NMLS Study

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shedstrom
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268199
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NMLS Study
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2014-05-20 16:03:12
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NMLS MLO Mortgage
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  1. According to the Truth in Lending Act, a loan applicant does NOT have the right to rescind a loan transaction if his home is used to guarantee repayment and the loan
    is used to purchase the home.
  2. Under the Bank Secrecy Act, each institution must
    develop a written _________ compliance program, which must be approved by the
    institution's board of directors.
    • Under the Bank Secrecy Act, each institution must develop a written *anti-money-laundering compliance program, which must be approved by the institution's board of
    • directors. This question relates to the Loan Fraud Module.
  3. The practice of directing a borrower toward a subprime loan when he could qualify for a more standard loan is called
    • Steering is the practice
    • of directing a borrower toward a subprime loan when he could qualify for a more
    • standard loan, and is characteristic of predatory lending. This question
    • relates to the Ethics and Consumer Protection Module.
  4. An originating lender may be required to return the
    SRP
    • if the borrower defaults
    • within the first three months.
  5. Which of the following determines whether flood
    insurance is required for a particular property?
    The lender
  6. In regard to money laundering, the process of
    separating the criminal proceeds from their criminal origins using financial
    transactions in one or more accounts is called
    LAYERING
  7. According to TILA, a
    variation up to what amount is permitted for the annual percentage rate in a
    regular fixed-rate mortgage transaction?
    Under TILA and Regulation Z, the APR for a fixed-rate loan is permitted to vary up to 1/8 of 1% from the actual APR and still be considered accurate. This question applies to Module 7 - Federal Truth in Lending Act Part 1.
  8. An Alt-A Loan is
    is a loan made to a borrower with less than prime credit or lack of supporting documentation.
  9. ECOA and Regulation B
    provide that, for qualifying purposes, a creditor cannot ask an applicant about
    which of the following?
    RACE OR SEX
  10. A loan secured by vacant or unimproved property is covered under RESPA only if
    • 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.
  11. 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
    $100
  12. May Bea is applying for a loan that is to be secured by her principal dwelling. The mortgage broker may do which of the following with regard to an appraisal of the property she is trying to purchase, which comes in $5,000 below her offering price?
    Ask the appraiser to provide additional information about the basis for a valuation.
  13. Requesting a consumer to sign a waiver of his rights under Regulation N
    is prohibited.
  14. In regard to customers opening bank accounts, Section 326 of the USA Patriot Act requires
    that customer identities be verified when opening bank accounts.
  15. Under the Bank Secrecy Act, a Currency Transaction Report which is not filed electronically must be filed within __ days following the day on which the reportable transaction occurred.
    15
  16. In answering the question "Can your interest rate rise?" the loan originator must enter the maximum rate
    to which it can rise over the life of the loan.
  17. A consumer who needs credit before the end of a TILA waiting period to meet a bona fide personal financial emergency may
    modify or waive either the seven-business-day waiting period or the three-business-day waiting period.
  18. Under the Gramm-Leach-Bliley Act a privacy notice may be delivered in any of the following ways EXCEPT

    A. By Mail
    B. by posting in the office
    C. by posting on the institution's website
    D. in person
    B. by posting in the office
    (this multiple choice question has been scrambled)
  19. The Truth in Lending Disclosure Statement is
    an estimate of finance charges for a particular loan.
  20. Double selling is a form of mortgage fraud perpetrated by
    a mortgage broker or loan originator.
  21. According to the Truth in Lending Act, a loan applicant does NOT have the right to rescind a loan transaction if his home is used to guarantee repayment and the loan
    is used to purchase the home.
  22. When a TIL Disclosure is made inaccurate by a subsequent event, corrected disclosures are required if the APR at the time of consummation varies from the disclosed APR by
    more than 1/8% in a regular transaction.
  23. If the lender determines, at any time during the life of a loan, that the property securing the loan is located in a special flood hazard area and is not covered by flood insurance, then
    the lender may force place the insurance coverage if the borrower does not promptly purchase it.
  24. The Truth in Lending Act applies to
    home loans
  25. Which of the following informs a customer about his rights under the Truth in Lending Act to cancel a loan?
    Notice of right to rescind
  26. Which of the following best describes negative amortization?

    A. A decrease in property values to a level below the current loan balance.

    B. An increase in monthly payments due to an increase in the index rate for an ARM.

    C. The result of principal and interest payments not covering all of the interest being charged.

    D. An increase in the loan balance due to failure to pay scheduled interest when due.
    C. The result of principal and interest payments not covering all of the interest being charged.
  27. The Truth in Lending Act is within which law?
    Consumer Credit Protection Act
  28. A mortgage lender affiliated with a title company offers its customers the title company's services for $100 below the cost of what the services would be if ordered directly. If the customer is not required to use that title company's services and is given an AfBA Disclosure Statement, who would be in violation of RESPA?
    • The mortgage lender?
    • title company?
    • both
    • or neither?

    Neither
  29. Under the rules for the Do-Not-Call Registry, a mortgage broker may make an unsolicited call to a client or customer with whom he has established a business relationship for up to how many months after his last transaction?
    18
  30. Loans that are not backed by government insurance or guarantees are called

    Conforming or conventional?
    convential
  31. Studies related to the principal-agent problem show that, when compared to similar borrowers who obtained loans through retail sources, borrowers of loans originated by brokers are
    more likely to default on their loans.
  32. The Truth in Lending Act does all of the following EXCEPT
    A. enable customer to compare costs of obtaining credit.

    B. impose restrictions on home equity lines of credit

    C. limit interest rates creditors may charge

    D. allow consumers to rescind certain loans
    C. limit interest rates creditors may charge
  33. Under ECOA, a creditor includes
    any person who regularly extends, renews or continues credit.
  34. Which of the following is true of the GFE?

    A. The GFE binds the loan originator to making the loan, upon which the GFE is based, to that borrower.

    B. The loan originator must provide a GFE if the loan originator does not have a loan available for which the borrower is eligible at the time.

    C. A GFE is a loan commitment.

    D. If a transaction will involve more than one mortgage loan, the loan originator must provide the applicant with a separate GFE for each loan.
    If a transaction will involve more than one mortgage loan, the loan originator must provide the applicant with a separate GFE for each loan.
  35. Excessive rates and fees are considered predatory when
    the borrower qualifies for lower rates and/or fees offered by the lender.
  36. An APR must be disclosed within what percentage of the actual APR in a regular transaction
    1/8%
  37. Lucky Lenders grants Tota Loss mortgage loan, believing that the money for the down payment and closing costs was Tota's own. In fact, Tota had borrowed these funds from the seller, secured by a second mortgage which was not disclosed or recorded. This is a fraud for property scheme called
    silent second
  38. The Federal Reserve directly controls which of the following interest rates?
    discount
  39. The document that includes all borrower information is
    ten oh three
  40. Which law requires distribution of the CHARM booklet to certain mortgage loan applicants?
    Truth in lending act
  41. An applicant received TILA disclosures in person on Monday, May 1, and then received corrected disclosures that were personally delivered on Wednesday, May 3. The earliest the transaction may be consummated is
    May 9th
  42. The Truth in Lending Act is within which law?
    Consumer Credit Protection Act
  43. The function of wholesale lenders is to provide
    A. limitation of competition.
    B. servicing and pricing.
    C.liquidity and standardization.
    D. a market for secondary financing.
    Wholesale lenders enable mortgage brokers to make loans based on pricing set by the wholesale lender. Once made, the loan will be serviced by the wholesale lender. This means the mortgage broker is relieved of all tasks but the marketing to get applications and then the processing of the applications.
  44. The market where lenders and investors buy and sell existing mortgages or mortgage-backed securities is
    A. the subprime market.
    B. the primary market.
    C. the gray market.
    D. the secondary market.
    The secondary market is where lenders and investors buy and sell existing mortgages or mortgage-backed securities. Mortgage-backed securities are specifically developed for sale to investors in the secondary mortgage market.
  45. The Federal Reserve System normally affects the supply of money in the economy by all of the following ways EXCEPT
    A. buying or selling gold on the international market.
    B. changing reserve requirements.
    C. buying or selling bonds.
    D. adjusting the discount rate.
    The Federal Reserve does not buy or sell gold. The Fed controls inflation by controlling the supply of money in circulation in this country. It does this in a number of ways. One is open market operations. This involves buying and selling government bonds. Another method is to change member banks' reserve requirements, the percentage of assets the must keep in the reserve. A third control method is to change the "discount rate." This is the interest rate charged to banks who wish to borrow from the Federal Reserve Bank.
  46. In what year was Fannie Mae established?
    1903
    1938
    1968
    2009
    The Federal National Mortgage Association, or Fannie Mae, was established in 1938 as a government agency to purchase loans insured by the FHA. Later it went private and became known as a government-sponsored entity.
  47. Who is responsible for determining whether states are complying with the SAFE Act?
    A. Conference of State Bank Supervisors 
    B. Federal Reserve Board
    C. Consumer Financial Protection
    D. BureauFederal Trade Commission
    Although the states have a duty to enact licensing standards that meet SAFE Act requirements, overall responsibility for interpretation, implementation and compliance with the SAFE Act was delegated to the U.S. Department of Housing and Urban Development. However, the SAFE Act was amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Effective July 21, 2011, the authorities and duties delegated to HUD are now delegated to the Consumer Financial Protection Bureau.
  48. All of the following have to be licensed as mortgage loan originators EXCEPT
    A. an individual taking mortgage applications for a mortgage broker.
    B. an employee of a banking institution taking mortgage applications.
    C. an employee of a mortgage lender taking mortgage loan applications.
    D. an individual negotiating loans on behalf of his friends, for a fee.
    Individuals taking applications and negotiating loans for compensation as employees of banks and or other depository institutions must be registered with the NMLS, but they need not be licensed. Those who originate loans for mortgage brokers or mortgage lenders must be licensed by the state as well as registered.
  49. When a broker originates, processes, closes and records a loan in its own name, but the loan is underwritten by, funded by and assigned to a secondary lender at the closing table, this is referred to as
    A. warehousing.
    B. securitization.
    C. discounting.
    D. table funding.
    Under table funding, a broker can originate, process, close and record a loan in its own name, but the loan is underwritten by, funded by and assigned to a secondary lender at the closing table.
  50. The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 requires that each state
    A. establish its own loan originator registration system.
    B. deny a license to any person who has a felony conviction.
    C. license or register residential and commercial loan originators.
    D. impose a standard of at least 20 hours of prelicensing education, plus testing for loan originator licensing.
     The SAFE Act does require at least 20 hours of prelicensing education, as well as testing for a loan originator license. It requires that the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators establish and maintain a Nationwide Mortgage Licensing System and Registry in which the states participate, so they do not have to establish their own systems. The Act requires the licensing or registration of residential (not commercial) loan originators. It does not prevent everyone with a felony conviction from becoming licensed.

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