☑️ Chapter 10: The SAFE Act Flashcards
The SAFE Act: Introduction:
The Housing and Economic Recovery Act (HERA) is a major housing law that serves multiple purposes:
The modernization of the _____ (FHA), FORECLOSURE prevention, and the ENHANCEMENT of consumer protections.
Title ____, the SECURE AND FAIR ENFORCEMENT FOR MORTGAGE LICENSING ACT also known as the SAFE Act, is a key component of HERA. The SAFE Act is designed to ENHANCE consumer protection and REDUCE fraud by requiring national _____ standards for mortgage training, including prelicensing education and annual continuing education.
Furthermore, under the SAFE Act, ALL mortgage loan originators MUST be either state-licensed or federally-registered. All mortgage loan originators seeking state licensure or currently holding a state license are REQUIRED to pass the national COMPONENT of the SAFE Mortgage Loan Originator Test, which includes a NATIONAL component, the ______ component.
A. Federal Housing Administration (FHA)
B. Title V
C. MINIMUM
D. Uniform State Test (UST)
The SAFE Act: Introduction:
The SAFE Act requires all states to implement an MLO licensing process that meets certain standards through the ____. The NMLS, which was ENACTED in January 2008 by the _________ (CBS) and the _____ (AARMR), is responsible for providing a centralized and standardized system for mortgage licensing that accommodates both the regulatory agencies and the mortgage industry. The NMLS website contains valuable comprehensive information for all MLOs, including specific details about the steps necessary to set up an account, schedule a test appointment, and access state-specific requirements.
A. Nationwide Mortgage Licensing System & Registry (NMLS)
B. Conference of State Bank Supervisors (CBS)
C. American Association of Residential Mortgage Regulators (AARMR)
The SAFE Act:
Objectives of the SAFE Act:
Among the objectives of the SAFE Act are to:
• Provide _____ license applications and reporting requirements for state-licensed MLOs.
• Provide a comprehensive licensing and SUPERVISORY _____.
• _______ and improve the flow of information to and between regulators.
• Provide increased ACCOUNTABILITY and _____ of MLOs.
• STREAMLINE the licensing process and ______ regulatory BURDEN.
• Enhance consumer PROTECTIONS and support anti-_____ measures.
• Provide consumers with _____, easy-to-access information about an MLO’s EMPLOYMENT history and any public DISCIPLINARY and ENFORCEMENT actions.
• Establish a means by which residential MLOs are REQUIRED to act in the BEST _____ of the consumer.
• Facilitate RESPONSIBLE behavior in the _____ mortgage market place.
• Provide comprehensive training and EXAMINATION requirements related to _____mortgage products.
• Facilitate the collection and disbursement of consumer ______ on behalf of state mortgage regulators.
A. UNIFORM
B. database
C. Aggregate
D. tracking
E. REDUCE
F. fraud
G. FREE
H. subprime
I. NON-TRADITIONAL
J. COMPLAINTS
The SAFE Act:
SAFE Act Mandates for States:
With the enactment of the SAFE Act, the CBS and the AARMR worked with to fulfill the mandates of the Act, including the requirements that states establish MINIMUM standards for the licensing or registration of all MLOs. The CBS and AARMR developed a ______ state law that met the minimum standards in the SAFE Act, including definitions, education and testing requirements, and financial responsibility and criminal background standards for MLOs. HUD reviewed the MODEL legislation and determined that it met the SAFE Act requirements. Therefore, any state legislation that follows the MODEL also MEETS the applicable minimum requirements of the SAFE Act.
A. HUD
B. Model
The SAFE Act:
Mortgage Loan Originator
Definition:
The SAFE Act defines a licensed mortgage loan originator as an individual who:
• _____ a residential mortgage loan application.
• Offers or ______ terms of a residential mortgage loan for compensation or gain.
An individual “assists a consumer in obtaining or applying to obtain a residential mortgage loan” by, among other things, ADVISING on loan terms (including rates, fees, and other costs), PREPARING loan packages, or COLLECTING information on behalf of the consumer with regard to a residential mortgage loan.
The definition of Mortgage Loan Originator does NOT include:
• Any individual who performs _____ administrative or clerical tasks on behalf of a licensee.
• A person or entity that ONLY performs real estate _____ activities and is licensed or registered in accordance with applicable state law, unless the person or entity is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator.
• A person or entity solely involved in EXTENSIONS of credit relating to _____ plans.
• An individual who is a ____ MLO, employed by a covered institution, and who has a unique identifier through NMLS.
• An individual who is employed by a ______ agency to act as a loan originator.
• An individual employed by a bona fide _____ organization to act as a loan originator.
NOTE: This definition differs from the ____ definition.
A. Takes
B. Negotiates
C. Purely
D. Brokerage
E. Timeshare
F. Registered
G. Government
H. Non-Profit
I. TILA
The SAFE Act:
Mortgage Loan Originator
Definition:
A _____ or _____ who does NOT represent to the public, through advertising or other means of communicating or providing information (including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items), that he or she can or will perform any of the activities of a loan originator shall NOT be required to be a STATE-Licensed mortgage loan originator.
An _________ CONTRACTOR may NOT engage in residential mortgage loan origination activities as a loan processor or underwriter unless such independent contractor IS a state-licensed mortgage loan originator.
The same exclusions listed above that apply to licensed mortgage originators above also apply here.
A. Loan Processor
B. Underwriter
C. Independent Contractor
The SAFE Act:
Mortgage Loan Originator
Definition:
The SAFE Act requires all residential mortgage loan originators to be issued and be identified by a unique identifier through NMLS as either:
• ________ MLO: Any mortgage loan originator EMPLOYED by a DEPOSITORY institution, a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency, or an institution regulated by the _____ Administration.
• ________ MLO: A mortgage loan originator NOT EMPLOYED by a DEPOSITORY institution, a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency, or an institution regulated by the Farm Credit Administration AND is LICENSED by a STATE.
NOTE: An independent contract processor or underwriter working for MORE than _____ ORIGINATING Entity must be licensed as a mortgage _____ or company.
A. Federally-Registered
B. Farm Credit Administration
B. State-Licensed
C. One
D. Broker
The SAFE Act:
Other Definitions:
______ or ______ Tasks: The RECEIPT, COLLECTION, and DISTRIBUTION of information common for the processing or underwriting of a loan in the mortgage industry and COMMUNICATION with a consumer to OBTAIN information necessary for the processing or underwriting of a residential mortgage loan.
A. Administrative or Clerical Tasks
The SAFE Act:
Other Definitions:
_______: Has the same meaning as in Section 3 of the Federal Deposit Insurance Act and is defined as any BANK or SAVINGS association and ALSO includes any CREDIT UNION.
Depository Institution
The SAFE Act:
Other Definitions:
________ Agencies: The Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the National Credit Union Administration, and the Federal Deposit Insurance Corporation.
A. Federal Banking Agencies
The SAFE Act:
Other Definitions:
________ or _______: In general, an individual who performs clerical or support duties at the direction of and subject to the supervision and instruction of:
• A state-_______mortgage loan originator; or
• A ______ mortgage loan originator.
“________or support duties” may include:
• The RECEIPT, COLLECTION, DISTRIBUTION, and ANALYSIS of information common for the processing or underwriting of a residential mortgage loan.
• Communicating with a consumer to obtain the information necessary for the processing or underwriting of a loan to the extent that such COMMUNICATION does NOT include OFFERING or ______ loan rates or terms, or COUNSELING consumers about residential mortgage loan rates or terms.
A. Loan Processor or Underwriter
B. Licensed
C. Federally Registered
D. Clerical
E. Negotiating
The SAFE Act:
Other Definitions:
______ Mortgage Product: Any mortgage product other than a 30-year fixed-rate mortgage.
A. Non-Traditional Mortgage Product
The SAFE Act:
Other Definitions:
Real Estate _______ Activity: Any activity that involves offering or providing real estate brokerage services to the public, including:
• Acting as a real estate agent or real estate BROKER for a buyer, seller, lessor, or lessee of real property.
• Bringing TOGETHER parties interested in the sale, purchase, lease, rental, or exchange of real property.
• NEGOTIATING, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property (other than in connection with providing financing with respect to any such transaction).
• Engaging in ANY activity for which a person engaged in the activity is REQUIRED to be registered or licensed as a real estate agent or real estate broker under any applicable law.
• OFFERING to engage in any activity, or acting in any capacity described above.
A. Real Estate Brokerage Activity
The SAFE Act:
Other Definitions:
_______ Mortgage Loan Originator: Is any individual who:
A. Meets the definition of mortgage loan originator and is an employee of:
1. A DEPOSITORY institution.
2. A SUBSIDIARY that is:
a) Owned and controlled by a DEPOSITORY institution; and
b) Regulated by a FEDERAL banking agency.
3. An institution regulated by the ______ Credit Administration.
B. Is registered with, and maintains a unique identifier through the Nationwide Mortgage Licensing System and Registry.
A. Registered
B. Farm
The SAFE Act:
Other Definitions:
________MORTGAGE LOAN: Any loan primarily for PERSONAL , family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in Section 103(v) of the Truth in Lending Act) or residential real estate upon which is constructed or intended to be constructed a dwelling (as so defined).
A. Residential Mortgage Loan
The SAFE Act:
Other Definitions:
A Defined _______: This term means any STATE of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the Northern Mariana Islands.(12 USC § 5102.11 State)
A. State
The SAFE Act:
Other Definitions:
_______ -Licensed Mortgage Loan Originator:
Any individual who:
A. IS a loan originator.
B. Is NOT an employee of:
1. A DEPOSITORY institution.
2. A subsidiary that is:
a) Owned and controlled by a DEPOSITORY institution; and
b) REGULATED by a FEDERAL banking agency.
3. An institution regulated by the FARM Credit Administration.
C. Is LICENSED by a STATE or by the SECRETARY under SECTION ______ AND REGISTERED as a loan originator with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry (NMLS).
A. State-Licensed Mortgage Loan Originator
B. Section 1508
The SAFE Act:
SAFE Act Licensing Requirements:
To meet its objectives, the SAFE Act requires that applicants for an MLO license must:
• Submit to a BACKGROUND check (including fingerprints, state, and national criminal check).
• Provide PERSONAL history and experience.
• Complete ____ hours of approved pre-licensing education.
• Achieve at least _____% test score on National Test.
• Demonstrate financial responsibility, character, and general fitness.
• Be covered by either a net worth or _____ or pay into a state fund.
• Provide authorization to obtain an independent _____ report and information relative to any administrative, civil, or criminal findings.
• Never have had an MLO license ______ in any government jurisdiction a subsequent formal vacating of such revocation is not considered a revocation).
• Not have been convicted of or pled guilty or NOLO CONTENDERE to a ______ in a domestic, foreign, or military court during the ______-year period PRECEDING the date of the application for licensing and registration or at ANY time preceding such date of application, IF such felony involved an act of FRAUD, DISHONESTY, or a BREACH of TRUST, or MONEY LAUNDERING.
NOTE: Any Court Ordered _____ of a conviction is NOT considered a CONVICTION.
• Meet the requirements according to revisions to $1026.36 Prohibited acts or practices and certain requirements for credit secured by a dwelling) as an employee of a _______ institution.
A. 20 Hours
B. 75%
C. Surety Bond
D. Credit
E. Revoked
F. Felony
G. 7 Year
H. PARDON
I. Depository
The SAFE Act:
Mortgage Loan Originator Test:
In order to meet the Written test requirement as defined by the state, an individual must PASS, in accordance with the standards established under this subsection, a qualified written test developed by the NMLS and administered by a test provider approved by the NMLS based upon reasonable standards.
NOTE: All state-licensed MLOs MUST PASS the NATIONAL component of the SAFE Mortgage Loan Originator Test.
Passing the Uniform State Content (UST) component of the national test qualifies an MLO to apply for licensure in a participating state, subject to any additional state requirements.
The national component covers the following topics:
• Federal _____-related laws (24%)
• _____ mortgage knowledge (20%)
• Mortgage loan origination _____ (27%)
• Code Of _____ (18%)
• _____ State Content (11%)
A. Mortgage
B. General
C. Activities
D. Ethics
E. Uniform
The SAFE Act Licensing Requirements:
Mortgage Loan Originator Test: MLO Prelicensing Education Requirements:
MINIMUM loan originator license requirements:
To become a state-licensed MLO, an applicant must complete at least _______ hours of APPROVED PRE-LICENSING education, which includes:
• ______ law and regulation (3 hours)
• ______, including fraud, consumer protection, and fair lending (3 hours)
A. 20 Hours
B. FEDERAL
C. ETHICS
The SAFE Act:
Mortgage Loan Originator Test:
Resource Assistance:
The _____ website provides many resources, including information regarding the SAFE Mortgage Loan Originator Test. Each test appointment includes an additional 30-35 minutes for completing a tutorial and an optional candidate survey. Test enrollment fees are non-refundable and non-transferable. A detailed guide for the entire testing process (from creating an enrollment and scheduling a testing appointment to what to expect at the testing center, etc.) is available online.
A. NMLS
The SAFE Act:
Mortgage Loan Originator Test:
Retaking the Exam:
According to the HUD final rule implementing the SAFE Act, any candidate may ONLY take and fail the national component of the SAFE Mortgage Loan Originator Test with Uniform State Content _____ CONSECUTIVE times, which are separated by a _____-day waiting PERIOD. After the THIRD FAILURE, that candidate must wait at LEAST _____ MONTHS before taking the test for the FOURTH time.
A. 3
B. 30 Days
C. 6 Months
The SAFE Act:
Mortgage Loan Originator Test:
Character and Fitness:
The ______ state legislative LANGUAGE of the SAFE Act indicates that an applicant must demonstrate financial responsibility, character, and general fitness such as to COMMAND the CONFIDENCE of the community and to warrant a DETERMINATION that the MLO will operate honestly, fairly, and efficiently within the purposes of this Act.
A person has shown that he is NOT financially responsible when he has shown a DISREGARD in the management of his OWN financial condition. A determination that an individual has NOT SHOWN FINANCIAL RESPONSIBILITY may include, but NOT be limited to:
• Current outstanding JUDGEMENTS, except judgments solely as a result of ______ expenses.
• Current outstanding _____ liens or other GOVERNMENT liens and filings.
• FORECLOSURES within the past ____ years.
• A PATTERN of SERIOUSLY DELINQUENT accounts within the past ______ years.
A. MODEL
B. Medical
C. Tax
D. Three
C. Three
