NMLS SAFE Exam Questions with Correct Answers | Verified Solutions
"PFC" stands for:
Prequalification of financed credit
Prepaid finance charge
Paid from closing costs
Prepayment for a creditor - ✔✔Prepaid finance charge
5 C's of Credit - ✔✔Character-conv/fha/va/
Credit-CBR
Capacity-savings history/source of funds
Capability-income/stability
Collateral-anything that describes the property
A borrower is a 65 year old retiree with a fixed income and significant equity in
his home. Which of the following would be the best option to supplement his
income?
HECM
SISA
ARM
HELOC - ✔✔HECM
A borrower is obtaining a refinance through a lender who requires PMI on first
lien mortgages with LTV ratios over 80%. The property is values at 221k and the
,borrower has a HELOC with a balance of 46k. The borrower has applied for a
first mortgage of 175k with a 15 year fixed rate of 6.5% Which of the following is
correct:
The lender will require mortgage insurance
The lender will not require mortgage insurance
The LTV is 90%
The LTV is 100% - ✔✔The lender will not require mortgage insurance
A buyer pays $200,000 for a home and gets a fixed-rate loan from his lender at
5.75%. He puts $40,000 down. What is the LTV on this loan, and does the buyer
have to pay PMI?
Unknown - need to know the term of the loan to determine
80% and YES
90% and YES
80% and NO - ✔✔80% and NO
A creditor may include a prepayment penalty provision in which of the following
mortgages?
High cost
Fixed-rate qualified mortgage that is NOT a higher-priced mortgage
Adjustable-rate qualified mortgage that is a higher-priced mortgage
An ARM with a loan term of 15 years - ✔✔Fixed-rate qualified mortgage that is
NOT a higher-priced mortgage
,A loan-level price adjustment (LLPA) is best described as:
Premium pricing paid by GSEs to purchase loans made to highly creditworthy
customers
GSE charges that result in higher interest rates when consumer eligibility or loan
features present a higher risk of default
Handling fees charged by GSEs when creditors sell loans to them
An added fee systematically charged by GSEs when purchasing loans made to
consumers with credit scores below 620 - ✔✔??????
A mortgage broker pays for title services on behalf of a developer. In return, the
developer agrees to refer prospective buyers to the mortgage broker. Who has
violated RESPA? - ✔✔Both of them
A mortgage broker structures a higher-priced loan with two points in borrower
credit because the borrower has limited cash to close, and suggests the
borrower use the premium generated to subsidize the closing costs. After
consideration, the borrower agrees and moves forward. This is:
Illegal and unethical
Legal and ethical
Legal and unethical
Illegal and ethical - ✔✔Legal and ethical
, A one-year ARM has a 6.00% start rate and is locked for three years. Its
adjustment caps are set at 2/1/5. In what year could this loan reach its rate
ceiling?
11th year
4th year
6th year
7th year - ✔✔7th year
A property is valued at 295k, there is a first and second mortgage with a 77%
CLTV. The second mortgage has a 10% LTV. What is the approximate amount of
the first mortgage? - ✔✔197,650
A straw buyer is: - ✔✔A buyer who accepts a fee for the use of his or her Social
Security Number and other personal information on a mortgage application
A supreme court decision has held that:
Markups are not illegal unless they are split
Minimal markups do not violate RESPA
RESPA does not prohibit unearned fees
RESPA does not prohibit markups if they are earned - ✔✔Markups are not
illegal unless they are split
A VA loan referred to as an "IRRRL" is an:
"PFC" stands for:
Prequalification of financed credit
Prepaid finance charge
Paid from closing costs
Prepayment for a creditor - ✔✔Prepaid finance charge
5 C's of Credit - ✔✔Character-conv/fha/va/
Credit-CBR
Capacity-savings history/source of funds
Capability-income/stability
Collateral-anything that describes the property
A borrower is a 65 year old retiree with a fixed income and significant equity in
his home. Which of the following would be the best option to supplement his
income?
HECM
SISA
ARM
HELOC - ✔✔HECM
A borrower is obtaining a refinance through a lender who requires PMI on first
lien mortgages with LTV ratios over 80%. The property is values at 221k and the
,borrower has a HELOC with a balance of 46k. The borrower has applied for a
first mortgage of 175k with a 15 year fixed rate of 6.5% Which of the following is
correct:
The lender will require mortgage insurance
The lender will not require mortgage insurance
The LTV is 90%
The LTV is 100% - ✔✔The lender will not require mortgage insurance
A buyer pays $200,000 for a home and gets a fixed-rate loan from his lender at
5.75%. He puts $40,000 down. What is the LTV on this loan, and does the buyer
have to pay PMI?
Unknown - need to know the term of the loan to determine
80% and YES
90% and YES
80% and NO - ✔✔80% and NO
A creditor may include a prepayment penalty provision in which of the following
mortgages?
High cost
Fixed-rate qualified mortgage that is NOT a higher-priced mortgage
Adjustable-rate qualified mortgage that is a higher-priced mortgage
An ARM with a loan term of 15 years - ✔✔Fixed-rate qualified mortgage that is
NOT a higher-priced mortgage
,A loan-level price adjustment (LLPA) is best described as:
Premium pricing paid by GSEs to purchase loans made to highly creditworthy
customers
GSE charges that result in higher interest rates when consumer eligibility or loan
features present a higher risk of default
Handling fees charged by GSEs when creditors sell loans to them
An added fee systematically charged by GSEs when purchasing loans made to
consumers with credit scores below 620 - ✔✔??????
A mortgage broker pays for title services on behalf of a developer. In return, the
developer agrees to refer prospective buyers to the mortgage broker. Who has
violated RESPA? - ✔✔Both of them
A mortgage broker structures a higher-priced loan with two points in borrower
credit because the borrower has limited cash to close, and suggests the
borrower use the premium generated to subsidize the closing costs. After
consideration, the borrower agrees and moves forward. This is:
Illegal and unethical
Legal and ethical
Legal and unethical
Illegal and ethical - ✔✔Legal and ethical
, A one-year ARM has a 6.00% start rate and is locked for three years. Its
adjustment caps are set at 2/1/5. In what year could this loan reach its rate
ceiling?
11th year
4th year
6th year
7th year - ✔✔7th year
A property is valued at 295k, there is a first and second mortgage with a 77%
CLTV. The second mortgage has a 10% LTV. What is the approximate amount of
the first mortgage? - ✔✔197,650
A straw buyer is: - ✔✔A buyer who accepts a fee for the use of his or her Social
Security Number and other personal information on a mortgage application
A supreme court decision has held that:
Markups are not illegal unless they are split
Minimal markups do not violate RESPA
RESPA does not prohibit unearned fees
RESPA does not prohibit markups if they are earned - ✔✔Markups are not
illegal unless they are split
A VA loan referred to as an "IRRRL" is an:
