Nmls Basic Terms

Front 1

Which prohibit discrimination against loan applicants based on race, color, religion, national origin, sex, marital status or age?

Back 1

Equal Credit Opportunity Act (ECOA)
and Regulation B

Front 2

Which establishes requirements for credit reporting and creditworthiness of applicants?

Back 2

Fair Credit Reporting Act (FCRA)

Front 3

Which prohibits discrimination in the sale, rental and financing of any residential housing based on race, color, religion, national origin, sex, familial status or mental or physical handicap?

Back 3

Fair Housing Act

Front 4

Which require that specific information be made available to the public when mortgages are sold on the secondary market?

Back 4

Home Mortgage Disclosure Act (HMDA)
and Regulation C

Front 5

Which requires specific disclosures on loans with APRs more than 8 percentage points on first liens, and more than 10 percentage points on subsequent liens, above the rates on Treasury securities of comparable maturity?

Back 5

HOEPA

Front 6

Which require the disclosure of fees and costs involved when closing home mortgages and which prohibit abusive settlement practices, including payment of anything of value for a referral?

Back 6

Real Estate Settlement Procedures Act (RESPA)
and Regulation X

Front 7

Which require disclosure of loan terms and percentage rates in a form that makes it easier for a consumer to compare loans?

Back 7

Truth in Lending Act (TILA)
and Regulation Z


(APR)

Front 8

Which requires a Free copy of credit report
from each CRA annually?

Back 8

Fair and Accurate Transaction Act (FACTA)

Front 9

Which requires a Privacy Notice no later than when customer relationship established; Opt-out Notice – prior to sharing non-public information; and
Annual notices to customers?

Back 9

Gramm-Leach-Bliley Financial Modernization Act (GLBA) Regulation P

Front 10

Discussion of borrower's qualifications prior to taking a loan application

Back 10

Prequalification

Front 11

Process of making or initiating a new loan.

Back 11

Origination

Front 12

Act of preparing the application and supporting documents for underwriting.

Back 12

Loan Processing

Front 13

Used to gather information and assist in complying with discrimination laws.

Back 13

Form 1003

Front 14

Good Faith Estimate (GFE) must be provided to a loan applicant within how many business days following receipt of the application?

Back 14

3

Front 15

The Real Estate Settlement Procedures Act is administered by

Back 15

the Consumer Financial Protection Bureau

Front 16

Which document advises the consumer not to provide false information in relation to his loan application?

Back 16

The HUD special information booklet

Front 17

In what year was the Real Estate Settlement Procedures Act enacted?

Back 17

1974

Front 18

A loan secured by vacant or unimproved property is covered under RESPA only if

Back 18

the loan proceeds will be used to construct or place a structure or a manufactured home on the real property within two years from the date of the settlement of the loan.

Front 19

What federal statute primarily governs settlement of residential mortgage loans?

Back 19

RESPA

Front 20

The loan originator's estimate of the charges and terms must be available for at least what period of time after the GFE is provided?

Back 20

10 business days

Front 21

In the loan application process, which of the following documents contains a "shopping chart"?

Back 21

GFE (Regulation X)

Front 22

RESPA does not require lender disclosures of closing costs and procedures for which of the following home loans?

Back 22

Temporary construction loans

Front 23

The transfer of title to real property from one party to another is called

Back 23

conveyance

Front 24

A defeasance clause in a security agreement provides that

Back 24

upon repayment of the debt in full, the mortgage will be voided.

Front 25

Which of the following is responsible for maintaining the NMLS?

Back 25

The Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators

Front 26

In which way does the U.S Department of Veteran Affairs participate in mortgage financing?

Back 26

It GUARANTEES a lender against loss in the event of default on a VA loan.

Front 27

Who is responsible for determining whether states are complying with the SAFE Act?

Back 27

Consumer Financial Protection Bureau

Front 28

The annual mortgage insurance premium is

Back 28

based on the loan term and the loan-to-value ratio

Front 29

An FHA loan is a loan that is

Back 29

INSURED by a federal agency.

Front 30

When a borrower offers his property as security for a debt but does not give equitable title or possession to the lender, this is called

Back 30

hypothecation

Front 31

What is true of the repayment of a construction loan?

Back 31

Principal is repaid when all the work is completed.

Front 32

NMLSR stands for

Back 32

Nationwide Mortgage Licensing System and Registry

Front 33

A mortgage promissory note contains

Back 33

the interest rate

Front 34

In what year was Fannie Mae established?

Back 34

1938

Front 35

The market where lenders and investors buy and sell existing mortgages or mortgage-backed securities is

Back 35

the secondary market.

Front 36

In the Assets and Liabilities section of the Uniform Residential Loan Application, "cash deposit" refers to

Back 36

money on deposit with a real estate broker or closing agent toward the purchase of the property.

Front 37

Fannie Mae Form 1003 (also called Freddie Mac 65) is the

Back 37

the Uniform Residential Loan Application

Front 38

For purposes of completing FNMA form 1003, a first-time homebuyer is a person who is purchasing security property in which he will reside and who had no ownership interest (sole or joint) in a residential property

Back 38

during the three years prior to purchasing the security property.

Front 39

The appraisal approach in which the replacement value is calculated is

Back 39

the cost approach.

Front 40

The appraisal approach most suited to residential property is

Back 40

the market data approach, also called the sales comparison approach.

Front 41

When the originating lender sells the rights to collect the payments the price charged in the sale is called

Back 41

a service release premium

Front 42

Which of the following is a claim of a creditor in a property

Back 42

lien

Front 43

The three appraisal approaches are

Back 43

- income (rental property)
- sales comparison (home and land)
- cost (for everything else)

Front 44

An interest or right of a person who is not the owner in a property is

Back 44

an encumbrance.
(must be cleared prior to closing)

Front 45

Property appraisals are used to determine

Back 45

the market value of the property

Front 46

The appraisal approach in which the replacement value is calculated is

Back 46

the cost approach

Front 47

The four C's of mortgage credit are

Back 47

- credit history (character)
- capacity (amount of income is sufficient)
- capital (cash needed at closing to cover
the down payment and closing costs)
- collateral (property used as security for the loan)

Front 48

The guidelines for the professional conduct of appraisers are set in

Back 48

Uniform Standards of Professional Appraisal Practices (USPAP)

Front 49

A title commitment is divided into several sections

Back 49

Schedule A, Schedule B Exceptions, Requirements, and Exclusions

Front 50

In which document does a mortgagee clause appear?

Back 50

The property insurance policy
(in the event of a covered loss, the lender can ensure that the proceeds are applied to repairing the damage).

Front 51

A borrower would pay discount points at closing in order to

Back 51

reduce the note rate below the current market rate.

Front 52

A float-down rate lock agreement allows the applicant to

Back 52

get a lower rate than the lock-in rate.

Front 53

John Johnson obtained a 90% loan amounting to $63,000 to buy his house. If he had to pay 2 points for loan fees and 4 discount points for his loan, what sum did he need for settlement?

Back 53

$10,780

Because the loan was 90% of the value, the value was $70,000 ($63,000 ÷ 90%). Therefore, he paid $7,000 down ($70,000 - $63,000). He also paid $3,780 in points (6% of the $63,000 loan). Therefore, the total paid was $10,780.

Front 54

determines whether flood insurance is required for a particular property

Back 54

lender

Front 55

Prepaid reserves are for

Back 55

taxes and insurance

Front 56

Discount points are

Back 56

prepaid interest

Front 57

Service release premiums (SRP) are

Back 57

fees collected upon sale of the servicing rights of the loan.

Front 58

Loan origination fees or points refer to

Back 58

loan fees
(sometimes called "points," covers the lender's administrative costs in processing the loan, including taking the loan application, loan processing, underwriting and funding the loan).

Front 59

credited to a borrower to pay a borrower's closing costs

Back 59

Yield spread premium

Front 60

The purpose of the Good Faith Estimate (GFE) is

Back 60

to allow applicants to shop for lower closing costs.
(has shopping cart)

Front 61

Within how many business days of receiving a mortgage loan application must a loan originator provide the applicant with the Special Information Booklet?

Back 61

3

Front 62

In an affiliated business arrangement, a provider of settlement services

Back 62

has more than one percent ownership interest in another settlement services provider.

Affiliated Business Arrangement Disclosure Statement (AfBA) is required.

Front 63

When several businesses offering settlement services are owned or controlled by a common corporate parent, they are known as

Back 63

Affiliates

Front 64

A HUD Settlement Cost booklet must be provided in a loan transaction involving

Back 64

a loan to purchase a home.

Front 65

Borrowers receive information regarding their rights in negotiating the terms of a loan in

Back 65

the Settlement Cost Booklet.

Front 66

The special information booklet (Settlement Cost Booklet)

Back 66

information regarding real estate settlement services in a home purchase.

Front 67

Designed to show all receipts and disbursements by the closing agent in a refinance transaction in which there is NO SELLER

Back 67

HUD-1A

Front 68

The lowest month-end target balance for an escrow account at the end of its computation year is

Back 68

zero plus a two-month cushion.

Front 69

The aggregate adjustment, which corrects the escrow account deposits the lender is allowed to collect, is always

Back 69

zero or a negative amount.

Front 70

Who is responsible for preparing the HUD-1?

Back 70

Settlement agent (the person responsible for the closing)

Front 71

The HUD-1 Settlement Statement is also known as

Back 71

the settlement or closing statement.

Front 72

Which fee would appear in Section 800 (Items Payable in Connection with Loan) of the HUD-1?

Back 72

Appraisal fee

Front 73

Charges for survey fees appear in which section of the HUD-1 Settlement Statement?

Back 73

Additional settlement charges (Section 1300)

Front 74

In the HUD-1, escrow account deposits include

Back 74

flood insurance premiums. (Section 1000)

Front 75

Which law requires disclosure of settlement costs in a HUD-1 Settlement Statement?

Back 75

Real Estate Settlement Procedures Act (RESPA)

Front 76

A borrower has paid the fee for the credit report before closing. How is this fee noted in a HUD-1 statement?

Back 76

POC (paid outside of closing)

(i.e. credit reports, appraisals, etc.)

Front 77

The early TIL Disclosure must be provided to a borrower at least how many business days prior to closing?

Back 77

7

Front 78

The Truth in Lending Act is within which law?

Back 78

Consumer Credit Protection Act (1968)

Front 79

Which of the following documents shows the cost of a loan expressed as an annual percentage rate?

Back 79

TIL Disclosure

Front 80

Which of the following federal agencies created the regulations for TILA?

Back 80

The Federal Reserve System (or Federal Reserve Board)

2011 TILA Reg Z

Front 81

Which law requires distribution of the CHARM booklet to certain mortgage loan applicants?

Back 81

Truth in Lending Act

Consumer Handbook on Adjustable Rate Mortgages (CHARM)

Front 82

According to TILA, a loan cost paid separately before or at consummation of a transaction or withheld from the proceeds of a loan is

Back 82

a prepaid finance charge.

Front 83

Requires a disclosure of the terms of the credit transactions, including costs and key provisions

Back 83

TILA

Front 84

Requires disclosure of closing costs and loan servicing practices

Back 84

RESPA

Front 85

Requires disclosure of the appraisal

Back 85

ECOA

Front 86

Which of the following documents shows the cost of a loan expressed as an annual percentage rate?

Back 86

TIL Disclosure

Front 87

One purpose of Title I of the Consumer Credit Protection Act is to ensure that consumers

Back 87

receive meaningful disclosures of credit terms.

Front 88

A limit on the amount of interest or loan fees a creditor may charge is imposed by

Back 88

state usury laws.

Front 89

The Truth in Lending Disclosure given to an applicant for a 30-year home loan must be supplemented by additional disclosures when

Back 89

the loan is an adjustable rate mortgage.

Front 90

Foreclosure is initiated on a consumer's principal dwelling that secures a credit obligation. At this time, the finance charge and other disclosures affected by the finance charge are considered accurate if they are above the amount required to be disclosed or if they are understated by no more than

Back 90

$35

Front 91

In a closed-end transaction secured by real property or a dwelling, the disclosed finance charge and any disclosure affected by the finance charge (e.g., the APR) are considered accurate if the finance charge is not understated by more than

Back 91

$100