MLO SAFE NMLS safe test practice
questions
Taking advantage of ill-informed consumers through excessively high fees, misrepresented loan terms,
frequent refinancing that does not benefit the borrower and other prohibited acts is called
__________________________. - ANS Predatory Lending.
RESPA-Real Estate Settlement Procedures Act - ANS The Federal Statute that deals with the settlement
of residential mortgage loans.
RESPA's section 9 Prohibits - ANS Home sellers from requiring home buyers to purchase title insurance
from a particular company providing title services.
The Dodd-Frank Act modifies ECOA to require a creditor to furnish a copy of an appraisal developed in
connection with a first mortgage_____________________ and absolutely not later than ________
business days prior to closing. - ANS upon completion and 3 business days
TIL (Truth In Lending Disclosure) & GFE (Good Faith Estimate) - ANS Per the Dodd Frank Act, a single
disclosure form combines these 2 statements.
Per the Dodd-Frank Acvt, to be a "qualified mortgage" total points and fees may not exceed ________%
of the total loan amount. - ANS 3% (three percent)
Per a provision of the Dodd-Frank Act mortgage lenders are to determine that a borrower has a
reasonable ability to repay a loan. Does this provision apply to all loans or just owner occupied loans? -
ANS All loans, whether owner occupied or not.
A loan subject to HOEPA allows prepayment penalties for the first ______ years of the loan. - ANS 2
(two) years
Per the Dodd-Frank Act an abusive act would include which of the following:
,1. One that materially interferes with the consumers ability to understand the product or service.
2. One that take unreasonable advantage of a consumers' lack of understanding.
3. One that takes unreasonable advantage of the consumer's reasonable reliance on the MLO. - ANS All
three would be considered abusive acts.
Per the Dodd-Frank Act if an MLO receives compensation directly from a consumer, up to how much
additional compensation may be received from a lender in the same transaction? - ANS $0.00, dual
compensation is not allowed. Compensation must be borrower paid or lender paid.
What kinds of reasons are necessary for a lender to take adverse action with regard to a borrower? -
ANS Specific reasons.
Adverse action means ______________________. - ANS A denial or revocation of credit. Also, a change
in the terms of an existing credit arrangement or a refusal to grant credit in substantially the amount or
terms requested.
Per Regulation B, Lenders should retain certain records for _____________ months. - ANS 25 Months
Because of the impact of the Dodd-Frank Act on a second mortgage, an APR that exceeds the ________
by more than _____% is the trigger that defines a high cost loan. - ANS APOR ( Average Prime Offer
Rate), 8.5%
Regulation C is known as ________________________. - ANS HMDA, The Home Mortgage Disclosure
Act.
What is the purpose of HMDA? - ANS The HMDA determines whether financial institutions are serving
the housing needs of their communities. It also identifies patterns of discriminatory lending.
Under what circumstances can a lender with an Affiliated Business Arrangement require a borrower to
use a specific third party service provider? - ANS If there are no kickback or referral fees and the service
,provider is an attorney, credit reporting agency or appraiser the lender can require that the borrower
uses the provider
If a transfer of servicing occurs, the _______________ must provide a servicing transfer statement not
less than ________ days before the transfer occurs. - ANS Servicer, 15 (fifteen) days.
An individual who fails the MLO written exam 3 times must wait _________ months to retake the exam.
- ANS 6 (Six) Months
Per RESPA, an annual escrow statement is required to ______________. - ANS determine shortages and
surpluses in the escrow account.
When must the Servicing Disclosure Statement be provided to the borrower? - ANS Within 3 (three)
Business Days of the Application.
Any party involved in a federally covered loan that submits fraudulent information is subject to a fine of
up to $___________ and up to __________years in prison. - ANS $1,000,000 (one million dollars), 30
years in prison
Per RESPA, an escrow cushion is limited to a maximum of _________ of the annual payments and
surpluses over $_____must be refunded within ________ days. - ANS 1/6th (2 months), $50 (fifty
dollars), 30 (thirty) days.
A seller takes back a $100,000 PMM @ 5.5% interest. This straight note will balloon after 10 years of
payments. How much is the balloon payment? - ANS $100,000 + interest for the last month. A straight
note (term mortgage) is a non-amortizing interest only mortgage. The balloon would include the entire
principal plus the last month's interest, as interest is paid in arrears.
FNMA conforming debt ratios equal ______/________. - ANS 28%, maximum housing expense/36%
maximum total obligations
, HOEPA stands for ___________________________. - ANS Home Ownership and Equity Protection Act.
RESPA applies to what type of properties? - ANS 1-4 Unit Residential Properties
On a conventional mortgage loan, who makes the final decision regarding approval, denial or counter
offer? - ANS The Underwriter
The Civil Rights Act of 1866, prohibited public and private racial discrimination in any property
transaction and was expanded in 1968 in which act? - ANS The Civil Rights Act of 1968, also known as
Title VIII of the Civil Rights Act , Also known as Title VIII, Also Known as The Fair Housing Act
Of the following, which is not required to be disclosed on the TIL statement? The (1) APR, (2) Note Rate,
(3) Finance Charge, (4) Amount Financed or (5) Total of Payments - ANS The note rate is NOT required.
Which act of 1968 provides guidelines and restrictions regarding the financing, selling and renting of real
property? - ANS The Civil Rights Act of 1968. AKA, The Civil Rights Act, AKA Title VIII, AKA The Fair
Housing Act
Which act prohibits asking questions regarding child bearing intentions or birth control practices? - ANS
ECOA/Regulation B, the Equal Credit Opportunity Act
Based on objective criteria regarding the condition and value of the property or area, may a lender deny
loans in neighborhoods where property values are declining? - ANS YES, loans can be denied in a
geographic area, but not for discriminatory reasons relative to the population of the area.
A teaser rate occurs in an ARM when the starting rate is less than the _____________. - ANS Fully
indexed rate.
questions
Taking advantage of ill-informed consumers through excessively high fees, misrepresented loan terms,
frequent refinancing that does not benefit the borrower and other prohibited acts is called
__________________________. - ANS Predatory Lending.
RESPA-Real Estate Settlement Procedures Act - ANS The Federal Statute that deals with the settlement
of residential mortgage loans.
RESPA's section 9 Prohibits - ANS Home sellers from requiring home buyers to purchase title insurance
from a particular company providing title services.
The Dodd-Frank Act modifies ECOA to require a creditor to furnish a copy of an appraisal developed in
connection with a first mortgage_____________________ and absolutely not later than ________
business days prior to closing. - ANS upon completion and 3 business days
TIL (Truth In Lending Disclosure) & GFE (Good Faith Estimate) - ANS Per the Dodd Frank Act, a single
disclosure form combines these 2 statements.
Per the Dodd-Frank Acvt, to be a "qualified mortgage" total points and fees may not exceed ________%
of the total loan amount. - ANS 3% (three percent)
Per a provision of the Dodd-Frank Act mortgage lenders are to determine that a borrower has a
reasonable ability to repay a loan. Does this provision apply to all loans or just owner occupied loans? -
ANS All loans, whether owner occupied or not.
A loan subject to HOEPA allows prepayment penalties for the first ______ years of the loan. - ANS 2
(two) years
Per the Dodd-Frank Act an abusive act would include which of the following:
,1. One that materially interferes with the consumers ability to understand the product or service.
2. One that take unreasonable advantage of a consumers' lack of understanding.
3. One that takes unreasonable advantage of the consumer's reasonable reliance on the MLO. - ANS All
three would be considered abusive acts.
Per the Dodd-Frank Act if an MLO receives compensation directly from a consumer, up to how much
additional compensation may be received from a lender in the same transaction? - ANS $0.00, dual
compensation is not allowed. Compensation must be borrower paid or lender paid.
What kinds of reasons are necessary for a lender to take adverse action with regard to a borrower? -
ANS Specific reasons.
Adverse action means ______________________. - ANS A denial or revocation of credit. Also, a change
in the terms of an existing credit arrangement or a refusal to grant credit in substantially the amount or
terms requested.
Per Regulation B, Lenders should retain certain records for _____________ months. - ANS 25 Months
Because of the impact of the Dodd-Frank Act on a second mortgage, an APR that exceeds the ________
by more than _____% is the trigger that defines a high cost loan. - ANS APOR ( Average Prime Offer
Rate), 8.5%
Regulation C is known as ________________________. - ANS HMDA, The Home Mortgage Disclosure
Act.
What is the purpose of HMDA? - ANS The HMDA determines whether financial institutions are serving
the housing needs of their communities. It also identifies patterns of discriminatory lending.
Under what circumstances can a lender with an Affiliated Business Arrangement require a borrower to
use a specific third party service provider? - ANS If there are no kickback or referral fees and the service
,provider is an attorney, credit reporting agency or appraiser the lender can require that the borrower
uses the provider
If a transfer of servicing occurs, the _______________ must provide a servicing transfer statement not
less than ________ days before the transfer occurs. - ANS Servicer, 15 (fifteen) days.
An individual who fails the MLO written exam 3 times must wait _________ months to retake the exam.
- ANS 6 (Six) Months
Per RESPA, an annual escrow statement is required to ______________. - ANS determine shortages and
surpluses in the escrow account.
When must the Servicing Disclosure Statement be provided to the borrower? - ANS Within 3 (three)
Business Days of the Application.
Any party involved in a federally covered loan that submits fraudulent information is subject to a fine of
up to $___________ and up to __________years in prison. - ANS $1,000,000 (one million dollars), 30
years in prison
Per RESPA, an escrow cushion is limited to a maximum of _________ of the annual payments and
surpluses over $_____must be refunded within ________ days. - ANS 1/6th (2 months), $50 (fifty
dollars), 30 (thirty) days.
A seller takes back a $100,000 PMM @ 5.5% interest. This straight note will balloon after 10 years of
payments. How much is the balloon payment? - ANS $100,000 + interest for the last month. A straight
note (term mortgage) is a non-amortizing interest only mortgage. The balloon would include the entire
principal plus the last month's interest, as interest is paid in arrears.
FNMA conforming debt ratios equal ______/________. - ANS 28%, maximum housing expense/36%
maximum total obligations
, HOEPA stands for ___________________________. - ANS Home Ownership and Equity Protection Act.
RESPA applies to what type of properties? - ANS 1-4 Unit Residential Properties
On a conventional mortgage loan, who makes the final decision regarding approval, denial or counter
offer? - ANS The Underwriter
The Civil Rights Act of 1866, prohibited public and private racial discrimination in any property
transaction and was expanded in 1968 in which act? - ANS The Civil Rights Act of 1968, also known as
Title VIII of the Civil Rights Act , Also known as Title VIII, Also Known as The Fair Housing Act
Of the following, which is not required to be disclosed on the TIL statement? The (1) APR, (2) Note Rate,
(3) Finance Charge, (4) Amount Financed or (5) Total of Payments - ANS The note rate is NOT required.
Which act of 1968 provides guidelines and restrictions regarding the financing, selling and renting of real
property? - ANS The Civil Rights Act of 1968. AKA, The Civil Rights Act, AKA Title VIII, AKA The Fair
Housing Act
Which act prohibits asking questions regarding child bearing intentions or birth control practices? - ANS
ECOA/Regulation B, the Equal Credit Opportunity Act
Based on objective criteria regarding the condition and value of the property or area, may a lender deny
loans in neighborhoods where property values are declining? - ANS YES, loans can be denied in a
geographic area, but not for discriminatory reasons relative to the population of the area.
A teaser rate occurs in an ARM when the starting rate is less than the _____________. - ANS Fully
indexed rate.
