When a mortgage or deed of trust contains a power of sale clause:

The lender may foreclose without first obtaining a court order

What is the primary purpose of the Home Mortgage Disclosure Act?

Identify discriminatory lending practices

Which of the following is not a consideration when determining the financial responsibility of a licensee?

Felony Convictions of company officers

TILA requires lenders to provide disclosures in what format?

Easily understandable written format

When is credit checked during the loan application process?

At the beginning and before closing

If a (LO) has not completed their required 8 hours of continuing education before the license renewal deadline..

Their license is suspended until they complete the required education

When completing the Loan Estimate, costs must be presented:

By rounding them to next whole number except for principal interest payment

For the purposes of providing and (LE), a "business day" is:

Any day on which the creditor's office are open to the public

The Qualified Mortgage Rule applies to which if the following?

Loans secured by non-owner-occupied homes

Which of the following is NOT considered a valid change in circumstances for revising a Loan Estimate?

The lender decides to increase their origination fee without reason

The “Confirm Receipt” box on the Loan Estimate informs the consumer that:

Not obligated to accept loan because they've signed/received the disclosure

Yield spread premiums (YSP) compensate:

A borrower for closing a loan above par

The Lost Payee Clause protects whom:

The lender in the event the property is damaged by fire and other risk

Underwriting of non-qualified mortgages must compute periodic payments that:

Do Not Take Periodic Caps into Consideration

Who enforces the Truth in Lending Act (TILA)?

Consumer Financial Protection Bureau (CFPB)

In full at the time of closing.

Mortgage insurance may be cancelled at what LTV percentage on a VA loan?

Mortgage insurance is not required

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NMLS EXAM PRACTICE

120 termsStudBud Administration56 plays

Includes questions, terms and formulas found between the training manual, class presentations, flashcards, and other online practice exams.

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Questions 120

Answers

1
Which of the following loan types considers residual income in qualification?
FHA
VA
HPML
ARMs
2
A lending arrangement that permits a mortgage broker to originate, close and fund loan using a warehouse line of credit:
Warehouse Serving
Table Lending
Table Funding
Warehouse Lending
3
For a loan to qualify as a general QM, the APR may not exceed the APOR for a comparable transaction by:
Less than 2.25%
More than 2.25%
More than .25%
Any amount
4
When a mortgage or deed of trust contains a power of sale clause:
A judge must enter an order of foreclosure before the home can be sold
The lender can sell the home at their discretion
The lender may foreclose without first obtaining a court order
The lender is made whole for losses by MIP
5
Which of the following fees is NOT subject to a 10% cumulative tolerance under TRID?
Appraisal fees
Government recording fees
Title insurance (if the lender chooses the provider)
Origination fees
6
What is the primary purpose of the Home Mortgage Disclosure Act?
Protect consumer privacy
Regulate the licensing requirements
Identify discriminatory lending practices
Use disclosures to help consumers shop for available credit options
7
Which federal agency oversees the regulation of Fannie Mae and Freddie Mac?
FHFA
CFPB
HUD
Federal Reserve System
8
"MBS" stands for:
Mortgage-Backed Securities
Mortgage Beneficiary Securitization
Mortgage Borrowing Standards
Mortgage Balance Subordinate
9
Which of the following is not a consideration when determining the financial responsibility of a licensee?
Net Worth
Credit Score
Surety Bond or State fund
Felony Convictions of company officers
10
TILA requires lenders to provide disclosures in what format?
Easily understandable written format
Complex legal documents
Email confirmation only
Verbal explanation only
11
When is credit checked during the loan application process?
Before the Closing Disclosure is given
At the beginning
At the beginning and before closing
After the Loan Estimate is given
12
If a (LO) has not completed their required 8 hours of continuing education before the license renewal deadline..
They receive a grace period of six months to complete the requirement.
Their license is suspended until they complete the required education
Can continue working as long as they reapply for licensing
Their license remains active since they are already working in the industry
13
Government monitoring information regarding applicant demographics is found where?
The 1003
The HUD-1
The 4506-C
The Broker Agreement
14
Which factor may lawfully be considered when evaluating an applicant's eligibility for a mortgage loan?
Visa or Immigration status
Sexual Orientation
None of these factors may be considered
Martial Status
15
A ____ may not engage in mortgage loan origination as a loan processor/underwriter?
Registered loan originator
Mortgage loan originator
Licensed loan processor
Independent contractor
16
Which of the following is a limit on the amount that the interest rate can change, up or down, on any adjustment date?
Lifetime Cap
LTV
Periodic Rate Cap
Initial Cap
17
If a broker is preparing to publish an ad to bring in new clients, with which law should they be familiar?
FCRA
TILA
FACTA
FNMA
18
All of the following are items that may affect the title, EXCEPT
Leaseholds
Land Locks
Easements
Completion Notice
19
Which of the following documents connect the promissory note to the collateral?
Note
Broker Agreement
Mortgage
Commitment Letter
20
When completing the Loan Estimate, costs must be presented:
In dollars and cents, except for appraisal costs
In dollars and cents
By rounding them to next whole number except for principal interest payment
By rounding them to next whole number, except for third-party costs
21
For the purposes of providing and (LE), a "business day" is:
Any day on which the creditor's office are open to the public
Any day except Sunday
Any day except Sunday and legal holidays
Any day of the week
22
Which form of fraud is most prevalent involving borrowers in the mortgage process?
Straw Sellers
Identity Theft
Falsified Applications
Foreclosure Rescue Scam
23
The Qualified Mortgage Rule applies to which if the following?
Reverse Mortgages
Bridge Loans of 12 months or less
Loans secured by non-owner-occupied homes
Open-End home equity loans
24
Which of the following is NOT considered a valid change in circumstances for revising a Loan Estimate?
The lender miscalculates the property taxes in the original Loan Estimate
The borrower loses their job and their income changes significantly
The borrower decides to switch loan programs (ex, from FHA to conventional)
The lender decides to increase their origination fee without reason
25
Non-Traditional Credit includes all of the following, EXCEPT:
Electric Bills
Payments to a landlord
Car Loans
Telephone Bills
26
Person forces the sale of a home at a much lower price value than its true worth, then resells it at its true value is:
Air Loan
Property Flipping
Property Flopping
Short Sale
27
The implementing regulations for the Home Mortgage Disclosure Act are known as:
HDA
Section 32
Regulation X
Regulation C
28
The practice of intentionally targeting borrowers in poor or underserved areas with expensive high cost loans is:
Misappropriation
Reverse Redlining
Steering
Redlining
29
Look at the question below:
Within three business days of application
Within three business days after the referral
No, because MZ Mortgage owns less than 25% of the title company
At the time of the referral
30
The “Confirm Receipt” box on the Loan Estimate informs the consumer that:
They are now obligated to proceed with the loan transaction
Not obligated to accept loan because they've signed/received the disclosure
They have agreed to all costs and terms stated in the disclosure
May face legal action for not paying fees due at time of receiving the LE
31
Yield spread premiums (YSP) compensate:
A borrower for closing a loan below par
A lender for closing a loan above par
A borrower for closing a loan below par
A borrower for closing a loan above par
32
A consumer submits a complaint about a mortgage lender to the CFPB, the lender has _____ days to pursue a investigation?
10
7
15
20
33
The Lost Payee Clause protects whom:
The borrower from losing all of their investment
The borrower using mortgage insurance to offset interest rate adjustment
The lender in the event the borrower defaults on the loan
The lender in the event the property is damaged by fire and other risk
34
How long is a credit report valid for? (Before you say, we didn't learn this, ITS IN THE MANUAL!!)
60-80 Days
90-120 Days
60-90 Days
30-60 Days
35
Second Appraisal requirements for high priced mortgage loans were put in place in an attempt to curb the:
Reverse Lining
Equity Stripping
Steering
Property Flipping
36
Before accepting a loan that is a high-cost mortgage, borrowers must complete counseling with a counselor approved by:
HOEPA
FTC
CFPB
HUD
37
The Dodd-Frank Act listed the creation of financial education programs as one of the primary functions of:
CFPB
FHA
HUD
NMLS
38
Purchases from service members are not subject to the requirement of 2 appraisals.
True
False
39
Underwriting of non-qualified mortgages must compute periodic payments that:
Include Consideration of Periodic Rate Caps
Do Not Take Lifetime Caps into Consideration
Do Not Take Periodic Caps into Consideration
Include Consideration of the value of the dwelling as a borrower assets
40
All of the following loans types require monthly payments EXCEPT:
HELOCs
HECMs
ARMs
Fixed-Rate Loans
41
Which legislation sets the disclosure requirements for the Affiliated Business Arrangement Disclosure?
HOEPA
ECOA
RESPA
TILA
42
A covered loan under HOEPA is commonly known as a:
Low Cost, High Fee
Non-Prime
Non Conventional
High-Cost Mortgage
43
The Loan Estimate must be provided at least how many days prior to consummation?
3 Business Days
7 Days
3 Days
7 Business Days
44
What is the minimum time period that MIP must be in place for a USDA loan?
Three years
Zero years
Five years
Depends on LTV
45
A conditional refinance provision might be a feature of what type of loan?
15 year fixed
Interest-Only ARM
Option ARM
Balloon
46
Which is NOT included in the "4 C's of Underwriting"?
Credit
Collateral
Commitment
Capacity
47
The GLB Act gives loan applicants the ability to opt out of sharing non-public information with:
Nonaffiliates of the Creditor
Affiliates and non-affiliates of the Creditors
Third party settlement service providers
Affiliates of the Creditor
48
Which of the following is considered a loan primarily for personal, family or household use secured by a mortgage/deed:
Residential Mortgage Loan
Residential Real Estate
Nontraditional Mortgage Product
Commercial Mortgage Loan
49
Who enforces the Truth in Lending Act (TILA)?
Consumer Financial Protection Bureau (CFPB)
Internal Revenue Service (IRS)
U.S. Department of Treasury
Federal Trade Commission (FTC)
50
UFMIP is paid:
In full at the time of closing.
In full at the time of application approval.
In full at the time of application
Never
51
Mortgage insurance may be cancelled at what LTV percentage on a VA loan?
83%
Mortgage insurance is not required
70%
80%
52
Calculate LTV: sales price of $210k, the appraisal came in at $200,000. The borrower takes out a loan of $160,000?
90%
75%
76%
80%
53
According to the TILA, a variation up to what amount is permitted for the APR in a regular fixed-rate mortgage
125%
120%
90%
100%
54
Qualifying ratios consist of which two separate calculations?
Total Debt Ratio and Qualifying Income Ratio
LTV ratio and Qualifying Income Ratio
Housing Expense Ratio and Total Debt Ratio
LTV Ratio and Housing Expense Ratio
55
Sharing borrower's personal financial information other than for what it was intended is a violation of:
Homeowner Protection Act
GLB Act
SAFE Act
TILA
56
Which is NOT one of the initial 6 items of information needed for a completed mortgage loan application?
Borrower's martial status
Gross monthly income of the borrower
Name of all of the borrowers
Loan amount sought
57
Which of the following is an allowed practice regarding LO compensation?
LO receives compensation for closing over $1 million in volume per month
LO gets 10% more compensation for transactions with interest rate 6.5%
LO receives .5% more compensation if a loan contains a prepayment penalty
A LO receives compensation from a consumer and from the creditor
58
Which of these loan types is NOT covered under TILA?
Home mortgages
Credit cards
Auto loans
Business loans
59
A loan servicer must notify a borrower at least how many days before transferring the servicing of their loan?
60 days
15 days
45 days
30 days
60
In general terms, which of the following comes latest in a mortgage loan transaction?
Commitment
Underwriting
Application
Funding
61
Provisionary Note contains all of the following, EXCEPT:
Provision requiring notices be done in writing
The loan terms
The loan amount
Legal Description of the Property
62
Which of the following is NOT required to be disclosed under TILA?
Loan term length
Monthly payment amount
Borrower’s credit score
Total finance charges
63
Which of the following prefixes indicate the purchase of flood insurance is mandatory?
V and D
A and D
A and V
B, C and D
64
What is the primary purpose of RESPA?
To prevent kickbacks and ensure transparency in real estate transactions
To regulate interest rates on mortgages
To provide funding for first-time homebuyers
To set minimum down payment requirements
65
The NMLS was developed and is maintained by:
The CFPB and CSBS
The CSBS and AARMR
The AARMR and CFPB
The FHFA and CFPB
66
What is the maximum timeframe you can pay on PMI?
15 years
30 years
10 years
5 years
67
A balloon mortgage that includes a conditional refinance provision allows the borrower to:
Rescind the transaction if the loan becomes too expensive
Request modification of the terms of the loan when it reaches maturity
Refinance the loan if they are in default
Request that the loan be refinanced and converted to a 30 year fixed loan
68
A deed conveys title to real property?
True
False
69
What practice is prohibited under RESPA’s Section 8?
Paying or receiving kickbacks for referrals
Charging loan origination fees
Offering discounts on real estate commissions
Requiring private mortgage insurance
70
Which act passed in 2008 established standards for MLOs licensing and registration?
Dodd-Frank Consumer Protection Act
Housing and Economic Recovery Act
TILA
SAFE ACT
71
Which of the following transactions does RESPA apply to?
Commercial real estate loans
Vacant land purchases with no financing
Personal loans under $50,000
Residential mortgage loans on 1-4 unit properties
72
Loans are originate and funded in the:
Secondary Market
Primary Market
Subprime Mortgage Market
Reverse Mortgage Market
73
Which two disclosures did TRID combine?
Loan Estimate & Closing Disclosure
Good Faith Estimate & Truth in Lending Disclosure
Loan Estimate & Truth in Lending Disclosure
Good Faith Estimate & HUD-1 Settlement Statement
74
The Fair Housing Act prohibits discrimination against all of the following classes EXCEPT:
Familial Status
Religion
National Origin
Age
75
Calculate points paid: 300k sales price, LTV is 80% and they paid 3,600 in discount points
4
1.5
2.5
2
76
In a transaction for a fixed-rate mortgage to finance a home purchase, the loan applicant should receive:
What You Should Know about Home Equity Lines of Credit
The Consumer Handbook on Fixed Mortgages
Your Home Loan Toolkit: A Step-By-Step Guide
The CHARM Booklet
77
Marketing campaigns for the solicitation of credit are covered by the provisions of:
GLB
TILA
RESPA
ECOA
78
Loans are purchased as investments in the secondary market
True
False
79
"PITI" stands for:
Principle, Interest, Taxes and Insurance
Principle Index of taxable Investments
Principle, Insurance, taxes and Investments
Prime Intended Tax Index
80
RESPA requires servicers to provide borrowers with an initial escrow account statement within how many days of closing?
30 days
15 days
60 days
45 days
81
"Equity" is defined as:
The difference between the appraised value and the purchase price
The balance of any liens divided by the proposed value of any new loan
The difference between market value of a property and balances of any liens
The relationship between the value of the house and a borrower’s assets
82
The primary purpose of ECOA is to:
Make credit available to borrowers who are less than qualified
Make sure credit is available to all creditworthy applicants
Make sure credit is not denied because of a lack of income stability
Prevent denial of credit due to a potential borrower's past credit history
83
How long do creditors have to retain the Loan Estimate?
1 year
7 years
3 years
5 years
84
under the SAFE Act, which entity oversees MLO licensing?
FTC
FDIC
AARMR
NMLS
85
A lender with direct endorsement is authorized to underwrite what type of loan applications?
ARMs
HELOC
VA
FHA
86
Annual PMI determined by multiple:
The loan amount and the mortgage insurance rate
The mortgage insurance rate and the number of months in a year
The loan amount and interest rate
The interest rate and the number of months in a year
87
The Telemarketing Sales Rule prohibits calls:
Made to customer who have requested to not asked an MLO not to contact them
Made after 8am or before 9pm
To consumers who established a business relationship recently
To consumers on the DNC registry
88
Mortgage Insurance Premiums are REQUIRED for?
The first 5 years of the loan term as long as equity is less than 20%
All FHA loans until 20% equity position is attained
All conventional loans with a LTV greater than 80%
All FHA Loans
89
All of the following are types of income not taxed and therefore can be "grossed up" EXCEPT:
Disability
Social Security
Freelance Income
Public Assistance
90
TRID applies to reverse mortgages?
True
False
91
The Primary reason for adopting special appraisal requirements of HPMLs was to:
Ensure that appraisals include a physical inspection of interior/exterior
Discourage use of inflated appraisals to flip properties
Discourage subprime lending
Encourage the use of certified and licensed appraisers
92
RESPA’s Section 6 focuses on which of the following areas?
Standardizing closing costs
Restricting prepayment penalties
Regulating loan servicing and borrower protections
Prohibiting unearned fees
93
What violation is it if a borrower is denied a mortgage due to low credit, and the LO refuses to provide an explanation?
The lender violated the Equal Credit Opportunity Act (ECOA).
The borrower has no legal recourse since credit scores are private.
The lender should have referred the borrower to a different loan officer.
None, because lenders are not required to disclose reasons for denial.
94
How soon much a Loan Estimate (LE) be provided after receiving a loan application?
Within 3 Business Days
Within 1 Business Day
Within 7 Business Days
Before the loan is approved
95
The standard FHA-insured loan program is the Section 203(b)
False
True
96
What is the penalty for violating the FCRA (Fair Credit Reporting Act)?
Potential civil penalties and prison time
Civil penalties only
Possible prison time only
Civil penalties up to a maximum of 1,000 dollars
97
What's an example of predatory lending in mortgage finance?
Providing transparent loan terms and conditions to the borrower
Offering competitive interest rates based on borrowers credit score
Allowing borrowers to choose mortgage products to suit their financial need
Charging excessive fees and points that inflate the cost of the loan
98
An interest-only loan might be suitable for any of the following, except:
A corporate executive who receives large quarterly bonuses
Part-time worker who may get overtime later and plan to pay principal later
Investor who prefer to pay little as possible while holding the property
Self-employed borrower whose company is busiest during a six-month period
99
For a loan to qualify for general QM the APR may not exceed APOR by:
Any amount
More than 2.25%
Less than 2.25%
More than .25%
100
Two types of loans used to finance the construction of a property are:
Interim and Permanent Construction
Fully amortized and interest-only
Construction-to-permanent and stand-alone construction
Pre-Construction and Full-Construction
101
Which of the following loans is NOT covered under TRID?
A Home Equity Line of Credit (HELOC)
A 30-year fixed mortgage
A VA loan
An FHA loan
102
When a triggering term appears in advertisement for a mortgage loan, the ad must include which of the following:
The amount of the payment
All of the above
The annual percentage rate
The term of the loan
103
When a loan originator accepts a referral fee from a real estate agent, both are in violation of what section of RESPA?
Section 9
Section 6
Section 10
Section 8
104
It is an violation of TILA for a loan originator to collect ___ before providing a loan applicant with ___.
A fee for credit report/ a Loan Estimate
Information on income and assets/ a Good Faith Estimate
an origination fee/ a Loan Estimate
A origination fee/ a Closing Disclosure
105
What were the 2 original protected classes under the ECOA in 1974?
Sex and Martial status
Race and Age
Age and Sex
Race and Color
106
What does the Right of Rescission under TILA allow borrowers to do?
Change their loan terms after closing
Lower their interest rate after signing
Extend their loan repayment period
Cancel certain loans within three business days
107
Which of the following is not a characteristic of an HPML?
It's secured by the borrower’s principal dwelling
has an APR that exceeds the rate for Treasury securities by 6.5%
It has an APR that exceeds the average prime offer rate by 3.5%
It has an APR that exceeds the APOR by 1.5%
108
Which of the following is offered on conventional mortgages?
COE
Guarantee Fee
PMI
UFMIP
109
An upfront mortgage insurance premium is required for __ loans and borrowers can pay this amount directly or finance it:
FHA
USDA
VA
Conventional
110
Which of the following features would be permitted for a non-qualified mortgage, but not for a qualified mortgage?
An interest-only option
A debt-to-income ratio of 43%
A term of 15 years
An adjustable interest rate
111
What does RESPA require lenders to do regarding escrow accounts?
Limit the amount lenders can collect for escrow reserves
Allow borrowers to opt out of escrow accounts
Provide monthly escrow statements
Require all borrowers to have an escrow account
112
Which of the following inquires is considered lawful when asked for credit approval by ECOA?
Race
Age
Martial Status
Years on the job
113
A VA loan referred to as an "IRRRL" is an:
Interest Reduction and Refinance Loan
Interim Rate Refinance Reduction Loan
Interest Rate Reduction Refinance Loan
Interest Rate Refinance Return Loan
114
According to federal guidelines on Non-Traditional, all of the following are considered nontraditional EXCEPT:
Payment-Option ARM
Hybrid ARM
Interest-Only
Stated Income
115
How often does must a borrower renew owner's title insurance?
Its not necessary to renew
With each refinance
Owner's title insurance expires every 7 years
When the house is sold to the next owner
116
The Qualified Mortgage Rule establishes a minimum seasoning period of___ for seasoned QMs.
36 months
60 months
24 months
12 months
117
Which of the following changes would require a new 3-day waiting period before closing?
The borrower changes homeowners insurance providers
The title company changes
A minor typo in the borrower’s name is corrected
The interest rate increases by more than 0.125% on a fixed-rate loan
118
RESPA requires lenders to provide borrowers with which key document within three days of a loan application?
Closing Disclosure
Loan Estimate
Deed of Trust
Appraisal Report
119
Under the GLB Act, a consumer relationship is established:
Once the loan servicing begins
Upon Application
As soon as a borrower inquiries about a loan
When the borrower's loan is funded
120
Conforming loan guidelines generally include DTI ratios of:
31% / 43%
26% / 38%
28%/ 50%
28% / 41%

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