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25 Cards in this Set
- Front
- Back
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All of the following are included within the authority of the Commissioner, except: |
Enter a cease and desist order Order restitution and monetary penalties Subpoena witnesses and documents Issuing an order to a former employer of a loan originator to turn over records The answer is issuing an order to a former employer of a loan originator to turn over records. Commissioner does not have authority to examine records of former employers of a loan originator. |
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Which of the following types of loans is not a conventional mortgage? |
Nonconforming loan Non-qualified mortgage FHA loan Subprime loan The answer is FHA loan. Conventional loans include a wide range of loan types except for government-insured and guaranteed loans such as FHA loans, USDA loans, and VA loans. |
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Which of the following describes an air loan? |
A loan is obtained with inflated property values A loan that is repeatedly refinanced with no benefit to the borrower A loan that is presented to the borrower with hidden fees A fictitious borrower obtains a mortgage and secures it with fictitious property The answer is a fictitious borrower obtains a mortgage and secures it with fictitious property. An air loan is an instance in which a fictitious borrower obtains a mortgage and secures it with fictitious property. |
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Which of the following is least likely to be a sign of fraudulent behavior? |
The applicant currently rents an apartment, but is purchasing a second home by the beach The consumer is making a significant cash down payment Signatures on various documents do not match Identification documents appear to be smudgy photocopies The answer is the consumer is making a significant cash down payment. A consumer who makes a significant cash down payment is not necessarily engaging in fraudulent behavior. |
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While taking an application, an originator learns that his potential borrower receives income from a public assistance program. Without even running a full pre-qualification, the originator tells the would-be borrower that he cannot help someone who is receiving public assistance. This originator is in violation of the: |
Equal Credit Opportunity Act Fair Housing Act Equal Housing Act Fair Credit Transaction Act The answer is Equal Credit Opportunity Act. Under ECOA, originators may not base a decision to extend credit on the fact that an applicant receives income from a public assistance program. |
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Which of the following is used as a method of identifying and holding licensees accountable, according to the S.A.F.E. Act? |
Loan originator financial and ethical disclosures Records of annual loan originator volume Unique identifier CSBS number The answer is unique identifier. The “unique identifier” is the official description of the NMLS number, which is used to track and hold accountable all licensed entities and individuals in the mortgage lending industry. |
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In an ARM, margin is determined by: |
The lender and represents the amount of commission paid to the broker The lender and represents the lender’s operating costs and profit margin The broker and is the amount of profit split between the broker and lender The underwriter and represents the percentage of error allowable for debt-to-income ratio The answer is the lender and represents the lender’s operating costs and profit margin. The margin is a fixed number set by the lender and is not subject to change. It represents the lender’s operating costs and profit margin, and varies from lender to lender. |
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All of the following may affect the amount of a VA funding fee, except: |
Marital status First-time use of the VA eligibility 10% down payment Disability The answer is marital status. The funding fee for a VA loan can be affected by a number of factors, which can include previous use of eligibility, any down payment amount, and/or a disability. |
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In which of the following transactions must “Your Home Loan Toolkit” be provided? |
A reverse mortgage origination A purchase transaction A refinance transaction When a borrower applies for subordinate financing The answer is a purchase transaction. The “Your Home Loan Toolkit” disclosure is required for a purchase transaction. |
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The Notice of Right to Cancel PMI is required by the: |
Homeowners Protection Act Equal Credit Opportunity Act Truth-in-Lending Act Real Estate Settlement Procedures Act The answer is Homeowners Protection Act. The Notice of Right to Cancel PMI is required by the Homeowners Protection Act. |
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An acceleration clause is sometimes added to reverse mortgages. This means that the loan could become due and payable under certain circumstances, which may include all but which of the following? |
A new owner is added to the title The borrower adds MIP to the loan New debt against the home is taken out All or part of the home is rented out The answer is the borrower adds MIP to the loan. Reverse mortgages may contain acceleration clauses which can cause a loan to become due and payable. Reasons for this may include adding an owner to the title, taking out new debt against the home, or renting out all or part of the home. Some reverse mortgages do include MIP, which helps to guarantee that the borrower will never owe more than the value of the home. |
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What is the difference between MIP and PMI? |
PMI is applicable to FHA loans; MIP is applicable to conventional mortgages MIP is applicable to FHA loans; PMI is applicable to conventional mortgages There is no difference between MIP and PMI MIP is optional; PMI is not The answer is MIP is applicable to FHA loans; PMI is applicable to conventional mortgages. Mortgage insurance premium (MIP) is applicable to FHA loans. Private mortgage insurance (PMI) is applicable to conventional mortgages. While they serve a similar purpose, they are not the same. |
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A state licensing agency may conduct examinations and investigations for all of the following reasons, except: |
To determine the maximum licensing fees Initial licensing or license renewal License suspension, conditioning, revocation, or termination To determine compliance with state law The answer is to determine the maximum licensing fees. A state licensing agency may conduct examinations and investigations for the purpose of initial licensing or license renewal; license suspension, conditioning, revocation, or termination; and to determine compliance with state law. |
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Which federal law includes provisions that address misleading and deceptive advertising practices? |
TILA RESPA HMDA ECOA The answer is TILA. TILA includes provisions that address misleading and deceptive advertising practices. |
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What is the name of the disclosure required for HELOCs? |
Financial Advantages of Second Mortgages CHARM Booklet Your Home Loan Toolkit: A Step-by-Step Guide What You Should Know about Home Equity Lines of Credit The answer is What You Should Know about Home Equity Lines of Credit. The disclosure required by TILA for HELOCs is called “What You Should Know about Home Equity Lines of Credit.” |
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Sharing a borrower’s personal financial information for purposes other than what it was provided for is a violation of what act? |
GLB Act S.A.F.E. Act TILA Homeowners Protection Act The answer is GLB Act. The Gramm-Leach-Bliley Act governs the use of non-public personal information and how it can be shared amongst affiliated third parties. |
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The law requires that first-time borrowers complete counseling with a HUD-approved counselor before accepting a loan that features |
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Negative amortization A fixed interest rate An adjustable interest rate A 15-year term The answer is negative amortization. The law requires that first-time borrowers complete counseling with a HUD-approved counselor before accepting a loan that features negative amortization. This is a requirement that applies specifically to first-time homebuyers. |
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The Smiths are buying a house for $200,000. After their 10% down payment, they have also decided to pay two discount points. What is the dollar amount of the discount points? |
$4,000 $3,800 $3,600 $2,000 The answer is $3,600. Discount points are calculated based on the loan amount, which is determined by subtracting any down payment (in this case, $20,000) from the purchase price ($200,000). Each discount point is 1% of the loan amount. In this transaction, the Smiths are obtaining a $180,000 loan and buying two discount points, equal to 2% of the loan amount. $180,000 × 0.02 = $3,600. |
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A revised Loan Estimate is required when: |
There is any change in circumstances Interest rates drop Interest rates increase The loan applicant locks his or her interest rate The answer is the loan applicant locks his or her interest rate. A revised Loan Estimate is required when a loan applicant locks the interest rate. Offering revised estimates for a change in circumstances is restricted to limited situations. |
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Which of the following correctly demonstrates how to calculate the periodic rate on a mortgage loan? |
Annual rate / number of payments in a year = periodic rate Annual rate × number of payments in a year = periodic rate Loan balance / annual rate = periodic rate Annual rate × monthly payment = periodic rate The answer is annual rate / number of payments in a year = periodic rate. The periodic rate is calculated by dividing the annual rate by the number of payments in a year. |
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The 1004 is the form number for: |
URLA CSBS FNMA URAR The answer is URAR. The 1004 is the form number for the Uniform Residential Appraisal Report (URAR). |
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The Federal Housing Administration does not make loans; it insures loans. What does the FHA insure against? |
Foreclosure The borrower losing his job Forbearance Down payment The answer is foreclosure. The FHA insures loans against foreclosure. |
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The Federal Housing Administration does not make loans; it insures loans. What does the FHA insure against? |
Foreclosure The borrower losing his job Forbearance Down payment The answer is foreclosure. The FHA insures loans against foreclosure. |
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The primary purpose of the FTC Red Flags Rule is: |
Preventing the overvaluation of real estate Improving the accuracy of information in consumer credit files Identifying, mitigating, and preventing identity theft Establishing methods for protecting consumer personal information The answer is identifying, mitigating, and preventing identity theft. The FTC Red Flags Rule focuses on methods of detecting a security breach that may lead to identity theft within a financial institution that maintains a covered account on behalf of the customer. |
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Kelsey is a registered loan originator who is employed by the Your Home Town Bank, a depository institution regulated by a federal banking agency. Each of the following is a federal banking agency, except the |
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Board of Governors of the Federal Reserve System Comptroller of the Currency Federal Home Loan Mortgage Corporation National Credit Union Administration The answer is Federal Home Loan Mortgage Corporation. The federal banking agencies include the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the National Credit Union Administration, and the Federal Deposit Insurance Corporation. |
