SAFE MLO EXAM 225 PRACTICE QUESTIONS
If a consumer believes that information on a credit report is inaccurate, what must the
credit bureau do?
A. Notify any lender of the alleged discrepancy
B. Confirm and remove inaccurate information within 30 days
C. Provide a credit score at no charge
D. Prevent creditors from accessing the report
B
A lender that is transferring the servicing of a loan to another lender must provide the
Servicing Transfer Disclosure within what timeframe?
A. 3 business days before the transfer
B. 3 business days after the transfer
C. 15 business days before the transfer
D. 15 business days after the transfer
C
Although some exceptions apply, in general, overtime income should be in order to be
used for qualifying purposes:
A. Averaged over the past 18 months
B. Averaged over the past 2 years
C. Used as a compensating factor only
D. Received for more than 1 year
B
Which factor must be considered when evaluating a borrower's ability to repay a higher-
priced mortgage loan?
A. The borrower's debt-to-income ratio
B. The borrower's plans to start a family
C. The lender's desire to retain servicing
D. The borrower's ancestry
A
,PMI protects:
A. the public
B. the mortgagor
C. the mortgagee
D. the seller
C
Which of the following is typically not required in a gift letter?
A. A statement that the money is not a loan
B. The donor's relationship to the recipient
C. The amount of the gift
D. The donor's Social Security number
D
Which type of mortgage loan lets the borrower make regular monthly payments for a
period of time and then requires one larger payment upon maturity?
A. Jumbo loan
B. Balloon loan
C. Alt-A loan
D. Subprime loan
B
Molly O'Callaghan walks into a creditor's office to apply for a loan at 9:00 AM. She is
greeted promptly and offered a cup of coffee before being directed to a loan officer. At
3:30 PM, Quoc-Huy Nguyen enters the same office. The receptionist is busy and does
not greet him for five minutes. After introducing himself, Quoc-Huy is directed to a couch
to wait for a loan officer, which takes an additional five minutes. During this time, he is
not offered a beverage. This is an example of:
A. An acceptable practice
B. Overt discrimination
C. Disparate treatment
D. Disparate impact
C
Which of the following loans is subject to RESPA's disclosure requirements? A. A loan
secured by vacant land
B. A loan secured by commercial property
C. A loan secured by a residential property on a 29 acre lot
D. A loan secured by a four-unit residential property
D
,A borrower has applied for a $296,000 loan with an interest rate of 6.25%, a term of 30
years with a loan-to-value ratio of 65%. Assuming that the loan funds on May 22nd and
the lender uses a 360-day year, how much per-diem interest will be collected at closing
as shown on the Closing Disclosure?
A. $334.03
B. $513.90
C. $506.85
D. $329.45
B
If a borrower paid $12,000 in discount points on a $600,000 loan, how many points did
he pay?
A. 2 points
B. 5 points
C. 12 points
D. 20 points
A
Five business days prior to closing, the creditor sends its figures to the settlement agent
to prepare the borrower's closing disclosure. The settlement agent delivers the Closing
Disclosure to the borrower two business days prior to closing and there is a tolerance
violation. Under TRID, who will be held liable for the errors in documentation and
process?
A. The creditor
B. The settlement agent
C. The loan officer
D. The notary public who witnessed the signing
A
If the loan-to-value ratio on an FHA-insured 30-year loan exceeds 90% at origination,
how long will the applicant be required to pay the FHA annual MIP paid monthly?
A. 7 years
B. 11 years
C. Until the loan reaches 78% LTV
D. For the life of the loan
D
, When a creditor issues a Loan Estimate to an applicant, which of the following fees can
increase without limit between the LE and the final charges as shown on the Closing
Disclosure?
A. The borrower's hazard insurance premiums
C. Any borrower-paid transfer tax associated with the purchase of a property
D. The title charges, including any settlement fee
B. The origination fee
A
Negative amortization results when:
A. The term of a loan is less than 20 years.
B. The minimum payment due is less than the amount of interest accrued on
the loan in a given period.
C. An ARM interest rate adjusts downward.
D. A 15-year balloon loan has an interest rate above 8%.
B
A loan officer meets with a client at 9:00 AM to take an application. When the client
arrives, the MLO welcomes her warmly, shakes her hand and offers a cup of coffee.
During the meeting, the client decides that she is not ready to own a home and does not
follow through with the loan application. The MLO had counted on this loan application
to reach a volume bonus for the month. An hour later, an existing client comes into the
office to see the same MLO and drop off a document. The MLO greets the client and
shakes his hand, but does not offer a cup of coffee. Which of the following statements is
true regarding this series of events?
A. The actions of the MLO do not raise any potential issues
B. The actions of the MLO could give rise to a claim of overt discrimination
C. The actions of the MLO could give rise to a claim of disparate treatment
D. The actions of the MLO could give rise to a claim of disparate impact
C
Under RESPA, when is it acceptable for a property seller to condition a sale on the
buyer's use of a specific title company?
A. When full disclosure is provided
B. Under no circumstances
C. When the property contains more than one dwelling unit
D. When the loan amount exceeds the conforming loan limit
If a consumer believes that information on a credit report is inaccurate, what must the
credit bureau do?
A. Notify any lender of the alleged discrepancy
B. Confirm and remove inaccurate information within 30 days
C. Provide a credit score at no charge
D. Prevent creditors from accessing the report
B
A lender that is transferring the servicing of a loan to another lender must provide the
Servicing Transfer Disclosure within what timeframe?
A. 3 business days before the transfer
B. 3 business days after the transfer
C. 15 business days before the transfer
D. 15 business days after the transfer
C
Although some exceptions apply, in general, overtime income should be in order to be
used for qualifying purposes:
A. Averaged over the past 18 months
B. Averaged over the past 2 years
C. Used as a compensating factor only
D. Received for more than 1 year
B
Which factor must be considered when evaluating a borrower's ability to repay a higher-
priced mortgage loan?
A. The borrower's debt-to-income ratio
B. The borrower's plans to start a family
C. The lender's desire to retain servicing
D. The borrower's ancestry
A
,PMI protects:
A. the public
B. the mortgagor
C. the mortgagee
D. the seller
C
Which of the following is typically not required in a gift letter?
A. A statement that the money is not a loan
B. The donor's relationship to the recipient
C. The amount of the gift
D. The donor's Social Security number
D
Which type of mortgage loan lets the borrower make regular monthly payments for a
period of time and then requires one larger payment upon maturity?
A. Jumbo loan
B. Balloon loan
C. Alt-A loan
D. Subprime loan
B
Molly O'Callaghan walks into a creditor's office to apply for a loan at 9:00 AM. She is
greeted promptly and offered a cup of coffee before being directed to a loan officer. At
3:30 PM, Quoc-Huy Nguyen enters the same office. The receptionist is busy and does
not greet him for five minutes. After introducing himself, Quoc-Huy is directed to a couch
to wait for a loan officer, which takes an additional five minutes. During this time, he is
not offered a beverage. This is an example of:
A. An acceptable practice
B. Overt discrimination
C. Disparate treatment
D. Disparate impact
C
Which of the following loans is subject to RESPA's disclosure requirements? A. A loan
secured by vacant land
B. A loan secured by commercial property
C. A loan secured by a residential property on a 29 acre lot
D. A loan secured by a four-unit residential property
D
,A borrower has applied for a $296,000 loan with an interest rate of 6.25%, a term of 30
years with a loan-to-value ratio of 65%. Assuming that the loan funds on May 22nd and
the lender uses a 360-day year, how much per-diem interest will be collected at closing
as shown on the Closing Disclosure?
A. $334.03
B. $513.90
C. $506.85
D. $329.45
B
If a borrower paid $12,000 in discount points on a $600,000 loan, how many points did
he pay?
A. 2 points
B. 5 points
C. 12 points
D. 20 points
A
Five business days prior to closing, the creditor sends its figures to the settlement agent
to prepare the borrower's closing disclosure. The settlement agent delivers the Closing
Disclosure to the borrower two business days prior to closing and there is a tolerance
violation. Under TRID, who will be held liable for the errors in documentation and
process?
A. The creditor
B. The settlement agent
C. The loan officer
D. The notary public who witnessed the signing
A
If the loan-to-value ratio on an FHA-insured 30-year loan exceeds 90% at origination,
how long will the applicant be required to pay the FHA annual MIP paid monthly?
A. 7 years
B. 11 years
C. Until the loan reaches 78% LTV
D. For the life of the loan
D
, When a creditor issues a Loan Estimate to an applicant, which of the following fees can
increase without limit between the LE and the final charges as shown on the Closing
Disclosure?
A. The borrower's hazard insurance premiums
C. Any borrower-paid transfer tax associated with the purchase of a property
D. The title charges, including any settlement fee
B. The origination fee
A
Negative amortization results when:
A. The term of a loan is less than 20 years.
B. The minimum payment due is less than the amount of interest accrued on
the loan in a given period.
C. An ARM interest rate adjusts downward.
D. A 15-year balloon loan has an interest rate above 8%.
B
A loan officer meets with a client at 9:00 AM to take an application. When the client
arrives, the MLO welcomes her warmly, shakes her hand and offers a cup of coffee.
During the meeting, the client decides that she is not ready to own a home and does not
follow through with the loan application. The MLO had counted on this loan application
to reach a volume bonus for the month. An hour later, an existing client comes into the
office to see the same MLO and drop off a document. The MLO greets the client and
shakes his hand, but does not offer a cup of coffee. Which of the following statements is
true regarding this series of events?
A. The actions of the MLO do not raise any potential issues
B. The actions of the MLO could give rise to a claim of overt discrimination
C. The actions of the MLO could give rise to a claim of disparate treatment
D. The actions of the MLO could give rise to a claim of disparate impact
C
Under RESPA, when is it acceptable for a property seller to condition a sale on the
buyer's use of a specific title company?
A. When full disclosure is provided
B. Under no circumstances
C. When the property contains more than one dwelling unit
D. When the loan amount exceeds the conforming loan limit
