Which of the following describes an air loan?
A. A loan that is obtained with inflated property values
B. A loan that is repeatedly refinanced with no benefit to the borrower
C. A loan that is presented to the borrower with hidden fees
D. A loan that is obtained by a fictitious borrower using a fictitious property - AN-
SWER D. A loan that is obtained by a fictitious borrower using a fictitious property
It is unethical and illegal to use yield spread premiums for any reason other than:
A. To earn an additional commission on a loan origination
B. To enable a creditor to earn more on a mortgage transaction
C. To enable a loan originator to meet a monthly sales quota
D. To help a borrower pay for settlement costs - ANSWER D. To help a borrower pay
for settlement costs
A person wanting a loan to build a house would apply for what type of loan?
A. Take out
B. Adjustable
C. Construction
D. Reverse mortgage - ANSWER C. Construction
1
,Richie Rich has been approved for a 90% loan. Richie is under contract to purchase a home
for $400,000 and put $5,000 earnest money down with the contract. If Richie's lender is
charging 1% origination, 1% discount, and the title company fees total $1,350, how much
does Richie need to bring to closing?
A. $49,350
B. $46,850
C. $43,550
D. $48,550 - ANSWER C. $43,550
Which of the following best describes the available options for an individual who is applying
for a loan originator license but does not pass the required written test?
A. The applicant may take the test up to two additional times, with at least 30 days between
each attempt
B. The applicant may try to pass the test a second time, but must wait at least six months
C. The applicant may attempt to pass the test again up to three times within a five-year pe-
riod before needing to retake the pre-licensing course
D. The applicant may be issued a provisional license for a period of six months, but must
maintain a surety bond of twice the normal amount - ANSWER A. The applicant may
take the test up to two additional times, with at least 30 days between each attempt
Which of the following terms applies to a VA mortgage?
A. Certificate of eligibility
B. Mortgage insurance certificate
C. UFMIP
D. Insuring fee - ANSWER A. Certificate of eligibility
2
,Assume that the Loan Estimate is mailed on Tuesday. The office is open six days a week and
closed on Sundays. What is the earliest day on which the transaction could close?
A. Wednesday of the following week
B. Friday of the following week
C. Monday of the following week
D. Tuesday of the following week - ANSWER A. Wednesday of the following week
According to federal law, which of the following circumstances would require the lender to
drop a borrower's private mortgage insurance (PMI) without the borrower's request?
A. The current principal balance is 80% of the original purchase price
B. The current principal balance is 78% of the original purchase price
C. The current principal balance is 75% of the current appraised value
D. The current principal balance is 70% of the current appraised value - ANSWER B.
The current principal balance is 78% of the original purchase price
If a borrower waives the right to receive a copy of an appraisal:
A. They must receive a copy within 30 days of closing
B. The lender is never required to give the borrower a copy of the appraisal
C. They must receive a copy seven days before closing
D. They must receive a copy at or before consummation - ANSWER D. They must re-
ceive a copy at or before consummation
The S.A.F.E. Act creates several consumer protection provisions. Which of the following is
not a provision created through the enactment of the S.A.F.E. Act?
A. Encourages responsible behavior through licensing standards
3
, B. Provides consumers access to information about originators
C. Allows consumers a full refund if the originator is found to have engaged in unethical acts
D. Facilitates collection and distribution of consumer complaints between regulators - AN-
SWER C. Allows consumers a full refund if the originator is found to have engaged in
unethical acts
According to the S.A.F.E. Act, all of the following are nontraditional loan products, except:
A. Interest-only ARMs
B. Hybrid ARMs
C. Reverse mortgages with fixed rates
D. Interest-only fixed-rate 30-year mortgage loans - ANSWER D. Interest-only fixed-
rate 30-year mortgage loans
Which of the following is not true concerning ECOA?
A. It requires lenders to notify loan applicants of their application status within 30 days
B. Its provisions are implemented by Regulation B
C. It requires lenders to give borrowers a copy of their appraisal and a notice stating they are
entitled to a copy of the appraisal
D. It requires the disclosure of the APR on all advertisements which contain an interest rate -
ANSWER D. It requires the disclosure of the APR on all advertisements which contain
an interest rate
A homeowner with an FHA loan would like to sell his home and allow the buyer to assume
the existing mortgage. However, he is concerned about violating a due-on-sale clause. Is a
due-on-sale clause allowed under the terms of the loan?
A. No, because the loan is assumable
B. Yes, because the loan is assumable
4
A. A loan that is obtained with inflated property values
B. A loan that is repeatedly refinanced with no benefit to the borrower
C. A loan that is presented to the borrower with hidden fees
D. A loan that is obtained by a fictitious borrower using a fictitious property - AN-
SWER D. A loan that is obtained by a fictitious borrower using a fictitious property
It is unethical and illegal to use yield spread premiums for any reason other than:
A. To earn an additional commission on a loan origination
B. To enable a creditor to earn more on a mortgage transaction
C. To enable a loan originator to meet a monthly sales quota
D. To help a borrower pay for settlement costs - ANSWER D. To help a borrower pay
for settlement costs
A person wanting a loan to build a house would apply for what type of loan?
A. Take out
B. Adjustable
C. Construction
D. Reverse mortgage - ANSWER C. Construction
1
,Richie Rich has been approved for a 90% loan. Richie is under contract to purchase a home
for $400,000 and put $5,000 earnest money down with the contract. If Richie's lender is
charging 1% origination, 1% discount, and the title company fees total $1,350, how much
does Richie need to bring to closing?
A. $49,350
B. $46,850
C. $43,550
D. $48,550 - ANSWER C. $43,550
Which of the following best describes the available options for an individual who is applying
for a loan originator license but does not pass the required written test?
A. The applicant may take the test up to two additional times, with at least 30 days between
each attempt
B. The applicant may try to pass the test a second time, but must wait at least six months
C. The applicant may attempt to pass the test again up to three times within a five-year pe-
riod before needing to retake the pre-licensing course
D. The applicant may be issued a provisional license for a period of six months, but must
maintain a surety bond of twice the normal amount - ANSWER A. The applicant may
take the test up to two additional times, with at least 30 days between each attempt
Which of the following terms applies to a VA mortgage?
A. Certificate of eligibility
B. Mortgage insurance certificate
C. UFMIP
D. Insuring fee - ANSWER A. Certificate of eligibility
2
,Assume that the Loan Estimate is mailed on Tuesday. The office is open six days a week and
closed on Sundays. What is the earliest day on which the transaction could close?
A. Wednesday of the following week
B. Friday of the following week
C. Monday of the following week
D. Tuesday of the following week - ANSWER A. Wednesday of the following week
According to federal law, which of the following circumstances would require the lender to
drop a borrower's private mortgage insurance (PMI) without the borrower's request?
A. The current principal balance is 80% of the original purchase price
B. The current principal balance is 78% of the original purchase price
C. The current principal balance is 75% of the current appraised value
D. The current principal balance is 70% of the current appraised value - ANSWER B.
The current principal balance is 78% of the original purchase price
If a borrower waives the right to receive a copy of an appraisal:
A. They must receive a copy within 30 days of closing
B. The lender is never required to give the borrower a copy of the appraisal
C. They must receive a copy seven days before closing
D. They must receive a copy at or before consummation - ANSWER D. They must re-
ceive a copy at or before consummation
The S.A.F.E. Act creates several consumer protection provisions. Which of the following is
not a provision created through the enactment of the S.A.F.E. Act?
A. Encourages responsible behavior through licensing standards
3
, B. Provides consumers access to information about originators
C. Allows consumers a full refund if the originator is found to have engaged in unethical acts
D. Facilitates collection and distribution of consumer complaints between regulators - AN-
SWER C. Allows consumers a full refund if the originator is found to have engaged in
unethical acts
According to the S.A.F.E. Act, all of the following are nontraditional loan products, except:
A. Interest-only ARMs
B. Hybrid ARMs
C. Reverse mortgages with fixed rates
D. Interest-only fixed-rate 30-year mortgage loans - ANSWER D. Interest-only fixed-
rate 30-year mortgage loans
Which of the following is not true concerning ECOA?
A. It requires lenders to notify loan applicants of their application status within 30 days
B. Its provisions are implemented by Regulation B
C. It requires lenders to give borrowers a copy of their appraisal and a notice stating they are
entitled to a copy of the appraisal
D. It requires the disclosure of the APR on all advertisements which contain an interest rate -
ANSWER D. It requires the disclosure of the APR on all advertisements which contain
an interest rate
A homeowner with an FHA loan would like to sell his home and allow the buyer to assume
the existing mortgage. However, he is concerned about violating a due-on-sale clause. Is a
due-on-sale clause allowed under the terms of the loan?
A. No, because the loan is assumable
B. Yes, because the loan is assumable
4
