Mlo Exam

Front 1

Mortgage broker Jack was in a hurry to get to the country club for a round of golf. He was impatient with borrower John when John said he didn't understand all of the loan terms. Jack just told him to sign the papers because "it was the best loan available". Feeling pressure, John signed. Jack's behavior is best described as:

Back 1

negligent

Front 2

Regarding prepayment penalties, Title XIV of the Dodd Frank Act:

Back 2

limited any pre-payment penalties to 6 months interest.

Front 3

In order to be eligible for a SAFE Act-compliant license, an applicant must not have a:

Back 3

felony conviction in the past seven years.

Front 4

What federally required disclosures must be provided within three business days of receipt of the loan application for a qualified mortgage loan?

Back 4

Loan Estimate and a Special Information Booklet, which contains consumer information regarding various real estate settlement services

Front 5

The purpose of Regulation Z is to:

Back 5

promote the informed use of consumer credit by requiring disclosures about its terms and costs.

Front 6

The Real Estate Settlement Procedures Act pertains to federally related loans used to purchase 1-4 single-family property used as a personal residence. RESPA regulates:

Back 6

all closing practices for real property sales.

Front 7

The reason for inclusion of the Verification of Deposit (VOD) in the loan package is to confirm the:

Back 7

status and balance of the borrower's bank accounts.

Front 8

Which federal act includes the Privacy Rule?

Back 8

Gramm-Leach-Bliley Act

Front 9

One of the key safeguards of the Federal Fair Credit Reporting Act (FCRA) is

Back 9

running a consumer credit check without telling the subject violates FCRA and carries substantial civil penalties.

Front 10

A home equity line-of-credit (HELOC) is a good example of a(n):

Back 10

open-end loan.

Front 11

When obtaining a VA-guaranteed loan, veterans

Back 11

pay a funding fee

Front 12

What is any charge payable directly or indirectly by the borrower and imposed directly or indirectly by the lender?

Back 12

A finance charge

Front 13

Under TILA, which of the following is not included in the finance charge for a real estate loan?

Back 13

Finder fees

Front 14

Which law requires the disclosure of the late payment charged or the method used to compute a late payment charge?

Back 14

TILA

Front 15

_________________ is the abusive practice of extending credit with the intent to deceive and take advantage of the borrower.

Back 15

Predatory lending

Front 16

The purchase contract indicates that the buyer's purchase price is higher than the listing price. Which of the following statements is true?

Back 16

This is a red flag

Front 17

A loan originator was found guilty of paying kickbacks to the title company and the real estate agent who referred the buyer. According to RESPA, what is the maximum fine that can be imposed?

Back 17

$10,000

Front 18

A standard insurance coverage policy protects against

Back 18

the expense incurred in defending the title.

Front 19

Under which situation is the Commissioner LEAST LIKELY to suspend or revoke a MLO license?

Back 19

Charles submitted a loan application and neglected to include his unique identifier.

Front 20

Alex, a residential loan originator, has been in the lending business for 20 years. He has made a good reputation and makes a nice living for his wife Martha and their two children. He attributes his success to his personal ethics. How is ethics defined?

Back 20

Set of principles or values by which an individual guides his or her own behavior and judges that of others

Front 21

The minimum down payments for an FHA 203b loan is:

Back 21

3.50%

Front 22

What is the passing score that the SAFE Act requires all mortgage loan originators to pass with on the NMLS-developed SAFE Mortgage Loan Originator Test for each component?

Back 22

75

Front 23

The process by which state agencies certify that licensed mortgage loan originators have successfully completed state education and/or state testing requirements in satisfaction of the SAFE Act PE and state test requirements is known as:

Back 23

certification

Front 24

certification

Back 24

a unique identifier.

Front 25

RESPA applies to ALL:

Back 25

real estate transactions for 1-4 unit residential dwellings.

Front 26

What loan product requires a Loan Estimate?

Back 26

Closed-end mortgages

Front 27

Under the ECOA, borrowers must be notified whether their loan has been approved or not within __________ days after filing a complete application.

Back 27

30

Front 28

Under RESPA statute, the lender is allowed to maintain a cushion equal to one-sixth of the amount of items paid out of the account, or approximately __________ of escrow payments.

Back 28

2 months

Front 29

Fannie Mae is able to circulate funds back into the market by:

Back 29

purchasing loans that meet FNMA guidelines.

Front 30

Which section of the Uniform Residential Loan Application gives evidence that the borrower can repay the loan?

Back 30

Employment Information

Front 31

On the Loan Estimate, how are fees and settlement charges determined?

Back 31

They are the estimated, normal fees for the type of loan as known by the loan originator

Front 32

The Truth in Lending Act requires a disclosure statement be given to the consumer. This statement includes:

Back 32

description of the security interest retained and used for the loan.

a listing of all items included in the finance charge

the annual percentage rate, fully spelled out.

Front 33

When are the funds disbursed for an owner-occupied residential refinance

Back 33

After the 3-day rescission period

Front 34

A(n) _________ of title is a written statement by an attorney or title agent determining whether the property is encumbered or has clear and marketable title.

Back 34

opinion

Front 35

The length of time that adverse credit collection information may appear in a credit report is regulated by:

Back 35

Regulation C.

Front 36

A property insurance company hosts a dinner for the employees of a mortgage broker. Afterwards, the designated broker encourages the employees to send clients to the insurance company. Who has violated RESPA?

Back 36

Only the property insurance company

Front 37

Which department ensures that a state’s licensing requirements meet the SAFE Act’s federally-mandated standards?

Back 37

The Federal Reserve Board

Front 38

Which of the following sources of funds for the down payment is acceptable for an FHA loan?

Back 38

Gift from a relative

Front 39

According to the FACT Act, which of the following acts could be considered a failure to secure private information?

Back 39

Dumping old files in the trash bin behind the building

Front 40

Sometimes the value on the Certificate of Reasonable Value is less than the purchase price. Which of the following actions is not allowed?

Back 40

The seller can carry back a second for the difference between the sales price and the value indicated on the CRV.

Front 41

Fannie Mae refers to the process of purchasing property with the intent of immediately reselling it as:

Back 41

flipping

Front 42

Ted is purchasing a single-family home for $300,000 and can only give a 10% down payment. Ted also has some minor problems with his credit history. Under Fannie Mae's underwriting guidelines, which of the following is most likely true?

Back 42

Ted may face stricter underwriting guidelines due to the low down payment and flaws in his credit history.

Front 43

All residential mortgage loan originators must be __________ according to the SAFE Act.

Back 43

either state-licensed or federally registered

Front 44

Lenders use credit scores as part of the underwriting process. Which statement regarding credit scoring is true?

Back 44

FICO® scores range from 300 to 850.

Front 45

Lenders must provide a corrected Closing Disclosure if an event in connection with the settlement occurs during the _____ day period after consummation that causes the Closing Disclosure to be inaccurate and result in a change to an amount paid by the borrower from what was previously disclosed.

Back 45

60 calendar

Front 46

A borrower who applies for a subprime loan is most likely someone who:

Back 46

experienced bankruptcy or foreclosure in the past.

Front 47

Under the TILA-RESPA rule, what term refers to a charge imposed for paying "all or part of" a transaction’s principal before the date on which the principal is due?

Back 47

A prepayment penalty

Front 48

The SAFE Act helps reduce fraud by establishing licensing requirements for:

Back 48

mortgage loan originators.

Front 49

Which of the following federal agencies is not represented on the Council?

Back 49

Securities and Exchange Commission

Front 50

RESPA applies to which of the following?

Back 50

First-lien residential loans for cooperatives, condominiums and one-to-four family homes

Front 51

The purpose of the ECOA, as implemented by __________, is to prevent discrimination when granting credit.

Back 51

Regulation B

Front 52

The Homeowners Mortgage Disclosure Act (HMDA) is the federal law that requires lenders to:

Back 52

collect data regarding race of applicant voluntary given by applicant at time of loan application.

Front 53

If, for a fee, a real estate broker offers a mortgage company the names and telephone numbers of all the people who attended an open house who has violated RESPA?

Back 53

Real estate broker

Front 54

A lender may agree to a rate commitment with the borrower. This means that the borrower may lock in an interest rate and number of points:

Back 54

during the processing of the loan.

Front 55

If an applicant knowingly gives false information on the Uniform Residential Loan Application:

Back 55

it is a Federal crime

the applicant can be fined

the applicant can be imprisoned

Front 56

Who is legally responsible for any errors or defects with delivery of the Closing Disclosure if the settlement agent provides the Closing Disclosure on the lender’s behalf?

Back 56

The lender

Front 57

In addition to a criminal background check, state-licensed mortgage loan originators must give authorization to the Nationwide Mortgage Licensing System (NMLS) to obtain a:

Back 57

credit report.

Front 58

In adjustable rate loans, the note rate is the:

Back 58

initial introductory interest rate.

Front 59

The Financial Privacy Rule of the GLB Act requires financial institutions to give their customers privacy notices that explain the financial institution's:

Back 59

information collection and sharing practices.

Front 60

When compared to a 25-year amortized loan, a 30-year amortized loan has:

Back 60

lower monthly payments of principal and interest.

Front 61

As measured by the Fair Isaac Corporation, which FICO® credit score is considered subprime?

Back 61

610

Front 62

If a manufactured home is not permanently attached to the land, financing is available through a:

Back 62

personal property loan.

Front 63

What is the first thing a veteran must do in order to apply for a VA-guaranteed loan?

Back 63

Apply for a Certificate of Eligibility

Front 64

On loans governed by RESPA, a buyer or seller may legally be charged for all of the following, except:

Back 64

preparation of the loan documents.

Front 65

Even though she had a debt-to-income ratio of 50%, Jane was able to qualify for a home loan of $525,000. The lender got Jane into a loan product with a low teaser rate that will increase dramatically after 2 years. Jane is unaware of the fact that the payment increase will cause her debt-to-income ratio to spike to 70%. What type of loan product did she secure?

Back 65

Exploding ARM

Front 66

Amortization is the:

Back 66

liquidation of a financial obligation on an installment basis.

Front 67

A mortgage broker may be paid a yield spread premium (YSP) by a lender for selling a loan at an interest rate above the par rate, as long as the:

Back 67

YSP does not exceed 1.5% of the loan amount.

Front 68

Four lenders decided to collaborate and refuse to work with a new mortgage loan originator in the area in an effort to force the new loan originator out of business. This is an example of:

Back 68

group boycotting.

Front 69

The SAFE Act is designed to:

Back 69

enhance consumer protection and reduce fraud.

Front 70

Unless state consumer protection laws conflict with a particular federal law, the:

Back 70

state law usually applies.

Front 71

The form included in the loan package that is used to verify an applicant's employment history is the:

Back 71

VOE.

Front 72

A point is 1% of the loan amount. Generally, a 1 point discount is equated to raising the yield on a loan by:

Back 72

1/8 of 1%.

Front 73

The purpose of title insurance is to:

Back 73

protect against loss of the investment in a property due to a defective title.

Front 74

Under TILA, the Right of Rescission applies to:

Back 74

refinancings of owner occupied dwelling, or equity loans (1 to 4 units).

Front 75

All state licensed and federally registered mortgage loan originators must be registered with the:

Back 75

Nationwide Mortgage Licensing System and Registry.

Front 76

A movable economic index will alter an interest rate upwards or downwards for what type of loan?

Back 76

Adjustable-rate loan

Front 77

Under the SAFE Act, mortgage loan originators must complete how many hours of Nationwide Mortgage Licensing System-approved pre-licensing education?

Back 77

20

Front 78

TILA requires lenders to disclose important terms and costs of their loans. Which of the following is a required disclosure?

Back 78

Finance charge

Payment terms

Number of payments

Front 79

Which type of real estate professional is exempt from the Fair Housing Act?

Back 79

Title companies

Front 80

To determine a borrower's ability to repay a maximum loan amount, the underwriter uses __________ ratios to calculate the risk of default on the part of the borrower.

Back 80

debt-to-income

Front 81

A loan processor who is confirming information on a loan application for a VA loan must send a __________ in addition to the standard verification letters.

Back 81

Request for Certificate of Eligibility

Front 82

A lender may require a borrower to maintain an escrow account with them to ensure the payment of taxes, insurance, and other items. This typically occurs when the borrower's first loan exceeds what percentage?

Back 82

80%

Front 83

Under which directive is a creditor required to furnish consumers with certain disclosures prior to a contract for loan?

Back 83

Regulation Z

Front 84

When obtaining a conventional loan, what type of documentation is required to verify the income of a self-employed person?

Back 84

Signed and dated tax returns for the two previous years

Year-to-date income statement and balance sheet

Document showing ownership percentages if business is owned by more than one person

Front 85

Good underwriting is the foundation of current mortgage payments or:

Back 85

performing loans.

Front 86

The SAFE Act states that a waiting period of __________ calendar days prior to the candidate being allowed to retake a failed test component.

Back 86

30

Front 87

If any triggering terms are used in an advertisement, all of the following disclosure must be made, except:

Back 87

closing costs total.

Front 88

One of the most important laws protecting consumers' identities and credit information is the:

Back 88

Fair Credit Reporting Act.

Front 89

Lender Jack, his appraiser friend Alice, and his cousin Rob work together obtain loans on overvalued properties. Alice prepares an inflated appraisal for the property, Rob obtains the loan (even though he has no intention of repaying it), and Jack approves the loan. In this scenario, Rob would be considered a:

Back 89

straw buyer.

Front 90

Which of the following is the most widely used and volatile of the indexes used for ARMs?

Back 90

CMT

Front 91

If a borrower is charged $50 for a credit report on a HUD 1 Settlement Statement, but the actual cost was only $20. What section of RESPA was violated?

Back 91

Section 8 (b)

Front 92

The VA Certificate of Eligibility form number is:

Back 92

Form 26-8320.

Front 93

DVA commonly referred to as VA guarantees loan programs for qualified veterans. They also require funding fees for these guarantees for each military service. For 100% loan guarantee to a National Guard Veteran, the funding fee would be:

Back 93

2.40%

Front 94

If the payments on a loan financing a real estate purchase are insufficient to service the debt, the result will be:

Back 94

negative amortization.

Front 95

Regarding the Information for Government Monitoring Purposes section of the Uniform Residential Loan Application, the borrower:

Back 95

has the option of completing it or not completing it.

Front 96

Jane's loan package is almost complete. She wants to use alternative loan documentation for her rental property loan payments. What eligible documentation can she submit with her application?

Back 96

Credit report reference for the last 12 months

Front 97

Which is considered the most important when qualifying a borrower?

Back 97

Payment history

Front 98

A lender must provide a revised Loan Estimate to the borrower no later than _________ business days after receiving the information that required the revision.

Back 98

three

Front 99

When completing a loan application, a consumer who intentionally withholds information that would disqualify him or her from obtaining a loan, commits mortgage fraud based on:

Back 99

omission.

Front 100

An appraiser intentionally undervalues the properties in an area to keep the values of property in that area low. Which law is violated by the appraiser's actions?

Back 100

Fair Housing Act

Front 101

Prior to renewing a MLO license, how many hours of continuing education are necessary?

Back 101

8

Front 102

Which federal agency monitors compliance with the Equal Credit Opportunity Act?

Back 102

Federal Trade Commission

Front 103

A consumer is entitled to a free copy of his or her credit report every __________, assuming there has been no fraud or adverse action.

Back 103

year

Front 104

Brad just took a listing on a three-bedroom fixer-upper home in a school district with high ratings. Brad wrote the following ads. Which ad follows acceptable advertising guidelines?

Back 104

“Nice fixer, three-bedrooms, located by parks and schools with high ratings.”

Front 105

An appraiser must go out to re-inspect property after the appraiser has called for work to be done. This form is:

Back 105

442

Front 106

An example of an ad valorem tax is:

Back 106

property tax.

Front 107

What does COFI stand for?

Back 107

Cost of Funds Index

Front 108

Subprime loans can also be referred to as:

Back 108

"B" paper loans.

Front 109

What circumstances allow lenders to charge more than disclosed on the loan estimate?

Back 109

Amount charged falls within explicit tolerance thresholds.

Charges that may exceed the disclosed amount.

Changed circumstances.

Front 110

Fred is a candidate taking the SAFE MLO test at a testing center. Which of these actions could result in Fred being denied the license?

Back 110

Fred used his cell phone during a restroom break.

Front 111

When a purchaser borrows funds to finance real estate, he or she promises to repay the loan and offers the property as __________ to secure the loan.

Back 111

collateral

Front 112

Seller Sam prepaid his property taxes for the year. On Sam's closing statement, this entry will appear as a:

Back 112

credit to the seller, debit to the buyer.

Front 113

Closing is also known as:

Back 113

settlement

Front 114

"CRV" is a common phrase used in the financing of real estate. The CRV is issued by the:

Back 114

Certificate of reasonable Value. Department of Veterans Affairs.

Front 115

If a lender wants to originate more loans, it can ______________ its underwriting and property guidelines.

Back 115

loosen

Front 116

As of April 9, 2012, FHA charges an upfront insurance premium. It is __________ of the base loan amount.

Back 116

1.75%

Front 117

What type of e-mail is excluded from the CAN-SPAM Act of 2003?

Back 117

Transactional e-mail message

Front 118

According to the Department of Housing and Urban Development (HUD), an individual who “takes a residential mortgage loan application” includes someone that :

Back 118

takes down a borrower's information for purposes of completing a loan application.

Front 119

The main benefit of a VA-guaranteed home loan is:

Back 119

no down payment.

Front 120

Which of the following statements can be associated with jumbo loans?

Back 120

Jumbo loans require additional underwriting conditions.

Front 121

The Truth in Lending Act is Title 1 of the:

Back 121

Consumer Credit Protection Act of 1968.

Front 122

A licensed mortgage broker must include which of the following in his or her advertising?

Back 122

Valid, unique identifier

Front 123

Under the SAFE Act, what organization must help develop and maintain a nationwide mortgage licensing system (NMLS)?

Back 123

Conference of State Bank Supervisors

Front 124

Which is the FTC authorized website that consumers can use to obtain their annual free credit report?

Back 124

www.annualcreditreport.com

Front 125

What VA form is used by the underwriter to determine if the applicant has sufficient income?

Back 125

26-8497

Front 126

A subsequent VA cash out refinance also requires a funding fee of _______.

Back 126

3.30%

Front 127

The __________ ensures that all consumers are given an equal chance to obtain credit.

Back 127

ECOA

Front 128

What does the Closing Disclosure Form integrate and replace?

Back 128

The existing HUD-1 and final TILA disclosure

Front 129

TILA is overseen by:

Back 129

FRB - Federal Reserve Board

Front 130

What is an SRP?

Back 130

It is the payment received by a lender when a closed mortgage loan is sold to the secondary mortgage market

Front 131

__________ is the process of analyzing the degree of risk involved in a real estate loan.

Back 131

Underwriting

Front 132

Back-end debt to income (DTI) ratios include:

Back 132

PITI plus minimum revolving credit and monthly fixed debt divided by gross monthly income.