NMLS MLO EXAM QUESTIONS AND ANSWERS
What must a borrower do to avoid having late payments reported to a credit bureau? -
Answers -Pay within 30 days of due date
Max penalty if a borrower is required to use a specific title company or settlement
agent? - Answers -3 times the fee
What should not be over-weighted in an analysis of borrower repayment capacity? -
Answers -Credit scores
Max prepayment penalty on residential mortgages in the first year of the loan - Answers
-3%
What must condominium associations do with respect to property insurance? - Answers
-Keep a "blanket" policy that protects the entire structure
If a lender is planning on referring a borrower to a title company that the lender has
ownership in, when must the AFBA must be provided to the borrower? - Answers -
Before the referral to the title company is made
Website to obtain copy of your credit report that the credit bureaus are required to
provide once per year at no charge - Answers -annualcreditreport.com
2/3/6 caps - Answers -ARM initial adjustment max is 2%, subsequent adjustment period
max is 3%, and lifetime cap of 6%
What does FHLB stand for and what do they provide? - Answers -Federal Home Loan
Bank, and they provide advances to financial institutions for residential mortgage loans
According to the Dodd-Frank Act, how much risk must be retained by the securitizer for
a loan that does not meet QRM guidelines? - Answers -5%
On a purchase transaction, what document contains the purchase price for a property? -
Answers -Sales Contract
Escheat - Answers -When a property owner dies without a will and the state is unable to
locate any heirs, so the state claims the property.
Disintermediation - Answers -The withdrawal of funds out of savings accounts and into
stocks and bonds
Eminent Domain - Answers -The condemnation of private property for public good
, Warranty Deed - Answers -The document conveying title from one party to another and
guaranteeing that the title is good
Another name for an installment contract - Answers -Contract for Deed
An outstanding claim on a property that limits the ability to sell the property is a -
Answers -Title Defect
A mortgage note that does NOT limit recovery solely from the property is called a: -
Answers -Note Endorsed with Recourse
Are investment properties exempt from RESPA's requirements? - Answers -Yes
Tolerance amount (%) for an Appraisal Fee? - Answers -0%
Are FHA loans Partially Guaranteed or 100% insured? - Answers -100% insured
Mortgagee title insurance policy is not _____ - Answers -Optional
Which parties sign the deed? - Answers -Grantor and 2 witnesses
When the mortgagor and mortgagee title insurance policies are issued at the same
time, this is known as: - Answers -Simultaneous issue
What minimum % of ownership in a related service requires a conflict of interest
disclosure? - Answers -10%
What law defines the right of rescission? - Answers -Truth-in-Lending
How long after the application date must social security payments continue to be
received in order to count as income? - Answers -3 years
Which appraisal approach is most suitable for an office building? - Answers -Income
Capitalization Approach
Term Mortgage - Answers -Short-term mortgage (usually less than 5 years) where the
loan is not fully amortized, instead the borrower makes interest only payments for the
term of the loan. At the end of the term, the entire principle is due in a lump sum
payment aka balloon payment
Who is responsible for completing the HUD-1/Loan Disclosure? - Answers -The closing
agent
A mortgagor's title insurance policy is based on purchase price. True or False? -
Answers -True
What must a borrower do to avoid having late payments reported to a credit bureau? -
Answers -Pay within 30 days of due date
Max penalty if a borrower is required to use a specific title company or settlement
agent? - Answers -3 times the fee
What should not be over-weighted in an analysis of borrower repayment capacity? -
Answers -Credit scores
Max prepayment penalty on residential mortgages in the first year of the loan - Answers
-3%
What must condominium associations do with respect to property insurance? - Answers
-Keep a "blanket" policy that protects the entire structure
If a lender is planning on referring a borrower to a title company that the lender has
ownership in, when must the AFBA must be provided to the borrower? - Answers -
Before the referral to the title company is made
Website to obtain copy of your credit report that the credit bureaus are required to
provide once per year at no charge - Answers -annualcreditreport.com
2/3/6 caps - Answers -ARM initial adjustment max is 2%, subsequent adjustment period
max is 3%, and lifetime cap of 6%
What does FHLB stand for and what do they provide? - Answers -Federal Home Loan
Bank, and they provide advances to financial institutions for residential mortgage loans
According to the Dodd-Frank Act, how much risk must be retained by the securitizer for
a loan that does not meet QRM guidelines? - Answers -5%
On a purchase transaction, what document contains the purchase price for a property? -
Answers -Sales Contract
Escheat - Answers -When a property owner dies without a will and the state is unable to
locate any heirs, so the state claims the property.
Disintermediation - Answers -The withdrawal of funds out of savings accounts and into
stocks and bonds
Eminent Domain - Answers -The condemnation of private property for public good
, Warranty Deed - Answers -The document conveying title from one party to another and
guaranteeing that the title is good
Another name for an installment contract - Answers -Contract for Deed
An outstanding claim on a property that limits the ability to sell the property is a -
Answers -Title Defect
A mortgage note that does NOT limit recovery solely from the property is called a: -
Answers -Note Endorsed with Recourse
Are investment properties exempt from RESPA's requirements? - Answers -Yes
Tolerance amount (%) for an Appraisal Fee? - Answers -0%
Are FHA loans Partially Guaranteed or 100% insured? - Answers -100% insured
Mortgagee title insurance policy is not _____ - Answers -Optional
Which parties sign the deed? - Answers -Grantor and 2 witnesses
When the mortgagor and mortgagee title insurance policies are issued at the same
time, this is known as: - Answers -Simultaneous issue
What minimum % of ownership in a related service requires a conflict of interest
disclosure? - Answers -10%
What law defines the right of rescission? - Answers -Truth-in-Lending
How long after the application date must social security payments continue to be
received in order to count as income? - Answers -3 years
Which appraisal approach is most suitable for an office building? - Answers -Income
Capitalization Approach
Term Mortgage - Answers -Short-term mortgage (usually less than 5 years) where the
loan is not fully amortized, instead the borrower makes interest only payments for the
term of the loan. At the end of the term, the entire principle is due in a lump sum
payment aka balloon payment
Who is responsible for completing the HUD-1/Loan Disclosure? - Answers -The closing
agent
A mortgagor's title insurance policy is based on purchase price. True or False? -
Answers -True
