Mortgage educators California 20hr MLO
course notes Study Set Questions With
Correct Answers
property |taxes |are |superior |to |all |other |taxes |meaning.... |- |CORRECT |ANSWER✔✔-they |are |
paid |first
Federal |Reserve |System |(1913) |- |CORRECT |ANSWER✔✔-It |is |the |central |banking |system |of |the
|United |States. |It |was |created |in |1913 |with |the |enactment |of |the |Federal |Reserve |Act, |largely |
in |response |to |a |series |of |financial |panics, |particularly |a |severe |panic |in |1907; |This |was |the |
first |step |to |creating |the |mortgage |industry |lending
Federal |Home |Loan |Bank |Act |(1932) |- |CORRECT |ANSWER✔✔-Gave |Federal |Home |Loan |Banks |
authority |to |lend |money |to |thrifts, |S&Ls, |credit |unions, |savings |banks |to |finance |home |
mortgages |in |their |neighborhoods
Banking |Act |(1933) |- |CORRECT |ANSWER✔✔-The |law |that |established |the |Federal |Deposit |
Insurance |Corporation |(FDIC) |to |insure |bank |deposits. |It |also |prohibited |commercial |banks |
from |selling |insurance |or |acting |as |investment |banks. |Ensures |deposits |and |protects |
consumers |against |bank |default.
Department |Of |Housing |And |Urban |Development |(HUD) |(1965) |- |CORRECT |ANSWER✔✔-
Provides |financial |incentives |to |renovate |and |build |within |certain |urban |areas, |improves |the |
nations |communities |and |enforces |fair |housing |laws
Community |Reinvestment |Act |(CRA) |(1977) |- |CORRECT |ANSWER✔✔-A |congressional |act |that |
encourages |mortgage |originators |to |actively |lend |in |their |communities |and |that |requires |
financial |institutions |to |evaluate |the |"fairness" |of |their |lending |practices. |Analyzes |banks |
success |or |failure |in |reaching |out |to |lending |communities |it |serves.
,What |year |did |FNMA |(Federal |National |Mortgage |Association) |become |a |GSE |(Government |
Sponsored |Entity)? |- |CORRECT |ANSWER✔✔-1968
Government |National |Mortgage |Association |(GNMA) |- |CORRECT |ANSWER✔✔-Commonly |
known |as |"Ginnie |Mae," |this |agency |of |HUD |operates |in |the |secondary |mortgage |market. |It |is |
involved |with |special |government |financing |programs. |Created |in |1968
FNMA |(Fannie |Mae) |- |CORRECT |ANSWER✔✔-Federal |National |Mortgage |Association, |a |major |
secondary |money |market |player. |It |is |privately |owned, |but |Federally |regulated.
FHLMC |(Federal |Home |Loan |Mortgage |Corporation) |- |CORRECT |ANSWER✔✔-The |Federal |
Home |Loan |Mortgage |Corporation, |commonly |known |as |Freddie |Mac. |The |company |buys |
mortgages |from |lending |institutions, |pools |them |with |other |loans |and |then |sells |shares |to |
investors; |an |independent |stock |company |which |creates |a |secondary |market |in |conventional |
residential |loans |and |in |FHA |and |VA |loans |by |purchasing |mortgages. |Works |hand |in |hand |with |
FNMA
When |did |the |housing |bubble |peak? |- |CORRECT |ANSWER✔✔-July |2006
Dodd-Frank |Wall |Street |Reform |and |Consumer |Protection |Act |(2010) |*aka |The |Dodd-Frank |
Act* |- |CORRECT |ANSWER✔✔-Put |in |place |many |of |the |regulations |we |have |in |the |mortgage |
industry |today
What |created |the |CFPB |(Consumer |Financial |Protection |Bureau)? |- |CORRECT |ANSWER✔✔-The |
Dodd-Frank |Act
Consumer |Financial |Protection |Bureau |(CFPB) |- |CORRECT |ANSWER✔✔-A |U.S. |government |
agency |that |helps |protect |consumers |by |regulating |financial |products |and |services, |like |
mortgages, |credit |cards, |banks, |credit |unions |and |student |loans. |Proposes |new |regulations, |
supervises |the |mortgage |industry |and |enforces |federal |law |to |avoid |another |recession |
incident.
,NMLS |- |CORRECT |ANSWER✔✔-Nationwide |Mortgage |Licensing |System |and |Registry
Mortgage |Loan |Originator |(MLO) |- |CORRECT |ANSWER✔✔-Real |estate |licensee |who |conducts |
mortgage |loan |origination |activities |and |is |required |to |register |annually |on |the |Nationwide |
Mortgage |Licensing |System |& |Registry |(NMLS). |Individual |who |receives |compensation |or |gain |
for |taking |residential |mortgage |loan |applications |or |offers |and |negotiates |terms |of |a |
residential |mortgage |loan.
True |or |False: |The |Great |Recession |was |caused, |in |large |part, |by |predatory |lending |practices? |-
|CORRECT |ANSWER✔✔-True
Two |Types |of |MLO's |- |CORRECT |ANSWER✔✔-Licensed |MLOs |and |Registered |MLOs
Conference |of |State |Bank |Supervisors |(CSBS) |- |CORRECT |ANSWER✔✔-A |national |organization |
of |state |bank |supervisors |who |are |charged |with |ensuring |that |state |banking |institutions |
adhere |to |certain |standards. |The |organization |played |a |major |role |in |the |formation |of |the |
NMLS-R |and |in |the |drafting |of |the |model |licensing |law. |Also |helped |develop |the |American |
Association |Of |Residential |Mortgage |Regulators
Does |the |NMLS |issue |licenses? |- |CORRECT |ANSWER✔✔-NO. |It |is |merely |a |database |that |keeps
|track |of |all |services |provided |and |information.
What |do |processors |and |underwriters |do |? |- |CORRECT |ANSWER✔✔-These |unlicensed |
positions |help |MLOs |perform |data |entry |to |complete |or |start |the |loan |process |for |the |client.
Loan |Processor |- |CORRECT |ANSWER✔✔-One |who |is |responsible |for |verifying |information |
contained |in |a |prospective |borrower's |loan |file |and |for |coordinating |aspects |of |the |loan |
process |to |make |it |go |smoothly |in |order. |Application, |Document, |Employment, |Verification |
Then |is |sent |to |the |underwriter |who |approves |or |denies.
, Underwriter |- |CORRECT |ANSWER✔✔-A |person |who |evaluates |and |classifies |risks |to |accept |or |
reject |them |on |behalf |of |the |insurer. |Either |Approves |or |Denies.
When |do |processors |and |underwriters |have |to |be |licensed? |- |CORRECT |ANSWER✔✔-when |
they |are |independent |contractors
Independent |Contractor |- |CORRECT |ANSWER✔✔-One |who |works |for, |and |receives |payment |
from, |an |employer |but |whose |working |conditions |and |methods |are |not |controlled |by |the |
employer. |An |independent |contractor |is |not |an |employee |but |may |be |an |agent. |(Not |under |
direct |supervision |of |a |licensed |entity)
Who |classifies |as |entities |or |companies? |- |CORRECT |ANSWER✔✔-Brokers |and |Lenders
Brokers |- |CORRECT |ANSWER✔✔-independent |firms |or |individuals |whose |principal |function |is |
to |bring |buyers |and |sellers |together |to |make |sales. |Brokers |give |the |info |to |underwriters |for |
closure |of |the |loan |but |do |not |fund |it.
Lenders |- |CORRECT |ANSWER✔✔-Banks, |individuals, |companies, |car |companies. |Anyone |who |
allows |individuals |to |borrow |money. |Lenders |fund |their |own |loans.
What |are |the |two |sections |loans |get |broken |down |into |when |negotiating |rates? |- |CORRECT |
ANSWER✔✔-"Service |Rights" |and |"Mortgage"
mortgage |- |CORRECT |ANSWER✔✔-a |specific |type |of |loan |that |is |used |to |buy |real |estate. |
Lenders |typically |sell |mortgage |loans |to |the |secondary |market
Servicing |Rights |- |CORRECT |ANSWER✔✔-Rights |retained |by |a |lender |selling |a |loan |in |which |
the |lender |continues |to |collect |interest |payments |from |the |borrower |and |monitors |the |
borrower's |compliance |with |loan |terms |on |behalf |of |the |purchaser |of |the |loan. |(service |the |
loan, |collect |payments, |pay |insurance, |pay |taxes)
course notes Study Set Questions With
Correct Answers
property |taxes |are |superior |to |all |other |taxes |meaning.... |- |CORRECT |ANSWER✔✔-they |are |
paid |first
Federal |Reserve |System |(1913) |- |CORRECT |ANSWER✔✔-It |is |the |central |banking |system |of |the
|United |States. |It |was |created |in |1913 |with |the |enactment |of |the |Federal |Reserve |Act, |largely |
in |response |to |a |series |of |financial |panics, |particularly |a |severe |panic |in |1907; |This |was |the |
first |step |to |creating |the |mortgage |industry |lending
Federal |Home |Loan |Bank |Act |(1932) |- |CORRECT |ANSWER✔✔-Gave |Federal |Home |Loan |Banks |
authority |to |lend |money |to |thrifts, |S&Ls, |credit |unions, |savings |banks |to |finance |home |
mortgages |in |their |neighborhoods
Banking |Act |(1933) |- |CORRECT |ANSWER✔✔-The |law |that |established |the |Federal |Deposit |
Insurance |Corporation |(FDIC) |to |insure |bank |deposits. |It |also |prohibited |commercial |banks |
from |selling |insurance |or |acting |as |investment |banks. |Ensures |deposits |and |protects |
consumers |against |bank |default.
Department |Of |Housing |And |Urban |Development |(HUD) |(1965) |- |CORRECT |ANSWER✔✔-
Provides |financial |incentives |to |renovate |and |build |within |certain |urban |areas, |improves |the |
nations |communities |and |enforces |fair |housing |laws
Community |Reinvestment |Act |(CRA) |(1977) |- |CORRECT |ANSWER✔✔-A |congressional |act |that |
encourages |mortgage |originators |to |actively |lend |in |their |communities |and |that |requires |
financial |institutions |to |evaluate |the |"fairness" |of |their |lending |practices. |Analyzes |banks |
success |or |failure |in |reaching |out |to |lending |communities |it |serves.
,What |year |did |FNMA |(Federal |National |Mortgage |Association) |become |a |GSE |(Government |
Sponsored |Entity)? |- |CORRECT |ANSWER✔✔-1968
Government |National |Mortgage |Association |(GNMA) |- |CORRECT |ANSWER✔✔-Commonly |
known |as |"Ginnie |Mae," |this |agency |of |HUD |operates |in |the |secondary |mortgage |market. |It |is |
involved |with |special |government |financing |programs. |Created |in |1968
FNMA |(Fannie |Mae) |- |CORRECT |ANSWER✔✔-Federal |National |Mortgage |Association, |a |major |
secondary |money |market |player. |It |is |privately |owned, |but |Federally |regulated.
FHLMC |(Federal |Home |Loan |Mortgage |Corporation) |- |CORRECT |ANSWER✔✔-The |Federal |
Home |Loan |Mortgage |Corporation, |commonly |known |as |Freddie |Mac. |The |company |buys |
mortgages |from |lending |institutions, |pools |them |with |other |loans |and |then |sells |shares |to |
investors; |an |independent |stock |company |which |creates |a |secondary |market |in |conventional |
residential |loans |and |in |FHA |and |VA |loans |by |purchasing |mortgages. |Works |hand |in |hand |with |
FNMA
When |did |the |housing |bubble |peak? |- |CORRECT |ANSWER✔✔-July |2006
Dodd-Frank |Wall |Street |Reform |and |Consumer |Protection |Act |(2010) |*aka |The |Dodd-Frank |
Act* |- |CORRECT |ANSWER✔✔-Put |in |place |many |of |the |regulations |we |have |in |the |mortgage |
industry |today
What |created |the |CFPB |(Consumer |Financial |Protection |Bureau)? |- |CORRECT |ANSWER✔✔-The |
Dodd-Frank |Act
Consumer |Financial |Protection |Bureau |(CFPB) |- |CORRECT |ANSWER✔✔-A |U.S. |government |
agency |that |helps |protect |consumers |by |regulating |financial |products |and |services, |like |
mortgages, |credit |cards, |banks, |credit |unions |and |student |loans. |Proposes |new |regulations, |
supervises |the |mortgage |industry |and |enforces |federal |law |to |avoid |another |recession |
incident.
,NMLS |- |CORRECT |ANSWER✔✔-Nationwide |Mortgage |Licensing |System |and |Registry
Mortgage |Loan |Originator |(MLO) |- |CORRECT |ANSWER✔✔-Real |estate |licensee |who |conducts |
mortgage |loan |origination |activities |and |is |required |to |register |annually |on |the |Nationwide |
Mortgage |Licensing |System |& |Registry |(NMLS). |Individual |who |receives |compensation |or |gain |
for |taking |residential |mortgage |loan |applications |or |offers |and |negotiates |terms |of |a |
residential |mortgage |loan.
True |or |False: |The |Great |Recession |was |caused, |in |large |part, |by |predatory |lending |practices? |-
|CORRECT |ANSWER✔✔-True
Two |Types |of |MLO's |- |CORRECT |ANSWER✔✔-Licensed |MLOs |and |Registered |MLOs
Conference |of |State |Bank |Supervisors |(CSBS) |- |CORRECT |ANSWER✔✔-A |national |organization |
of |state |bank |supervisors |who |are |charged |with |ensuring |that |state |banking |institutions |
adhere |to |certain |standards. |The |organization |played |a |major |role |in |the |formation |of |the |
NMLS-R |and |in |the |drafting |of |the |model |licensing |law. |Also |helped |develop |the |American |
Association |Of |Residential |Mortgage |Regulators
Does |the |NMLS |issue |licenses? |- |CORRECT |ANSWER✔✔-NO. |It |is |merely |a |database |that |keeps
|track |of |all |services |provided |and |information.
What |do |processors |and |underwriters |do |? |- |CORRECT |ANSWER✔✔-These |unlicensed |
positions |help |MLOs |perform |data |entry |to |complete |or |start |the |loan |process |for |the |client.
Loan |Processor |- |CORRECT |ANSWER✔✔-One |who |is |responsible |for |verifying |information |
contained |in |a |prospective |borrower's |loan |file |and |for |coordinating |aspects |of |the |loan |
process |to |make |it |go |smoothly |in |order. |Application, |Document, |Employment, |Verification |
Then |is |sent |to |the |underwriter |who |approves |or |denies.
, Underwriter |- |CORRECT |ANSWER✔✔-A |person |who |evaluates |and |classifies |risks |to |accept |or |
reject |them |on |behalf |of |the |insurer. |Either |Approves |or |Denies.
When |do |processors |and |underwriters |have |to |be |licensed? |- |CORRECT |ANSWER✔✔-when |
they |are |independent |contractors
Independent |Contractor |- |CORRECT |ANSWER✔✔-One |who |works |for, |and |receives |payment |
from, |an |employer |but |whose |working |conditions |and |methods |are |not |controlled |by |the |
employer. |An |independent |contractor |is |not |an |employee |but |may |be |an |agent. |(Not |under |
direct |supervision |of |a |licensed |entity)
Who |classifies |as |entities |or |companies? |- |CORRECT |ANSWER✔✔-Brokers |and |Lenders
Brokers |- |CORRECT |ANSWER✔✔-independent |firms |or |individuals |whose |principal |function |is |
to |bring |buyers |and |sellers |together |to |make |sales. |Brokers |give |the |info |to |underwriters |for |
closure |of |the |loan |but |do |not |fund |it.
Lenders |- |CORRECT |ANSWER✔✔-Banks, |individuals, |companies, |car |companies. |Anyone |who |
allows |individuals |to |borrow |money. |Lenders |fund |their |own |loans.
What |are |the |two |sections |loans |get |broken |down |into |when |negotiating |rates? |- |CORRECT |
ANSWER✔✔-"Service |Rights" |and |"Mortgage"
mortgage |- |CORRECT |ANSWER✔✔-a |specific |type |of |loan |that |is |used |to |buy |real |estate. |
Lenders |typically |sell |mortgage |loans |to |the |secondary |market
Servicing |Rights |- |CORRECT |ANSWER✔✔-Rights |retained |by |a |lender |selling |a |loan |in |which |
the |lender |continues |to |collect |interest |payments |from |the |borrower |and |monitors |the |
borrower's |compliance |with |loan |terms |on |behalf |of |the |purchaser |of |the |loan. |(service |the |
loan, |collect |payments, |pay |insurance, |pay |taxes)
