NMLS Study Guide; Test with Verified Solutions
Portfolio Lender CORRECT ANS-Retail lender (ex. a bank, savings bank, credit union, or
mortgage lender) that interacts directly with the borrower and actually makes the loan. If it
holds, rather than sells, it's loans, it is called a portfolio lender.
Correspondent Lender CORRECT ANS-Generally a smaller lender that takes apps and
underwrites and funds loans either with its own money or from a line of credit with a larger
lender and, immediately upon closing, sells the loans to wholesale lenders under previously
agreed-upon terms.
Wholesale Lender CORRECT ANS-Goes through a mortgage broker. This is a mortgage
investor that prices and funds loans applied for through mortgage brokers. After a mortgage
broker process and app, the wholesale lender has it underwritten and funded. After the loan
is made, the wholesale lender will either service it or sell or assign servicing to another entity.
Mortgage Lender CORRECT ANS-(mortgage banker) Makes loans with its own funds,
through mortgage brokers, mortgage loan originators and loan processors who obtain and
process applications from borrowers.
, NMLS Study Guide; Test with Verified Solutions
Mortgage Broker CORRECT ANS-Does NOT fund loans. Qualifies and then finds lenders that
are willing to make a loan based on the brw's qualifications.
The Fed (Monetary policy) CORRECT ANS-When the fed believes there is danger that
economic growth is likely to result in inflation, it may: Raise its asset reserve requirements for
members, raise its target for the fed funds rate (rate at which members borrow from each
other), raise the discount rate (rate charged to members to borrow from the fed), sell gov't
securities through its open market operations.
Secondary Mortgage Market CORRECT ANS-Where mortgages may be sold individually or
in bundles with other mortgages with similar features into mortgage-backed securities and
sold on the equity market.
Freddie and Fannie CORRECT ANS-Government sponsored enterprises (GSE's) - Created by
congress and receive gov't assistance.
Conveyance CORRECT ANS-In such a (land contract) contact, the seller (or vendor) finances
the purchase of his property for the buyer. The buyer (or vendee) makes the payments to the
seller in installments until he can pay off his entire debt, generally by refinancing, at which
, NMLS Study Guide; Test with Verified Solutions
time he is given a deed, transferring ownership of the property to the buyer. The transfer of
property, and the deed itself, may be called a conveyance.
Legal title CORRECT ANS-The seller keeps the legal title until the contract is paid off, even
though the contract may give the buyer possession and equitable title as soon as it is signed.
Equitable Title CORRECT ANS-Means the buyer is entitled to a deed conveying the legal
title when the contract is fully paid and performed. If the vendee defaults, the vendor may
foreclose or, depending on state statute, declare forfeiture to regain his property.
Security instrument CORRECT ANS-In a typical real estate sales transaction, the seller gives
the buyer a deed at closing, and the buyer gives the lender a promissory note and a security
instrument (ex a mortgage or trust deed) creating a lien on the property.
Soft money vs Hard money loans CORRECT ANS-When the seller finances the purchase,
and does not actually give the buyer any cash, the loan may be called a soft money loan.
When a 3rd party lender provides actual funds for the loan, it is called a hard money loan.
, NMLS Study Guide; Test with Verified Solutions
Due-on-sale (alienation) clause CORRECT ANS-Allows lender to: -Declare the entire
balance of the loan due at once. or - Refuse to allow another person to assume the loan, if the
title is transferred. FHA and VA loans are assumable by qualified buyers, Fannie Mae and
Freddie Mac conforming loans may or may not be assumable based on the contents of the
mortgage docs and the type of transfer.
Defeasance clause CORRECT ANS-Which provides for release of the lien when the
borrower pays off the debt. However, to provide public notice that the debt has been repaid
and to clear it from the public record: - satisfaction or release is recorded to clear a mortgage
lien. - a deed of reconveyance is recorded to clear a trust deed lien ( or in some states, a
mortgage).
Conventional loans CORRECT ANS-Loans made by private parties and nongovernmental
lending institutions w/o any gov't insurance or gov't guarantee against loss for the lender.
Mortgage loans that are not FHA, VA, or USDA (or RHS) loans are conventional loans. They
may be conforming or nonconforming.
VA Loan Qualifications CORRECT ANS-1. A 41% debt-to-income ratio (DTI) (including
housing and fixed debt)
Portfolio Lender CORRECT ANS-Retail lender (ex. a bank, savings bank, credit union, or
mortgage lender) that interacts directly with the borrower and actually makes the loan. If it
holds, rather than sells, it's loans, it is called a portfolio lender.
Correspondent Lender CORRECT ANS-Generally a smaller lender that takes apps and
underwrites and funds loans either with its own money or from a line of credit with a larger
lender and, immediately upon closing, sells the loans to wholesale lenders under previously
agreed-upon terms.
Wholesale Lender CORRECT ANS-Goes through a mortgage broker. This is a mortgage
investor that prices and funds loans applied for through mortgage brokers. After a mortgage
broker process and app, the wholesale lender has it underwritten and funded. After the loan
is made, the wholesale lender will either service it or sell or assign servicing to another entity.
Mortgage Lender CORRECT ANS-(mortgage banker) Makes loans with its own funds,
through mortgage brokers, mortgage loan originators and loan processors who obtain and
process applications from borrowers.
, NMLS Study Guide; Test with Verified Solutions
Mortgage Broker CORRECT ANS-Does NOT fund loans. Qualifies and then finds lenders that
are willing to make a loan based on the brw's qualifications.
The Fed (Monetary policy) CORRECT ANS-When the fed believes there is danger that
economic growth is likely to result in inflation, it may: Raise its asset reserve requirements for
members, raise its target for the fed funds rate (rate at which members borrow from each
other), raise the discount rate (rate charged to members to borrow from the fed), sell gov't
securities through its open market operations.
Secondary Mortgage Market CORRECT ANS-Where mortgages may be sold individually or
in bundles with other mortgages with similar features into mortgage-backed securities and
sold on the equity market.
Freddie and Fannie CORRECT ANS-Government sponsored enterprises (GSE's) - Created by
congress and receive gov't assistance.
Conveyance CORRECT ANS-In such a (land contract) contact, the seller (or vendor) finances
the purchase of his property for the buyer. The buyer (or vendee) makes the payments to the
seller in installments until he can pay off his entire debt, generally by refinancing, at which
, NMLS Study Guide; Test with Verified Solutions
time he is given a deed, transferring ownership of the property to the buyer. The transfer of
property, and the deed itself, may be called a conveyance.
Legal title CORRECT ANS-The seller keeps the legal title until the contract is paid off, even
though the contract may give the buyer possession and equitable title as soon as it is signed.
Equitable Title CORRECT ANS-Means the buyer is entitled to a deed conveying the legal
title when the contract is fully paid and performed. If the vendee defaults, the vendor may
foreclose or, depending on state statute, declare forfeiture to regain his property.
Security instrument CORRECT ANS-In a typical real estate sales transaction, the seller gives
the buyer a deed at closing, and the buyer gives the lender a promissory note and a security
instrument (ex a mortgage or trust deed) creating a lien on the property.
Soft money vs Hard money loans CORRECT ANS-When the seller finances the purchase,
and does not actually give the buyer any cash, the loan may be called a soft money loan.
When a 3rd party lender provides actual funds for the loan, it is called a hard money loan.
, NMLS Study Guide; Test with Verified Solutions
Due-on-sale (alienation) clause CORRECT ANS-Allows lender to: -Declare the entire
balance of the loan due at once. or - Refuse to allow another person to assume the loan, if the
title is transferred. FHA and VA loans are assumable by qualified buyers, Fannie Mae and
Freddie Mac conforming loans may or may not be assumable based on the contents of the
mortgage docs and the type of transfer.
Defeasance clause CORRECT ANS-Which provides for release of the lien when the
borrower pays off the debt. However, to provide public notice that the debt has been repaid
and to clear it from the public record: - satisfaction or release is recorded to clear a mortgage
lien. - a deed of reconveyance is recorded to clear a trust deed lien ( or in some states, a
mortgage).
Conventional loans CORRECT ANS-Loans made by private parties and nongovernmental
lending institutions w/o any gov't insurance or gov't guarantee against loss for the lender.
Mortgage loans that are not FHA, VA, or USDA (or RHS) loans are conventional loans. They
may be conforming or nonconforming.
VA Loan Qualifications CORRECT ANS-1. A 41% debt-to-income ratio (DTI) (including
housing and fixed debt)
