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NMLS > Becoming an MLO - Chapter 1 > Flashcards

Becoming an MLO - Chapter 1 Flashcards

1
Q

What established a federal charter for banks that permitted them to make real estate loans, which established a framework for government involvement in mortgage lending?

A

The Federal Reserve System

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2
Q

What year was the Federal Reserve System created?

A

1913

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3
Q

What year was the Dodd-Frank Wall Street Reform Act passed?

A

2010

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4
Q

What is a mortgage loan originator?

A

An individual who, for compensation or gain, or in expectation of compensation or gain takes a mortgage loan application or offers or negotiates terms of a residential mortgage loan.

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5
Q

Name a few real estate brokerage activities

A

Acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property

bringing together parties interest in sale, purchase, lease, rental, or exchange of real property

negotiating on behalf of any party

engaging in any activity for which a person engaged in the activity is required to be licensed

offering to engage in any activity or act described above.

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6
Q

What is a registered MLO?

A

Someone who is registered with the NMLS and maintains a unique identifier.

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7
Q

True/False - NMLS does not approve a license application

A

TRUE - NMLS is merely a database. it’s job is to assign a unique identifier

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8
Q

True/False - processors and underwriters are required to be licensed.

A

FALSE

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9
Q

Loan processors and underwriters who are not licensed are prohibited from doing what?

A

advertising or presenting to the public that they are MLOS or negotiating rates/terms.

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10
Q

What is a mortgage broker?

A

a company or firm that brings borrowers and lenders together for loan origination.

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11
Q

What is a mortgage lender?

A

the entity that provides funds for a mortgage.

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12
Q

What is a mortgage servicer?

A

the firm that performs servicing functions including collecting mortgage payments, paying the investor, collecting and paying the borrower’s taxes and insurance, and generally managing borrower escrow accounts.

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13
Q

Name some big players on the secondary market

A

Fannie, Freddie, Ginnie

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14
Q

What is the SAFE Act?

A

Secure and Fair Enforcement Act for Mortgage licensing Act of 2008

federal law that regulates the licensing process and responsibilities of mortgage loan originators.

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15
Q

How many hours of pre-licensing education must you take?

A

20 hours

3 hours of federal law
3 hours of ethics
2 hours of training related to lending standards for non-trad mortgage product market place
12 hours of elected

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16
Q

To pass the National Test with UST you must receive a score of what?

A

75%

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17
Q

If you fail the MLO exam 3 times, how long must you wait to take it again

A

6 months

18
Q

True/False - if an MLO leaves the business for more than 2 years, they must retake the exam.

A

False - if an MLO leaves the business for more than FIVE years they must retake the exam. This does not apply to MLOs who switch from being a licensed MLO to a registered MLO.

19
Q

Name a few factors that go into the decision on whether or not you will get your MLO license.

A

No license Revocation

no felony conviction in the last 7 years or EVER if the crime involved an act of fraud, dishonesty, breach of trust, or money laundering.

must demonstrate financial responsibility

completed pre-licensing requirements

passes testing

must satisfy net worth, surety bond, or state fund requirement.

20
Q

What are some things that are a marker of not being financially responsible?

A

non-medical judgements

tax liens

Foreclosure within 3 years

pattern of serious delinquencies within 3 years

some states require child support to be up to date.

21
Q

How often must an MLO renew his/her license?

A

Every year. License expires on Dec 31st.

22
Q

How many hours of continuing education must an MLO complete?

A

8 hours

3 hours of federal law
2 hours of ethics
2 hours of training related to the lending standards for nontrad mortgage products
1 hour of electives.

23
Q

True/False - continuing education only counts in the year when it was taken

A

True

24
Q

True/False - an MLO cannot take the same continuing education course in successive years.

A

True

25
Q

What is the Model Law?

A

Most states use the Model law to implement their SAFE Acts. The model law has a list of what should AT LEAST be considered prohibited.

26
Q

prohibited practices in the Model law are?

A

defraud or mislead
unfair or deceptive practices
obtaining property by fraud or misrepresentation
earning a fee or commission through best efforts
soliciting based on financing terms that are not actually available
not holding a valid license
Failing to make disclosures
failing to comply with state/federal law
making false or deceptive statements
bait and switch
false statements
making a payment, threat or promise to any person that influences the application process
collecting/charging/attempting to collect a prohibited fee
mismanagement of monies
requiring excessive property insurance

27
Q

What is the difference between an examination and investigation?

A

Examination is generally a yearly reviewed of files and business practices to ensure they are compliant. An Investigation usually arises from a complaint or suspicion that an entity or individual is breaking the law.

28
Q

How long must licensed lenders retain records related to the loans originated?

A

Three years

29
Q

How long must the closing disclosure be retained after consummation to be compliant with TRID?

A

Five years

30
Q

Upon the request of documentation needed for an examination, the licensee must provide the documents within how many days?

A

Within the prescribed timeframe, but generally no longer than 30 days.

31
Q

What is the maximum penalty for a violation of the SAFE Act?

A

$25,000 per violation

32
Q

True/False - The LO originator compensation rule (LO comp) DOES NOT prohibits compensation based on terms/fees of a transaction or a proxy of a term of a transaction

A

FALSE

33
Q

True/False - LO comp rules permits some bonus and retirement and profit sharing plans to be based on the terms of multiple loan originator transactions.

A

True

Funds can be used for:
contributions to tax advantaged retirement plans
bonuses if the individual LO originated 10 or fewer mortgage transactions
bonuses and other types of non-deferred profit based compensation that do not exceed 10% of the individual loan originator’s total compensation.

34
Q

True/False - you can receive compensation based on the single term of a transaction

A

FALSE

you cannot receive compensation based on:
a single term
the terms of multiple transactions by the same MLO
the terms of multiple transaction conducted by multiple MLOS

35
Q

What are some safe harbor LO compensation types?

A 
Dollar volume
long term performance of the loans
hourly rate based on number of actual hours worked
loans made to new customers
fixed payment for every loan originated
% of loans that close
quality of loans submitted
36
Q

When is Steering a problem?

A

When an MLO steers a borrower into a loan that could harm the borrower

37
Q

How long must lenders/brokers keep information regarding LO compensation?

A

Three years

38
Q

Who implemented MLO compensation rules, created the CFPB and the MLO contact of appraisers?

A

Dodd-Frank

39
Q

Who implemented NMLS, registration of all MLOS and the licensing of MLOS working for non-financial companies?

A

SAFE Act - Secure and Fair Enforcement

40
Q

Every MLO under the Safe Act must have what?

A

A unique identifier

NMLS (10 decks)

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