NMLS Questions Flashcards

Question

Which of the following is NOT true about the financial responsibility of a mortgage loan originator? The penal sum of a surety bond must reflect the dollar amount of loans originated A sponsored mortgage loan originator may be covered under the sponsoring licensee’s surety bond If a mortgage loan originator pays into a state fund established to pay claims of consumers, he or she is not required to maintain a surety bond A mortgage loan originator must always have his or her own surety bond in an amount that reflects the dollar value of loans originated in the previous year

Answer 1

The answer is a mortgage loan originator must always have his or her own surety bond in an amount that reflects the dollar value of loans originated in the previous year. Each mortgage loan originator must be covered by a surety bond. If he or she is an employee or exclusive agent of a mortgage licensee, the surety bond of the employing licensee may be used to satisfy the loan originator surety bond requirement. The penal sum of the surety bond must reflect the dollar amount of loans originated. If the loan originator’s licensing state has developed and administers a fund specifically to provide protection to consumers by making funds available for claims resulting from violations of state or federal laws and regulations, in lieu of a surety bond or net worth requirement, the state may instead require the loan originator to pay a certain amount into the state fund.

Answer 2

The answer is fully-indexed rate after one year. The promissory note is both a promise to repay the money borrowed with interest and evidence of the debt. For an ARM loan, it will typically identify the index, specify the margin, and list adjustment parameters, but will not specify the fully-indexed rate after one year.

Answer 3

The answer is the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators. The Nationwide Multistate Licensing System and Registry (NMLS) is a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for licensing and registering loan originators.

Answer 4

The answer is the most common sales price for the neighborhood. In the context of an appraisal, the term “predominant value” refers to the price or price range appearing most frequently in the market area defined by the appraiser in the report, based on comparable sales.

Answer 5

The answer is The lender is always required to provide a copy of the appraisal promptly upon completion or three days prior to consummation for closed-end credit, whichever is earlier. A creditor is required to provide an applicant with a copy of all appraisals and other written valuations developed in connection with an application for credit that is to be secured by a first lien on a dwelling. A copy of each appraisal or other written valuation must be provided the earlier of promptly upon completion, or three business days prior to consummation of the transaction for closed-end credit or account opening for open-end credit.

Answer 6

The answer is adjustment. Adjustments are made when comparable properties are compared to the subject property in a mortgage loan transaction. Adjustments assign positive or negative values to certain property features to help gauge value.

Answer 7

The answer is ECOA. The Equal Credit Opportunity Act (ECOA) prohibits discrimination in extension of credit based on race, color, religion, national origin, sex, marital status, age, potential to have or raise children, the fact that the applicant receives income from a public assistance program, or the fact that the applicant has exercised his or her rights under the Consumer Credit Protection Act. This includes the discriminatory lending pattern of redlining, in which a lender refuses to provide lending products and services on an equal basis to residents of minority neighborhoods (the term is derived from the practice of drawing red lines around minority areas on a map.)

Answer 8

The answer is balloon mortgage. A partially amortized or balloon mortgage provides for some, but not total, amortization during the mortgage term. It has payments that are equal and regular in nature. However, the loan term is shorter than the time needed to repay the full loan balance by making those payments. Therefore, at the end of the loan term, a large balloon payment is needed to pay off the remaining balance.

Answer 9

The answer is is not confidential and is available for public access. The requirements under any federal and/or state law regarding the privacy or confidentiality of any information or material provided to the NMLS continue to apply after such information has been disclosed to the NMLS. However, information or material held by the NMLS relating to the employment history and/or disciplinary and enforcement actions taken against a mortgage loan originator, is not protected by confidentiality and is available for public access.

Answer 10

The answer is “Can this amount increase after closing?” The first table on page 1 of the Closing Disclosure is the Loan Terms table, which lists the same information given in the Loan Estimate’s Loan Terms table (i.e., loan amount, interest rate, the monthly principal and interest, and space to indicate whether the product has a prepayment penalty or balloon payment). This information is updated to reflect the terms that will be in place at consummation, and the loan originator must answer the question “Can this amount increase after closing?” for each item.

Answer 11

The answer is Regulation B. Under Regulation B, a loan originator may not ask whether an applicant receives alimony, child support, or separate maintenance payments not needed in order to get credit, unless he or she is first told that this information does not have to be provided. If regular alimony, child support, or separate maintenance payments need to be counted as income to qualify for credit, an applicant may be asked to prove that it has been received consistently.

Answer 12

The answer is interest, principal, escrow. In a standard deed of trust, payments are applied to interest first, then to principal, and then to escrow items, such as tax and insurance payments. AND THEN LATE FEES ARE LAST

Answer 13

The answer is hazard insurance premium. The annual percentage rate (APR) represents the relationship of the total finance charge to the total amount financed, as a yearly rate. It is not the same as the nominal rate (i.e., the interest rate shown in the note), as it includes all finance charges, not just interest. Among other charges, finance charges include points, loan fees, and mortgage insurance premiums, but not hazard insurance premiums.

Answer 14

The answer is Wednesday. A consumer may not be charged any fee in connection with a mortgage loan application, except a reasonable and bona fide credit report fee, before receipt of the Loan Estimate and prior to indicating that he or she wishes to proceed with the loan. Once this occurs, there is no additional waiting period before the lender may charge a fee, such as an appraisal fee.

Answer 15

The answer is regional property tax rates. Interest rates on long-term debt instruments, such as residential mortgages, are influenced by changes in such economic indicators as the gross domestic product (GDP), which measures the amount of goods and services produced in the United States, and the Consumer Price Index (CPI), which measures the average change in prices of consumer goods and services. Features of the economic climate, such as loan fraud, loan payoff rates, and foreclosure rates, will all have an impact on interest rates. Rates are also affected by actions taken by the Federal Reserve (the Fed), which controls the country's monetary policy, though the Fed does not itself directly set the interest rates that individual lenders will charge borrowers. Each lender will set its own prime rates (i.e., the lowest rates it charges for its best customers), as well as rates for loans to other customers based on its costs and desired profit margin. Regional property tax rates will impact monthly payments, but they do not have a direct relationship with the interest rates set for mortgage loans.

Answer 16

The answer is one sixth. Under RESPA, a lender may require the borrower to establish an escrow account at closing. The loan servicer may require a borrower to pay into the account to cover disbursements that are unanticipated or disbursements made before the borrower’s monthly payments are available in the account. This is the escrow cushion or reserve, which must be no greater than one sixth of the estimated total annual disbursements from the escrow account.

Answer 17

The answer is a buyer who accepts a fee for the use of his or her Social Security Number and other personal information on a mortgage application. A straw buyer is a person who purchases the property or applies for the loan in his or her own name for the actual borrower and is typically paid for the use of his or her personally identifying information.

Answer 18

The answer is charging different fees based on race is prohibited. The Fair Housing Act prohibits discrimination in the sale, rental, and financing of any residential housing based on race, color, religion, national origin, sex, familial status, or mental or physical handicap, and therefore, prohibits charging different fees based on race. Residency status is not a protected category under the Fair Housing Act. Disclosure requirements are not imposed by the Fair Housing Act. Government reporting requirements are covered under the Home Mortgage Disclosure Act (HMDA).

Answer 19

The answer is Secure and Fair Enforcement for Mortgage Licensing Act. Under the Secure and Fair Enforcement for Mortgage Licensing Act (the SAFE Act), an applicant for a mortgage loan originator license must pass a written national test developed by the NMLS and administered by an approved test provider that covers ethics, federal and state law, and regulations pertaining to mortgage origination, fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues. To pass, the individual must achieve a test score of at least 75%.

Answer 20

The answer is assess jail time for fraudulent activities. Under the SAFE Act, the authority of state agencies allows them to impose sanctions including suspending, revoking, or refusing to renew a license in response to violations; ordering restitution and imposing fines; and issuing orders or directives, including ordering or directing licensees to cease and desist from conducting business, including immediate temporary orders to cease and desist. The agencies are not authorized to assess jail time to licensees for any reason.

Answer 21

The answer is interest-only fixed-rate 30-year mortgage loans. The S.A.F.E. Act defines a nontraditional loan as any loan product other than a 30-year fixed mortgage. All ARMs have rates that are adjustable. A reverse mortgage does not have a 30-year loan term and may have either a fixed rate or adjustable rate of interest. An interest-only loan is considered a traditional loan under the S.A.F.E. Act definition if it has a fixed rate and a 30-year term, even though the period of interest-only payments would be only five, 10, or 15 years. High-risk loans that might still be considered “traditional” under the S.A.F.E. Act include interest-only fixed-rate, no-money-down, subprime, and alternative-documentation (Alt-A) loans.

Answer 22

The answer is transfers to the wife. Joint tenants share equal ownership of the property and have equal, undivided right to keep or dispose of the property. Joint tenancy creates a right of survivorship; if any of the joint tenants die, the remainder of the property is transferred to the survivors. In this case, when the husband dies, his interest in the property would transfer to his wife.

Answer 23

The answer is Home Ownership and Equity Protection Act. A lender may not extend credit subject to HOEPA based on the value of the consumer’s collateral without regard to his/her repayment ability as of the date of consummation, including consideration of his/her current and reasonably expected income, employment, assets other than the collateral, current obligations, and mortgage-related obligations (i.e., expected property taxes, premiums for mortgage-related insurance required by the lender, and similar expenses). This prohibition does not apply to temporary (bridge) loans that have terms of 12 months or less.

Answer 24

The answer is it may be communicated however the borrower chooses. A prospective borrower can indicate his/her intent to proceed with a loan in a number of ways, including orally, in person, at the time the Loan Estimate is delivered; by telephone; and in a written communication via e-mail. However, the applicant’s silence (i.e., failure to communicate that he/she will not proceed) may not be used as an indication of intent to proceed.

Answer 25

The answer is $12,000. To calculate the annual interest: 6% × $200,000 = $12,000.

Answer 26

The answer is borrower's payment amount. When a loan servicer sells or assigns loan servicing rights to another loan servicer, the borrower must be sent a servicing transfer statement at least 15 days before the effective date of the servicing transfer. This statement must show the name, address, and toll-free telephone numbers of both the old servicer and the new servicer, as well as the date the new servicer will begin accepting payments.

Answer 27

The answer is straw seller. A straw seller is a person who falsely claims to own a property being sold (which may or may not exist) and is typically paid in exchange for doing so.

Answer 28

The answer is generating requests for information from FinCEN. Under the BSA, financial institutions are required to establish and maintain procedures designed to ensure their compliance with the law. Federal regulations outline such requirements. Each institution must develop a written anti-money laundering compliance program, which must be approved by the institution’s board of directors. Provisions of the BSA also require a financial institution to report to FinCEN on a CTR any large currency transaction that exceeds $10,000, and to report suspicious activity and transactions to FinCEN using a Suspicious Activity Report (SAR). There is no requirement to generate requests for information from FinCEN.

Answer 29

The answer is borrower's Social Security Number. In the typical real estate sales transaction, the seller gives the buyer a deed at closing and the buyer gives the lender a promissory note and a security instrument (i.e., a mortgage or trust deed) that creates a lien on the property. The promissory note is both a promise to repay the money borrowed with interest and evidence of the debt. It shows the payor and payee, amount owed, rate of interest and whether the loan is fixed or adjustable, due dates for payment, and the loan terms.

Answer 30

The answer is the anticipated ARM rates for the first five years. In the heading of the Loan Estimate, the licensee must indicate the property address and its sale price, as well as the loan’s term. The Other Considerations table provides the applicant with information on appraisals, the homeowner's insurance requirement, the lender’s late payment policy, loan servicing information, and whether the loan may be assumed or refinanced. Anticipated ARM rates for the first five years of the loan are not disclosed, although the total the applicant will have paid in principal, interest, mortgage insurance, and loan costs for that time period is, in the Comparisons table.

Answer 31

The answer is allows consumers a full refund if the originator is found to have engaged in unethical acts. The S.A.F.E. Act includes provisions to enhance professional standards within the mortgage industry by imposing licensing requirements, providing consumers access to information about licensees at no charge through its online registry, and facilitating the collection and disbursement of consumer complaints on behalf of state and federal mortgage regulators. While the S.A.F.E. Act does have provisions ensuring compensation to victims of mortgage law violations, it does not guarantee such consumers a full refund in all cases of unethical conduct.

Answer 32

The answer is a portion of it may be applied to the UFMIP of another FHA-insured mortgage. The FHA funds the insurance from a mortgage insurance premium (MIP) charged to the borrower. Most FHA mortgages require payment of an upfront mortgage insurance premium (UFMIP). The UFMIP is nonrefundable, except to the extent that a portion may be applied to the UFMIP of another FHA-insured mortgage within three years. In addition, most FHA loans require payment of an annual mortgage insurance premium, payable monthly as part of the mortgage payment. This premium is based on the loan program, the loan term, and the LTV.

Answer 33

The answer is the applicant had a property foreclosed two years prior to application. In order for a state to approve a license application, the applicant must show that he/she has not been convicted of, or pled guilty or nolo contendere to, any felony in any court during the seven-year period preceding the date of the application; or at any time if the felony involved an act of fraud, dishonesty, or a breach of trust or money laundering. Indications of financial irresponsibility include bankruptcy or pattern of bankruptcies, a foreclosure within the past three years, any unpaid judgments (other than those relating to medical expenses), tax or other government liens, or a pattern of paying creditors late.

Answer 34

The answer is servicing. Settlement services include a variety of services related to the origination, processing, or funding of a loan, including, among others, rendering credit reports and appraisals, and conducting settlement by a settlement agent (e.g., the originating lender, an attorney, or a licensed escrow agent) and any related services. They do not include loan servicing.

Answer 35

The answer is either at the time of application or within three business days of application. A mortgage servicing disclosure statement discloses whether the servicing of the loan (i.e., collection of payments) may be assigned, sold, or transferred to any other person at any time while the loan is outstanding. It must be delivered to the borrower at application or within three business days.

Answer 36

The answer is Betty can rescind for three years from recording. If the creditor has failed to provide the required disclosures and notice of the right of rescission, the rescission period may be extended up to the date of the first of the following: three years after the consummation of the transaction, transfer of all of the consumer’s interest in the property, or sale of the property.

Answer 37

The answer is lower down payment requirements. So that he/she may get a loan with a small down payment, a borrower pays a mortgage insurance premium either as a lump sum at closing covering the life of the loan, or by paying the first year's premium at closing and then paying annual premiums as part of the mortgage payment. The amount of the premium is a percentage of the loan amount based on the borrower's down payment.

Answer 38

The answer is applicant and collateral. Underwriting is the process of deciding whether to make a loan based on credit, employment, assets, and other factors. To ensure that loans are marketable in the secondary market, the underwriter assesses the borrower’s ability and willingness to repay and the property’s ability to serve as collateral for the debt.

Answer 39

The answer is three months. Under the Do-Not-Call-Act, a company engaging in telemarketing is prohibited from making interstate or intrastate calls to anyone whose number is listed on the Registry, unless an “established business relationship” exists. An established business relationship means a relationship between the company and a consumer based on the consumer’s purchase, rental, or lease of the seller’s goods or services or a financial transaction between the consumer and seller, within the 18 months immediately preceding the date of a telemarketing call. This may also include an inquiry or application regarding an offered product or service, within the three months (90 days) immediately preceding the date of a telemarketing call.

Answer 40

The answer is due-on-sale clause. A due-on-sale clause provides that the loan must be immediately paid off if the subject property is sold. These apply to most mortgages/deeds of trust, unless the loan is assumable.

Answer 41

The answer is future tax liens. A lender’s title insurance policy insures the lender or mortgagee against loss caused by a borrower’s invalid title or loss of priority of the mortgage or deed of trust due to legal claims based on undisclosed encumbrances. Title insurance protects the lender against losses caused by problems that arose prior to the purchase of the property, such as mechanic’s liens, judgments, and covenants and restrictions. It would not cover future tax liens.

Answer 42

The answer is interest rate. In the typical real estate sales transaction, the seller gives the buyer a deed at closing and the buyer gives the lender a promissory note and a security instrument (i.e., a mortgage or trust deed) that creates a lien on the property. The promissory note is both a promise to repay the money borrowed with interest and evidence of the debt. The mortgage or trust deed secures repayment of the note. Housing costs, including principal, interest, taxes, and insurance, are not typically specified on the deed of trust.

Answer 43

The answer is it requires the disclosure of the APR on all advertisements which contain an interest rate. Regulation B implements the provisions of ECOA. Under ECOA, a creditor is required to provide an applicant with a copy of all appraisals and other written valuations developed in connection with an application for credit that is to be secured by a first lien on a dwelling. A copy of each appraisal or other written valuation must be provided the earlier of promptly upon completion or three business days prior to consummation of the transaction for closed-end credit or account opening for open-end credit. The creditor must mail or provide a notice of the applicant’s right to receive a copy of all written appraisals developed in connection with the application no later than three business days after receiving a completed application. ECOA also requires creditors to notify loan applicants within 30 days regarding application status (i.e., incomplete, accepted, denied, etc.).

Answer 44

The answer is Wednesday of the following week. A creditor must provide the Loan Estimate either in person, via overnight delivery, or by placing it in the mail or delivering it no more than three business days after receipt of the consumer’s application AND no later than seven business days prior to consummation. For the purposes of determining the waiting period that must elapse between providing a Loan Estimate and consummation, a "business day" is defined to mean all calendar days except Sundays and legal public holidays. Here, the Loan Estimate is mailed on Tuesday. Seven business days from Tuesday would be the following Wednesday (Wednesday, Thursday, Friday, Saturday, Monday, Tuesday, Wednesday).

Answer 45

The answer is five. In regard to higher-priced mortgage loans, under TILA and Regulation Z, a creditor or servicer may cancel an escrow account only upon the earlier of termination of the underlying debt obligation or five years after the loan was consummated, at the request of the consumer.

Answer 46

The answer is Regulation Z. The TILA-RESPA Rule, or TRID Rule, sets forth disclosure requirements and model forms for the two consolidated disclosures, the Loan Estimate and Closing Disclosure, and provides guidance to ensure compliance by licensees and exempt persons required to follow its provisions. The Rule’s provisions amended Section 19 of Subpart C of Regulation Z (12 C.F.R. §1026.19) and added two sections to Subpart E.

Answer 47

The answer is the second mortgage holder will need to agree to a subordination. A mortgage is a second mortgage when it is recorded after another mortgage that is still outstanding on the same property; or when it has a subordination clause specifying that it has lower priority (i.e., is subordinate) even though it may have had priority based on its date of recording, or will remain subordinate in the event that the first mortgage is refinanced. In order to preserve lien priority under the circumstances described, the second mortgage holder will need to agree to a subordination clause.

Answer 48

The answer is depreciation. For a sole proprietorship (a self-employed borrower), the income, expenses, and taxable profits are reported on the Profit or Loss from Business (Schedule C) on the owner’s individual tax return (IRS Form 1040). The individual’s actual income would be the net income shown on the Schedule C, plus any recurring capital gains or non-cash expenses, such as depletion and depreciation, that was deducted in arriving at the adjusted income, since the borrower did not actually have to spend the amount claimed for non-cash expenses.

Answer 49

The answer is negotiates the terms of a residential mortgage on behalf of a cousin. S.A.F.E. Act exemptions include individuals solely involved in extensions of credit referring to timeshare plans; an individual who is an employee of a federal, state, or local government agency or housing finance agency, acting as a loan originator only pursuant to his or her official duties; and an individual who offers or negotiates terms of a residential mortgage loan secured by his own dwelling, or only with or on behalf of an immediate family member. However, a cousin is not considered an immediate family member under the legal definition, which includes a spouse, child, sibling, parent, grandparent, or grandchild, including stepparents, stepchildren, stepsiblings, and adoptive relationships.

Answer 50

The answer is a high-cost bridge loan may include provision for a balloon payment. Equal and regular payments still may not fully amortize a loan, thus resulting in a balloon payment. A high-cost home loan may not provide for a payment schedule that results in a balloon payment, unless the schedule is adjusted for the irregular or seasonal income of the borrower; the loan is a bridge loan with a term of 12 months or less, taken for the acquisition or construction of the borrower’s principal residence; or the loan satisfies the requirements of a balloon payment qualified mortgage (among other requirements, the loan must be originated in a predominantly rural or underserved community, have a fixed rate, and be for a term of five to 30 years).

Answer 51

The answer is two months' taxes, two months' insurance. A borrower’s monthly mortgage payment may include a reserve payment (also known as an escrow or impound payment) that represents approximately 112 of the estimated annual hazard and flood insurance premiums and property taxes. When there is need of an account, the borrower may be required to make an initial deposit into the reserve account at settlement to ensure that the regular monthly deposits will accumulate enough to pay the property taxes, insurance premiums, or other charges when they are due. The maximum amount that a lender can collect for this deposit cannot exceed the sum of an amount sufficient to pay taxes, insurance premiums, or other charges up to the due date of the new loan’s first full monthly mortgage installment payment, plus an additional amount sufficient to pay future estimated taxes, insurance premiums, and other charges, not in excess of two months’ worth, which is 16 of the estimated charges for the following 12 months.

Answer 52

The answer is Regulation Z. Regulation Z cites a series of required disclosures, including the Consumer Handbook on Adjustable-Rate Mortgages (the CHARM Booklet), published by the Federal Reserve Board and the Federal Home Loan Bank Board, or a similar booklet.

Answer 53

The answer is zero tolerance. Fees in the zero-tolerance category, for which the actual charges at settlement may not exceed the amounts included on the Loan Estimate unless there is a change in circumstance, include fees paid to an unaffiliated third-party service provider if the creditor did not permit the consumer to shop for the third-party service provider.

Answer 54

The answer is it has a major role in overseeing the mortgage industry. Although the federal Department of Housing and Urban Development (HUD) no longer oversees the mortgage industry (that job has been taken over by the Consumer Financial Protection Bureau, or CFPB), it continues to operate in a number of important areas relating to housing. These areas include programs related to community planning and development, public housing and multi-family housing, and providing counseling for those seeking to purchase a home. The Federal Housing Administration (FHA) also operates under HUD; the FHA sponsors loan programs with relatively liberal qualification requirements, insuring financial institutions that offer loans to individuals who might not qualify for a prime loan.

Answer 55

The answer is No, because the loan is assumable. A due-on-sale (alienation) clause allows the lender to declare the entire balance of the loan due when the property is sold or transferred. This means that the loan may NOT be assumed. Since FHA and VA loans are generally assumable, a due-on-sale clause would not be included in the security instrument.

Answer 56

The answer is 0.125%. Under TILA and Regulation Z , the APR is considered accurate generally if it is not more than one eighth of one percentage point (0.125%) above or below the APR determined in accordance with legal requirements (i.e., in accordance with the actuarial method or the United States Rule method), or in an irregular transaction, if it is not more than one quarter of one percentage point (0.25%) above or below the annual percentage rate determined in accordance with legal requirements.

Answer 57

The answer is 60 days. Under most deeds of trust, including most FHA and VA loans, a borrower who intends to occupy the property as his or her primary residence must move in within 60 days after closing.

Answer 58

The answer is they must receive a copy at or before consummation. Under ECOA, a creditor is required to provide an applicant with a copy of all appraisals and other written valuations developed in connection with an application for credit that is to be secured by a first lien on a dwelling. A copy of each appraisal or other written valuation must be provided the earlier of promptly upon completion or three business days prior to consummation of the transaction for closed-end credit or account opening for open-end credit. An applicant may waive the timing requirement and agree to receive a copy at or before consummation or account opening.

Answer 59

The answer is "5% down payment." Under TILA, an ad must disclose a number of additional credit terms if it contains a trigger term. A trigger term includes certain credit terms specifically cited in an ad, including the amount or percentage of any down payment (e.g., "5% down," "95% financing," "$6,200 down"), except when the amount of the down payment is zero; the number of payments or period of repayment (e.g., "360 monthly payments," "a 30-year loan"); the amount of any payment (e.g., “payments of less than $1,400 per month”); and the amount of any finance charge (e.g., “total financing costs of less than $3,000”).

Answer 60

The answer is VA funding fees are refundable if the borrower is overcharged. VA loans are made by approved lenders and guaranteed by the U.S. Department of Veterans Affairs. The guarantee is similar to mortgage insurance in that it limits the lender's exposure to loss in the event of a borrower's default that results in foreclosure. However, the veteran borrower is charged a nonrefundable upfront funding fee that can be financed, instead of a mortgage insurance premium. The funding fee is only refundable if the borrower was overcharged. There are some exceptions to the imposition of a funding fee, including for veterans with disabilities. A veteran receiving VA compensation for a service-connected disability is exempt from the fee requirement.

Answer 61

The answer is a borrower closes on a refinance transaction for his primary residence and did not receive the proper rescission notice. The borrower changes his mind and wants to cancel 18 months later. TILA gives a consumer a right of rescission, allowing him or her to cancel the loan contract within a specified period of time for any reason if the loan is secured by the borrower’s principal residence and is a refinance transaction for a first or subordinate mortgage. The right of rescission does not apply to a residential mortgage transaction for a purchase or initial construction of a dwelling. In order to rescind, the consumer must forward a completed rescission form to the creditor no later than midnight of the third business day after the last of certain events occur, including consummation of the transaction, delivery of all material TILA disclosures, or delivery of notice of the right to rescind. If the creditor failed to provide the required disclosures and notice of the right of rescission, the rescission period may be extended up to the date of the first of the following: three years after the consummation of the transaction, the transfer of all of the consumer’s interest in the property, or the sale of the property.

Answer 62

The answer is actual amounts for taxes and insurance. In the typical real estate sales transaction, the seller gives the buyer a deed at closing and the buyer gives the lender a promissory note and a security instrument (i.e., a mortgage or trust deed) that creates a lien on the property. The promissory note is both a promise to repay the money borrowed with interest and evidence of the debt. It shows the payor and payee, the amount owed, the rate of interest and whether it is fixed or adjustable, the due date(s) for payment, and the terms of the loan. The mortgage or trust deed secures repayment of the note. Its covenants address topics that include occupancy, insurance, and hazardous materials, but it does not typically specify actual amounts for taxes and insurance.

Answer 63

The answer is is based on verifying income, assets, and current obligations. A lender extending mortgage credit subject to HOEPA in an open-end high-cost mortgage may not extend credit based on the value of the consumer’s collateral without regard to repayment ability as of the date of consummation, including consideration of current and reasonably-expected income, employment, assets other than the collateral, current obligations, and mortgage-related obligations (i.e., expected property taxes, premiums for mortgage-related insurance required by the lender, and similar expenses). This prohibition does not apply to temporary (bridge) loans that have terms of 12 months or less.

Answer 64

The answer is 15 years. For FHA loans, the annual mortgage insurance premium (MIP) will differ based on whether the term of the loan is greater than 15 years or is 15 years or less.

Answer 65

The answer is if a licensee fails to request a hearing with the state regulator. The NMLS does not require a hearing. Under most circumstances, the licensee has the right to request a hearing with the state banking department. If one is not requested, a hearing is not conducted.

Answer 66

The answer is the original VA loan is satisfied. A VA loan is assumable; however, the veteran’s VA eligibility is no longer available until the original VA loan has been satisfied. This means that it is paid off, either over the remaining amortization time period, sale of the home, or refinancing out of the VA loan.

Answer 67

The answer is no, because the judgments are a result of medical expenses, they will not be held against him. Evidence that an individual has not shown financial responsibility may include current outstanding judgments, except those solely as a result of medical expenses.

Answer 68

The answer is ECOA. The Equal Credit Opportunity Act is a fair lending law passed primarily because of anecdotal evidence that women were not treated on an equal basis with men in credit markets.

Answer 69

The answer is none; Leilani's tasks are complete. After loan settlement, there are some cases in which additional disclosures are due, however, these would be provided by the creditor rather than the loan originator.

Answer 70

The answer is three years. In order for a small creditor to originate a balloon payment qualified mortgage, the small creditor must hold the loan in its portfolio for three years.

Answer 71

The answer is yes, a dwelling includes a structure whether or not that structure is attached to real property. A residential mortgage loan is any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling or residential real estate upon which is constructed or will be constructed a dwelling. A dwelling is a residential structure that contains one to four units, whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobile home and trailer, if it is used as a residence.

Answer 72

The answer is seller carry-back. In a purchase transaction involving an assumable mortgage, when the party selling the property provides all or part of the financing, it is referred to as a seller carry-back.

Answer 73

The answer is declarations. The “Declarations” section of the URLA contains questions which, depending on the applicant’s answer, could result in immediate rejection of the application.

Answer 74

The answer is determine criminal sentences for non-licensed entities under the Act. A state regulator has the responsibility to carry out the administration of the SAFE Act, but is not involved in criminal prosecution or penalty decision making.

Answer 75

The answer is no later than the time at which a customer relationship is established. If a financial institution intends to share consumer information with nonaffiliated third parties, an initial privacy notice is due to a consumer no later than the time at which a customer relationship is established.

Answer 76

The answer is person or entity that only performs real estate brokerage activities. Real estate brokerage activities are not considered within the definition of a loan originator.

Answer 77

The answer is $35,900. The down payment in this scenario will be $35,900. This is just enough to keep them at the $647,200 conforming loan limit which was adjusted January 1, 2022. 683,100-647,200 = 35,900.

Answer 78

The answer is provide comprehensive training and facilitate responsible behavior to expand the subprime mortgage marketplace. The NMLS is a measure aimed at increasing responsible behavior and accountability and protecting consumers, not expanding the subprime marketplace.

Answer 79

The answer is single purpose. A single-purpose reverse mortgage is a low-cost loan offered to low-income borrowers by state and local agencies or non-profit organizations. They are typically made for purposes such as payment of property taxes or payment for home improvements.

Answer 80

The answer is a deed with conflicting ownership information. Creditors protect their investment in a mortgage by placing a lien on the home used as security. A title search shows whether other liens are in place that will have priority over the creditor’s lien. When a refinance pays off an existing first mortgage, the second mortgage will have priority, but creditors can use subordination agreements to ensure that the new mortgage has priority over the existing second mortgage. The title search might also uncover problems in the chain of title which could stop a transaction - for instance, a deed with conflicting ownership information (sometimes these are "wild deeds" with names that appear nowhere else on record) will require additional research and might demand legal action or could fully stop the refinance.

Answer 81

The answer is Notice of Adverse Action. The Notice of Adverse Action is a disclosure required by ECOA, not TILA.

Answer 82

The answer is the size of the loan being obtained. The size of the government’s guarantee on a VA loan depends on the size of the loan being obtained.

Answer 83

The answer is allows a buyer to assume the seller’s mortgage. An assumption clause is a provision in the terms of a loan that allows a buyer to assume the seller’s mortgage.

Answer 84

The answer is straw seller. A straw seller is an individual who accepts a fee to falsely claim ownership to a property.

Answer 85

The answer is nontraditional mortgage. A nontraditional mortgage is defined as any mortgage product other than a 30-year fixed-rate mortgage.

Answer 86

The answer is property owner and seller are not the same. If the property owner and property seller are not the same, it is likely more questions should be asked about the deal.

Answer 87

The answer is a part-time hourly worker who may get overtime in the summer and plans to pay principal at that time. An interest-only loan is suitable when a borrower is savvy enough to manage it properly. A part-time, hourly worker who “may” get overtime in the summer likely would not be the best candidate for an interest-only loan.

Answer 88

The answer is by rounding them to the next whole number, except for estimated principal and interest payments. Except for estimated principal and interest payments, costs on the Loan Estimate are rounded to the next whole number.

Answer 89

The answer is more than $35. If a foreclosure proceeding has been initiated by a creditor, the borrower may exercise his/her three-year right to rescind if the finance charge for the loan was understated by more than $35.

Answer 90

The answer is encumbrances. An encumbrance is a claim or liability on the title to a property, such as a lien or a mortgage.

Answer 91

The answer is USPAP. The Uniform Standards of Professional Appraisal Practice (USPAP) are the recognized standards for appraisals in the United States.

Answer 92

The answer is 15. If a consumer submits a complaint about a mortgage lender to the CFPB, the lender has 15 days to respond before the CFPB publishes the complaint in its public complaint database and pursues a potential investigation.

Answer 93

The answer is judgment, attachment, mortgage. Judgments, attachments, and mortgages are all considered liens.

Answer 94

The answer is a loan assumption made without lender approval. RESPA covers loans secured by first or subordinate liens on residential property but does not extend to an assumable loan which can be assumed without lender approval.

Answer 95

The answer is interest-only option fixed-rate. The loan has a rate of 6% for 30 years, meaning it has a fixed rate. This loan has an interest-only feature for the first five years.

Answer 96

The answer is making a loan solely based on the collateral value of the property. Under HOEPA, you may not make a loan solely based on the value of the borrower’s collateral without considering his/her ability to repay the loan.

Answer 97

The answer is the loan cannot include prepayment penalties after the first two years of the loan term. HPMLs cannot include prepayment penalties at all, so it is false to say that the loan cannot include prepayment penalties after the first two years of the loan when they are prohibited altogether.

Answer 98

The answer is until the loan balance is completely paid off. Flood insurance must stay in place at least until the loan balance is paid off and the lender no longer needs to be protected from the hazard.

Answer 99

The answer is not be required since purchases from servicemembers are not subject to the requirement for two appraisals. Purchases from servicemembers are not subject to the requirement for two appraisals.

Answer 100

The answer is bank statements. Bank statement review is part of an underwriter’s assessment of the borrower, not the collateral.

Answer 101

The answer is June 30th. The Equal Credit Opportunity Act requires lenders to inform applicants of the status of their loan within 30 days of application.

Answer 102

The answer is 80%. The LTV is calculated using the lesser of the purchase price and the appraised value. In this case, the loan amount of $160,000 is divided by the appraised value of $200,000 to get 80% LTV.

Answer 103

The answer is $13,800. The seller concession allowed on a conforming loan with a 90% (or less) LTV is 6%. This number is taken from the sales price, not the loan amount. $230,000 × 6% = $13,800.

Answer 104

The answer is 1007. The 1004 is the Uniform Residential Appraisal Report, or URAR. There are variations for certain properties; the 1007 is used for single-family properties that are investment properties.

Answer 105

The answer is refinance of a second home. HMDA data is required for purchase loans, refinance loans, and home improvement loans, as long as the loans are secured by a dwelling.

Answer 106

The answer is Department of Housing and Urban Development (HUD). The Department of Housing and Urban Development implements and enforces rules related to FHA lending.

Answer 107

The answer is Loan/Application Register. The form used for reporting HMDA data is called the Loan/Application Register (LAR).

Answer 108

The answer is a verification of employment. Generally, a verification of employment is signed by the borrower with blank spaces remaining, with the understanding the borrower has signed to give permission for the employer to complete it.

Answer 109

The answer is prepaid finance charges. A prepaid finance charge is any finance charge paid separately, in cash or by check, before or at consummation of a transaction or withheld from the proceeds of the loan at any time. They are direct charges paid by the borrower and include loan origination, discount, and commitment fees; any prepaid private mortgage insurance; underwriting, processing, tax service, and courier fees; buy-down funds; and prepaid interest.

Answer 110

The answer is termination of PMI is automatic at the midpoint of the amortization schedule as long as a borrower is current on his/her payments. The term “high-risk loans” pertains specifically in this case to legislation related to the HPA which facilitates the cancellation of private mortgage insurance. The HPA requires PMI on high-risk loans to be terminated automatically at the midpoint of the amortization schedule, when the borrower is current.

Answer 111

The answer is ethnicity, race, sex, and religion of the applicant. HMDA monitoring requires the collection of extensive data about each mortgage loan application and origination. This includes any action taken on the loan, indication of whether the loan is subject to HOEPA, and the ethnicity, race, sex, and income of the applicant. HMDA does not require the collection of information about an applicant’s religion.

Answer 112

The answer is a 65-year-old borrower without a mortgage who would like to supplement his income. Home equity conversion mortgages allow elderly borrowers who have significant equity in their homes the opportunity to draw on that equity, without repayment, as long as they continue to live in the home.

Answer 113

The answer is residential, business, commercial, and agricultural loans. ECOA has a wider range than RESPA and TILA, beyond just loans related to residential properties. The law also covers loans for businesses, commercial, and agricultural loans.

Answer 114

The answer is title search. The title search is the first step in the title process. It involves an abstractor or an attorney searching county or municipal records to determine the status of a property.

Answer 115

The answer is an employee of a non-depository institution. A state-licensed loan originator is an employee of a non-depository institution and is licensed by the state. An originator employed by a depository or the Farm Credit Administration would be registered.

Answer 116

The answer is 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.

Answer 117

The answer is HOEPA. HOEPA prohibits the intentional targeting of poor or underserved areas with expensive high-cost loans, which is a practice known as reverse redlining.

Answer 118

The answer is provide disclosure of the corrected discrepancy and wait three business days before closing. When the APR listed on the Closing Disclosure is inaccurate, the APR must be re-disclosed to the borrower, and the loan cannot close for at least three business days from the re-disclosure date.

Answer 119

The answer is CFPB. The CFPB has primary oversight and enforcement authority for the Fair Credit Reporting Act. However, it shares some of its enforcement authority with the FTC.

Answer 120

The answer is suspension of a license without notice of a right to a hearing. As a result of an investigation, state licensing authorities may not suspend a license without making the licensee aware of why an action may be taken and that the licensee may request a hearing.

Answer 121

The answer is TILA. The Home Ownership and Equity Protection Act is part of TILA. Created in 1994, it was the first legislation specifically created to combat predatory lending. Its regulations are found in Section 32 of Regulation Z.

Answer 122

The answer is a balloon payment. "5/25" and "7/23" are commonly used to designate loans that include a balloon payment.

Answer 123

The answer is higher-priced mortgage loan. Special second appraisal requirements apply for a loan that is a higher-priced mortgage loan.

Answer 124

The answer is the purchase price is 20% higher than the seller’s acquisition price 150 days ago. According to the HPML Rule, a transaction will require a second appraisal if the purchase involves a possible case of “loan flipping.” This is true when the consumer’s purchase price is 10% more than the seller’s acquisition price (if the seller acquired the property 90 or fewer days ago) or 20% more than the seller’s acquisition price (if the seller acquired the property 91 to 180 days ago).

Answer 125

The answer is The Dodd-Frank Act. The Dodd-Frank Act amended TILA and other mortgage-related laws, and mandated the implementation of additional rules to improve consumer protection.

Answer 126

The answer is escrow accounts are required for all first-lien HPMLs secured by the borrower’s principal dwelling. Escrow accounts are required for all first-lien HPMLs secured by the borrower’s principal dwelling.

Answer 127

The answer is deed. The deed is a written instrument properly signed and delivered that conveys title to real property.

Answer 128

The answer is 15- and 30-year. The FHA offers 15- and 30-year fixed-rate mortgages to qualifying borrowers.

Answer 129

The answer is making a loan commitment. A mortgage loan originator assisting a consumer in obtaining or applying to obtain a residential mortgage loan may provide advice on loan terms, including rates, fees, and other costs; prepare loan packages; or collect information on behalf of the consumer with regard to a residential mortgage loan. A loan commitment is made by a lender.

Answer 130

The answer is 33 or 38. Direct RHS loans may have terms of 33 and 38 years.

Answer 131

The answer is $11,880. For a conforming loan, the max seller contribution in this scenario is 6% (the down payment is more than 10%). The 6% is taken from the purchase price of $198,000, which is $11,880.

Answer 132

The answer is Either Oskar or Half Nelson. Each mortgage loan originator must be covered by a surety bond. If he/she is an employee or exclusive agent of a person subject to the state’s SAFE Act, the surety bond of the employing licensee or exempt person may be used to satisfy the loan originator surety bond requirement.

Answer 133

The answer is recommending insurance in excess of the replacement value of the improvements is prohibited. It is prohibited for any person, when engaging in loan origination activity, to cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement value of the improvements as established by the property insurer.

Answer 134

The answer is a unilateral markup, which is legal, but may be a violation of RESPA’s prohibition against unearned fees. RESPA requires compensation for settlement services to be earned. Any compensation not in direct correlation with an actual service is likely a violation. However, according to a 2012 case, the act of unilaterally marking up a fee and retaining the additional earnings is not illegal, as long as fee-splitting is not involved.

Answer 135

The answer is 10%. For the purposes of issuing a revised Loan Estimate, “changed circumstances” that affect estimated settlement charges must result in a change to those charges of more than 10%.

Answer 136

The answer is liability for ATR Rule violations. The Qualified Mortgage Rule extends a safe harbor from liability for ATR Rule violations. The safe harbor is for loans that meet qualified mortgage standards.

Answer 137

The answer is the frequency with which the rate will change. If an ad states a simple annual rate of interest and more than one simple annual rate of interest will apply over the term of the loan, the ad must clearly and conspicuously disclose each applicable simple annual interest rate, the period of time during which each rate will apply, and the annual percentage rate for the loan.

Answer 138

The answer is the third business day after the Closing Disclosure is mailed. The waiting period prior to closing will begin on the third business day after the Closing Disclosure is mailed.

Answer 139

The answer is FHFA. HERA created and installed the FHFA (Federal Housing Finance Agency) as the conservator of the GSEs (Fannie Mae and Freddie Mac). The FHFA’s powers include the responsibility to set the conforming loan limits from year to year.

Answer 140

The answer is dated prior to the sales contract. An appraisal dated prior to the sales contract is a red flag.

Answer 141

The answer is ten business days. A revised Loan Estimate may be provided if an applicant waits more than ten business days after the creditor provides a Loan Estimate before indicating an intent to proceed.

Answer 142

The answer is investigative consumer report. A consumer report using information obtained through personal interviews is known as an investigative consumer report and is meant to give insight into a person’s character, general reputation, personal characteristics, and mode of living.

Answer 143

The answer is CRAs, furnishers of information to CRAs, and users of consumer reports. The FCRA creates a number of obligations for users and furnishers of credit information as well as the credit reporting agencies (CRAs) which receive and report credit information.

Answer 144

The answer is protect consumers by ensuring that the mortgage lending industry operates without unfair and deceptive practices.

Answer 145

The answer is credit history is missing entirely. Missing credit history is a credit report red flag, not an employment red flag.

Answer 146

The answer is conversion option. The option on an ARM that gives a borrower the opportunity to convert his/her loan to a fixed rate is called a conversion option.

Answer 147

The answer is allowing the FBI access to a borrower’s file for an investigation. Exceptions to the FCRA allow for FBI access to a consumer report for the purposes of investigations.

Answer 148

The answer is the locked term; the adjustment frequency. ARMS are often named for their features. In other words, a 3/1 ARM is locked for three years, and then adjusts annually each year thereafter. The first number represents the locked term and the second number represents the adjustment frequency.

Answer 149

The answer is become state-licensed as a loan originator. An independent contractor is required to become state-licensed in order to increase accountability within the NMLS system.

Answer 150

The answer is a limit on bankruptcies that are more than seven years old. Most negative information that is more than seven years old is not included in a credit report; however, bankruptcies may be reported for up to ten years.

Answer 151

The answer is the state regulator. The NMLS consolidates and makes licensing records available to state regulators to use for licensing decisions.

Answer 152

The answer is establishing compensation programs that withhold payment for services until the service provider can demonstrate compliance with the law. Establishing compensation programs to withhold payment for services is not a required element of a risk management program.

Answer 153

The answer is business signage. The unique identifier of any person originating a residential mortgage loan must be clearly shown on all residential mortgage loan application forms; solicitations or advertisements, including business cards or websites; and any other documents as established by rule, regulation, or order of the state licensing agency (MSL.210).

Answer 154

The answer is make the required disclosures with equal prominence and in close proximity to the advertised rates or payments. In order to comply with the advertising rules found in Regulation Z, creditors that advertise rates and payments for mortgages must make the required disclosures with equal prominence and in close proximity to the advertised rates or payments.

Answer 155

The answer is a balloon payment may result from minimum periodic payments. The advertisement must include a statement that a balloon payment may result from minimum periodic payments.

Answer 156

The answer is Interest Rate Reduction Refinance Loan. In terms of VA loans, IRRRL stands for Interest Rate Reduction Refinance Loan, often referred to as “streamline” or a “VA to VA.”

Answer 157

The answer is deed of trust / trustee. In a title theory state, title to residential real estate is granted with a deed of trust, naming the lender as the beneficiary of the trust, the borrower as the trustor, and the third party that holds the deed until the loan is fully paid as the trustee.

Answer 158

The answer is no, he is exempt from the requirement to be licensed. A state is not required to license an individual who is an employee of a federal, state, or local government agency or housing finance agency who acts as a loan originator in the course of his/her employment.

Answer 159

The answer is may be cancelled at the borrower’s request five years after consummation if the borrower is not currently delinquent or in default and the loan balance is less than 80% of the original value of the home securing the loan. After an escrow account is established for an HPML, it may be cancelled at the borrower’s request five years after consummation if the borrower is not currently delinquent or in default and the loan balance is less than 80% of the original value of the home securing the loan.

Answer 160

The answer is loans secured by non-owner-occupied homes. The Qualified Mortgage Rule applies to a broad range of loans including those secured by second homes or investment properties, but does not apply to open-end home equity loans, bridge loans of 12 months or less, reverse mortgages, or mortgages for timeshares.

Answer 161

The answer is the lender may foreclose without first obtaining a court order. When a mortgage or deed of trust contains a power of sale clause, the lender is authorized to sell the property through foreclosure steps without having to obtain a court order first. This is known as a non-judicial foreclosure.

Answer 162

The answer is the loan amount and the mortgage insurance rate. Annual PMI is determined by multiplying the loan amount and the mortgage insurance rate.

Answer 163

The answer is mortgage. A mortgage connects the promissory note (the borrower’s promise to pay) with the collateral.

Answer 164

The answer is less expensive than that charged for FHA loans and for private mortgage insurance. USDA/RHS guaranteed loans require payment of upfront and annual mortgage insurance, but the premiums are less than those for other types of mortgage insurance. For USDA/RHS loans, the insurance charge is referred to as the "guarantee fee."

Answer 165

The answer is do not take periodic rate caps into consideration. Underwriting of non-qualified mortgages must compute periodic payments that do not take periodic rate caps into consideration.

Answer 166

The answer is car loans. Nontraditional credit includes payments for things not traditionally tracked by or reported to the credit bureaus. This includes things like rent and utility bills.

Answer 167

The answer is Both Connie and Callie. Both Connie and Callie would be guilty of engaging in a prohibited act. Callie would be conducting loan origination business without holding a valid license, while Connie is assisting Callie, an unlicensed individual, in conducting loan origination business.

Answer 168

The answer is Hybrid ARM. The term “nontraditional” primarily refers to payment structure or qualification documentation. In other words, traditional loans will include a payment structure that regularly decreases the principal balance and will require a borrower to prove that he/she can pay off the loan to qualify.

Answer 169

The answer is accepting payments, disbursing escrow funds, maintaining records, and managing delinquent accounts. Loan servicers handle many tasks, including accepting payments, disbursing escrow funds, maintaining records, and managing delinquent accounts.

Answer 170

The answer is the amount paid for private mortgage insurance before the LTV ratio reaches 78%. The comparisons table does not show the amount paid for PMI before the LTV ratios reaches 78%.

Answer 171

The answer is bridge financing. Bridge financing is used to help homeowners who are selling one home and buying another to make payments on their new home loan while waiting for the closing date on their old home to arrive.

Answer 172

The answer is appraiser; underwriter. The appraiser is responsible for determining whether a property is located in a flood zone, and the underwriter verifies that proper flood insurance is in place.

Answer 173

The answer is have an appraisal done on the item, or ask for further documentation. The underwriter will ask to see documentation if the value of personal property being sold is called into question. This may include an appraisal of the property, and/or some further documentation.

Answer 174

The answer is upon application. Under the Gramm-Leach-Bliley Act, a customer relationship begins as soon as a borrower provides non-public personal information. For the purposes of mortgage lending, this happens at application.

Answer 175

The answer is it is not necessary to renew. Owner’s title insurance is good for the period of time that a borrower owns the home, meaning it must only be purchased once and does not require renewal.

Answer 176

The answer is the lender in the event the property is damaged by fire or other risks. The loss payee clause in a hazard insurance policy protects the lender’s investment in the event that the collateral is damaged by fire or other risks. This means that if there is a fire or other loss, the lender is paid first to cover its investment.

Answer 177

The answer is completion notice. A completion notice is required of an appraiser, typically to document the completion of new construction prior to closing a loan on the property. Easements, land locks, and leaseholds are all examples of title issues that may affect marketability or cloud title.

Answer 178

The answer is issuing an order to a former employer of a loan originator to turn over records. Commissioner does not have authority to examine records of former employers of a loan originator.

Answer 179

The answer is within 30 days of application, if the application is missing required information. ECOA requires the borrower to know the status of his/her loan within 30 days of application. This includes letting the borrower know, within 30 days, that his/her application needs to be completed in order for any further consideration of the file.

Answer 180

The answer is fixed rate. This loan is a fixed-rate loan (at 6% for 30 years). The payment example shows an interest-only feature for the first five years and then a fully-amortized payment for the remainder of the loan.

Answer 181

The answer is ECOA. The Equal Credit Opportunity Act strictly prohibits the assumption that a woman will discontinue working once she has had a baby.

Answer 182

The answer is to ensure accuracy, fairness, and the privacy of consumers’ personal information assembled and used by consumer reporting agencies. The FCRA was enacted to protect the consumer in any transaction involving the use of credit reports. It is meant to govern the accuracy, fairness, and privacy of a consumer’s information when it is assembled for the purposes of credit evaluation.

Answer 183

The answer is the borrower adds MIP to the loan. Reverse mortgages may contain acceleration clauses which can cause a loan to become due and payable. Reasons for this may include adding an owner to the title, taking out new debt against the home, or renting out all or part of the home. Some reverse mortgages do include MIP, which helps to guarantee that the borrower will never owe more than the value of the home.

Answer 184

The answer is a legal description of the property. The promissory note contains the borrower’s name, loan amount, interest rate, loan terms, and a provision requiring notices be done in writing. It does not contain a legal description of the property.

Answer 185

The answer is he/she takes applications on behalf of the loan originator. A processor and/or underwriter may only maintain exempt status from licensure if engaged solely in clerical or support duties while employed with either a licensed or exempt entity. Under no circumstances may a processor or underwriter engage in the activities of a loan originator.

Answer 186

The answer is calculated based on a penalty matrix, which considers good faith, previous violations, and financial resources of the entity involved. HMDA uses a penalty matrix to determine fines for violations. The matrix includes considerations for good faith, previous violations, and the financial resources of the entity involved.

Answer 187

The answer is mechanic’s liens. The first lien recorded has priority. One possible exception is mechanic’s liens, depending on state law.

Answer 188

The answer is origination fees. TILA requires charges for origination fees to be included when calculating the finance charge.

Answer 189

The answer is identifying, mitigating, and preventing identity theft. The FTC Red Flags Rule focuses on methods of detecting a security breach that may lead to identity theft within a financial institution that maintains a covered account on behalf of the customer.

Answer 190

The answer is initial rate cap. The initial rate cap is a limit on the amount by which the interest rate can increase or decrease at the first adjustment date for an ARM.

Answer 191

The answer is consummation, delivery of the notice of the right to rescind, or delivery of all material disclosures, whichever is later. In a closed-end loan transaction that offers the right to rescind, rescission may be exercised at any time until midnight on the third business day after consummation, delivery of the notice of the right to rescind, or delivery of all material disclosures, whichever is later.

Answer 192

The answer is a purchase money mortgage. A purchase money mortgage would be subject to the ATR Rule.

Answer 193

The answer is misrepresented or accounted for untruthfully. Money paid to a mortgage lender for the purpose of paying a third party may not be misrepresented or accounted for untruthfully.

Answer 194

The answer is frequency of change, caps, index, margin. There are four factors involved in determining an ARM’s movement. They are frequency of change, caps, index, and margin.

Answer 195

The answer is making a lending decision based solely on the amount of equity in a loan applicant’s home. HOEPA prohibits lending decisions based solely on the amount of equity in a loan applicant’s home and requires consideration of repayment ability. This prohibition is intended to discourage reverse redlining.

Answer 196

The answer is FHA loan. Conventional loans include a wide range of loan types except for government-insured and guaranteed loans such as FHA loans, USDA loans, and VA loans.

Answer 197

The answer is the creation of a separate agency. In overseeing mortgage loan originators, a state must provide effective supervision and enforcement. Effective supervision by a state includes participation in the NMLS, the writing of rules and regulations necessary to the licensing of loan originators, conducting background checks, the setting and resetting of renewal or reporting dates, and taking appropriate enforcements actions.

Answer 198

The answer is a variable interest rate. High-cost mortgages are permitted to have a variable interest rate, however, negative amortization, advanced payments, and prepayment penalties are not allowed.

Answer 199

The answer is the dollar value of loans Jim originates annually. The penal sum of the surety bond must be maintained in an amount that reflects the dollar value of loans originated.

Answer 200

The answer is before consummation of the loan. Mary must establish an escrow account prior to the consummation of the loan.

Answer 201

The answer is a fiduciary duty. If a mortgage broker agrees to serve a loan applicant as his or her agent, the broker owes a fiduciary duty to the applicant.

Answer 202

The answer is the mortgage broker can pay the contractor directly. HOEPA prohibits direct payments to home improvement contractors, unless payment is a joint payment to the borrower and the contractor, or is made to a third-party escrow agent pursuant to a written agreement between the lender, borrower, and contractor.

Answer 203

The answer is annual rate / number of payments in a year = periodic rate. The periodic rate is calculated by dividing the annual rate by the number of payments in a year.

Answer 204

The answer is the consumer has specifically requested a balloon payment. A qualified mortgage may only include a balloon payment if the loan has a term of at least five years, has a fixed interest rate, and is made by a small creditor.

Answer 205

The answer is promissory note. The promissory note is the promise to repay a loan and contains the contractual terms for repayment.

Answer 206

The answer is origination of a residential mortgage loan. Origination of a residential mortgage loan involves all residential mortgage loan-related activities from the taking of a loan application through completion of all required closing documents and the funding of the residential mortgage loan.

Answer 207

The answer is for each variable-rate mortgage product in which the applicant expresses an interest. A Loan Program Disclosure must be provided for each variable-rate mortgage product in which the applicant expresses an interest.

Answer 208

The answer is the loan applicant locks his or her interest rate. A revised Loan Estimate is required when a loan applicant locks the interest rate. Offering revised estimates for a change in circumstances is restricted to limited situations.

Answer 209

The answer is a home equity line of credit. A Loan Estimate would not be required in a transaction for a home equity line of credit.

Answer 210

The answer is is a qualified mortgage, and may have a conclusive presumption of compliance. A VA loan that is an IRRRL may have a conclusive presumption of compliance if certain underwriting standards are met. IRRRLs do not automatically have a conclusive presumption of compliance.

Answer 211

The answer is to determine the maximum licensing fees. A state licensing agency may conduct examinations and investigations for the purpose of initial licensing or license renewal; license suspension, conditioning, revocation, or termination; and to determine compliance with state law.

Answer 212

The answer is an appraisal is done on a new home being built for a first-time homebuyer. The cost approach is generally used on new home construction (among other reasons). This approach arrives at a value by estimating the value of the land, as if vacant, and adding the cost to build the house.

Answer 213

The answer is Section 4. Section 4 of the 1003, “Loan and Property Information,” provides information about the property, including its street address and how it will be used.

Answer 214

The answer is a borrower with a 580 credit score is offered a loan with credit life premiums included. Tacking on unnecessary insurance premiums such as “credit life” is a practice that predatory lenders often use to increase profits.

Answer 215

The answer is reverse mortgage/FHA. HECMs are reverse mortgages that are offered in compliance with program guidelines set by the FHA and HUD.

Answer 216

The answer is one year. FACTA requires an initial Fraud Alert to be kept in a consumer’s file for a period of one year. An Extended Fraud Alert, meaning there is an actual identity theft report submitted, is required for seven years.

Answer 217

The answer is there is a DBA or an AKA. The presence of a DBA (doing business as) or AKA (also known as) would be a credit report red flag.

Answer 218

The answer is The Commissioner. The Commissioner or state regulator for financial institutions determines licensing eligibility.

Answer 219

The answer is race, color, religion, national origin, sex, marital status, age, because the applicant receives public assistance income, or because an applicant exercised his or her right under the Consumer Credit Protection Act. ECOA prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, because the applicant receives public assistance income, or because an applicant exercised their right under the Consumer Credit Protection Act.

Answer 220

The answer is take a loan application in the absence of a loan originator. Exempt processors and underwriters may not take on any of the responsibilities of the loan originator that would ordinarily require a license, such as taking an application.

Answer 221

The answer is stated income verified assets. “SIVA” stands for stated income verified assets.

Answer 222

The answer is undetected encumbrances. The owner’s policy protects the owner of the property against ownership disputes or undetected liens or encumbrances on the property. The standard owner’s policy does not cover survey issues, legal costs to the lender, or protection against foreclosure.

Answer 223

The answer is a statement that ECOA prohibits discrimination against credit applicants. There must be a statement on the Adverse Action Notice stating that ECOA prohibits discrimination against credit applicants.

Answer 224

The answer is a person who regularly refers applicants to creditors, or selects or offers to select creditors to whom requests for credit can be made. A broker does not technically extend credit. However, ECOA specifically addresses the broker by including persons who “regularly refer applicants to creditors, or selects or offers to select creditors to whom requests for credit can be made.”

Answer 225

The answer is fees charged by an unaffiliated appraiser. Finance charges always include fees charged by the creditor, charges by an affiliate of the creditor, and fees charged by a third-party provider required by the creditor. Fees charged for real estate-related services, such as appraisal, are not included in the finance charge if they are reasonable, are not charged by affiliates, and the creditor does not receive a direct or indirect fee for those services.

Answer 226

The answer is payment cap. The payment cap is a limit on the amount by which the payment can change on any adjustment date from the current or previous payment amount on an ARM.

Answer 227

The answer is $189,000; 90%. The LTV is always based off of the lower of the purchase price or the appraised value. In cases where the appraisal comes back lower than the purchase price, lenders will typically adjust the figures based on the appraisal value. So, in this case, the purchase price would be adjusted to $210,000 (the appraisal price). From here, after the borrower’s 10% down payment, the loan amount would be $189,000, and the LTV would be 90%.

Answer 228

The answer is use of a trigger term requires the clear and conspicuous disclosure of other relevant terms with equal prominence.

Answer 229

The answer is TILA. In 1994, TILA was amended to provide greater protection to borrowers who chose or were coerced into loans with high costs or high rates. This section of TILA is known as Section 32.

Answer 230

The answer is The Fraud Enforcement and Recovery Act. The Fraud Enforcement and Recovery Act was enacted with the intent to increase enforcement against those who commit mortgage fraud.

Answer 231

The answer is HUD establishes loan limits for FHA loans based on county-by-county conforming limits. HUD establishes loan limits for FHA loans based on county-by-county conforming loan limits. FHA loan limits are divided into lower-cost and higher-cost areas.

Answer 232

The answer is power of sale clause. The foreclosure process is determined by the presence or absence of a power of sale clause in the mortgage or deed of trust. If there is no power of sale clause, the lender must go to court to foreclose (called a judicial foreclosure). If a power of sale clause is included in the mortgage or deed of trust, then the lender can begin foreclosure without court involvement (nonjudicial foreclosure).

Answer 233

The answer is CLTV. The CLTV is the ratio of all mortgages on the property divided by the total value of the property.

Answer 234

The answer is the property owner and the property seller are two different individuals. A transaction in which the property owner and the property seller are two different individuals may be a red flag of attempted mortgage fraud.

Answer 235

The answer is reports of condition. Each mortgage licensee must submit to the NMLS reports of condition in the form and containing the information as may be required by the NMLS.

Answer 236

The answer is both the hazard insurance company and the mortgage broker. Under Section 8 of RESPA, it is illegal to give or accept any fee, kickback or other thing of value under any agreement or understanding, oral or otherwise, that business relating to or part of a settlement service involving a federally related mortgage loan will be referred to any person. The term "thing of value" includes any payment, advance, funds, loan, service or other consideration, such as payments of another person’s expenses. The above is an example of an instance in which both parties are in violation of the prohibition against the payment or receipt of a thing of value in exchange for referrals.

Answer 237

The answer is a loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid. A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid.

Answer 238

The answer is Freddie Mac. The Federal Home Loan Mortgage Corporation is known more commonly as “Freddie Mac,” and also as “FHLMC.”

Answer 239

The answer is borrower. In lien theory states, the borrower holds the title to the home securing a mortgage, and when the loan is paid in full, the lien on his or her home is released.

Answer 240

The answer is $300,000. For transactions involving an HPML (higher-priced mortgage loan), a second appraisal is required if the seller acquired the home 91 to 180 days prior to the consumer’s agreement to purchase it, and the price at which the consumer agreed to purchase the home is 20% more than the price paid by the seller. 20% of $300,000 is $60,000. $300,000 + $60,000 = $360,000.

Answer 241

The answer is fees paid to a creditor. Fees that are subject to a zero tolerance for variances between estimated and actual fees include those for creditors, mortgage brokers, and their affiliates.

Answer 242

The answer is the maximum interest rate that will apply during the first five years after the date of the first payment. Payments for qualified mortgages must be based on the maximum interest rate that will apply during the first five years after the date of the first payment.

Answer 243

The answer is not charge any fees for the loan modification. HOEPA prohibits creditors, assignees, and agents of these parties from charging any fee to modify, renew, extend, or amend a high-cost home loan, and from charging a fee for payment deferrals.

Answer 244

The answer is Van is exempt from the requirement to be licensed as the property on which he is negotiating the terms of the mortgage loan was his own residence. An individual is not required to be licensed if he or she offers or negotiates the terms of a residential mortgage loan secured by a dwelling that served as his or her residence.

Answer 245

The answer is a fixed-rate qualified mortgage that is not a higher-priced mortgage loan. The only loans that may include prepayment penalties are fixed-rate qualified mortgages that are not higher-priced mortgage loans.

Answer 246

The answer is his license will expire. The license of a mortgage loan originator will expire if he or she fails to satisfy the minimum standards for license renewal, including satisfying the annual continuing education requirement.

Answer 247

The answer is Michael and the mortgage broker are liable for submitting a loan application that contains false information. When signing a loan application, loan applicants affirm that all information in the application is true and accurate. Michael has broken the law by submitting false information and misrepresenting that it is true. Mortgage brokers and other originators have an obligation to advise loan applicants that it is a crime to submit false information on a loan application, and those who suggest, encourage, or condone the submission of false information are conspiring with loan applicants to commit fraud.

Answer 248

The answer is principal; agent. Fiduciary duties include loyalty, good faith, and an obligation to put the interests of the principal (borrower) ahead of those of the agent (broker).

Answer 249

The answer is Loan Estimate and Closing Disclosure. A Loan Estimate and Closing Disclosure would not be required for an adjustable-rate home equity plan, because this type of loan is exempt from the requirements of the TRID Rule.

Answer 250

The answer is RESPA. The mishandling of a borrower’s funds often leads to commingling or misappropriation, which is a practice prohibited by RESPA.

Answer 251

The answer is allowed when certain changed circumstances arise. Revisions to a Loan Estimate are allowed when certain changed circumstances arise.

Answer 252

The answer is take possession of records or designate a specific person to control access. During the course of an examination or investigation, the state licensing agency may take possession of the documents and records of the person being examined or place a person in exclusive charge of the documents and records in the place where they are usually kept. Licensees generally must still be given access to records for the purposes of conducting normal business, but licensees and their employees are prohibited from any attempt to destroy, conceal, secrete, remove, or otherwise tamper with records and files during investigation or at any time.

Answer 253

The answer is may be oral or written. The TRID Rule allows consumers to indicate their intent to proceed with a transaction orally or in writing.

Answer 254

The answer is Initial Rate Change Disclosure. The Initial Rate Change Disclosure is required for ARMs and is intended to provide borrowers with information to prepare them for interest rate adjustments that will result in changes in payment amounts.

Answer 255

The answer is FCRA. Failing to give borrowers accurate information about their credit in an effort to steer them into a loan they may be overqualified for is an ethical and legal violation of the Fair Credit Reporting Act

Answer 256

The answer is both first and subordinate liens. RESPA covers first and second liens on residential property.

Answer 257

The answer is reasonable methods. FACTA requires the use of “reasonable methods” to make sure a borrower’s personal information cannot be accessed as a result of its disposal.

Answer 258

The answer is FHA loans. The Homeowners Protection Act (HPA) is used to facilitate the cancellation of private mortgage insurance, or PMI. FHA loans require upfront and annual mortgage insurance premiums; they do not rely on private mortgage insurance to protect their investment.

Answer 259

The answer is title theory. In a title theory state, the lender holds legal title until the debt is paid, which, in theory, means the lender actually owns the home until the borrower has paid the mortgage.

Answer 260

The answer is the lender can require the borrower to make up the shortage over the next 12 months. If the escrow account is short by more than 1 month, the lender can choose to do nothing or require repayment of the shortage over a minimum of 12 months. If an escrow account analysis discloses a shortage of less than one month's escrow account payment, the lender or servicer may allow the shortage to exist and do nothing to change it, require the borrower to repay the shortage amount within 30 days, or require the borrower to repay the shortage amount in 2 or more equal monthly payments.

Answer 261

The answer is none of the choices. Under Regulation Z, an ad must disclose a number of additional credit terms if it contains a trigger (or triggering) term, which is any of a number of credit terms specifically cited in an ad. Since in this case the ad does not cite any specific credit terms, no further disclosures are required.

Answer 262

The answer is the CFPB. Under the S.A.F.E. Act, states and their regulatory agencies have the duty and the authority to enact licensing standards that meet S.A.F.E. Act requirements. Overall responsibility for interpretation, implementation, and compliance with the S.A.F.E. Act was originally delegated to the U.S. Department of Housing and Urban Development (HUD). However, effective July 21, 2011, all of HUD’s authorities and duties were delegated to the Consumer Financial Protection Bureau (CFPB).

Answer 263

The answer is title insurance. The annual percentage rate (APR) represents the relationship of the total finance charge to the total amount financed, as a yearly rate. It is not the same as the nominal rate (i.e., the interest rate shown in the note), as it includes all finance charges, not just interest. Among other charges, finance charges include points, loan fees, and mortgage insurance premiums, but not title insurance premiums.

Answer 264

The answer is this is allowed as long as the borrower has received the Loan Estimate and expressed an intent to proceed. A consumer may not be charged any fee in connection with a mortgage loan application, except a reasonable and bona fide credit report fee, before receipt of the Loan Estimate and prior to indicating an intent to proceed with the loan.

Answer 265

The answer is the new buyer is going to use the property as a rental property. The income (or capitalization) approach is used to appraise properties that produce rental income (e.g., apartments, office buildings, and rental units). It bases the value of the property on the net income the owner will receive and a rate of return (capitalization rate) the owner should find acceptable. The estimated net income is calculated by subtracting an allowance for vacancies and bad debts from scheduled gross income to arrive at effective gross income, and then subtracting fixed expenses, operating expenses, and reserves to replace items that will wear out.

Answer 266

The answer is annual percentage rate. A prepaid finance charge is any finance charge paid separately, in cash or by check, before or at the consummation of a transaction or withheld from the proceeds of the loan at any time. They are direct loan charges paid by the borrower that must be included in computing the annual percentage rate.

Answer 267

The answer is an interest-only option. An interest-only option is permitted for a non-qualified mortgage, but not for a qualified mortgage.

Answer 268

The answer is all closed-end federally related mortgage loans. The Loan Estimate is required for all closed-end federally related mortgage loans.

Answer 269

The answer is providing computer records. Providing records electronically is an acceptable method of keeping records available for examination.

Answer 270

The answer is rules for disclosure are the same whether credit is open-end or closed-end. This is NOT true because the rules for TILA disclosures differ whether the loan is open-end or closed-end, including rules about disclosing APR and finance charges.

Answer 271

The answer is The CSBS and AARMR. The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) are the two organizations responsible for creating and implementing the NMLS.

Answer 272

The answer is stating that a borrower can take advantage of an opportunity to refinance an ARM with a fixed-rate loan. Regulation Z and the Map Rule prohibit misleading practices. These prohibitions do not include advertising the availability of refinances from adjustable- to fixed-rate products, unless the ad includes misleading or inaccurate information in the benefits of a refinance.

Answer 273

The answer is within three business days of loan application. Under ECOA, a notice concerning the applicant’s right to obtain a copy of the appraisal is due within three business days of receiving a loan application.

Answer 274

The answer is the Safeguards Rule. The provisions of the GLB Act specifically require compliance with the Safeguards Rule.

Answer 275

The answer is Can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan after submitting a written request that is signed by the parties entitled to the waiting period and which describes the emergency and consent to the waiver. If a borrower selects a mortgage loan covered by HOEPA, he/she can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan after submitting a written request that is signed by the parties entitled to the waiting period and which describes the emergency and consent to the waiver.

Answer 276

The answer is an origination fee/a Loan Estimate. The collection of an origination fee prior to providing a Loan Estimate is illegal.

Answer 277

The answer is no later than four business days prior to consummation. When a creditor revises a Loan Estimate, the revised version must be received by the consumer no later than four business days prior to consummation.

Answer 278

The answer is the borrower is 65 years old. According to ECOA, a lender may not consider a borrower’s age for the purposes of credit qualification.

Answer 279

The answer is IRS W-2s, tax returns, and payroll receipts. The Ability to Repay Rule requires that a borrower document his/her ability to repay the loan, using “reliable evidence” such as W-2s, tax returns, and payroll receipts.

Answer 280

The answer is showing a borrower of a particular race or ethnicity properties in a specific neighborhood regardless of the borrower’s interests or financial capacity. In fair lending terms, steering is the practice of directing a potential homebuyer in a particular direction based on his or her demographics and without regard to his or her interests or financial capacity. This should not be confused with the separate predatory lending practice called steering, in which mortgage professionals coerce or otherwise guide consumers to accept loan terms that are more expensive than they need in order to increase profits.

Answer 281

The answer is under federal law, a mortgage broker does not have a fiduciary relationship with a loan applicant. Federal law does not require a mortgage broker to serve a loan applicant as a fiduciary. Only a few state laws impose this requirement on mortgage brokers and loan originators.

Answer 282

The answer is section 8. Section 8 of RESPA deals with the prohibition against giving or receiving anything of value pursuant to an agreement or understanding.

Answer 283

The answer is The Loan Estimate is provided. Once an application is received, a creditor must issue the Loan Estimate to a loan applicant and may not require additional information or verification until that document is provided.

Answer 284

The answer is The Fair Housing Act and ECOA. The Fair Housing Act and ECOA both prohibit the practice of “steering,” which is directing or recommending a buyer or borrower in a particular direction based on their demographics. This should not be confused with the separate predatory lending practice called steering, in which mortgage professionals coerce or otherwise guide consumers to accept loan terms that are more expensive than they need in order to increase profits.

Answer 285

The answer is a property inspection waiver. A property inspection waiver may be allowed if the lender is comfortable with existing data on a property used as collateral for a rate/term refinance.

Answer 286

The answer is potentially unlawful under the disparate impact theory. Even when there is no intent to discriminate, lending policies are potentially unlawful if they could adversely impact creditworthy consumers who belong to a protected class. For example, the lending standards described in this question could adversely impact younger applicants, thereby violating ECOA’s prohibition against age-based discrimination.

Answer 287

The answer is registered mortgage loan originator. A “registered mortgage loan originator” is an individual who is employed by an exempt depository institution and is therefore also exempt from licensure as a loan originator. The registered mortgage loan originator is merely required to be registered with the NMLS.

Answer 288

The answer is FTC or the CFPB. The CFPB is the federal agency responsible for enforcing violations of TILA prohibitions against misleading advertisements, but shares some enforcement authority with the FTC.

Answer 289

The answer is ensure the protection of personal information through an effective security program. The Safeguards Rule requires the creation, implementation, and maintenance of an effective security program that ensures the privacy of clients’ personal financial information. The program must include four key elements, including a program coordinator, identification of risks, regular testing, and oversight of third-party service providers.

Answer 290

The answer is a loan that has a specific amortization period but matures prior to the time it fully amortizes. A balloon loan is a loan that has a specific amortization period but matures prior to the time at which it fully amortizes.

Answer 291

The answer is reconveyance. Reconveyance is the process of releasing a lien on a property.

Answer 292

The answer is General ATR standards require a consideration of DTI ratio and residual income; there is no DTI threshold or minimum required residual income. General ATR standards require a consideration of DTI ratio and residual income. However, there is no DTI ratio threshold or minimum required residual income.

Answer 293

The answer is verifying that the purchase price is not greater than the average for the area. A purchase price that is slightly higher than the average area is not, in and of itself, an indicator of a fraudulent transaction. There are a number of reasons for a higher purchase price, such as property features, age, improvements, and more.

Answer 294

The answer is only if nonpublic personal information is intended to be shared with nonaffiliated third parties. Financial institutions are only required to provide an Initial Privacy Notice to consumers if they intend to share their information.

Answer 295

The answer is comparables within one mile of the subject property and sold within one year. Comparables located within one mile of the subject property and sold within one year are not considered an appraisal red flag.

Answer 296

The answer is reverse mortgages. The Dodd-Frank Act broadened the scope of HOEPA to cover almost all mortgage types, except for reverse mortgages.

Answer 297

The answer is $46,517. Violations of the federal Do-Not-Call rules can lead to fines of $46,517 per violation, as of 2022.

Answer 298

The answer is 20 days. If a borrower rescinds a transaction, within 20 days of the rescission, he is entitled to a refund of all money or property given to the creditor.

Answer 299

The answer is providing a borrower with a notice of adverse action. The underwriter is responsible for confirming that a potential borrower has sufficient cash assets to close, ensuring that the property is eligible and meets lender guidelines for collateral, and examining the overall pattern of credit behavior and isolated occurrences of derogatory credit.

Answer 300

The answer is not continue to conduct any loan originator activities until the license has been renewed. While some state regulators will allow for a “late renewal,” after December 31st the license is expired. Therefore, the originator is technically unlicensed and may not continue to engage in any activities that require a license to conduct business.

Answer 301

The answer is Neither Slim nor Tiny receives a Notice of the Right to Cancel. TILA allows for a rescission period on the refinance of a borrower’s principal dwelling. Since Slim has been living in a condo as his primary residence for two years, the refinance of his previous home would be considered non-owner-occupied, which is not subject to the right of rescission.

Answer 302

The answer is The Fair Housing Act. HUD is still responsible for implementation of the Fair Housing Act.

Answer 303

The answer is 2.50%. For this ARM, the lifetime cap is 2.5%. The lifetime cap limits the maximum amount by which the rate on an ARM may increase. Here, the rate is not permitted to exceed 5%. To determine the lifetime rate cap, subtract the start rate (2.5%) from the maximum rate (5%). This results in the lifetime rate cap of 2.5%.

Answer 304

The answer is as soon as is determined in accordance with state regulator notification requirements. A change which renders the initial application inaccurate must be made known to the NMLS and the Commissioner through an updated Individual Form.

Answer 305

The answer is not a violation of TILA if it provides information on APRs and payments with equal prominence, as long as the statement is true. An advertisement that states “Refinance with 30 year fixed rates as low as 4.25!” is not a violation of TILA if it provides information on APRs and payments with equal prominence, as long as the statement is true.

Answer 306

The answer is $5,625. The seller would pay 3% of the sales price, not 3% of the borrower’s loan amount. 187,500 × 3% = $5,625.

Answer 307

The answer is trigger term. A trigger term is any of the following specific credit terms: the amount or percentage of any down payment, except when the amount of the down payment is zero; the number of payments or period of repayment; the amount of any payment; and the amount of any finance charge.

Answer 308

The answer is the provisions of HOEPA apply to first- and subordinate-lien transactions that are secured by a borrower’s principal residence. HOEPA applies to first- and subordinate-lien transactions that are secured by the borrower’s principal residence.

Answer 309

The answer is conveyance. A conveyance is the transfer of ownership of real estate from one owner to another.

Answer 310

The answer is MortgageMax may pay the counseling fees, but is prohibited from steering Jenny towards a particular counselor or allowing her to complete counseling from one of its affiliates. MortgageMax may pay the counseling fees, but it is prohibited from steering Jenny towards a particular counselor or allowing her to complete counseling from one of its affiliates.

Answer 311

The answer is the loan applicant must pay for both appraisals. When two appraisals are required, the creditor may not charge the consumer for the second appraisal.

Answer 312

The answer is the fully-indexed rate. Payments for non-qualified mortgages must be based on the fully-indexed rate.

Answer 313

The answer is conduct examinations and investigations. Under the S.A.F.E. Act, a state licensing agency must have the authority to conduct investigations and examinations of licensed loan originators and individuals required to have a loan originator license.

Answer 314

The answer is finance charge. The finance charge is a trigger term in advertising for both open- and closed-end loans.

Answer 315

The answer is Mike must be licensed as a loan originator. A licensed attorney is exempt from the requirement to be licensed as a mortgage loan originator if he offers or negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to his/her representation of the client, unless the attorney is compensated by a lender, mortgage broker, or other loan originator, or by any agent of the same.

Answer 316

The answer is prime loans that meet the qualified mortgage standards. The conclusive presumption of compliance applies to prime loans that meet the qualified mortgage standards.

Answer 317

The answer is premiums for optional insurance products are always included. Charges that result in compensation for creditors and affiliates are included in finance charges, but when required disclosures are provided, charges for optional insurance products are not.

Answer 318

The answer is a transaction for a home equity line of credit secured by a principal residence. The right to rescind a loan applies to a transaction for a home equity line of credit secured by a principal residence.

Answer 319

The answer is 100% of the lesser of the loan amount or the cost to restore the improvements to the property. Fannie Mae requires hazard insurance in place of at least 100% of the lesser of the loan amount, or the cost to restore the improvements to the property.

Answer 320

The answer is offering or negotiating mortgage loan terms. An individual offers or negotiates terms of a residential mortgage loan for compensation or gain if the individual presents for consideration by a borrower or prospective borrower particular residential mortgage loan terms.

Answer 321

The answer is statement that the interest rate will be offered for the duration of the loan. Under TILA guidelines, required disclosures for an adjustable-rate loan include the frequency of changes in the annual percentage rate, the index used to determine rate adjustments, and the fact that the payment amount may change over time.

Answer 322

The answer is Declarations. The Declarations Section (Section 5) asks the borrower for information regarding any judgments, citizenship, default status, occupancy status, and other questions that may affect underwriting.

Answer 323

The answer is to limit the cash necessary to bring to the table. A borrower may take on a piggyback loan to avoid mortgage insurance, but not “MIP,” because that is required for FHA loans. Of the answers given, the best is to limit the cash necessary to bring to the table.

Answer 324

The answer is provide Xavier notice and an opportunity for a hearing. The state licensing agency may impose a civil penalty on a mortgage loan originator or person subject to the S.A.F.E. Act if it finds, after notice and an opportunity for hearing, that the mortgage loan originator or person subject to the Act has violated or failed to comply with any requirement of the Act or any regulations prescribed by the state licensing agency.

Answer 325

The answer is after the first three years of the loan term. When a fixed-rate qualified mortgage includes a prepayment penalty, the penalty may not be charged after the first three years of the loan term.

Answer 326

The answer is Financial Information - Real Estate. Income derived from a rental property would be entered into the "Financial Information - Real Estate" section of the URLA, under a heading called “Property You Own." If the applicant owns multiple properties from which they earn rental income, there are additional content boxes in this section to accommodate that information.

Answer 327

The answer is personal property. Personal property is property that is transitory and can be moved.

Answer 328

The answer is A Loan Estimate. For most mortgage loan transactions (unless exempt), a Loan Estimate must be provided no later than three business days after receiving a completed loan application and at least seven business days prior to consummation.

Answer 329

The answer is markups. The earning of additional revenue through the practice of one settlement service provider increasing the fees of another settlement provider with the intention of retaining the additional fees is a practice known as markup.

Answer 330

The answer is the fully-indexed rate. For an adjustable-rate mortgage, the interest rate that should be listed on the Loan Terms table of the Loan Estimate is the fully-indexed rate.

Answer 331

The answer is 2.30%. The funding fee for a first-time user who is regular military, purchasing a home using a VA loan, is 2.30%.

Answer 332

The answer is borrower delayed in returning initial signed docs. A borrower being delayed in returning docs would suggest that the file has not even gone into underwriting yet, which would not be an underwriting pitfall.

Answer 333

The answer is all of these are likely to result. It is likely that in Jimmy’s long-term relationship with his appraiser, the meaning in this kind of email is very clear to the appraiser. In order to please Jimmy and the borrower, the appraiser is likely to do everything he/she can to arrive at as high a value as possible. This may lead to an inflated appraisal, possibly an appraisal review, and a violation of TILA’s rules regarding communication with appraisers

Answer 334

The answer is there is no refund. RESPA requires a refund if an escrow analysis uncovers an overage of greater than $50. Smaller overages are applied to the next year’s escrow payments; anything above $50 is then required to be refunded within 30 days.

Answer 335

The answer is the “Loan Terms” section. The Loan Terms section on page 1 of the Loan Estimate includes, among other things, an indication of whether the loan includes a prepayment penalty or a balloon payment.

Answer 336

The answer is the revised charges may be provided to the consumer on a revised Closing Disclosure. If a changed circumstance occurs fewer than four business days prior to consummation, the revised charges may be provided to the consumer on a revised Closing Disclosure.

Answer 337

The answer is lenders must notify the CRA that provided the credit report of any disputes that the loan applicant has with information shown in the report. Lenders do not have a legal obligation to notify CRAs of disputes that loan applicants have with information presented in a credit report.

Answer 338

The answer is the loan balance increases. Reverse mortgage interest is charged on the outstanding balance and added to the debt, which means the debt increases with each payment or draw. This is how a reverse mortgage is designed to be implemented.

Answer 339

The answer is buy-back provisions. A warehouse lender often uses buy-back provisions in the agreements with brokers to assure themselves some protection against fraudulent activity during the loan process.

Answer 340

The answer is a loan for an RV which the borrower uses as his/her primary housing six months a year. HMDA reporting is not required for loans for personal property; loans to purchase RVs are personal loans and therefore not subject to mortgage lending laws.

Answer 341

The answer is lender. Title insurance provides coverage for undisclosed liens or other title defects that may not turn up on a title search and is required by the lender. Lender’s insurance is mandatory for loan approval, but owner’s insurance is voluntary.

Answer 342

The answer is divorced. Regulation B provides that, when inquiries related to marital status are permitted, the terms that may be used are “married,” “unmarried,” and “separated.”

Answer 343

The answer is a tax lien. A tax lien takes priority over all other liens, regardless of chronological order.