CHAMPION'S MLO STUDY GUIDE Flashcards
Mortgage loan originators who make cold calls must comply with the requirements of the Na-
tional Do-Not-Call registry and the Do-Not-Call rules. The loan originator needs to update any
download of the registry at least every:
31 days
The appraisal approach that is used as the best indicator of value for existing properties is:
Sales Comparison Approach
The Equal Credit Opportunity Act is implemented by the CFPB’s
Regulation B
The SAFE Act requires all MLOs seeking state-licensure to pass the NMLS-developed Mort-
gage Loan Originator Test with a score of:
75% or better.
The Consumer Financial Protection Act of 2010 establishes the Consumer Financial Protection
Bureau (CFPB), as an independent entity housed within the:
Federal Reserve System
The Equal Credit Opportunity Act prohibits discrimination in any aspect of a credit transaction
on the basis of all of the following except:
Immigration status
The VA’s debt-to-income ratio is a ratio of total monthly debt payments (housing expense, in-
stallment debt, etc.) to gross income. It is a guide and, as an underwriting factor, it is secondary
to the:
Residual income calculation
The SAFE Act requires mortgage loan originators to pass a qualified test to obtain a license.
An individual may retake the test 2 consecutive times, with each consecutive taking occurring
at least:
30 days after the preceding test
Which of the following loans is excluded from the Ability-to-Repay Rule requirements?
Home Equity Line of Credit Loans
Fannie Mae is the nickname for the:
Federal National Mortgage Association.
The Home Mortgage Disclosure Act requires lenders to ask applicants and borrowers for in-
formation regarding their ethnicity, race, and sex even when applications are made entirely by
telephone, mail, or the Internet. If an applicant submitting his or her application in person fails
to provide the information, the lender must note the information from applicants:
Appearance and surname
Protecting the privacy of consumer information held by financial institutions is the heart of the
financial privacy provisions of the:
Gramm-Leach-Bliley Financial Modernization Act of 1999
Excessive lending activity for the purpose of generating fees and commissions is called:
Churning
What law requires mortgage loan originators to implement a written identity theft prevention
program to detect the warning signs or “red flags” of identity theft?
Fair and Accurate Credit Transaction Act of 2003
Whenever a mortgage loan originator discusses an ARM product, the Truth in Lending Act
requires they provide to the borrower the CFPB booklet:
Consumer Handbook on Adjustable Rate Mortgages
(CHARM)
A person used to buy a property in order to conceal the actual owner is called:
Straw Buyer
The term “qualified mortgage” was first used within the text of the:
Dodd-Frank Wall Street Reform and Consumer Protection Act
The law requires that the VA be paid a funding fee on guaranteed loans. The only exceptions are
loans made to all of the following except:
Veterans who provide more than 20 % down payment toward the purchase of the
property
As defined in Regulation Z, these loans are secured by the consumer’s principal dwelling with
an APR that exceeds the average prime offer rate (APOR) for comparable transactions by 1.5
percentage points for a first lien conforming residential mortgage loan.
Higher-Priced loans
The regulations implementing the Truth in Lending Act are known as:
Regulation Z
The SAFE Act requires continuing education for state-licensed loan originators. In order to
meet the annual continuing education requirement, the loan originator must complete:
8 hours of CE
What is the name of a type of mortgage loan whose interest remains fixed for a certain period
then changes over time based upon a market index?
Hybrid ARM
Mr. and Mrs. Smith are closing on a home on January 10, 2011. The sales price of the home
is $450,250, and the lender has approved them for a 90% LTV. The Smith’s 15-year fixed-rate
mortgage loan has an interest rate of 5.00%. How much pre-paid interest must the Smith’s pay
at closing, assuming a 360-day calendar year?
$1,238.19
A mortgage loan originator must notify an applicant of action taken on the applicant’s request
for a mortgage loan, whether favorable or adverse:
Within 30 days of receiving a completed application
The type of mortgage that provides an elderly borrower with a monthly check instead of the
borrower paying a monthly payment is known as:
Reverse mortgage.
What is the name of FHLMC’s automated underwriting system?
Loan Product Adviser
Section 8 of RESPA prohibits any person who, pursuant to any agreement or understanding,
gives or receives a fee or thing of value (including payments, commissions, fees, gifts, or special
privileges) for:
The referral of settlement business
According to the Truth in Lending Act, the early disclosures are required to be delivered or
placed in the mail not later than three business days after the lender receives the loan application,
and
At least 7 days before consummation of the transaction
Under the TILA, the three-day right of rescission period begins once the material disclosure
and notice have been given and last three full business days. Rescission business days are defined
as:
All calendar days except Sunday and federal holidays
For purchase money transactions, the maximum insurable FHA LTV is:
96.5 % LTV the reciprocal of the 3.50% down payment
Any seller concession or combination of concessions that exceeds 4 percent of the established
reasonable value of the property is considered excessive and unacceptable for:
VA guaranteed loans
RESPA places restrictions on the lender’s requirements for tax and insurance escrow accounts.
In addition, the servicer may add an amount to maintain a cushion no greater than:
1/6 of the estimated total annual payments from the account
Mortgage originators must provide the borrower with a copy of the Special Information Book-
let, “Your Home Loan Toolkit: A Step by Step Guide,” either at the time a written application
is submitted or no later than:
Three business days after the application is received
The Fraud Enforcement and Recovery Act (FERA) was introduced in Congress in February
2009 and signed into law by President Obama on May 20, 2009. Convictions for mortgage
fraud can carry a:
30-year maximum prison sentence or a maximum $1 million fine, or both.
As defined in the SAFE Act, the term “nontraditional mortgage product” means any mortgage
product other than:
30 year Fixed Rate Loan
Which of the following is considered in a borrower’s housing expense to income ratio (Front
End Ratio)?
Homeowner’s Insurance
Per FHA underwriting guidelines, gift funds are acceptable and may be used for the entire
down payment. Gift funds may be provided by:
The borrower’s family member.
TILA requires mortgage loan originators to make certain material disclosures on loans
subject to the RESPA within __________ after receipt of a written application.
3 Business Days
The category of _____ mortgage loans is defined as a consumer credit transaction that
for, first-lien loans, are 1.5 percentage points above the average prime offer rate issued by
Freddie Mac.
Higher-Priced
An essential requirement under TILA is that no loan originator shall receive, directly or in-
directly, ______ for a consumer-purpose loan secured by a dwelling that is based on terms
of a transaction.
Compensation
The Truth in Lending Act permits a borrower to assert a defense to foreclosure against a
creditor when there is a violation of the ____ and the ability to repay provisions.
Anti-Steering
The Loan Estimate must be delivered or placed in the mail no later than the seventh busi-
ness day before ______.
Consummation
In order to receive a residential mortgage loan originator license, an applicant may not have been
convicted of, or plead guilty or nolo contendere, to any felony in a domestic, foreign, or military
court during the ____ preceding the date of application for an MLO license.
7 Years
An originator may call a person whose number is on the National Do Not Call Registry if
the originator has an ____ with the person.
Established Business Relationship
The Dodd-Frank Act establishes the Consumer Financial Protection Bureau as an inde-
pendent entity housed within the _____.
Federal Reserve System
A ____ quote requires no discount points.
Par
FHA allows sellers to provide concessions up to _________ percent of the sales price.
6%
The Department of Veterans Affairs allows sellers to provide concessions up to _____
percent of the sales price.
4%
If the initial rate on an ARM is less than the fully indexed rate, it is called a __________.
Teaser Rate
The _____ approach is used as the best indicator of value for existing properties.
Sales Comparison
_______ refers to the loss in the desirability of the style, layout, or function of an element
of a property over time.
Functional Obsolescence
Under FERA, convictions for _____ can carry a 30-year maximum prison sentence or a
maximum 1 million dollar fine, or both.
Mortgage Fraud
RESPA prohibits abusive practices such as undisclosed referral fees and ____
Kickbacks
