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43 Cards in this Set

  • Front
  • Back
Under the SAFE Act, states are required to do background checks as part of their effective supervision. A background check includes all of the following EXCEPT
-Credit history
-Criminal history
-Civil or administrative records
-Education history
A: Education history
(Effective supervision by a state includes conducting background checks for criminal history through fingerprint and other databases, civil or administration records, credit history or any other information as deemed necessary by the NMLS.)
Enhancing protection and reducing fraud by directing states to adopt minimum uniform standards for the licensing and registration of residential mortgage loan originators was the purpose of the federal act known as the
A: SAFE Act
Desperate to increase her business, Sandy has advertised a loan product that has very attractive terms but which does not actually exist in the marketplace. She plans on telling consumers who inquire about the product that it was pulled from the market and then steer them to other loan products that are actually available. By doing this, Sandy has engaged in
A: Bait-and-switch
Jethro has placed an advertisement that includes the language "95% financing available." Is Jethro required to provide any other disclosures?
Yes. Additional disclosures required, because he is implying a 5% down payment
After viewing a house they were interested in buying, the Foxxes stopped by Brian Hobbit's mortgage business to explore lending options. After discussing several products, the Foxxes asked about the cost of the credit. Even though this is an oral question, Brian must disclose information about each discussed product's
A: APR
Carrie is a mortgage loan originator for Bintly Loans while her sister, Rhonda, originates loans for the Gotbucks Credit Union. Carrie is a state-licensed mortgage loan originator and Rhonda is
-Exempt from licensing
-A regulated loan originator
-A state-licensed loan originator
-A federally licensed loan originator
A: A registered loan originator

(A registered loan originator is an individual who meets the definition of a loan originator; is an employee of a depository institution (i.e., a bank, savings association or credit union), a subsidiary owned and controlled by a depository institution and regulated by a federal banking agency or an institution regulated by the Farm Credit Administration; and is registered with, and maintains a unique identifier through, the NMLS.)
During a routine examination, a state licensing agency discovered that mortgage loan originator Karen Villmer routinely overcharged borrowers for third-party services and pocketed the difference for herself. In terms of an enforcement action, the state licensing agency may do all of the following EXCEPT
-Seize Karen's bank accounts
-Require restitution be paid to the borrowers
-Impose a civil penalty
-Suspend or revoke Karen's license
A: Seize Karen's bank accounts

( In order to ensure effective supervision and enforcement of the SAFE Act, the state licensing agency may deny, suspend, revoke, condition or decline to renew a license for a violation of the state's SAFE Act, rules and regulations issued under the Act or any order or directive entered under the Act; order restitution be paid by persons who have violated the state's SAFE Act; and/or impose a civil penalty on a mortgage loan originator.)
Gabby is a mortgage loan originator who is employed by Hayes Mortgage Brokerage. In preparing the TIL Disclosure, the mortgage broker fees that will be paid to her employer will be shown as part of the
-Pay off demand
-Third-party fees
-Underwriting fees
-Pre-paid finance charges
A: Pre-paid finance charges

(The pre-paid finance charges in a real estate loan transaction may include, among other things, mortgage broker fees, whether paid by the consumer directly to the broker or to the lender for delivery to the broker; interest; points, loan fees and assumption fees; and premiums for insurance protecting the lender from borrower default.)
Angela Conyer took a continuing education course on December 31. Can she apply those credit hours towards next year's continuing education requirements?
-Angela may use the credits towards the following year as long as she receives her certificate of completion on or after January 1
-Angela may use those hours towards the following year's requirement only if she did not need the hours to meet her current year's continuing education hours.
-Yes. A completed continuing education course can be used towards any year the loan originator designates.
-No. Coursework may only be credited towards the year in which the course was taken.
A: Angela may use the credits towards the following year as long as she receives her certificate of completion on or after January 1

( A state-licensed loan originator may only receive credit for a continuing education course in the year in which the course is *TAKEN*)
In reviewing loan originator license applicant Joe Poore's credit history, his state may determine Joe is not financially responsible based on each of the following EXCEPT
-current outstanding tax liens.
-seriously delinquent accounts.
-his average monthly income over the past year.
-current outstanding judgments.
A: his average monthly income over the past year.

*The amount of income has nothing to do with responsibility, aka how smartly you use your money*

( A determination that an individual has not shown financial responsibility may include current outstanding judgments, except those solely as a result of medical expenses; current outstanding tax liens or other government liens and filings; and foreclosures or a pattern of seriously delinquent accounts within the past three years. )
Frank Stein is a loan originator for a county housing finance agency whose function is to help meet the affordable housing needs of the residents of the state. Is Frank required to be licensed under the SAFE Act?
-He is not required to be licensed if he is registered.
-Yes. All loan originators must be licensed.
-He must be licensed only if he represents he can and will perform the services of a mortgage loan originator.
-No, he is exempt from the requirement to be licensed.
A: No, he is exempt from the requirement to be licensed.

**He works for a COUNTY finance agency**

( 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 employment. )
Dina Soar is mailing literature to potential borrowers that states the payment for a certain loan product is less than $1,000 a month. As her advertising literature contains a triggering term, Dina must also include all of the following:
- The amount or percentage of the down payment
-The terms of repayment
-The annual percentage rate
Penalties for an individual violating SAFE include:
1. Deny, suspend, revoke, condition, or decline to renew a license

2. Ordre restitution be paid by the persons who have violated the state's SAFE Act and/or

3. Impose a civil penalty on a mortgage loan originator
Buffy Sleigher is taking her prelicensing courses. While taking her two hours of coursework in lending standards of the nontraditional mortgage product marketplace, Buffy learned that nontraditional lending includes any loan product other than a
A: 30 year fixed mortgage
The state in which Jim Jungle works requires a mortgage loan originator be covered by a surety bond. The bond must be maintained in an amount that reflects the:
A: Dollar value of loans Jim originates annually
State supervisory authority includes
A: Reporting violations of state law to NMLS, as well as enforcement actions/other relevant info to the NMLS

(State supervisory authority includes reporting violations of state law, as well as enforcement actions and other relevant information to the NMLS. The SAFE Act does not mandate annual examinations.)
Mortgage loan originator Trevor Tibbs has accepted a loan application for a dwelling that is a mobile home not permanently affixed to the land. Does this mobile home meet the requirements necessary for it to be considered security for a residential mortgage loan? Why?
-No. Dwellings must be permanently attached to real property.
-Yes. As long as the real property upon which the mobile home will be located is in the borrower's name, the loan may be a residential mortgage loan.
-No. Mobile homes are classified as personal property, not real property.
-Yes. A dwelling includes a structure whether or not that structure is attached to real property.
A: 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. )
Mortgage loan originator Billy Bumpo teaches a three-hour NMLS-approved continuing education course on required truth in lending disclosures. How many hours of continuing education credits may Billy earn towards meeting his own continuing education requirement?
A: 6 hours.

( A state-licensed mortgage loan originator who is an approved instructor of continuing education may receive credit towards his own annual continuing education requirement at the rate of two hours credit for every one hour taught. )
A state licensing agency granted Crook Cromwell a license to act as a mortgage loan originator. Subsequent to the granting of the license, the agency received a supplemental criminal history report which indicated that Crook had been convicted of a money laundering charge in another state. What action can the state licensing agency take?

-Issue a temporary cease-and-desist order
-Refuse to renew Crook's license
-Require a hearing with Crook before any other action can be taken
-Condition issuance of the license against future bad acts
A: Issue a temporary cease-and-desist order

(The state licensing agency may enter a temporary order requiring a person to cease doing business under a license or interim license if it determines that the license was erroneously issued.)
When a state agency is conducting a background check, which state department is required to provide access to an applicant's criminal history information?
A: The Attorney General

(All criminal history information must be provided by the state's Attorney General to the state officials responsible for regulating state-licensed loan originators to the extent criminal history background checks are required under the loan originator licensing laws of the state.)
Muny Baggins regularly extends credit that is subject to a finance charge and payable in a written agreement of more than four installments. Under the Truth in Lending Act, Muny is a
Creditor

( The Truth in Lending Act identifies a creditor as a person, including a lender and a table funding mortgage broker, that regularly extends credit that is subject to a finance charge or is payable by written agreement in more than four installments. A creditor may also be a credit card issuer. )
Goh Getter has developed an advertisement he wants to use to solicit more business. In the advertisement, Goh is stating specific terms relating to a mortgage loan product. Is this permissible?
A: Yes, if those stated terms actually are or will be arranged for a consumer
Mortgage loan originator Bill Zeppalin contacted the appraisal company that had been routinely performing appraisals for his company. In talking with the appraiser, Bill noted that recent appraisals had been coming in "kind of low" and perhaps he would be making other arrangements for future appraisals. This comment is
A: Prohibited
Mortgage loan originator Shantee Higgins is responsible for preparing the Truth in Lending Disclosure Statement. In order to comply with federal law, she is required to deliver it within how many days of receiving a written application?
Three
The state in which William is licensed does not provide a time period in which to make up continuing education deficiencies. Since William did not complete his required eight hours, what will happen to his license?
A: His license will expire
Wanda had been procrastinating on taking her continuing education courses. As the end of the year approached, she saw a course she had taken the previous year was available. Since she had already mastered the information, she decided to take it again. Will this course count towards her continuing education hours for the current year?
A: No. A state-licensed loan originator may not take the same approved course in the same or successive years to meet his annual continuing education requirement of eight hours of coursework.
Hours required for continuing of education:
8 Hours, which must include:
- Three hours of federal laws and regulations
-Two hours of ethics, including fraud, consumer protection, and fair lending issues
-Two hours of lending standards for the nontraditional product market place
Practice Exam 2


Question of 25 (#46333)
Ginger is a mortgage loan originator. She discussed with her clients, the Salts, the requirement to carry property insurance on their home that was securing the mortgage loan Ginger was originating for them. Her recommendation was that they insure the property for an amount exceeding the replacement value of the improvements on the property. What excess amount is Ginger permitted to recommend?
A: Recommending insurance in excess of the replacement value of the improvements is prohibited
Betty is preparing the Truth in Lending Disclosure Statement. All the charges payable by the consumer and required by the lender for the extension of credit, whether prepaid or charged over the term of the loan, are included in the
A: Finance Charge

( The finance charge is the cost of consumer credit as a dollar amount. It includes any charges payable, directly or indirectly, by the consumer and required, directly or indirectly, by the lender for the extension of credit. It is the total of prepaid finance charges and charges paid over the term of the loan. )
Definition of the finance charge:
The finance charge is the cost of consumer credit as a dollar amount. It includes any charge payable, directly or indirectly, by the consumer and required, directly or indirectly, by the lender for the extension of credit. The finance charge is the total of:
- Prepaid finance charges; and
-Charges paid over the term of the loan (e.g. the total interest and mortgage insurance premiums, which would be paid over the term of the loan)
What factor may cause a finance charge to change? In what situation, and why?
- The interest paid on the loan is part of the finance charge,
- So if it is an ARM, and the interest rate can change, then
-The finance charge may also vary
Van Gordon, who is an IT tech, has decided to sell his house. He is offering to carry the contract himself and does all the negotiating necessary to reach agreement on the mortgage terms. Must Van be licensed?
A: Van is exempt from the requirement to be licensed as the property on which he was negotiating the terms of the mortgage loan had served as his own residence.
The Nominal rate is shown where?
The note
Had a $200,000 loan and $7000 in finance charges, what would amount financed be if...

- He paid the prepaid finance charges?
-He added the charges and financed them?
- $193,000

-$200,000
When a state is conducting an investigation, what is it authorized to do?
-Administer oaths or affirmations
-Subpoena witnesses
-Require the production of relevant documents
-Control access to any documents and records or any person under examination or investigation.
How might a state control the documents used in an investigation?
-Take possession of them, or
-Place a person in exclusive charge of them in the place they are usually kept.
*They cannot be removed without court order or state's consent.
*The owner of the documents can still have ACCESS to them to conduct business as usual
Zelda has been employed as a loan processor or underwriter at Mortgage Loans For All for a number of years. She now wants more freedom to set her own schedule and is planning on becoming an independent contractor. In order to do this, Zelda must
A: Be licensed as a stat-licensed originator
Independent Contractor:
- Individual (in this case originator/processor) who does not work for an individual who is licensed under SAFE act (or exempt.
-May not engage in residential mortgage loan activities as a processor or underwriter unless he is a state-licensed originator.
Mortgage loan originator Janine is assisting the Barstows in obtaining a residential mortgage loan. Her assistance may include all of the following EXCEPT
-providing advice on loan terms.
-preparing loan packages.
-making a loan commitment.
-collecting information on behalf of the consumer.
A: Make 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 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.)
Sole proprietors income documents?
Schedule C
Supplemental income and loss:
-Income from rental property
-Income from partnership or limited liability

Found where?
Schedule E
Chap 13 Bankruptcy is?

Chap 7 Is?
13 = Plans to repay debt

7 = Payoff without repayment
Basic rules for appraisal comps:
-Must be located within 1 mile
-3 comps must be used
-Ideally, com's that have had sales within the last 90 days
-15% limit of net adjustments, 25% limit of gross adjustments.
-Basements aren't taxable living area, but if they are finished can be used for an "adjustment"