MORTGAGE EXAM UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS
Question:
1. Collateralized Debt Obligation (CDOs)
Answer:
A structured financial product that pools together cash flow-generating assets and repackages this asset
pool into discrete tranches that can be sold to investors.
Question:
2. Lien
Answer:
Legal claim against a property that must be satisfied when the property is sold. The lien is the borrower's
IOU to the lender for providing the money to purchase or refinance a property.
Question:
3. Reverse Mortgage
Answer:
convert equity in home into cash. No repayment is required while the borrower resides in the home. must
be 62 or older to get!
Question:
4. amortization
Answer:
the process of paying a loan down gradually with periodic payments of principal and interest.
,Question:
5. prime loan (A-paper)
Answer:
loan with a high probability of being paid back based on the borrowers previous records
Question:
6. (SAFE)
Answer:
Secure & Fair Enforcement for Mortgage Licensing Act
Question:
7. (HMDA)
Answer:
Home Mortgage Disclosure Act
Question:
8. (FCRA)
Answer:
Fair Credit Reporting Act
Question:
9. (MARS)
Answer:
Mortgage Assistance Relied Services Act
Question:
10. Independent contractor
Answer:
an individual whose performance and manner of work is not controlled by another
Question:
11. Mortgage Loan Originator
Answer:
person who helps a consumer obtain or apply for a residential mortgage loan
, Question:
12. Non-Depository Institution
Answer:
NOT regulated by the FDIC
Question:
13. Registered Mortgage Loan Originator
Answer:
person who is a mortgage loan originator with an NMLS unique #
Question:
14. Affiliated Business
Answer:
settlement service provider referred by a lender or mortgage banker and in which the entity has at least 1%
ownership in the referred company
Question:
15. Servicing
Answer:
the billing, accepting and recording payments, issuing late payment notices, and managing of escrow
accounts for a mortgage loan
Question:
16. Settlement
Answer:
The point, also known as closing, when all documents related to the mortgage loan have been signed. Per
RESPA, settlement is the process of executing legally binding documents regarding a lien on a property
Question:
17. Fee Splitting
Answer:
sharing of fees by loan originators is prohibited when one or both parties fail to perform enough work to
earn the fee
Question:
18. Unreasonable Charges
Answer:
charges such as double-billing, are prohibited even when services are performed to earn a fee
Question:
19. Illegal Agreements
Answer:
It is prohibited for two parties to share a written or verbal agreement or even an agreement established
through a practice, pattern, or of course, to offer things of value to one or the other in exchange for referals
Question:
20. Section 9 of RESPA
CORRECT ANSWERS
Question:
1. Collateralized Debt Obligation (CDOs)
Answer:
A structured financial product that pools together cash flow-generating assets and repackages this asset
pool into discrete tranches that can be sold to investors.
Question:
2. Lien
Answer:
Legal claim against a property that must be satisfied when the property is sold. The lien is the borrower's
IOU to the lender for providing the money to purchase or refinance a property.
Question:
3. Reverse Mortgage
Answer:
convert equity in home into cash. No repayment is required while the borrower resides in the home. must
be 62 or older to get!
Question:
4. amortization
Answer:
the process of paying a loan down gradually with periodic payments of principal and interest.
,Question:
5. prime loan (A-paper)
Answer:
loan with a high probability of being paid back based on the borrowers previous records
Question:
6. (SAFE)
Answer:
Secure & Fair Enforcement for Mortgage Licensing Act
Question:
7. (HMDA)
Answer:
Home Mortgage Disclosure Act
Question:
8. (FCRA)
Answer:
Fair Credit Reporting Act
Question:
9. (MARS)
Answer:
Mortgage Assistance Relied Services Act
Question:
10. Independent contractor
Answer:
an individual whose performance and manner of work is not controlled by another
Question:
11. Mortgage Loan Originator
Answer:
person who helps a consumer obtain or apply for a residential mortgage loan
, Question:
12. Non-Depository Institution
Answer:
NOT regulated by the FDIC
Question:
13. Registered Mortgage Loan Originator
Answer:
person who is a mortgage loan originator with an NMLS unique #
Question:
14. Affiliated Business
Answer:
settlement service provider referred by a lender or mortgage banker and in which the entity has at least 1%
ownership in the referred company
Question:
15. Servicing
Answer:
the billing, accepting and recording payments, issuing late payment notices, and managing of escrow
accounts for a mortgage loan
Question:
16. Settlement
Answer:
The point, also known as closing, when all documents related to the mortgage loan have been signed. Per
RESPA, settlement is the process of executing legally binding documents regarding a lien on a property
Question:
17. Fee Splitting
Answer:
sharing of fees by loan originators is prohibited when one or both parties fail to perform enough work to
earn the fee
Question:
18. Unreasonable Charges
Answer:
charges such as double-billing, are prohibited even when services are performed to earn a fee
Question:
19. Illegal Agreements
Answer:
It is prohibited for two parties to share a written or verbal agreement or even an agreement established
through a practice, pattern, or of course, to offer things of value to one or the other in exchange for referals
Question:
20. Section 9 of RESPA
