CA MLO - Compliance Flashcards
- When the telephone number of a licensed mortgage lender is the same after the company moves to a new location, does the Corporations Commissioner need to be notified of the address change?
a. No, because the telephone number did not change.
b. No, the change can be noted on the annual renewal application.
c. Yes, the Corporations Commissioner must be notified of the address change within 10 days of the change.
d. Yes, the Corporations Commission must receive written notification of the address change 10 days before the change.
d. Yes, the Corporations Commission must receive written notification of the address change 10 days before the change.
- Under RESPA, which of the following would not be considered an affiliated business arrangement (AfBA)?
a. Referral to an employee of the same company
b. Referral to an escrow company
c. Referral to a hazard insurance company
d. Referral to a home inspection company
a. Referral to an employee of the same company
. Which of the following would not be considered trust funds?
a. Cash
b. Check
c. Commission
d. Personal note made payable to the seller
c. Commission
. How much is the fee for an application for a new branch location?
a. $100
b. $200
c. $250
d. $500
b. $200
- The Mortgage Disclosure Improvement Act (MDIA) amending Regulation Z requires creditors to make good faith estimates of the required mortgage disclosures, and deliver or place them in the mail:
a. no later than 3 days after receiving a consumer’s application for a dwelling-secured closed-end loan.
b. no later than 3 business days after receiving a consumer’s application for a dwelling-secured closed-end loan.
c. no later than 7 days after receiving a consumer’s application for a dwelling-secured closed-end loan.
d. no later than 7 business days after receiving a consumer’s application for a dwelling-secured closed-end loan.
b. no later than 3 business days after receiving a consumer’s application for a dwelling-secured closed-end loan.
- How long after the date of last use must a licensed mortgage company retain a copy of an advertising radio script?
a. 30 days
b. 90 days
c. 1 year
d. 3 years
b. 90 days
Correct answer is (b).
Radio and televisions scripts and material distributed on the Internet must be kept on file in the licensee’s office for at least 90 days after the last use of the advertisement
- To maintain trust fund integrity, a broker should follow safe practices to reduce trust fund liability, such as:
a. ensuring that the trust fund account balance is equal to the fund’s total liabilities.
b. complying with the Commissioners’ Regulations regarding recordkeeping.
c. not commingling trust funds.
d. doing all of the above.
d. doing all of the above.
- Unless otherwise specified by the beneficiary of the funds in writing, what is the broker required to do with trust funds no later than three business days following receipt of the funds?
a. Deposit the funds into the seller’s bank account
b. Place the funds accepted on behalf of the owner in the hands of the lender
c. Deposit the funds into a trust fund bank account maintained by the broker
d. Return the funds to the buyer
c. Deposit the funds into a trust fund bank account maintained by the broker
- Which form is used to record trust funds received from a buyer that are deposited into the broker’s trust fund account?
a. Record of All Trust Funds Received - Not Placed in Brokers Trust Account
b. Separate Record for each Beneficiary or Transaction
c. Standardized Columnar Record
d. Reconciliation of Funds Received
b. Separate Record for each Beneficiary or Transaction
- Who may examine a licensed lender’s affairs, business, premises, and records?
a. Competitor
b. Commissioner
c. Consumer
d. Creditor
b. Commissioner
- The Commissioner may deny the renewal of a MLO license if the licensee:
a. completes only 8 hours of CE credits.
b. does not send the renewal fee before December 31st.
c. has a minor traffic accident.
d. receives an incentive bonus during the year
b. does not send the renewal fee before December 31st.
- Which of the following fees may not be included in the finance charge for a real estate loan according to the federal Truth in Lending Act?
a. Appraisal fees
b. Buyer’s points
c. Finder’s fees
d. Interest
a. Appraisal fees
- Commingling is the illegal act of mixing a broker’s personal funds with those of a client or a beneficiary. Which of the following is considered commingling?
a. A broker always disburses any non-trust funds from the trust account not later than 25 days after their deposit
b. A broker keeps $150 in a trust account to pay service charges or fees levied or assessed against the account by the bank
c. A broker uses one business account for all money received
d. All of the above
c. A broker uses one business account for all money received
- Why would a MLO licensee need to file a Change of Control application with the Commissioner?
a. Licensee is indicted on a criminal charge.
b. Direct ownership of the company changes.
c. MLO resigns.
d. Business office relocates.
b. Direct ownership of the company changes.
- A licensed mortgage broker must include which of the following in his or her advertising?
a. Logo of professional associations in which the broker is a member
b. Valid, unique identifier
c. Registered trademark of business, if there is one
d. All professional designations
b. Valid, unique identifier
- A real estate broker license allows the broker to do all of the following, except:
a. employ other brokers.
b. employ salespeople.
c. negotiate real estate loans.
d. perform acts that require a real estate license.
c. negotiate real estate loans.
- Which fees may a MLO collect from an applicant prior to getting a commitment from a qualified lender?
a. Application fee
b. Appraisal fee
c. Credit report fee
d. All of the above
d. All of the above
- A licensed mortgage broker may publish advertisements that identify all of the following, except the:
a. broker by his or her name as it is written on the license.
b. broker by a different name than the name on the license.
c. directions and map showing the licensee’s place of business.
d. icon of professional associations to which the licensee belongs.
b. broker by a different name than the name on the license.
- According to the ECOA, a lender must provide an applicant a copy of the appraisal report obtained in connection with the loan for which the applicant applied. Which statement is incorrect?
a. The applicant must send written request within a reasonable period of time of the application
b. The lender must promptly send a copy of the appraisal report upon receiving the written request
c. The applicant must pay for the cost of the appraisal in order to be entitled to a copy
d. The lender may require the applicant to reimburse the lender for the cost of the appraisal
c. The applicant must pay for the cost of the appraisal in order to be entitled to a copy
- On loans governed by RESPA, a buyer or seller may legally be charged for all of the following, except:
a. preparation of the loan documents.
b. conducting an appraisal prior to the loan.
c. preparation of the Uniform Settlement Statement.
d. preparation of credit reports.
c. preparation of the Uniform Settlement Statement.
Correct answer is (c).
As provided by RESPA, a lender may not assess a fee or charge anyone in connection with or on account of the preparation or distribution of the Uniform Settlement Statement.
- A MLO licensee may not conduct business at any other location other than the place of business that is named on the license, unless the:
a. borrower asks (orally or in writing)that the loan be made at a different location.
b. it is the personal residence of the licensee.
c. alternate location is the office of another MLO-licensed lender.
d. lender has changed locations, but has not yet notified the Commission of the address change.
a. borrower asks (orally or in writing)that the loan be made at a different location.
- Under the California Financial Code, Section 4970, a covered loan refers to a consumer loan that meets one of the following conditions: (1) the APR at consummation of the transaction will exceed the yield on Treasury securities by more than ____ ; or (2) the total points and fees payable by the consumer at or before closing for a real estate loan will exceed ____ of the total loan amount.
a. 4%; 2%
b. 6%; 8%
c. 8%; 6%
d. 8%; 8%
c. 8%; 6%
Correct answer is (c).
Under the California Financial Code, Section 4970, a covered loan refers to a consumer loan that meets one of the following conditions: (1) the APR at consummation of the transaction will exceed the yield on Treasury securities by more than 8%; or (2) the total points and fees payable by the consumer at or before closing for a mortgage or deed of trust will exceed 6% of the total loan amount.
- A MLO licensee may credit a 4-hour online ethics towards the continuing education renewal requirement:
a. once, in the same calendar year in which the course is taken.
b. once, in the next calendar year after the course is taken.
c. twice, 2 hours in the year in which the course is taken and 2 hours carried over into the next year.
d. twice, if the same course is taken twice in 2 consecutive years.
a. once, in the same calendar year in which the course is taken.
- Of the following, which is a violation rather than a bona fide error?
a. The date on the loan document is smudged caused during printing.
b. The borrower received the loan documents stapled together, but pages 4 and 5 were out of order.
c. The MLO was in a hurry to get the loan agreement submitted and asked the borrower to sign even though some important items were left blank, to be filled in later.
d. The MLO’s business card had an incorrect email address, due to a printing error.
c. The MLO was in a hurry to get the loan agreement submitted and asked the borrower to sign even though some important items were left blank, to be filled in later.
- A finance lender must send a branch office application to the Commissioner at least __________ days before engaging in business at the new location.
a. 5
b. 10
c. 15
d. 30
b. 10
- Which should not be disbursed from a trust account?
a. Borrower’s payments
b. Borrower’s refunds
c. Payments to the lender
d. Transfers to another depository institution
c. Payments to the lender
- In addition to written authorization from the broker, what must an unlicensed authorized signatory have to withdraw funds from the broker’s trust fund account?
a. Driver license
b. Fidelity bond
c. High school diploma
d. Notary Public License
b. Fidelity bond
Correct answer is (b).
An unlicensed signatory on the trust account must have fidelity bond coverage at least equal to the maximum amount of trust funds to which the employee could have access to at any time.
- Andy is a real estate broker. Charles listed a rundown apartment building through Andy, asking one million dollars. Andy knew that Donna, a real estate investor, would readily pay twice that amount for the land alone due to its choice location. Andy had his fiancée purchase the property for him, and then immediately resold the property to Donna. All three parties got what they sought: Charles got the one million dollars he wanted, Donna got the property she wanted, Andy got the commission plus the difference between the two sales. Did Andy act ethically?
a. No, he advertised falsely
b. No, he engaged in secret profits
c. No, he failed to disclose listing-option profits
d. Yes, everyone received what he or she expected
b. No, he engaged in secret profits
- A principal of ABE Mortrgage filed a petition for personal bankruptcy. The principal or ABE Mortgage:
a. must submit written notification of the petition within 5 days to the DOC Commissioner.
b. must submit written notification of the petition within 15 days to the DOC Commissioner.
c. must submit written notification of the petition within 30 days to the DOC Commissioner.
d. do not need to notify the Commissioner.
a. must submit written notification of the petition within 5 days to the DOC Commissioner.
- At least once every 2 years, the Commissioner must:
a. audit the licensee’s financial information.
b. examine the licensee’s books and records to ensure compliance.
c. review the licensee’s original application for the MLO license.
d. suspend the MLO license to conduct an audit.
b. examine the licensee’s books and records to ensure compliance.
- Who is responsible for paying for the credit report fee needed to obtain a mortgage loan?
a. Borrower
b. Commissioner
c. Lender
d. Mortgage loan originator
a. Borrower
- Of the following, which is grounds for revocation or suspension of a real estate license under Business and Professions Code Section 10176?
a. Acting for more than one party in a transaction with the consent of all parties
b. Commingling personal money with the money of others
c. Receiving a commission on an exclusive listing that has a definite termination date
d. All of the above
b. Commingling personal money with the money of others
- Under the California Finance Code, no finance lender, broker, or mortgage loan originator licensee may transact business at any other place of business than that named in the license; however, a licensee is permitted to:
a. do business in the office of another licensed lender.
b. make an offer of a loan via the Internet.
c. make loans in an office set aside on the premises of an organization that is exempt from licensing.
d. use a conference room of a public library to conduct business.
b. make an offer of a loan via the Internet.
- Individual licensees are required to display their licenses:
a. at the licensed office with which they are affiliated.
b. on their identification badges and business cards.
c. at both their home offices and the main office.
d. in all advertising.
a. at the licensed office with which they are affiliated.
- Which disclosure must be given to borrowers when they apply for a loan to purchase a home?
a. Good Faith Estimate (GFE) of settlement costs
b. Mortgage Servicing Disclosure Statement
c. Special Information Booklet
d. All of the above
d. All of the above
- The Commissioner may investigate a mortgage broker’s or lender’s books, accounts, records, and files:
a. at any time.
b. monthly.
c. quarterly.
d. annually.
a. at any time.
- Donna is a real estate broker. Which of the following activities would require her to have an MLO endorsement?
a. Negotiating a construction loan for a commercial building
b. Taking a residential mortgage loan application
c. Selling her own home with seller carryback financing
d. Offering to locate a residential property for an out-of-state buyer
b. Taking a residential mortgage loan application
- Within 105 days after the end of the licensee’s business fiscal year, every MLO must:
a. file an annual audit report with the Commissioner.
b. apply for the annual license renewal.
c. submit audited financial statements to the NMLS.
d. ask the Commissioner to conduct the annual audit.
a. file an annual audit report with the Commissioner.
- Under Section 4973 of the California Financial Code, a covered loan may include:
a. a prepayment penalty up to the first 36 months after the date of consummation of the loan.
b. a prepayment fee after the first 36 months after the date of consummation of the loan.
c. a provision for negative amortization.
d. a provision that increases the interest rate as a result of a default.
a. a prepayment penalty up to the first 36 months after the date of consummation of the loan.
- The California law that prohibits discrimination in the sale, rental or financing of practically all types of housing is called the:
a. Holden Act.
b. Housing Financial Discrimination Act.
c. California Fair Employment and Housing Act.
d. Unruh Civil Rights Act.
c. California Fair Employment and Housing Act.
(c) . The California Fair Employment and Housing Act (Rumford Act) prohibits discrimination in the sale, rental or financing of housing. Housing Financial Discrimination Act (Holden Act) prohibits discrimination in real estate lending. The Unruh Civil Rights Act covers discrimination in business.