When completing the Loan Estimate, costs must be presented:

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

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

Identify discriminatory lending practices

A VA loan referred to as an "IRRRL" is an:

Interest Rate Reduction Refinance Loan

RESPA’s Section 6 focuses on which of the following areas?

Regulating loan servicing and borrower protections

What practice is prohibited under RESPA’s Section 8?

Paying or receiving kickbacks for referrals

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

The lender may foreclose without first obtaining a court order

A balloon mortgage that includes a conditional refinance provision allows the borrower to:

Request modification of the terms of the loan when it reaches maturity

TILA requires lenders to provide disclosures in what format?

Easily understandable written format

In full at the time of closing.

What does the Right of Rescission under TILA allow borrowers to do?

Cancel certain loans within three business days

What is the penalty for violating the FCRA (Fair Credit Reporting Act)?

Potential civil penalties and prison time

Yield spread premiums (YSP) compensate:

A borrower for closing a loan above par

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).

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

Do Not Take Periodic Caps into Consideration

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

Two types of loans used to finance the construction of a property are:

Construction-to-permanent and stand-alone construction

Which of the following is an allowed practice regarding LO compensation?

LO receives compensation for closing over $1 million in volume per month

The Lost Payee Clause protects whom:

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

What is the primary purpose of RESPA?

To prevent kickbacks and ensure transparency in real estate transactions

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

Mortgage insurance is not required

Which of the following transactions does RESPA apply to?

Residential mortgage loans on 1-4 unit properties

The Telemarketing Sales Rule prohibits calls:

Made to customer who have requested to not asked an MLO not to contact them

The primary purpose of ECOA is to:

Make sure credit is available to all creditworthy applicants

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

NMLS EXAM PRACTICE Flashcards | StudBud