National Safe Exam - Nmls Mortgage Loan Originator Licensure Exam Prep

Front 1

What does ECOA prohibit discrimination against?

Back 1

sex, age, marital status, race, color, religion, national origin, receipt of public assistance, exercised rights under the Consumer Credit Protection Act

Front 2

How far should comparable properties be in the appraisal market approach?

Back 2

within one mile

Front 3

What is loan suitability?

Back 3

a term that refers to the matching of loan programs with the current financial circumstance of the borrower

Front 4

What is APR?

Back 4

Annual Percentage Rate

tells the borrower the total cost of financing a loan in percentage terms, as a relationship of the total finance charges to the total amount financed. it includes not just the interest rate on the note, but the total cost of the loan, including all other finance charges spread out over the life of the loan.

Front 5

When must an applicant receive an adverse action notice if they do not qualify for a loan?

Back 5

within 30 days

Front 6

What is an aggregate escrow analysis used for?

Back 6

to make sure there are no escrow overages; to ensure that borrowers are not being forced to maintain any surplus over the allowed two month cushion

Front 7

What does Section 8 of RESPA state?

Back 7

it is prohibited for a mortgage professional to give or accept any sort of referral or kickback fee

Front 8

What agency is responsible for creating the regulations for TILA?

Back 8

The Federal Reserve

Front 9

What does LIBOR stand for and what is it's relation to mortgages?

Back 9

London Interbank Offered Rate

it is one of the main methods of determining ARM adjustments

Front 10

What is a re-conveyance clause?

Back 10

it removes the lien on a property once the loan is paid off in full

Front 11

What is another term for a junior lien?

Back 11

subordinate lien, anything behind something else

Front 12

What sort of information is included in the market conditions addendum?

Back 12

an inventory of homes in the neighborhood, existence of foreclosures in the neighborhood, market conditions

Front 13

In order to meet fair lending requirements, what test must a credit scoring system be based on?

Back 13

validity test

Front 14

What is the amount of MIP for FHA loans based on?

Back 14

the LTV (mortgage insurance)

Front 15

What is redlining?

Back 15

refusing to originate loans in areas that are perceived to have a lack of creditworthiness

Front 16

Describe a "discount point"

Back 16

a discount point is 1% of the loan amount

Front 17

What does easement mean?

Back 17

a right to cross or otherwise use someone else's land for a specified purpose

Front 18

Describe subprime lending

Back 18

subprime lending is making riskier loans to people who may have difficulty paying them back. usually have higher interest rates and less favorable terms.

Front 19

What is a buy down loan?

Back 19

a fixed rate loan where you can reduce the interest rate and monthly payment amount for a specific period of time by paying a fee up front

Front 20

What is loan flipping?

Back 20

no benefit to refinancing or there are hidden fees or balloon payments involved

Front 21

What is SRP?

Back 21

Service Release Premium

SRP is the payment received by the bank or lending institution when selling a closed loan in the secondary market. such as Fannie Mae or Freddie Mac.

Front 22

What is YSP?

Back 22

Yield Spread Premium

also known as "borrower credit" or "lender credit"
the money paid to a mortgage broker for giving a borrower a higher interest rate on a loan that is applied towards the borrower's closing costs

Front 23

What does HECM stand for, what is it, and what is the minimum age limit?

Back 23

Home Equity Conversion Mortgage

it's a reverse mortgage, meaning the borrower is no longer required to make a mortgage payment and the monthly interest is instead tacked onto the principal balance of the loan. minimum age for reverse mortgages is 62.

Front 24

If a loan had prepayment penalties, which documents would disclose them?

Back 24

the TILA disclosure and the promissory note

Front 25

When is a residual income test used?

Back 25

when qualifying a borrower for a VA loan

Front 26

What clause changes lien priority?

Back 26

subordination clause

Front 27

What does title insurance protect?

Back 27

Lender's title/owner's title insurance;lender/owner from loss by encumbrances or defective title

Front 28

What is the acceleration clause?

Back 28

clause in a mortgage that allows a lender to foreclose if a borrower defaults

Front 29

Re-conveyance deed is recorded to clear what?

Back 29

trust deed lien

Front 30

FRB administers what?

Back 30

ECOA, HMDA, TILA

Front 31

When a loan has a greater risk, a lender may charge what?

Back 31

Loan Level Price Adjustment (LLPA)

Front 32

What is Schedule E?

Back 32

supplemental income and loss, income from rental property, income from partnership or limited liability comp.

Front 33

Calls can be made when according to the FTC-No Call Registry?

Back 33

18 months after business transaction has been completed or 3 months after they have made an inquiry

Front 34

What is a bridge mortgage?

Back 34

occurs between the termination of one mortgage and the beginning of the next

Front 35

What is FNMA?

Back 35

Federal National Mortgage Association aka FANNIE MAE

Front 36

What is FHLMC?

Back 36

Federal Home Loan Mortgage Corporation aka FREDDIE MAC

Front 37

What is GNMA?

Back 37

Government National Mortgage Association aka Ginnie Mae

Front 38

What is loan suitability?

Back 38

A term that refers to the matching of loan programs with the current financial circumstance of the borrower.

Front 39

When must an applicant receive an adverse action notice if they do not qualify for a loan?

Back 39

Within 30 days

Front 40

What is an aggregate escrow analysis used for?

Back 40

To make sure there are no escrow overages; to ensure that borrowers are not being forced to maintain any surplus over the allowed 2 month cushion

Front 41

What does section 8 of RESPA state?

Back 41

It is prohibited for a mortgage professional to give or accept any sort of referal or kickback fee

Front 42

What agency is responsible for creating the regulations for TILA?

Back 42

The Federal Reserve

Front 43

What does LIBOR stand for and what is it's relation to mortgages?

Back 43

London Interbank Offered Rate. It is one of the main methods of determining ARM adjustments.

Front 44

What is a reconveyance clause?

Back 44

It removes the lien on a property once the loan is paid off in full.

Front 45

What is another term for a Junior Lien?

Back 45

Subordinate lien

Front 46

What sort of information is included in the Market Conditions Addendum?

Back 46

An inventory of homes in the neighborhood, Existence of foreclosures in the neighborhood, market conditions.

Front 47

In order to meet fair lending requirements, what test must a credit scoring system be based on?

Back 47

Validity Test

Front 48

What is the amount of MIP for FHA loans based on?

Back 48

The LTV

Front 49

What is redlining?

Back 49

Refusing to originate loans in areas that are perceived to have a lack of creditworthiness

Front 50

How does TILA describe a creditor?

Back 50

One who regularly extends credit

Front 51

What does COFI stand for?

Back 51

Cost Of Funds Index

Front 52

What does “Easement” mean?

Back 52

A right to cross or otherwise use someone else's land for a specified purpose

Front 53

Describe Subprime lending.

Back 53

Subprime Lending is making riskier loans to people who may have difficulty paying them back. Usually have higher interest rates and less favorable terms.

Front 54

What is a buy down loan?

Back 54

A fixed rate loan where you can reduce the interest rate and monthly payment amount for a specific period of time by paying a fee up front

Front 55

Describe “loan flipping.”

Back 55

Loan Flipping is a type of predatory lending in which the lender convinces you to refinance your home(sometimes several times) when there is either no benefit in it for you, or there is something hidden in the fine print such as a balloon payment.

Front 56

What is SRP(Service Release Premium)?

Back 56

SRP is the payment received by the bank or lending institution when selling a closed loan in the secondary market. Such as Fannie Mae or Freddie Mac.

Front 57

What is YSP(Yield Spread Premium)?

Back 57

Also known as “Borrower Credit” or “Lender Credit.” The money paid to a mortgage broker for giving a borrower a higher interest rate on a loan that is applied towards the borrower’s closing costs.

Front 58

What does HECM stand for, what is it, and what is the minimum age limit?

Back 58

Home Equity Conversion Mortgage. It’s a reverse mortgage, meaning the borrower is no longer required to make a mortgage payment, and the monthly interest is instead tacked onto the principle balance of the loan. Minimum age for a reverse mortgage is 62.

Front 59

On a particular loan a seller’s concession can be up to 6%. Is it 6% of the purchase price or the loan amount?

Back 59

6% of the purchase price

Front 60

What is the Red Flags Rule and what is its main purpose?

Back 60

The Red Flags Rule is a measure in FACTA to address identity theft. Its main purpose is to identify patterns and detect irregularities that may indicate identity theft

Front 61

If a loan had prepayment penalties, which documents would disclose them?

Back 61

The TILA disclosure and the promissory note

Front 62

36% back-end ratio, an applicant for an 80% conventional loan, gross monthly income of $4,600 and monthly fixed debts of $500 would be eligible for a loan with monthly payments to PITI of?

Back 62

($1156) 4600*.36=1656
1656-500=1156

Front 63

When is a residual income test used?

Back 63

When qualifying a borrower for a VA loan.

Front 64

What clause changes lien priority?

Back 64

Subordination Clause

Front 65

The permanent financing used to replace the construction loan is?

Back 65

Take-Out Loan.

Front 66

PFC

Back 66

Prepaid Finance Charge

Front 67

Sole-proprietorship is which "Schedule"?

Back 67

C

Front 68

What does title insurance protect?

Back 68

Lender from loss by encumbrances or defective title.

Front 69

Close-Ended loan is?

Back 69

Fixed amount of $ repayable or a fixed period.

Front 70

What Act is safegaurds rule?

Back 70

Gram-Leach Bliley (GLB)

Front 71

What does the Safeguard Rule protect?

Back 71

Protects consumer information from unauthorized access.

Front 72

Clause in a mortgage that allows a lender to foreclose if a borrower defaults?

Back 72

Acceleration clause.

Front 73

Promise to pay a monetary obligation is contained where?

Back 73

The NOTE

Front 74

Reconveyance deed is recorded to clear what?

Back 74

Trust deed lien

Front 75

Which Act facilitates responsible behavior in the subprime market?

Back 75

SAFE ACT

Front 76

FRB Administers what?

Back 76

ECOA, HMDA. TILA

Front 77

Loan Origination Fee for HECM is?

Back 77

$6,000

Front 78

What will provide the seller to buy back the loan under certain conditions?

Back 78

Buyback Agreement.

Front 79

Relieves the seller of obligation/buyer has all of the burden or trying to collect from the borrower.

Back 79

Non-Recourse

Front 80

When a loan has a greater risk a lender may charge what?

Back 80

Loan Level Price Adjustment (LLPA)

Front 81

LLPA

Back 81

Loan Level Price Adjustment- One time fee charged to compensate for the borrower.

Front 82

Prior to being taken over by the government, Fannie Mae and Freddie Mac were known as?

Back 82

GSE's-Government Sponsored Enterprises

Front 83

Margin/Index-Which fluctuates and which stays the same?

Back 83

Margin-Stays Index Fluctuates

Front 84

Act: Information sharing and privacy to consumers?

Back 84

GLB

Front 85

Who's purpse to assure creditors provide accurate and truthful information ro consumers relating to the cost and terms and credit being offered?

Back 85

TILA

Front 86

Whats covers the lenders risk?

Back 86

PMI and MIP

Front 87

Act: Gives the consumer access to his credit report: Both with a written request and free once a year.

Back 87

FCRA

Front 88

Not being able to secure financing for the entire purchase price of the property?

Back 88

Seller wrap of an exsisting loan.

Front 89

ARM Disclosures

Back 89

Interest rate ceiling
CHARM booklet
15 year historical example
worst case scenario

Front 90

Can you charge a fee for the preparation of the HUD-1?

Back 90

no.

Front 91

Adverse Action

Back 91

Denial or revocation of credit

Front 92

PMI/MIP's benefit to the borrower?

Back 92

Loan obtained with a lower down payment.

Front 93

APR is usually higher than what?

Back 93

Nominal rate.

Front 94

What enables the borrower to compare percentage costs of different loans?

Back 94

APR

Front 95

It represents the relationship of the total finance charge to the total amount financed, as a yearly rate.

Back 95

APR

Front 96

Sole Proprietors

Back 96

Schedule C

Front 97

Supplemental income and loss.
-Income from rental prop.
-Income from partnership or limited liability comp.

Back 97

Schedule E

Front 98

Loss Payee Clause (Mortgage Clause)

Back 98

Hazard Ins. allows payments to be made jointly to both the lender and homeowner if subject property is damaged.

Front 99

FTC No-Call Registry....Calls can be made when?

Back 99

18 Months after business trans has been completed or 3 months after they have made an inquiry.

Front 100

BKT:
13=
7=

Back 100

13-Plans to repay debt.
7-payoff without repayment.

Front 101

Contract Kiting

Back 101

Seller agrees to create a second falsified sales agreement with an inflated purchase price in order to influence the appraiser to make a higher appraisal and the lender to grant a higher loan.