MLO Exam Prep Flashcards

Question

Is **Hazard Insurance** required on all **Fannie Mae** and **Freddie Mac** loans?

Answer 1

A **mortgagee clause** is a provision in a **hazard insurance** policy that ensures the lender receives the insurance payout directly if the property is damaged, protecting the lender’s interest in the property.

Answer 2

In a real estate transaction, the **borrower pays** for the **lender's title insurance**, which protects the lender against title issues like liens or ownership disputes.

Answer 3

**Total Interest Percentage** A percentage showing the total interest paid over the life of the loan relative to the loan amount, calculated by **dividing total interest by the loan amount**.

Answer 4

**Certificate of Reasonable Value ** A document issued by the VA that **confirms the appraised value** of a property for a VA loan. It ensures the **property meets VA standards** and that the loan amount is in line with the appraised value

Answer 5

**Higher-Priced Mortgage Loan** Defined under **Section 35** of the Truth in Lending Act (**TILA**), Higher-Priced Mortgage Loans (HPMLs) have **First Lien interest rates 1.5% above the average prime offer rate (APOR)**.

Answer 6

**Fee Simple** If the borrower owns both the land and the house, they hold title in fee simple, the **most complete form** of property ownership, **granting full rights** to use, sell, or transfer the property, subject to legal restrictions like zoning and taxes.

Answer 7

**Notice of Value** It is the modern term for the VA CRV.

Answer 8

**Average Prime Offer Rate** The Average Prime Offer Rate (**APOR**) is the **interest rate** offered to borrowers with the **best credit profiles**, used to determine if a loan is a Higher-Priced Mortgage Loan (**HPML**). Published weekly by the FFIEC, it reflects the average rate on prime loans.

Answer 9

**Loan Originator Compensation** This refers to federal regulations under the **Dodd-Frank Act** that govern loan originator (LO) compensation. The rules **prevent** LOs from being **paid based on loan terms** (like interest rates or fees) to avoid steering borrowers into higher-cost loans, protecting consumers from unfair lending practices.

Answer 10

**Certificate of Eligibility** A **document** issued by the VA to verify a **veteran's eligibility** for a VA loan. It confirms the borrower qualifies based on their service record, and ensures the **government** will guarantee about **25% of the loan**, up to the VA's limit.

Answer 11

**Home Ownership and Equity Protection Act** **Section 32** and **Section 35** of the Truth in Lending Act (**TILA**) address **high-cost loans**, aiming to protect consumers from predatory lending practices.

Answer 12

At least **5 years** per the SAFE act

Answer 13

**Conference of State Bank Supervisors** The CSBS is a **national organization** representing **state banking regulators**, supporting their efforts to ensure the safety and soundness of state-chartered financial institutions, **including banks and mortgage companies**.

Answer 14

**American Association of Residential Mortgage Regulators** AARMR represents **state regulators** overseeing **residential mortgage lending and servicing**, promoting uniformity and fairness in state mortgage regulations and providing guidance to ensure consistent enforcement.

Answer 15

A **statute is a law** enacted by a legislative body, while a **rule** is a regulation created by a regulatory agency to **interpret and implement** the statute.

Answer 16

2:1; for example, if an instructor taught 8 hours of coursework, they would receive 16 hours of CE

Answer 17

A mortgage banker funds and closes their own loans with their own funds. A mortgage broker negogiates loans and closes with funds from other entit(ies).

Answer 18

When the licensee is served papers

Answer 19

A Real Estate broker negotiates the buying/selling of a home. A mortgage broker negotiates the financing of the home purchase.

Answer 20

**Department of Housing and Urban Development**, and it insures FHA loans. *The FHA is a department within HUD. It provides mortgage insurance on loans made by approved lenders to borrowers with low to moderate incomes*

Answer 21

**Automated Underwriting System** Software used by lenders to evaluate a borrower's mortgage application. It automatically assesses financial data like credit score, income, and debt-to-income ratio to determine loan eligibility. The system generates a decision—approve, refer, or deny—based on preset criteria, making the underwriting process faster and more consistent.

Answer 22

Chunking is the practice of **making numerous small loans to a borrower to generate fees** (rather than one larger loan), often with little regard for the borrower’s ability to repay.

Answer 23

Redlining is illegal practice of **denying loans or offering less favorable terms based on the geographic location** of a borrower, **typically targeting minority** or economically disadvantaged neighborhoods.

Answer 24

Churning is the **practice of repeatedly refinancing loans** for the purpose of generating fees, often **without providing a clear benefit to the borrower**.

Answer 25

**Reverse Redlining** is the illegal practice of targeting minority or low-income borrowers in specific neighborhoods with higher interest rates or unfavorable loan terms based on their race or economic status.

Answer 26

The **Fair Housing Act** prohibits discrimination in housing based on several protected characteristics, including disability. This law ensures that individuals with disabilities have equal access to housing and are not discriminated against in the housing process, whether renting or buying a home.

Answer 27

Occupancy fraud occurs when a **borrower misrepresents the intended use** of a property to obtain more favorable loan terms. *In Logan's case, he plans to buy an investment property but falsely claims it will be his primary residence in order to secure better terms (such as lower interest rates or down payment requirements). This is a classic example of occupancy fraud.*

Answer 28

**(1) Sex (2) Religion (3) National Origin (4) Age** *(not disability)*

Answer 29

**30 Days**

Answer 30

One of **Dodd-Frank's (2008)** key provisions was the creation of the Qualified Mortgage (QM) rule. The Dodd-Frank Act instructed the Consumer Financial Protection Bureau (CFPB) to define the criteria for what constitutes a qualified mortgage. A qualified mortgage is designed to ensure that lenders offer loans that are more likely to be affordable for borrowers.

Answer 31

A straw buyer is an **individual who acts as a proxy for another person**, usually to commit fraud in a real estate or loan transaction. The straw buyer typically applies for and obtains a mortgage or purchase loan under false pretenses, **often because the actual buyer (the person who intends to live in or benefit from the property) cannot qualify** for the loan due to poor credit or other financial reasons.

Answer 32

Takes the **cost of rebuilding** the property, **plus the cost of the land** the property is on and **subtracts any depreciation** to determine a value of the property

Answer 33

**Sales Comparison** approach, **Income** approach, **Cost** approach

Answer 34

Both are paid partially upfront (1.7% for FHA and 1% for USDA), then through follow-up payments. The payments for **FHA** mortgages are **monthly** as a variable rate while **USDA** are **annually** as .35% of the outstanding loan balance.

Answer 35

Residual income is the amount of **money left over after a borrower has paid all of their monthly obligations**, including their mortgage payment, taxes, insurance, credit card bills, and other living expenses. It also includes additional sources of income such as child support, Social Security, and investment income. These sources contribute to the borrower’s overall financial capacity and are factored in when calculating residual income.

Answer 36

The Red Flags Rule is part of the **Fair and Accurate Credit Transactions Act** (FACTA), which was enacted in 2003 as an **amendment to** the Fair Credit Reporting Act (**FCRA**). The Red Flags Rule requires **financial institutions and creditors to implement written programs designed to detect, prevent, and mitigate identity theft**.

Answer 37

**(1) Federal Law - 3 Hours (2) Ethics - 3 Hours (3) Non-traditional Mortgage Products - 2 Hours (4) Elective Education - 12 Hours**

Answer 38

The **Ability to Repay (ATR) Rule** falls under TILA (Truth in Lending Act), as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The ATR rule requires lenders to ensure that a borrower has the ability to repay the loan before issuing a mortgage. This ensures the loan is not "predatory" and that the borrower will not face undue financial hardship.

Answer 39

The **Loan Originator Compensation Rule** (found in Regulation Z, which is part of the Truth in Lending Act - **TILA**) prohibits mortgage loan originators (MLOs) from being paid based on the terms of a loan, such as the interest rate or the size of the loan. This rule was implemented to prevent steering borrowers into loans that are not in their best interest in order to increase the loan originator's compensation.

Answer 40

A loan that doesn't follow **Fannie Mae** and **Freddie Mac** guidelines

Answer 41

The Home Loan Toolkit is a disclosure required by **RESPA** within three business days or less of initial Loan Application. It **provides key information about the home buying process** and is intended to help consumers understand their mortgage options and the costs involved.

Answer 42

RESPA (**Real Estate Settlement Procedures Act**) is the law that promotes informed shopping by requiring the disclosure of settlement services to the borrower. It ensures that **consumers receive accurate and clear information about the costs and fees involved in the real estate settlement** process.

Answer 43

An IRRRL stands for **Interest Rate Reduction Refinancing Loan**, and it is a type of **VA refinance loan** designed to help veterans and active military service members reduce their existing mortgage interest rate. It is **often referred to as a VA Streamline Refinance** because it has a simpler, faster approval process compared to a traditional refinance.

Answer 44

The **Mortgage Servicing Disclosure** is a required document under **RESPA** (Real Estate Settlement Procedures Act) that must be provided to borrowers **within 3 business days of the loan application**. It **informs the borrower whether the lender intends to service the loan or transfer the servicing to another company**

Answer 45

The **Electronic Signatures in Global and National Commerce Act (E-Sign Act)**. It is a Federal Law that gives legal recognition to electronic signatures and records, ensuring that they are as valid and enforceable as traditional paper-based signatures.

Answer 46

Reverse Mortgages and HELOCs

Answer 47

It doesn't have one! It just means the combilation of TILA (Z) and RESPA (X)

Answer 48

**(1) Require the implementation of a written plan** to detect and prevent indentity theft. **(2) Protect sensitive personal data.** **(3) Create specific disposal policies.**

Answer 49

**Section 8** of the Uniform Residential Loan Application (1003), also called the **Demographic Information Addendum**, is where a borrower’s demographic information (such as race, ethnicity, and sex) is collected. This data is required for HMDA (**Home Mortgage Disclosure Act**) reporting purposes.

Answer 50

HDMA (Home Mortgage Disclosure Act) collects information to ensure fair lending practices and ensure that ECOA isn't violated

Answer 51

The FCRA (Fair Credit Reporting Act) is the federal law that **governs the use of credit reports** and ensures the **accuracy, fairness, and privacy **of the information contained in consumer credit reports.

Answer 52

**Maritial Status**

Answer 53

(1) Race (2) Ethnicity (3) Sex (4) Age

Answer 54

Blockbusting is an illegal and unethical practice in real estate where individuals or companies (often real estate agents or developers) induce homeowners to sell their property at a lower price by creating fear or panic about the neighborhood's racial, ethnic, or economic composition changing. The fear is often based on the false idea that a specific group of people moving into the area (e.g., a racial or ethnic group) will lower property values.

Answer 55

(1) **Safeguards Rule:** Requires financial institutions to implement security programs to protect consumer information from threats or unauthorized access. (2) **Opt-Out Rule:** Gives consumers the right to opt out of having their personal financial information shared with non-affiliated third parties. (3) **Pretexting Rule:** Prohibits the practice of pretexting (obtaining private information under false pretenses), such as when someone impersonates a customer to access their information.

Answer 56

6% if LTV is < 90% 3% if LTC is >90%

Answer 57

**10 Years**

Answer 58

The **Homeowners Protection Act (HPA)**, also known as the PMI Cancellation Act, was enacted in 1998. It allows borrowers to request the cancellation of **Private Mortgage Insurance (PMI)** when their loan-to-value (LTV) ratio reaches 80%. Under this law, borrowers have the **right to ask their lender to cancel PMI once the LTV reaches 80% based on the original property value or the current market value**, as long as they are current on their mortgage payments. **Additionally, the law also requires lenders to automatically cancel PMI when the LTV reaches 78% (for most loans) without the borrower needing to request it**.

Answer 59

**Conventional loans have PMI.** FHA loans, VA loans, and USDA loans have different rules regarding mortgage insurance. **FHA loans**: FHA mortgage insurance (MIP) is **paid upfront and then monthly** and remains for the life of the loan unless the borrower refinances. **VA loans**: There is **no PMI**, but the borrower may need to pay a funding fee. **USDA loans**: There is an **upfront and annual** guarantee fee, but not PMI.

Answer 60

Home Ownership Equity Protection Act kicks in if any on of the three applies: **APR Test**: APR Over 8.5% **Points and Fees Test**: Points and Fees collectively over 5% **Prepayment Penalty**: A prepayment penalty exists

Answer 61

**$10,000** BSA/AML (Bank Secrecy Act/ Anti Money Laundering)

Answer 62

Section 35 of TILA governs **higher-priced loans (HPLs)**. These are loans that have an **APR (Annual Percentage Rate) that exceeds a certain threshold**, which is set by regulation. Higher-priced loans are defined as loans where the **APR exceeds the average prime offer rate (APOR) by a certain percentage (1.5% for first liens, 3.5% for subordinate liens)**. **A requirement for additional appraisal protections. Restrictions on prepayment penalties (they cannot last longer than 3 years and can't exceed 2%/1%/.5% of the original loan balance for each of the first three years).**

Answer 63

**These loans are defined under HOEPA (Home Ownership and Equity Protection Act), which is an amendment to TILA as Section 32** A loan is considered high-cost if it exceeds certain thresholds for: **APR (it must exceed the APOR by 6.5% for first liens or 8.5% for second liens).** **Points and fees (they must exceed 5% of the loan amount or a set dollar amount). Prepayment penalties that are excessive or last too long.** High-cost loans are subject to much stricter regulations, including: **A mandatory 3-day right of rescission after closing. A ban on balloon payments for certain loans. Limits on fees, prepayment penalties, and other practices that might be considered predatory.**

Answer 64

**The USA Patriot Act** requires lenders and other financial institutions to verify the identity of individuals involved in mortgage transactions as part of **Know Your Customer (KYC) regulations**. This is aimed at preventing money laundering, terrorist financing, and other financial crimes. Specifically, it mandates that lenders: Verify the identity of any borrower or customer (including individuals and businesses) before conducting business with them. Collect identifying information such as name, address, date of birth, and taxpayer identification number.

Answer 65

45 calendar days of closing

Answer 66

An FHA loan for the purchase and rehab of a property

Answer 67

Total Debt Ratio = ( All **Debt Expenses** (monthly) ) **/** ( Borrower's **Gross** (monthly) **Income** )

Answer 68

Housing Ratio = ( All **Housing Expenses** (monthly) ) **/** ( Borrower's **Gross** (monthly) **Income** )

Answer 69

**0%** and **10%** respectively

Answer 70

Here’s a breakdown of the key points: **1) 3 years if required notice is not given**: If the borrower does not receive the required notice of the right to rescind, they can exercise the right to rescind the loan within 3 years. **2) 3 business days to rescind**: The borrower has 3 business days after closing or receiving the required disclosures (whichever is later) to rescind the loan. **3) Only for owner-occupied refinances**: The right of rescission applies only to refinance loans on primary residences (owner-occupied properties). It does not apply to purchases or home equity lines of credit (HELOCs). **4) Required notice**: The lender is required to provide the borrower with **two copies of the Notice of Right to Rescind at closing**.

Answer 71

Blockbusting occurs when real estate agents and building developers attempt to **convince property owners to sell their houses at low prices by promoting fears** in those homeowners that **racial minorities would soon be moving into** the neighborhood.

Answer 72

Redlining is a **discriminatory practice** in which financial institutions, such as banks or mortgage lenders, **refuse to offer loans or provide services to residents in certain neighborhoods based on the racial or ethnic composition** of those areas.

Answer 73

Chunking is **the sale of properties at artificially inflated prices**, pitched as investment opportunities to naïve real estate investors who are promised improbably high returns and loan risks. You would usually see this type of fraud scheme presented as a "get rich quick" real estate seminar.

Answer 74

**Disparate Treatment** occurs when someone is **intentionally** treated unfairly based on a protected characteristic, such as race or gender. **Disparate Impact** refers to policies or practices that, while **unintentional**, result in unintentional discrimination by disproportionately affecting a protected group.

Answer 75

MDIA is the **Mortgage Disclosure Improvement Act**. It mandates at least **7 business days** between the delivery of the Initial Disclosure Documents and Loan Closing

Answer 76

FACTA (**Fair and Accurate Credit Transactions Act**) was an ammendment to FCRA (Fair Credit Reporting Act) FACTA mandated **four new things**: **(1) Free annual credit reports (not scores). **(2) Identity theft protections** (the ability to place fraud alerts and credit freezes on credlit lines). **(3) Red flags rule**, which requires financial institutions to implmenet programs to **detect and repond to identity theft**. **(4) Secure disposal** of consumer credit information to protect against identity theft.

Answer 77

Desktop Underwritter (DU)

Answer 78

**Loan Prospector (LP)**

Answer 79

**Fannie Mae's** Automated Underwritting System

Answer 80

**Freddie Mac's** Automated Underwritting System

Answer 81

FCRA = **Reg V**

Answer 82

The Mortgage Servicing Disclosure Statement (**MSDS**) is required by the Real Estate Settlement Procedures Act (**RESPA**). It is provided to the borrower at the time of the loan application or **within three business days of receiving a complete application**. The purpose of the MSDS is to inform the borrower that the **mortgage servicing may be transferred, assigned, or sold to another company** during the life of the loan.

Answer 83

**Right to cancel PMI**: The Act allows borrowers to request the cancellation of PMI **once their loan balance reaches 80%** of the original home value (based on the original property value or the appraised value at the time of purchase, depending on the loan). The borrower must be current on payments and request cancellation in writing. **Automatic termination of PMI**: The Act also requires PMI to be **automatically terminated when the loan balance reaches 78%** of the original property value, provided the borrower is current on payments.

Answer 84

**10 Years**

Answer 85

**Initial Privacy Notice** – This must be provided when a customer relationship is established, typically when the customer first opens an account or engages in a financial service with the institution. **Annual Privacy Notice** – This must be provided at least once a year as long as the customer relationship exists. It updates the consumer on the institution's privacy practices. **Opt-Out Notice** – This informs consumers about their right to opt out of the sharing of their information with non-affiliated third parties. The institution must provide a way for the consumer to exercise this opt-out right.

Answer 86

**March 1st**

Answer 87

**15 Days**

Answer 88

The **Yield Spread Premium** (YSP) is a **payment made by the lender to the broker for originating a loan** with an interest rate higher than the **par rate** (the rate that would have resulted in no premium). In other words, the broker earns the YSP for facilitating the loan and securing a higher rate for the lender. The YSP is considered compensation for the broker's role in brokering the loan between the borrower and the lender.

Answer 89

**Gross percentage Adjustment** refers to the total amount of adjustments made to each of the comparable properties in the appraisal, including adjustments for differences in features, size, condition, location, etc. Industry standards suggest that the **total of all adjustments should generally stay below 15%** of the value of each property, to ensure that the appraisal which is based on those comps is based on reliable and comparable data.

Answer 90

**Non-public Personal Information**

Answer 91

**30 Days**

Answer 92

The rule is **governed by TILA** (1): The lender must provide the borrower with a **LE within 3 business days** of receiving a completed LA. (2): The borrower must receive the Loan Estimate at least **7 business days before** the loan is **consumated**. (3): If there are any **changes to the loan terms** that affect the Loan Estimate (such as an increase in the APR or certain fees), the lender must provide the borrower with a **revised LE within 3 business days** of those changes, and the borrower must wait an additional 3 business days before closing.

Answer 93

**3 hours of Federal Law** **2 hours of Ethics** **2 hours of State Law** **1 hour of Electives**

Answer 94

**Tenancy by the Entirety**

Answer 95

**Section 35**

Answer 96

**4 Years** from the Discharge Date

Answer 97

**Orgination Fee**

Answer 98

**Annually.** Borrowers must perform the analysis, refund excess funds (if they exist), and provide an annual escrow disclosure statement (with account details)

Answer 99

Within 3 days of loan application

Answer 100

10 Housing Counselors

Answer 101

Owner Occupied Refinance

Answer 102

The refinance is cancelled and the buyer is refunded all fees

Answer 103

Up to 3 days after Consumation

Answer 104

The Transmittal Summary sent to Fannie and Freddie for underwritting with loan application details after the borrower's intent to proceeed following the initial Loan Estimate.

Answer 105

≥ .125 Percent

Answer 106

Charges associated with obtaining the loan financing. NOT insurance.

Answer 107

Redisclosure - an additional Loan Estimate must be sent out

Answer 108

60 days of of receiving the lender notification

Answer 109

Yes! Because the collateral was a residential property

Answer 110

A Market Conditions Addendum (often used in the context of an appraisal or as part of a loan application) is a document that provides insights into the local real estate market and economic conditions surrounding the subject property. This information helps lenders, buyers, and other parties understand how market trends are influencing property values and the risk associated with the loan.

Answer 111

A Verification of Deposit. An underwritter can request the borrower secure documentation from their financial institution showing they have proper funds for a down payment.

Answer 112

Schedule C Net Income Plus Non-cash Expenses and Depreciation

Answer 113

The intereste rate is fixed for 7 years, then it adjusts 1 time per year.

Answer 114

A cash-out refinance involves replacing an existing mortgage with a new one (generally lower interest rate but sometimes not) that has a higher balance than the current loan, allowing the borrower to take out the difference in cash.

Answer 115

Zero, 10%, and No Tolerance

Answer 116

**Page 3 of LE** and Page 5 of CD. **RESPA** (X)

Answer 117

A Credit Report fee

Answer 118

$10,000 and up to 1 year in prison (per instance)

Answer 119

If they are an Independent Contractor; if they are employees there is no need to be licensed.

Answer 120

Chapter 7 involves liquidating all debts. Chapter 13 and 11 involve restructuring debt.

Answer 121

Both are to refinance, however the 203k loan is specifically for borrowers who want to addditionally renovate their home as well.

Answer 122

The HOEPA prepayment penalty test is a **requirement** under the Home Ownership and Equity Protection Act (HOEPA) to determine whether a prepayment penalty is allowed on certain **high-cost loans**. To pass the test, a loan **cannot have a prepayment penalty that exceeds** the following: **Three years after consummation**: The penalty cannot be charged if the borrower pays off the loan within the first three years. Amount limit: If the penalty is charged, it must not exceed **2% of the amount of the loan in the first year, 1% in the second year, and 0.5% in the third year**.

Answer 123

There isn't one. The VA only has back end DTI criteria and it's 41%

Answer 124

4.5%. The buydown means the loan will be below the note rate by 2% the first year, 1% the second year, and at the note rate the third year.

Answer 125

It must be classified as a rental/investment property (not a second home)

Answer 126

Owners! Even if they aren't a borrower. Since they could be affected by the lien.

Answer 127

6.5%; E.G. if APOR was 5%, the APR would have to be 11.5% or higher.

Answer 128

1/100. E.G. 50 basis points is .5%

Answer 129

Both of them

Answer 130

Yes, they are not legally allowed to enter a traditional mortgage contract

Answer 131

General, temporary, small creditor, and balloon

Answer 132

Are you married, unmarried, or separated?

Answer 133

The full term of the loan, if it is a 30 year loan. For loan terms 15 years or less, the MIP will be paid for 11 years.

Answer 134

5 years for both the LE and CD; 2 years for everything else.

Answer 135

It requires credit reporting agencies to allow individuals to freeze their credit for free, preventing lenders from accessing their credit information. If a lender attempts to check the borrower’s credit, they will be notified of the freeze, stopping new credit from being issued until the freeze is lifted.

Answer 136

Questions asking the borrower to list the number of dependents they have and their ages.

Answer 137

Situations where two or more individuals own a property together. This is a generalized term and could apply to either Joint Ownership or Ownership in Common for instance.

Answer 138

A form of co-ownership where co-owners have equal shares and the right of survivorship (if one owner dies, their share passes to the surviving co-owners)

Answer 139

Another form of co-ownership where each owner has a share of the property that can be unequal, and there is no right of survivorship.

Answer 140

Refers to a property owned by a single individual, not co-owned.

Answer 141

A wet closing refers to a situation where the loan documents are signed, the loan is balanced, funded, and recorded on the same day. A dry closing is where the loan is signed but not funded or recorded on the same day, which may occur if certain conditions aren't met. A wet closing typically happens when all conditions for closing are satisfied promptly, allowing for immediate disbursement and recording.

Answer 142

A pre-qualification letter is issued based on the borrower's self-reported financial information, such as income and employment, but does not require verification of those details. Since the borrower has not provided verifying documentation, a pre-qualification letter is appropriate. pre-approval letter requires verified financial information and a more thorough review.

Answer 143

March 31st

Answer 144

Fine up to $1,000,000 and/or imprisonment up to 30 years

Answer 145

Depository Institutions (such as banks, credit unions, and savings and loan associations) typically have credit card or bank accounts, originate loans, and may also service loans. These institutions offer a variety of financial services, including loan origination and servicing, and they hold deposits from customers.

Answer 146

Servicer: A servicer is responsible for managing and administering loans after they are originated, including collecting payments, managing escrow accounts, and handling defaults. They do not typically originate loans.

Answer 147

Correspondent Lender: A correspondent lender originates loans, but often sells them to other lenders or investors after closing. They may not service loans in the same way as a depository institution.

Answer 148

Mortgage Banker: A mortgage banker originates, funds, and may service loans, but they typically do not offer other banking services like credit cards or checking accounts.

Answer 149

The dataset developed by the GSEs (Government-Sponsored Enterprises) to improve the quality and consistency of loan application data collection is called the Uniform Loan Application Dataset (ULAD). The ULAD is used to standardize the data collected during the mortgage application process to ensure that lenders provide consistent and accurate information, making it easier for the GSEs (like Fannie Mae and Freddie Mac) to evaluate and purchase loans.

Answer 150

It is an act to help regulate against unwanted calling and deceptive calls. Included are the Telemarketing Sales Rules (TSR) which prevent deceiption and Do Not Call PRovision

Answer 151

Lender's title insurance. Borrowers title insurance generally only covered them. While lenders title insurance generally only covers the lender.

Answer 152

The MLO must insure it is complete and accurate to the best of their ability.

Answer 153

25% for vacancy and 75% for occupancy

Answer 154

In general, February 28th. However, some states require January 31st, and other states require a new MLO application.

Answer 155

A fine of up to $5,000 and up to one year in prison

Answer 156

> 1.5% = high priced >2.25% = Non-QM

Answer 157

A qualified mortgage is a loan that meets specific regulatory requirements set by the Consumer Financial Protection Bureau (CFPB). It ensures the borrower's ability to repay and restricts risky features like interest-only payments, balloon payments, and negative amortization. Loan structures covered: Fixed-rate mortgages, adjustable-rate mortgages (ARMs), and other standard loan types, as long as they do not include prohibited features like interest-only or balloon payments.

Answer 158

A conforming loan is a mortgage that meets the standards set by Fannie Mae or Freddie Mac, such as maximum loan limits, credit score, and debt-to-income ratio requirements. Loan structures covered: Primarily conventional loans (fixed-rate and adjustable-rate mortgages), but it can also include other government-backed loans if they meet GSE requirements (e.g., FHA, VA, USDA loans) within the conforming loan limits. However, most FHA, VA, and USDA loans are typically not considered "conforming" because they have separate eligibility and funding criteria outside Fannie Mae and Freddie Mac's guidelines.

Answer 159

Every 31 Days

Answer 160

CAIVRS (Credit Alert Interactive Voice Response System) is the system used by underwriters to determine if a borrower is delinquent on any federal debt when underwriting an FHA loan. CAIVRS is a database maintained by the federal government that tracks borrowers who have defaulted on federal loans, such as student loans, government-backed mortgages, and other federal debts.

Answer 161

30 Days after the negative information was provided

Answer 162

Up to 3 years

Answer 163

Be receiving VA compensation for a service-connected disability

Answer 164

HOEPA applies to high cost loans only. More specifically, it doesn't apply to high cost Construction Loans.

Answer 165

A presumption of compliance and safe harbor

Answer 166

In the mortgage industry, cash-on-hand refers to money that borrowers keep at home instead of depositing it into a bank account. This can be a concern for lenders because cash-on-hand is difficult to verify and may not be considered a reliable or acceptable source of funds for the down payment, closing costs, or reserves in a loan transaction.

Answer 167

Section 8 of the 1003 application (Uniform Residential Loan Application) notes the borrower's sources of funds for closing costs, including information about the borrower's assets and how they intend to cover closing costs (e.g., savings, gift funds, or a seller contribution). Here’s what the other sections are used for: Section 3: This section is used for Borrower Information and Employment History. Sections 2a, 2b, & 4d: These sections are used for Property Information, Loan Terms, and Income & Employment Information, but not specifically for closing costs. Section 1b: This section is for the borrower's personal information like name, address, and contact details.

Answer 168

Loan Estimate

Answer 169

The BSA/AML (Bank Secrecy Act/Anti-Money Laundering) regulations require that all employees of a lender receive yearly training to ensure compliance with anti-money laundering and financial crime prevention laws. This training is essential for understanding how to detect and report suspicious activities, including money laundering and fraud, in accordance with the BSA/AML requirements.

Answer 170

Section 5b

Answer 171

annualcreditreport.com

Answer 172

Large deposits are defined as a single deposit that exceeds 50% of the total monthly qualifying income for the loan.

Answer 173

If the subject property is the income property, the underwriter will require an additional addendum called the "Single-Family Comparable Rent Schedule", form 1007. The addendum compares the rent generated by the subject property in comparison to other rental properties in the area.

Answer 174

Cross collateralization is the act of using an asset that's collateral for an initial loan as collateral for a second loan. In a situation with a mortgage that would be using the same house to collateralize two loans – so a first mortgage and second mortgage. The borrower may get access to the equity in the home they are exiting, i.e. Selling, by getting a loan on the home which may secure the home they are leaving and buying.

Answer 175

Unspecified. As long as they are opted in.

Answer 176

They must notify the state licensing agency before closing their office

Answer 177

The borrower can pay third party fees like appraisal fees or credit report fees as well as an application fee or commitment fee. The lender can't require the borrower to pay other fees before closing.

Answer 178

$498k and $1,149k

Answer 179

$766k for most counties and $1,149k for high cost areas

Answer 180

$766k and $1,149k

Answer 181

Generally $398k

Answer 182

203b - purchase 203k - rehab streamline refi - refi

MLO Exam Prep Flashcards

(250 cards)