SAFE Mortgage Loan Originator Test -
National Component UPDATED Exam
Questions and CORRECT Answers
What does UST stand for? - Correct Answer- Uniform State Test
Who does the CFPB protect? - Correct Answer- The Consumer Financial Protection Bureau
protects consumers in the financial marketplace.
What does the CFPB do? - Correct Answer- CFPB is now in charge of implementing and
enforcing most of the provisions of federal lending laws that relate to protecting consumers
while they are shopping for, securing, and paying off mortgages.
What is the purpose of RESPA? (3 things) - Correct Answer- a.Protect consumers from
excessive settlement costs and unearned fees
b.Limit the amount of funds that creditors can require consumers to deposit into escrow
accounts
c.Establish disclosures, policies, and procedures to facilitate timely communications between
loan servicers and consumers
Who is responsible for the enforcement of RESPA and for issuing implementing regulations?
- Correct Answer- The CFPB
What are RESPA's regulations called? - Correct Answer- Regulation X
Which 2 documents replaced RESPA's Good Faith Estimate and the Truth-in-Lending
Disclosure? - Correct Answer- 1.) Loan Estimate
2.) Closing Disclosure
,What types of mortgages does RESPA cover? - Correct Answer- "Federally-related mortgage
loans," the requirements of RESPA apply to virtually every home loan secured by a mortgage.
What type of loans does RESPA not pertain to? - Correct Answer- a. Loans for business,
commercial, or agricultural purposes
b. Temporary financing
c. Loans secured by vacant land
d. The sale of a loan into the secondary market
e. Loan conversions (same note - new terms)
Is compensating someone for a referral legal? - Correct Answer- No!!!
What is "borrower credit"? - Correct Answer- Historically referred to as "yield spread
premium" (YSP), the borrower credit is a fee paid to the borrower by the lender when a loan
is originated at a higher interest rate than the lowest rate for which the borrower qualifies.
The borrower credit is used to subsidize closing costs, such as the origination or broker fee,
because it is financed so that out-of-pocket closing costs are "borrowed" from the lender.
What is a markup? - Correct Answer- A unilateral increase in the cost of a settlement service
and retention of the additional fee by the party making the markup. The controversy over
markups and their legality is discussed in a subsequent course section. As a practice that may
easily lead to litigation, it is one that should not be used without obtaining legal advice.
What are the 5 disclosures required by RESPA? - Correct Answer- 1.) Loan Estimate
2.) Closing Disclosure
3.) Settlement Cost Information Booklet
4.) Mortgage Servicing Disclosure Statement
5.) Affiliated Business Arrangement Disclosure
,Are creditors allowed to add their name to the cover of the Special Information Booklet sent
to borrowers? - Correct Answer- Yes
Are they allowed to translate it into other languages? - Correct Answer- Yes
Are they allowed to send it with other materials in a larger document? - Correct Answer- No
For a loan with a co-borrower, must each applicant receive a Special Information Booklet? -
Correct Answer- No, only one person has to receive.
After a loan application is submitted, how many business days later must a borrower receive
their Special Information Booklet? - Correct Answer- 3 days (for purchase only)
When is a Special Information Booklet not required to be sent? (3 answers) - Correct Answer-
1.) A refinance
2.) A closed-end loan secured by a subordinate lien
3.) A reverse mortgage loan
How long does RESPA require a lender to keep each Affiliated Business Arrangement
disclosure? - Correct Answer- 5 years
If a MLO recommends a particular settlement service provider over the phone, in how many
days must a borrower receive a disclosure in the mail? - Correct Answer- 3 business days
If a settlement service provider refers a loan applicant to an affiliated business for settlement
services, he or she must disclose the affiliated business arrangement...? - Correct Answer- At
the time the referral is made.
On which document does the lender specify if he will service the loan or sell the servicing to
someone else? - Correct Answer- On the Loan Estimate
RESPA and Regulation X still impose a requirement on servicers to provide notice to
consumers of any assignment, sale, or transfer of servicing. How many days before a switch,
must a servicer disclose that a switch will occur? - Correct Answer- 15 days
, How many months cushion can a servicer require a borrower to keep in his/her escrow
account? - Correct Answer- one sixth of the estimated total annual disbursements = 2 months
payments
If there is a surplus in excess of 2 months required disbursements in one's escrow account by
$45 dollars, must it be returned to the borrower? - Correct Answer- No, it will be credited to
next year. Only funds equal to or in excess of $50 must be returned.
What are the 2 mandatory escrow account disclosures? - Correct Answer- 1.) the initial
escrow statement and 2.) the annual escrow statement.
When is the initial escrow statement required to be given to the borrower, and what must it
include? - Correct Answer- While this disclosure is typically given at settlement, the lender
has 45 days from settlement to deliver it. The initial escrow statement must show:
1.) The amount of the borrower's mortgage payment and the portion that is deposited into the
escrow account
2.) Itemized taxes, insurance, and other payments to be made from the escrow account during
the computation year
3.) The amount that the servicer has selected as a cushion
4.) A "trial running balance" (the accounting process used to reach target balances over the
course of a computation year)
When is the annual escrow statement required to be disclosed, and what must it include? -
Correct Answer- This disclosure is due within 30 days of completion of the escrow account
computation year, and it must provide:
1.) An account history and a projection of the payments for the coming year
2.) A statement showing both last year's and the current year's monthly mortgage payment,
and the amount of the payment that is deposited into the escrow account
National Component UPDATED Exam
Questions and CORRECT Answers
What does UST stand for? - Correct Answer- Uniform State Test
Who does the CFPB protect? - Correct Answer- The Consumer Financial Protection Bureau
protects consumers in the financial marketplace.
What does the CFPB do? - Correct Answer- CFPB is now in charge of implementing and
enforcing most of the provisions of federal lending laws that relate to protecting consumers
while they are shopping for, securing, and paying off mortgages.
What is the purpose of RESPA? (3 things) - Correct Answer- a.Protect consumers from
excessive settlement costs and unearned fees
b.Limit the amount of funds that creditors can require consumers to deposit into escrow
accounts
c.Establish disclosures, policies, and procedures to facilitate timely communications between
loan servicers and consumers
Who is responsible for the enforcement of RESPA and for issuing implementing regulations?
- Correct Answer- The CFPB
What are RESPA's regulations called? - Correct Answer- Regulation X
Which 2 documents replaced RESPA's Good Faith Estimate and the Truth-in-Lending
Disclosure? - Correct Answer- 1.) Loan Estimate
2.) Closing Disclosure
,What types of mortgages does RESPA cover? - Correct Answer- "Federally-related mortgage
loans," the requirements of RESPA apply to virtually every home loan secured by a mortgage.
What type of loans does RESPA not pertain to? - Correct Answer- a. Loans for business,
commercial, or agricultural purposes
b. Temporary financing
c. Loans secured by vacant land
d. The sale of a loan into the secondary market
e. Loan conversions (same note - new terms)
Is compensating someone for a referral legal? - Correct Answer- No!!!
What is "borrower credit"? - Correct Answer- Historically referred to as "yield spread
premium" (YSP), the borrower credit is a fee paid to the borrower by the lender when a loan
is originated at a higher interest rate than the lowest rate for which the borrower qualifies.
The borrower credit is used to subsidize closing costs, such as the origination or broker fee,
because it is financed so that out-of-pocket closing costs are "borrowed" from the lender.
What is a markup? - Correct Answer- A unilateral increase in the cost of a settlement service
and retention of the additional fee by the party making the markup. The controversy over
markups and their legality is discussed in a subsequent course section. As a practice that may
easily lead to litigation, it is one that should not be used without obtaining legal advice.
What are the 5 disclosures required by RESPA? - Correct Answer- 1.) Loan Estimate
2.) Closing Disclosure
3.) Settlement Cost Information Booklet
4.) Mortgage Servicing Disclosure Statement
5.) Affiliated Business Arrangement Disclosure
,Are creditors allowed to add their name to the cover of the Special Information Booklet sent
to borrowers? - Correct Answer- Yes
Are they allowed to translate it into other languages? - Correct Answer- Yes
Are they allowed to send it with other materials in a larger document? - Correct Answer- No
For a loan with a co-borrower, must each applicant receive a Special Information Booklet? -
Correct Answer- No, only one person has to receive.
After a loan application is submitted, how many business days later must a borrower receive
their Special Information Booklet? - Correct Answer- 3 days (for purchase only)
When is a Special Information Booklet not required to be sent? (3 answers) - Correct Answer-
1.) A refinance
2.) A closed-end loan secured by a subordinate lien
3.) A reverse mortgage loan
How long does RESPA require a lender to keep each Affiliated Business Arrangement
disclosure? - Correct Answer- 5 years
If a MLO recommends a particular settlement service provider over the phone, in how many
days must a borrower receive a disclosure in the mail? - Correct Answer- 3 business days
If a settlement service provider refers a loan applicant to an affiliated business for settlement
services, he or she must disclose the affiliated business arrangement...? - Correct Answer- At
the time the referral is made.
On which document does the lender specify if he will service the loan or sell the servicing to
someone else? - Correct Answer- On the Loan Estimate
RESPA and Regulation X still impose a requirement on servicers to provide notice to
consumers of any assignment, sale, or transfer of servicing. How many days before a switch,
must a servicer disclose that a switch will occur? - Correct Answer- 15 days
, How many months cushion can a servicer require a borrower to keep in his/her escrow
account? - Correct Answer- one sixth of the estimated total annual disbursements = 2 months
payments
If there is a surplus in excess of 2 months required disbursements in one's escrow account by
$45 dollars, must it be returned to the borrower? - Correct Answer- No, it will be credited to
next year. Only funds equal to or in excess of $50 must be returned.
What are the 2 mandatory escrow account disclosures? - Correct Answer- 1.) the initial
escrow statement and 2.) the annual escrow statement.
When is the initial escrow statement required to be given to the borrower, and what must it
include? - Correct Answer- While this disclosure is typically given at settlement, the lender
has 45 days from settlement to deliver it. The initial escrow statement must show:
1.) The amount of the borrower's mortgage payment and the portion that is deposited into the
escrow account
2.) Itemized taxes, insurance, and other payments to be made from the escrow account during
the computation year
3.) The amount that the servicer has selected as a cushion
4.) A "trial running balance" (the accounting process used to reach target balances over the
course of a computation year)
When is the annual escrow statement required to be disclosed, and what must it include? -
Correct Answer- This disclosure is due within 30 days of completion of the escrow account
computation year, and it must provide:
1.) An account history and a projection of the payments for the coming year
2.) A statement showing both last year's and the current year's monthly mortgage payment,
and the amount of the payment that is deposited into the escrow account
