MLO Exam 2

Question 1

For license renewal, an MLO is required annually to complete a minimum of how many hours of continuing education on the topic of federal law?

Answer 1

3 Hours

Question 2

The Red Flag Rule falls under which law?

Answer 2

FACTA

Question 3

Which rule mandates disclosure to consumers that mortgage relief providers have no connection to any government program or agency?

Answer 3

MARS

Question 4

Which form is used most frequently for residential appraisals?

Answer 4

Form 1004 - URAR

Question 5

There are two borrowers, one is White and the other is African American. They have very similar credit profiles. The White applicant is approved, and the African American is denied. These loans were approved and denied at the discretion of the lender and an automated underwriting system was not used. This is an example of:

Answer 5

Comparative Evidence

Question 6

How many days does the lender have to notify the applicant of Adverse Action after they give a counter offer?

Answer 6

90 Days

Question 7

A lender has a minimum loan amount of $150,000. The lender serves a large area including a minority neighborhood. The minority neighborhood’s home value is usually $125,000 or less. This policy is an example of:

Answer 7

Disparate Impact

Question 8

APR must be disclosed on all advertisements falls under which rule?

Answer 8

HOEPA

Question 9

What was the purpose of the Homeowners Protection act of 1998?

Answer 9

It gives buyers the right to cancel or terminate PMI

Question 10

Borrower(s) may decide to disclose income from child support or alimony. What federal law states that a lender cannot refuse to consider alimony or child support as income?

Answer 10

ECOA

Question 11

Through the life of a loan, the servicer is allowed to cushion a borrower’s escrow account. What is true about that cushion?

Answer 11

It can’t exceed 1/6 of the estimated total annual payment

Question 12

Which was the first major legislation to directly affect equal rights to ownership of real property?

Answer 12

Civil Rights act of 1964

Question 13

If a credit card company has a written policy that anyone who is between age 20-30 can only have a credit line of $1,000 but anyone over 30 gets an automatic line of $5,000, this is an example of:

Answer 13

Overt Discrimination

Question 14

What are MLOs never permitted to do in reference to an appraisal

Answer 14

Tell an appraiser the min value needed to approve a loan.

Question 15

A Mortgage Servicing Disclosure Statement is required by what law?

Answer 15

RESPA

Question 16

Lenders submit Loan/Application Registers in order to comply with what law?

Answer 16

HMDA

Question 17

HMDA is implemented as what Regulation?

Answer 17

Reg C

Question 18

After the crisis of the Great Recession according to VA underwriting when can a borrower repurchase again after a Chapter 7 bankruptcy?

Answer 18

2 years

Question 19

After the crisis of the Great Recession according to Conventional underwriting when can a borrower repurchase again after a Chapter 7 bankruptcy?

Answer 19

4 Years

Question 20

How many days prior to consummation or closing is the final Loan Estimate required to be provided to the borrower?

Answer 20

4 days

Question 21

After the crisis of the Great Recession according to Conventional underwriting when can a borrower repurchase again after a short sale?

Answer 21

4 years

Question 22

Relevant financial information about an applicant who applies for an FHA or conventional residential mortgage is entered on:

Answer 22

FNMA Form 1003

Question 23

Under which federal legislation does the consumer have the right to receive a copy of the appraisal report on a dwelling that is to be used as collateral for a loan?

Answer 23

ECOA

Question 24

Why was Regulation Z enacted?

Answer 24

Give borrowers disclosures regarding the APR on a transaction and to protect consumers

Question 25

What is a Form 1008?

Answer 25

Transmittal Summary for a loan package

Question 26

How long does a borrower have to request a reason for denial from a lender?

Answer 26

60 days

Question 27

A yield spread premium occurs when:

Answer 27

An interest rate is charged above the par rate and is a credit to the borrower.

Question 28

One purpose of the Fair and Accurate Credit Transaction Act is to prevent:

Answer 28

Identity Theft

Question 29

When a trust deed (or deed of trust) is recorded what happens?

Answer 29

A lien is created

Question 30

Section 32 which covers high cost loans is part of which federal law?

Answer 30

TILA

Question 31

What is HOEPA also known as?

Answer 31

Section 32 (Part of TILA)

Question 32

An MLO is required to protect a borrower's non-public personal information, per what federal law?

Answer 32

GLBA / Reg P

Question 33

An MLO is looking over a borrower's credit report and sees a fraud alert, under the Economic Growth, Regulatory Relief and Consumer Protection Act, how long can a fraud alert be on a borrower's credit report?

Answer 33

90 days to 1 year

Question 34

What law requires the lender to collect a borrower's demographic information for first mortgages and home improvement loans?

Answer 34

HMDA

Question 35

Under what law is a lender required to provide an adverse action disclosure if the borrower's credit is the reasoning for all or part of the decision to deny the loan application:

Answer 35

Fair Credit Reporting Act / Reg V

Question 36

According to the Fair and Accurate Credit Transaction Act, when are borrowers entitled to get a copy of their credit scores for no reason?

Answer 36

Once a year / never for free

Question 37

What is the name of Fannie Mae’s automated underwriting system?

Answer 37

Desktop Underwriter

Question 38

An MLO has a borrower come in who is a veteran, the borrower is looking to obtain a VA loan. The borrower has never received a VA loan before and intends to put 0% down, what would be this borrower's funding fee?

Answer 38

2.3%

Question 39

USDA loans include a guarantee fee, what is the initial guarantee fee?

Answer 39

1%

Question 40

An MLO is working with a borrower who wants to purchase a home using an FHA loan, what is the maximum LTV allowed on an FHA loan?

Answer 40

3.5% down or 96.5% LTV

Question 41

When you order an Insurance binder on a borrower's loan file, the one-page sheet that summarizes all the insurance information is known as the:

Answer 41

Declaration Page

Question 42

How is rental income calculated when the borrower owns rental properties other than the subject property?

Answer 42

75% of the income less PTI