Homemade NMLS Qs from Paul Flashcards
GET ABOVE A 70%!
1
Q
MLO paycheck can never be based on:
A
Rate
Term
Program
2
Q
MLO CAN get PAID based on:
A
Flat fee in advance
Hourly rate for time worked
Overall loan volume (measured in units or dollars)
3
Q
In advertisements, if you use a trigger term you must disclose the __________.
A
APR
4
Q
How long must you keep applications/compliance with disclosures?
A
2 years
5
Q
How long must you keep MARS Rule?
A
2 years
6
Q
How long must you keep ECOA-B Complaints?
A
25 months
7
Q
How long must you keep CDs/complice with compensation records/consummate files/compliance with qualified mortgage rule?
A
3 years
8
Q
How long must you keep Final CDs/consummated files?
A
5 years
9
Q
How long must you keep SARs Report?
A
5 years
10
Q
How long must you keep Patriot Act?
A
7 years
11
Q
To what does Higher-Priced Mortgage Loan (HPML) belong?
A
Section 35 of TILA
12
Q
To what does Home Ownership and Equity Protection Act (HOEPA) belong?
A
Section 32 of TILA
13
Q
What are prohibited terms in HPML / HOEPA?
A
- Balloon payment within the first 5 years of the loan
- Negative amortization
- Prepayment penalties after first two years
- Demand clauses
14
Q
How do lenders have to advertise?
A
“equal housing lender”
15
Q
How do MLOs have to advertise?
A
“equal housing opportunity”
16
Q
If you live somewhere from 0-14 days a year it is considered a ____________.
A
investment property
17
Q
If you live somewhere from 15 days - less than 6 months is considered a ___________.
A
2nd home
18
Q
If you live somewhere for 6 or more months is considered a __________.
A
primary residence
19
Q
What is the MAX penalty per day from the CFPB?
A
$25,000
20
Q
initial disclosures (LE, HUD, SIB) must be sent at or within ___________ of application.
A
3 business days
21
Q
fastest a loan may close (consummate) is on the ___________ after sending an LE
A
7th business day
22
Q
fastest a loan may close is on the 3rd business day after receipt of a CD. Resets if:
A
- Add prepayment penalty
- Change program
- APR increases by .125% or more
23
Q
How many days do you have to make a decision on application?
A
30 days
24
Q
How many days do you have to communicate exact reasoning for application decision?
A
60 days
25
How many days does borrower have from receipt of ADVERSE ACTION NOTICE (AAN) to get credit file?
60 days
26
Actual Fraud
you know better
27
Constructive Fraud
you don't know &/or don't look into it
28
What's an example of a GSE?
Fannie Mae, Ginnie Mae, and Freddie Mac
29
What gives an MLO "safe harbor"?
- Providing lowest interest rate
- Lowest interest rate without risky features
- Lowest total dollar amount for origination fees and discount points
30
A MLO may have ________ communication with an appraiser.
limited
31
USPAP is the
appraiser code of conduct... (Uniform Standards of Professional Appraisal Practice)
32
Blockbusting
Encouraging a person to move/sell based on race, ethnicity, religion, etc.
33
Who is most likely to falsify tax documents?
The Accountant (the only person who COULD forge them).
34
Who is most likely to falsify a sales contract or a purchase agreement?
The Real Estate Agent (the only ones that do it).
35
Blockbusting
encouraging people to sell
36
Who is most likely to falsify a deed or a title?
The government worker, county clerk, county reporter.
37
Redlining
Not giving money in a certain area (mortgages)
38
Steering
Channeling customer to an area/home/etc based on race, religion, ethnic background, etc.
39
Community Reinvestment Act of 1977
- Has a program where banks can get money for not redlining
| - It’s like a HMDA audit
40
HMDA - C evaluates ________ __________ and monitors ______
lending practices ; compliance
41
Section 114 of FACTA is _______.
RED FLAGS
42
HMDA - C ensures that people are following ______ and ___________.
ECOA & Fair Housing Act
43
What is the purpose of HMDA-C?
To identify discriminatory patterns
44
What does the Fair Housing Act say?
Don't discriminate when buying, selling, or renting out a house
45
Can you ask someone where his/her downpayment comes from?
YES! for a downpayment
46
What does ECOA - B say?
Don't discriminate when giving people money or credit
47
List the 12 protected classes
1. Age
2. Color
3. Disability
4. Familial status
5. Income from public assistance
6. Marital status
7. LGBTQ/sexual orientation
8. National origin/ethnicity
9. Race
10. Religion
11. Separate credit reports
12. Sex
48
Higher-Priced Mortgage Loan (HPML) “Higher-Priced” is Section ____ of _________.
Section 35 of TILA
49
Home Ownership and Equity Protection Act (HOEPA) “High Cost” is Section ____ of ________.
Section 32 of TILA
50
When is HPML triggered on your first lien?
When you have an APR +1.5% greater than APOR.
51
When is HPML triggered on your second lien?
When APR is +3.5% greater than APOR.
52
When is HPML triggered on a JUMBO loan?
When APR is +2.5% greater than APOR.
53
What does APOR stand for?
Average Prime Offer Rate (The average APR)
54
HPML / HOEPA are two separate laws. (True or False)
TRUE!
55
HPML / HOEPA
- Gov DOES NOT “cap” interest rates
- But IF you charge interest rates past a certain point, the gov is gonna make sure there are rules in place to protect to borrower
56
What is the Mailbox Rule?
a document is considered received on the 3rd business day after mailing
57
What is Recession?
3 day waiting period from closing to funding on a refinance of a primary residence
58
Must receive LE at least ___ days prior to close.
4
59
Must receive CD at least ___ days prior to close
3
60
Can LE / CD be sent on same day?
NO! MUST be AT LEAST one day apart.
61
Under FCRA do customers have the right to require removal of poor credit?
NO! Only the right to DISPUTE incomplete or inaccurate information.
62
What does GFE stand for?
good faith estimate
63
Who do you need approval from to give someone a CD?
the underwriter
64
What is considered a "business day"?
Monday - Saturday; no Holidays
65
What is the purpose of FACTA?
to empower consumers to prevent identity theft
66
Name another abbreviation for an LE.
GFE
67
Red Flag Rules are from what?
Section 114 of FACTA
68
Name another abbreviation for an CD
TIL
69
The Settlement Statement is also known as what?
The Final CD
| HUB 1
70
Abbreviation for Loan Estimate
LE
71
Abbreviation for Closing Disclosure
CD
72
What are you NEVER allowed to write on a form (except when writing about the subject property)
N/A
73
The Loan Estimate is _______.
summarized
74
The Closing Disclosure is _________.
itemized
75
What is main font size?
12
76
What is subtext font size?
8
77
What law requires you to Safe Guard customers' NPPI?
GLB
78
What law keeps security of credit reports?
FACTA
79
What is GLB?
Gramm-Leach Bliley Act; safeguard NPPI
80
What does NPPI stand for?
Non-Public Personal Information
81
What law requires customer identification programs? (CIPs)
The Patriot Act
82
To what does RESPA apply?
covered transactions
83
What is a covered transaction?
Any conventional loan, non-conventional loan, any reverse mortgage
84
Where is the only place RESPA doesn't apply?
ALL STAFF SALE
85
What law covers 3rd party settlement procedure and providers?
The Real Estate Settlement Procedure Act (RESPA)
86
Why is a Land Contract is considered risky?
Because you "Rent to Own"
87
TCPA rules what hours for calling?
8am - 9pm borrower local call time, unless they have an established business relationship already.
88
What does HELOC stand for?
Home Equity Line of Credit
89
A Home Equity Line of Credit is
a mortgage; a lien; a line (or credit) instead of a loan; a line of credit with a mortgage; open-ended; all the rules still apply
90
SAFE Act - Reg H is a law within which other law?
Title V of HERA (Housing Economic Recovery Act)
91
360/120 or 360/180
balloon loan/balloon payment
92
If you're a Processor, can you be a W-2?
Yes!
93
If you're a Processor, can you be a 1099?
Yes; IF you pass an MLO test.
94
If you're an MLO, can you be a W-2?
Yes!
95
What type of appraisal is a construction loan?
"subject to" appraisal
96
What is the Successive Year Rule?
You cannot take the same course in back to back years for continuing education
97
What is a Compensating Factor?
- A strength that offsets a weakness
| - ex: Maybe i have poor credit BUT i have been working a job 3 years with a new DOPE income
98
List the 3 Non-Conventional Loan Types.
FHA, VA, USDA
99
Can Non-Conventional Loans have a prepayment penalty?
NO!
100
How often can the state technically audit you?
As often as they deem necessary
101
For a Non-Conventional Loan that is a primary residence only within how many days must customer occupy the home?
60 days
102
Non-Conventional Loans require you to stay in that home for how long?
At least 1 year
103
Do Non-Conventional Loans require escrows?
Yes!
104
A banker or a lender is a ______.
creditor
105
A creditor is responsible for the final ________.
"clear to close"
106
What is a creditor responsible for?
Gathering all papers (Act of Settlement Agent responsible for signing)
107
What is an encumbrance?
- Anything that encumbers a property/title from being transferred
- Like a mortgage
108
What is an easement?
- Public right to be on private land
- Ex: Gas meter reader can walk on your property
- Ex: Sidewalks
109
What is encroachment?
- Structural trespassing
| - Ex: our tree branches fall on Mark’s house; Anne’s fence is on our yard
110
What is a setback?
The distance SET BACK from the road your house needs to be
111
What is eminent domain?
- The public government's right to FORCE the sale of private land (at fair market value)
- Poconos house
112
What is an example of a "cloud on the title"?
I change my name. Who owns the house? Summer Seipel or Summer Andrews?
113
Property taxes use _______ when customer move in in the middle of the month.
proration
114
List the two different title insurance policies.
Lender’s Title Insurance Policy
| Borrower’s Title Insurance Policy
115
What type of insurance do Conventional Loans use?
PMI (private mortgage insurance)
116
What type of insurance do Non-Conventional Loans use?
MIP (mortgage insurance premium)
117
If you get ____% LTV (loan value), borrower HAS to take out insurance.
100%
118
USPAP
Code of conduct for appraisers
119
Appraiser: don't want to see adjustments:
| line
+/- 10%
120
Appraiser: don't want to see adjustments:
| net
+/- 15%
121
Appraiser: don't want to see adjustments:
| gross
+/- 25%
122
Appraiser: don't want to see adjustments:
| land
+/- 30%
123
Approaches to Appraisals:
| Income approach:
- Renting something out
- Ex: i own a house on OSU campus but I rent it out
- Compare rent income id make
124
Approaches to Appraisals:
| Cost approach:
- New construction/weird property
| - Ex: dome shaped house
125
Approaches to Appraisals:
| Sales/Market Approach:
- Buy/refinance regular house
| - Ex: they draw geographic circle on a map & compare to similar properties
126
IRS Form 4506-T grants ______ __________.
Electronic permission
127
Can we directly contact the IRS directly?
Yes!
128
Can we directly contact Social Security?
Yes!
129
What type of form is a IRS Form 8892?
a tax extension form
130
Can we look at the source of income?
NO! (because all sources of income are "equal")
131
Can we look at the durability & stability of income?
Yes, please!
132
Can we look at the source of down-payments and/or assets?
Yes, please!
133
What are the 4 Cs of underwriting?
1. Credit history
2. Capacity to repay
3. Cash assets
4. Collateral
134
For a disability payment, who will give an award letter?
Social Security
135
Does short term disability qualify as a disability payment?
NO!
136
What does the E-Sign Act say/do?
- You can NEVER force a borrower to do online
- Borrower can agree & then change mind
- Wet signatures: sign w/ pen
137
TILA - Reg Z laws apply to which two categories?
- 1-4 SFD (single family dwelling)
| - 5 + payments
138
RESPA laws apply to which three categories?
- 3rd party settlement
- Covered transaction
- 3rd party: not directly part of the transaction
139
What is another term for a note rate?
interest rate (NOT APR)
140
YSP
- You accept a higher interest rate to pay less now in closing cost
- Credit to borrower
141
Discount Points
- Person gives money upfront for a BON A FIDE interest rate drop/reduction
- Charge to borrower
142
Discount Points are also known as
permanent buydown
143
When you are feeling questionable on the exam...
Go with whatever is in the borrower’s best interest and protects & helps them the most.
144
Prepayment Clause
- Penalty for paying soon
| - ONLY a conventional & qualified mortgage can have this
145
Defeasance
If you pay off the house, they can’t still charge you
146
What is RESPA - X comprised of?
6: servicing
8: referrals
9: seller title insurance
10: escrows
147
What is TILA - Z comprised of?
```
Advertisements
MDIA (3/7/3)
AIR
MLO Comp Rule
HOPEA
```
148
FHA DTI ratios
31/43
149
What is Dodd-Frank Act - Reg Z comprised of?
- Title X - Consumer Protection Act → created CFPB
| - Title XIV - Mortgage Reform & Anti-Predatory Lending Act → Amended TILA/RESPA
150
What is TILA/RESPA Integrated Disclosures (TRID) - Reg Z comprised of?
- LE: loan estimate
| - CD: closing disclosure
151
What did Dodd Frank Act AND TRID amended?
RESPA and TILA
152
What is the minimum downpayment on an FHA Loan
3.5%
153
What is the minimum downpayment on a Conventional Loan?
5%
154
What are Ethics and Discrimination Laws comprised of?
- ECOA - B
- Fair Housing Act
- HDMA - C
- CRA
155
What are the two laws regarding credit?
- FCRA - V
| - FACTA -V
156
What type of loan are public?
Non-Conventional (FHA, VA, USDA)
157
What type of loan are private?
Conventional Programs (FNMA, private)
158
What is another name for a loan?
```
A note
(a promise to pay money = financing instrument/negotiable instrument)
```
159
What is another name for a mortgage?
```
A lien
(collateral = security instrument)
```
160
What is another name for an instrument?
documents
161
What is the Primary Market?
lenders make mortgage loans directly to borrowers
162
What is the Secondary Market?
private investors and gov agencies (FNMA, FRDMC, FHL Banks) buy and sell real estate mortgages
163
Will Ginnie Mae BUY or SELL a loan?
NEITHER!!! They are insurance!
164
What helped to restore faith in the cycle between the primary market, secondary market, pod/securities, and bond market?
The Dodd-Frank Act
165
What established a "qualified mortgage"?
The Dodd-Frank Act
166
Who can ONLY buy qualified mortgages?
FNMA (Fannie Mae)
167
Loan Process Step 1
Inquiry
168
What is INQUIRY
- Not a full application
- Borrower inquires about rates and terms of a loan
- Must provide APR which is NOT the interest rate
169
Loan Process Step 2
Application
170
What is APPLICATION
Collection of:
- Address
- Loan amount
- Income
- Estimate of property value
- Name
- SSN
ALIENS constitutes the LEGAL EVENT of an application → this triggers a clock that starts ticking.
171
What is the application form known by?
Uniform Residential Loan Application = 1003 = URLA = 65
172
What are the Three Steps of Money Laundering?
- Placement
- Layering
- Integration
173
Who can take applications?
Only an MLO
174
After accepting an application, what can you do?
- Accept
- Deny
- Withdrawal
175
Loan Process Step 3
Processing
176
What is the percentage for total DTI for a qualified mortgage?
43%
