Safe 20 Practice Exam 2 Flashcards by Antonio Rullo

Which of the following is NOT a loan origination activity?

a. Assisting in a refinance
b. Assisting in a purchase
loan
c. Assisting in a loan
modification
d. Changing the name of
debtors on an existing loan

c. Assisting in a loan

modification

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A unilateral contract is binding on:

a. One party
b. Two parties
c. The neighbor
d. No one

a. One party

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Loan originator organizations must keep compensation records for how many years?

a. One
b. Two
c. Three
d. Four

c. Three years

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Mortgage companies must submit a residential loan origination report to the NMLSR every

a. Month
b. Three months
c. Six months
d. Year

b. Three months

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How many years must loan originator applicants wait after a felony fraud conviction in order to qualify for a license?

a. One year
b. Two years
c. Five years
d. They aren’t eligible for
licensing

d. They aren’t eligible for

licensing

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How many years must loan originator applicants wait after having a loan origination license revoked in another state, in order to qualify for a license?

a. One year
b. Two years
c. They aren’t eligible for
licensing
d. They can qualify
immediately

c. They aren’t eligible for

licensing

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Who chooses force-placed hazard insurance companies?

a. Lender
b. Homeowner
c. Attorney
d. Loan originator

a. Lender

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Which of the following is required for an FHA Streamline refinance loan?

a. Credit verification
b. New appraisal
c. Current on mortgage
payments for the last three
month
d. Income and debt
verification

c. Current on mortgage
payments for the last three
month

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What law addresses loan originators’ compensation issues

a. Truth-in-Lending
b. Loan Origination Rule
c. Equal Credit Opportunity
Act
d. Mortgage Compensation
Act

b. Loan Origination Rule

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Commercial telemarketers are restricted to calling:

a. Only on weekends
b. Between 10 AM and 10 PM
c. Between 8 AM and 9 PM
d. There no restrictions

c. Between 8 AM and 9 PM

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Commercial telemarketers must search the Do-Not-Call registry

a. Every 7 days
b. Every 31 days
c. Every 180 days
d. Once a year

b. Every 31 days

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In order to send a fax advertisers must:

a. Have an established 
    business relationship with 
    recipient
b. Only fax t toll-free numbers
c. Include a personal cell 
    phone number on the 
    cover sheet
d. Not send faxes across state 
    lines

a. Have an established
business relationship with
recipient

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The first page on an advertisers fax must include

a. Company’s mailing address
b. Company’s email address
c. Company’s phone number
d. Opt-out instructions

d. Opt-out instructions

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What type of real estate co-ownership is only for married couples

a. Tenants in common
b. Joint tenancy
c. Tenancy by the entirety
d. Spousal tenancy

c. Tenancy by the entirety

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Increasing neighborhood crime exemplifies what type of depreciation?

a. Economic obsolescence
b. Functional obsolescence
c. Physical deterioration
d. Unstable deterioration

a. Economic obsolescence

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What agency was established to respond to consumer financial complaints?

a. Federal Deposit Insurance 
    Company
b. Federal Insurance office
c. Financial Stability Oversight 
    Council
d. Consumer Financial 
    Protection Bureau

d. Consumer Financial

Protection Bureau

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What law protects homeowner from foreclosure-prevention scams?

a. Foreclosure Mediation Rule
b. Mortgage Assistance Relief
Services Rule
c. Truth-in-Lending Act
d. Homeowner’s Protection
Act

b. Mortgage Assistance Relief

Services Rule

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Individuals must file a report when they transport how much cash out of the country?

a. $5,000 or more
b. $10,000 or more
c. $50,000 or more
d. $100,000 or more

b. $10,000 or more

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What type of federal report is filed when financial institutions detect suspicious activity?

a. Suspicious Activity Report
b. Treasure Alert Report
c. Unaccounted Funds Report
d. Unexplained behavior
Report

a. Suspicious Activity Report

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What agency becomes the receiver for some failing financial institutions?

a. Federal Deposit Insurance 
    Company
b. Federal Insurance Office. 
c. Financial Stability Oversight 
    Council
d. Consumer Financial 
    Protection Bureau

a. Federal Deposit Insurance

Company

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The ability-to-repay regulation applies to:

a. Equity lines of credit
b. Reverse mortgages
c. Investment home
purchases
d. Construction loans

c. Investment home

purchases

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Which of the following is NOT a feature of a qualified mortgage?

a. Positive amortization
b. 30 year maximum loan
term
c. Maximum debt-to-income
ratio of 50 percent
d. No interest only periods

c. Maximum debt-to-income

ratio of 50 percent

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Individuals submit an annual Report of Foreign Bank and Financial Accounts to:

a. IRS
b. Mortgage lender
c. Federal Trade Commission
d. Fannie Mae

a. IRS

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Which of the following is part of the Mortgage Assistance Relief Services Rule

a. Negotiators may be paid 
    an up-front fee
b. Borrowers must pay a fee 
    if they cancel their contract 
    with the negotiator
c. Negotiators can't interfere 
    with communication 
    between borrowers and 
    lenders
d. Negotiators only have to 
     present reasonable lender 
     offers to the borrower

c. Negotiators can’t interfere
with communication
between borrowers and
lenders

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Loan originators are't allowed to receive compensation: a. Based on loan terms b. From a consumer c. From a lender d. Based on the performance of the loan

a. Based on loan terms

High-cost home loans require a borrower to: ``` a. Receive quotes from multiple lenders b. Receive homeownership counseling c. Receive free flood insurance d. Receive 3% seller concessions ```

b. Receive homeownership | counseling

The Truth-in-Lending Disclosure does NOT include a. APR b. Finance charge c. Total amount of payments d. Borrower's credit score

d. Borrower's credit score

Which of the following is NOT true of high-cost home loans? ``` a. Borrower must have a documented ability to pay the loan b. Borrower must have a minimum credit score of 650 c. Prepay penalties are prohibited d. Most balloon payments are prohibited ```

b. Borrower must have a minimum credit score of 650

Which of the following does NOT have zero variance between the GFE and HUD-1 a. Title insurance b. Real estate transfer taxes c. Loan origination fees d. Interest Rate

a. Title insurance

Which of the following can have an unlimited variance between the GFE and HUD-1 a. Hazard insurance b. Recording fees c. Appraisal d. Credit report fee

a. Hazard insurance

What happens if the acceptable variance between the GFE and HUD-1 is exceeded? ``` a. Loan originator faces criminal penalties b. The loan can't be funded c. The excess is refunded to the borrower with 30 days d. The excess is refunded to the borrower with 60 days ```

c. The excess is refunded to | the borrower with 30 days

Which law requires businesses to print only the last five card numbers on a credit card receipt? a. Homeowner Protection Act b. Fact Act c. Gramm-Leach-Bliley d. Dodd-Frank

b. Fact Act

What happens if the acceptable variance between the Loan Estimate and the Closing Disclosure is exceeded ``` a. Loan originator faces criminal penalties b. The loan can't be funded c. The excess is refunded to the borrower with 30 days d. The excess is refunded to the borrower with 60 days ```

d. The excess is refunded to | the borrower with 60 days

A higher-priced home loan is one that has ``` a. More than 5% in fees and points b. More than 8% in fees and points c. APR exceeds the average prime rate by at least 1.5% for the first-lien loans d. Interest rate is higher than 10% ```

c. APR exceeds the average prime rate by at least 1.5% for the first-lien loans

What is the shortest time in which a mortgage purchase loan can close? a. 3 business days b. 7 business days c. 14 days d. 30 days

b. 7 business days

What type of loan gives a borrower money each month? ``` a. Graduated payment mortgage b. Reverse mortgage c. Package mortgage d. Wholesale mortgage ```

b. Reverse mortgage

What type of loan is a non-recourse loan ``` a. Graduated payment mortgage b. Reverse mortgage c. Package mortgage d. Wholesale mortgage ```

b. Reverse mortgage

A lender won't lose money funding what type of loan? a. FHA b. VA c. Conventional d. Construction

a. FHA

A lender that offers mortgage loans directly to the public is a: a. Participating lender b. Private lender c. Wholesale lender d. Retail lender

d. Retail lender

Which disclosure can be initially sent to the borrower within 45 days after closing? ``` a. Affiliated Business Arrangement b. Good Faith Estimate c. Truth-in-Lending d. Initial Escrow Statement ```

d. Initial Escrow Statement

What type of loan is short-term with money advanced in stages? a. Package b. Construction c. Wraparound d. Balloon

b. Construction

A loan originator who accepts an upfront fee for negotiating a loan modification is violating which law a. RESP b. TILA c. HMDA d. MARS

d. MARS

A lender that works with licensed loan originators is a: a. Participating lender b. Private lender c. Wholesale lender d. Retail lender

c. Wholesale lender

What type of mortgage is not guaranteed or insured by the government a. FHA b. VA c. USDA d. Conventional

d. Conventional

What agency became the conservator of Fannie Mae and Freddie Mac ``` a. Federal Housing Finance Agency b. Consumer Financial Protection Bureau c. U.S. Department of Housing and Urban Development d. Internal Revenue Service ```

a. Federal Housing Finance | Agency

HMDA requires lenders to submit their loan application register to the: a. Library of Congress b. Federal Financial Institutions Examination Council c. Federal department of Books and Records d. Nationwide Mortgage Licensing System and Registry

b. Federal Financial Institutions Examination Council

MIP is associated with what type of loan? a. FHA b. VA c. Interest-Only d. Conventional

a. FHA

UFMIP is associated with what type of loan a. FHA b. VA c. Interest-Only d. Conventional

a. FHA

What law requires ARM borrowers to receive the Consumer Handbook on Adjustable Rate Mortgages? a. RESP b. ECOA c. Gramm-Leach-Bliley d. TILA

d. TILA

What law allowed the government to assume control over Fannie Mae and Freddie Mac? ``` a. Homeowners Protection Act b. Housing and Economic Recovery Act c. Home Mortgage Disclosure Act d. Truth-in-Lending Act ```

b. Housing and Economic | Recovery Act

What law passed in 2010 in response to the financial meltdown and recession? a. Truth-in-Lending b. Gramm-Leach-Bliley c. Dodd-Frank Wall Street Reform and Consumer Act d. Home mortgage Disclosures Act

c. Dodd-Frank Wall Street | Reform and Consumer Act

Lenders must maintain an escrow account for higher-priced mortgages for a: a. 1 year b. 3 years c. 5 years d. No escrow account is required

c. 5 years

How much of a down payment does a borrower need if he doesn't want to pay PMI? a. 5% b. 10% c. 15% d. 20%

d. 20%

Borrowers with a high-cost loan can rescind the loan with how many business days? a. 3 b. 7 c. 15 d. There is no rescission period

a. 3

Acceptable income for loan qualification includes: a. 1 year of sales commissions b. Disability benefits with 2 years remaining c. 1 year of unemployment benefits d. 2 years of bonuses

d. 2 years of bonuses

Who determines the underwriting guidelines for conforming loans? ``` a. Federal Housing Finance Agency b. Federal Trade Commission c. U.S. Department of Housing and Urban Development d. Fannie Mae ```

d. Fannie Mae

Which appraisal method subtracts a value for depreciation? a. Sales Comparison b. Cost c. Income Capitalization d. Gross Income Multiplier

b. Cost

What is the Fannie Mae appraisal report form? a. USPAP b. HVCC c. USAPP d. URAR

d. URAR

What lien has the highest priority and is paid off first when a property is sold? a. Property tax b. Senior mortgage lien c. Mechanics lien d. Judgement lien

a. Property tax

What document is assigned along with mortgage a. Deed b. GFE/Loan Estimate c. HUD-1/Closing Disclosure d. Promissory note

d. Promissory note

When does the borrower pay the first year of hazard insurance premium? a. Each month for 12 months b. Before or at closing c. 6 months premium paid at closing; 6 month premium due 30 day after closing d. Every 2 months for a total of 6 payments during the first year after closing

b. Before or at closing

How many times may a loan originator receive credit for the same continuing education coarse? a. 1 b. 2 c. 3 d. No limit

a. 1

What type of valuation takes into account annual rent as well as other generated income? a. Sales comparison b. Cost c. GRM d. GIM

d. GIM

What term describes the process of a senior mortgage lien-holder voluntarily changing into a junior mortgage lien holder? a. Demotion b. Assignment c. Alienation d. Subordination

d. Subordination

Which of the following is an appropriate adjustment in a market data appraisal? ``` a. The comp has a two-car garage and the subject has a on-car garage. Subtract $5,000 from the comp's sale price b. The subject has a pool and the comp doesn't. Subtract $15,000 from the subjects's estimated value c. The comp has a fireplace and subject doesn't. Add $1,200 to the comp's sale price d. The subject has a dirty yard, and the comp is professionally landscaped. Add $8,000 to the subjects estimated value. ```

``` a. The comp has a two-car garage and the subject has a on-car garage. Subtract $5,000 from the comp's sale price ```

Which of the following is NOT a valid component of a contract a. Competent parties b. Mutual agreement c. Down payment d. Legal object

c. Down payment

Which of the following is NOT a valid requirement for a deed ``` a. Names of the seller and the buyer b. Must be signed in blue ink c. Legal description of the property d. Signed by grantor and two witnesses ```

b. Must be signed in blue ink

Which of the following is NOT required for self-employed qualification? a. 2 years business tax returns b. 60 day pay stub c. Company balance sheet d. Company profit and loss statement

b. 60 day pay stub

Ginnie Mae: a. Buys and sells loans b. Regulates loan originators c. Guarantees Ginnie-Mae Mortgage-backed securities d. Sets guidelines for government loans

c. Guarantees Ginnie-Mae | Mortgage-backed securities

Which law requires lenders to train employees to recognize the Red Flags of Identity. ``` a. Homeowner's Protection Act b. Fact Act c. Gramm-Leach-Bliley d. Dodd-Frank ```

b. Fact Act

A California residential loan originator referred a borrower to a Florida residential loan originator. The California loan originator can receive a referral fee. ``` a. Only if he is also licensed in Florida b. Only if the Florida loan originator is a licensed in California c. Only with written permission from the lender d. Never ```

d. Never

Which law requires loan originators to shred credit reports? ``` a. Homeowner's Protection Act b. Fact Act c. Gramm-Leach-Bliley d. No such law ```

d. No such law

Higher-priced loans for a flipped home require a second appraisal that is: ``` a. Performed by a different appraiser at no charge to the borrower b. Performed by a different appraiser and paid for by the borrower c. Performed by the same appraiser using different comparables at no charge to the borrower d. Performed by the same appraiser using different comparables and paid for by the borrower ```

a. Performed by a different appraiser at no charge to the borrower

If a consumer makes an inquiry to a company, the company can call for: a. 6 weeks b. 3 months c. 6 months d. 18 months

b. 3 months

Which of the following is NOT a loss mitigation option? a. Loan modification b. Refinance c. Deed-in-leu d. Foreclosure

d. Foreclosure

Which of the following is NOT part of the primary mortgage market? a. Commercial bank b. Seller financier c. Insurance company d. Credit union

c. Insurance company

Which is NOT a possible indication of a short sale fraud? ``` a. Buyer is a business partner of the seller b. Seller has a poor credit history c. Seller has an excellent credit history d. The property appraised significantly below neighboring properties ```

b. Seller has a poor credit | history

An individual with a good credit history who is paid to represent himself as a buyer is a : a. Straw buyer b. Particular buyer c. Promotion buyer d. Demotion buyer

a. Straw buyer

A deficiency judgement occurs when a: ``` a. Borrower needs additional down payment funds b. Seller wins a breach of contract lawsuit against the buyer c. Lender sues for borrower's personal assets to pay balance of the note d. Borrower needs additional private mortgage insurance ```

c. Lender sues for borrower's personal assets to pay balance of the note

What type of fraud occurs when a loan originator submits and closes on loan application with multiple lenders? a. Chunking b. Equity skimming c. Buy and bail d. Phantom sale

a. Chunking

What type of fraud occurs when a loan originator changes a borrower's birth date to make him appear older a. Reverse mortgage b. Equity skimming c. Buy and bail d. Phantom sale

a. Reverse mortgage

What type of of funding occurs when a lender borrows money from an investor and assigns the mortgage and note to the investor immediately after closing? a. Warehouse b. Table c. Direct investor d. Temporary

b. Table

What is the practice called when a real estate agent only shows Hispanic buyers properties in Hispanic neighborhoods? a. Redlining b. Steering c. Blockbusting d. Conversion

b. Steering

What is the practice called when a real estate agent spreads rumor that a specific ethnic group is planning to move into the neighborhood and advises residents to sell before property values drop? a. Redlining b. Steering c. Blockbusting d. Conversion

c. Blockbusting

What is the term used when a lender allows a tenant's improvements to be applied toward down payment funds when the tenant purchase the home? a. Home improvement funds b. Restoration funds c. Sweat equity d. Good faith money

c. Sweat equity

Anything that affects title to a property such as liens, easements or restrictions is a (an): a. Encumbrance b. Barrier c. Covenant d. Egress

a. encumbrance

What is the general term for the security pledged for the payment of a loan? a. Repository b. Collateral c. Transaction account d. Good faith

b. Collateral

Purchase issues that must be resolved before closing are called a. Dynamics b. Resolutions c. Contingencies d. Operations

c. Contingencies

Local laws that control the use of the land are called: a. Dynamics b. Resolutions c. Contingencies d. Zoning

d. Zoning

Which of the following is NOT characteristic of a warranty deed? ``` a. Guarantees the seller is true owner of the property b. Guarantees the seller has the legal right to sell c. Guarantees that there are no undisclosed lies on the property d. Guarantees that the sale price is fair and reasonable ```

d. Guarantees that the sale | price is fair and reasonable

Monthly income before taxes and other deductions is known as: a. Gross income b. Net income c. Assured income d. Household income

a. Gross income

What protects lenders against losses when a borrower defaults on a loan? a. Transactional account b. Mortgage insurance c. Deed restrictions d. Title insurance

b. Mortgage insurance

Which federal agency guarantees mortgage back securities that are based on FHA and VA loans? a. FHA b. VA c. Ginnie Mae d. Fannie Mae

c. Ginnie Mae

The lowest possible interest rate for an ARM loan is known as the: a. Floor b. Basin c. Basement d. Ground

a. Floor

An FHA reverse mortgage loan is a: a. FHARM b. HECM c. RMFHA d. UFFHA

b. HECM

What type of deed transfers ownership without making any guarantee of clear title? a. General warranty deed b. Special warranty deed c. Power of attorney deed d. Quitclaim deed

d. Quitclaim deed

What is the difference between the purchase price and the mortgage amount a. Good faith money b. Escrow c. Down payment d. Discount points

c. Down payment

What is a claim against a property for the payment of a debt? a. Lien b. Title c. Egress d. Arbitration

a. Lien

What is the interest rate commercial banks charge their most creditworthy customers? a. Partial rate b. Prime rate c. Premium rate d. Preferred rate

b. Prime rate

What is the current name for the Federal Home Loan Mortgage Corporation? a. Fannie Mae b. Freddie Mac c. FHA d. Fed

b. Freddie Mac

Safe 20 Practice Exam 2 Flashcards

(100 cards)