔Extended Right of Rescission tolerances - ✔✔Acceptable tolerances for accuracy of
the finance charge include:
Understated by no more than 1/2% of the face amount of the loan or $100, whichever is
greater; or
Is greater than the amount required to be disclosed
The tolerance is 1% for refinancing with a new creditor if there is no new advance and
no consolidation of existing loans.
✔✔Extended Right of Rescission expires: - ✔✔3 years after the occurrence giving rise
to the right of rescission
✔✔Additional Rescission Considerations for Foreclosures: - ✔✔After in initiation of
foreclosure a consumer has the right to rescind if:
The MLO fee should have been included in the finance fee and was not
The creditor didn't provide completed Notice of Rescission
✔✔Accuracy for Rescission Considerations in Foreclosures: - ✔✔Accuracy is defined
as being understated by no more than $35; or
Greater than the amount required to be disclosed
✔✔Regulation Z - Higher Priced Loans - ✔✔Closed end home purchase loan where the
APR exceeds the average prime offer rate by at least 1.5% f or the first lien loan; and
3.5% for a junior lien loan
✔✔Regulation Z - Higher Priced Loans does not apply to loans used to finance; -
✔✔The initial construction of a dwelling
A bridge loan with a term of 12 months or less
A reverse mortgage transaction
A home equity line of credit
✔✔Regulation Z - Higher Priced Loans Restrictions - ✔✔For loans meeting the
definition:
Repayment Ability must be verified
Prepayment Penalties are prohibited unless limited to the first 2 years f the loan.
Escrow account must be established for property taxes and MIP
✔✔Escrow Requirements on Jumbo Loans above $417,000 - ✔✔The threshold for
requiring escrow goes to 2.5% above average prime vs. 1.5% above
✔✔TILA provisions related to servicing violations - ✔✔Failing to credit a payment as of
the date of receipt
Imposing any late fee, when the only delinquency is attributable to late fees.
Failing to provide, within a reasonable time, statements showing the payoff amounts as
of a specific date in time.
, ✔✔HPA Homeowners Protection Act - ✔✔Relates to requirements about providing
disclosures and notifications about Private Mortgage Insurance
✔✔HPA Homeowners Protection Act applies: - ✔✔To mortgages on single-family,
primary residences
Does not apply to VA loans, FHA loans, or loans with no PMI
✔✔HPA Homeowners Protection Act about PMI cancellation - ✔✔Borrower may
request cancellation of PMI when the loan is 80% of original value
Mortgage insurance may be automatically canceled when LTV is 78% of original value
Borrower may accelerate cancellation date with additional payments
✔✔Reg (B) ECOA Equal Credit Opportunity Act - ✔✔Ensures that all consumers are
given an equal chance to obtain credit.
Originally passed in 1974 to prohibit lending discrimination on the basis of sex or marital
status
Requires credit bureaus to maintain separate credit files on married spouses, if
requested
Implemented by FTC and applies to any creditor
Allows credit applicants to file discrimination complaints or file civil lawsuits
Requires maintenance records of application for 25 months after notifying applicant of
action taken
✔✔Reg (B) ECOA Equal Credit Opportunity Act Protections - ✔✔Sex, Age, Marital
status, Race, Color, Religion, National origin, Receipt of public assistance, exercised
rights under the Consumer Credit Protection Act.
✔✔Reg (B) ECOA Equal Credit Opportunity Act on Marital Status - ✔✔MLO should not
ask about marital status or a spouse unless:
It is a joint application
The applicant is relying on their spouse's income or alimony or child support from former
spouse to qualify
It is in a community property state, and the loan is secured by property
When asking only use the terms:
Married,
Unmarried,
Separarted
✔✔Reg (B) ECOA Equal Credit Opportunity Act Income Evaluation - ✔✔A creditor may
not discount or refuse to consider:
Public assistance income
Income because of sex or marital status
Income from verifiable and consistent part time employment, overtime, pension, annuity
or retirement benefits programs
QUESTIONS SET A+
✔✔Rescind Rules apply to: - ✔✔Credit transactions for existing homes i.e.:
Home equity loans
Home improvement loans
Refinances
✔✔Rescind Rules do not apply to: - ✔✔Purchase loans
Construction loans
Commercial loans
Loans on vacation or second homes
Refinancing by the same creditor
A transaction in which a state agency is a creditor
✔✔Rescind Rules provisions: - ✔✔Consumers may exercise the right to rescind until
midnight of the 3rd business day following loan consummation, delivery of the required
rescission notice, or delivery of all material disclosures, whichever occurs last.
Must provide 2 copies of a Notice of Right to Rescind to to each borrower
Rescinded by one is effective for all
✔✔Right to Rescind notice must disclose: - ✔✔The retention or acquisition of a security
interest in the borrower's dwelling
The consumer's right to rescind
How to exercise the right with a form to use with the creditor's address
The effects of rescission
The date on which the rescission period ends
All funds must be returned within 20 calendar days
✔✔Extended Right of Rescission - ✔✔Up to 3 years if the creditor fails to properly notify
consumers of the right to rescind
The creditor does not provide all parties on the title with required disclosures
,✔✔Extended Right of Rescission tolerances - ✔✔Acceptable tolerances for accuracy of
the finance charge include:
Understated by no more than 1/2% of the face amount of the loan or $100, whichever is
greater; or
Is greater than the amount required to be disclosed
The tolerance is 1% for refinancing with a new creditor if there is no new advance and
no consolidation of existing loans.
✔✔Extended Right of Rescission expires: - ✔✔3 years after the occurrence giving rise
to the right of rescission
✔✔Additional Rescission Considerations for Foreclosures: - ✔✔After in initiation of
foreclosure a consumer has the right to rescind if:
The MLO fee should have been included in the finance fee and was not
The creditor didn't provide completed Notice of Rescission
✔✔Accuracy for Rescission Considerations in Foreclosures: - ✔✔Accuracy is defined
as being understated by no more than $35; or
Greater than the amount required to be disclosed
✔✔Regulation Z - Higher Priced Loans - ✔✔Closed end home purchase loan where the
APR exceeds the average prime offer rate by at least 1.5% f or the first lien loan; and
3.5% for a junior lien loan
✔✔Regulation Z - Higher Priced Loans does not apply to loans used to finance; -
✔✔The initial construction of a dwelling
A bridge loan with a term of 12 months or less
A reverse mortgage transaction
A home equity line of credit
✔✔Regulation Z - Higher Priced Loans Restrictions - ✔✔For loans meeting the
definition:
Repayment Ability must be verified
Prepayment Penalties are prohibited unless limited to the first 2 years f the loan.
Escrow account must be established for property taxes and MIP
✔✔Escrow Requirements on Jumbo Loans above $417,000 - ✔✔The threshold for
requiring escrow goes to 2.5% above average prime vs. 1.5% above
✔✔TILA provisions related to servicing violations - ✔✔Failing to credit a payment as of
the date of receipt
Imposing any late fee, when the only delinquency is attributable to late fees.
Failing to provide, within a reasonable time, statements showing the payoff amounts as
of a specific date in time.
, ✔✔HPA Homeowners Protection Act - ✔✔Relates to requirements about providing
disclosures and notifications about Private Mortgage Insurance
✔✔HPA Homeowners Protection Act applies: - ✔✔To mortgages on single-family,
primary residences
Does not apply to VA loans, FHA loans, or loans with no PMI
✔✔HPA Homeowners Protection Act about PMI cancellation - ✔✔Borrower may
request cancellation of PMI when the loan is 80% of original value
Mortgage insurance may be automatically canceled when LTV is 78% of original value
Borrower may accelerate cancellation date with additional payments
✔✔Reg (B) ECOA Equal Credit Opportunity Act - ✔✔Ensures that all consumers are
given an equal chance to obtain credit.
Originally passed in 1974 to prohibit lending discrimination on the basis of sex or marital
status
Requires credit bureaus to maintain separate credit files on married spouses, if
requested
Implemented by FTC and applies to any creditor
Allows credit applicants to file discrimination complaints or file civil lawsuits
Requires maintenance records of application for 25 months after notifying applicant of
action taken
✔✔Reg (B) ECOA Equal Credit Opportunity Act Protections - ✔✔Sex, Age, Marital
status, Race, Color, Religion, National origin, Receipt of public assistance, exercised
rights under the Consumer Credit Protection Act.
✔✔Reg (B) ECOA Equal Credit Opportunity Act on Marital Status - ✔✔MLO should not
ask about marital status or a spouse unless:
It is a joint application
The applicant is relying on their spouse's income or alimony or child support from former
spouse to qualify
It is in a community property state, and the loan is secured by property
When asking only use the terms:
Married,
Unmarried,
Separarted
✔✔Reg (B) ECOA Equal Credit Opportunity Act Income Evaluation - ✔✔A creditor may
not discount or refuse to consider:
Public assistance income
Income because of sex or marital status
Income from verifiable and consistent part time employment, overtime, pension, annuity
or retirement benefits programs
