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26 Cards in this Set
- Front
- Back
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Which of the following is responsible for determining whether to issue a license approval? |
The NMLS The Governor The Legislature The Commissioner The answer is The Commissioner. The Commissioner or state regulator for financial institutions determines licensing eligibility.
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Appraisers are often pressured by homeowners, originators, or real estate agents to: |
Provide appraisals in as short a time period as possible Include the borrower’s name on the appraisal Inflate the value in order to make the deal work Provide the names and numbers of former customers The answer is inflate the value in order to make the deal work. While most originators like to have appraisals back as quickly as possible, generally, appraisers are most often pressured to “hit the number” even if it means inflating values beyond a reasonable amount. |
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ECOA prohibits creditors from discriminating against credit applicants on the basis of: |
Race, color, religion, national origin, sex, marital status, age Tax bracket, ZIP code, number of children, or immigration status ECOA was not enacted to address discrimination Race, color, religion, national origin, sex, marital status, age, because the applicant receives public assistance income, or because an applicant exercised his or her right under the Consumer Credit Protection Act The answer is race, color, religion, national origin, sex, marital status, age, because the applicant receives public assistance income, or because an applicant exercised his or her right under the Consumer Credit Protection Act. ECOA prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, because the applicant receives public assistance income, or because an applicant exercised their right under the Consumer Credit Protection Act. |
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Information that would be protected as nonpublic personal information under the Gramm-Leach-Bliley Act includes which of the following? |
A consumer’s credit report Information in government real estate records Listed telephone numbers provided by consumers Government records of recorded liens The answer is a consumer’s credit report. The GLB Act covers “nonpublic personal information.” This does not include information that is readily available to the public through court records, phone books, or land records. I |
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A subordinate lien that allows a borrower to pay down principal and continue to make withdrawals is known as: |
A reverse mortgage An ARM A home equity line of credit A piggyback loan The answer is a home equity line of credit. Open-ended credit that allows a borrower to make repeated withdrawals and also make monthly payments based on the outstanding balance is known as a home equity line of credit. |
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Costs anticipated to be charged in a loan transaction, such as origination fees, processing fees, appraisal fees, title fees, and recording fees are called: |
Total costs Estimated closing costs Purchase price Pre-paids The answer is estimated closing costs. Costs anticipated to be charged in a loan transaction, such as origination fees, processing fees, appraisal fees, title fees, and recording fees are called estimated closing costs. |
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In order to consider overtime pay for an hourly employee, it must: |
Be at least 1.5 times the normal rate Have at least a consistent two-year history and be likely to continue Be paid in a separate paycheck documenting the hours Be consistently worked for the next three years The answer is have at least a consistent two-year history and be likely to continue. Overtime pay is unlikely to be considered (as with bonus pay) unless the applicant can show that he/she has received it consistently for the past two years, and that it is likely to continue. |
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Loan processors and underwriters who are exempt from licensure may not: |
Communicate with consumers to obtain information necessary for loan processing Collect information required to document a loan application Distribute disclosures required in accordance with federal law Take a loan application in the absence of a loan originator The answer is take a loan application in the absence of a loan originator. Exempt processors and underwriters may not take on any of the responsibilities of the loan originator that would ordinarily require a license, such as taking an application. |
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Which regulation details seven specific advertising prohibitions? |
Regulation B Regulation C Regulation X Regulation Z The answer is Regulation Z. The Truth-in-Lending Act (Regulation Z) details seven specific prohibitions when it comes to advertising for credit. |
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John Walker’s loan application was denied by XYZ Mortgage. XYZ is required to provide a(n) _____ within _____. |
Valuation Results Report; three days of denial Notice of Adverse Action; 30 days of application Derogatory Action Notice; three days of application Notice of Action Taken; 60 days of application The answer is Notice of Adverse Action; 30 days of application. John Walker’s loan application was denied by XYZ Mortgage. XYZ is required to provide a Notice of Adverse Action within 30 days of application.
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The Homeowners Protection Act is applicable to all but which of the following? |
Lenders Loan servicers Appraisers Mortgage insurance companies The answer is appraisers. The HPA applies to residential mortgages used for primary residences and is applicable to lenders, loan servicers, and insurers. |
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SIVA” stands for: |
Stated income validation amortization Simple interest validation account Stated income verified assets Stated interest verification account The answer is stated income verified assets. “SIVA” stands for stated income verified assets. |
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In regard to title insurance, a standard owner’s policy covers: |
Undetected encumbrances Mechanic’s liens Survey issues Foreclosure The answer is undetected encumbrances. The owner’s policy protects the owner of the property against ownership disputes or undetected liens or encumbrances on the property. The standard owner’s policy does not cover survey issues, mechanics liens, or protection against foreclosure. |
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Which appraisal approach is most commonly used to appraise new home construction? |
The income approach The cost approach The sales comparison approach The market approach The answer is the cost approach. The cost approach is an appraisal method commonly used to appraise new home construction. |
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All but which of the following must be completed prior to engaging in the business of mortgage loan origination? |
Payment of licensing fees Obtain a unique identifier Completing pre-licensing education A letter of recommendation from a former employer The answer is a letter of recommendation from a former employer. A letter of recommendation is not required from a former employer as a condition of licensure within the NMLS system. |
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Which of the following is required if a borrower receives an Adverse Action Notice? |
A suggestion of a loan product for which the consumer may be eligible A referral to a lender who offers subprime products A statement that ECOA prohibits discrimination against credit applicants A statement of the minimum credit score required for loan approval The answer is a statement that ECOA prohibits discrimination against credit applicants. There must be a statement on the Adverse Action Notice stating that ECOA prohibits discrimination against credit applicants. |
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Under ECOA, a broker is defined as: |
A person who regularly refers applicants to creditors, or selects or offers to select creditors to whom requests for credit can be made Any person who sells mortgage loans in the secondary market Any person who regularly extends, renews, or continues credit A natural person or entity who regularly extends closed-end or open-end credit The answer is a person who regularly refers applicants to creditors, or selects or offers to select creditors to whom requests for credit can be made. A broker does not technically extend credit. However, ECOA specifically addresses the broker by including persons who “regularly refer applicants to creditors, or selects or offers to select creditors to whom requests for credit can be made.” |
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What legislation was enacted to strengthen money laundering laws to prevent the financing of terrorist activities? |
Money Laundering Act of 2003 PATRIOT Act HERA FTC Red Flags Rule The answer is PATRIOT Act. The USA PATRIOT Act is intended to deter and punish terrorist acts in the United States and around the world. One of the many ways this is accomplished is by attempting to prevent the free-flow of financing for these acts through various money laundering schemes. |
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If a loan has an initial fixed-rate period and then becomes adjustable, it is referred to as a: |
Nontraditional ARM Hybrid ARM Fixed ARM Fixed hybrid The answer is Hybrid ARM. An ARM is known as a “hybrid ARM” if it has an initial fixed-rate period and then, after expiring, turns fully adjustable. |
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The legal document that authorizes one person to act on behalf of another is called: |
Legal prerogative Power of attorney Fiduciary authorization Proxy agreement The answer is power of attorney. Power of attorney is a legal document that authorizes one person to act on behalf of another. It can grant complete authority or be limited to certain acts and/or certain periods of time. |
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Bankruptcy information will remain on a consumer’s credit report for up to: |
Two years Five years Seven years Ten years The answer is ten years. Bankruptcy information will remain on a consumer’s credit report for ten years. |
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A state-licensed loan originator who fails to maintain a valid license for a period of _____ years or longer shall be required to retake the NMLS test. |
Three Seven Five Ten The answer is five. The NMLS requires a licensee who fails to maintain a license for five years or longer to retake the exam. |
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What is the primary intent of RESPA? |
Protect borrowers from misleading advertising Eliminate unearned fees, such as referral fees, kickbacks, and fee splitting Protect the privacy of a borrower’s personal financial information Provide the borrower an opportunity to rescind certain types of loans The answer is eliminate unearned fees, such as referral fees, kickbacks, and fee splitting. RESPA’s provisions prohibit the payment of any fee that was not earned. |
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Which of the following fees is not included in the calculation of the finance charge for a mortgage? |
Origination fees charged by the creditor Charges for title work by an affiliate of the creditor Use of a closing attorney required by the creditor Fees charged by an unaffiliated appraiser The answer is fees charged by an unaffiliated appraiser. Finance charges always include fees charged by the creditor, charges by an affiliate of the creditor, and fees charged by a third-party provider required by the creditor. Fees charged for real estate-related services, such as appraisal, are not included in the finance charge if they are reasonable, are not charged by affiliates, and the creditor does not receive a direct or indirect fee for those services. |
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Which of the following fees is not included in the calculation of the finance charge for a mortgage? |
Origination fees charged by the creditor Charges for title work by an affiliate of the creditor Use of a closing attorney required by the creditor Fees charged by an unaffiliated appraiser The answer is fees charged by an unaffiliated appraiser. Finance charges always include fees charged by the creditor, charges by an affiliate of the creditor, and fees charged by a third-party provider required by the creditor. Fees charged for real estate-related services, such as appraisal, are not included in the finance charge if they are reasonable, are not charged by affiliates, and the creditor does not receive a direct or indirect fee for those services. |
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A mortgage lender regularly shares loan applicants’ nonpublic personal information with an underwriter who works as an independent contractor. What must the lender do to comply with the GLB Act? |
The lender must require the underwriter to contractually agree that it will only share the nonpublic personal information with affiliated companies The lender must provide an opt-out notice to its loan applicants, because the underwriter is a nonaffiliated service provider The lender must offer its loan applicants a choice of providers for underwriting services The lender must require the underwriter to contractually agree that it will only use the nonpublic personal information to perform the services requested The answer is the lender must require the underwriter to contractually agree that it will only use the nonpublic personal information to perform the services requested. When sharing nonpublic personal information with third party settlement service providers, a mortgage lender must require that the service providers enter a contract agreeing to use the information only for the performance of requested services. |
