CA MLO - Compliance Flashcards
(102 cards)
1
Q
- When the telephone number of a licensed mortgage lender is the same after the company moves to a new location, does the Corporations Commissioner need to be notified of the address change?
a. No, because the telephone number did not change.
b. No, the change can be noted on the annual renewal application.
c. Yes, the Corporations Commissioner must be notified of the address change within 10 days of the change.
d. Yes, the Corporations Commission must receive written notification of the address change 10 days before the change.
A
d. Yes, the Corporations Commission must receive written notification of the address change 10 days before the change.
2
Q
- Under RESPA, which of the following would not be considered an affiliated business arrangement (AfBA)?
a. Referral to an employee of the same company
b. Referral to an escrow company
c. Referral to a hazard insurance company
d. Referral to a home inspection company
A
a. Referral to an employee of the same company
3
Q
. Which of the following would not be considered trust funds?
a. Cash
b. Check
c. Commission
d. Personal note made payable to the seller
A
c. Commission
4
Q
. How much is the fee for an application for a new branch location?
a. $100
b. $200
c. $250
d. $500
A
b. $200
5
Q
- The Mortgage Disclosure Improvement Act (MDIA) amending Regulation Z requires creditors to make good faith estimates of the required mortgage disclosures, and deliver or place them in the mail:
a. no later than 3 days after receiving a consumer’s application for a dwelling-secured closed-end loan.
b. no later than 3 business days after receiving a consumer’s application for a dwelling-secured closed-end loan.
c. no later than 7 days after receiving a consumer’s application for a dwelling-secured closed-end loan.
d. no later than 7 business days after receiving a consumer’s application for a dwelling-secured closed-end loan.
A
b. no later than 3 business days after receiving a consumer’s application for a dwelling-secured closed-end loan.
6
Q
- How long after the date of last use must a licensed mortgage company retain a copy of an advertising radio script?
a. 30 days
b. 90 days
c. 1 year
d. 3 years
A
b. 90 days
Correct answer is (b).
Radio and televisions scripts and material distributed on the Internet must be kept on file in the licensee’s office for at least 90 days after the last use of the advertisement
7
Q
- To maintain trust fund integrity, a broker should follow safe practices to reduce trust fund liability, such as:
a. ensuring that the trust fund account balance is equal to the fund’s total liabilities.
b. complying with the Commissioners’ Regulations regarding recordkeeping.
c. not commingling trust funds.
d. doing all of the above.
A
d. doing all of the above.
8
Q
- Unless otherwise specified by the beneficiary of the funds in writing, what is the broker required to do with trust funds no later than three business days following receipt of the funds?
a. Deposit the funds into the seller’s bank account
b. Place the funds accepted on behalf of the owner in the hands of the lender
c. Deposit the funds into a trust fund bank account maintained by the broker
d. Return the funds to the buyer
A
c. Deposit the funds into a trust fund bank account maintained by the broker
9
Q
- Which form is used to record trust funds received from a buyer that are deposited into the broker’s trust fund account?
a. Record of All Trust Funds Received - Not Placed in Brokers Trust Account
b. Separate Record for each Beneficiary or Transaction
c. Standardized Columnar Record
d. Reconciliation of Funds Received
A
b. Separate Record for each Beneficiary or Transaction
10
Q
- Who may examine a licensed lender’s affairs, business, premises, and records?
a. Competitor
b. Commissioner
c. Consumer
d. Creditor
A
b. Commissioner
11
Q
- The Commissioner may deny the renewal of a MLO license if the licensee:
a. completes only 8 hours of CE credits.
b. does not send the renewal fee before December 31st.
c. has a minor traffic accident.
d. receives an incentive bonus during the year
A
b. does not send the renewal fee before December 31st.
12
Q
- Which of the following fees may not be included in the finance charge for a real estate loan according to the federal Truth in Lending Act?
a. Appraisal fees
b. Buyer’s points
c. Finder’s fees
d. Interest
A
a. Appraisal fees
13
Q
- Commingling is the illegal act of mixing a broker’s personal funds with those of a client or a beneficiary. Which of the following is considered commingling?
a. A broker always disburses any non-trust funds from the trust account not later than 25 days after their deposit
b. A broker keeps $150 in a trust account to pay service charges or fees levied or assessed against the account by the bank
c. A broker uses one business account for all money received
d. All of the above
A
c. A broker uses one business account for all money received
14
Q
- Why would a MLO licensee need to file a Change of Control application with the Commissioner?
a. Licensee is indicted on a criminal charge.
b. Direct ownership of the company changes.
c. MLO resigns.
d. Business office relocates.
A
b. Direct ownership of the company changes.
15
Q
- A licensed mortgage broker must include which of the following in his or her advertising?
a. Logo of professional associations in which the broker is a member
b. Valid, unique identifier
c. Registered trademark of business, if there is one
d. All professional designations
A
b. Valid, unique identifier
16
Q
- A real estate broker license allows the broker to do all of the following, except:
a. employ other brokers.
b. employ salespeople.
c. negotiate real estate loans.
d. perform acts that require a real estate license.
A
c. negotiate real estate loans.
17
Q
- Which fees may a MLO collect from an applicant prior to getting a commitment from a qualified lender?
a. Application fee
b. Appraisal fee
c. Credit report fee
d. All of the above
A
d. All of the above
18
Q
- A licensed mortgage broker may publish advertisements that identify all of the following, except the:
a. broker by his or her name as it is written on the license.
b. broker by a different name than the name on the license.
c. directions and map showing the licensee’s place of business.
d. icon of professional associations to which the licensee belongs.
A
b. broker by a different name than the name on the license.
19
Q
- According to the ECOA, a lender must provide an applicant a copy of the appraisal report obtained in connection with the loan for which the applicant applied. Which statement is incorrect?
a. The applicant must send written request within a reasonable period of time of the application
b. The lender must promptly send a copy of the appraisal report upon receiving the written request
c. The applicant must pay for the cost of the appraisal in order to be entitled to a copy
d. The lender may require the applicant to reimburse the lender for the cost of the appraisal
A
c. The applicant must pay for the cost of the appraisal in order to be entitled to a copy
20
Q
- On loans governed by RESPA, a buyer or seller may legally be charged for all of the following, except:
a. preparation of the loan documents.
b. conducting an appraisal prior to the loan.
c. preparation of the Uniform Settlement Statement.
d. preparation of credit reports.
A
c. preparation of the Uniform Settlement Statement.
Correct answer is (c).
As provided by RESPA, a lender may not assess a fee or charge anyone in connection with or on account of the preparation or distribution of the Uniform Settlement Statement.
21
Q
- A MLO licensee may not conduct business at any other location other than the place of business that is named on the license, unless the:
a. borrower asks (orally or in writing)that the loan be made at a different location.
b. it is the personal residence of the licensee.
c. alternate location is the office of another MLO-licensed lender.
d. lender has changed locations, but has not yet notified the Commission of the address change.
A
a. borrower asks (orally or in writing)that the loan be made at a different location.
22
Q
- Under the California Financial Code, Section 4970, a covered loan refers to a consumer loan that meets one of the following conditions: (1) the APR at consummation of the transaction will exceed the yield on Treasury securities by more than ____ ; or (2) the total points and fees payable by the consumer at or before closing for a real estate loan will exceed ____ of the total loan amount.
a. 4%; 2%
b. 6%; 8%
c. 8%; 6%
d. 8%; 8%
A
c. 8%; 6%
Correct answer is (c).
Under the California Financial Code, Section 4970, a covered loan refers to a consumer loan that meets one of the following conditions: (1) the APR at consummation of the transaction will exceed the yield on Treasury securities by more than 8%; or (2) the total points and fees payable by the consumer at or before closing for a mortgage or deed of trust will exceed 6% of the total loan amount.
23
Q
- A MLO licensee may credit a 4-hour online ethics towards the continuing education renewal requirement:
a. once, in the same calendar year in which the course is taken.
b. once, in the next calendar year after the course is taken.
c. twice, 2 hours in the year in which the course is taken and 2 hours carried over into the next year.
d. twice, if the same course is taken twice in 2 consecutive years.
A
a. once, in the same calendar year in which the course is taken.
24
Q
- Of the following, which is a violation rather than a bona fide error?
a. The date on the loan document is smudged caused during printing.
b. The borrower received the loan documents stapled together, but pages 4 and 5 were out of order.
c. The MLO was in a hurry to get the loan agreement submitted and asked the borrower to sign even though some important items were left blank, to be filled in later.
d. The MLO’s business card had an incorrect email address, due to a printing error.
A
c. The MLO was in a hurry to get the loan agreement submitted and asked the borrower to sign even though some important items were left blank, to be filled in later.
25
25. A finance lender must send a branch office application to the Commissioner at least __________ days before engaging in business at the new location.
a. 5
b. 10
c. 15
d. 30
b. 10
26
26. Which should not be disbursed from a trust account?
a. Borrower's payments
b. Borrower's refunds
c. Payments to the lender
d. Transfers to another depository institution
c. Payments to the lender
27
27. In addition to written authorization from the broker, what must an unlicensed authorized signatory have to withdraw funds from the broker's trust fund account?
a. Driver license
b. Fidelity bond
c. High school diploma
d. Notary Public License
b. Fidelity bond
Correct answer is (b).
An unlicensed signatory on the trust account must have fidelity bond coverage at least equal to the maximum amount of trust funds to which the employee could have access to at any time.
28
28. Andy is a real estate broker. Charles listed a rundown apartment building through Andy, asking one million dollars. Andy knew that Donna, a real estate investor, would readily pay twice that amount for the land alone due to its choice location. Andy had his fiancée purchase the property for him, and then immediately resold the property to Donna. All three parties got what they sought: Charles got the one million dollars he wanted, Donna got the property she wanted, Andy got the commission plus the difference between the two sales. Did Andy act ethically?
a. No, he advertised falsely
b. No, he engaged in secret profits
c. No, he failed to disclose listing-option profits
d. Yes, everyone received what he or she expected
b. No, he engaged in secret profits
29
29. A principal of ABE Mortrgage filed a petition for personal bankruptcy. The principal or ABE Mortgage:
a. must submit written notification of the petition within 5 days to the DOC Commissioner.
b. must submit written notification of the petition within 15 days to the DOC Commissioner.
c. must submit written notification of the petition within 30 days to the DOC Commissioner.
d. do not need to notify the Commissioner.
a. must submit written notification of the petition within 5 days to the DOC Commissioner.
30
30. At least once every 2 years, the Commissioner must:
a. audit the licensee's financial information.
b. examine the licensee's books and records to ensure compliance.
c. review the licensee's original application for the MLO license.
d. suspend the MLO license to conduct an audit.
b. examine the licensee's books and records to ensure compliance.
31
31. Who is responsible for paying for the credit report fee needed to obtain a mortgage loan?
a. Borrower
b. Commissioner
c. Lender
d. Mortgage loan originator
a. Borrower
32
32. Of the following, which is grounds for revocation or suspension of a real estate license under Business and Professions Code Section 10176?
a. Acting for more than one party in a transaction with the consent of all parties
b. Commingling personal money with the money of others
c. Receiving a commission on an exclusive listing that has a definite termination date
d. All of the above
b. Commingling personal money with the money of others
33
33. Under the California Finance Code, no finance lender, broker, or mortgage loan originator licensee may transact business at any other place of business than that named in the license; however, a licensee is permitted to:
a. do business in the office of another licensed lender.
b. make an offer of a loan via the Internet.
c. make loans in an office set aside on the premises of an organization that is exempt from licensing.
d. use a conference room of a public library to conduct business.
b. make an offer of a loan via the Internet.
34
35. Individual licensees are required to display their licenses:
a. at the licensed office with which they are affiliated.
b. on their identification badges and business cards.
c. at both their home offices and the main office.
d. in all advertising.
a. at the licensed office with which they are affiliated.
35
34. Which disclosure must be given to borrowers when they apply for a loan to purchase a home?
a. Good Faith Estimate (GFE) of settlement costs
b. Mortgage Servicing Disclosure Statement
c. Special Information Booklet
d. All of the above
d. All of the above
36
36. The Commissioner may investigate a mortgage broker's or lender's books, accounts, records, and files:
a. at any time.
b. monthly.
c. quarterly.
d. annually.
a. at any time.
37
37. Donna is a real estate broker. Which of the following activities would require her to have an MLO endorsement?
a. Negotiating a construction loan for a commercial building
b. Taking a residential mortgage loan application
c. Selling her own home with seller carryback financing
d. Offering to locate a residential property for an out-of-state buyer
b. Taking a residential mortgage loan application
38
38. Within 105 days after the end of the licensee's business fiscal year, every MLO must:
a. file an annual audit report with the Commissioner.
b. apply for the annual license renewal.
c. submit audited financial statements to the NMLS.
d. ask the Commissioner to conduct the annual audit.
a. file an annual audit report with the Commissioner.
39
39. Under Section 4973 of the California Financial Code, a covered loan may include:
a. a prepayment penalty up to the first 36 months after the date of consummation of the loan.
b. a prepayment fee after the first 36 months after the date of consummation of the loan.
c. a provision for negative amortization.
d. a provision that increases the interest rate as a result of a default.
a. a prepayment penalty up to the first 36 months after the date of consummation of the loan.
40
40. The California law that prohibits discrimination in the sale, rental or financing of practically all types of housing is called the:
a. Holden Act.
b. Housing Financial Discrimination Act.
c. California Fair Employment and Housing Act.
d. Unruh Civil Rights Act.
c. California Fair Employment and Housing Act.
(c) . The California Fair Employment and Housing Act (Rumford Act) prohibits discrimination in the sale, rental or financing of housing. Housing Financial Discrimination Act (Holden Act) prohibits discrimination in real estate lending. The Unruh Civil Rights Act covers discrimination in business.
41
41. The SAFE Act requires that every mortgage loan originator (MLO) in the __________ be registered in the National Mortgage License System (NMLS).
a. city
b. county
c. country
d. state
c. country
42
42. In advertising, which is the only phrase a California licensed mortgage lender is permitted to use?
a. "Approved by the Department of Corporations under the California Residential Mortgage Lending Act."
b. "Bonded by the Department of Corporations under the California Residential Mortgage Lending Act."
c. "Licensed by the Department of Corporations under the California Residential Mortgage Lending Act."
d. "Regulated by the Department of Corporations under the California Residential Mortgage Lending Act."
c. "Licensed by the Department of Corporations under the California Residential Mortgage Lending Act."
43
43. Under Article 7 of the B&P Code, the maximum commission that can be charged by a licensee for negotiating a second trust deed of $7,500 for a period of five (5) years is:
a. 5%.
b. 10%.
c. 15%.
d. unlimited because this loan is not regulated by Article 7.
c. 15%.
Correct answer is (c).
Article 7 of the Business & Professions Code, Section 10242 limits a licensee's commission to 15% where the loan term is three years or longer.
44
44. Common practices to use to safeguard the integrity of a trust fund account include:
a. depositing all trust funds in an untimely manner.
b. ensuring that all checks deposited to the trust fund account have cleared before disbursing funds from the account.
c. reconciling the cash record with the bank account statement at least once yearly.
d. maintaining no records of any disbursements from the trust account
b. ensuring that all checks deposited to the trust fund account have cleared before disbursing funds from the account.
45
45. What does TILA consider the tolerance for accuracy of the annual percentage rate?
a. Not less than 1/8 of 1% in a regular transaction
b. Not more than 1/8 of 1% in an irregular transaction
c. Not more than 1/8 of 1% in a regular transaction
d. Not more than 1/2 of 1% in an irregular transaction
c. Not more than 1/8 of 1% in a regular transaction
Correct answer is (c).
As a general rule, the annual percentage rate is considered accurate if it is not more than 1/8 of 1 percentage point above or below the annual percentage rate. In an irregular transaction, the annual percentage rate is considered accurate if it is not more than 1/4 of 1 percentage point above or below the annual percentage.
46
46. Which act requires lenders to give special disclosures and use special procedures and forms for closing costs on most home loans?
a. Real Estate Settlement Procedures Act
b. Good Faith Estimate
c. Equal Credit Opportunity Act
d. Financing Disclosure Act of America
a. Real Estate Settlement Procedures Act
Correct answer is (a).
The Real Estate Settlement Procedures Act (RESPA) applies to all federally related, 1-4 units, residential mortgage loans. The act requires lenders to give special disclosures and to use special procedures and forms for closing costs on most home loans.
47
47. Which of the following would be exempt from Regulation Z?
a. Loan for agricultural purposes made by a federally chartered bank
b. Loan for household purposes obtained from a credit union
c. $90,000 mortgage from a savings and loan institution secured by a single-family residence
d. $15,000 loan used to purchase an owner-occupied mobile home
a. Loan for agricultural purposes made by a federally chartered bank
48
48. When a mortgage loan originator registers in the NMLS, he or she is assigned:
a. a unique identifying number.
b. a mentor.
c. a picture ID.
d. all of the above.
a. a unique identifying number.
49
49. A real estate broker may keep up to _______ of personal funds in the trust fund account to pay for bank charges or service fees related to the trust account.
a. $100
b. $200
c. $300
d. $400
b. $200
50
50. All of the following incidents would require immediate notification to the DOC Commissioner, except a(n)
a. arrest for a misdemeanor.
b. declaration of personal bankruptcy.
c. indictment for an assault.
d. traffic ticket citation.
d. traffic ticket citation.
51
51. The Commissioner's Regulations require that brokers reconcile and balance their trust fund accounts at least once each:
a. day.
b. week.
c. month.
d. quarter.
c. month.
52
52. Bob is a broker who employs Sally, a salesperson who has an MLO license. Sally has made several careless and significant errors on the last four loan transactions she has handled. The various clients in all four transactions separately filed complaints against Sally with the DRE. What may be the outcome?
a. Bob will not be disciplined for improper supervision of his sales associate because Sally is the one who was negligent
b. Both Bob and Sally may be disciplined
c. Neither Bob nor Sally will be disciplined
d. Sally will not be disciplined for negligence, because it is Bob's responsibility to supervise her actions
b. Both Bob and Sally may be disciplined
53
53. A creditor is allowed to collect which fees from a consumer prior to the issuance of the initial TIL disclosure?
a. Appraisal fee
b. Credit report fee
c. Inspection fee
d. All of the above
b. Credit report fee
Correct answer is (b).
Under TILA, prior to the issuance of early disclosures, collection of fees from a mortgage applicant are limited to a reasonable credit report fee.
54
54. In advertising the availability of real estate loans, using any of the following phrases by itself would be a violation of the federal Truth in Lending Act's Regulation Z, except:
a. 5% down payment
b. 360 payments.
c. easy terms available.
d. 30-year loans.
c. easy terms available.
55
55. An individual who takes a residential loan application or negotiates the terms of a mortgage loan, for compensation is considered a:
a. residential mortgage lender.
b. residential mortgage broker.
c. mortgage loan correspondent.
d. mortgage loan originator.
d. mortgage loan originator.
56
56. Complaints filed against a licensee with the DRE are investigated by the:
a. Administrative Law Judge.
b. Commissioner.
c. Enforcement and Audit Section.
d. Department of Housing and Urban Development.
c. Enforcement and Audit Section.
Correct answer is (c).
The complaint is investigated by the Enforcement and Audit Sections of the DRE.
57
57. Funds in a broker's trust account that exceed the aggregate trust fund liability of the account, where the broker is unable to determine the beneficiary of the funds, are considered unexplained trust account overages. Unexplained trust account overages:
a. can be withdrawn by the broker.
b. cannot be used by the broker to cover shortages in the trust account.
c. may be used by the broker to cover shortages in the trust account.
d. remain in the account for 3 years and then become the property of the broker.
b. cannot be used by the broker to cover shortages in the trust account.
Correct answer is (b).
Unexplained trust account overages cannot be used by the broker to cover shortages in the trust account nor shall they be withdrawn by the broker. Unless the broker can establish the ownership of such funds, the funds should remain in the account for 3 years at which time they will then escheat to the State.
58
58. Loans that mortage brokers negotiate must be offered or applied for:
a. by a government agency.
b. through a licensed mortgage mortgage loan originator.
c. via the Internet.
d. through a bank or credit union.
b. through a licensed mortgage mortgage loan originator.
59
59. Which of the following could be a red flag according to the Interagency Guidelines?
a. An address either does not exist or is that of a mail drop or prison
b. A phone number is invalid or associated with a pager or answering service
c. Unusual patterns in the consumer's use of credit
d. All of the above
d. All of the above
60
60. Trust fund overages or shortages are serious violations of the law, which can result in loss of license, even if the discrepancy is caught and corrected. Which statement is correct regarding trust fund liability?
a. A trust fund overage occurs if the trust account balance is greater than the total liability of the account
b. A trust fund shortage occurs when the trust account balance is more than the total liability of the fund
c. When a shortage occurs, it is likely that somehow the broker's own monies have been commingled with the trust fund
d. When an overage occurs, it is likely that the broker has somehow disbursed funds, thus reducing the aggregate balance to an amount lower than the trust fund liability
a. A trust fund overage occurs if the trust account balance is greater than the total liability of the account
61
61. A record is required for which of the following trust funds received:
a. cash.
b. checks held uncashed.
c. promissory notes.
d. all of the above.
d. all of the above.
Correct answer is (d).
A record is required for all of the choices. Every broker shall keep a record of all trust funds received, including uncashed checks held pursuant to the instructions of his or her principal.
62
62. Two licensed mortgage loan originators are equal co-owners of ABC Mortgage Company, a licensed lender. If one co-owner is put in jail on an assault charge, what should the other owner do?
a. Buy out the co-owner.
b. Send the license of the jailed co-owner to the Commissioner.
c. Notify the Commissioner about the situation.
d. Send the company license to the Commissioner.
c. Notify the Commissioner about the situation.
63
63. Under California law, a broker may broker loans only to:
a. banks.
b. credit unions.
c. licensed finance lenders.
d. mortgage loan originators.
c. licensed finance lenders.
64
64. Designated officers of the CA Department of Corporations, when conducting an examination, have the authority to:
a. revoke a license.
b. suspend a license.
c. arrest an employee of a lender.
d. force the company to produce papers and objects for review.
d. force the company to produce papers and objects for review.
65
65. What is the length of time that a broker is required to retain trust fund and other records in connection with any transaction for which a real estate broker license is required?
a. Two years
b. Three years
c. Four years
d. Five years
b. Three years
66
66. Once licensed as a mortgage loan originator, a person must renew his or her license every year. What is a step for license renewal?
a. Review the information in the NMLS account and attest that it is correct
b. Confirm that the 8 hours of CE is completed
c. Pay the renewal fee
d. All of the above
d. All of the above
67
67. If only the annual percentage rate (APR) is disclosed in an advertisement for property, which additional disclosures must be made?
a. The amount or percentage of the down payment
b. The terms of repayment
c. The amount of any finance charge
d. No other disclosures are required
d. No other disclosures are required
68
68. The main purpose of RESPA is to:
a. regulate all real estate loans.
b. choose a lender that can process applications for loans.
c. regulate home improvement loans.
d. require that disclosures be made by lenders that make loans on 1-to-4 unit dwellings.
d. require that disclosures be made by lenders that make loans on 1-to-4 unit dwellings.
Correct answer is (d).
RESPA's main purpose is to provide purchasers of real property with information to take the mystery out of settlement (closing) process.
69
69. Dan asked Fred to join him as a partner in running his real estate mortgage business. What type of license must Fred have?
a. Broker license with an MLO endorsement
b. Corporate MLO license
c. Partnership license with MLO endorsement
d. Salesperson MLO license
a. Broker license with an MLO endorsement
70
70. Robert is handling several different transactions at once. He has six different homes being sold by six different people, and six separate buyers buying them. During the course of these transactions, he receives money from all the buyers and puts all the funds into a trust account. Robert has:
a. acted unethically because he handled too many transactions simultaneously.
b. commingled funds.
c. engaged in blockbusting.
d. done none of the above.
d. done none of the above.
71
71. Commercials and ads for real estate loans should not include prohibited statements. Of the following phrases, which would not be prohibited under the Truth in Lending Act?
a. No down payment
b. 5.5% interest rate
c. Low down payment
d. No closing costs
c. Low down payment
72
72. Section 2831 requires brokers to keep a record of all trust funds received. The trust fund record must:
a. be columnar.
b. not be computerized.
c. be in chronological sequence.
d. exclude the date of the funds received.
c. be in chronological sequence.
73
73. When can the consumer exercise his or her right to rescind the transaction in which the security interest is a consumer's principal residence?
a. Midnight of the 3rd day following consummation
b. Midnight of the 3rd business day following consummation
c. 5:00PM of the 3rd business day following consummation
d. 5:00PM of the 7th calendar day following consummation
b. Midnight of the 3rd business day following consummation
74
74. The annual percentage rate is:
a. a measure of the cost of credit, expressed as a yearly rate.
b. an annualized simple interest rate.
c. the cost of a loan, expressed as a biannual rate.
d. the cost of credit, expressed as a monthly rate.
a. a measure of the cost of credit, expressed as a yearly rate.
75
75. Most of the standards for receiving and handling trust funds are contained in the:
a. Business and Professions Code.
b. Code of Ethics.
c. Code of Civil Procedure.
d. Criminal Code.
a. Business and Professions Code.
76
76. May a loan processor who is exempt from licensing discuss residential loan rates and terms with customers?
a. No, an unlicensed loan processor is not permitted to contact customers.
b. No, an unlicensed loan processor may not discuss rates and terms.
c. Yes, once the loan is in the processing phase, the MLO license requirements are ineffective.
d. Yes, discussing rates and terms is part of a loan processor's job.
b. No, an unlicensed loan processor may not discuss rates and terms.
77
77. The California Department of Corporations requires a mortgage lender or broker to file a(n):
a. annual report on or before March 15.
b. quarterly report at the end of each quarter.
c. estimated income taxes at the end of each quarter.
d. request for an audit at the end of each calendar year.
a. annual report on or before March 15.
78
78. When does the mortgage loan originator have to give the Special Information Booklet to a borrower applying to refinance his or her home?
a. At the time of application
b. Within 3 days of receiving the loan application
c. Within 3 business days of receiving the loan application
d. None of the above
d. None of the above
Correct answer is (d).
The Special Information Booklet is required for purchase transactions only, not refis.
79
79. When advertising a property for sale, which of the following statements would place the broker in violation of the federal Truth in Lending Act?
a. 3-bedroom, 2 bath, excellent FHA or VA financing available; total price $225,000
b. 4-bedroom, 2 baths, easy terms; total price $225,000
c. 3-bedroom, 2 bath, large lot, with 10% down; total price $225,000
d. 3-bedroom, 3 bath, owner will help finance; total price $225,000
c. 3-bedroom, 2 bath, large lot, with 10% down; total price $225,000
Correct answer is (c).
An ad must disclose all credit terms if it contains any one of the following four triggering terms: (1) the down payment, (2) the number, or term of payments, (3) the amount of any payment, or (4) the finance charge. In this case, the 10% down payment triggers the other disclosures.
80
80. Who authorizes any disbursements of funds from the broker's trust fund account?
a. Banker
b. Broker
c. Escrow agent
d. Owner of the funds
d. Owner of the funds
Correct answer is (d).
Since the owner of the trust funds must authorize any disbursement of the funds, it is essential that you are able to identify who actually owns the funds.
81
81. A person paid the application fee and obtained a MLO license. A few months later, the Commissioner discovered that the licensee had committed fraud while licensed as a lender in another state. If the Commissioner suspends the MLO's license, is the person entitled to a partial refund of the application fee?
a. No, the application fee is only refundable in the event of revocation.
b. No, the application fee is non-refundable.
c. Yes, a prorata portion is refundable.
d. Yes, the fee is refunded when the person surrenders the MLO license.
b. No, the application fee is non-refundable.
82
82. Under Title 10, Chapter 3 of the Calfiornia Code of Regulations, licensees must maintain __________ records, which may be inspected by the Commissioner.
a. affidavit
b. continuing education
c. employment
d. loan application
d. loan application
83
83. A person with a salesperson license with an MLO endorsement who wishes to perform the acts requiring a real estate license must:
a. be employed by an active broker.
b. be insured by a nationally-recognized insurance company.
c. have a degree from an accredited 2-year college.
d. have all of the above.
a. be employed by an active broker.
84
84. All of the following require a real estate license with an MLO endorsement, except:
a. any trustee selling under a deed of trust.
b. negotiating a promissory note secured by real property.
c. soliciting potential borrowers for loans.
d. negotiating loans.
a. any trustee selling under a deed of trust.
85
85. According to TILA, for purposes of rescission and the 3-day or 7-day waiting period, how is a business day defined? A business day is defined as:
a. all calendar days except Sundays and legal public holidays.
b. a day in which the creditor's offices are open to the public for carrying on substantially all of its business functions.
c. Monday through Friday and 1/2 day on Saturday.
d. all weekdays except legal holidays.
a. all calendar days except Sundays and legal public holidays.
86
86. The main purpose of the federal Truth in Lending Act is to:
a. eliminate or minimize usury.
b. establish the maximum annual percentage rate.
c. limit the cost of credit available to consumers.
d. require disclosure of credit terms so consumers can compare loans.
d. require disclosure of credit terms so consumers can compare loans.
87
87. According to the Commissioner's Regulations 2834, withdrawals can be made from the trust account only by designated individuals. Of the following, which would not be designated to withdraw funds from an individual broker's trust account?
a. Broker
b. Employee of the broker with written authorization and fidelity bond
c. Seller, after acceptance of the offer
d. Salesperson licensed to the broker with written authorization
c. Seller, after acceptance of the offer
Correct answer is (c).
Withdrawals may be made from a trust fund account of an individual broker only upon the signature of the broker or other specified persons if specifically authorized in writing by the broker.
88
88. A licensed lender that is not in complete compliance with any provision of the California Code could have the amount of the surety bond increased to:
a. $50,000.
b. $100,000.
c. $150,000.
d. $250,000.
Correct answer is (b).
A licensed lender that is not in complete compliance with any provision of the California Code could have the amount of the surety bond increased to $100,000.
Correct answer is (b).
A licensed lender that is not in complete compliance with any provision of the California Code could have the amount of the surety bond increased to $100,000.
89
89. Pat is a licensed real estate salesperson at a real estate brokerage who is studying for his MLO license exam. Pat may perform all of the following tasks, except:
a. solicit listing from potential sellers.
b. help buyers with submit offers on real property.
c. negotiate the terms of a refinance for a single-family home.
d. prepare a 2-year lease on a commercial property.
c. negotiate the terms of a refinance for a single-family home.
90
90. Funds belonging to the licensee should not be commingled with trust funds. Examples of commingling include:
a. personal or company funds deposited into the trust fund bank account.
b. trust funds deposited into the general or personal bank account.
c. funds collected on real property wholly owned by the broker handled through the trust account.
d. all of the above.
d. all of the above.
91
91. Which statement is correct regarding a MLO license? MLO licenses:
a. are assignable between business partners.
b. may be transferred upon relocation to a new business.
c. must be posted in the place where business in conducted.
d. automatically renew each year if there is no change.
c. must be posted in the place where business in conducted.
92
92. Trust funds are things of value, which are received and held for the benefit of others when a broker is performing any activity that requires a real estate license. Which of the following would not be considered trust funds?
a. Cash down payment
b. Check given by the buyer
c. Commission earned
d. Rents collected
c. Commission earned
93
93. Of the following, who is exempt from licensing requirements?
a. Person negotiating a loan for a homebuyer
b. Person taking a residential loan application
c. Person dealing with his or her own property
d. Person advertising loans and soliciting borrowers
c. Person dealing with his or her own property
94
94. The purpose of a trust account is to:
a. charge for bank fees.
b. charge for bank fees.
c. separate client's funds from personal funds.
d. save for the future.
c. separate client's funds from personal funds.
95
95. A licensed mortgage broker must fully disclose to the borrower the amount of compensation the broker would receive, within __________ days after receipt of a loan application.
a. 3
b. 7
c. 15
d. 30
a. 3
Correct answer is (a).
Within 3 days after receipt of a loan application, a licensed mortgage broker must fully disclose to the borrower the amount of compensation the broker would receive from any loan.
96
96. Non-trust funds include all of the following, except:
a. cash transferred from the business savings account to the operating account.
b. earned commissions.
c. earnest money deposit.
d. funds received for services performed.
c. earnest money deposit.
97
97. RESPA pertains to:
a. all residential property.
b. agricultural property.
c. commercial properties only.
d. residential properties with 1-to-4 units.
d. residential properties with 1-to-4 units.
98
98. Regulation Z requires that consumers be informed of credit terms by the:
a. broker.
b. trustee.
c. creditor.
d. escrow officer.
c. creditor.
Correct answer is (c).
The creditor (lender) is responsible for providing Truth in Lending disclosures to the consumer. A creditor is defined as someone who extends credit more than 25 times a year or more than 5 times a year for transactions secured by a dwelling. Real estate brokers or others who merely arrange credit are not considered creditors under Regulation Z.
99
99. Which statement is incorrect regarding trust fund records?
a. A trust fund record must always be in a columnar format
b. A trust fund record must be in chronological sequence
c. A trust fund record must indicate the date trust funds were received
d. A trust fund record must state the amount received
a. A trust fund record must always be in a columnar format
100
100. Bob just took a listing on a three-bedroom fixer-upper home located in an area near public transportation. Although it is a mixed neighborhood, it is primarily Hispanic. He's eager to sell the home and wrote the following ads. Which of the ads best follows acceptable advertising guidelines?
a. “This is the best home in the neighborhood and seller will finance with 20% down.”
b. “Nice fixer, with three-bedrooms located by public transportation. Seller financing possible.”
c. “Clean and move-in ready for the right family. Seller may finance.”
d. “Beautiful home near parks, looking for Hispanic family.” Suitable for FHA financing.”
b. “Nice fixer, with three-bedrooms located by public transportation. Seller financing possible.”
101
101. A(n) __________ cannot receive compensation for acts that require an MLO license or endorsement.
a. unlicensed person
b. real estate broker
c. real estate salesperson
d. individual with a salesperson license
a. unlicensed person
102
102. Can a consumer waive the 7-day or 3-day waiting periods regarding the TIL Statement disclosure?
a. No, the waiting period cannot be waived
b. No, only the creditor can waive the waiting period
c. Yes, if the consumer can show that it is a bona fide personal financial emergency
d. Yes, if the creditor needs to close the transaction to meet monthly performance goals
c. Yes, if the consumer can show that it is a bona fide personal financial emergency
