MLO Test Prep

Question 1

What would not appear on page 5 of the closing document?

Answer 1

DISCOUNT POINTS

page 5 contains TIP, finance charges, APR, total # of payments, disclosures

Question 2

What is mortgage insurance on $250,000 with a multiplier of 0.65%?

Answer 2

$135.42

$250,000 x .0065 = $1625, $1625 / 12 = $135.42

Question 3

When did the Homeowner’s Protection Act go into effect? (Before this, the government didn’t regulate PMI)

Answer 3

JULY 1999

Question 4

HMDA

Answer 4

Home Mortgage Disclosure Act
Regulation C
Sex, ethnicity, and race are collected

Section X of the 1003
Lenders are required to submit loan/application registers by March 1st of each year for HMDA reports.

Question 5

TILA

Answer 5

Truth in Lending Act
Regulation Z

Section 32 - HOEPA, Home Ownership and Equity Protection Act. requires that all federally-related loan applicants receive a list of housing counselors that must be sent 3 business days after receiving the application. Also, late fees cannot exceed 4% of the past due payments and it prohibits the pyramiding of late fees.
Section 35 - HPMLs, Higher-Priced Mortgage Loans

Requires CHARM for Arms
TILA doesn’t apply to a larger than 4-unit property.
Deals with advertising

Question 6

RESPA

Answer 6

Regulation X

Applies to all residential real estate loans. Excludes vacant land, 25 acres or more, commercial or business loans, the government, temporary financing (bridge)
Section 8 = no fees or kickbacks for referrals
Requires a copy of appraisal be given to the applicant promptly upon completion or at least 3 business days before the consummation of the transaction.
Requires the Mortgage Servicing Disclosure Statement

Question 7

ECOA

Answer 7

Equal Credit Opportunity Act
Regulation B

Prohibits asking a borrower’s childbearing intentions.
Requires to notify borrower of approval or denial within 30 days of completed application.
Requires Adverse Action Notice to disclose the reasons for denial or allow the borrower 60 days to request that information.
Gives consumer the right to receive a copy of the appraisal report on a dwelling that is to be used as collateral for a loan.

Question 8

Mortgage late payments-how many months, and how many days for conventional

Answer 8

Late payments on a mortgage in the last 12 months can kill a deal. For conventional, if a borrower is 60 or more days late within 12 months, the UW will deny the loan.

Question 9

How far back does an underwriter look at a borrower’s credit INQUIRIES?

Answer 9

90 days

Question 10

What is considered a business day in regards to the Loan Estimate?

Answer 10

a business day is a day on which the lender’s offices are open to the public.

Question 11

What do acquisition costs include?

Answer 11

Sales price + buyer’s closing costs - closing costs the seller pays.

DO NOT go off of the loan amount for this calculation.

Question 12

How many years must closing disclosures be kept?

Answer 12

5 years

Question 13

Who regulates the Do Not Call List?

Answer 13

The FTC (Federal Trade Commission)

Question 14

What is not included in the APR?

Answer 14

Appraisal Fee

Question 15

How many years in the past much appraisers analyze the transfer history of the property?

Answer 15

3 years.
Appraisers analyze the purchase contract, current listing, and recent prior sales for the past 3 years. They also research the subject’s transfers from 3 years prior to the effective date of the appraisal.

Question 16

What type of mortgage is a wrap around mortgage?

Answer 16

A second mortgage.

The lender assumes payments on the borrower’s low interest 1st mortgage and lends additional funds.

Question 17

FHA

Answer 17

Fair Housing Act

Prohibits discrimination of race, color, religion, handicap, sex, familial status or national origin.

Question 18

What tolerance fee does Title Insurance fall under?

Answer 18

10% cumulative tolerance fee

Question 19

What tolerance fee do Origination, Underwriting and Processing fees fall under?

Answer 19

zero-tolerance fee

These are all compensation to the lender

Question 20

The Real Estate Settlement Procedures Act falls under the control of what agency?
What type of property does it not apply to?

Answer 20

CFPB (Consumer Financial Protection Bureau)

Doesn’t apply to property > 25 acres, vacant land, commercial or business loans, the government, temporary financing like bridge loans.

Question 21

GSE

Answer 21

Government Sponsored Entity

Fannie Mae and Freddie Mac

Question 22

Minimum down payment on a conventional loan.

Answer 22

3%

Question 23

Which market buys closed mortgage loans?

Answer 23

SECONDARY MARKET

purchases mortgage backed securities and servicing rights after the loan has been closed.

Question 24

TRID

Answer 24

TILA-RESPA Integrated Disclosure Rule

Requires disclosure of all fees including discount points on the LE and CD.
Regulates the fees that can be rounded on the LE.

Question 25

VOR

Answer 25

Verification of Rent

Question 26

Who sets the margin on an ARM?

Answer 26

THE LENDER

Question 27

Where do funds for an FHA come from?

Answer 27

approved FHA lenders

Question 28

What government agency guarantees VA loans?

Answer 28

The Department of Veterans Affairs

Question 29

What % of business ownership requires a borrower to submit personal and business tax returns?

Answer 29

25% or more

Question 30

If a borrower is not allowed to shop for a service and not allowed to pick from a list of settlement service providers, what type of fee tolerance is this?

Answer 30

Zero-tolerance fee | cannot change from the LE to the CD

Question 31

How many months/years is considered a long term debt?

Answer 31

12 months

Question 32

Consummation definition

Answer 32

The date a consumer becomes contractually obligated to the creditor on the loan (the day they sign the note)

Question 33

When does the title company issue on the subject property at time of closing?

Answer 33

Mortgagee Title Policy

Question 34

Business income derived from a sole proprietorship is calculated on what tax form?

Answer 34

Schedule C

Question 35

Second job income is always considered what type of income?

Answer 35

Variable income

Question 36

What type of bankruptcy liquidates debts?

Answer 36

CHAPTER 7

Question 37

What type of fraud occurs when a borrower fails to disclose a liability they have?

Answer 37

LIABILITY FRAUD

Question 38

GLBA requires FI's to provide consumer with a Consumer Privacy Policy how often?

Answer 38

ANNUALLY

Question 39

If something changes after consummation, how long does lender have to present a corrected CD? What about for non-numerical clerical errors and document refunds for tolerance violations?

Answer 39

30 DAYS | 60 DAYS for non-numerical

Question 40

When can fees be charged?

Answer 40

If they are disclosed before they can be collected on the LE. This includes the appraisal fee.

Question 41

What type of appraisal has a value listed with no repairs included?

Answer 41

An "AS IS" appraisal

Question 42

How many comparables are required on an appraisal?

Answer 42

THREE

Question 43

``` SAFE Act requires how many hours of: federal law ethics mortgage products elective ```

Answer 43

3 federal laws 3 ethics 2 nontraditional mortgage products remaining are electives

Question 44

How many days does a lender have to notify an applicant of action on request for credit, whether favorable or adverse?

Answer 44

30 days, required by ECOA

Question 45

What are the three fee tolerances?

Answer 45

ZERO 10% cumulative no-tolerance

Question 46

FCRA

Answer 46

Fair Credit Reporting Act

Question 47

FNMA

Answer 47

Fannie Mae | underwrites with desktop underwriter

Question 48

FHLMC

Answer 48

Freddie Mac | Underwrites with loan product advisor

Question 49

Form 1004MC

Answer 49

Market Conditions Addendum | designed to enhance the transparency of the market trends and conditions conclusions made by the appraiser.

Question 50

Fine for calling National Do Not Call Registry

Answer 50

$43,280

Question 51

FHA - when can a borrower repurchase after a foreclosure?

Answer 51

3 years

Question 52

Conventional - when can a borrower repurchase after a foreclosure?

Answer 52

7 years

Question 53

FHA - when can a borrower repurchase after a short sale?

Answer 53

3 years from the date of the short sale, or if the prior mortgage was also an FHA insured loan, from the date that FHA paid the claim on the short sale.

Question 54

Form 1008

Answer 54

Uniform Underwriting and Transmittal Summary | it summarizes key data from the loan application package

Question 55

Conventional - when can a borrower repurchase after a Chapter 7 bankruptcy?

Answer 55

4 years

Question 56

FACTA

Answer 56

requires a dispute on credit to be resolved within 30 days after the dispute was received.

Question 57

VA - when can a borrower repurchase after chapter 7? | What about a chapter 13?

Answer 57

2 years from discharge date | 1 year for chapter 13

Question 58

When must the final LE be received?

Answer 58

no later than four days before closing.

Question 59

SAFE acronym

Answer 59

Secure and Fair Enforcement for Mortgage Licensing Act

Question 60

FHA - when can a borrower repurchase after a chapter 13?

Answer 60

1 year

Question 61

FORM 4506-T

Answer 61

sent to IRS to confirm the numbers on the tax returns are the same

Question 62

What % of the loan amount do discount points generally cost?

Answer 62

1%

Question 63

YSPs are paid to the broker for what?

Answer 63

Giving a borrower a higher interest rate on a loan in exchange for lower up-front costs generally paid in origination fees, broker fees or discount points.

Question 64

How long is the LE good for if the consumer does not expressly provide their Intent to Proceed?

Answer 64

10 business days

Question 65

How many days is the "cooling off" period under HOEPA

Answer 65

3 days prior to closing

Question 66

Conventional - when can a borrower repurchase after a short sale?

Answer 66

4 years

Question 67

What is not a finance charge in a residential mortgage loan?

Answer 67

An appraisal fee

Question 68

Loan >$50,000 fails HOEPA APR test if APR is what % for 1st lien?

Answer 68

6.5%

Question 69

What is down payment for FHA?

Answer 69

3.5%

Question 70

Bankruptcy 7 vs 13?

Answer 70

7 - liquidates debtor's debts | 13 - allows debtor to pay back lenders through court payment program

Question 71

How do you calculate fully indexed rate for ARMs?

Answer 71

Index + margin

Question 72

QM, acronym and 4 requirements

Answer 72

Quality Mortgage 1 general 2 temporary 3 small lender 4 balloon

Question 73

What is the only fee ok to collect prior to LE?

Answer 73

credit report fee

Question 74

HOEPA late fees can't exceed what %?

Answer 74

4%

Question 75

What act requires Equal Housing Opportunity logo on ads?

Answer 75

Fair Housing Act

Question 76

Escrow. Servicer can charge borrowers _ monthly sum of escrow payments, servicer can cushion no more than _ of total annual payment.

Answer 76

1/2, 1/6