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 __________________________. - Answers -Predatory
Lending.
RESPA-Real Estate Settlement Procedures Act - Answers -The Federal Statute that
deals with the settlement of residential mortgage loans.
RESPA's section 9 Prohibits - Answers -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. - Answers -upon
completion and 3 business days
TIL (Truth In Lending Disclosure) & GFE (Good Faith Estimate) - Answers -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. - Answers -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? - Answers -All loans, whether owner occupied or not.
A loan subject to HOEPA allows prepayment penalties for the first ______ years of the
loan. - Answers -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. - Answers -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? - Answers -$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? - Answers -Specific reasons.
,Adverse action means ______________________. - Answers -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. -
Answers -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.
- Answers -APOR ( Average Prime Offer Rate), 8.5%
A teaser rate occurs in an ARM when the starting rate is less than the _____________.
- Answers -Fully indexed rate.
Per ECOA, is it true that while a lender must consider reliable alimony, child support or
separate maintenance payments as income, the applicant is not required to disclose
such income? - Answers -Yes, it is true. Only income intended to be used for qualifying
has to be disclosed and verified.
Of the following, who make a flood zone determination?
1. The Lender
2. The Appraiser
3. The Surveyor
4. The Underwriter - Answers -2. The Appraiser makes the flood zone determination.
Force-placed insurance protects the _________________.
a. Lender
b. borrower
c. both - Answers -a. lender
FHA requires mortgage insurance on all loans for a period of ______________ years. -
Answers -5 (five) years.
A property sells for $300,000 and requires a 20% down payment. The origination fee
will be two points. How much is the origination fee? - Answers -$4,800, $300,000 X 20%
= $60,000 down payment
$300,000 X 80% LTV = $240,000,
$240,000 X 2% = $4,800
HOEPA prohibits ____________________ amortization. - Answers -Negative.
Increasing the principal balance, usually because of not paying sufficient interest which
then is added to the principal balance of the loa.
How often does the external Do Not Call list get updated? - Answers -Every 3 months or
90 days.
What does VA stand for? - Answers -The Department of Veteran's Affairs
, The three functions of a direct endorser include ______________ ,
__________________ and ________________. - Answers -Originate, underwrite and
close loans.
What is the down payment requirement on a VA guaranteed loan? - Answers -0, Zero.
There is no down payment required.
The APR is also know at the _____________ rate. - Answers -Effective rate.
The term of a loan effects the APR. The longer the term the ______________ the APR.
- Answers -Lower.
Business days exclude ________________ and _________________. - Answers -
Sundays and Federal Holidays.
Per the TILA the three business days Right of Rescission applies to the
_____________________ of a ______________________ dwelling. - Answers -The
refinance of a primary residence.
GLBA stand for the ________________. - Answers -GRAMM-LEACH-BLILEY ACT
A "qualified" mortgage is one with points and fees not exceeding ______________% of
the loan amount, do not have terms that exceed __________________ year and do not
result in _________________ amortization. - Answers -3%, 30 years and negative
amortization
On qualified mortgages, prepayment penalties are prohibited except for some
_____________ loans. - Answers -Fixed rate
With regard to a credit score, the Dodd-Frank Act amended the FCRA to require
creditors to provide the score to a consumer at $ ______________ cost. - Answers -$0,
no charge
From a banks perspective, the term that describes depositors withdrawing their funds is
_______________________. - Answers -Disintermediation
What is a 360/180 loan? - Answers -This loan would require payments as if amortized
over 30 years but will become due or balloon in 15 years.
In a fully amortizing loan the principle portion of the payment ____________________
and the interest portion _________________. - Answers -Principle portion increases
and interest portion decreases.
The name of the loan used to complete construction is a ______________________. -
Answers -Gap Loan (sometimes bridge loan).
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 __________________________. - Answers -Predatory
Lending.
RESPA-Real Estate Settlement Procedures Act - Answers -The Federal Statute that
deals with the settlement of residential mortgage loans.
RESPA's section 9 Prohibits - Answers -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. - Answers -upon
completion and 3 business days
TIL (Truth In Lending Disclosure) & GFE (Good Faith Estimate) - Answers -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. - Answers -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? - Answers -All loans, whether owner occupied or not.
A loan subject to HOEPA allows prepayment penalties for the first ______ years of the
loan. - Answers -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. - Answers -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? - Answers -$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? - Answers -Specific reasons.
,Adverse action means ______________________. - Answers -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. -
Answers -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.
- Answers -APOR ( Average Prime Offer Rate), 8.5%
A teaser rate occurs in an ARM when the starting rate is less than the _____________.
- Answers -Fully indexed rate.
Per ECOA, is it true that while a lender must consider reliable alimony, child support or
separate maintenance payments as income, the applicant is not required to disclose
such income? - Answers -Yes, it is true. Only income intended to be used for qualifying
has to be disclosed and verified.
Of the following, who make a flood zone determination?
1. The Lender
2. The Appraiser
3. The Surveyor
4. The Underwriter - Answers -2. The Appraiser makes the flood zone determination.
Force-placed insurance protects the _________________.
a. Lender
b. borrower
c. both - Answers -a. lender
FHA requires mortgage insurance on all loans for a period of ______________ years. -
Answers -5 (five) years.
A property sells for $300,000 and requires a 20% down payment. The origination fee
will be two points. How much is the origination fee? - Answers -$4,800, $300,000 X 20%
= $60,000 down payment
$300,000 X 80% LTV = $240,000,
$240,000 X 2% = $4,800
HOEPA prohibits ____________________ amortization. - Answers -Negative.
Increasing the principal balance, usually because of not paying sufficient interest which
then is added to the principal balance of the loa.
How often does the external Do Not Call list get updated? - Answers -Every 3 months or
90 days.
What does VA stand for? - Answers -The Department of Veteran's Affairs
, The three functions of a direct endorser include ______________ ,
__________________ and ________________. - Answers -Originate, underwrite and
close loans.
What is the down payment requirement on a VA guaranteed loan? - Answers -0, Zero.
There is no down payment required.
The APR is also know at the _____________ rate. - Answers -Effective rate.
The term of a loan effects the APR. The longer the term the ______________ the APR.
- Answers -Lower.
Business days exclude ________________ and _________________. - Answers -
Sundays and Federal Holidays.
Per the TILA the three business days Right of Rescission applies to the
_____________________ of a ______________________ dwelling. - Answers -The
refinance of a primary residence.
GLBA stand for the ________________. - Answers -GRAMM-LEACH-BLILEY ACT
A "qualified" mortgage is one with points and fees not exceeding ______________% of
the loan amount, do not have terms that exceed __________________ year and do not
result in _________________ amortization. - Answers -3%, 30 years and negative
amortization
On qualified mortgages, prepayment penalties are prohibited except for some
_____________ loans. - Answers -Fixed rate
With regard to a credit score, the Dodd-Frank Act amended the FCRA to require
creditors to provide the score to a consumer at $ ______________ cost. - Answers -$0,
no charge
From a banks perspective, the term that describes depositors withdrawing their funds is
_______________________. - Answers -Disintermediation
What is a 360/180 loan? - Answers -This loan would require payments as if amortized
over 30 years but will become due or balloon in 15 years.
In a fully amortizing loan the principle portion of the payment ____________________
and the interest portion _________________. - Answers -Principle portion increases
and interest portion decreases.
The name of the loan used to complete construction is a ______________________. -
Answers -Gap Loan (sometimes bridge loan).
