Module 1 NMLS exam questions with complete solutions

What are the penalties for violation of RESPA/Section 8 - Answer-Section 8 of RESPA prohibits referral fees and other forms of kickbacks/fee splitting. Penalties include fines of up to 10,000 and up to one year in prison Disclosures due within three business days of loan application - Answer-Loan Estimate Your Home Loan Toolkit: A Step By Step Guide CHARM Booklet Variable-rate program disclosures Home equity plan disclosures Notice of Right to Receive an Appraisal Report What can result in a 1,000,000 fine and 30 years in prison? - Answer-Acts of mortgage fraud Definition of the term "creditor" - Answer-The Equal Credit Opportunity Act (ECOA), the Fair Credit Reporting Act (FCRA), and the Fair and Accurate Credit Transactions Act (FACTA) all use the same definition for creditor. A creditor is any person who regulary extends, renews, or continues credit. Loan originators, lenders, and other mortgage progessionals are included in this definition. Transactions reported under HMDA.. - Answer-Purchases Refinances Home improvement loans Pre-qualifications must also be reported, along with their disposition When a borrowers LTV reaches 80%... - Answer-He/she is permitted to request discontinuation of PMI. The Homeowners Protection Act sets the requirements for discontinuation of PMI. It is at the lenders discretion to permit discontinuation - the borrower must be current on payments An initial privacy notice is due.. - Answer-At the time that a customer relationship is established. the Gramm-Leach Bliley Act requires financial institution (including mortgage brokers) to provide and intial privacy notice " not later than when you establish a customer relationship..." The initial privacy notice should also be accompanied by the opt-out noitce HMDA requires loan originators to... - Answer-Request information on and applicants race, ethnicity, and sex. The applicant may decline to answer, in which case the loan originator must make a best guess based on visual observation. This information is necessary to meet the reporting requirements of HMDA