Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Mortgage Loan Originator Exam > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

What is the primary purpose of the SAFE Act?

A

To enhance consumer protection and reduce fraud by setting minimum standards for licensing and registration of state-licensed mortgage loan originators.

Chapter 2, p. 74

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the two organizations authorized under the SAFE Act?

A

The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR).

Chapter 2, p. 74

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the NMLSR, and what is its purpose?

A

The Nationwide Mortgage Licensing System and Registry; it provides a uniform system for licensing and tracking mortgage loan originators.

Chapter 2, p. 74

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the Model State Law in the SAFE Act?

A

A framework created by CSBS and AARMR to help states establish compliant licensing systems for mortgage loan originators.

Chapter 2, p. 74

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Name two objectives of the NMLSR.

A

1) Enhance consumer protections. 2) Provide uniform license applications and reporting requirements.

Chapter 2, p. 75

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the role of the Consumer Financial Protection Bureau (CFPB) in the SAFE Act?

A

The CFPB has rule-making authority and oversees the implementation of Regulation G and Regulation H.

Chapter 2, p. 76

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are considered ‘administrative or clerical tasks’ in mortgage processing?

A

Tasks like receiving, collecting, or analyzing loan application information, provided they do not include offering or negotiating loan terms.

Chapter 2, p. 76

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is the annual renewal period for MLO licenses?

A

November 1 through December 31.

Chapter 2, p. 76

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Define ‘mortgage loan originator’ (MLO).

A

An individual who takes a mortgage application and offers or negotiates terms for compensation or gain.

Chapter 2, p. 77

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is a ‘nontraditional mortgage product’?

A

Any mortgage product other than a 30-year fixed-rate mortgage.

Chapter 2, p. 77

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are the minimum requirements to obtain an MLO license?

A

Background check, 20 hours of pre-licensure education, passing the NMLS test with at least 75%, and meeting financial responsibility standards.

Chapter 2, p. 82

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How many hours of pre-licensing education are required, and what do they include?

A

20 hours, including 3 hours of federal law, 3 hours of ethics, 2 hours of nontraditional mortgage products, and 12 hours of general education.

Chapter 2, p. 82

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

How many times can an individual retake the NMLS exam after failing?

A

Three consecutive times with a 30-day waiting period, after which they must wait six months.

Chapter 2, p. 82

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the minimum passing score for the NMLS exam?

A

75%.

Chapter 2, p. 82

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is Temporary Authority to Operate?

A

It allows certain MLOs transitioning between states or from federally registered institutions to originate loans for up to 120 days while their application is processed.

Chapter 2, p. 83

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What must MLOs with Temporary Authority do to maintain eligibility?

A

Be continuously registered or licensed, with no disqualifying events such as license revocation or felony convictions.

Chapter 2, p. 83

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What continuing education is required for MLOs?

A

8 hours annually, including 3 hours of federal law, 2 hours of ethics, 2 hours on nontraditional mortgages, and 1 hour of general education.

Chapter 2, p. 84

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is the Successive Year Rule for continuing education?

A

MLOs cannot retake the same course for credit in consecutive years.

Chapter 2, p. 84

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

When do MLO licenses expire?

A

December 31 of the year they were issued.

Chapter 2, p. 84

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is the penalty for a lapsed MLO license?

A

MLOs must complete late CE requirements before the license can be renewed.

Chapter 2, p. 84

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is the Mortgage Call Report (MCR)?

A

A report submitted to the NMLS that provides information on the financial condition and loan activity of licensees.

Chapter 2, p. 85

22
Q

What are the two components of the Standard MCR?

A

1) Residential Mortgage Loan Activity (RMLA) and 2) Financial Condition (FC).

Chapter 2, p. 85

23
Q

When is the Residential Mortgage Loan Activity (RMLA) report due?

A

Quarterly, within 45 days of the end of each calendar quarter.

Chapter 2, p. 85

24
Q

What information must be included in MLO advertising?

A

The MLO’s unique identifier.

Chapter 2, p. 86

25
Q

What are prohibited acts under the SAFE Act?

A

Fraud, misrepresentation, deceptive practices, failing to disclose required information, and influencing appraisers.

Chapter 2, p. 86

26
Q

What is the maximum civil penalty for violating the SAFE Act?

A

$25,000 per violation.

Chapter 2, p. 88

27
Q

What is the role of the CFPB under the SAFE Act?

A

The CFPB has backup authority to establish and maintain the licensing system if the NMLS fails to meet requirements.

Chapter 2, p. 88

28
Q

What is the Bureau’s authority regarding loan originator records?

A

The Bureau can examine records, summon individuals, and conduct investigations to ensure compliance.

Chapter 2, p. 88

29
Q

What is required for an independent contractor loan processor to operate legally?

A

They must be licensed as an MLO.

Chapter 2, p. 81

30
Q

What defines financial irresponsibility under the SAFE Act?

A

Outstanding judgments (excluding medical), tax liens, foreclosures, or a pattern of seriously delinquent accounts within three years.

Chapter 2, p. 82

31
Q

What is the NMLSR’s role in MLO background checks?

A

It processes fingerprints for national and state criminal history checks.

Chapter 2, p. 75

32
Q

What is the penalty for operating without an MLO license?

A

Civil and criminal penalties, including fines and potential imprisonment.

Chapter 2, p. 86

33
Q

What is an Immediate Family Member under the SAFE Act?

A

A spouse, child, sibling, parent, grandparent, or grandchild, including step and adoptive relationships.

Chapter 2, p. 77

34
Q

What is the definition of a Residential Mortgage Loan?

A

A loan for personal, family, or household use secured by a dwelling or residential real estate.

Chapter 2, p. 77

35
Q

What are the licensing requirements for supervised loan processors?

A

They are not required to be licensed if they work under a licensed MLO.

Chapter 2, p. 81

36
Q

What is required for an MLO license renewal?

A

Meeting minimum standards, completing continuing education, and updating registration information.

Chapter 2, p. 84

37
Q

What is the annual reporting requirement for the Financial Condition (FC) component of the MCR?

A

It must be submitted within 90 days of the fiscal year-end.

Chapter 2, p. 85

38
Q

What actions can a state take against MLOs violating the SAFE Act?

A

Deny, suspend, revoke, or condition licenses; impose fines; and issue cease-and-desist orders.

Chapter 2, p. 88

39
Q

What is the purpose of the unique identifier assigned by the NMLSR?

A

To facilitate electronic tracking and provide public access to MLO history and disciplinary actions.

Chapter 2, p. 77

40
Q

What is a Covered Financial Institution under Regulation G?

A

Any federally insured bank, credit union, or Farm Credit System institution.

Chapter 2, p. 77

41
Q

What is a Licensed Not Required scenario?

A

Employees involved only in timeshare plans, supervised clerical tasks, or nonprofit MLO activities.

Chapter 2, p. 81

42
Q

What are prohibited compensation practices for MLOs?

A

Dual compensation and steering borrowers to less favorable terms for higher commissions.

Chapter 2, p. 86

43
Q

How often must MLOs update registration information?

A

Within 30 days of any changes.

Chapter 2, p. 84

44
Q

What defines a break in service for Temporary Authority?

A

A period exceeding 14 calendar days.

Chapter 2, p. 83

45
Q

What is the penalty for influencing appraisers under the SAFE Act?

A

Civil and criminal penalties, including fines up to $25,000.

Chapter 2, p. 86

46
Q

What is the role of the Mortgage Call Report (MCR) in state supervision?

A

It aids state regulators in monitoring compliance and scheduling examinations.

Chapter 2, p. 85

47
Q

What actions require MLO license suspension?

A

Violations of state or federal law, or misrepresentation in license applications.

Chapter 2, p. 88

48
Q

What must MLOs do before advertising specific loan terms?

A

Ensure the terms are actually available at the time of the advertisement.

Chapter 2, p. 86

49
Q

What happens if an MLO license is revoked?

A

The individual cannot be licensed in any jurisdiction unless the revocation is formally vacated.

Chapter 2, p. 82

50
Q

What are examples of financial irresponsibility that disqualify an MLO?

A

Foreclosures, tax liens, or delinquent accounts within the past three years.

Chapter 2, p. 82

Mortgage Loan Originator Exam (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions