☑️ Chapter 12: Uniform State Test Flashcards
Uniform State Test:
HERA and the SAFE Act:
The Housing and Economic Recovery Act (HERA) of 2008, signed into law on July 30, 2008, constitutes a major piece of legislation designed to assist with the recovery and ______ of America’s residential housing market - from modernization of the _______, to foreclosure prevention, to enhancing consumer protections. The ______Act is a key component of HERA.
A. revitalization
B. Federal Housing Administration
C. SAFE Act
Uniform State Test:
HERA and the SAFE Act:
The SAFE Act is designed to ENHANCE consumer protection and REDUCE fraud by requiring states to establish minimum standards for the _____ and registration of STATE-licensed MORTGAGE LOAN ORIGINATORS. It also called for the _______ (CBS) and the _______ (AARMR) to establish and maintain a NATIONWIDE mortgage LICENSING system and REGISTRY for the residential mortgage industry. The objectives and other information about the legislation are available for review.
A. licensing
B. Conference of State Bank Supervisors (CBS)
C. American Association of Residential Mortgage Regulators (AARMR)
Uniform State Test:
HERA and the SAFE Act:
The SAFE Act required states to have the licensing and registration system in place by: (1) July 31, 2009 for states whose legislatures meet ANNUALLY; and (2) July 31, 2010 for states whose legislatures meet BIENNIALLY.
The CBS and AARMR spent considerable time reaching out to states and the financial services industry regarding the development of the _______ (NMLS) and the development of legislation to meet the requirements of the SAFE Act. The CBS and AARMR developed a ________ (MSL) designed to assist and facilitate states in the enactment of legislation on MLO licensing that complies with the SAFE Act within the deadlines imposed by the SAFE Act.
A. Nationwide Mortgage Licensing System and Registry (NMLSR/NMLS)
B. model state law (MSL)
Uniform State Test:
State Regulatory Authority:
Title V-SAFE Act:
The SAFE Act is a federal law that has jurisdiction in ALL states, the District of Columbia, as well as the U.S. territories of Puerto Rico, U.S. Virgin Islands, and Guam.
> Mandates of Public Law 110-289:
• _______ : All residential MLOs must be either state-licensed OR federally registered.
• _______: All states are required to have a system of licensing in place for residential MLOs that meets national definitions and minimum standards, including among other things: Criminal history and credit background checks, pre-licensure education, pre-licensure testing, continuing education, net worth, and surety bond or recovery fund.
• All states must license MLOs through the NMLS.
NOTE: The 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.
A. Industry
B. States
C. state
Uniform State Test:
State Regulatory Authority:
State Regulatory Authority Agencies:
The regulatory authority agency for each state may be referred to by a name similar to one of the following examples:
• ________
• ________
• ________
A. Department of Financial Institutions
B. Mortgage Regulatory Commission
C. Division of Banking
Uniform State Test:
State Regulatory Authority:
State Regulatory Agency Authority Responsibilities:
Under the SAFE Act, the minimum requirements for each state’s MLO regulatory authority include that it MUST:
• Must provide effective _____ and ______ of the law, including the suspension, termination, or nonrenewal of a license for a violation of any state or federal law.
• Must ensure that all state-licensed MLOs operating in the state are ______ with the NMLS.
• Must regularly report _____, as well as _____\ actions and other relevant information, to the NMLS.
• Must have a _____ in place for challenging information contained in the NMLS.
• Must have an established mechanism to ______ for individuals acting as MLOs in the state without a valid license or registration.
• Must have ONE of these financial protection options in place:
a. An established minimum _____
b. _______ requirement that reflects the dollar amount of loans originated by a residential MLO.
c. established ______ paid into by MLOs.
A. supervision and enforcement
B. registered
C. violations
D. enforcement
E. process
F. assess civil money penalties
G. net worth
H. surety bond
H. Recovery Fund
Uniform State Test:
State Regulatory Authority:
Broad Administrative Authority:
The state regulatory authority must have broad administrative authority administer, interpret, and enforce __the SAFE Act, and to make the rules or regulations implementing the Act _____, in order to carry out the intentions of the legislature.
A. known
Uniform State Test:
State Regulatory Authority:
State Examination Authority:
In addition to ANY authority allowed under state law, a state-licensing agency MUST have the authority to conduct _____ and ______.
A. investigations and examinations
Uniform State Test:
State Regulatory Authority:
Authority to Access Information:
For purposes of INITIAL licensing and license MAINTENANCE, the state shall have _____ to ALL MLO or mortgage entity records.
NOTE: it is prohibited to destroy or alter these records.
A. access
Uniform State Test:
State Regulatory Authority:
Investigation, Examination and Subpoena Authority:
The state regulatory authority may review, investigate, or examine any licensee, individual, or person subject to the SAFE Act, as OFTEN as ______ in order to carry out (i.e., AUDIT records) the purposes of the Act.
A. necessary
Uniform State Test:
State Regulatory Authority:
Reports and Other Information:
Each licensee, individual, or person subject to the SAFE Act shall MAKE or COMPILE ______ or prepare other information as directed by the state regulatory authority in order to carry out the purposes
A. Reports
Uniform State Test:
State Regulatory Authority:
Mortgage Call Reports (MCRs)
Companies that hold a state license or state registration through NMLS will be REQUIRED to complete a _______. Fannie Mae and Freddie Mac Seller ________ or Ginnie Mae ______ must submit an _______.
The MCR contains two components:
1. _______ - This component collects application, closed loan, individual MLO, line of credit, servicing, and repurchase information by STATE.
2. ________ - This component collects financial information at the _______ level.
It does not have to be completed by the state.
A. Mortgage Call Report (MCR)
B. Servicers
C. Issuers
D. Expanded MCR
E. Residential Mortgage Loan Activity (RMLA)
F. Financial Condition (FC)
G. company
Uniform State Test:
State Regulatory Authority:
Mortgage Call Reports (MCR)
• The ______ component is due quarterly, within _____ days of the end of the calendar quarter.
• The ________ component for standard filers is due annually, within ______ days of your company’s Fiscal Year End as reported in the Company _______ Form. For _______ filers, the FC component is due QUARTERLY at the SAME time as the ______.
A. RMLA
B. 45 days
C. FC
D. 90 days
E. MU1 Form
F. EXPANDED
G. RMLA
Uniform State Test:
State Regulatory Authority:
Control of and Access to Records:
In making any examination or investigation authorized by the SAFE Act, the state regulatory authority may ______ ACCESS to ANY documents and records of the licensee or person under examination or investigation.
A. control
Uniform State Test:
State Regulatory Authority:
Additional Authority:
In order to carry out the purposes of the SAFE Act, the state regulatory authority may ______ attorneys, accountants, or other professionals and specialists as examiners, auditors, or investigators to conduct or assist in the conduct of examinations or investigations.
A. retain
Uniform State Test:
State Regulatory Authority:
Penalties:
The state regulatory authority may impose a civil penalty on an MLO or person subject to the SAFE Act, if the state regulatory authority finds, after notice and opportunity for hearing, that such MLO or person subject to the Act, violated or failed to comply with any requirement of the SAFE Act, or any regulation prescribed by the state regulatory authority under the Act, or order issued under authority of the Act.
The maximum amount of penalty for EACH act or omission that is a violation of the Act is $_______.
ANNUALLY the CFPB may adjust this penalty amount for INFLATION. In 2022, this amount was adjusted to $_______.
A. $25,000
B. $31,928
Uniform State Test:
State Regulatory Authority:
State Department Obligations:
The state regulatory authority:
• Must establish a PROCESS whereby MLOs may _____ information entered into the NMLS.
• May be responsible for setting, or _______ as necessary, RENEWAL or REPORTING dates.
• Must establish requirements for amending, transferring, or surrendering a license or any other license status _____ the state regulatory authority deems necessary for participation in the NMLS.
Fees to apply for or renew licenses may be ______ through the NMLS.
A. challenge
B. resetting
C. change
D. remitted
Uniform State Test:
State Regulatory Authority:
Regulatory Authority Limitations:
State and federal regulating authorities do NOT have the authority, nor are they empowered, to impose a prison sentence.
MLOs, processors, and underwriters employed by credit unions and depository institutions (local, state, and federal banks and savings associations) are _____ required to be state-licensed under the SAFE Act.
The EXCEPTION requires that the employees of these institutions be registered through the NMLS and have an NMLS Unique Identifier.
A. NOT
Uniform State Test:
State Regulatory Authority:
CFPB Examinations:
Any appointed examiner shall have power, on behalf of the CFPB (Bureau), to make any examination of any MLO, operating at any time, in any state, which is subject to a licensing system established by the Bureau, whenever the Bureau determines that an examination of any MLO is necessary to determine the compliance by the MLO with minimum ______ of the SAFE Act.
The cost of conducting any examination of any MLO operating in any state shall be assessed by the Bureau and may have to be paid by the MLO or the employing entity, or BOTH.
A. requirements
Uniform State Test:
Compliance:
Prohibited Conduct and Practices:
It is a violation of the SAFE Act for a person or individual subject to the SAFE Act to:
• Directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers or lenders or to DEFRAUD any person.
• Engage in any unfair or DECEPTIVE practice toward any person.
• Obtain PROPERTY by fraud or misrepresentation.
• Solicit or enter into a contract with a borrower that provides in substance that the person or individual subject to this Act may earn a fee or commission through “_______” to obtain a loan, even though NO loan is actually obtained for the borrower.
• Solicit, advertise, or enter into a contract for SPECIFIC interest rates, points, or other financing terms, UNLESS the terms are actually available at the TIME of soliciting, advertising, or contracting.
• Conduct any business covered by the SAFE Act _____ holding a valid license as required under the Act, or assist or aid and abet any person in the conduct of business under the SAFE Act WITHOUT a valid license as required under the Act.
• Fail to make DISCLOSURES as required by the SAFE
Act and any other applicable state or federal law, including regulations thereunder.
• Fail to COMPLY with the rules or regulations promulgated under the SAFE Act, or fail to comply with any other state or federal law, including the rules and regulations thereunder, applicable to any business authorized or conducted under the SAFE Act.
A. best efforts
B. without
Uniform State Test:
Compliance:
Prohibited Conduct and Practices:
It is a violation of the SAFE Act for a person or individual subject to the SAFE Act to:
• Make, in any manner, any false or deceptive statement or representation, or optional ADD-ON, including, with regard to the rates, points, or other financing terms or conditions for a residential mortgage loan, or engage in BAIT AND SWITCH advertising.
• NEGLIGENTLY make any false statement or knowingly and willfully make any omission of material fact in connection with any information or reports FILED with a governmental agency or the NMLS or in connection with any investigation conducted by the ________ or another governmental agency.
• Make any payment, THREAT, or promise, directly or indirectly, to any person for the purposes of ________ the independent judgment of the person in connection with a residential mortgage loan, or make any payment, threat, or promise, directly or indirectly, to any appraiser of a property, for the purposes of influencing the independent judgment of the appraiser with respect to the value of the property.
• Collect, charge, attempt to collect, or charge or use or propose any agreement ______ to collect or charge any fee PROHIBITED by the SAFE Act.
• Cause or require a borrower to obtain property insurance coverage in an amount that EXCEEDS the replacement cost of the improvements as established by the property insurer.
• Fail to TRUTHFULLY account for monies belonging to a party to a residential mortgage loan transaction.
A. Commissioner
B. influencing
C. purporting
Uniform State Test:
Compliance:
Required Conduct:
The following conduct and activities would require an individual to be licensed as an MLO through the SAFE
Act:
• _______ a loan application
• _______ or negotiating loan terms
• Receiving any “______” for compensation or gain when performing as an MLO
• Engaging in the business of an MLO with _______ or REPETITION
• Performing as a loan processor or underwriter who is engaged in the business of an ______ while employed as an independent contractor
• Functioning as an ______ who is engaged in the business of an MLO
A. Taking
B. Offering
C. thing of value
D. habitualness
E. MLO
F. attorney
Uniform State Test:
Compliance:
Taking a Loan Application:
The SAFE Act is implemented through Regulation _____, Part 1008 - SAFE Mortgage Licensing Act - State Compliance and Bureau Registration System, which is under Title ____, Banks and Banking, of the Code of Federal Regulations (CFR).
Taking a residential mortgage loan application, within the meaning of Section 1008.103(c)(1), means:
Receipt by an individual, for the purpose of facilitating a decision whether to extend an offer of loan terms to a borrower or prospective borrower, of an application as defined in Section _______ (a request in any form for an offer, or a response to a solicitation of an offer; of residential mortgage loan terms, and the information about the borrower or prospective borrower that is customary or necessary in a decision whether to make such an offer).
A. Regulation H
B. Title 12
C. Section 1008.23
Uniform State Test:
Compliance:
Taking a Loan Application: Example #1:
An individual “takes a residential mortgage loan application,” even if the individual:
• Has received the borrower’s or prospective borrower’s request or information _______.
Section 1008.103(c)(1) provides that an individual takes an application, whether he receives it “_____ or ______” from the borrower or prospective borrower.
This means that an individual who offers or negotiates residential mortgage loan terms for compensation or gain CANNOT avoid licensing requirements simply by having another person physically receive the application from the prospective borrower and then pass the application to the individual.
A. indirectly
B. directly or indirectly
Uniform State Test:
Compliance:
Taking a Loan Application: Example #2:
An individual “takes a residential mortgage loan application,” even if the individual:
• Is NOT responsible for _______ information. An individual who takes application information from a borrower or prospective borrower and is not responsible for verifying that information STILL takes the loan application.
This example highlights the fact that just because an individual is a mortgage broker who collects and sends information to a lender who makes the ultimate lending decision, that does NOT mean that the individual who receives the information is NOT _______ an application.
A. verifying
B. taking
Uniform State Test:
Compliance:
Taking a Loan Application: Example #3:
An individual “takes a residential mortgage loan application,” even if the individual:
• ONLY inputs the information into an online application or other _____ system, or
• Is not involved in approval of the loan, including determining whether the consumer QUALIFIES for the loan.
Similar to an individual who is not responsible for ______, an individual can still “take a residential mortgage loan application” even if she is NOT ultimately responsible for approving the loan.
For example, a mortgage broker can take a residential mortgage loan application, even though it is passed on to a lender for a decision on whether the borrower qualifies for the loan and for the ultimate loan approval. Therefore, she MUST be _______.
A. automated
B. verification
C. licensed
Uniform State Test:
Compliance:
Exempt Activities - Taking a Loan Application:
Let’s compare some examples of activities that do not constitute “taking a loan application” and would not require an MLO to be state-licensed.
NOT Taking a Loan Application:
An individual does not take a loan application merely because the individual:
• Receives a loan application through the mail and forwards it, WITHOUT_______, to loan approval personnel.
The CFPB interprets the term “takes a residential mortgage loan application” to EXCLUDE an individual whose ONLY role with respect to the application is physically handling a completed application form, or transmitting a completed form to a lender on behalf of a borrower or prospective borrower (i.e., administrative or clerical role).
A. review
