State Law & Regulation Definitions & License Regulations Flashcards by Veronika Escobedo Childs

What is the main purpose of the Real Estate Law?

a) Determine ownership of real property with concurrent owners
b) Ensure fair and equitable closings
c) Protect the public in real estate transactions involving a licensee
d) Warrant that real property has no liens

c) Protect the public in real estate transactions involving a licensee

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Which law was enacted to provide mortgage bankers with a licensing law specifically intended to regulate their primary functions of originating loans and servicing loans?

a. California Residential Mortgage Lending Act
b. California Finance Lenders Law
c. Real Estate Law
d. Rumford Act

a. California Residential Mortgage Lending Act

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Which entity is e
exempt from licensing under CRMLA? 
 a. Banks 
 b. Insurance companies 
 c. Persons engaged solely in business, commercial, or agricultural lending 
 d. All of the above

d. All of the above

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According to Penal Code Section 830.11(a), who may act as peace officers and serve search warrants? Persons employed by the:

a. Department of Financial Institutions designated by the Commissioner of Financial Institutions.
b. Department of Real Estate designated by the Real Estate Commissioner.
c. Neither (a) nor (b)
d. Both (a) and (b)

d. Both (a) and (b)

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What is a bona fide error?

a. Clerical miscalculation, computer malfunction, or programming error
b. Mistake in judgment resulting in loss
c. Egregious error
d. Intentional error.

a. Clerical miscalculation, computer malfunction, or programming error

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Which California law was passed to meet the MLO licensing requirements of the federal SAFE Act?

a. Administrative Procedures Act
b. Finance Lenders Law
c. Senate Bill 36 (SB36)
d. Code of Regulations

c. Senate Bill 36 (SB36)

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Which activity is not prohibited by Real Estate Commissioner’s Regulation 2780?

a. Refusing to list and show properties to selected people
b. Processing some applications more slowly than others
c. Refusing to work with other licensees who discriminate against minorities
d. Using special codes on applications

c. Refusing to work with other licensees who discriminate against minorities

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The California Finance Lenders Law requires all of the following for business licensees, except:

a. branch offices must be located in a suitable location determined by the Commissioner.
b. required documents must be filed when there is a change of address.
c. each office must be certified for coverage by a surety bond.
d. registered residential mortgage brokers must have an office in the state.

d. registered residential mortgage brokers must have an office in the state.

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A nontraditional mortgage loan is any:

a. 30-year fixed rate mortgage loan.
b. 30-year fixed rate FHA loan.
c. 30-year fixed rate VA loan.
d. 30-year adjustable rate mortgage loan.

d. 30-year adjustable rate mortgage loan.

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The California Unfair Competition Law prohibits:

a. advertising that is truthful.
b. advertising that is representative.
c. business practices that are fraudulent.
d. business practices that are lawful.

c. business practices that are fraudulent.

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Which California law modified the foreclosure process to provide additional time for borrowers to work out loan modifications?

a. Residential Mortgage Lending Act
b. Foreclosure Prevention Act
c. Making Home Affordable Act
d. Finance Lenders Law

b. Foreclosure Prevention Act

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Which law regulates a finance lender, who is defined in the law as “any person who is engaged in the business of making consumer loans or making commercial loans”?

a. California Residential Mortgage Lending Act
b. California Finance Lenders Law
c. Real Estate Law
d. Personal Property Brokers Law

b. California Finance Lenders Law

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What comprehensive anti-discrimination law covering a variety of businesses, including the business of real estate is found at California Civil Code §§51 et seq?
a. Housing Financial Discrimination Act
b. Holden Act
c. Rumford Act
d. Unruh Civil Rights Act

d. Unruh Civil Rights Act

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Which of these would not be considered a residential mortgage loan as defined by the CRMLA?
a. Home mortgage refinance
b. Loan to a corporation to purchase a home for its president secured by a home in Costa Rica
c. First deed of trust on a second home
d. HARP loan

b. Loan to a corporation to purchase a home for its president secured by a home in Costa Rica

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Which is incorrect regarding the Subdivided Lands Law?
a. It is found in Division 4, Part 2 of the B&P Code
b. It is an important component of California Real Estate Law
c. The Subdivided Lands Law covers subdivision of 50 or more lots that are in California, Arizona, or Nevada
d. It is also titled “Regulation of Transactions”

c. The Subdivided Lands Law covers subdivision of 50 or more lots that are in California, Arizona, or Nevada

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Under which law is a mortgage loan originator licensed?
a. California Financial Corporation Law
b. California Finance Lenders Law
c. California Residential Mortgage Lending Act.
d. California Residential Foreclosure Law

c. California Residential Mortgage Lending Act.

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Which division of the California Department of Corporations handles violations of the California Financial Code and the California Code of Regulations?
a. Executive Division
b. Enforcement Division
c. Financial Services Division
d. Securities Regulation Division

b. Enforcement Division

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A lender refuses to make loans to real property in a certain part of a city. Which of the following statutes has the lender likely violated?
a. The Truth in Lending Act
b. The Real Estate Settlement Procedures Act
c. The Federal Trade Commission Act
d. The Holden Act

d. The Holden Act

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Under the California Finance Lenders Law, a residential mortgage loan would be any loan made to a borrower:
a. to refinance property that is used for commercial purposes.
b. secured by a mortgage or deed of trust on a property used for agricultural purposes.
c. secured by a mortgage or deed of trust on a dwelling which contains 1-to-4 residential units.
d. secured by a mortgage or deed of trust on a property that has no dwelling.

c. secured by a mortgage or deed of trust on a dwelling which contains 1-to-4 residential units.

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The California Fair Employment and Housing Act:
a. is found at Government Code §12900 through 12987.
b. prohibits discrimination and harassment in all aspects of housing including sales, rentals, evictions, terms and conditions, mortgage loans, insurance, land use, and zoning.
c. extended the coverage of protected classes to include sexual orientation, source of income, and medical condition.
d. is all of the above.

d. is all of the above.

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Which advertising phrase would be permitted in an advertisement placed by a mortgage broker?
a. “5% APR loans available to qualified borrowers.”
b. “Easy loans - no qualifying.”
c. “No down payment needed.”
d. “Bad credit? Don’t worry, we’ll fund your loan.”

a. “5% APR loans available to qualified borrowers.”

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Under the California Finance Lenders Law, a mortgage broker is defined as a person who negotiates loans made by a:
a. bank.
b. credit union.
c. insurance company.
d. finance lender.

d. finance lender.

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Which act covers the established legal procedures that must be followed when the Commissioner disciplines real estate licensees?
a. Administrative Procedure Act
b. B&P Code
c. Real Estate License Law
d. Code of Civil Procedure

a. Administrative Procedure Act

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Which of the following is considered a loan transaction and therefore is covered under the California Finance Lenders Law?
a. Automobile sales finance contract
b. Bona fide leases
c. Home equity lines of credit
d. Retail installment sales contracts

c. Home equity lines of credit

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25. The California Health and Safety Code §§35800 through 35833 are known as: a. the Housing Financial Discrimination Act of 1977. b. the Holden Act. c. the California Fair Lending Law. d. any of the above.

d. any of the above.

26. According to Section 4973(a) of the Financial Code, what is a prohibited act when dealing with a covered loan? a. It cannot have a prepayment penalty after 3 years from the original date of the loan b. A loan with a maturity date of 5 or less years must be fully amortized c. The loan cannot have a provision that allows the lender to call the loan at its sole discretion d. All of the proceeding are prohibited acts

d. All of the proceeding are prohibited acts

27. Which is considered a third-party fee? a. Application fee b. Lock-in fee c. Pest inspection fee d. Warehouse fee

c. Pest inspection fee

28. What does the Real Estate Commissioner use to enforce the Real Estate Law? a. Commissioner's Axioms b. Commissioner's Injunctions c. Commissioner's Regulations d. Commissioner's Writs

c. Commissioner's Regulations

29. Which California law regulates the primary functions of originating and servicing loans? a. California Finance Lenders Law b. California License Law c. California Residential Mortgage Lending Act d. California Real Estate Mortgage Law Act

c. California Residential Mortgage Lending Act

30. A mortgage banker or mortgage lender is any person who: a. directly originates, acquires, or negotiates first mortgage loans. b. obtains information necessary to process or underwrite a residential mortgage loan. c. negotiates, places, or sells mortgage loans for finance lenders. d. processes a residential loan under the direction of a licensed lender.

a. directly originates, acquires, or negotiates first mortgage loans.

1. What is the amount of the surety bond required for a mortgage broker license? a. $10,000 b. $25,000 c. $50,000 d. $100,000

b. $25,000

2. In order to comply with the CRMLA, which person would need to become a registered mortgage loan originator and obtain a unique identifier? a. Mortgage lender employee who underwrites mortgage loans b. Mortgage lender employee who performs processing activities. c. Credit union employee who performs processing activities. d. Bank employee who performs the activities of a mortgage loan originator.

d. Bank employee who performs the activities of a mortgage loan originator.

3. Which personal information is not required to be included as part of a MLO license application? a. Authorization to obtain a credit report b. Authorization to obtain criminal findings from any government jurisdiction c. Copies of licenses issued by other states d. Fingerprints to be used to perform a criminal background check

c. Copies of licenses issued by other states

4. A person hired by a licensed lender to work as a mortgage servicer is: a. employed by a licensed lender and is exempt from licensing. b. employed as a mortgage servicer and needs to be licensed under CRMLA. c. acting as a mortgage procesor and is exempt from licensing. d. performing adminstrative functions and is exempt from licensing.

b. employed as a mortgage servicer and needs to be licensed under CRMLA.

5. Which person would need a MLO license or a MLO endorsement? a. A certified mortgage underwriter employed to process loans originated by a licensed mortgage lender b. A licensed real estate broker who acts as a buyer's agent c. A licensed real estate broker who receives commissions for performing mortgage brokerage activities d. A licensed real estate broker, who brings interested parties together in the sale or exchange of real property.

c. A licensed real estate broker who receives commissions for performing mortgage brokerage activities

6. How can an MLO applicant prove financial responsibility? a. Obtain a surety bond b. Demonstrate the minimum net worth requirements c. Establish a recovery account d. All of the above prove financial responsibility

d. All of the above prove financial responsibility

Broker Bob owns and operates a real estate brokerage specializing in residential property. Which activity would require Bob to have an endorsement to his license? a. Obtaining a listing from a seller b. Presenting an offer from a buyer c. Managing a duplex for an owner d. None of the above

d. None of the above

8. The Commissioner requires a MLO licensee to retain records for _____ years. a. 2 b. 3 c. 5 d. 7

b. 3

``` 9. A person who takes a loan application or negotiates the terms of a mortgage loan for compensation is known as a: a. mortgage loan correspondent. b. mortgage loan originator. c. residential mortgage lender. d. residential mortgage broker. ```

b. mortgage loan originator.

10. What is the minimum tangible net worth requirement for an applicant for a mortgage lender license? a. $25,000 b. $100,000 c. $150,000 d. $250,000

d. $250,000

11. CRMLA requires licensure of which entity? a. Federal credit union making mortgage loans b. Lender making business and commercial loans c. Mortgage servicer of residential mortgage loans d. Pension plans offering loans to their participants

c. Mortgage servicer of residential mortgage loans

12. What is the purpose of the State Regulatory Registry? a. Develop and operate nationwide systems for state regulators in the financial services industry b. Develop and regulate participating state registries c. Register financial institutions in a national trade organization d. Design and operate computer systems for the financial industry

a. Develop and operate nationwide systems for state regulators in the financial services industry

``` 13. The SAFE Act prohibits licensing anyone as a mortgage loan originator who convicted of a felony involving: a. fraud. b. money laundering. c. breach of trust. d. all of the above. ```

d. all of the above.

``` 14. How many hours of continuing education (CE) must be completed from a sponsor approved through NMLS? a. 3 b. 8 c. 15 d. 45 ```

b. 8

15. What information will be in the NMLS database regarding state-licensed mortgage loan originators? a. Licensing information b. Enforcement actions c. Background data d. All of the above

d. All of the above

16. How many hours of pre-licensing education are required under the SAFE Act? a. 8 b. 12 c. 20 d. 30

c. 20

17. The application for an initial MLO license would be denied if the applicant: a. had a pre-existing medical condition. b. only completed 20 hours of pre-licensing education. c. resigned his or her position with a previous employer. d. only scored 70% on the written licensing exam.

d. only scored 70% on the written licensing exam.

18. The pre-license education must be completed: a. through a NMLS approved provider. b. before taking the National examination component. c. before taking the State examination component. d. every year before December 31.

a. through a NMLS approved provider.

``` 19. When is the Residential Mortgage Loan Report filed by the real estate broker with the MLO license endorsement? a. Quarterly b. Annually on December 31 c. No later than March 31 each year d. Every 6 months ```

c. No later than March 31 each year Form RE 857 - Residential Mortgage Loan Report is required by law. The report must be filed no later than March 31 following the calendar year for which the loan data is compiled.

20. What is the penalty for a broker who arranges real estates loans for failure to submit a Mortgage Loan Activity Notification to the DRE in a timely manner? a. $50 per day for the first 30 days the report is not filed and $100 per day thereafter b. $75 per day the report is not filed not to exceed $10,000 c. $100 per day the report is not filed not to exceed $5,000 d. $50 per day for the first 30 days the report is not filed and thereafter 5 days in county jail

a. $50 per day for the first 30 days the report is not filed and $100 per day thereafter

21. Which of the following is not one of the specific topics in the pre-license education? a. 2 hours of lending standards for nontraditional mortgage products b. 2 hours of marketing and advertising c. 3 hours of ethics and fair lending issues d. 3 hours of federal law and regulations

b. 2 hours of marketing and advertising

22. Bob is employed by Big Bank (regulated by the FDIC) as a full-time registered mortgage loan officer. He primarily originates commercial loans, but makes 9 to 10 residential loans each year. Does Bob have to become licensed as a mortgage loan originator under the California Residential Mortgage Lending Act? a. No, Bob is exempt because he only makes 10 or less residential loans per year. b. Yes, Bob is not exempt because he makes 10 residential loans per year. c. No, Bob is exempt because he is employed by a bank that is regulated by a federal banking agency. d. Yes, Bob may be registered, but he still must be licensed under CRMLA.

c. No, Bob is exempt because he is employed by a bank that is regulated by a federal banking agency.

``` 23. As part of the license application, a mandatory background check is performed. Which of the following is not required? a. Criminal check b. Credit report c. Fingerprints d. Income verification ```

d. Income verification

24. A licensee who opens a branch office or changes its business location must: a. get a unique identifier from the NMLS. b. hire a licensed MLO for each location. c. notify the Commissioner, in writing, 10 days after engaging in any business. d. notify the Commissioner, in writing, 10 days prior to engaging in any business.

d. notify the Commissioner, in writing, 10 days prior to engaging in any business.

25. MLO applicants are required to authorize the licensing agency to have access to the applicant's credit report in order to: a. calculate the amount of the application fee. b. determine the amount of the surety bond. c. evaluate the financial responsibility of the applicant. d. estimate the overall net worth of the applicant.

c. evaluate the financial responsibility of the applicant.

26. An initial MLO license application will most likely be denied based on: a. a disorderly conduct arrest when in college. b. a score of 76% on the written test. c. a poor credit report. d. lack of job experience in the mortgage industry.

c. a poor credit report.

27. What type of license, if any, does a licensed mortgage lender need to open a full-service branch office? a. Mortgage broker license b. Mortgage lender branch license c. Mortgage underwriter license d. No license

b. Mortgage lender branch license A mortgage lender branch license is required for any additional location of a residential mortgage lender other than its principal licensed office. The lender must submit a branch office application to the Commissioner at least 10 days before conducting business at the branch location.

``` 28. Under the California Penal Code, any person who knowingly files false or forged instruments within the state of California, has committed a(n): a. code violation. b. error. c. felony. d. misdemeanor. ```

c. felony.

29. Which of the following situations is ethical and legal? a. A licensed MLO runs ads in the local newspaper showing the current interest rates without including the APR. b. A licensed MLO helps a borrower obtain a 30-year, fixed rate loan that the client wants, even though the commission is lower. c. A lender only works with appraisers who know how to make the deal work. d. A lender consistently provides borrowers the GFE five days after taking a loan application.

b. A licensed MLO helps a borrower obtain a 30-year, fixed rate loan that the client wants, even though the commission is lower.

30. According to the SAFE Act, when must the pre-license education be completed? a. Before taking the National exam component b. Before taking the State examination component c. Before applying for the MLO license d. Within one year of receiving the MLO license

c. Before applying for the MLO license

31. A CRMLA licensed mortgage lender employs Kate, a licensed MLO and Sue, a loan processor. When Kate is "swamped" she asks Sue to help her by discussing loan options and taking applications over the phones. Kate always reviews Sue's applications and is available if Sue has questions. Under these circumstances, this: a. is permissible as long as Kate supervises Sue's work b. violates the CRMLA and could result in license suspension for the lender as well as the mortgage loan originator. c. action would force the lender to increase the amount of the surety bond on file with the Commissioner. d. constitutes a change of controll, and the appropriate paperwork must be filed.

b. violates the CRMLA and could result in license suspension for the lender as well as the mortgage loan originator.

32. Renewal for a real estate broker MLO endorsement is every: a. year. b. 2 years. c. 3 years. d. 4 years.

a. year

33. Who owns and operates the Nationwide Mortgage Licensing System? a. Federal Reserve Board b. American Mortgage Bankers Association c. Securities and Exchange Commission d. State Regulatory Registry, LLC

d. State Regulatory Registry, LLC

``` 34. Under the Finance Lenders Law, what is the minimum surety bond amount for a residential mortgage lender or broker in California? a. $10,000 b. $15,000 c. $20,000 d. $25,000 ```

d. $25,000

35. The residential mortgage lender may accept fees from the borrower without disclosing the: a. amount of the fees. b. APR. c. estimate for the number of days to issue a loan commitment. d. terms and conditions for any refund of the fees.

b. APR.

36. Mary wants to be a licensed MLO in more than one state. Which statement is incorrect? a. She is required to take the Unique State Component for each state in which she wants to become licensed b. She is required to take the National Component again for each state c. The National Component of the test need only be passed once d. The tests must be passed with a 75% score

b. She is required to take the National Component again for each state

37. A mortgage loan originator is a person, who for compensation: a. does clerical duties as an employee of a licensed lender. b. negotiates or places loans made by a finance lender. c. takes residential loan applications. d. services residential mortgage loans.

c. takes residential loan applications.

38. What is the required score to pass the MLO written exam? a. 55% b. 65% c. 75% d. 85%

c. 75%

39. Which is not required for a lock-in agreement? a. expiration date of lock-in. b. locked-in discount points. c. locked-in interest rate. d. lock-in fees that are refunded after closing

Correct answer is (d). d. lock-in fees that are refunded after closing. Fees are refunded if the lock-in agreement is executed and the loan is denied.

40. The SAFE Act requires that a credit report be obtained for each applicant to determine if the applicant: a. demonstrates responsibility in the management of his or her personal finances. b. has an acceptable FICO® score. c. has outstanding loans for more that two vehicles. d. demonstrates responsibility in the performance of his or her duties at the workplace.

a. demonstrates responsibility in the management of his or her personal finances.

``` The fee charged by a lender for the cost of holding a mortgage loan pending its sale to a permanent investor is called a _________ fee. a. application b. commitment c. lock-in d. warehouse ```

d. warehouse

42. The Commissioner may require a licensed lender that employs more than one MLO, to: a. hire a full-time MLO supervisor. b. increase the amount of the surety bond on file. c. open a branch office. d. take more CE credits

b. increase the amount of the surety bond on file

43. What is not included in the background check required to obtain a MLO license? a. Fingerprinting b. Medical history c. Credit history d. Criminal history

b. Medical history

44. In order to meet the SAFE Act license requirements in California through the Department of Real Estate (DRE), individuals must first: a. be issued a California real estate license. b. have an MLO license. c. pass a national exam. d. pay an application and registration fee.

a. be issued a California real estate license.

45. An advertisment placed by a real estate broker with a MLO endorsement must include: a. the company name. b. the DRE license number only. c. The DRE license number and the unique identifier. d. only the NMLS unique identifier

c. The DRE license number and the unique identifier.

46. An investment partnership that makes more than ________ mortgage loans on single-family homes in California in 1 year, must obtain a mortgage banker license. a. 2 b. 5 c. 8 d. 10

c. 8 Correct answer is (c). Any person, partnership, association, or other entity that makes more than 8 mortgage loans in any one calendar year on 1-to-4 residential proeprty in California, must obtain a mortgage banker license from the Commissioner.

47. XYZ Mortgage has one principal location in California. Which would be considered a branch and need to have a branch office license? a. Leased office suite in a law office where applications and fees for XYZ Mortgage are distributed to consumers b. Kiosk at the mall where consumers receive information about XYZ's loan products c. Non-profit agency where consumers are prequalified for a loan with XYZ, but no fee is charged d. Visitor's bureau where advertising materials for XYZ's products are distributed to consumers, but no loan applications are provided

a. Leased office suite in a law office where applications and fees for XYZ Mortgage are distributed to consumers A branch office is any location where applications for mortgage loans are distributed to or received by consumers.

48. Which of the following is a qualification to obtain a license or endorsement? a. Satisfy the federal requirements for MLO licensure b. Submit fingerprints to Homeland Security for a criminal background check c. Pass the national component of the Mortgage Loan Originator exam d. Satisfy the county requirements for MLO licensure

a. Satisfy the federal requirements for MLO licensure

49. The written exam developed by NMLS must be taken and passed by: a. mortgage loan originator applicants. b. attorneys specializing in buyer brokerage. c. escrow and closing officers. d. all of the above

a. mortgage loan originator applicants.

50. When will the MLO endorsements expire? a. Every two years from the date of issuance b. December 31st each year c. December 31st in the odd years d. June 30 of each fiscal year

b. December 31st each year

51. What is the passing score for the SAFE Test? a. 75% on the combined National and State components b. 75% on the National component and 75% on the State component c. 70% on the National component and 70% on the State component d. 75% on the National component and 60% on the State component

b. 75% on the National component and 75% on the State component

52. Real estate brokers and any salespersons who make, arrange, or service loans secured by real property must: a. have a Mortgage Loan Originator License. b. purchase errors and omissions insurance. c. submit a Mortgage Loan Activity Notification to the DRE. d. have a net worth of at least $300,000.

c. submit a Mortgage Loan Activity Notification to the DRE Correct answer is (c). Pursuant to SB 36, B&P Section 10166.02, real estate brokers who make, arrange, or service loans secured by real property and any salespersons who act in a similar capacity under the supervision of a broker must submit a report, Mortgage Loan Activity Notification (RE 866), to the Department by January 31, 2010 or within 30 days of commencing the activity, whichever is later. A licensed broker or salesperson needs a MLO endorsement...not a MLO license.

53. Of the following, which individual would be exempt from the SAFE Act? a. A seller who offers carry-back financing to the buyer b. A broker who helps his sister obtain a residential loan c. A licensed attorney who negotiates terms of a residential mortgage loan with a prospective lender on behalf of a client as an ancillary matter to the attorney's representation of the client d. They are all exempt under the SAFE Act

d. They are all exempt under the SAFE Act Correct answer is (d). The commercial context implied by the taking of an "application" is also absent where an individual seller provides financing to a buyer pursuant to the sale of the seller's own residence. The provision in the definition that loan originators are individuals who take an "application" implies a formality and commercial context that is wholly absent where an individual offers or negotiates terms of a residential mortgage loan with or on behalf of a member of his or her immediate family. Additionally, the definition generally would not apply to, for example, a licensed attorney who negotiates terms of a residential mortgage loan with a prospective lender on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a lender.

54. How many hours of qualifying, pre-license education is required to obtain a MLO license in California? a. 8 b. 10 c. 20 d. 25

c. 20

55. The Conference of State Bank Supervisors (CSBS) in cooperation with the _________ established the State Regulatory Registry LLC (SRR) on September 21, 2006. a. American Association of Bank Directors b. American Association of Residential Mortgage Regulators c. Association of Mortgage Intermediaries d. Association of Mortgage Professionals

b. American Association of Residential Mortgage Regulators (AARMR)

56. An ad for a mortgage loan is illegal if it states the: a. name, address, phone number, and unique identifier of the licensee. b. words, "immediate approval". c. percentate of the down payment. d. unique identifier of the license.

b. words, "immediate approval".

57. A loan originator is an individual who: a. obtains a listing from a seller. b. records the names of potential borrowers in a logbook. c. takes a residential mortgage loan application. d. takes a loan application for a timeshare.

c. takes a residential mortgage loan application.

58. What are the mortgage loan originator requirements for individuals under the California Residential Mortgage Lending Act and the California Finance Lenders Law? a. Completion of pre-licensure education b. Satisfactory criminal background check including fingerprints c. Sponsorship in NMLS by a licensed company d. All of the above

d. All of the above

59. Which activity would require an MLO to be licensed or have an endorsement on his or her license? a. Advising on loan terms b. Collecting information with regard to a residential mortgage loan c. Preparing loan packages d. All of the above

d. All of the above

61. Who will have access to the information on the NMLS database? a. State regulators b. Licensees c. Consumers d. All of the above

d. All of the above

62. A California licensed mortgage loan originator who wants to be licensed and negotiate loans in Nevada and Arizona: a. may do so providing that he or she has filed the Mortgage Loan Activity Notification report with the Department of Real Estate. b. needs to be registered in the NMLS. c. must first pass the State Component test in each of those states. d. must obtain a physical business address in each of those states.

c. must first pass the State Component test in each of those states.

63. When does a mortgage lender have to disclose to the borrower the description and amount of fees to be charged for the loan, which fees are refundable, and the terms and conditions for a refund? a. Before receiving any fees from the borrower b. Before approval of the loan c. After approval of the application d. As soon as the fees are received

a. Before receiving any fees from the borrower

64. A person was a director of a Colorado mortgage company whose lending license was revoked for making improper disclosures to buyers. Since the person was not personally convicted of any wrongdoing, could he obtain a California mortgage loan originator license and open his own mortgage business in California? a. The person will be granted a license because the problem occured in Colorado, not California. b. Because the person was not personally convicted, the Commissioner will grant him a probationary license. c. Since the problem was minor, not fraud, the person will probably obtain the license. d. The Commissioner will probably not grant the person a license.

d. The Commissioner will probably not grant the person a license.

``` 65. How long does an applicant have to respond to a written notification of deficiency to keep a current application in process? a. 10 days b. 30 days c. 60 days d. 90 days ```

Correct answer is (d). The applicant has 90 days to correct the deficiency and continue with the current application. If the applicant fails to respond within the 90 days, the application is withdrawn and the application fee is non-refundable.

66. The Commissioner may suspend a license for a period of 30 days pending an investigation: a. at any time. b. if the licensee has a license in another state. c. if there is good cause or risk of public harm. d. when the licensee fails to pay annual fees promptly.

c. if there is good cause or risk of public harm.

67. A mortgage lender license must be held by a: a. laywer acting within the normal course of business of assisting clients. b. company owner who employs others to originate mortgage loans for the company. c. person who negotiates mortgage loans for others in the primary market. d. person who negotiates the terms of a mortgage loan on behalf of his or her family members.

c. person who negotiates mortgage loans for others in the primary market.

68. The MLO application includes: a. proof of financial responsibility. b. 20 hours of mandatory pre-licensing education. c. successfully passing the federal and state components of the MLO exam. d. all of the above.

d. all of the above.

69. What is the purpose of the Nationwide Mortgage Licensing System (NMLS)? a. NMLS brings greater uniformity to the mortgage industry. b. NMLS allows regulators to renew licenses online. c. NMLS facilitates nationwide fraud among is participating members. d. NMLS does all of the above.

a. NMLS brings greater uniformity to the mortgage industry.

70. In which instance might the application for a MLO license be denied? The applicant: a. only scored 77% on the licensing exam. b. was pardoned for a conviction of fraud. c. has not paid property taxes on his personal residence for 3 years. d. has a real estate license.

c. has not paid property taxes on his personal residence for 3 years.

71. In which instance would the application for a MLO license likely be denied? a. The applicant is not employed by a license mortgage lender. b. The applicant voluntarily surrendered a MLO license in another state and relocated to California. c. The applicant did not complete all 20 hours of prelicense education in California. d. The applicant performed clerical duties for a licensed mortgage lender.

a. The applicant is not employed by a license mortgage lender. Correct answer is (a). The application for a MLO license likely would be denied if the applicant is not employed by a mortgage lender or servicer licensed under CRMLA. "All applicants must apply for a license through the NMLS by filing a Form MU4 and receiving a sponsorship by a company holding a valid unique identifier with NMLS and which is licensed by the California Department of Corporations." [From the CA Dept. of Corporations website]

72. If a candidate fails a component of the MLO test, he or she must: a. retake both components of the test again. b. wait 30 days before retaking the failed component. c. immediately retake the failed component. d. complete a pre-license course before retaking the test.

b. wait 30 days before retaking the failed component.

73. In California, a mortgage banker must have a tangible net worth of at least _____ and obtain a surety bond of at least ______, to obtain licensure. a. $100,000 / $50,000 b. $150,000 / $100,000 c. $250,000 / $100,000 d. $250,000 / $50,000

d. $250,000 / $50,000

74. When Don lived in Nevada, he had a loan originator license which was revoked. He now lives in California and plans to apply for the SAFE MLO license. Will he qualify for the license? a. The SAFE Act allows him to get a California MLO license, but not one in Nevada b. If two years have passed, the SAFE Act allows him to get a MLO license in any state c. He cannot get the MLO license because the SAFE Act prohibits licensure if the applicant ever had a loan originator license revoked in any governmental jurisdiction d. After three years, the SAFE Act allows him to get a MLO license in California only

c. He cannot get the MLO license because the SAFE Act prohibits licensure if the applicant ever had a loan originator license revoked in any governmental jurisdiction

75. Under what circumstance would an initial MLO license likely be denied? a. The applicant was convicted of a felony 5 years ago. b. The applicant was convicted of a felony 10 years ago c. The applicant was licensed in another state 5 years ago. d. The applicant was accused of felonious assault and battery 10 years ago.

a. The applicant was convicted of a felony 5 years ago.

76. A mortgage loan originator may: a. accept deposits to induce lenders to make a loan. b. conduct business with a known unregistered broker. c. disburse mortgage loan proceeds into a customer's account via direct deposit. d. charge hidden fees to establish a borrower's escrow account.

c. disburse mortgage loan proceeds into a customer's account via direct deposit.

77. Which characteristis would not automatically result in the denial of a MLO license? a. Out-of-state MLO license b. Irresponsible finances c. Fradulent behaviour d. Moral turpitude

a. Out-of-state MLO license

78. In which instance would a felony conviction not render an individual ineligible for an MLO license? a. The conviction is expunged b. The conviction is pardoned c. The conviction is five years old d. The conviction occurred within the preceding seven years of the application

b. The conviction is pardoned

79. The surrender of an individual license does not affect the licensee's: a. ability to take loan applications as an independent contractor. b. liability (civil or criminal) for acts committed prior to the surrender of the license. c. ability to originate loans as an employee for a licensed lender. d. elegibility for obtaining a license in another state

b. liability (civil or criminal) for acts committed prior to the surrender of the license.

80. A licensed mortgage lender that puts together loan packages, hires Kris to handle administrative and clerical duties. Kris is considered a: a. mortgage loan originator and is not exempt from licensing. b. mortgage loan originator and is exempt from licensing. c. mortgage loan processor and is not exempt from licensing. d. mortgage loan processor and is exempt from licensing.

d. mortgage loan processor and is exempt from licensing.

81. Which statement regarding mortgage licensing is incorrect? a. Independent contractors employed by a licensed mortgage lender are exempt from CRMLA licensure. b. A licensed CRMLA lender may provide brokerage sercives to a borrower, by trying to obtain a loan on behalf of the borrower from another lender. c. A MLO licensee must be employed and supervised by a licensed residential mortgage lender or servicer. d. A person does not have to be licensed to negotiate mortgage terms for an immediate family member.

a. Independent contractors employed by a licensed mortgage lender are exempt from CRMLA licensure.

82. On a residential mortgage loan, a residential mortgage lender is allowed to charge a fee for: a. appraisal. b. processing. c. underwriting. d. updating files.

a. appraisal.

83. Of the following, which usually perform clerical or support duties, and does not need an MLO license? a. Administrative assistant b. Loan processor c. Loan underwriter d. All of the above do not need an MLO license

d. All of the above do not need an MLO license

84. How many components are in the SAFE Test? a. 1 b. 2 c. 3 d. 4

b. 2 | The SAFE Test includes two components, a National Component and a Unique California State Component.

85. Under what circumstance is the application fee for the MLO license refunded? a. If the MLO license expires. b. If the MLO license is surrendered. c. If the MLO license is revoked. d. The application fee for the license is not refunded under any circumstances.

d. The application fee for the license is not refunded under any circumstances.

86. Al, Betty, Carol, and Dennis are employed by XYZ Mortgage Company, a licensed mortgage lender. Which employee would not be exempt from licensing? a. Al talkes to consumers to get the necessary information to process a residential mortgage loan. b. Betty talks to customers to discuss residential loan rates and terms. c. Carol analyzes information related to processing residential mortgage loans. d. Dennis talks to consumers to get the necessary information to process a commercial loan

b. Betty talks to customers to discuss residential loan rates and terms.

87. A licensed MLO may be: a. an independent contractor. b. simultaneously affiliated with two mortgage brokers. c. employed by another MLO. d. considered as the originating entity for other MLOs.

a. an independent contractor

88. A mortgage broker may NOT: a. make mortgage loans. b. negotiate the terms of mortgage loans. c. place mortgage loans. d. solicit mortgage loans.

a. make mortgage loans. Correct answer is (a). Mortgage brokers do not make loans; finance lenders do.

89. What is the purpose of the Nationwide Mortgage Licensing System (NMLS)? a. NMLS brings greater uniformity to the mortgage industry b. NMLS allows regulators to renew licenses online c. NMLS facilitates nationwide fraud among participating members d. NMLS does all of the above

a. NMLS brings greater uniformity to the mortgage industry

90. According to the California Business and Professions Code, if the loan documents allow the lender to charge a late payment fee, if the payment is past due 10 days or more, the lender can collect: a. one penalty fee for the late payment. b. a penalty fee every month after the late payment occurred. c. a fee for each day the payment is late. d. the payment, with no penalties.

a. one penalty fee for the late payment. Correct answer is (a). B&P Code 10242.5 states that no charge may be imposed on any installment which is paid or tendered in full within 10 days after its scheduled due date, even though an earlier maturing installment or a late charge on an earlier installment may not have been paid in full. No charge may be imposed more than once for the same late payment of an installment. No late charge may be imposed on any installment which is paid or tendered in full within 10 days after its scheduled due date, even though an earlier maturing installment or a late charge on an earlier installment may not have been paid in full.

``` 91. How long must a real estate broker who has an MLO endorsement retain the records of mortgage loans he or she originates? a. 2 years b. 3 years c. 4 years d. 5 years ```

b. 3 years

``` 92. How many hours of the MLO CE can be used satisfy the real estate license continuing education requirements? a. 0 b. 3 c. 5 d. 8 ```

a. 0 Correct answer is (a). The continuing education completed for the purpose of renewing a MLO license endorsement cannot be used to satisfy real estate license continuing education requirements.

93. Which of the following activities would not require licensure or an endorsement under the SAFE Act? a. Negotiating terms of a residential mortgage loan for compensation b. Offering a residential mortgage loan for compensation c. Taking a commercial loan application d. Taking a residential mortgage loan application

c. Taking a commercial loan application

94. The California Department of Corporations may deny the MLO applicant a license, if the applicant has ever been: a. convicted of an act of domestic violence or endangering a minor, unless pardoned. b. pardoned on any felony in the last 10 years. c. convicted of driving under the influence. d. convicted of an act of fraud, dishonesty, breach of trust, or money laundering, unless pardoned.

d. convicted of an act of fraud, dishonesty, breach of trust, or money laundering, unless pardoned

95. To obtain a MLO license, the applicant should have: a. an affiliation with a licensed mortgage originating entity. b. a business office in California. c. . a college degree. d. at least 4 years previous experience in mortgage lending.

a. an affiliation with a licensed mortgage originating entity.

96. Which person is not exempt from licensing under the California Residential Mortgage Lending Act? a. California real estate brokers b. Licensed California finance lenders c. Independent contractors employed by licensed California mortgage lenders d. Individuals making 8 or less residential loans with their own funds, for their own investment in any one calendar year

c. Independent contractors employed by licensed California mortgage lenders

97. A person allowed a MLO license to lapse. When applying to the Department of Corporations for a new license, he or she must prove that: a. the license lapsed by mistake. b. all of the continuing education requirements were completed for the year the license was last active. c. he or she actively negotiated mortgage loans while the license was inactive. d. no more than 2 loans were placed during the time the license was inactive.

b. all of the continuing education requirements were completed for the year the license was last active.

98. Real estate brokers will need an MLO Endorsement on their real estate licenses if they: a. solicit borrowers for real estate loans. b. collect payments on real estate loans. c. negotiate real estate loans on behalf of lenders. d. do any of the above.

d. do any of the above.

99. A registered mortgage loan originator is: a. a mortgage loan originator licensed under CRMLA, but has an ofifce in another state. b. a mortgage loan originator registered with and maintains a unique identifier through NMLS. c. any mortgage loan originator whose license had been suspended or revoked by the Commissioner. d. any licensed mortgage loan originator who is employed by a lender licensed under CRMLA.

b. a mortgage loan originator registered with and maintains a unique identifier through NMLS.

Mortgage brokers must retain which record for 3 years? a. Contract for compensation b. Income statement c. Income tax return d. License application

a. Contract for compensation

Which statement is incorrect regarding the Real Estate Commissioner's role in enforcing the license law? a. The Commissioner can investigate both licensed and non-licensed persons b. The Commissioner can investigate only licensed persons c. The Commissioner can only discipline licensed persons d. The Commissioner can suspend, revoke, or restrict licenses

b. The Commissioner can investigate only licensed persons

Unless licensed for more than 5 years in California, a residential mortgage lender who surrenders a lender's license may not: a. apply for reinstatement of the license within 2 years. b. help an immediate family member negotiate the terms of a loan. c. make or service mortgage loans under a real estate license. d. originate mortgage loans as an employee of a federal housing agency.

c. make or service mortgage loans under a real estate license. Correct answer is (c). A residential mortgage lender or servicer licensee may not surrender a license to the DOC Commissioner and then, under the authority of a real estate license, engage in residential mortgage lending or servicing activities that are subject to the rules and regulations of the CRMLA, unless the licnesee has been licensed under this division for 5 years or more.

Which California agency is authorized to issue licenses and endorsements for individuals working as mortgage loan originators? a. Department of Corporations b. Department of Insurance c. Department of Real Estate d. Department of Revenue

c. Department of Real Estate The Department of Real Estate issues licenses to real estate brokers and salespersons and facilitates the MLO License Endorsement. MLOs working under the Department of Corporations are issued a new MLO license—not an endorsement.

State Law & Regulation Definitions & License Regulations Flashcards

(132 cards)