NMLS Study Guide

The flashcards below were created by user cduvall on FreezingBlue Flashcards.

  1. Does the Fair Credit Reporting Act entitle customers to a free copy of their credit scores?
  2. Which law was enacted to eliminate requiring the use of certain third-party settlement providers as a condition of getting a loan?
  3. A HOEPA loan may not have
    negative amortization
  4. Which household does NOT qualify as a protected class under the familial status clause of the Fair Housing Act?
    • retired couple
    • Familial status refers to households that include individuals under the age of 18 who either live with parents or legal custodians. This protection also extends to pregnant women
  5. Which was the first major legislation to directly affect equal rights to ownership of real property?
    Civil Rights Act
  6. During the application process, a mortgage loan originator asks if the borrower is widowed; the MLO is violating which law?
  7. Alice has some credit issues and really needs a place to live. She has three dogs so she has to buy a home. Alice's friend, Jim has a debt ratio and credit that permit him to qualify for a home loan though he has no plans to move. Alice offers to give Jim the down payment for the home and she will move in and make the payments. What is this considered?
    fraud for profit and property
  8. A loan originator who provides false information on a loan application regarding a borrower's receipt of disability income is
    misrepresenting his client.
  9. The Privacy Rule requires that financial institutions provide the consumer with a Consumer Privacy Policy
    before disclosing information to non-affiliated third parties.
  10. Are third party processing companies required to be licensed?
  11. The Financial Services Modernization Act of 1999 is more commonly known as the
    Gramm-Leach-Bliley Act.
  12. Which industry insider would be the one most likely to falsify a deed?
    government worker
  13. TILA requires creditors to maintain records that they complied with the disclosure requirements for how many years?
  14. Hoepa amends what law?
  15. On the loan estimate form, you are required to include how many pieces of information in the disclosure?
    • 2
    • payment feature that may change the periodic payment
    • type of rate (an Adjustable Rate, Step Rate, or Fixed Rate)
    • In order to determine the interest rate applied to the principal balance.
  16. how long can you call a customer if they're not on the do not call list?
  17. Borrower Finn wants to refinance his loan. What might his MLO use to determine who is servicing Finn's current loan?
    • MERS
    • The Mortgage Electronic Registrations System (MERS)
  18. What document would be required in order for a person to relinquish all interest and future rights to property that is jointly owned by him/her and a person other than his or her spouse?
    quitclaim deed
  19. What does the Federal Housing Administration (FHA) do?
    insures mortgage lenders against default through HUD
  20. Which is the type of loan where a seller may finance all or part of the sale of property for the buyer?
    purchase money mortgage
  21. Funds for FHA loans are provided by
    qualified lending institutions.
  22. What is the legal clause that gives the lender certain stated rights when there is a transfer of ownership in the property?
    alienation clause
  23. What is the accurate term for money held on deposit (commonly known as good faith money) in a real estate purchase?
    earnest money
  24. The Federal National Mortgage Association (Fannie Mae) is designed to
    increase availability of money to primary lenders.
  25. Dave got a mortgage loan where he pays only interest for the first 5 years, then begins paying both interest and principal for the next 25 years. This arrangement could best be referred to as a(n)
    hybrid loan.
  26. Which type of entity originates mortgages using a line of credit, WITHOUT any depositors' funds, and services the loans until a pool of loans can be sold?
    mortgage banker
  27. When does a loan originator's obligation end in a construction loan?
    when the loan is fully funded
  28. An easement is
    permission to use another's property
  29. Which form documents the commission paid to a real estate broker?
    Closing Disclosure
  30. According to the new FHA rules effective June 2013, mortgage insurance must be paid for at least how many years prior to cancellation?
  31. An objective of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 is to
    eliminate unfair practices relating to compensation paid to mortgage loan originators (The Loan Originator Compensation Rule).
  32. The loan estimate and closing disclosure must be used for most _____________mortgages?
    Closed end
  33. Which federal legislation requires that the lender perform an annual audit of the escrow account balance?
  34. When is an application "taken"
    any time a loan originator obtains enough information to make any sort of loan decision
  35. RESPA requires disclosing?
    • Loan Estimate
    • Closing Disclosure
    • Mortgage Servicing Disclosure
    • Initial and Annual Escrow Statements
    • AfBA Disclosure.
  36. RESPA does NOT require the lender to disclose
    The annual percentage rate (APR).
  37. Mary, a single mother, applies for a first mortgage. What is NOT necessary to comply with Ability to Repay rules?
    copy of the appraisal of the home
  38. Which is derived from average interest rates, points, and other loan pricing terms offered to consumers by a representative sample of creditors engaged in mortgage transactions that have low risk?
    Average Prime Offer Rate or APOR
  39. Walter has been assigned the task of developing an identity theft prevention program for the owner of a new mortgage brokerage company. Compliance with which of the following requires the development and implementation of an identity theft program?
    Red Flag Rules
  40. If you use this calculation while evaluating income, "PITI divided by Gross Monthly Income," you have just determined what?
    housing expense ratio
  41. In January 2013, mortgage servicing rules were instituted by the CFPB to provide additional consumer protections related to
  42. Who manages the National Do Not Call Registry?
    Federal Trade Commission (FTC)
  43. When a mortgage broker accepts any third party fee from a borrower, the funds must immediately be placed in a/an
    escrow account.
  44. A nontraditional loan is defined by the SAFE Act as
    anything other than a 30-year or less fixed rate loan.
  45. Commissions of real estate brokers or agents would be listed:
    In other
  46. Bob meets with a loan originator at XYZ Mortgage Company to inquire about loan options. His name is on the National Do Not Call Registry. XYZ
    can call Bob for up to 3 months from the meeting date.
  47. Which fee is NOT permitted to be included in a high cost loan?
    loan modification fee
  48. George is starting his own business in this state. Previously, George was a director, employed by a mortgage lending company in another state whose principal's lending license was revoked for violations associated with making improper disclosures and misleading statements to borrowers. George was not personally convicted. Will George likely be granted a mortgage loan originator license in this state?
    not likely b/c director
  49. A licensed mortgage loan originator may be
    an independent contractor.
  50. What is the LEAST acceptable factor in evaluating a mortgage loan application?
    source of income
  51. According to the 2013 amendment to TILA related to loan originator compensation requirements, a loan originator must retain records sufficient to evidence all compensation it pays to a loan originator for ____ years after the date of payment.
  52. A recorded deed or recorded note and mortgage are considered to be a(n)
    constructive notice of title.
  53. Which statement describes the appraisal cost approach?
    using plans, specs, and building material costs to determine the total cost to rebuild the property per square foot, plus the site value, and subtracting depreciation
  54. Gross living area includes a(n)
    finished attic, if it's heated.
  55. PITI divided by income. What have you just determined?
    housing expense ratio
  56. In a refinance transaction of a conventional loan that has a rate reduction, what time of month has the most savings for the borrower, considering per diem interest?
    beginning of the month
  57. Which of the following types of income will NOT require additional information, such as likelihood that it will continue, to determine if the income can be used to qualify the borrower?
  58. What is the name of a common USDA loan program?
    Section 502 loans
  59. One of the most critical points of the Federal Reserve Loan Originator Compensation Rule is the prohibition of the practice of
  60. A Direct Endorser is a lender who is authorized to underwrite what type of loan applications?
  61. Rate locks for construction loans must be
    long term
  62. Which two types of loan programs are considered traditional government agency-backed products?
    FHA and VA
  63. The fact that a borrower's income will require verification explains what is meant by the underwriting concept of
  64. Which activity is considered a significant stabilizing influence of the secondary mortgage market
    standardization of loan criteria
  65. One of the purposes of the Qualified Mortgage (QM) definition is to
    prohibit or limit certain high-risk mortgage products and features.
  66. A Registered mortgage loan originator refers to
    a mortgage loan originator who is registered with and maintains a unique identifier through the Nationwide Mortgage Licensing System and Registry.
  67. A Mortgage lender is any person who
    makes a residential mortgage loan OR lends money secured by a mortgage or deed of trust.
  68. After investigating a charge of fraud against loan originator Mark, the state regulatory authority permanently withdraws his license. What is this known as?
  69. The SAFE Act made it the responsibility of states to use unique identifiers instead of
    social security numbers.
  70. Title VIII of the Civil Rights Act is commonly called the
    Fair Housing Act.
  71. The Fair Housing Act requires what to be posted in all institutions where mortgage loans are made?
    Equal Housing Opportunity House logo
  72. Rob cuts and pastes the borrower's signature into the form and scans it to his email. What type of fraud is this?
  73. Which is NOT a part of the Gramm-Leach-Bliley Act? What is?
    • Red Flags Rules
    • Safeguards is
  74. Which rule allows consumers to opt out of having their private information shared?
    Financial Privacy Rule
  75. An occupancy certificate means the
    borrower has permission to move into the home from the zoning department.
  76. According to 2013 updates related to the qualified mortgage definition, what is the maximum percentage (%) limit on the total obligation debt-to-income (DTI) ratio for a qualified mortgage?
  77. The interest rate stated on the financing instrument is the
    note rate.
  78. There is a _____ waiting period once the initial Mortgage Disclosure Improvement Act (MDIA) is provided to the borrower before closing a home loan.
    7 business day
  79. When qualifying for a residential mortgage loan, an applicant's debts are likely to be measured as a
    monthly payment amount.
  80. are discount points paid on loan amount or sales price?
    loan amount
  81. A credit account where the borrower places a certain amount of money on deposit with a credit card issuer is known as
  82. Which information is NOT required to be included on the Closing Disclosure?
    property appraised value
  83. The acquisition cost of a property is $220,000 (sale price is $215,000 and the closing costs are $5,000) and the loan amount is $200,000. The seller is paying $2,000 of the closing costs. What is the total amount the borrower will need to bring to closing if the earnest money is $1,000 and is being credited on the Closing Disclosure at closing?
    • 17,000
    • $220,000 - $200,000 - $2,000 - $1,000 = $17,000.
  84. A verification of deposit verifies what?
    down payment and/or reserves
  85. The Fair Housing Act requires a lender to use what term in any advertisement broadcast over the airwaves?
    Equal Housing Lender
  86. The requirement that a borrower will have to pay a prepayment penalty must be disclosed under what federal legislation?
  87. Under the SAFE Act, each state has the authority to
    write state-specific rules or regulations or adopt procedures related to licensing of persons covered under this Act.
  88. According to the Truth in Lending Act, which of these would be EXCLUDED from the finance charge?
    seller's points
  89. What is the maximum length of time that collection information can be reported on a credit report according to the Fair Credit Reporting Act?
    • 7 years
    • except for bankruptcies which can be reported up to ten years, and criminal convictions, which can be reported indefinitely.
  90. A borrower elects to lower his settlement costs by paying a slightly higher interest rate. This appears on the Loan Estimate as a
    credit to the borrower.
  91. On the Loan Estimate, charges for loan origination services are
  92. A telemarketer can be fined how much for calling someone registered on the National Do Not Call Registry?
    $16,000 for each instance
Card Set:
NMLS Study Guide
2017-11-09 17:24:52

safe exam
Show Answers: