SAFE MLO TESTQUESTIONS AND ANSWERS
Prohibits Discrimination (including granting credit) - Answer -ECOA
When is the latest time frame by which the MLO can distribute the Loan Estimate -
Answer -3 business days after receiving the application
What is the difference between the note rate and the APR? - Answer -The note rate is
the interest rate applied to the principal. The APR takes into account all fees and
charges associated with a loan
What is the minimum number of items that an MLO must review and verify under the
Ability-to-Repay Rule to be confident that a borrower qualifies for a mortgage - Answer
-8
The FTC Disposal Rule: - Answer -Requires the establishment of policies and
procedures governing document disposal
If either the seller or buyer does not show up at the settlement, when should the Closing
Disclosure be mailed - Answer -Immediately
What does reverse redlining mean - Answer -Intentionally lending to certain
demographics
When applying for a mortgage, a joint financial statement is NOT required in which of
the following circumstances - Answer -The potential borrower is over 50 years of age
Subpart E of TILA specifically includes rules related to - Answer -HOEPA defined loans
Which of the following is allowed under the Telemarketing Sales Rule - Answer -Calling
a consumer at 8 AM in the consumer's time zone
Which of the following would be considered unethical - Answer -Local mortgage
company charges the borrower $15 for a credit report which is much lower than it
competitors, however has an agreement with the credit repository for $10 for each
report due to the volume of reports pulled from the company
Which of the following would NOT be an acceptable trust deed rider? - Answer -A
mortgage insurance rider
According to RESPA, where must the YSP be disclosed? - Answer -Loan Estimate
underwriter does all of the following EXCEPT: - Answer -Determine that the seller has
the legal right to sell the property
,The Lender takes a loan application from Borrower. The Truth in Lending Act states that
the borrower is entitled to the disclosure of the costs of a mortgage loan in writing from
the lender: - Answer -. Within three business days of the loan application
When the borrowers pay an upfront cost to initially reduce the interest rate knowing that
the rate will increase back to the note rate after a specific period of time, the borrower
has paid - Answer -Temporary buydown fed
Under RESPA, the aggregate escrow limits at consummation are: - Answer -Zero
dollars up to two month's taxes and insurance
The Creditor must provide the Closing Disclosure to the consumer - Answer -No later
than 3 business days before consummation
You have been working with Dick and Jane and have prequalified them for a $500,000
30-year purchase money loan. They are putting down $100,000 and have decided to
use the MI company to which you referred them and is also your affiliate. Today is
Monday the 1st and you now have all 6 pieces of information needed to have an
application and their intent to proceed. Your office is closed for business on Saturdays.
What is the last day you must deliver the Affiliated Business Disclosure - Answer -That
document is not needed
In order to meet pre-licensing education requirement, a person shall complete at least
20 hours of education which shall include at least - Answer -. Three hours of federal
law and three hours of ethics
The TRID rules apply to - Answer -Single-family residences, Loans secured by vacant
land, and Construction-only loans
You initially disclose a rate of 5% to the customer but are floating the rate. Over the next
few days, rates improve and you have the option to lock the customer in at a rate of
4.75%. You choose to lock the rate at the initially disclosed figure. This behavior would
be considered - Answer -Legal but unethical
The APR includes all fees that are associated with residential financing. Not included
are costs which would occur with a - Answer -Cash buyer
When purchasing a two - four unit property according to FHLMC/FNMA guidelines, how
many months of reserves are required - Answer -6 months
TRID rules define "Consummation" as - Answer -The day the consumer becomes
contractually obligated on a credit transaction
A borrower wants to purchase a secondary home and tells you that they intend to rent
the property out when they are not living in it. You have reviewed their financial
information and realize that the borrower would qualify for financing if the property is
, classified as a secondary residence. However, if the property is classified as an
investment property, the borrower is unlikely to qualify. What should you do? - Answer -
You should classify the property as a rental property even though the borrower intends
to reside there part of the year
In accordance with RESPA, which of the following, could NOT provide settlement
services for the purchase of an owner occupied property? - Answer -Someone who
holds power of attorney
mortgage originator is required to display his or her unique identifier on all of the
following except: - Answer -Internal emails
In all forms of advertising a credit, the only number that can be used without additional
conditions is the: - Answer -APR
Aside from reverse mortgages, most residential mortgages begin through the - Answer
-Uniform Residential Loan Application
The APR is the interest rate plus the finance charges computed and expressed as: -
Answer -A percentage
Ecoa - Answer -Reg B
According to Freddie Mac and Fannie Mae guidelines, how long must a Chapter 7
bankruptcy be discharged before a borrower may get a loan? - Answer -4 years
You interview a customer and collect all of the necessary information to complete the
1003 and access his credit. Before ordering the credit report, however, you specifically
ask the client if it is okay to do so and they consent. You should now - Answer -Have
the customer sign a Borrower's Authorization form and then pull credit
When an underwriter is manually underwriting a Freddie Mac/Fannie Mae loan without
compensating factors, what is the maximum housing ratio allowed? - Answer -28%
According to ECOA when must you provide a copy of the appraisal to your borrower? -
Answer -Within 90 days after the issuance of a Notice of Right to Receive Appraisal
Report and upon receipt of a written request from the borrower
Which of the following does RESPA require to be given to the borrower - Answer -
Home Loan Toolkit
According to Reg. Z, the borrower's automatic right to rescind the loan within three
business days does not apply to: - Answer -Loans used to purchase or build the
borrower's residence
Prohibits Discrimination (including granting credit) - Answer -ECOA
When is the latest time frame by which the MLO can distribute the Loan Estimate -
Answer -3 business days after receiving the application
What is the difference between the note rate and the APR? - Answer -The note rate is
the interest rate applied to the principal. The APR takes into account all fees and
charges associated with a loan
What is the minimum number of items that an MLO must review and verify under the
Ability-to-Repay Rule to be confident that a borrower qualifies for a mortgage - Answer
-8
The FTC Disposal Rule: - Answer -Requires the establishment of policies and
procedures governing document disposal
If either the seller or buyer does not show up at the settlement, when should the Closing
Disclosure be mailed - Answer -Immediately
What does reverse redlining mean - Answer -Intentionally lending to certain
demographics
When applying for a mortgage, a joint financial statement is NOT required in which of
the following circumstances - Answer -The potential borrower is over 50 years of age
Subpart E of TILA specifically includes rules related to - Answer -HOEPA defined loans
Which of the following is allowed under the Telemarketing Sales Rule - Answer -Calling
a consumer at 8 AM in the consumer's time zone
Which of the following would be considered unethical - Answer -Local mortgage
company charges the borrower $15 for a credit report which is much lower than it
competitors, however has an agreement with the credit repository for $10 for each
report due to the volume of reports pulled from the company
Which of the following would NOT be an acceptable trust deed rider? - Answer -A
mortgage insurance rider
According to RESPA, where must the YSP be disclosed? - Answer -Loan Estimate
underwriter does all of the following EXCEPT: - Answer -Determine that the seller has
the legal right to sell the property
,The Lender takes a loan application from Borrower. The Truth in Lending Act states that
the borrower is entitled to the disclosure of the costs of a mortgage loan in writing from
the lender: - Answer -. Within three business days of the loan application
When the borrowers pay an upfront cost to initially reduce the interest rate knowing that
the rate will increase back to the note rate after a specific period of time, the borrower
has paid - Answer -Temporary buydown fed
Under RESPA, the aggregate escrow limits at consummation are: - Answer -Zero
dollars up to two month's taxes and insurance
The Creditor must provide the Closing Disclosure to the consumer - Answer -No later
than 3 business days before consummation
You have been working with Dick and Jane and have prequalified them for a $500,000
30-year purchase money loan. They are putting down $100,000 and have decided to
use the MI company to which you referred them and is also your affiliate. Today is
Monday the 1st and you now have all 6 pieces of information needed to have an
application and their intent to proceed. Your office is closed for business on Saturdays.
What is the last day you must deliver the Affiliated Business Disclosure - Answer -That
document is not needed
In order to meet pre-licensing education requirement, a person shall complete at least
20 hours of education which shall include at least - Answer -. Three hours of federal
law and three hours of ethics
The TRID rules apply to - Answer -Single-family residences, Loans secured by vacant
land, and Construction-only loans
You initially disclose a rate of 5% to the customer but are floating the rate. Over the next
few days, rates improve and you have the option to lock the customer in at a rate of
4.75%. You choose to lock the rate at the initially disclosed figure. This behavior would
be considered - Answer -Legal but unethical
The APR includes all fees that are associated with residential financing. Not included
are costs which would occur with a - Answer -Cash buyer
When purchasing a two - four unit property according to FHLMC/FNMA guidelines, how
many months of reserves are required - Answer -6 months
TRID rules define "Consummation" as - Answer -The day the consumer becomes
contractually obligated on a credit transaction
A borrower wants to purchase a secondary home and tells you that they intend to rent
the property out when they are not living in it. You have reviewed their financial
information and realize that the borrower would qualify for financing if the property is
, classified as a secondary residence. However, if the property is classified as an
investment property, the borrower is unlikely to qualify. What should you do? - Answer -
You should classify the property as a rental property even though the borrower intends
to reside there part of the year
In accordance with RESPA, which of the following, could NOT provide settlement
services for the purchase of an owner occupied property? - Answer -Someone who
holds power of attorney
mortgage originator is required to display his or her unique identifier on all of the
following except: - Answer -Internal emails
In all forms of advertising a credit, the only number that can be used without additional
conditions is the: - Answer -APR
Aside from reverse mortgages, most residential mortgages begin through the - Answer
-Uniform Residential Loan Application
The APR is the interest rate plus the finance charges computed and expressed as: -
Answer -A percentage
Ecoa - Answer -Reg B
According to Freddie Mac and Fannie Mae guidelines, how long must a Chapter 7
bankruptcy be discharged before a borrower may get a loan? - Answer -4 years
You interview a customer and collect all of the necessary information to complete the
1003 and access his credit. Before ordering the credit report, however, you specifically
ask the client if it is okay to do so and they consent. You should now - Answer -Have
the customer sign a Borrower's Authorization form and then pull credit
When an underwriter is manually underwriting a Freddie Mac/Fannie Mae loan without
compensating factors, what is the maximum housing ratio allowed? - Answer -28%
According to ECOA when must you provide a copy of the appraisal to your borrower? -
Answer -Within 90 days after the issuance of a Notice of Right to Receive Appraisal
Report and upon receipt of a written request from the borrower
Which of the following does RESPA require to be given to the borrower - Answer -
Home Loan Toolkit
According to Reg. Z, the borrower's automatic right to rescind the loan within three
business days does not apply to: - Answer -Loans used to purchase or build the
borrower's residence
