997 NMLS Questions with Answers, 100% Accurate, Graded A+

997 NMLS Questions with Answers, 100% Accurate, Graded A+ Document Content and Description Below 997 NMLS Questions with Answers The practice of getting people to sell their homes at bargain prices by suggesting that certain ethnic groups are going to move into the area is nicknamed: -Price f ixing -Redlining -Steering -Blockbusting>>>> Blockbusting You and the borrower believe an Adjustable Rate Mortgage would be best for the borrower. What is the name of the booklet you are required to give? -CHARM Booklet -ARM Disclosure -Fair Lending Practices Booklet -RESPA Booklet>>>> CHARM Booklet How many days in advance of transferring a loan to another lender must the current mortgage servicer inform that customer of the transfer to another lender who will subsequently be servicing the loan? ->>>> 15 After meeting with the borrowers to complete a loan application, you return to your office and order a Tri-Merged credit report. Now that you have a credit report, what Loan Disclosure must you now prepare and mail (or give) to them? -Notice to Home Loan Applicant -Credit Authorization Consent -Denial Letter -Rapid Rescore>>>> Notice to Home Applicant In a face-to-face application, what do you do if the borrower refuses to fill out the race, ethnicity and gender section on Section X of the 1003? -Continue with the loan application, but be sure to get the information completed before submitting the loan to the underwriter. -Process and complete the loan entirely without the information. -Use your best guess and complete the information in Section X of the 1003. -End the application process.>>>> Use your best guess and complete the information in Section X of the 1003. Which is not part of the original loan application? -Borrower's marital status-ECOA disclosure -Borrower provided ethnicity -Borrower provided birth date>>>> ECOA disclosure Which is not an application disclosure? -Servicing disclosure -Environmental hazard disclosure -Appraisal disclosure -APR disclosure>>>> Environmental hazard disclosure Regarding Mortgage Servicing Transfers, what are the number of days that the current mortgage servicer must inform that customer prior to transferring the loan to another lender - who will subsequently service that loan. How many days prior to this loan transfer does the current mortgage servicer have to inform the customer? -15 -20 -3 -45>>>> 15 What is not likely to happen if the lender/investor finds fraud? -A 1% interest rate increase on the loan -The lender and/or broker will be required to repurchase the loan -The entire loan can be called due and payable -The loan officer must pay back any premium made on the loan>>>> A 1% interest rate increase on the loan What is the maximum penalty for providing false information on a federally related loan? -$5,000 fine and one year jail time -$250,000 fine and 30 years jail time -Revoke license and $1,000 fine -Up to $1,000,000 fine and jail time>>>> Up to $1,000,000 fine and jail time What law requires the lender to collect borrower information for first mortgages and home improvement loans? -HOEPA -TILA -ECOA -HMDA>>>> HMDA HMDA requires the lenders to obtain which of the following information for each borrower? -Age and Race -Race and Sex -Marital status and Sex -Marital status and Age>>>> Race and SexProviding a referral fee to a realtor is? -An acceptable practice -An illegal practice -An acceptable practice as long as it is a fair price for services actually provided -Acceptable only if fully disclosed>>>> An illegal practice What are the penalties for giving a referral fee to a realtor?-There are no penalties. -$10,000 per incident and up to one year in jail -$100,000 plus up to 30 years in jail -$1,000,000 plus up to one year in jail>>>> $10,000 per incident and up to one year in jail What are the penalties for violating Section 8 of RESPA? -$5,000 per incident and up to one year in jail -$10,000 per incident plus one year jail time -$100,000 plus up to 30 years in jail -$1,000,000 plus up to one year in jail>>>> $10,000 per incident plus one year jail time Which of the following does RESPA require on a purchase? -Lead paint notice -A 1008 -APR disclosure -Settlement cost booklet>>>> Settlement cost booklet Aggregate escrow requires that the borrower have which of the following? -$0 in the account or no more than 2 months impounds in reserves -$0 in account, or no more than 1 month impound in reserves -No more than 1% of the principal balance of the loan maximum in the impound account -$100 and no impound reserves>>>> $0 in the account or no more than 2 months impounds in reserves What is the minimum amount of time that a lender has to inform the borrower that they are transferring servicing? -15 days -45 days -10 days -60 days>>>> 15 days A yield spread premium is disclosed on which document? -TIL disclosure -Good faith estimate -Servicing disclosure -Rescission disclosure>>>> Good faith estimate Which is the primary law that affects mortgage loan closings?-TILA -ECOA -RESPA -HMDA>>>> RESPA If a loan officer were to take a loan application Tuesday at 1:00 p.m., what is the last day that the good faith estimate must be mailed or disclosed? -The same day, Tuesday before end of business -The next day, Wednesday before 5pm -Friday before midnight -Within 3 days before 5pm>>>> Friday before midnight If you are a lender, it is acceptable to REQUIRE the services of a specific provider: -if you have no ownership interest in the provider. -if the other service provider is an affiliate. -as long as you provide the borrower with the appropriate disclosure within three business days of the loan application. -only if the service provider is licensed.>>>> if you have no ownership interest in the provider. RESPA imposes requirements about or prohibits all of the following except: -legal kickbacks and referral fees. -the loan origination fee. -the amount of prepaids. -information that must be disclosed to the borrower at the loan application or within 3 business days of the application.>>>> the loan origination fee. Regulation Z requires: -disclosure of the settlement costs to buyers and sellers. -disclosure of the impound accounts and the prepaids of the borrower(s). -computation and disclosure of the APR to the borrowers. -disclosure of servicing information on the loan.>>>> computation and disclosure of the APR to the borrowers. If a borrower and a co-borrower are refinancing a home that they both occupy, at the closing - who must receive a copy of the rescission disclosure? -Both borrowers -Either borrower or co-borrower -Neither borrower because it is a refinance -Neither borrower because it is owner occupied and was already financed>>>> Both borrowers If a loan is a refinance, and the loan is improperly closed and funded in one day with no three day rescission period, how long do the borrowers have to rescind the transaction? -1 day -3 days-1 week -3 years>>>> 3 years What is not included in the APR calculations? -Mortgage insurance premium -Origination fee -Processing fee -Hazard/Fire insurance premium>>>> Hazard/Fire insurance premium Regulation B allows all of the following except: -inquiries about the ages of dependents. -inquiries about citizenship and residency status. -inquiring about receiving child support and/or alimony. -using the terms husband or wife when inquiring about a potential co-borrower.>>>> using the terms husband or wife when inquiring about a potential co-borrower. If an applicant has been denied credit, how long does the lender have to get a letter of adverse action to him/her? -10 days -15 days -30 days -It is not necessary to send a letter as long as the borrower knew before they applied they had bad credit.>>>> 30 days If the file is inactive for borrower non-performance a declination letter must be sent within? -10 days -15 days -30 days -It is not necessary to send a letter if the file is merely inactive.>>>> 30 days Define "Business day" under the Truth in Lending Act for the three day right of rescission. -Monday through Friday, except federally related holidays -Monday through Saturday, except federally related holidays -Monday through Saturday except legal public holidays -Any day the mortgage company is open for "business">>>> Monday through Saturday except legal public holidays Which property is exempt under RESPA? -Owner occupied dwellings -25 acres or more -Condominiums -PUDs and condominiums>>>> 25 acres or more A Good Faith Estimate:-must be within $500 of the final costs. -is an estimate only and is not required to reflect the actual settlement costs. -should exhibit a reasonable relationship to the actual final settlement costs. -be within $1,000 of the final costs.>>>> should exhibit a reasonable relationship to the actual final settlement costs. If a home is purchased with an FHA owner-occupied loan, the borrower must move in within? -10 days -20 days -30 days -60 days>>>> 60 days Which of the following must be provided to the client on an ARM loan? -The "Consumer Handbook on Adjustable Rate Mortgages" -The "ARM Handbook" -"When Your Home is on the Line" -"Your Settlement Costs and You" booklet by HUD>>>> The "Consumer Handbook on Adjustable Rate Mortgages" The CHARM booklet was prepared by: -the CFPB. -The Dept. of Housing and Urban Development. -The Federal Housing Administration. -The Federal Reserve Board.>>>> The Federal Reserve Board. When is a loan not subject to RESPA? -When it's a primary residence -When it's a second residence -When the property is 5 acres or less -When the property will be used for a commercial purpose>>>> When the property will be used for a commercial purpose The following two disclosures are required by RESPA, if applicable: -1003 and AfBA -GFE and AfBA -1003 and 1008 -Borrower's Signature Authorization and GFE>>>> GFE and AfBA Which of the following is responsible for determining the need for flood insurance? -The appraiser -The title company -The loan officer -The borrower>>>> The appraiser How long is flood insurance required?-Until the next drought -For the first 5 years -For the life of the loan -Until the LTV is 78% or less>>>> For the life of the loan What does HMDA stand for? -Home Mortgage Disclosure Act -Home Mortgage Disabilities Act -Housing Mortgage Disclosure Act -Home Mortgage Development Association>>>> Home Mortgage Disclosure Act Which of the following are functions of FACTA? (Select all that apply) -To improve consumer access to credit information -To improve resolution of consumer disputes with credit agencies -To prevent identity theft and restore credit history to victims of identity theft -All of the above>>>> All of the above What is the objective of FCRA? -To assure fairness, relevancy, confidentiality, and accuracy -To assure all borrowers have access to credit -To delete obsolete information -All of the above>>>> All of the above Under the FCRA, when must credit reporting agencies delete obsolete information? -5 years from the date placed for collection or charged off -10 years from the date opened, except for bankruptcies -7 years from the date of last activity, except for bankruptcies -7 years from the date of last activity including bankruptcies>>>> 7 years from the date of last activity, except for bankruptcies Which is the only authorized site for obtaining your free credit report? -FreeCreditR -AnnualCreditR -FreeS -CreditR>>>> AnnualCreditR When is it legal and/or acceptable for the loan originator to provide the consumer with a copy of his/her credit report? -Never -When the customer pays for it -When the customer requests it -When contracts with the credit reporting agency do not prohibit it>>>> When contracts with the credit reporting agency do not prohibit it What is ECOA? -Equal Credit Option Administration-Environmental Commission Oversight Act -Equal Consumer Opportunity Act -Equal Credit Opportunity Act>>>> Equal Credit Opportunity Act Regulation B does which of the following? -Protects a borrower from fraudulent use of their information -Requires Upfront Mortgage Insurance on all FHA loans -Provides equality in the extension of credit -Regulates advertising of APR>>>> Provides equality in the extension of credit Who provides the Annual Escrow Account Disclosure Statement? -The Mortgage Loan Originator -The Broker -The Title Company -The Servicing Lender>>>> The Servicing Lender When is an Affiliated Business Agreement required? -Always when there is a co-borrower/affiliate -Only purchase loans -If an affiliated business is providing services -It is no longer required>>>> If an affiliated business is providing services 4.It is no longer required Which of the following is a purpose of RESPA? -To regulate interest rates -To monitor high cost loans -To eliminate kickback and referral fees -To track real estate settlement trends>>>> To eliminate kickback and referral fees What is a purpose of the Truth in Lending Act? -To enable consumers to compare the cost of credit from lender to lender -To keep loan officers honest -To prevent kickback and referral fees -To oversee commercial lending>>>> To enable consumers to compare the cost of credit from lender to lender Which of the following is acceptable discrimination under ECOA? -Race -Sex -Religion -Employment>>>> Employment If an advertisement contains TRIGGER TERMS, what must then be disclosed? -APR only -APR and payment amount -Interest rate, term, balance, and APR-Interest rate, closing costs, and APR>>>> Interest rate, term, balance, and APR Which of the following is not a prepaid finance charge? -Origination fee -Discount point -Upfront Mortgage Insurance Premium -Appraisal fee>>>> Appraisal fee What is the purpose of HMDA? -To detect discriminatory lending -To prevent high cost loans -To regulate Home Mortgage Appraisals -To oversee the FHA>>>> To detect discriminatory lending Regulation B is affiliated with which act? -TILA -ECOA -HMDA -HOEPA>>>> ECOA ECOA prevents discrimination based on: -Income -Marital Status -Location -Employment>>>> Marital Status The practice of denying home financing in certain neighborhoods is called: -Redlining -Bait and switch -Dart boarding -Skimming>>>> Redlining How long must a brokerage owner keep records? -3 years -4 years -5 years -7 years>>>> 3 years Which of the following is an example of a subprime loan? -2/28 -3/1 -5/1 -360/180>>>> 2/28 A 360/180 best describes what type of loan? -Subprime-FHA -Balloon -ARM>>>> Balloon How often must a borrower receive an annual privacy notice? -As long as they are customers -Every 6 months -Only at closing -With initial disclosures, then annually for the first 5 years>>>> As long as they are customers Who is required to comply with the Do Not Call list? -National Banks -Airlines -Political organizations -Loan officers>>>> Loan officers Examples of Red Flags include all of the following except: -Fraud alert on credit reports -Documentation which appears altered or forged -Address discrepancies -Credit scores>>>> Credit scores The Patriot Act requires loan originators to: -check all gift donors against the known terrorist list. -report suspicious individuals. -keep records with customer identifying information for years. -verify citizenship/legal residency before submitting a file to underwriting.>>>> check all gift donors against the known terrorist list. Which disclosure is due within 3 business days of application? -Fair Housing Disclosure -HUD-1 -ECOA Notice -Servicing Disclosure>>>> Servicing Disclosure 68.What is the penalty for Red Flag non-compliance? -$5,000 per incident -$2,500 per incident -$10,000 per incident -$3,500 per incident>>>> $3,500 per incident The fastest permissible closing time under MDIA is: -3 business days -5 business days -7 business days -10 business days>>>> 7 business days According to MDIA, when must you provide a copy of the appraisal to your borrower? -3 business days prior to settlement -At settlement -1 business day prior to settlement -Within 90 days after a borrower request for the appraisal>>>> 3 business days prior to settlement-The Real Estate Settlement Procedures Act falls under the control of which agency? -HUD/CFPB -Federal Reserve -SEC -State Regulators>>>> HUD/CFPB -Which of the following entities oversees MDIA? -CFPB -HUD -State Attorney's General -Dept. of Veteran Affairs>>>> CFPB -Which of the following documents itemizes all settlement costs including lender charges? -Agreement of sale -HUD-1/Settlement statement -Form 1003 -Forbearance agreement>>>> HUD-1/Settlement statement According to the Truth-in-Lending Act (TILA), the term "refinance" applies to: -a change in payment schedule. -a reduction of the APR. -the renewal of a single payment obligation with no change in the original terms. -the satisfaction of an existing obligation and its replacement by a new obligation.>>>> the satisfaction of an existing obligation and its replacement by a new obligation. Which of the following methods of disclosure does NOT meet the requirements of the Equal Credit Opportunity Act (ECOA)? -E-Mail -Mailed Letter -Telephone -Faxed letter>>>> Telephone RESPA is the acronym for: -Real Estate Sales Procurement Act -Real Estate Sales Process Act -Real Estate Settlement Procedures Act -Rights, Equalization, Stabilization and Processing Act>>>> Real Estate Settlement Procedures Act -HMDA is the acronym for: -House and Mortgage Deposit Act. -Home Mortgage Discovery Act. -Home Mortgage and Development Act. -Home Mortgage Disclosure Act.>>>> Home Mortgage Disclosure Act. FIRREA is the acronym for: -Financial Institutions Reform, Recovery and Enforcement Act. -Fair Institutional Rules, Regulations and Equalization Act. -Federal Institution Recover, Reform, and Executive Act. -Falsification of Restoration, Recover and Extrication Act.>>>> Financial Institutions Reform, Recovery and Enforcement Act. FHA is the acronym for: -Fair Habitation Act -Federal Housing Act -Fair Home Act -Fair Housing Act>>>> Fair Housing ActFCRA is the acronym for: -Federal Credit Reporting Act. -Federal Certificate of Reimbursement Act. -Fair Credit Reporting Act. -Federal Community Redevelopment Act.>>>> Fair Credit Reporting Act. CFPB is the acronym for: -Congressional Fair Public Business Act. -Consumer Financial Protection Bureau. - Consumers Federal Policy Bureau. -Congressional Federal Protection Board.>>>> Consumer Financial Protection Bureau. ECOA is the acronym for: -Equal Credit Opportunity Act. -Equal Community Opportunity Act. -Equity Conservation and Organization Act. -Equal Contribution and Options Act.>>>> Equal Credit Opportunity Act. CRA is the acronym for: -Congressional Reclamation Act. -Community Reinvestment Act. -Community Redevelopment Act. -Cost of Reinvestment Act.>>>> Community Reinvestment Act. APR is the acronym for: -Average Percentage Rate. -All-Inclusive Percentage Rate. -Annual Percentage Rate. -Amortized Percentage Rate.>>>> Annual Percentage Rate. Which of the following, under RESPA, could NOT provide settlement services for the loan and purchase of an owner occupied property? -Someone who holds a power of attorney -The lender originating the loan -A licensed escrow officer -A licensed attorney>>>> Someone who holds a power of attorney 2.The lender originating the loan What is the penalty for a loan officer violating RESPA by paying a referral fee to a real estate agent? -$10,000/three years prison -$10,000/one year prison -$1,000/one year suspension -$5,000/one year prison>>>> $10,000/one year prison According to RESPA, where must the YSP be disclosed? -Truth in Lending Disclosure -Notice of Right to Cancel-Good Faith Estimate -APR Calculation>>>> Good Faith Estimate RESPA regulations require that an annual escrow statement be provided to the borrower within what time frame? -10 days after the end of the calendar year -Annually -30 days BEFORE the end of the calendar year -Annually 15 days after the funding of the loan by the new servicer>>>> Annually Which of the following does RESPA require to be given to the borrower? -Settlement Cost Booklet -Right of Rescission -Lead Based Paint Disclosure -APR Disclosure>>>> Settlement Cost Booklet Under RESPA, which of the following would be considered legal? -Charging a slight fee over the actual cost of the credit report. -Charging $50 over the actual cost of the appraisal. -A payment to a real estate agent bringing a client for a loan. -Charging for fees that are direct costs of the loan.>>>> Charging for fees that are direct costs of the loan. Under RESPA, the aggregate impound limits at closing are: -zero dollars or 1 months taxes and insurance. -1% of the entire principal balance. -zero dollars / up to 2 months taxes and insurance. -$100 and three months taxes and insurance.>>>> zero dollars / up to 2 months taxes and insurance. How much notice is the lender required to give the borrower before transferring the "servicing" of the loan? -10 Days -45 Days -30 Days -15 Days>>>> 15 Days A "trigger term" is any number used in advertising, other than the APR. When a trigger term is used, the advertising must include all of the following EXCEPT the: -Origination fee -Payment -Rate -Term>>>> Origination fee In all forms of advertising credit, the only number that can be freely used is the: -total number of payments.-amount financed. -annual percentage rate. -finance charge.>>>> annual percentage rate. When an ARM loan is obtained, additional disclosures to the borrower include all the following EXCEPT: -a loan program disclosure. -the balance in the lender's trust account. -a $10,000 loan historical example. -a handbook explaining Adjustable Rate Mortgages.>>>> the balance in the lender's trust account. The APR is the interest rate plus the finance charges computed and expressed as: -a percent. -an annual payment. -a dollar amount. -the amount financed.>>>> a percent. The APR includes fees that are required to get the loan. Not included are costs which would occur with a: -first time homebuyer. -home refinance loan. -cash buyer. -construction loan.>>>> cash buyer. The APR does not include which of the following? -Mortgage Insurance -Appraisal -Interest rate -Origination charges>>>> Appraisal The Truth in Lending Disclosure Statement must reveal all the following EXCEPT the: -date of the first payment. -annual percentage rate -finance charge. -amount financed.>>>> date of the first payment. According to Reg. Z, the borrower's automatic right to rescind the loan within 3 business days does not apply to: -loans used to refinance the borrower's home. -loans secured by second trust deeds. -equity lines of credit. -loans to purchase or build the borrower's residence.>>>> loans to purchase or build the borrower's residence. The borrower right to rescind the loan is disclosed in the:-72-hour Contingency Clause -Loan application -Notice of Right to Cancel -HUD-1 Settlement Statement>>>> Notice of Right to Cancel If the annual percentage rate (APR) of a loan changes more than .250 of 1% from the original disclosure on an irregular (ARM) transaction, which of the following would be applicable? -The lender is in violation of the law. -The borrower can "lock-in" the loan to avoid further interest increases. -The lender must pay for the borrower's credit report. -The borrower must be given a new disclosure at least 3 business days before the loan can be closed.>>>> The borrower must be given a new disclosure at least 3 business days before the loan can be closed. The Borrower is entitled to the disclosure of the costs of a mortgage loan in writing in a form he may keep: -within three business days of the loan application. -prior to making application for a loan. -within 7 business days of the loan application. -Within 3 business days prior to loan closing.>>>> within three business days of the loan application. The Truth in Lending Act protects the borrower by: -putting caps or limits on rate adjustments. -making low interest rate guarantees. -requiring disclosure of loan costs -establishing usury laws.>>>> requiring disclosure of loan costs Regulation Z is another name for: -Equal Credit Opportunity Act. -Truth in Lending Act. -Americans With Disabilities Act. -Home Mortgage Disclosure Act.>>>> Truth in Lending Act. The Truth in Lending Act is also known as: -Consumer Credit Protection Act -Fair Credit Reporting Act -Home Mortgage Disclosure Act -Trust Fund Accounting Act>>>> Consumer Credit Protection Act A refinance loan closes and funds. The lender forgot to tell the borrowers about the right of rescission. How long do the borrowers have to rescind the loan? -3 days -3 months -3 years-Only until the first payment is due>>>> 3 years A mortgage lender gave a final disclosure to a borrower which understated the APR by 50 basis points. What should be done? -The lender has to give the loan at the lower amount. -The lender should prepare new documents and redisclose in accordance with MDIA required waiting periods. -Re-close the transaction. -Nothing, as it was less than the required amount for redisclosure.>>>> The lender should prepare new documents and redisclose in accordance with MDIA required waiting periods. Under the Truth in Lending Act, which of the following is NOT a requirement? -Borrower review of HUD-1 -Three day right of rescission -Use of APR in advertising -Disclosure of loan costs>>>> Borrower review of HUD-1 Which of the following would NOT appear on the Truth-in-Lending Disclosure? -Finance charge -Amount financed -Total of Payments -Discount points>>>> Discount points Which of the following is NOT calculated into the APR? -Fixed interest rate -Lender's origination fee -Realtor's com