Chapter 1 Laws Regulation Flashcards
Residential Mortgage Loan include which of the following?
A. Loan for a personal, family or household dwelling that’s secured by a mortgage or deed of trust and vacant land
B. Loan for a personal, family or household dwelling that’s secured by a mortgage or deed of trust and construction
C. Loan for a personal, family or household dwelling that’s secured by a mortgage or deed of trust only
D. Loan for a personal, family or household dwelling that’s secured by a lien
A
What is a HELOC is considered an A. PrimaryClosed-End Debt B. Secondary Closed-End Debt C. Primary Open-End Debt C. Secondary Open End Debt
Answer: C
A HELOC is an Open end Secondary Lien
A HEL is a A. PrimaryClosed-End Debt B. Secondary Closed-End Debt C. Primary Open-End Debt C. Secondary Open End Debt
Answer: B
A HEL is a closed end secondary lien
A borrower is entitled to request and obtain a copy of the HUD-1Settlement Statement how many days before closing? A. 1 B. 3 C. 5 D. 7
Answer D
The HUD-1 Settlement Statement itemizes the costs and disbursements tothe buyer and seller and must be made available, upon request by the borrower (for reverse mortgages) one business day prior to closing. The Closing Disclosure must be delivered three business days before closing.
The servicer has how many days to notify the borrower if the servicing rights have been sold and are being transferred to another company? A. 3 B. 5 C. 10 D. 15
Answer: D
According to RESPA, the loan servicer must notify the borrower 15 days before the effective date of the loan transfer.
How many days does a lender have after receipt of an application to notify the applicant of its action on the application? A. 10 B. 15 C. 30 D. 60
C
How many days does an applicant have after receipt of an adverse actionnotice to request a statement of reasons from the lender? A. 10 B. 15 C. 30 D. 60
D
Pay attention to applicant or MLO or lender
Which of the following must never be changed under any circumstances?
A. Loan origination charge, including processing and underwriting fees, Interest rate, state Local Taxes
B. Loan Origination charge, interest rate on an unlocked loan, appraisal
A
****You are working on a file referred to you by a realtor. The realtor calls you to see if there is going to be any problem getting the customer qualified. The realtor wants to know what the borrower’s credit scores are before presenting the offer.
The most appropriate course of action is to:
A. refer the realtor to the borrower.
B.never disclose a borrower’s information to a realtor.
C. obtain permission from the borrower to disclose the information.
D. tell the realtor the credit score.
A
****A borrower wants to purchase a 2nd home and tells you that they intend to rent the property out when they are not living in it. You have reviewed their financial information and realize that the borrower would qualify for financing if the property is classified as a2nd residence. However, if the property is classified as an investment property, the borrower is unlikely to qualify. What should you do?
A. Classify the property as a rental property even though the borrower intends to reside there part of the year.
B. Classify the property as a 2nd residence; since the borrower intends to use the property for part of the year, this is acceptable.
C. Classify the property as a 2nd residence because it is not legal for the borrower to
personally reside in a property classified as a rental for any length of time.
D. Deny the borrower because it is neither legal to rent out a 2nd residence or reside in a rental property for any length of time.
A
****What kind of authority does the Consumer Financial Protection Bureau have:
A. None
B. Limited authority subject to the regulators of the Federal Reserve
C. Rule making and enforcement authority over many consumer financial laws
D. Unlimited power over all federally insured financial institutions
C
Which of the following would qualify for a qualified mortgage?
A. positive amortization, maximum 30-year loan term, 3percent cap on fees, interest-only mortgages
B. Negative amortization, maximum 30-year loan term, 3percent cap on fees, no balloon or interest-only mortgages
C. positive amortization, maximum 30-year loan term, 3.5% cap on fees, no balloon or interest-only mortgages
D. positive amortization, maximum 30-year loan term, 3% cap on fees, no balloon or interest-only mortgages
answer D.
Facts about QM
(positive amortization, maximum 30-year loan term, 3percent cap on fees, no balloon or interest-only mortgages
The rule defines small creditors as businesses with less than $2
billion in assets and fewer than 500 closed-end, first-lien residentialmortgages in the previous year is defined by which of the following
A. FHA
B. QM ATR
C. RHS
D. Fannie Mae
Answer: QM loan Small Creditor Exception
Which of the following is allowed to originate balloon mortgages in rural or under-served areas and not sell loan weighing three years if made by small creditors. A. TIlA B. RESPA C. QM D. Conventional
C
According to Qualified Mortgages, which of the following is True?
A. No Balloon Payments under any circumstances
B. Can originate balloon mortgages in rural or under-served areas and not sell loan within three years if made by small creditors.
C. Can originate balloon mortgages in rural or under-served areas if the creditor is a major depository institution.
D. Only if the loan is made with good faith
B
According to ATR, how long must customer file be kept? A. 2 Years B. 3 Years C. 5 years D. 25 Months
B
What do ability to pay cover?
A. closed end, Primary and Investment Property
B. Closed End, Residential, Open and Money Mortgage
C. Closed End, Refinance. HELOC, and Money Mortgage
D. Closed End, Secondary Lien, Jumbo Loans
A
What is exempt from ability to repay rule?
A. Home Equity, Reverse Mortgages, Construction Loan. Commercial Loan and money Mortgages
B. Home Equity, Refinance Mortgages, Construction Loan and vacant land, and timeshare
C. Home Equity, Reverse Mortgages, Construction Loan and vacant land, and timeshare
D. Home Equity, Reverse Mortgages, Construction Loan and vacant land, and Money Mortgage
Answer: C
The ability to repay exempts the following
Home Equity, Reverse Mortgages, Construction Loan and vacant land, and timeshare
What is the thing that Loan originator not allowed to say to those who is getting an interest only loan?
A. You will pay off your principal in five years
NA
What type of disclosure do you give to a loan with no land? A. No disclosure needed B. TILA Disclosures C. LE and CD D. GFE
Answer: B. A home such as mobile home not attached to land is called a chattel nd covered by the TILA Disclosures
***What is the best case scenario of a mortgage process ABC Broker mortgage the loan, XYZ company funds and services it
NA
**Qualified Mortgage (QM)- LO can be protected by safe harbor if loan is a QM and
A. Income verified and documented
B. No negative amortization or allowing deferred principal payments
C. No balloon payment (except for rural area)
D. Construction Loan
A
***which is true of subordinate liens A. second mortgage loans often carry higher interest rates than first mortgage loans. B. Longer term than primary C. Shorter term than primary D. Paid off sooner than the primary loan
Answer A.
Subordinate loans have higher interest rate and paid after the primary loan
What is the punitive charges for failure to comply with ECOA?
A. $10,000 in individual actions and the lesser of $500,000 or 1 percent of the MLO net worth in class actions.
B. $10,000 in individual actions and one year in jail.
C. 1,000 and/or 30,000 year in jail
D. $10,000 in individual actions and the lesser of $500,000 or 1 percent of thecreditor’s net worth in class actions.
Answer D $10,000 in individual actions and the lesser of $500,000 or 1 percent of thecreditor’s net worth in class actions.
Which of the following allows the lender to collect anadditional 2 months of escrow payments to act as a cushion? A. TIlA B. RESPA C. HPML D. HOEPA
B
Which of the following requires maintain eacrow account for property tax and hazard insurance on principal residencies for five years? A. TIlA B. RESPA C. HPML D. HOEPA
C
Which of the following is True of HPML?
A. Flipping Homes are allowed
B. Are considered qualified mortgage
C. Borrowers must receive homeownership counseling from aHUD-approved counselor.
D. Refinancing a higher-priced mortgage may result in a higherbalance, balloon payments or negative amortization.
Answer: A
An additional appraisal is required if the purchase is a “flipped”
home. Flips are defined as resells within 90 days with seller
paying a minimum 10 percent price increase, or resells within
the past 91-180 days with seller paying a minimum 20 percentprice increase.
QM needs to meet certain parameters- a covered transaction is not a qualified mortgage if the transaction’s total points and fees exceed: 3 Percent of the total loan amount for a loan amount greater than or equal to $100,000
Home ownership counseling is for High Cost Loans
Which of the following is true of a high cost loan?
A. Information Booklet Needed
B. Interest Rate Increase If default
C. Borrowers must have a documented ability to repay the loan prior to funding.
D. It is a QM Loan
C
What type of balloon mortgage is allowed in a HOEPA loan? A. Short term bridge loans B. Interest Only Loan C. Long Term Balloons D. None of the above
A
What type of loan is exempt from HOEPA?
A. Refinance, Government, New construction, investment
B. Reverse, Government, New construction, investment
C. Refinance , Government, Residential, investment
D. Reverse, Residential, New construction, investment
B
HOEPA exempts, Reverse Mortgages, Governmental Mortgages, Investment and new construction
All of the following loans are covered by HOEPA except: A. Purchase Money B. Home Equity C. Refinances D. Reverse Mortgages
D
HOEPA covers Purchase Money Mortgage, HEL, and Refinance loan
What type of balloon mortgage is allowed in a HOEPA loan? A. Short term bridge loans B. Interest Only Loan C. Long Term Balloons D. None of the above
A
The HUD-1/Closing Disclosure is not required if? A. Borrower has no closing cost B. If it’s a reverse mortgage C. If the consumer rescinds the offer D. If there is no appraisals
Answer: A
The HUD-1/Closing Disclosure isnot required if the borrower has no closing costs.
HUD-1 is used for what type of mortgage? a. Refinance B. Reverse C. ARMs D. QM
B
What type of disclosure is the HUD-1? A. Application disclosure B. Pre-Settlement C. Settlement D. Post- Settlement
B
When must the The initial Closing Disclosure must be received? A. Three business days after application B. Three business days before closing. C. At Closing D. At time of appraisal
B
The HUD-1/Closing Disclosure is not required if? A. Borrower has no closing cost B. If it’s a reverse mortgage C. If the consumer rescinds the offer D. If there is no appraisals
Answer: A
The HUD-1/Closing Disclosure isnot required if the borrower has no closing costs.
HUD-1 is used for what type of mortgage? a. Refinance B. Reverse and all 1-4 unit residential property C. ARMs D. QM
B
The HUD-1 Settlement Statement/Closing Disclosure is required to be usedas the standard real estate settlement form in all transactions in the United States that involve federally-related mortgage loans and have closing costs for the borrower.
What type of disclosure is the HUD-1? A. Application disclosure B. Pre-Settlement C. Settlement D. Post- Settlement
B
The HUD-1 Settlement Statement/Closing Disclosure is required to be used as the standard real estate settlement form in all transactions in the United States that involve federally-related mortgage loans and have closing costs for the borrower.
When must the the initial Closing Disclosure must be received? A. Three business days after application B. Three business days before closing. C. At Closing D. At time of appraisal
B. At least three business days before closing.
Which are two forms of settlement disclosure? A. HUD-1 and ABA B. Final HUD-1 and ABA C. Final HUD-1/CD and Initial Escrow D. Initial HUD-1 and Initial Escrow
C
Answer C
RESPA requires two disclosures that must be given at settlement: Final HUD-1 Settlement (if the borrower has closing costs for reverse mortgages)or the Closing Disclosure, and the Initial Escrow Statement, which may be given shortly after closing.
What disclosure does the borrower receives an at the closing or within 45 days after closing that estimates the first-year escrow payment for property taxes and homeowner’s insurance? A. Initial Escrow Statement B. Final Escrow Statement C. Service Transfer Disclosure D. HUD-1 Disclosure
A. Initial Escrow Statement
What information must included in the Service Transfer? A. Loan Application Disclosures B. Pre-Settlement Disclosures C. Settlement Disclosure D. Post Settlement Disclosure
D
Which of the following has a grace period of 60 days payment before being penalized? A. Initial Escrow Statement B. Final Escrow Statement C. Service Transfer Disclosure D. HUD-1 Disclosure
Answer: C
Borrowers can’t be penalized for non-payment if they continued tomake payments to the prior servicer; this grace period expires after60 days.
Which of the following is part of a post settlement statement? A. HUD-1 and ABA B. Final HUD-1 and Initial Escrow C. Service Transfer and Annual Escrow D. Final HUD-1 and Annual Escrow
C
What is the difference between the GFE and LE?
A. LE contains Finance Charges and Terms
B. GFE contains Finance Charges and Terms
C. LE contains expiration dates for aninterest rate lock
D. GFE contains expiration dates for aninterest rate lock
A
Which of the following is true of loan revisions?
A. It’s only allowed in an LE under the right circumstances
B. It’s only allowed on GFE under right circumstances
C. It’s allowed on both GFE and LE under the right circumstances
D. It’s neither allowed for GFE nor LE
C
A borrower is in the process of a loan application and got fired, what should the MLO do?
A. Offer to revise GFE/LE
B. Offer to use the same comps if it’s less than 60 days since the applicant got fired
C. Offer to talk to the lender
D. Reject the loan
A
The applicant and MLO is almost complete with the LE when the MLO notices that there is an increase in the interest rate. What should an MLO do?
A. With the borrower permission, revise the loan estimate and increase the closing cost on an unlocked loan
B. With the borrower permission, revise the loan estimate and increase the closing cost on an locked loan
C. With the lenders approval, With the borrower permission, revise the loan estimate and increase the closing cost on an unlocked loan
D. With the lenders approval, With the borrower permission, revise the loan estimate and increase the closing cost on a locked loan
A
The loan estimate is done but new information came out which shows that the house was a flooded unit. What should the MLO required to do?
A. Continue with the process and address later
B. Notify the CFPB
C. Ask the Realtor to negotiate the price down
D. Do an estimate revision
D
The loan estimate is done but new information came out which shows that the house was a flooded unit. What should the MLO required to do?
A. Continue with the process and address later
B. Notify the CFPB
C. Ask the Realtor to negotiate the price down
D. Do an estimate revision
D
Which of the following is eligible for a revised LE?
A. Consumer waits more than 10 business days to indicate an Intent to proceed
B. If the interest increase on a Locked Loan
C. If the consumer hired their own appraiser
D. If the lender retracts loan
A
Which of the following is eligible for a revised LE?
A. Settlement is delayed more than 10 calendar days for a new
construction loan if the original Loan Estimate includes thestatement that the estimate can be revised for this reason.
B. Settlement is delayed more than 60 calendar days for a
Residential loan if the original Loan Estimate includes thestatement that the estimate can be revised for this reason.
C. Settlement is delayed more than 30 calendar days for a new
construction loan if the original Loan Estimate.
D. Settlement is delayed more than 60 calendar days for a new
construction loan if the original Loan Estimate includes thestatement that the estimate can be revised for this reason.
D
When should a revised loan estimate be received?
A. Received 3 business days before loan consummation and mailed 7 days prior to consummation
B. Received 3 business days before loan consummation and mailed 10 days prior to consummation
C. Received 4 business days before loan consummation and mailed 7 days prior to consummation
D. Received 4 business days before loan consummation and mailed 10 days prior to consummation
C
An applicant is applying for a reverse mortgage, which form should the MLO use? A. LE/HUD-1 B. GFE/HUD-1 C. LE/Initial Escrow GFE/Initial Escrow
Answer B
GFE/HUD-1 are used for reverse mortgages.
Which of the following have zero tolerance variances? A. Loan originator and interest rate B. Credit Report, Recording Fees C. Title Insurance D. Hazard Insurance
A
Real estate transfer taxes, creditor’s or mortgage broker’s charges for its own services (loan origination fees and interest rate),
charges for services provided by an affiliate of the creditor or
mortgage broker, and charges for services for which the
creditor or mortgage broker does not permit the consumer to
shop for (credit report, appraisal) have zero variance. They
must be identical on the Loan Estimate and Closing
Disclosure.
Which of the following if recommended by lender can have a 10% Tolernce fee.
A. Loan Origination, Interest, Title
B. Credit Report, Appraisal, Recording, Title if recommended
C. Hazard, Title and Appraisal
D. Hazard, TItle, Pre-Paid mortgage Interest
B
Fees that the lender chooses or identifies (government recordingfees, and title insurance if selected or “recommended” by the
lender) can’t vary on the two documents by more than 10
percent.
Which of the following have no limit on variance/Tolernce fee.
A. Loan Origination, Interest, Title
B. Credit Report, Appraisal, Recording, Title if recommended
C. Credit Report, Appraisal
D. Hazard, TItle, Pre-Paid mortgage Interest
D
Fees for services that the owner chooses for themselves (hazardinsurance or title insurance if the homeowner doesn’t chooseone of the lender-identified selections) and fees that are paid per diem (pre-paid mortgage interest) have no limit on the acceptable amount of variance between the estimates and theclosing statement.
How many days does lenders have to refund refund any excessive variance between the GFE and the HUD-1? A. 30 days B. 60 C. 90 D. 120
Answer: B
Lenders have 30 days to refund any excessive variance between the GFE and the HUD-1.
Which fees can be adjusted with no tolerance?
A. Loan Origination, Interest, Title
B. Credit Report, Appraisal, Recording, Title if recommended
C. Processing Fee
D. Hazard, TItle, Pre-Paid mortgage Interest
Answer D
Hazard Insurance, Title Insurance. Pre paid mortgage or per diem
How many days does lenders have to refund any excessive variance between theLoan Estimate and the Closing Disclosure? A. 30 B. 60 C. 90 D. 120
B
The 60 days does lenders have to refund any excessive variance between
A. Final HUD-1 and GMP
B. GFE and HUD-1
C. GFE and Appraisal
D. Loan Estimate and the Closing Disclosure
D
The 30 days does lenders have to refund any excessive variance between
A. Final HUD-1 and GMP
B. GFE and HUD-1
C. GFE and Appraisal
D. Loan Estimate and the Closing Disclosure
B
Which of the following is true of CD?
A. Sellers are permitted to see only cost and credits on their CD.
B. MLO are permitted to see only cost and credits on their CD.
C. Lenders are permitted to see only cost and credits on their CD.
D. Appraiser are permitted to see only cost and credits on their CD.
A
Which of the following is true of CD?
A. there is no 3-business-day-receipt requirement for MLO
B. there is no 3-business-day-receipt requirement for sellers.
C. There is no 3-business-day-receipt requirement for lenders
D. None of the above
B
A customer makes a complaint about the MLO website, which of the following is true?
A. The MLO have 5 days to acknowledge a borrower’s complaint, and 45 days to resolve or explain their position
B. The MLO have 10 days to acknowledge a borrower’s complaint, and 45 days to resolve or explain their position
C. The MLO have 30 days to acknowledge a borrower’s complaint, and 45 days to resolve or explain their position
D. The MLO should report the complaint to CFPB
A
When is the servicer prohibited from choosing a force-placed insurance provider?
A. the borrower sends a forbearance offer
B. the borrower pays for it out of pocket
C. If the borrower escrows the insurance payments the servicer and the servicer can continue the payments
D. the the MLO can add it to the loan
A
Answer C
if the borrower escrows the insurance payments, the servicer is prohibited from choosing a force-placed insurance provider if the servicer can continue the payments; this applies even if the servicer must
contribute funds to the borrower’s escrow account.
What are some loss mitigation options? A. Bankruptcy B. Reverse Mortgage, HELOc, Short Sales C. refinancing, loan modification, short sale and deed-in-lieu D. Apply for Hardship
C
What conditions must be satisfied before a foreclosure proceedings can take place?
A. The borrower agrees to mitigation
B. the servicer determines that the borrower is ineligible for mitigation and has no more possible appeals; the borrower declines any offers, or the borrower fails to honor the terms of an agreement.
C. When the lender successfully uses the borrower
D. When the judgement decides on the case
B
An applicant that is interested in a residential mortgage should receive which disclosures?
A. TIL Disclosures, Special information Booklet- “Your Loan Tool Kit, Mortgage Servicing Disclosure Statement, ABA, Appraisal Independence Disclosures
B. GFE and HUD-1, Initial/Final TILA disclosure
C. Initial/Final TILA disclosure
D. LE, CD, Service Transfer Disclosure,
A
An applicant that is interested in a reverse mortgage should receive which disclosures?
A. TIL Disclosures, Special information Booklet- “Your Loan Tool Kit, Mortgage Servicing Disclosure Statement, ABA, Appraisal Independence Disclosures
B. GFE and HUD-1, Initial/Final TILA disclosure
C. Initial/Final TILA disclosure
D. LE, CD, Service Transfer Disclosure,
B
An applicant that is interested in a refinance should receive which disclosures?
A. TIL Disclosures, Special information Booklet- “Your Loan Tool Kit, Mortgage Servicing Disclosure Statement, ABA, Appraisal Independence Disclosures
B. GFE and HUD-1, Initial/Final TILA disclosure
C. Initial/Final TILA disclosure
D. Initial/Final TILA disclosure, Recission Disclosures, Appraisal Independence
D
An applicant that is interested in a residential mortgage should receive which disclosures?
A. TIL Disclosures, Special information Booklet- “Your Loan Tool Kit, Mortgage Servicing Disclosure Statement, ABA, Appraisal Independence Disclosures
B. GFE and HUD-1, Initial/Final TILA disclosure
C. Initial/Final TILA disclosure
D. LE, CD, Service Transfer Disclosure,
A
An applicant that is interested in a HELOC should receive which disclosures?
A. TIL Disclosures, Special information Booklet- “Your Loan Tool Kit, Mortgage Servicing Disclosure Statement, ABA, Appraisal Independence Disclosures
B. GFE and HUD-1, Initial/Final TILA disclosure
C. Initial/Final TILA disclosure
D. Initial/Final TILA disclosure, Recission Disclosures, Appraisal Independence
C
An applicant that is interested in a mobile home should receive which disclosures?
A. TIL Disclosures, Special information Booklet- “Your Loan Tool Kit, Mortgage Servicing Disclosure Statement, ABA, Appraisal Independence Disclosures
B. GFE and HUD-1, Initial/Final TILA disclosure
C. Initial/Final TILA disclosure
D. Initial/Final TILA disclosure, Recission Disclosures, Appraisal Independence
C
An applicant that is interested in certain types of homebuyer assistance programs should receive which disclosures?
A. TIL Disclosures, Special information Booklet- “Your Loan Tool Kit, Mortgage Servicing Disclosure Statement, ABA, Appraisal Independence Disclosures
B. GFE and HUD-1, Initial/Final TILA disclosure
C. Initial/Final TILA disclosure
D. Initial/Final TILA disclosure, Recission Disclosures, Appraisal Independence
C
An Applicant Interested in an ARMs product should receive which Disclosures?
A. TIL Disclosures, Special information Booklet- “Your Loan Tool Kit, Mortgage Servicing Disclosure Statement, ABA, Appraisal Independence Disclosures
B. GFE and HUD-1, Initial/Final TILA disclosure
C. Initial/Final TILA disclosure
D. Initial/Final TILA disclosure, Consumer Handbook on Adjustable Rate Mortgages (CHARM), ARM Disclosures, Appraisal Independence
D
An applicant that is interested in vacant land should receive which disclosures?
A. TIL Disclosures, Special information Booklet- “Your Loan Tool Kit, Mortgage Servicing Disclosure Statement, ABA, Appraisal Independence Disclosures
B. GFE and HUD-1, Initial/Final TILA disclosure
C. Initial/Final TILA disclosure
D. LE, CD
D
An applicant that is interested in commercial loans should receive which disclosures?
A. TIL Disclosures, Special information Booklet- “Your Loan Tool Kit, Mortgage Servicing Disclosure Statement, ABA, Appraisal Independence Disclosures
B. GFE and HUD-1, Initial/Final TILA disclosure
C. Initial/Final TILA disclosure
D. LE, CD
D
Which of the following is NOT protected from discrimination by the FairHousing Act? A. HIV patients B. Elderly C. Pregnant women D. Mexicans
B
Fair Housing Not ECOA
What should a loan originator do on a Loan Estimate address field when the borrower requests a pre-approval?
A. Leave it blank
B. Enter one or more zip codes of likely locations
C. Enter the applicant’s personal address
D. Deny the loan application
B
A borrower must indicate an Intent to Proceed within how many businessdays after receiving the Loan Estimate? A. 3 B. 10 C. 15 D. 30
10
The Good Faith Estimate/Loan Estimate must be sent to the borrowerwithin how many business days of receiving a loan application? A. 1 B. 3 C. 5 D. 10
B
Which government agency enforces the RESPA regulations? A. CFPB B. FCC C. FHA D. FTC
A
The Special Information Booklet must be sent to the borrower within howmany business days of receiving a loan application? A. 1 B. 3 C. 5 D. 10
B
The Mortgage Servicing Disclosure Statement must be sent to the
borrower within how many business days of receiving a loan application?
A. 1
B. 3
C. 5
D. 10
B
A borrower is entitled to request and obtain a copy of the HUD-1Settlement Statement how many days before closing? A. 1 B. 3 C. 5 D. 7
A
The servicer has how many days to notify the borrower if the servicingrights have been sold and are being transferred to another company? A. 3 B. 5 C. 10 D. 15
D
What is the maximum criminal penalty for a kickback violation?A. $500 and 6 months in prison
B. $1000 and 6 months in prison
C. $10,000 and a year in prison
D. $25,000 and a year in prison
C
The HUD-1 Settlement Statement is required for what type oftransaction? A. Cash purchase of a condo B. Financed purchase of a warehouse C. Reverse Mortgage D. Cash purchase of a strip mall
C
The lender has how many days after settlement to refund any portion ofcharges on the HUD-1 that exceeded the acceptable variance? A. 15 B. 30 C. 45 D. 60
B
ECOA allows an applicant to have a copy of his: A. Credit score B. Credit report C. Property appraisal report D. Bank records
C
How many days does a lender have after receipt of an application tonotify the applicant of its action on the application? A. 10 B. 15 C. 30 D. 60
C
How many days does a lender have to send a statement of reasons for anadverse action after receiving a request from an applicant? A. 10 B. 15 C. 30 D. 60
C
The Truth-in-Lending Act (TILA) was implemented by the: A. Federal Reserve Board B. Fannie Mae C. Federal Bureau of Investigation D. Federal Express
A
The Right of Rescission does NOT apply to: A. Refinance loan B. Second mortgage C. Home improvement D. First mortgage on a purchase
D
***Which of the following is NOT a trigger term? A. 5 % interest rate B. $200 monthly payment C. Lowest rates in town D. 48 easy payments
C
The Truth-in-Lending Disclosure must be delivered within how manybusiness days prior to closing a reverse mortgage? A. 3 B. 7 C. 10 D. 15
B
The APR must be finalized at least how many days before closing?A. 1
B. 3
C. 5
D. 7
B
The Home Mortgage Disclosure Act (HMDA) was implemented by the:
A. Department of Housing and Urban Development
B. Department of Veterans Affairs
C. Federal Communication Commission
D. Federal Reserve Board
D
HMDA does NOT:
A. Set lending quotas for protected classes
B. Require the loan amount to be reported
C. Require the location of the property to be reported
D. Require the race of the borrower to be reported
A
Which of the following is NOT required HMDA borrower information? A. Loan amount B. Gender C. Race D. Age
D
The Fair Credit Reporting Act is enforced by: A. HUD B. FCC C. FHA D. FTC
D
Tax liens can be kept in the credit report for: A. 2 years B. 5 years C. 7 years D. 10 years
C
Borrowers are entitled to a free credit report if the lender takes adverseaction against them and they ask for their report within how many days of receiving notice of the action? A. 30 B. 60 C. 90 D. 120
B
Which of the following is allowed to call numbers on the Do Not CallList? A. Loan originators B. Charities C. Car dealerships D. Dry cleaners
B
If a Loan Estimate is mailed, It must be mailed how many days before loan consummation? A. 1 B. 3 C. 5 D. 7
D
A lender has how many days to refund excessive variances on a ClosingDisclosure? A. 10 B. 30 C. 60 D. 90
C
A change to which of the following does NOT trigger a new 3-daywaiting period?
A. Seller credits buyer money for landscaping
B. APR
C. Loan product
D. Addition of a prepayment penalty
A
How many business days before loan consummation is a borrower
entitled to see a revised Closing Disclosure that did not trigger an additional3-day waiting period?
A. 1
B. 2
C. 3
D. 4
A
How many days before loan consummation is a seller entitled to see
the Closing Disclosure?
A. 0 (closing day)
B. 1
C. 2
D. 3
A
When a consumer requests the cancellation of their escrow account, the
lender has how many business days prior to closing the account to deliver an Escrow Closing Notice?
A. 1
B. 3
C. 10
D. 30
B
When a lender cancels an escrow account for a reason other than default
or termination caused by refinancing, repayment or rescission, they have howmany business days prior to closing the account to deliver an Escrow Closing Notice?
A. 1
B. 3
C. 10
D. 30
D
For how many years must a lender retain the Loan Estimate? A. 2 B. 3 C. 4 D. 5
B
Loan Estimate and related documents for 3 years afterconsummation.
For how many years must a lender retain the Closing Disclosure?
A. 2
B. 3
C. 4
D. 5
D
Closing Disclosure and related documents for 5 years afterconsummation.
For how many years must a lender retain the Escrow Cancellation Notice? A. 2 B. 3 C. 4 D. 5
A
Escrow Cancellation Notice and Partial Payment Policy for 2 years after consummation.
For how many years must a lender retain the Partial Payment Policy? A. 2 B. 3 C. 4 D. 5
A
Escrow Cancellation Notice and Partial Payment Policy for 2 years after consummation.
The borrower must receive the Closing Disclosure how many business days before consummation? A. 1 B. 2 C. 3 D. 4
C
Which of the following is NOT delivered to a reverse mortgage applicant? A. TILA Disclosure B. Loan Estimate C. Good Faith Estimate D. HUD-1
B
Reverse mortgage applicants use GFE not LE
ECOA requires that a loan application is retained for how long after a denial? A. 6 months B. 25 months C. 36 months D. 60 months
Answer B
Loan applications, credit application should be retained fo 25 months
A borrower must indicate an Intent to Proceed within how many business days after receiving the Loan Estimate? A. 3 B. 10 C. 15 D. 30
B
Consumer waits more than 10 business days to indicate an Intent to Proceed May need to have their LE/GFE revised
Major agencies that support the federal mortgage laws include:
A. Office of Comptroller, the Financial Stability Oversight Council, the Orderly Liquidation Authority and the Federal Insurance Office.
B. Consumer Financial Protection Bureau, the Financial Stability Oversight Council, the Orderly Liquidation Authority and the Office of thrift supervision
C. Consumer Financial Protection Bureau, the Financial Stability Oversight Council, the Orderly Liquidation Authority and the Federal Insurance Office.
D. Consumer Financial Protection Bureau, the Financial Stability Oversight Council, the Orderly Liquidation Authority and the FDIC
Answer C
Consumer Financial Protection Bureau, the Financial Stability Oversight
Council, the Orderly Liquidation Authority and the Federal Insurance Office.
Who may the appraiser Not discuss the valuation with? A. Loan Staff B. Real Estate Agent C. MLO D. Anyone - It’s not confidential
A. Appraisers may not discuss valuations with loan staff.However, they may discuss it with real estate agents.
What are four types of pre-settlement Disclosure required by Respa?
A. Material Disclosures , GFE/LE, Service Disclosure and HUD counsel
B. Special Information Booklet, GFE/LE, Service Disclosure and Closing Disclosure
C. Special Information Booklet, GFE/LE, Service Disclosure and HUD
D. Special Information Booklet, GFE/LE, Service Disclosure and HUD counsel, CHARM booklet
counsel
answer C
RESPA requires four pre-settlement disclosures: Special information booklet, Good Faith Estimate (GFE) of settlement costs for reverse mortgages or the Loan Estimate for most closed-end loans, Mortgage Servicing Disclosure Statement and list of housing counseling agencies.
These must be sent to the borrower within three business days of receipt ofthe signed application.
Which of the following are the post-settlement Disclosures required by Respa?
A. Service Transfer Notice and Recission Disclosure
B. Final HUD and Escrow
C. Closing Disclosure and HUD-1
D. Service Transfer Statement and annual Escrow Analysis
D
When should a revised loan estimate be received?
A. 3 business days before loan consummation and mailed 7 days prior to consummation
B. 3 business days before loan consummation and mailed 10 days prior to consummation
C. 4 business days before loan consummation and mailed 7 days prior to consummation
D. 4 businessl days before loan consummation and mailed 10 days prior to consummation
Answer. C
Lender must ensure that the revised estimate is received at least 4 business days prior to loan consummation (mailed at least 7
business days prior).
In this case, a business day is every day but Sunday and federal holidays. If the closing is scheduled before then, the changes may be reflected in the closing statement without reissuing the estimate.
What does the borrower receives an at the closing or within 45 days after closing that estimates the first-year escrow payment for property taxes and homeowner’s insurance.
A. Initial Escrow Statement
B. Final Escrow Statement
C. LE
D. CD
Answer A
Initial Escrow Statement
The borrower receives an Initial Escrow Statement at the closing or Within 45 days after closing that estimates the first-year escrow
payment for property taxes and homeowner’s insurance.
What is the difference between the GFE and LE?
A. LE contains Finance Charges and Terms
B. GFE contains Finance Charges and Terms
C. LE contains expiration dates for aninterest rate lock
D. GFE contains expiration dates for aninterest rate lock
Answer A
The Loan Estimate is very similar to the GFE except that, in addition to
anticipated closing costs, it also includes the financing charges and terms,which eliminates the need for a separate TILA disclosure.
The applicant and MLO is almost complete with the LE when the MLO notices that there is an increase in the interest rate. What should an MLO do?
A. With the borrower permission, ask creditor to revise the loan estimate and increase the closing cost on the unlocked loan
B. With the borrower permission, revise the loan estimate and increase the closing cost on an locked loan
C. With the lenders approval, With the borrower permission, revise the loan estimate and increase the closing cost on an unlocked loan
D. With the lenders approval, With the borrower permission, revise the loan estimate and increase the closing cost on a locked loan
Answer A
Creditors may not revise an estimate because of technical issues, incorrect calculations or low estimates.
They can revise the estimate if changing circumstances:
Increase the closing costs (interest rate increase on an unlockedloan), disaster such as storm that damage home, borrower lost job, or consumer wait more than ten days with intent to proceed, more than 60 days for new construction loan.
Which of the following is true of loan revisions?
A. It’s only allowed in an LE under the right circumstances
B. It’s only allowed on GFE under right circumstances
C. It’s allowed on both GFE and LE under the right circumstances
D. It’s neither allowed for GFE nor LE
Answer C
Creditors may not revise an estimate because of technical issues, incorrect calculations or low estimates.
They can revise the estimate if changing circumstances:
Increase the closing costs (interest rate increase on an unlockedloan), disaster such as storm that damage home, borrower lost job, or consumer wait more than ten days with intent to proceed, more than 60 days for new construction loan.
A borrower is in the process of a loan application and got fired, what should the MLO do?
A. Offer to revise GFE/LE
B. Offer to use the same comps if it’s less than 60 days since the applicant got fired
C. Offer to talk talk to the lender
D. Reject the loan
Answer A
Creditors may not revise an estimate because of technical issues, incorrect calculations or low estimates.
They can revise the estimate if changing circumstances:
Increase the closing costs (interest rate increase on an unlockedloan), disaster such as storm that damage home, borrower lost job, or consumer wait more than ten days with intent to proceed, more than 60 days for new construction loan.
If the APR, Loan Product or Pre-Payment fees change, what must be disclosed 3 business days before consummation? A. A new LE B. A new GFE C. A new CD D. All of the above
Answer C
If the APR, Loan Product, Pre-Payment Penalty change, a new Closing Disclosure must be provided tothe borrower and settlement is delayed for an additional 3 business days
If there are changes other than the APR, Loan Product or Pre-Payment Penalties, which of the following is true?
A. The borrower must get a revised Cd within three days of consummation
B. The borrower has the right to view the revised Closing Disclosure 1 business day before consummation.
C. The borrower needs to sign off within three days of consummation
D. The borrower will receive a Change Disclosure
Answer: B
If there are changes other than the APR, Loan Product or Pre-Payment Penalties, the borrower has the right toview the revised Closing Disclosure 1 business day before consummation.
Which of the following is true of CD?
A. Sellers are permitted to see only cost and credits on their CD.
B. MLO are permitted to see only cost and credits on their CD.
C. Lenders are permitted to see only cost and credits on their CD.
D. Appraiser are permitted to see only cost and credits on their CD.
Answer A:
Lenders or closing agents prepare the Closing Disclosure. Sellers are permitted to receive a disclosure that only shows their costs and credits. Theymay receive the disclosure when the loan is consummated; there is no 3- business-day-receipt requirement for sellers.
Which of the following is true of CD?
A. there is no 3-business-day-receipt requirement for MLO
B. there is no 3-business-day-receipt requirement for sellers.
C. There is no 3-business-day-receipt requirement for lenders
D. None of the above
Answer B
Lenders or closing agents prepare the Closing Disclosure. Sellers are permitted to receive a disclosure that only shows their costs and credits.
They may receive the disclosure when the loan is consummated; there is no 3-business-day-receipt requirement for sellers.
***A customer makes a complaint about the MLO website, which of the following is true?
A. The MLO have 5 days to acknowledge a borrower’s complaint, and 45 days to resolve or explain their position
B. The MLO have 10 days to acknowledge a borrower’s complaint, and 45 days to resolve or explain their position
C. The MLO have 30 days to acknowledge a borrower’s complaint, and 45 days to resolve or explain their position
D. The MLO should report the complaint to CFPB
Answer A
Loan servicers have 5 days to acknowledge a borrower’s
complaint, and 45 days to resolve or explain their position.
The Right of Rescission does NOT apply to: A. Refinance loan B. Second mortgage C. Home improvement D. First mortgage on a purchase
D
The rescission period does not apply to a first mortgage on a purchase of a property.
Which of the following best describes third party charges:
A. Fees paid to any party other than the creditor.
B. Fees paid to any party other than affiliates of the creditor.
C. Fees for services the borrower Is not allowed to choose.
D. All of the above.
The correct answer is D. Third party charges include the appraisal fee, credit report fee, flood certification, private mortgage insurance, termite inspection report, recording fees, surveys, and other fees.
Settlement charges that are regulated by the 10% cumulative tolerance rule include which of the following:
A. Third party charges and recording fees.
B. Charges the borrower can shop for.
C. Any charge paid directly to the creditor.
D. Transfer taxes.
Answer A
Fees that the lender chooses or identifies (government recordingfees, and title insurance if selected or “recommended” by the
lender) can’t vary on the two documents by more than 10
percent.
The TILA-regulated 10% cumulative tolerance on settlement service provider charges is best described as which of the following:
A. The creditor may charge the consumer more than the amount disclosed on the Loan Estimate.
B. The total sum of the applicable charges added together cannot exceed the sum of those charges disclosed on the Loan Estimate by more than 10%.
C. The creditor may never charge the borrower more than the amount listed on the Loan Estimate.
D. A & B.
Answer D
TILA-regulated tolerance limits on settlement service provider charges that can change by any amount include all of the following, except:
A. Services the borrower is allowed to shop for.
B. Prepaid interest.
C. Transfer taxes.
D. Flood insurance.
The correct answer is C. Transfer taxes are charges that are stipulated based on the selling price of the property and cannot change by any amount.
They’re asking which of the following cannot change
A creditor may issue a revised Loan Estimate in which of the following circumstances:
A. When a borrower receives a Loan Estimate from an MLO and does not provide an intent to proceed, and the borrower re-engages in the transaction after the expiration date of the Loan Estimate.
B. When the transaction involves the financing of new construction and the creditor reasonably expects that settlement will occur more than 60 calendar days after the original Loan Estimate has been provided.
C. Any time a valid changed circumstance has occurred that has altered the material facts of the transaction.
D. All of the above.
The correct answer is D. All of these are legitimate reasons to issue a revised Loan Estimate.
All of the following are valid changed circumstances according to RESPA, except:
A. A creditor provides an estimate of title insurance costs but the title insurer goes out of business during the underwriting.
B. A borrower requests a cash out loan at a higher loan-to-value ratio because of a higher than expected appraised value.
C. Receipt of any items of information that are part of the complete application after the Loan Estimate has been provided.
D. The borrower does not initially lock an interest rate but does so after the Loan Estimate is delivered.
The correct answer is C. This is just adding information that should have already been received and is not regarded as a legitimate changed circumstance.
“Which of the following are not legit reason for change in LE?”
All of the following are valid changed circumstances according to RESPA, except:
A. A natural disaster occurs in the immediate area of the subject property affecting many of the costs of the transaction.
B. A creditor provides the required disclosures prior to receiving the property address from the consumer.
C. During underwriting, a neighbor of the seller, learning of the impending sale of the property, files a claim contesting the boundary lines of the property to be sold.
D. During underwriting, a co-borrower becomes unemployed.
The correct answer is B. The MLO cannot simply add the property address and call that a changed circumstance. The significance of having a legitimate changed circumstance is that it becomes a valid reason to issue a revised Loan Estimate to revise settlement costs or add charges.
The original Loan Estimate is determined to have been made in good faith according to which of the following:
A. When the borrower is generally happy with the outcome.
B. If the actual costs are greater than the original Loan Estimate.
C. By looking at the difference between the initial cost estimate and the final costs charged at loan closing.
D. If there are no changed circumstances.
The correct answer is C. Obviously, if actual charges surpass the allowed tolerance thresholds, the assumption is the Loan Estimate was not made in good faith.
Borrowers and lenders often agree to a rate lock for a predetermined period of time for which of the following reasons:
A. Because the 10-business day provision does not lock the interest rate.
B. Because the 10-business day provision does not apply to the charge or credit for the interest rate chosen.
C. Because the 10-day provision does not apply to the adjusted origination charges and per diem interest.
D. All of the above.
The correct answer is D. The rate lock will stabilize all of these charges.
The 10-business day provision for the estimate of charges and terms for all settlement services does not apply to which of the following:
A. The interest rate.
B. Charges and terms dependent on the interest rate.
C. The charge or credit for the interest rate chosen, the adjusted origination charges, and per diem interest.
D. All of the above.
The correct answer is D. Because the 10-business day provision does not lock the interest rate, many borrowers in cooperation with the MLOs like to lock the interest rate to avoid disappointment.
The expiration period for the availability of charges and terms is located where on the Loan Estimate?
A. Page 2 of the Loan Estimate in the Loan Costs section.
B. Page 1 of the Loan Estimate in the Loan Terms section.
C. Page 3 of the Loan Estimate in the Other Considerations section.
D. Page 1 of the Loan Estimate in the Rate Lock section.
The correct answer is D. For good test preparation, it is recommended that the student get very familiar with the new forms—what’s on the forms, where different items are located, what the various provisions mean and what their purpose is. Look for what benefit there is to the consumer.
The estimate of the charges and terms for all settlement services may remain available longer under which of the following circumstances:
A. If the lender authorizes an extension.
B. If the MLO extends the period of availability.
C. If the Fed hikes the interest rate.
D. If the borrower wants to close quickly.
The correct answer is B. This would be done based on the borrower’s circumstances and the MLO’s anticipation of a timely closing.
The estimate of the charges and terms for all settlement services must be available for which of the following periods of time:
A. At least 5 business days.
B. At least 10 days.
C. At least 10 business days.
D. At least 15 business days.
The correct answer is C. Keep in mind this does not apply to the interest rate or charges and terms dependent on the interest rate, like per diem interest, or adjusted origination charges, or the charge or credit for the interest rate chosen.
After a complete loan application has been provided by the borrower, which of the following has the ultimate responsibility for correct and timely delivery of disclosures to the consumer:
A. The MLO.
B. The creditor.
C. The trustee.
D. The MLO and lender have equal responsibility.
The correct answer is B. Though the mortgage broker (MLO) often acts as an extension of the creditor, the law places the responsibility for correct and timely delivery of disclosures on the creditor.
If the MLO is preparing the Loan Estimate form but does not know the wholesale lender’s name, how must this be handled?
A. Leave the space on the form blank.
B. Mark the space N/A.
C. Mark the space to be determined.
D. The MLO must hold onto the form and apply for an extension of the 3 business day disclosure requirement.
The correct answer is A. This is the way federal regulations require this situation to be handled.
The new regulation in expressed in the Loan Estimate applies to all of the following, except:
A. Vacant land.
B. Loans made to a business entity.
C. Construction loans.
D. Loans made to certain trusts for tax and estate planning purposes.
The correct answer is B. To be properly prepared for the test, you should be familiar with all situations where the Loan Estimate applies and does not apply.
The new Loan Estimate form does not apply to which of the following, according to federal regulation:
A. Mobile homes.
B. Time shares.
C. Reverse mortgages.
D. All of the above.
The correct answer is D. The Loan Estimate also does not apply to loans made by a person or entity that makes five or fewer loans per year, and a loan made to a business entity rather than a natural person.
According to federal regulations, the new Loan Estimate form does not apply to which of the following:
A. FHA loans.
B. HELOCs.
C. VA loans.
D. Conventional purchase money loans.
The correct answer is B. Home equity lines of credit are exempt from the Loan Estimate form.
The basic idea of the new TRID requirements is which of the following:
A. To impose specific penalties on MLOs who are in violation of the new requirements.
B. To provide more information to the consumer so they can make better decisions.
C. To allow consumers to escape liability for loan obligations.
D. To raise the level of competition among MLOs.
Answer B
Business and commercial use under TILA would include all of the following, except:
A. Owner-occupied single family residence.
B. Non-owner occupied single family residence.
C. Tenant-occupied fourplex.
D. When credit is extended to purchase or rehabilitate a non-owner occupied house.
The correct answer is A. TILA does not apply to business and commercial use, but would apply to the owner-occupied single family residence.
TILA Under TILA, the standard way to inform consumers of the true cost of borrowing money is by disclosing which of the following: A. TIP. B. The nominal rate. C. APR. D. Finance charge.
The correct answer is C. The formula for Annual Percentage Rate includes the nominal rate, the points, costs, and fees of getting the financing. It is the all-inclusive cost of the loan over the life of the loan and as all lenders follow the formula, it allows consumers to compare apples and apples.
TIL Disclosures
Under TILA, how long must the loan broker (MLO) keep evidence of compliance with disclosure requirements?
A. Six months.
B. One year.
C. Two years.
D. Five years.
Answer C
Finance Charge
According to TILA, all of the following are included as a finance charge, except:
A. Points and loan fees.
B. Insurance against loss or damage to the property.
C. Seller’s points.
D. Premiums for insurance protecting the creditor.
The correct answer is C. Points paid by the seller are not part of a finance charge paid by the borrower.
Finance APR Charge
According to TILA, all of the following charges would be excluded from the finance charge, except:
A. Appraisal fee.
B. Fees for inspections for assess the condition of the property.
C. Appraisal review fees.
D. Credit report fees.
The correct answer is C. An appraisal review fee is a legitimate finance charge that would be added to the APR.
APOR
According to the 2009 amendment to TILA, all of the following are true regarding the average prime offer rate, except:
A. An APR is derived from average interest rates, points, and other loan pricing terms currently offered to consumers.
B. They represent mortgage transactions that have low-risk pricing charactertistics.
C. The average prime offer rate for both fixed and adjustable rate loans is published in a table and updated at least weekly.
D. The average prime offer rate includes data used for a construction loan.
The correct answer is D. Yes, loans for the initial construction of a dwelling are not included in the average prime offer rate.
APOR
Average prime offer rate data does not apply to any of the following loans, except:
A. A bridge loan with a term of 12 months or less.
B. A reverse-mortgage.
C. A loan used to purchase a home.
D. A HELOC.
The correct answer is C. Yes, average prime offer rate data would apply to a purchase money loan.
HPML
When a loan falls into the category of a high-priced loan, all of the following are restrictions imposed by the 2009 amendment to TILA, except:
A. Lenders are required to verify the repayment ability of the borrower.
B. The repayment schedule must consolidate at least two periodic payments to be paid in advance.
C. Prepayment penalties are limited to two years.
D. Impound accounts must be established for payment of taxes and insurance.
The correct answer is B. This is not a restriction imposed by TILA.
