Safe MLO Exam 3 Questions and Answers Already Passed
A seller entering into a contract with a buyer to receive P&I payments in return for signing the
deed over to the buyer and placing a lien on the property until the debt is repaid is an example of:
a) Seller's concessions
b) Seller financing
c) Seller collateralization
d) Primary lending - Answers Seller financing
HOEPA is Section ___________ of ____________?
a) 35/TILA
b) 203/RESPA
c) 32/RESPA
d) 32/TILA - Answers 32/TILA
Answer: d) The Truth-in-Lending Act was amended in 1994 when Section 32 was added
enacting the Home Ownership and Equity Protection Act (HOEPA). This regulation was enacted
to address and stop predatory lending practices in purchases, refinances, open-ended credit
plans, and closed-ended home equity loans that abusively charged excessive points, interest
rates, and fees
Which of the following loans would be exempt from HOEPA coverage?
a) A purchase-money mortgage securitizing a vacation property
b) A primary-residential home purchase
c) A primary-residential home equity loan
d) A primary-residential refinance - Answers A purchase-money mortgage securitizing a
vacation property
Higher-priced mortgage loans are addressed in Section ____________ of ____________?
,a) 32/TILA
b) 35/RESPA
c) 35/TILA
d) 32 RESPA - Answers 35/TILA
A higher-priced mortgage loan is a loan through which the APR exceeds the APOR by:
a) 3.5% or more on first-lien instruments
b) 3.25% or more on second-lien instruments
c) 1.5% or more on first-lien instruments
d) 2.0% or more on second-lien instruments - Answers c) 1.5% or more on first-lien instruments
A ______________ is an example of an open-ended instrument while a/an ______________ is an
example of a closed-ended instrument.
a) home equity loan/auto loan
b) student loan/home equity line of credit
c) home equity loan/home equity line of credit
d) revolving credit card/boat loan - Answers revolving credit card/boat loan
MLO Monica is refinancing the only mortgage secured by her customer's primary residence. She
just realized that the APR of the interest rate that her customer locked exceeds the APOR by
1.625%. Which of the following statements now applies?
a) An escrow account is mandatory
b) A 2055 drive-by appraisal is sufficient
c) MLO Monica must offer a lower rate to her borrower
d) The three-day right to rescind is now extended to three years - Answers An escrow account is
mandatory
The Truth-in-Lending Act addresses all of the following except:
,a) Right of rescission
b) Comparative shopping
c) The cost of the credit
d) Advertising - Answers Comparative shopping
All but which of the following are not covered by RESPA?
a) Simple assumptions
b) The sale of loans on the secondary market
c) Loans intended for sale to Freddie Mac
d) Bridge loans - Answers Loans intended for sale to Freddie Mac
Sam originates a mortgage for Stella. Sam lists the cost of the credit report as $50.00 on the
loan estimate even though the credit report only cost him $25.00. Sam intends to keep the
difference. By doing this is Sam violating RESPA and, if so, of what is this an example?
a) Yes, and bait and switch
b) Yes, and chunking
c) Yes, and markup
d) Sam is not in violation of RESPA, and markup - Answers Yes, and markup
RESPA strictly prohibits markups to protect consumers from unscrupulous mortgage
professionals desiring to profit at their expense. RESPA prohibits markups by classifying them
as unearned fees. Markups involve charging a customer more than the cost of a third-party
settlement fee and pocketing the difference
Which of the following disclosures is not required by RESPA for a refinance transaction?
a) HUD's Home Loan Toolkit
b) Loan Estimate
c) Mortgage Servicing Disclosure Statement
d) ABAD - Answers HUD's Home Loan Toolkit
, Julie suspects that her loan originator may be participating in a sham affiliated business
arrangement (AFBA). Which of the following situations does HUD consider a factor indicating
the possibility of the AFBA being a sham?
a) The title company is located out of state
b) The independent home inspector only performs inspections for this one particular lender
c) The Realtor only works part time
d) The hazard insurance agent is newly-licensed - Answers The independent home inspector
only performs inspections for this one particular lender
Which of the following is permissible under the Equal Credit Opportunity Act?
a) Asking an applicant to define her race
b) Asking about a woman's intention to have more children since the expenses associated with
additional children may adversely affect her ability to repay the debt
c) Asking an applicant whether or not he is divorced after he discloses alimony payments as
one of his liabilities
d) Asking the applicant of what country she is a citizen - Answers Asking an applicant to define
her race
For which of the following individuals would it be permissible to refuse an application?
a) A 97-year-old woman who wishes to apply for a 30-year loan
b) A man who volunteers that his credit is severely damaged
c) A 17-year-old woman whose birthday is in a week and a half
d) An unemployed artist - Answers A 17-year-old woman whose birthday is in a week and a half
Which of the following is an example of disparate treatment?
a) A mortgage company located in an Asian community only conducts business in English
b) A mortgage originator who only speaks English refers an applicant to a colleague who
A seller entering into a contract with a buyer to receive P&I payments in return for signing the
deed over to the buyer and placing a lien on the property until the debt is repaid is an example of:
a) Seller's concessions
b) Seller financing
c) Seller collateralization
d) Primary lending - Answers Seller financing
HOEPA is Section ___________ of ____________?
a) 35/TILA
b) 203/RESPA
c) 32/RESPA
d) 32/TILA - Answers 32/TILA
Answer: d) The Truth-in-Lending Act was amended in 1994 when Section 32 was added
enacting the Home Ownership and Equity Protection Act (HOEPA). This regulation was enacted
to address and stop predatory lending practices in purchases, refinances, open-ended credit
plans, and closed-ended home equity loans that abusively charged excessive points, interest
rates, and fees
Which of the following loans would be exempt from HOEPA coverage?
a) A purchase-money mortgage securitizing a vacation property
b) A primary-residential home purchase
c) A primary-residential home equity loan
d) A primary-residential refinance - Answers A purchase-money mortgage securitizing a
vacation property
Higher-priced mortgage loans are addressed in Section ____________ of ____________?
,a) 32/TILA
b) 35/RESPA
c) 35/TILA
d) 32 RESPA - Answers 35/TILA
A higher-priced mortgage loan is a loan through which the APR exceeds the APOR by:
a) 3.5% or more on first-lien instruments
b) 3.25% or more on second-lien instruments
c) 1.5% or more on first-lien instruments
d) 2.0% or more on second-lien instruments - Answers c) 1.5% or more on first-lien instruments
A ______________ is an example of an open-ended instrument while a/an ______________ is an
example of a closed-ended instrument.
a) home equity loan/auto loan
b) student loan/home equity line of credit
c) home equity loan/home equity line of credit
d) revolving credit card/boat loan - Answers revolving credit card/boat loan
MLO Monica is refinancing the only mortgage secured by her customer's primary residence. She
just realized that the APR of the interest rate that her customer locked exceeds the APOR by
1.625%. Which of the following statements now applies?
a) An escrow account is mandatory
b) A 2055 drive-by appraisal is sufficient
c) MLO Monica must offer a lower rate to her borrower
d) The three-day right to rescind is now extended to three years - Answers An escrow account is
mandatory
The Truth-in-Lending Act addresses all of the following except:
,a) Right of rescission
b) Comparative shopping
c) The cost of the credit
d) Advertising - Answers Comparative shopping
All but which of the following are not covered by RESPA?
a) Simple assumptions
b) The sale of loans on the secondary market
c) Loans intended for sale to Freddie Mac
d) Bridge loans - Answers Loans intended for sale to Freddie Mac
Sam originates a mortgage for Stella. Sam lists the cost of the credit report as $50.00 on the
loan estimate even though the credit report only cost him $25.00. Sam intends to keep the
difference. By doing this is Sam violating RESPA and, if so, of what is this an example?
a) Yes, and bait and switch
b) Yes, and chunking
c) Yes, and markup
d) Sam is not in violation of RESPA, and markup - Answers Yes, and markup
RESPA strictly prohibits markups to protect consumers from unscrupulous mortgage
professionals desiring to profit at their expense. RESPA prohibits markups by classifying them
as unearned fees. Markups involve charging a customer more than the cost of a third-party
settlement fee and pocketing the difference
Which of the following disclosures is not required by RESPA for a refinance transaction?
a) HUD's Home Loan Toolkit
b) Loan Estimate
c) Mortgage Servicing Disclosure Statement
d) ABAD - Answers HUD's Home Loan Toolkit
, Julie suspects that her loan originator may be participating in a sham affiliated business
arrangement (AFBA). Which of the following situations does HUD consider a factor indicating
the possibility of the AFBA being a sham?
a) The title company is located out of state
b) The independent home inspector only performs inspections for this one particular lender
c) The Realtor only works part time
d) The hazard insurance agent is newly-licensed - Answers The independent home inspector
only performs inspections for this one particular lender
Which of the following is permissible under the Equal Credit Opportunity Act?
a) Asking an applicant to define her race
b) Asking about a woman's intention to have more children since the expenses associated with
additional children may adversely affect her ability to repay the debt
c) Asking an applicant whether or not he is divorced after he discloses alimony payments as
one of his liabilities
d) Asking the applicant of what country she is a citizen - Answers Asking an applicant to define
her race
For which of the following individuals would it be permissible to refuse an application?
a) A 97-year-old woman who wishes to apply for a 30-year loan
b) A man who volunteers that his credit is severely damaged
c) A 17-year-old woman whose birthday is in a week and a half
d) An unemployed artist - Answers A 17-year-old woman whose birthday is in a week and a half
Which of the following is an example of disparate treatment?
a) A mortgage company located in an Asian community only conducts business in English
b) A mortgage originator who only speaks English refers an applicant to a colleague who
