Chapter 10 free questions Flashcards by Kim L

When an assignor keeps the servicing rights this is known as:
A. Selling a loan with escrow impounds
B. Selling a loan with servicing released
C. Selling a loan with servicing retained
D. Selling a loan pro norma

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Which appraisal method subtracts a value for depreciation?
A. Sales comparison
B. Cost
C. Income capitalization
D. Gross income multiplier

Cost Approach (Construction Loan) =the appraiser estimates the cost to reproduce or replace the structures as if they were new; he subtracts a value for depreciation because the structure is not new, and adds in the value of the land and. improvements such as landscaping or a driveway.

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How many months must be left on an installment charge in order to be included as a debt?
A. More than 1 month
B. More than 3 months
C. More than 5 months
D. More than 10 months

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Which of the following does NOT have zero variance between the GFE and HUD-1?
A. Title insurance 
B. Real estate transfer taxes
C. Loan origination fees
D. Interest rate

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Borrower's equity equals:
A. Appraised value - loan balance
B. Appraised value - down payment
C. Loan balance + down payment
D. Loan balance - down payment

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What law protects homeowners from foreclosure-prevention scams?
A. Foreclosure Mediation Rule
B. Mortgage Assistance Relief Services Rule
C. Truth-in-Lending Act
D. Homeowner’s Protection Act

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Which law requires that the Special Information booklet be given to borrowers?
A. Truth-in-Lending
B. Real Estate Settlement Procedures Act
C. Homeowner's Protection Act
D. The Equal Credit Opportunity Act

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^^^When a lender sells a mortgage loan to another lender this is called:
A. Assignment of a mortgage 
B. Note transfer
C. Vendor selling
D. Linking a mortgage

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Which form is used as the standard settlement form?
A. HUD-1/Closing Disclosure 
B. FHA Closing Statement
C. USA Settlement Statement
D. National Closing Statement

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Which form is used to verify bank accounts? 
A. Fannie Mae 1006 
B. Fannie Mae 1005 
C. Fannie Mae 1008 
D. Fannie Mae 1003

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Which of the following is NOT a common type of mortgage fraud?
A. Rehabilitation 
B. Equity skimming
C. Inflated appraisals
D. Property flipping

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According to the GLB Act, an individual who obtains or has obtained a financial product or service from a financial institution is a
A. borrower.
B. consumer. 
C. creditor.
S. customer.

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Individuals must file a report when they transport how much cash out of the country? Mark one answer:
$5,000 or more
$10,000 or more
$50,000 or more
$100,000 or more

10,000

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mortgage is the:
A Document that conveys title
B. Pledge of the property as collateral for the loan
C. Borrower’s IOUc
D. Document that transfers contractual rights to another investor

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The borrower does NOT sign which document:
A. Deed 
B. HUD-1/Loan Disclosure
C. Mortgage
D. Note

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The condemnation of private property for public good is:
A. Eminent domain 
B. Escheat
C. Disintermediation
D. Intestate

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^^^In a completion escrow account, what is the minimum estimated repair cost held in trust by the lender?
A. 50%
B. 90%
C. 120% 
D. 200%

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Who is responsible for completing the HUD-1/Loan Disclosure?
A. The borrower
B. The closing agent 
C. The loan originator
D. The grantor

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Which law entitles an applicant to a copy of his property appraisal report?
A. Homeowner’s Protection Act
B. The Fair and Accurate Credit Transaction Act
C. Truth-in-Lending
D. The Equal Credit Opportunity Act

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The appraisal approach that best applies to residential property is:
A. Sales comparison approach
B. Cost approach
C. Residential approach
D. Income capitalization approach

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One discount point equals one percent of the Mark one answer:
A. Purchase price
B. Annual percentage rate
C. Loan amount
D. Appraisal amount

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How much of a down payment does a borrower need if he doesn't want to pay PMI?
A. 5%
B. 10%
C. 15%
D. 20%

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Which form is used to verify employment information? 
A. Fannie Mae 1006 
B. Fannie Mae 1005 
C. Fannie Mae 1008 
D. Fannie Mae 1003

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-A gift letter does NOT include the:
A. Donor's name
B. Amount of the gift
C. Terms of repayment 
D. Donor's address

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``` Fannie Mae's automated underwriting system is known as: A. Loan Prospector (LP) B. Desktop Underwriter (DU) C. Daniels Underwriting System (DUS) D. Limited Portfolio (LP) ```

Which of the following is NOT a loan origination activity? A. Assisting in a refinance B. Assisting in a purchase loan C. Assisting in a loan modification D. Changing the name of debtors on an existing loan

``` How many years of home addresses are required on the typical loan application? A. 1 year B. 2 years C. 3 years D. 4 years ```

Which of the following is NOT characteristic of a warranty deed: A. Guarantees the seller is true owner of the property B. Guarantees the seller has the legal right to sell C. Guarantees that there are no undisclosed liens on the property D. Guarantees that the sale price is fair and reasonable

``` ^^^What is the Fannie Mae appraisal report form? A. USPAP B. HVCC C. USAPP D. URAR ```

``` What is a clause in the deed that limits the future use of a property? A. Deed restriction B. Encumbrance C. Title lien D. Owner's privilege ```

HMDA requires lenders to submit their loan application registers to the: Mark one answer: A. Library of Congress B. Federal Financial Institutions Examination Council C. Federal Department of Books and Records D. Nationwide Mortgage Licensing System and Registry

``` Which of the following is NOT beneficial to a developer? A. Blanket mortgage B. Subordination clause C. Development clause D. Partial release clause ```

``` The economic concept which states that a knowledgeable buyer will pay no more for one property than they would pay for an equally desirable comparable property is: A. Principle of substitution B. Principle of highest and best use C. Principle of market value D. Principle of intelligent purchases ```

``` The most common type of legal description for residential subdivisions is: A. The monument method B. Lot and block C. Metes and bounds D. Government land survey method ```

``` Liens which are subsequent to the first recorded mortgage lien are known as: A. Junior liens B. Unavailable liens C. Estoppel liens D. Homestead liens ```

``` The borrower's IOU is the: A. Mortgage B. Note C. Loan-to-Value Ratio D. Equity ```

``` The mortgagee is the: A. Borrower B. Lender C. Closing agent D. Mortgage broker ```

``` Which law requires lenders to train employees to recognize the Red Flags of identity theft? A. Homeowner's Protection Act B. Fact Act C. Gramm-Leach-Bliley D. Dodd-Frank ```

``` Which lien will most likely have the lowest lien position? A. Property tax B. Senior mortgage C. Junior mortgage D. IRS tax lien ```

``` What term has the highest priority and is paid off first when a property is sold? A. Property tax B. Senior mortgage lien C. Mechanic's lien D. Judgement lien ```

``` Which of the following is NOT a loss mitigation option? A. Loan modification B.Refinance C. Deed-in-lieu D. Foreclosure ```

The Ability to Repay Rule applies to almost all closed-end consumer credit transactions se-cured by a dwelling including: a. reverse mortgage loans. b. subordinate lien loans. c. time-share mortgage plans. d. home equity lines of credit.

``` Which document is usually NOT recorded? A. Assignment of mortgage B. Note C. Deed D. Mortgage ```

A note is the: A Document that conveys title B. Pledge of the property as collateral for the loan C Borrower's IOU D. Document that transfers contractual rights to another investor

``` A five bedroom, one bathroom house is an example of: A. Appreciation B. Functional obsolescence C. Economic obsolescence D. Residential allowance ```

``` The most probable price which a property should being in an open market A. Median price B. Market value C. Going rate D. Insurance value ```

``` Loan originators aren't allowed to receive compensation: A. Based on loan terms B. From a consumer C. From a lender D. Based on the performance of the loan ```

``` The national trade association and voice of the abstract and title insurance industry is: A. TICOA B. ATC C. ALTA D. TITLE NOW ```

``` The liquidation of a debt by regular, usually monthly, installments of principal and interest is: A. Amortization B. Hypothecation C. Assignment D. Novation ```

``` What law allowed the government to assume control over Fannie Mae and Freddie Mac? A. Homeowner's Protection Act B. Housing and Economic Recovery Act C. Home Mortgage Disclosures Act D. Truth-in-Lending Act ```

``` Which of the following does include the Right of Survivorship? A. Good Faith Estimate B. Tenants in Common C. Joint Tenancy D. Truth-in-Lending disclosure ```

``` The assignee of a mortgage and note is participating in the: A. Primary lending market B. Capital market C. Secondary mortgage market D. Options market ```

``` A lender that works with licensed loan originators is a: Mark one answer: A. Participating lender B. Private lender C. Wholesale lender D. Retail lender ```

``` A borrower is buying a house for $180,000. He provides a down payment of $40,000. If he pays three discount points, what is the total cost of the points? A. $4,200 B. $6,000 C. $5,400 D. $4,667 ```

``` Insurance companies not willing to deal directly with borrowers, usually pay a loan servicing and preparation fee and make real estate mortgage loans to purchase indirectly through: A. Savings and loan associations B. FHA or VA C. Mortgage Companies D. Freddie Mac ```

``` Which clause allows the lender to increase the interest rate? A. Acceleration clause B. Escalation clause C. Deficiency judgement D. Exculpatory clause ```

The highest and best use of the property is NOT: A. Legally permissible B. Physically possible C. Financially feasible D. Based on possible future zoning changes

Higher-priced loans for a flipped home require a second appraisal that is: A. Performed by a different appraiser at no charge to the borrower B. Performed by a different appraiser and paid for by the borrower C. Performed by the same appraiser using different comparables at no charge to the borrower D. Performed by the same appraiser using different comparables and paid for by the borrower

``` When there is no new note and the original buyer retains all the liability, this is known as transferring title by: A. Creative financing B. Assumption C. Novation D. Subject to the mortgage ```

The VA guarantee covers up to what amount of the of the veteran's entitlement? a. 25% coverage b. Four times the amount of the loan c. Half the amount of the loan d. Four times the amount of the veteran's entitlement

``` In order to be counted as income, retirement income must continue for how long after the loan application is signed? A. 1 year B. 2 years C. 3 years D. 4 years ```

``` Which of the following methods of disclosure does NOT meet the requirements of the Equal Credit Opportunity Act (ECOA)? A. E-mail B. Mailed letter C. Telephone D. Faxed letter ```

A borrower gets a 15-year interest-only loan for $85,000 at 6%. At the end of the loan term, how much will the borrower owe the lender? a. $0 b. $79,900 c. $85,000 d. $90,100

How many months must be left on a car lease payment in order to be included as a debt? A. More than 1 month B. More than 5 months C. More than 10 months D. Automobile lease payments are always included

``` The act of lowering the priority of a mortgage lien is: A. Reduction B. Subordination C. Degradation D. Subtraction ```

``` What is the most important type of comparable used in the sales comparison approach? A. Active B. Pending C. Closed D. Expired ```

``` A salaried employee may have to produce which of the following documents to obtain a loan? A 90 day pay stubs B. 2 years W2s C. Profit and loss statement D. Balance sheet ```

Which of the following is part of the Mortgage Assistance Relief Services Rule? A Negotiators may be paid an up-front fee B. Borrowers must pay a fee if they cancel their contract with the negotiator C. Negotiators can't interfere with communication between borrowers and lenders D. Negotiators only have to present reasonable lender offers to the borrower

``` Increasing neighborhood crime exemplifies what type of depreciation? A. Economic obsolescence B. Functional obsolescence C. Physical deterioration D. Unstable deterioration ```

``` Which of the following is NOT a characteristic of a Tenants in Common form of ownership: A. Equal shares B. Buy at different times C Right of survivorship D. Ability to will shares ```

``` How long after the application date must social security payments continue to be received in order to count as income? A. 3 months B. 10 months C. 2 years D. 3 years ```

``` Notice which is recorded is known as: A. Constructive notice B. Actual notice C. Selective notice D. Lis pendens notice ```

``` What is the practice called when a real estate agent spreads the rumor that a specific ethnic group is planning to move into the neighborhood and advises residents to sell before the property values drop? A. Redlining B. Steering C. Blockbusting D. Conversion ```

``` What type of loan is short-term with money advanced in stages? Mark one answer: A. Package B. Construction C. Wraparound D. Balloon ```

``` The lender has how many days to send the Satisfaction of Mortgage letter to the borrower once the loan balance is paid? A. 30 days B. 60 days C. 90 days D. 120 days ```

``` Which of the following is NOT required for self-employed qualification? A. 2-year business tax returns B. 60-day paystubs C. Company balance sheet D. Company profit-and-loss statement ```

All of the following apply to a mortgagor's title insurance policy EXCEPT: A. It is for the amount of the purchase price B. It is based on loan amount C. It is optional D. It is not transferable

``` A lender's refusal to lend in a particular neighborhood is known as: A Referential lending B. Redemption C. Railroading D. Redlining ```

If two credit scores are obtained for a single borrower the representative score that is usually used is: A. The higher score B. The lower score C. It doesn't matter D. Whatever is the policy of the Mortgage Broker business

^^^Under the federal fair housing law, the seven protected classes include: A. Race, color, source of income, handicap, national origin, marital status, religion B. Race, color, religion, sex, handicap, familial status, national origin C. Race, sexual orientation, sex, familial status, handicap, age, national origin D. Race, color, age, religion, sex, handicap, familial status

B FHA protects RC RN Familial Status and Disability

``` Notice which is NOT recorded is known as: A. Constructive notice B. Actual notice C. Selective notice D. Lis pendens notice ```

``` The maximum age limit for a borrower is: A.62 B. 75 C. 85 D. There is no maximum age limit ```

``` Which law is known as Regulation C? A. Real Estate Settlement Procedures Act V. Truth-in-Lending C. Equal Credit Opportunity Act D. Home Mortgage Disclosure Act ```

``` Which law is known as Regulation B? A. Truth-in-Lending B. Real Estate Settlement Procedures Act C. Equal Credit Opportunity Act D. Patriot Act ```

``` The title company considers unpaid property taxes to be an: A. Encroachment B. Encumbrance C Easement D. Egress ```

``` pledging of property as collateral for a loan: A. Defeasance B. Hypothecation C. Exculpation D. Intermediation ```

``` Freddie Mac's Automated Underwriting system is known as: A. Loan Prospector (LP) B. Desktop Underwriter (DU) C. Daniels Underwriting System (DUS) D. Limited Portfolio (LP) ```

``` Which law is also known as Regulation X? A. Truth-in-Lending B. Real Estate Settlement Procedures Act C. Homeowner's Protection Act D. The Equal Credit Opportunity Act ```

deficiency judgement occurs when a: A. Borrower needs additional down payment funds B.Seller wins a breach of contract lawsuit against the buyer C. Lender sues for borrower's personal assets to pay balance of the note D. Borrower needs additional private mortgage insurance

``` The receiver of the deed is the: A. Grantee B. Grantor C. Mortgagee D. Assignee ```

Under the CFPB, the following groups are identified as types of consumer and protection laws EXCEPT A. Credit Authorization and Security. B. Financial Disclosure. C. Privacy Protection and Consumer Identification. D. Prohibition of Predatory Lending.

``` The use of borrowed funds to increase yield is: A. Leverage B. Acceleration C. Defeasance D. Forbearance ```

``` Individuals submit an annual Report of Foreign Bank and Financial Accounts to: A. IRS B. Mortgage lender C. Federal Trade Commission D. Fannie Mae ```

``` A loan offered to a consumer with poor credit is known as: A Subjugation B. Alternative C. Preliminary D. Subprime ```

``` guarantor or co-signer signs the: A. Mortgage B. Note C. Deed D. Mortgage and the note ```

B Although not responsible for making monthly payments on the loan, the co-signer is held responsible for repayment if the borrowers default. As such, the co-signer signs all loan documents including the application, the mortgage promissory note and the loan agreement, but she does not sign the MORTGAGE OR DEED OF TRUST

``` Which law requires businesses to print only the last five card numbers on a credit card receipt? A. Homeowner's Protection Act B. Fact Act C. Gramm-Leach-Bliley D. Dodd-Frank ```

``` All of the following types of income are non-taxed and therefore can be "grossed-up," except: Alimony Social Security Disability Public assistance ```

Alimony

``` A fee charged to the borrower for determining whether or not a property was in a flood zone is a: A. Mapper fee B. Flood certification fee C. FEMA fee D. Reviewer fee ```

``` What type of mortgage fraud scam occurs when a buyer borrows the down payment from the seller without the lender's knowledge? A. Equity skimming B Air loan C. Silent second D. Property flipping ```

In order to send a fax, advertisers must: A. Have an established business relationship with recipient B. Only fax to toll-free numbers C. Include a personal cell phone number on the cover sheet D. Not send faxes across state lines

``` The most accurate type of legal description for residential subdivisions is: A. The monument method B. Lot and block C. Metes and bounds D. Government land survey method/p> ```

C Metes and Bounds Method (Most Accurate) = Method is the most accurate and involves a surveyor measuring the distance (metes) and direction (bounds) between the metal plaques in the corners of the property. The direction of a boundary line is expressed using compass directions and is given in degrees, minutes and seconds. Distances are measured in feet. The surveyor must start and end hismeasurements at the same place (the Point of Beginning (POB)).

``` What is the mortgage fraud scam called when a broker invents borrowers and properties? A. Equity skimming B. Air loan C. Silent second D. Property flipping ```

``` If a consumer makes an inquiry to a company, the company can call for: A. 6 weeks B. 3 months C. 6 months D. 18 months ```

``` Escrow impounds are collected by the: A. Lender B. Attorney C. Police D. Seller ```

``` Mortgage companies must submit a residential loan origination activity report to the NMLSR every: A. Month B. Three months C. Six months D. Year ```

``` When title is transferred and the buyer assumes no liability for the note, this type of transference is known as: A. Free and clear B. Subject to the mortgage C. Assumption D. Novation ```

``` Which is NOT a component of a valid contract? A. Agreement B. Consideration C. Two witnesses D. Competent parties ```

``` What type of real estate co-ownership is only for married couples? A. Tenants in common B. Joint tenancy C. Tenancy by the entirety D. Spousal tenancy ```

``` Which parties sign the deed? A.Grantor, grantee and two witnesses B. Grantor and two witnesses C. Grantee and two witnesses D. Grantee only ```

``` Which of the following can have an unlimited variance between the GFE and HUD-1? A. Hazard insurance B. Recording fees C. Appraisal D. Credit report fee ```

Under the SAFE Act, a state has all of the following authorities EXCEPT Mark one answer: A. to deny, suspend, or revoke licenses. B. to issue cease and desist orders. C. to waive the requirement for fingerprints for an initial license application. D. to write rules and regulations.

``` What is the term used when a lender allows a tenant's improvements to be applied toward down payment funds when the tenant purchases the home? A. Home improvement funds B. Restoration funds C. Sweat equity D. Good faith money ```

``` Who enforces RESPA violations? A. FTC B. CFPB C. FHA D. FCC ```

``` Which of the following is NOT an escrow impound? A Title insurance B. Property insurance C. Flood insurance D. Hazard insurance ```

``` A legally binding letter from the lender to the mortgagor stating the terms of the loan is: A. A commitment letter B. A letter of intent C. A discover notice D. A conditional letter ```

``` What is the fine for violating the Federal Do Not Call rules? A. $5,000 B. $11,000 C. $42,530 D. $60,000 ```

``` Commercial telemarketers must search the Do-Not-Call registry: Mark one answer: A. Every 7 days B. Every 31 days C. Every 180 days D. Once a year ```

``` What is the shortest time in which a mortgage purchase loan can close? Mark one answer: A. 3 business days B. 7 business days C 14 days D. 30 days ```

``` Net worth is defined as: A. Cash plus real property B. Cash plus stocks and bonds C. Assets minus liabilities D. Liquid assets plus real property ```

``` Tenancy in Common does NOT have: A. Equal or unequal ownership B. Buy at same or different times C. Multiple owners D. Right of survivorship ```

``` A loan originator who accepts an upfront fee for negotiating a loan modification is violating which law? Mark one answer: A. RESPA B. TILA C. HMDA D. MARS ```

``` Bankruptcies can be kept on the credit report for a maximum of: Mark one answer: A. 3 years B. 5 years C. 7 years D. 10 years ```

Which of the following is not considered an acceptable source for a liquid financial reserve? a. Checking or savings accounts b. Investments in stocks. c. Cash proceeds from a cash-out refinance transaction d. The cash value of a vested life insurance policy.

``` PITI payments do NOT include which of the following: A. Principal B. Funding fee C. Hazard insurance D. Interest ```

``` A lock-in agreement does NOT include: A. Interest rate B. Expiration date C. Lock-in fee D. APR ```

``` Who does Fannie Mae hold responsible for the quality of an appraisal? A. Appraiser B. Borrower C. Mortgage broker D. Lender ```

``` What type of funding occurs when a lender obtains funds from a line of credit at a commercial bank? A. Credit lending B. Table funding C. Warehouse funding D. Temporary funding ```

``` The appraisal approach that best applies to vacant land is: A. Sales comparison approach B. Cost approach C. Residential approach D. Income capitalization approach ```

A sales comparison approach Vacant land can only be appraised using the sales comparison approach, since vacant land is not constructed nor does it earn an income. The determination of land value is necessary in both the cost approach and the sales approach to estimate depreciation, since land is not depreciable.

``` Which federal law requires that the Good Faith Estimate be provided to the borrower within three business days of the time a loan application is taken? Mark one answer: A. RESPA B. TILA C. HMDA D. ECOA ```

``` How many months must be left on an automobile lease to include it as a debt? A. 2 months B. 5 months C. 10 months D. It is always included ```

Which is NOT a possible indication of a short sale fraud? A. Buyer is a business partner of the seller B. Seller has a poor credit history C. Seller has an excellent credit history D. The property appraises significantly below neighboring properties

Answer: B Short sale- fraudster gets straw buyer to purchase home and default on payments. Fraudster thenoffers to buy home from lender prior to foreclosure sale for significantly less than what is owed.

``` A mortgager's title insurance policy is: A. Transferable B Required C. Based on purchase price D. Never used ```

``` Which document is NOT recorded? A. Note B. Satisfaction of Mortgage C. Mortgage D. Deed ```

What federal law specifies how long information on a chapter 13 bankruptcy remains on a credit report? a. TILA b. FACTA c. FCRA d. ECOA

``` Which of the following is a common index used in ARMs: A. CD rate B. The London Inter-Bank Offered Rate C. The Chase Fluctuating Index D. The New York Times Index ```

``` What clause in a mortgage prevents the lender from recovering additional assets from the mortgagor id there is a shortfall in the foreclosure proceeds? A. Defeasance B. Escalation C. Acceleration D. Exculpatory ```

2-PITI is an acronym for: A. Property, insurance, taxes, and interest B. Property, interest, taxes, and insurance C. Principal, insurance, taxes, and interest D. Principal, interest, taxes, and insurance

``` The appraisal approach that best applies to a school is: Mark one answer: A. Sales comparison approach B. Cost approach C. Residential approach D. Income capitalization approach ```

``` Which of the following is NOT a mortgage fraud indicator? A. Inflated appraisal B. Higher than normal commissions C. High credit score D. Request to sign blank forms ```

If three credit scores are obtained for a single borrower the representative score that is usually used is: A The higher score B. The lower score C. The middle score D. Whatever is the policy of the Mortgage Broker business

``` What type of valuation takes into account annual rent as well as other generated income? A. Sales comparison B. Cost C. GRM D. GIM ```

D A gross income multiplier is a rough measure of the value of an investment property. GIM is calculated by dividing the property's sale price by its gross annual rental income. Gross Income Multiplier (GIM) = Market Value / Annual Gross Income

Which of the following is incorrect regarding an adjustable-rate mortgage? A. The index is fixed B. The margin is fixed C There are rate caps on both the adjustment period and life of the loan D LIBOR is a typical index used

``` Who handles complaints regarding mortgage loan rejections? Mark one answer: A FCC B. FHA C. VA D. CFPB ```

``` A lender may choose NOT to take legal action upon default and this is known as: A. Forbearance B. Exculpation C. Fortitude D. Deficiency ```

``` The first page of an advertiser's fax must include: A. Company's mailing address B. Company's email address C. Company's phone number D. Opt-out instructions ```

``` Which of the following documents itemizes all settlement costs including lender charges? A. Agreement of sale B. HUD-1/Closing Disclosure C Form 1003 D. Forbearance agreement ```

``` A Point of Beginning is used in what type of survey? A. Government land survey B. Plat map C. Metes and bounds D. Circle grid ```

``` If there is no minimum monthly credit card payment, what percent of the balance is used in the calculation of monthly debt? A. 1% B. 3% C. 5% D. 10% ```

When does the borrower pay the first year of the hazard insurance premium? A. Each month for 12 months B. Before or at closing C. 6 months premium paid at closing; 6 months premium due 30 days after closing D. Every 2 months for a total of 6 payments during the first year after closing

Many financial experts believe that the repeal of the of 1933 led directly to the financial crisis of 2007-2008 by: A. making credit checks on mortgage applicants optional. removing barriers to imprudent B.speculation on the part of financial firms. C. allowing mortgagelenders to loan money to undocumented immigrants. D. removing the requirement that home buyers put at least 10% down.

``` Which of the following is NOT an involuntary lien? A. Judgement lien B. Mortgage lien C. Mechanic's lien D. IRS tax lien ```

``` What minimum percentage of ownership qualifies an individual as self-employed? A. 5% B. 10% C. 25% D. 50% ```

``` When a consumer is pre-approved for a line of credit and can use this line freely, making repeat transactions, and can pay it off at any time without closing the line, this is an example of: A. Reverse mortgage B. Revolving debt C. Mortgage D. Subordinate lien ```

``` The GFE/Loan Estimate must be mailed or given to the borrower within how many days after receiving the signed application? A 3 business days B. 7 business days C. 10 business days D. 30 business days ```

``` How many days after settlement does the lender have to send the Satisfaction of Mortgage letter? A. 10 days B. 15 days C. 30 days D. 60 days ```

``` A mortgage note that does NOT limit recovery solely from the property is called a: A. Note endorsed with recourse B. Hybrid loan C. Multi-level loan D. Non-recourse note ```

According to the Truth-in-Lending Act (TILA), the term "refinance" applies to: A.A change in payment schedule B. A reduction in annual percentage rate C. The renewal of a single payment obligation with no change in the original terms D. The satisfaction of an existing obligation and its replacement by a new obligation

``` Which of the following fraud schemes involves real estate professionals lying to lenders about the value of a foreclosed property? A. house flipping B. house flopping C. house stalling D. house terracing ```

What law was passed in 2010 in response to the financial meltdown and recession? A. Truth-in-Lending Act B. Gramm-Leach-Bliley C. Dodd-Frank Wall Street Reform and Consumer Act D. Home Mortgage Disclosures Act

A discount point is BEST described as a charge the borrower pays to: A. A lender to decrease the interest rate on the mortgage loan B. A mortgage broker at the time of application to obtain a favorable rate C. The seller as part of the closing costs of a loan D. A lender to ensure against foreclosure

``` Credit reports are good for how many days after they are pulled for qualifying purposes? Mark one answer: A. 60 B. 90 C. 120 D. 180 ```

``` A discount point costs: A. $100 B. $1,000 C. 1 percent of loan amount D. 10 percent of loan amount ```

``` Commission, bonus, or dividend income is usually averaged over: A. 1 year B. 2 years C. 3 years D. 4 years ```

Answer B Commission, Overtime, Bonus, Part-time, Interest and Dividend incomemust be averaged over 2 years.

``` Which regulation encourages financial institutions to help meet the credit needs of their communities, including low- and moderate-income neighborhoods, consistent with safe and sound lending practices? A. CRA B. HOEPA C. RESPA D. TILA ```

``` An outstanding claim on a property that limits the ability to sell the property is a: A. Title defect B. Subordination C. Penalty D. Fault fee ```

``` Which is NOT essential for a valid contract: A. $2,000 in reserves B. Competent parties C. Consideration D. Mutual agreement ```

``` Alimony payments must continue to be received for how long after the application date if they are to be included as income? A. 10 months B. 2 years C. 3 years D 4 years ```

``` Which of the following is NOT part of the primary mortgage market? A. Commercial bank B. Seller financier C. Insurance company D. Credit union ```

``` Which law requires loan originators to shred credit reports? A. Homeowner's Protection Act B. Fact Act C. Gramm-Leach-Bliley D. No such law ```

``` Which form is used to summarize the information in the loan package? A. Fannie Mae 1006 B. Fannie Mae 1005 C. Fannie Mae 1008 D. Fannie Mae 1003 ```

``` The enforcement of a lien is known as a: A. Closing B. Foreclosure C. Warranty inspection D. Police action ```

``` A term mortgage is NOT: A. Non-amortizing B. Interest only C. Satisfied by a final lump sum payment D. Fully amortized ```

``` How long do consumers have to file a lawsuit over alleged violations of Section 6 of RESPA? A. 6 months B. 1 Year C. 3 Years D. 7 Years ```

``` What is the enforcement of a lien? A. Arrest B. Bankruptcy C. Foreclosure D. Mediation ```

``` The Truth-in-Lending Disclosure does NOT include: A. APR B. Finance charge C. Total amount of payments D. Borrower's credit score ```

``` document conveying title from one party to another and guaranteeing that the title is good is known as a: A. Good faith B. Warranty Deed C. Usury limit D. Red Flags documentation ```

``` Which law defines the right of rescission? A. Truth-in-Lending B. Real Estate Settlement Procedures Act C. Equal Credit Opportunity Act D. Patriot Act ```

``` The actual amount of money a home buyer borrows is called: A. the mortgage. B. the principal. C. the equity. D. the PITI. ```

``` ^^^ Which of the following is an acceptable source of funds at closing? A. Sweat equity B Cash on hand C. Personal check D. Wire transfer ```

``` Surveys are NOT certified to: A. Lenders B. Title insurers C. Buyers D. Real estate brokers ```

``` Which of the following does NOT appear in a lock-in-agreement? A. Expiration rate B. APR C. Lock-in fee D Interest rate ```

``` A clause in some mortgages which allows subsequent mortgages on the same property to have a higher claim than the current mortgage is a: A. Subordination clause B. Penalty clause C. Privilege clause D. Inferior clause ```

``` Credit reports on new construction are good for how many days? Mark one answer: A. 90 days B. 120 days C. 180 days D. 225 days ```

``` Fannie Mae requires how many years of credit and public records review? A. 1 year B. 3 yearsb C. 5 years D. 7 years ```

``` When there is a new note and the original borrower is released from all liability, this is known as transferring title by: A. Creative financing B. Assumption C. Novation D. Subject to the mortgage ```

Which law requires the interviewer to complete the Government Monitoring section on the 1003? A. Homeowner's Protection Act B. The Fair and Accurate Credit Transaction Act C. Truth-in-Lending D. The Equal Credit Opportunity Act

``` Lenders must maintain an escrow account for higher-priced mortgages for a minimum: A. 1 year B. 3 years C. 5 years D. No escrow account is required ```

``` A real estate broker may pay a referral fee to: A. A closing agent B. A past customer C. A mortgage broker D. Another real estate brokerage firm ```

``` Which IRS form does a lender use to verify an applicant's income? A. 2071 B. 321-ML C. 911-R D. 4506-T ```

``` Payment for alimony must continue for how long after the application date in order to be included as a debt? A. 1 month B. 10 months C. 2 years D. 3 years ```

``` What gives someone other than the owner the right to be on the property for a specific purpose? A. Mechanic's lien B. Easement C. Encumbrance D. Declaration of intention ```

``` The principle of value that focuses on the most profitable, legal use to which a property can be put is: A. Principle of satisfaction B. Principle of substitution C. Principle of highest and best use D. Principle of conformity ```

``` A neighbor's fence that crosses over on to another's property is an example of an: A. Encroachment B. Encumbrance C. Exculpation D. Egress ```

``` How many years must loan originator applicants wait after a felony fraud conviction, in order to qualify for a license? A. One year B. Two years C. Five years D. They aren't eligible for licensing ```

The DTI standard for an FHA loan is _____, and the standard for a VA loan is ____. a. 26%/38% b. 31%/43% c. 41%/43% d. 43%/41%

``` Borrowers with a high-cost loan can rescind the loan within how many business days? A. 3 B. 7 C. 15 D. There is no rescission period ```

Which of the following is NOT usually required by a loan applicant? A. Photo ID B. Personal references C. 2 months of bank or brokerage statementsc D. 30 days previous pay stub

``` The withdrawal of funds out of savings accounts and into stocks and bonds is known as: Mark one answer: A. Intermediation B. Disintermediation C. Acceleration D. Exculpation ```

``` Which law prohibits discrimination by lenders? A. Truth-in-Lending B. Real Estate Settlement Procedures Act C. Equal Credit Opportunity Act D. Patriot Act ```

``` A lender that offers mortgage loans directly to the public is a: A. Participating lender B. Private lender C. Wholesale lender D. Retail lender ```

``` What is the practice called when a real estate agent only shows Hispanic buyers properties in Hispanic neighborhoods? Mark one answer: A. Redlining B. Steering C. Blockbusting D. Conversion ```

``` Which piece of information is NOT required in order to have a legal loan application? A. Consumer name B. Consumer monthly income C. Estimated property value D. Consumer signature ```

``` How many years of employment history may be required on the loan application? A. 1 year B. 2 years C. 3 years D. 4 years ```

After a loan closing, funds are disbursed. When are the funds disbursed for an owneroccupied, residential refinance? A. at the time of the loan closing B. right before the loan closing C. five business days after the closing D. after the three business-day rescission period

``` What type of scam entails homeowners who are encouraged to refinance their property over and over until little or no equity remains? A. property skimming B. reverse equity C. loan flipping D. extreme lending ```

``` ^^^Which title insurance policy is transferable? A. Mortgagor B. Mortgagee C. Restricted use D. Conforming ```

``` Which clause in a mortgage allows a lender to increase the interest rate? Mark one answer: A Defeasance B. Escalation C. Acceleration D. Exculpatory ```

``` How many years must loan originator applicants wait after having a loan origination license revoked in another state, in order to qualify for a license? A. One year B. Two years C. They aren't eligible for licensing D. They can qualify immediately ```

What are the two distinct areas of mortgage fraud that the FBI investigates? A. Fraud for profit and fraud for housing B. East coast and west coast C. Domestic and international D. Appraisers and mortgage brokers

``` What document is assigned along with the mortgage? A. Deed B. GFE/Loan Estimate C. HUD-1/Closing Disclosure D. Promissory note ```

``` Who can provide closed sales comparables to an appraiser? A. Real estate agent B. Underwriter C. Mortgage broker D. Lender ```

Acceptable income for loan qualification includes: A. 1 year of sales commissions B. Disability benefits with 2 years remaining C. 1 year of unemployment benefits D. 2 years of bonuses

``` Which disclosure can be initially sent to the borrower within 45 days after closing? A. Affiliated Business Agreement B. Good Faith Estimate C. Truth-in-Lending D. Initial Escrow Statement ```

``` Which law protects an individuals confidential information? A. Truth-in-Lending B. Real Estate Settlement Procedures Act C. Homeowner's Protection Act D. Gramm-Leach-Bliley Act ```

``` The most comprehensive form of ownership is: A. Real estate investment trust B. Fee simple absolute C. Tenants in common D. Joint tenancy ```

``` Which of the following is NOT a valid requirement for a deed? A. Names of the seller and buyer B. Must be signed in blue ink C. Legal description of the property D. Signed by grantor and two witnesses ```

``` The Gramm-Leach-Bliley Act contains all of the following provisions EXCEPT A. Financial Privacy Rule. B. National Do Not Call Registry. C. Pretexting Provisions Rule. D. Safeguards Rule. ```

``` Which is NOT a component of a valid contract? A. Agreement B. Consideration C. Two witnesses D. Competent parties ```

``` Which appraisal approach is most suitable for an office building? A. Sales comparison approach B. Cost approach C. Income capitalization approach D.Tenant collection approach ```

C The income approach is used to evaluate properties that have income potential. This includes apartment buildings or office buildings that will have tenants, and single or double family homes with rentable space. Using an income approach, the appraiser with evaluate the property's income potential.

``` What clause in a mortgage allows the lender to call the entire loan balance due? A. Defeasance B. Escalation C. Acceleration D. Exculpatory ```

``` Which of the following is NOT a valid component of a contract? A. Competent parties B. Mutual agreement C. Down payment D. Legal object ```

TIL Disclosure is also known as

Initial TILA Disclosure + GFE = LE 30 days | Final TILA Disclosure + HUD-1 = CD 60 days

``` Which of the following increases cap rate? A. Lower purchase price B. Increase purchase price C. Decreased cash flow D. Increase interest rate ```

``` ECOA defines elderly as: Mark one answer: A. 55 years B. 62 years C. 65 years D. 70 years ```

``` Loan originator organizations must keep compensation records for how many years? A. One B. Two C. Three D. Four ```

``` Which law allows consumers a free copy of their credit report every year? A. Homeowner's Protection Act B. The Fair and Accurate Credit C. Fair Credit Protection act D. Truth-in-Lending ```

``` The assignor: A. Transfers contract rights B Receives contract rights C. Must be a United States citizen D. Must be an attorney ```

``` Which has the superior lien position? A. Senior mortgage B. Junior mortgage C. Mortgages under $250,000 D. First signed mortgage ```

``` According to the Truth-in-Lending Act (TILA), which of the following fees is EXCLUDED from the calculation of the annual percentage rate? A. Hazard insurance B. Wire transfer C. Prepaid interest D. Mortgage insurance premiums ```

``` What agency was established to respond to consumer financial complaints? A. Federal Deposit Insurance Company B. Federal Insurance Office C. Financial Stability Oversight Council D. Consumer Financial Protection Bureau ```

What happens if the acceptable variance between the Loan Estimate and Closing Disclosure is exceeded? A. Loan originator faces criminal penalties B. The loan can't be funded C. The excess is refunded to the borrower within 30 days D. The excess is refunded to the borrower within 60 days

``` What agency becomes the receiver for some failing financial institutions? Mark one answer: A. Federal Deposit Insurance Company B. Federal Insurance Office C. Financial Stability Oversight Council D. Consumer Financial Protection Bureau ```

What happens if the acceptable variance between the GFE and the HUD-1 is exceeded? A. Loan originator faces criminal penalties B. The loan can't be funded C. The excess is refunded to the borrower within 30 days D. The excess is refunded to the borrower within 60 days

Under the MARS rule, if your firm offers to help people in financial straits who are seeking to lower their mortgage payments, it is illegal to advise them to: A. hire a credit repair firm. B. stop making payments on their mortgage. C. stop communicating with their lender D. file bankruptcy.

``` What term describes the intentional delay of action on the part of the lender upon a borrower's default? A. Defeasance B. Escalation C. Acceleration D. Exculpatory ```

``` What type of fraud occurs when a loan originator changes a borrower's birthdate to make him appear older? A. Reverse mortgage B. Equity skimming C. Buy and bail D. Phantom sale ```

A Reverse Mortgage

``` What does a loan originator use to determine the estimated value of a property based on an analytical comparison of similar property sales? A. An appraisal B. A market survey C. An area survey D. A cost-benefit analysis ```

``` A bi-weekly mortgage: Mark one answer: A Is paid every 2 weeks B. Is paid every 2 months C. Is not legal D. Has no mandatory payment schedule ```

``` When the mortgagor and mortgagee title insurance policies are issued at the same time, this is known as: A. Simultaneous issue B. Concurrent issue C. Subsequent issue D. Dual issue ```

``` What is the minimum number of closed sales comparables that can be used in the sales comparison approach? A. 1 B. 3 C. 6 D. 8 ```

``` What term describes the process of a senior mortgage lien-holder voluntarily changing into a junior mortgage lien-holder? A. Demotion B. Assignment C. Alienation D. Subordination ```

``` Joint Tenancy does NOT have: A. Equal ownership B. Right of survivorship C. Only one individual's name on title D. Buy at same time ```

``` What type of funding occurs when a lender borrows money from an investor and assigns the mortgage and note to the investor immediately after closing? A. Warehouse B. Table C. Direct investor D. Temporary ```

``` Ginnie Mae: A. Buys and sells loans B. Regulates loan originators C. Guarantees Ginnie-Mae mortgage-backed securities S. Sets guidelines for government loans ```

``` The conveyor of the deed is the: A. Grantor B. Lender C. Grantee D. Mortgager ```

``` In order to be counted as income, alimony must continue for how long after the loan application is signed? A. 1 year B. 2 years C. 3 years D. 4 years ```

``` The right to use land owned by another is an: A. Easement B Acquisition C. Exposition D. Alienation ```

``` Which of the following was one purpose of the HERA? A. Pursuing and prosecuting terrorists B. Establishing the NMLSR C. Improving the stock market D. Giving Wall Street greater autonomy ```

The SAFE Act creates standard guidelines for state legislation to regulate loan originators. In order to meet the standards established under the SAFE Act, state licensing laws must include all of the following except: A. An enforcement program B. Loan originator licensing requirements C. Requirements for effective licensee supervision D. A universal fine for violators

``` The functions of participating in the NMLS, conducting background checks, and writing rules and regulations are required under the SAFE Act by: A. A state licensing agency B. A state legislature C. A state Attorney General D. The federal government ```

A title insurance company provides a computer to a mortgage broker. The computer is used to transmit electronic documents from the mortgage broker's office to the title insurance company. Who is in violation of RESPA? A. The title insurance company B. The mortgage lender C. Both the title insurance company and the mortgage lender D. Neither the title insurance company nor the mortgage lender

A state licensing agency is conducting an examination of a company's loan origination activities. In doing so, it may do all of the following, except: A. Require the company to compile reports related to their mortgage loan transactions B. Subpoena books and records C. Close the company down for the period of the examination D. Control access to the company's books and records

The primary purpose of Truth in Lending is to: A. Control interest rates on behalf of the consumer. B. Disclose the true costs of only an FHA loan. C. Disclose the true costs of obtaining credit. D. Control the true costs to close a transaction.

The Rose family owns a home in a semi-rural area, which is about five years old. Recently announced plans for a new regional airport will place their home directly in line with a main runway ending 1 mile before their home. If the airport is constructed, will this diminish the value of the Rose Home? A. Yes, because of economic obsolescence. B. No, because value would increase due to the location close to the airport. C. Yes, because of functional obsolescence. D. No, because noise from aircraft passing overhead is not recognized as affecting property values.

``` The recording of an instrument gives: A. Constructive notice B. Documented notice C. Legal notice D. Actual notice ```

What are discount points or points? A. They are a fee paid by the borrower to the lender to reduce the interest rate on the loan. B. They are a fee paid by the seller to the borrower to cover the down payment on the home. C. They are a fee paid by the lender to the seller to help reduce closing costs. D. They are a fee paid by the bank to the government for guaranteeing the loan against default.

``` A mortgage company makes a number of loans to be assembled into one package and sold to permanent investors. This process is an example of interim financing to the mortgage company and is called: A. blanket financing. B. package financing. C. discounting. D. warehousing. ```

``` Which of the following is not a tool to calculate an applicant's income? A. Bank statements B. Pay stubs C. W-2 Forms D. State income tax forms ```

****Which of the following is least likely to be a sign of mortgage fraud? A. The applicant appears to be quite young but makes a high salary B. Identification documents provided are blurry, hard to read, and appear to be photocopies or faxed documents C. Signatures on documents provided by the applicant do not match one another D. Information on W-2s does not match the income of the applicant

``` All of the following are TILA-required disclosures, except: A. CHARM Booklet B. Early ARM Disclosure C. Right to Rescind D. Notice of Adverse Action ```

``` Requirements to provide rate/payment change disclosures do not apply to: A Creditors B. Loan services C. Assignees D. Mortgage brokers ```

All of the following are true concerning mortgage fraud, except: A. Mail fraud can be charged even if a violator did not complete the mailing B. FTC, HUD and IRS conduct investigations & refer to the Department of Justice C. Making false statements on a loan application can lead to 30 years in jail & up to a $1 million fine D. Federal laws have been amended to specifically address mortgage fraud

Which of the following must be a licensed loan originator? A. Commercial loan originator B. Independent contractor who is an underwriter C. Supervised loan processor employee D. An individual who negotiates the terms of his own mortgage loan

``` How ofter must a mortgage company submit a report on their financial condition? A. Monthly B. Quarterly C. Annually D. Every 2 years ```

``` What is the maximum fine for a SAFE Act violation? Mark one answer: A. $1,000 B. $5,000 C. $15,000 D. $25,000 ```

``` Returning MLOs must retake the national exam after how many years of inactivity? A. 1 B. 3 C. 5 D. 7 ```

``` The mortgagor is the: A. Lender B. Borrower C. Mortgage broker D. Real estate agent ```

``` The mortgagee is: A. Lender B. Borrower C. Mortgage broker D. Real estate agent ```

``` Mortgages are a(n): A. Involuntary lien B. Voluntary lien C. Special assessment D. Mechanics lien ```

``` What establishes the lien position? A. Date and time of signing B. Date and time the loan was approved C. Date and time of recording D Date and time of the title search ```

``` Junior mortgages are: A. Involuntary liens B. Limited to 30 year terms C. Limited to a total of 2 D. Voluntary lien ```

``` Which is NOT a promise by the mortgagor: A. Keep the home in good repair B. Obey all state and county laws C. Pay the hazard insurance D. Pay the mortgage payment ```

``` What is the minimum number of hours for annual loan originator continuing education? A. 2 B. 4 C. 8 D. 12 ```

Which of the following do NOT need to be licensed? A. Independent contractors who are loan originators B. Independent contractors who are underwriters C. Independent contractors who are loan processors D. Federally chartered bank employees

Which of the following does NOT have to be submitted by a Loan Originator applicant? A. Credit report authorization B. Criminal background check authorization C. References D. Fingerprints

``` After three consecutive attempts to pass the SAFE exam, what is the minimum amount of time a student must wait before trying again? A. 1 month B. 3 months C. 6 months D. 9 months ```

``` Which of the following is NOT an immediate family member? A. Adopted brother B. Aunt C. Grandfather D. Stepmother ```

What may be true of registered loan originators? A. They are independent contractors B. They must take the national loan originator exam C. They are bank employees D. They are licensed loan originators

``` Which of the following is NOT protected from discrimination by the Fair Housing Act? A. HIV patients B. Elderly C. Pregnant women D. Mexicans ```

``` ECOA requires that a loan application is retained for how long after a denial? A. 6 months B. 25 months C. 36 months D. 60 months ```

What should a loan originator do if an applicant refuses to disclose their nationality? A. Leave it blank on the application B. Refuse the application C. Select the box with their best guess D. Pester the applicant until they answer

What should a loan originator do on a Loan Estimate address field when the borrower requests a pre-approval? A. Leave it blank B. Enter one or more zip codes of likely locations C. Enter the applicant's personal address D. Deny the loan application

``` How many housing counseling agencies must be listed on the Housing Counseling Disclosure? A. 1 B. 3 C. 5 D. 10 ```

``` What entity does HUD oversee? Mark one answer: A. Department of Health B. Federal Housing Administration C. Department of Veterans Affairs D. Consumer Financial Protection Bureau ```

``` What is the maximum term for a HOEPA balloon bridge loan? A. 12 months B. 24 months C. 36 months D. 60 months ```

``` A borrower must indicate an Intent to Proceed within how many business days after receiving the Loan Estimate? A. 3 B. 10 C. 15 D. 30 ```

``` Which law enacted mandatory cancellation of PMI under certain circumstances? A Truth-in-Lending B. RESPA C. Homeowner's Protection Act D. Equal Opportunity Act ```

``` What is the minimum number of hours for loan originator pre-licensing education? A. 10 B. 20 C. 30 D. 40 ```

``` How many business days before loan consummation is a borrower entitled to see a revised Closing Disclosure that did not trigger an additional 3-day waiting period? A. 1 B. 2 C. 3 D. 4 ```

``` How many days before loan consummation is a seller entitled to see the final Closing Disclosure? A. 0 (closing day) B. 1 C. 2 D. 3 ```

``` When a consumer requests the cancellation of their escrow account, the lender has how many business days prior to closing the account to deliver an Escrow Closing Notice? A. 1 B 3 C. 10 D. 30 ```

``` When a lender cancels an escrow account for a reason other than default or termination caused by refinancing, repayment or rescission, they have how many business days prior to closing the account to deliver an Escrow Closing Notice? A. 1 B. 3 C. 10 D. 30 ```

``` For how many years must a lender retain the Loan Estimate? A. 2 B. 3 C. 4 D. 5 ```

``` For how many years must a lender retain the Closing Disclosure? A. 2 B. 3 C. 4 D. 5 ```

``` For how many years must a lender retain the Escrow Cancellation Notice? Mark one answer: A. 2 B. 3 C. 4 D. 5 ```

``` For how many years must a lender retain the Partial Payment Policy? A. 2 B. 3 C. 4 D. 5 ```

``` The borrower must receive the Closing Disclosure how many business days before consummation? A. 1 B. 2 C. 3 D. 4 ```

``` Which of the following is NOT delivered to a reverse mortgage applicant? A. TILA Disclosure B. Loan Estimate C. Good Faith Estimate D. HUD-1 ```

The Fair and Accurate Credit Transaction Act: A. Prohibits kickbacks to title companies B. Provides that all the information in a credit report is verified C. Allows consumers one free credit report per year from each repository D. Changes credit scoring to a 1-5 ranking system

``` Who does the consumer contact if he has questions about his credit score? A. Credit Reporting Agency B. Lender C. Title company D. Appraiser ```

``` The range of possible credit scores is: A. 200-900 B. 300-850 C. 400-700 D. 500-1000 ```

``` The Red Flags Rule is concerned with: A. Identity theft B. Kickbacks C. Disclosure of the APR D. Regulation of interest rates ```

``` The Red Flags Rule is part of the: A. Truth-in-Lending Act B. Real Estate Settlement Procedures Act C. SAFE Act D. Fair and Accurate Credit Transactions Act ```

``` Which of the following is a creditor as defined by the Red Flags Rule? A. Mortgage Broker B. Beauty shop C. Grocery store D. Appraiser ```

Which of the following is NOT a requirement for a company's Red Flags program? A. Be in writing B. Identify and detect warnings of identity theft C. Detail appropriate responses to the warning signs D. Managed by the Human Resources Department

``` If a Loan Estimate is mailed, it must be mailed how many days before loan consummation? A. 1 B. 3 C. 5 D. 7 ```

``` A lender has how many days to refund excessive variances on a Closing Disclosure? A. 10 B. 30 C. 60 D. 90 ```

A change to which of the following does NOT trigger a new 3-day waiting period? A. Seller credits buyer money for landscaping B. APR C. Loan product D. Addition of a prepayment penalty

``` Bankruptcies can be kept in the credit report for: A. 2 years B. 5 years C. 7 years D. 10 years ```

``` Tax liens can be kept in the credit report for: A. 2 years B. 5 years C. 7 years D. 10 years ```

``` Borrowers are entitled to a free credit report if the lender takes adverse action against them and they ask for their report within how many days of receiving notice of the action? A. 30 B. 60 C. 90 D. 120 ```

``` Which Act includes provisions to protect consumers' personal financial information held by financial institutions? A. Real Estate Settlement Procedures B. Fair and Accurate Credit Transaction C. Truth-in-Lending D. Gramm-Leach-Bliley ```

``` Which Act requires companies to give consumers privacy notices? A. Real Estate Settlement Procedures B. Fair and Accurate Credit Transaction C. Truth-in-Lending D. Gramm-Leach-Bliley ```

``` What is the fine for Do Not Call violations? A. $3,000 B. $9,000 C. $42,530 D. $60,000 ```

``` A company with which a consumer has an established business relationship may call for how many months after the consumer's last purchase? A. 6 B. 13 C. 18 D. 24 ```

``` If a consumer makes an inquiry or submits an application to a company, the company can call for how many months? A. 3 B. 6 C. 9 D. 12 ```

``` Which of the following is allowed to call numbers on the Do Not Call List? A. Loan originators B. Charities C. Car dealerships D. Dry cleaners ```

``` The Right of Rescission does NOT apply to: A. Refinance loan B. Second mortgage C. Home improvement D. First mortgage on a purchase ```

``` The TILA must be re-disclosed if the APR for a fixed-rate loan changes by more than: A. 1/8% B. 1/2% C. 1/4% D. 1% ```

``` HOEPA considers a loan to be high cost if the total charges to the borrower exceed what percent of the loan amount? A. 4% B. 5% C. 10% D 12% ```

``` The Truth-In-Lending Disclosure must be delivered within how many business days prior to closing a reverse mortgage? A. 3 B. 7 C. 10 D. 15 ```

``` The APR must be finalized at least how many days before closing? Mark one answer: A. 1 B. 3 C. 5 D. 7 ```

The Home Mortgage Disclosure Act (HMDA) was implemented by the: A. Department of Housing and Urban Development B. Department of Veterans Affairs C. Federal Communication Commission D. Federal Reserve Board

``` HMDA is also knows as: A. Regulation B B. Regulation C C. Regulation X D. Regulation Z ```

HMDA does NOT: A. Set lending quotas for protected classes B. Require the loan amount to be reported C. Require the location of the property to be reported D. Require the race of the borrower to be reported

``` Which of the following is NOT required HMDA borrower information? A. Loan amount B. Gender C. Race D. Age ```

``` The Fair Credit Reporting Act is enforced by: A. HUD B. FCC C. FHA D. FTC ```

``` What government agency enforcer ECOA? A. FCC B. HUD C. CFPB D FHA ```

``` A lender can discriminate based on: A. Age B. Sex C. Credit history D. Race ```

``` How many days does a lender have after receipt of an application to notify the applicant of its action on the application? A. 10 B. 15 C. 30 D. 60 ```

``` How many days does an applicant have after receipt of an adverse action notice to request a statement of reasons from the lender? A. 10 B. 15 C. 30 D. 60 ```

``` How many days does a lender have to send a statement of reasons for an adverse action after receiving a request from an applicant? A. 10 B. 15 C. 30 D. 60 ```

``` The Truth-In-Lending Act (TILA) is implemented as: A. Regulation B B. Regulation X C. Regulation A D. Regulation Z ```

``` The Truth-In-Lending Act (TILA) was implemented by the: A. Federal Reserve Board B. Fannie Mae C. Federal Bureau of Investigation D. Federal Express ```

``` The Truth-In-Lending Act is administered by: A. DVA B. FCC C. FHA D. CFPB ```

``` The TILA disclosure must be given to the applicant within how many days after receiving the signed loan application for a reverse mortgage? A. 3 business days B. 5 business days C. 7 business days D. 14 business days ```

``` Which of the following is NOT a trigger term? A. 5% interest rate B. $200 monthly payment C. Lowest rates in town D. 48 easy payments ```

``` A borrower is entitled to request and obtain a copy of the HUD-1 Settlement Statement how many days before closing? A. 1 B. 3 C. 5 D. 7 ```

``` After an escrow account analysis, money must be refunded if the over-paid amount equals or exceeds: A $50 B. $100 C. $250 D. $500 ```

``` The servicer has how many days to notify the borrower if the servicing rights have been sold and are being transferred to another company? A. 3 B. 5 C. 10 D. 15 ```

``` A borrower who makes a timely payment to the old servicer after a loan transfer, can be penalized after how many days if he still is not sending the payment to the correct servicer? A. 30 B. 60 C. 90 D. 120 ```

``` What is the maximum criminal penalty for a kickback violation? Mark one answer: A. $500 and 6 months in prison B. $1,000 and 6 months in prison C. $10,000 and a year in prison D. $25,000 and a year in prison ```

``` The HUD-1 Settlement Statement is required for what type of transaction? A. Cash purchase of a condo B. Financed purchase of a warehouse C. Reverse mortgage D. Cash purchase of a strip mall ```

The maximum escrow cushion that a lender can require is: A. 1/6 of total yearly disbursements B. 1/3 of total yearly disbursements C. 1/2 of total yearly disbursements D. 3/4 of total yearly disbursements

``` The lender has how many days after settlement to refund any portion of charges on the HUD-1 that exceeded the acceptable variance? A. 15 B. 30 C. 45 D. 60 ```

``` The Equal Credit Opportunity Act (ECOA) is implemented as: A. Regulation B B. Regulation X C. Regulation A D. Regulation Z ```

``` ECOA allows an applicant to have a copy of his: A. Credit score B. Credit report C. Property appraisal report D. Bank records ```

A lender will always require that the borrower obtain title insurance because: A. An owner's title policy provides more comprehensive coverage to the lender since it is for the full purchase price B. A lender's title policy issued following an extensive title search constitutes reasonable assurance that title is clear and any losses from claims on title will be reimbursed C. Once an owner's policy is issued the title is marketable D. With title insurance in place, defects on title leading to claims for compensation are rare

``` Real Estate Settlement Procedures Act (RESPA) is implemented as: A. Regulation B B. Regulation X C. Regulation A D. Regulation Z ```

``` Which government agency enforces the RESPA regulations? A. CFPB B. FCC C. FHA D. FTC ```

``` RESPA is concerned with: Mark one answer: A. Kickbacks B. Credit reports C. Triggering terms in ads D. U.S. security ```

``` The Good Faith Estimate/Loan Estimate must be sent to the borrower within how many business days of receiving a loan application? Mark one answer: A. 1 B. 3 C. 5 D. 10 ```

``` The Special Information Booklet must be sent to the borrower within how many business days of receiving a loan application? A. 1 B. 3 C. 5 D. 10 ```

``` The Mortgage Servicing Disclosure Statement must be sent to the borrower within how many business days of receiving a loan application? A. 1 B. 3 C. 5 D. 10 ```

``` How often must a summary of escrow activity statement be sent to the borrower? A. Once a month B. Once every 3 months C. Once every 6 months D. Once a year ```

``` RESPA requires which of the following to be given to the borrower when the loan servicer changes? A. Servicing Transfer Statement B. Good Faith Estimate C. Truth in Lending Disclosure D. Initial Escrow Statement ```

When must a referring party give the Affiliated Business Arrangement Disclosure to the consumer? A. Within 3 days of the loan application B. Within 15 days of the loan application C. At or prior to the time of referral D. At closing

An application fee is not included in the APR as long as: A. It is assessed to all applicants B. The borrower closes on his or her loan C. The borrower does not close on his or her loan D. Application fees are always included in the APR since they would not be assessed in a cash purchase

What is the Model State Law? A. A form filled in by the CSBS and the AARMR to guide banks in implementing the legislation required by the SAFE Act B. A document created by the CSBS and the AARMR to guide states in implementing the legislation required by the SAFE Act C. A model created by the CSBS and the AARMR to guide states in implementing the legislation required by the Mortgage Licensing Act D. A book created by the CSBS and the AARMR to guide mortgage companies in implementing the legislation required by the SAFE Act

Who is exempt from a mortgage loan originator business license? A. An individual who negotiates terms on behalf of an immediate family member or for a dwelling he or she lives in, or a non-depository employee planning on originating residential mortgage loans B. Registered mortgage loan originators, an individual who negotiates terms on behalf of a friend or for a dwelling he or she lives in, or a licensed attorney negotiating terms for a client C. First-time mortgage loan originators from a non-depository institution, an individual who negotiates terms on behalf of an immediate family member or for a dwelling he or she is about to purchase, or a licensed attorney negotiating for a client as an ancillary matter D. Registered mortgage loan originators, an individual who negotiates terms on behalf of an immediate family member or for a dwelling he or she lives in, or a licensed attorney negotiating for a client as an ancillary matter

Emily's MLO refers her borrower to a hazard insurance agent. Emily's husband works for the insurance company represented by the agent. As there is no ownership interest between any of these entities, Emily finds no reason to issue the borrower an ABAD. Which of the following statements is not correct? A. The fact that Emily's husband works for the insurance company mandates an ABAD due to the associated relationship B. The insurance company is responsible for issuing an ABAD to Emily's borrower the ABAD C. An ABAD was warranted D. The borrower was not obligated to use the hazard insurance agent that Emily recommended

``` The Homeowner's Protection Act is applicable to all but which of the following: A. Lenders B. Loan servicers C. Appraisers D. PMI Companies ```

Under the Truth-in-Lending Act, a “general” business day is: A. Any day of the week B. Monday through Friday C. Any day of the week aside from Sunday and federal holidays D. Any day of the week, aside from Sunday and federal holidays, on which the entity conducting business is fully operational

Which of the following statements violates ECOA? A. Since your credit score is 610, I do not have a product to offer you B. I think you should close out some of those dormant accounts before you apply C. What is your race, sex, and national origin? D. Since you're 17 years old, you'll need to wait until your 18th birthday to apply

A mortgage originator sends a thank-you note to a Realtor for referring a client. Who, if anyone, violated RESPA? A. The Realtor B. The mortgage originator C. Both the Realtor and the mortgage originator D. Neither the Realtor nor the mortgage originator

The S.A.F.E. Act creates several consumer protection provisions. Which of the following is not a provision created through the enactment of the S.A.F.E. Act? A. Provides consumers access to information about originators B. Encourages responsible behavior through licensing standards C. Facilitates collection and distribution of consumer complaints between regulators D. Allows consumers a full refund if the originator is found to have engaged in unethical acts

An initial privacy notice is due to consumer at what point? A. Within three business days of initial contact between the consumer and the financial institution B. No later than the time at which a customer relationship is established C. No later than three business days prior to settlement D. Within seven business days of customer providing nonpublic personal information sufficient to pull a credit report

Which of the following is not true, with regard to TILA disclosures? A Special disclosures are required for adjustable-rate mortgages B. Rules for disclosure are the same whether credit is open-end or closed-end C. Disclosure rules differ depending on whether the credit being offered is open-end or closed-end D. Everyone with ownership interest receives rescission notices

``` An underwriter examines what two main aspects of a loan application to determine if lender guidelines are being met? A. Applicants and credit B. Credit and collateral C. Credit and income D. Applicant and collateral ```

``` What legislation regulates the proper management of escrow accounts? A. Homeowners Protection Act B. Regulation X C. HMDA D. FHA ```

``` This is defined as the intentional perversion of the truth for the purpose of inducing another person or entity to rely on it in order to part with something or surrender a legal right. A. Identity theft B. Predatory lending C. Industry insider fraud D. Mortgage fraud ```

``` A person that is hired to take title to and sell a house in name only in order to conceal the identity of the actual seller. A. Straw seller B. Straw buyer C. Air seller D. Air buyer ```

``` A mortgage broker structures a loan priced with two points in borrower credit. He suggests that, based on the limited amount of cash the borrower has on hand to close, it may be best to take a slightly higher rate and use the premium generated to subsidize the closing costs. After consideration, the borrower agrees and moves forward. This is: A. Illegal and unethical B. Legal and unethical C. Illegal and ethical D. Legal and ethical ```

``` The Nationwide Mortgage Licensing System and Registry was developed and is maintained by: A. The AARMR and CFPB B. The CFPB and CSBS C. The FHFA and CFPB D. The CSBS and AARMR ```

During a routine examination, a state licensing agency discovered that mortgage loan originator Alre Macintosh routinely overcharged borrowers for third-party services and pocketed the difference for herself. In terms of an enforcement action, the state licensing agency may do all of the following, except: A. Seize Alre's bank accounts B. Require restitution be paid to the borrowers C. Impose a civil penalty D. Suspend or revoke Alre's license

Alre is working with the Sanchez Family who are considering an adjustable-rate mortgage. At the time that Alre provides the Sanchez family with an application form, he is also required to provide all of the following, except: A. Alternative mortgage options B. The CHARM booklet C. Information about the index, the margin, and the frequency of rate adjustments D. The loan program disclosure

If an employee commits violations of state and/ore federal law, an employer: A. May also be held liable B. Will have its license renewed C. Is not legally liable for the actions of its employees D. Must surrender the employee to the authorities within ten days

``` What is considered to be "mandatory" protection if a borrower takes an ARM loan? A. CHARM B. TILA C. Margin D. Caps ```

``` Which of the following documents conveys title to real property? Mark one answer: A. Note V. Mortgage C. Promissory note D. Deed ```

``` If the servicing of a loan is set to be transferred, who is responsible for informing the borrowers? Mark one answer: A. The title company B. The lender C. The broker D. The servicer ```

How often must a borrower renew owner's title insurance? Mark one answer: A. With each refinance B. Owner's title insurance expires every seven years C. When the house is sold to the next owner D. It is not necessary to renew

Which of the following is true? A. Reverse mortgage loans are covered by the ATR Rule B. Open-end credit plans, timeshare plans and closed-end consumer credit loans are exempt from the ATR Rule C. Open-end credit plans are covered by the ATR Rule D. Open-end credit plans, timeshare plans and reverse mortgage loans are exempt from the ATR Rule

``` Recording of the deed happens where? A. At closing B. At the local courthouse C. At the borrower's house D. Within the office of the Supervisor of Banks ```

``` The generally-accepted appraisal standards in the United States are known as: A. USASB B. FinCEN C. USPAP D. ASB ```

``` Which regulation's primary purpose is to identify discriminatory lending practices in violation of fair lending laws? A. Regulation C B. Regulation V C. Regulation P D. Regulation X ```

``` A top loan originator adjusts the income of a borrower by $400 so that the borrower can get an "approve-eligible" from DU. On prior attempts, with the borrowers real income, they wouldn't qualify. This is an example of: A. AUS B. Fraud for housing C. Fraud for profit D. Manual Underwriting ```

UDAAP" refers to practices that are: A. Unlawful, discriminatory or anit-consumer protection B. Unfair, discriminatory and/or abusive C. Unlawful, deceptive or anti-consumer protection D. Unfair, deceptive and/or abusive

``` All of the following are acceptable categories of marital status according to ECOA, except: A. Married B. Divorced C. Separated D. Unmarried ```

``` Second appraisal requirements for higher-priced mortgage loans were put in place in an attempt to curb the practice of: A. Property flipping B. Equity stripping C. Steering D. Reverse redlining ```

Which of the following is a characteristic of an HPML? A. It has an APR that exceeds the average prime offer rate by 3.5% percentage b. points for a loan secured by a subordinate lien on the home C. It has an APR that exceeds the rate for Treasury securities with a comparable rate of maturity by 6.5 percentage points It is secured by the borrower's principal dwelling D. It has an APR that exceeds the average prime offer rate by 1.5 percentage points for loan secured by a first lien on the home

A lender is trying to lure customers with advertisements for "Minimum Monthly Payments to Meet Any Budget!" This advertisement must also include an equally prominent statement in close proximity which alerts consumers that: A. The borrower should seek homeownership counseling prior to applying for the loan B. A balloon payment may result from minimum periodic payments C. The loan is only advised for borrowers with a short-term interest in the dwelling used to secure the loan D. The loan may not be paid off by the end of the loan term

How are FHA loan limits established? A. HUD establishes loan limits for FHA based on county-by-county limits B. FHA uses loan limits based on Fannie & Freddie C. Loan limits are set by GNMA D. FHFA establishes loan limits for FHA

``` Which of the following is a limit on the amount that the payment can change on any adjustment date from the current or previous payment amount on an ARM? A. Periodic rate cap B. Initial rate cap C. Payment cap D. Lifetime rate cap ```

When a mortgage or deed of trust contains a power of sale clause:  A. The lender is made whole for losses by MIP V. A judge must enter an order of foreclosure before the home can be sold C. The lender may foreclose without first obtaining a court order D. The lender can sell the home at its discretion

After a borrower allows the assumption of his/her VA loan, he/she may use his/her VA privilege again only after: A. The original VA loan is satisfied B. The home is sold to a new owner C. Five years have passed D. The original VA loan is moved from his/her name into the name of the assuming borrower

``` Which of the following is the least expensive type of reverse mortgage?  A. Proprietary mortgage B. HECM C. Non-recourse D. Single-purpose ** ```

The Federal Housing Finance Agency was formed in 2008 and is now: A. The overseer of FNMA, FHLMC, HUD and FTC B. Responsible for overseeing FNMA & HUD C. The entity that sets limits on loan pricing adjustments D. Responsible for setting annual conforming loan limits nationwide

``` Direct RHS loans may have terms of _____ years. A. 15 & 30 B. 21 or 29 C. 33 or 38 D. 30 & 40 ```

All of the following are included within the authority of the Commissioner, except: A. Enter a cease & desist order B Order restitution & monetary penalties C. Subpoena witnesses & documents D. Issuing an order to a former employer of a loan originator to turn over records

``` Tiffany Perez has attempted to pass the NMLS mortgage loan originator licensing test three times. After failing his third test, Tiffany must wait how long before testing again? A. 60 days B. 90 days C. Six months D. 30 days ```

``` Alre has been working on a loan transaction with a consummation date set for a Friday. To comply with the law, he must deliver or place in the mail a Closing Disclosure by: A. The previous Friday B. Tuesday C. Thursday D. Monday ```

Which statement about loan origination fees on a Loan Estimate is FALSE? A. The fees cannot change unless there is a changed circumstance B. The fee includes services performed by or behalf of the MLO C. Lender & mortgage broker fees for the same transaction must be itemized D. Origination fees must be expressed as lump sum

``` The Closing Disclosure discloses the settlement service provider charges the borrower will pay all of the following EXCEPT? A. Assumption of the mortgage loan B. Escrow account information C. Negative amortization features D. Rate lock in information ```

Which of the following is true about the right of rescission granted under the Truth-in-Lending Act (TILA)? A. It applies to 1st & 2nd mortgages only B. It only applies to residential mortgagee transaction involving a loan to purchase a property C. If there are multiple borrowers, only one can be designated as having the right to rescind D. It only applies to a loan secured by the borrower's principal residence

Which of the following is most likely a red flag of fraud? A. The borrower has a new job B. The borrower is moving from another state C. The borrower is purchasing a home down the street from his current home, stating the new house will be his primary residence but he plans to keep his current home and not rent it out D. The borrower's down payment is coming from the sale of another home, which was serving as his primary residence until its sale

C. The borrower is purchasing a home down the street from his current home, stating the new house will be his primary residence but he plans to keep his current home and not rent it out Among the red flags for loan application fraud are indications that the borrower will not be an owner-occupant. This can be evidenced by a significant or unrealistic commute distance from home to job, the purchase of new housing not large enough to accommodate all occupants, or if the buyer currently resides in the property and is purchasing it from landlord or lives close to the subject property or if the borrower indicates an intent to rent or sell his current residence with no documentation.

Each of the following would be considered a form of mortgage fraud for property, except: A. The borrower overstating assets necessary for a down payment or collateral for the loan B. Submission of a fraudulent gift letter C. Appraisal fraud D. Including sporadic bonuses in with regular income

C. Appraisal fraud Fraud for property involves a borrower lying about income or assets in order to qualify for a loan to buy a home in which he or she plans to live, but which he or she might resell at a profit if income does not increase to enable continued repayment. Overstating assets, providing fraudulent income information, or submitting a fraudulent gift letter would be forms of fraud for property. Appraisal fraud would be a form of fraud for profit (NOT property), which involves mortgage and real estate professionals and others who conspire to inflate property values and, therefore, loan amounts.

C. Appraisal fraud - Fraud for profit not fraud for property Fraud for property involves a borrower lying about income or assets in order to qualify for a loan to buy a home in which he or she plans to live, but which he or she might resell at a profit if income does not increase to enable continued repayment. Overstating assets, providing fraudulent income information, or submitting a fraudulent gift letter would be forms of fraud for property. Appraisal fraud would be a form of fraud for profit (NOT property), which involves mortgage and real estate professionals and others who conspire to inflate property values and, therefore, loan amounts.

Which of the following is least likely to indicate fraud with respect to occupancy status? A. A borrower is purchasing a home in the same neighborhood as his current home B. A borrower is moving from another state C. A borrower is moving from a 5,000-square-foot home to a 1,500-square-foot home D. A borrower claims to be selling his primary residence, but it is not listed

B. A borrower is moving from another state Occupancy fraud is a representation by the buyer that an investment property will be owner-occupied in order to obtain the more-favorable terms offered by the lender on owner-occupied real estate. A borrower moving from one state to another and seeking a mortgage loan would NOT be an indication of occupancy fraud.

``` Each of the following may be associated with contract kiting, or double-contract fraud, except: A. A silent second B. An inflated purchase price C. A cash-back transaction D. An under-secured loan ```

A. A silent second Contract kiting (also known as double contract or dual contract) occurs when a seller agrees to create a second, falsified sales agreement with an inflated purchase price so the buyer can obtain a larger loan from a lender. This would result in the buyer obtaining all the funds necessary to pay off the seller's lower actual selling price from the loan proceeds, possibly getting cash back, and the lender being under-secured and subject to greater loss in the event of default.

An example of a red flag under the Red Flags Rule would include all of the following, except: A. Missed payments occur when there is no history of missed payments by the borrower B. The borrower has moved from another state C. Mail sent to the borrower is returned as undeliverable D. The credit report contains a different address for the borrower than the one supplied

B. The borrower has moved from another state Categories of red flags include alerts, notifications, or other warnings received from consumer reporting agencies, the presentation of suspicious documents, the presentation of suspicious personal identifying information, personal identifying information provided by the customer that is inconsistent with other personal identifying information provided by the customer, a covered account is used in a manner that is not consistent with established patterns of activity on the account, and notification is received that the customer is not receiving paper account statements or that there have been unauthorized transactions on a covered account. Moving from one state to another would not be considered to be a red flag.

``` If a borrower lives a long distance from their work, that may be an indicator of fraud in the area of: A. Down payment B. Income C. Employment history D. Occupancy ```

D. Occupancy If the property a loan applicant is hoping to purchase is a long distance from the applicant's employment, that would be a possible flag for occupancy fraud. Occupancy fraud is a false representation by the buyer that a property being purchased as an investment property will be owner-occupied, in order to obtain the more favorable terms offered by the lender on owner-occupied real estate.

``` A borrower has obtained the down payment for a property by taking an undisclosed and unrecorded second mortgage from the seller. This is called a(n): A. Second mortgage B. Unsecured loan C. Silent second D. Dual contract ```

C. Silent second A silent second is a form of mortgage fraud whereby a primary lender grants a mortgage loan to a borrower, believing that the borrower has invested his or her own money in the down payment and closing costs. However, the borrower has actually borrowed the needed funds from the seller via an undisclosed and unrecorded (i.e., silent) second mortgage.

``` If a borrower lives a long distance from their work, that may be an indicator of fraud in the area of: A. Down payment B. Income C. Employment history D. Occupancy ```

Which of the following situations is least likely to be fraudulent? A. A borrower claims to make $250,000 per year, but owns almost no personal property B. A borrower lists "CPA" as his job title, but has no schooling C. A borrower claims to make $250,000 per year, but has very little debt D. A borrower has six children but is buying a two-bedroom condominium

C. A borrower claims to make $250,000 per year, but has very little debt It would not be unusual for a borrower making $250,000 to have little to no debt. As such, that situation would not be a red flag for mortgage fraud.

All of the following are red flags that broker-facilitated fraud is likely to occur or is occurring, except: A. The lender is not provided with original documents within a reasonable time B. Numerous applications from a particular loan originator have unique similarities C. A sharp decrease in the overall volume of loans processed by a particular loan originator during a short time period D. An unusually-high volume of loans with maximum loan-to-value limits from one loan originator

C. A sharp decrease in the overall volume of loans processed by a particular loan originator during a short time period Broker-facilitated fraud can be fraud for property, fraud for profit, or a combination of both. Warning signs may include, among other things, the following: the lender is not provided with original documents within a reasonable time; one mortgage loan originator has originated an unusually-high volume of loans with maximum loan-to-value limits; numerous applications from a particular mortgage loan originator have unique similarities; a high volume of loans exists in the name of trustees, holding companies, or offshore companies; an unusually large number of repurchases, foreclosures, delinquencies, early payment defaults, prepayments, missing documents, high-risk characteristics, quality control findings, or compliance problems is noted on loans processed by a particular mortgage loan originator; and an unusually-large increase in the overall volume of loans processed by a particular mortgage loan originator during a short time period.

When dealing with 3rd party service providers, banks & non-banks must establish risk management programs that include all but which of the following elements? A. Establishing compensation programs that withhold payments for services until the service provider can demonstrate compliance with the law B. Conducting due diligence to assess the service providers' ability to comply with the law C. Entering contracts with service providers that include enforceable consequences for failing to comply with the law D. Reviewing the service provider's employee training programs, particularly for those employees that have direct contact with consumers

TILA requires that _____ be provided for most mortgage loans transactions, unless exempt from the requirements. A. Trigger terms B. A CHARM Booklet C. A loan estimate & closing disclosure D. A finance charge disclosure form

``` When a state agency is conducting a background check, which state department is required to provide access to an applicant's criminal history information? A. The state police agency B. The Attorney General C. The state archives office D. The Secretary of Stated ```

Which of the following legislation designates federal disclosure requirements under CFPB? A. Fair Credit Reporting Act (FCRA) B. Home Ownership & Equity Protection Act (HOEPA) C. Truth in Lending Act (TILA) D. US Patriot Act

Which of the following legislation designates requirements that prohibit predatory lending under CFPB? A. Fair Credit Reporting Act ( FCRA ) B. Secure & Fair Enforcement for C. Mortgage Licensing Act (SAFE Act) D. Real Estate Settlement Act ( RESPA ) Truth in Lending Act ( TILA )

-L.O. accepted a loan application for a dwelling that is a mobile home not permanently affixed to the land. Does this mobile home meet the requirements necessary for it to be considered security for a residential mortgage loan? A. Yes, a dwelling includes a structure whether or not that structure is attached to real property B. No, dwellings must be permanently attached to real property C. No, mobile homes are classified as personal property, not real property D. Yes, as long as the real property upon which the mobile home will be located is in the borrower's name, the loan may be residential mortgage loan

Every mortgage licensee must submit to the NMLS: A. Annual financial statements B. Employment reports C. Reports of financial condition D. A summary of complaints filed against him/her each year C. Also call a mortgage call report

When would a license be suspended without a hearing? A A licensee fails to renew B. A licensee has failed to complete pre-licensing requirements C. The licensee has already executed a right to a hearing for a previous violation D. A request for a hearing is never made with the state regulator

VA loan referred to as an "IRRRL" is an: A. Interest Reduction and Refinance Loan B. Interest Rate Reduction Refinance Loan C. Interim Rate Refinance Reduction Loan D. Interest Rate Refinance Return Loan

``` There is/are _____ types(s) of reverse mortgage loans. A. One B. Two C. Three D. Five ```

C single-purpose reverse mortgages, federally-insured reverse mortgages, and proprietary reverse mortgages.

If a borrower is using an adjustable-rate mortgage to finance his/her home, what must be included in the Early ARM Disclosure that accompanies the CHARM? A. Examples to show the borrower how quickly (or slowly) loan balances can be paid based on interest changes B. A statement that the rate, payment, or loan terms can change C. A statement that the borrower will not be responsible for principal during the initial fixed period D. A selection of indices the borrower can choose from for the loan

For the purposes of providing a Loan Estimate, a "business day" is: A. Any day except for Sundays B. Any day of the week C. Any day on which the creditor's offices are open to the public for carrying out substantially all business functions D. Any day except for Sundays and legal public holidays

Gloria is purchasing her first home with an HPML. When her loan officer is reviewing the transactions with her, he tells her that she must establish an escrow account: A. Before consummation of the loan B. Before the first periodic payment is due C. At the time of consummation D. Three business days after consummation of the loan

A first-lien mortgage loan will exceed the HOEPA APR threshold & qualify as a high-cost mortgage if its APR is: A. 1.5% points above the average prime offer rate for a comparable transactions B. 3% points above the average prime offer rate for a comparable transactions C. 6.5% points above the average prime offer rate for a comparable transactions D. 4.5% points above the average prime offer rate for a comparable transactions

C HOEPA A.P.O.R. 6.5% or above 50K/8.5% below/8.5% junior HOEPA Points Fees: 5% or more $21,980 or more/8% or less and 1099 Prepayment Penalty Coverage Test = high Cost Loan if the lender charges a prepayment penalty: More than 36 months after consummation or account opening, or exceed 2% of that amount

Which of the following is not a prohibited lending term under HOEPA? A. A term permitting the creditor to charge prepayment penalties B. A term allowing the creditor to accelerate the indebtedness if the borrower defaults on the loan C. A term allowing the interest rate to increase after default D. A balloon payment term

``` Which form of fraud is most prevalent involving borrowers in the mortgage process? A. Identity theft B. Falsified applications C. Straw sellers D. Foreclosure rescue scams ```

Which of the following would be considered a credit report red flag? A. There is a DBA or an AKA B. The debts the applicant disclosed are accurately reflected on the credit report C. Names on credit report match names on application D. Paystubs, W-2's or other income docs are handwritten

Which of the following may be an indication of predatory lending? A. A borrower with a 560 credit score is given a rate that is 2% above a "standard" rate B. A borrower with a 720 credit score uses YSP to offset closing costs C. A borrower with a 580 credit score is offered a loan with credit life premiums included D. A borrower with a 610 credit score is offered a subprime loan

Which of the following best describes and air loan? a. A fictitious borrower obtains a loan and secures it with a ficitious property. b. A loan that is presented to a borrower with hidden fees. c. A loan obtained with inflated property values. d. A loan that is repeatedly financed with no benefit to the

C. A loan obtained with inflated property values

Which of the following would be a red flag of attempted mortgage fraud? a. The consumer's social security number begins with all zeros. b. The property owner and seller are two different people. c. The consumer is very young but makes a substantial salary as stated on the loan application an W-2s. d. The applicant runs a small business from home and only

The act of guiding homebuyers in a particular direction bases upon demographics: a. TILA and RESPA b. ECOA and RESPA c. RESPA and Fair Housing Act d. ECOA and Fair Housing Act

How long must flood insurance be in place? A. Until the loan reaches the halfway point in the amortization table B. It cannot be canceled as long as the property remains in a mandatory flood zone C. Until the loan balance is completely paid off D. The borrower can cancel at 80% of the loan balance

An underwriter would expect to see _____ in order to document the income of a commissioned borrower. A. 1099s from the previous year B. Profit and loss statement & two years' tax returns C. Two years' tax returns & all schedules if the commission income is more that 25% of income D. Two years' tax return if the borrower's commissions represent 20% of his/her income

The factors involved in determining the movement on an ARM loan include: Mark one answer: A. Rate, caps, index, margin B. Frequency of change, caps, index, rate C. Rate, index, margin, lifetime cap D. Frequency of change, caps, index, margin

``` Section II of the 1003 focuses on: A. Property information B. Borrower information C. Employment information D. Originator information ```

How much insurance does FNMA require on a property? A. 100% of the replacement cost B. 100% of the lesser of the loan amount or the cost to restore the improvements C. 80% of the value of the property D. 100% of the appraised value

``` The conforming guidelines include DTI ratios of: A. 28% / 41% B. 28% / 36% C. 31% / 43% D. 26% / 38% ```

If a consumer is using electronic means to open an account, which of the following is true? A. Disclosures must be provided both electronically and in hard copy B. Disclosures must be provided before the account is opened C. Disclosures must be provided electronically D. Disclosures are not required

``` violation of the Do-Not-Call Implementation Act will be enforced by which federal agency? A. FCC B. FTC C. SEC D. FinCEN ```

``` If you move & change your address and you notify your bank/credit union. What federal legislation requires the credit union to research and confirm the validity of this request? A. Fair Housing Act B. Truth-in-Lending Act C. FTC Red Flags Rule D. GLB Safeguards Rule ```

Frank Smith is applying for an adjustable-rate mortgage. Which disclosures is he required to receive according to provisions under TILA? A. CHARM and Balloon Payment Notice B. Notice of the Right to Rescind and Good Faith Estimate C. CHARM and Early ARM Disclosure D. CHARM and Notice of Action Taken

A company is required to take corrective action after conducting self-testing and discovering that a violation of ECOA: A. Occurred more than three times in any 12 month period B. Beyond a reasonable doubt occurred C. More likely than not occurred D. Occurred, by a preponderance of the evidence

``` HOEPA loans are covered by which federal legislation? A. TILA B. FHA C. FNMA D. FACTA ```

``` Which of the following describes a state where the lender holds legal title until the debt is paid? A. Conveyance theory B. Due-on-sale clause C. Title theory D. Lien theory ```

``` Cost anticipated to be charged in a loan transaction, such as origination fees, processing fees, appraisal fees, title fees, and recording fees are called: A. Pre-paids B. Purchase price C. Total costs D. Estimated closing costs ```

``` A borrower who owns more than _____ of a business must submit up to two years' tax returns in providing income documentation. A. 10% B. 15% C. 5% D. 25% ```

``` A funding fee is required on which government loans? A. Conventional Loans B. FHA Loans C. Reverse Mortgages D. VA Loans ```

``` Select the issue with which RESPA is concerned. A. Fair lending B. Kickbacks C. Disclosures to consumers D. All of the above ```

``` FACTA requires a Fraud Alert to be kept in a consumer's file for what period of time? A. 7 years B. 90 days C. Until removed by the borrower D.. 12 months ```

D A fraud alert can make it harder for an identity thief to open more accounts in your name. When you have an alert on your report, a business must verify your identity before it issues credit, so it may try to contact you. The alert stays on your report for one year. You can get a new one after one year.

``` According to the FBI, which form of mortgage fraud results in the greatest losses to the mortgage industry? A. Fraud for profit B. Broker fraud C. Agency fraud D. Fraud for housing ```

Even before the adoption of the Dodd-Frank Act and the Ability to Repay Rule, which of the following federal laws created specific requirements for the certification and documentation of a borrower's repayment ability? A. Equal Credit Opportunity Act B. Fair & Accurate Credit Transactions Act C. Home Ownership & Equity Protection Act D. Real Estate Settlement Procedures Act

``` Which of the following requires mortgage professionals to implement and maintain security protocols to ensure the confidentiality of consumer information? A. The Safeguards Rule B. The MAP Rule C. The Confidentiality Rule D. The ATR Rule ```

The obligation for mortgage brokers to serve as the agent or the fiduciary of borrowers is: A. Imposed by the Dodd-Frank Act B. Imposed by state licensing laws in some states C. Imposed by state licensing laws in every state D. Imposed by the S.A.F.E. Mortgage Licensing Act

``` Mishandling borrowers' funds or improperly managing their funds is a practice prohibited by: A. ECOA B. HOEPA C. RESP D. TILA ```

An advertisement that states, "Refinance and we can save you up to $300 per month!" is: A. A TILA violation only if the loans are not available B. Not a violation of TILA if it provides information on a APRs & payments with equal prominence, as long as the statement is true C. A violation of TILA D. A TILA violation because it targets struggling homeowners

A supreme court decision has held that: A. RESPA does not prohibit unearned fees B. Markups are not illegal unless they are split C. RESPA does not prohibit markups if they are earned D. Minimal markups do not violate RESPA

The Gramm-Leach Bliley Act protects the privacy of nonpublic personal information using all of the following methods, except: A. Requiring a security program for the protection of nonpublic personal information B. Offering consumers the right to opt out of the sharing of nonpublic personal information C. Advising consumers of the financial institution's policies regarding the use and exchange of personal information D. Requiring financial institutions, including mortgage companies, to obtain permission for the use and sharing of consumers nonpublic personal information

``` Which of the following lending terms is not prohibited for a high-cost loan regulated under HOEPA? A. An adjustable interest rate B. Negative amortization C. A prepayment penalty D. Advanced payments ```

``` The Uniform Residential Appraisal Report is commonly known as the: Mark one answer: A. 1004 B. 4506 C. 1003 D. 1040 ```

``` On which approach do appraisers place the most weight in reaching a value conclusion for conforming loans? A. Sales comparison approach B. Cost approach C. Income approach D. Assemblage ```

The cost approach to appraisal includes which of the following? A. The value of the lot plus the replacement cost of the improvements B. A comparison of the national average for sales of similar properties C. A value comparison with several comparable properties D. Analysis of revenue generated by the property

``` Which of the following real estate appraisal approaches considers the value of the property and any improvements made? A. Cost approach B. Sales approach C. Market approach D. Income approach ```

``` According to conforming guidelines, an appraiser may make net adjustments to comparables up to ____ in a residential appraisal. A. 25% B. 10% C. 15% D. 20% ```

An affiliated business arrangement established for the illegal purpose of collecting excessive fees from consumers and splitting them among participants is known as: A. Table funding B. Kickbacks C. A sham affiliated business arrangement D. A false settlement service markup

``` Oversight for the FCRA is shared between the FTC and: A. Federal Reserve B. CFPB C. TILA D. HUD ```

``` In order for a home loan to be a qualified mortgage, the debt-to-income ratio may not exceed: A. 28% B. 36% C. 43% D. 46% ```

In states with an agency requirement, which of the following practices could violate a mortgage broker's duty to serve as a borrower's fiduciary? A. Failing to pay third-party service providers within 30 days from their date of service B. Failing to secure more than one appraisal for a refinance C. Failing to submit an FHA loan application at the borrower's request D. Advising a borrower who wants an FHA loan that he or she should apply for a conventional/conforming loan

The federal agency that is responsible for implementation and enforcement of the USA PATRIOT Act is: A. The Treasury Department B. The Department of Homeland Security C. The Department of Housing and Urban Development D. The Federal Reserve Board

``` When calculating finance charges in compliance with TILA, all of the following are included, except: A. Private mortgage insurance premium B. Appraisal fees C. Settlement fees D. Broker fees ```

``` If a creditor violates ECOA, how many years does a consumer have in which to take civil action? A. Two B. Five C. One D. Ten ```

A balloon rider, a prepayment penalty rider and a second-home rider may all be part of: A. A title insurance policy B. A deed of trust C. A note D. A power-of-attorney agreement

B. A deed of trust A deed of trust is used to secure a note. A deed can carry a rider, or an addendum, which may include a balloon rider, a prepayment penalty rider and a second-home rider, among others.

*** While verifying identity, there are several consistent indicators that suggest identity theft. Which of the following is not an example? A. Co-borrowers call each other by nicknames that do not relate to the names on the application B. Credit history is inconsistent with the borrower's age C. Social Security Number given on the application is consistent with that found on the credit report, W-2s, and paystubs D. Income documents appear to have poor printer alignment

C. Social Security Number given on the application is consistent with that found on the credit report, W-2s, and paystubs Mortgage fraud can sometimes be difficult to detect; however, checking names on an application against names on credit reports and supporting documentation as well s the borrower's age is important. Additionally, if the supporting documents appear to be altered or tampered with, further investigation should occur.

The Fraud Enforcement & Recovery Act was adopted by Congress in 2009 to? A. Respond to the rising incidence of foreclosure scams B. Strengthen the Red Flags Rules C. Respond to identity theft & help victims restore their credit D. Facilitate the prosecution of those who commit mortgage fraud

Which of the following reasons for denying an applicant a loan is a violation of fair lending laws? A. The applicant's recent marital status may lean to a change in employment B. The applicant's income does not meet the required level for repayment of the loan C. The applicant's age is below the minimum age for executing a contract D. The applicant's credit history includes defaults on many credit payments

``` How long do consumers have to file a lawsuit over alleged violations of Section 6 of RESPA? A. 6 months B. 1 Year C. 3 Years D. 7 Years ```

5/25" and "7/23" are commonly used to designate loans including which of the following? A. A hybrid adjustable rate feature B. A balloon payment C. A subordinate lien D. A temporary interest rate buy-down

B. A balloon payment "5/25" and "7/23" are commonly used to designate loans that include a balloon payment.

According to ECOA, a borrower can request a copy of the appraisal report used in the decision process within ___ days of a credit decision. A. 30 B. 60 C. 90 D. 120

C loan flipping - In a loan flipping scam a type of equity skimming homeowners are encouraged to keep refinancing their property. Each time they refinance, they are charged points and closing costs, along with other fees. And each time, the equity gets smaller.

According to the Fair Credit Reporting Act, if adverse action is taken against a credit applicant because of information on a credit report, the lender who used that report is required to A. provide to the consumer the name, address, and telephone number of the consumer reporting agency that furnished the report. B. revise the inaccuracy in the credit report. C. provide a copy of the credit score to the consumer. D. inform the applicant that the reporting agency was the decision maker, and to dispute the decision in writing at the address provided.

The federal agency that is responsible for implementation & enforcement of the USA PATRIOT Act is: A. The Department of Homeland Security B. The Federal Reserve Board C. The Department of Housing & Urban Development D. The Treasury Department

``` The Gramm-Leach-Bliley Act contains all of the following provisions EXCEPT Mark one answer: A. Financial Privacy Rule. B. National Do Not Call Registry. C. Pretexting Provisions Rule. D. Safeguards Rule. ```

An acceptable anit-money laundering program must include all but which of the following elements? A. Approval by FinCEN prior to its implementation B. A compliance officer C. Procedures for meeting USA PATRIOT d. Act reporting requirements Employee training and testing

``` Which of the following real estate appraisal approaches considers the value of the property and any improvements made? Mark one answer: A. Cost approach B. Sales approach C. Market approach D. Income approach ```

Mortgage insurance premium: A. Is required on all FHA loans until 20% equity position B. Is paid on all conventional loans with an LTV greater than 0% C. Can be canceled after five years as long as the equity position is less than 20% D. Is paid upfront on all FHA loans

``` The DTI standard for an FHA loan is _____, and the standard for a VA loan is ____. A. 31%/43% B. 26%/38% C. 43%/41% D. 41%/43% ```

A adjustable rate