MLO Exam Flashcards by Joe Shaw

How long does Chapter 7 need to be discharged before getting a conventional loan?

4 yrs

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How soon can a person obtain a conventional loan after a chapter 13 bankruptcy?

4 Years

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What are the protected classes?

Sex Religion National Origin Color Age Race Martial Status Public Assistance

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What is a 1003?

Uniform Residential Loan Application

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What does CLTV Stand For?

Combined Loan to Value

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What does UFMIP mean?

Up Front Mortgage Insurance Premium

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What is the MARS rule

makes it illegal for a mortgage assistance relief provider to collect money from a consumer unless they deliver, and the customer agrees to a written offer of mortgage relief from the customer’s lender or servicer. It also requires them to disclose they are not associated with the government or the distressed borrower’s lender or servicer.

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What is CMT?

Constant Maturity Treasury

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What must be done to change your personal information by a Credit Card Company or bank under FACTA?

They must send an email or letter asking if you requested the change. Note: They will make the changes unless you respond telling them not to.

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What specific requirements does HOEPA have?

pre-loan counseling for all high-cost home loans, full appraisals and escrows for the first five (5) years

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What is the initial guarantee fee on a USDA loan?

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What is the fine for violation of the SAFE act?

$25,000 per instance

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Loan that meets guildlines that Fannie Mae and Freddie Mac can buy

Conforming Loan

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What percentage does a loan to value have to fall below for PMI to be removed?

78%

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How do you calculate monthly interest?

First find out the interest for the year, $180,000 x .05% = $9000. Divide $9,000 by 12 to get the monthly interest, that is $750.

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How much is the fine for improper record keeping?

$40,000 per violation

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What does CRA stand for?

Credit Reporting Agency

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How long does Chapter 7 need to be discharged before getting a FHA loan?

2 yrs

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When you order an insurance binder on a borrower’s loan file the one page sheet that summarizes all of the insurance information is called

Declaration page

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What is SOFR?

Secured Overnight Financing Rate

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Under what circumstances would it be ok to consider capital gains as income for a Freddie Mac or Fannie Mae loan?

The income can be used as long as it can be verified as continuing for the last two years on their tax returns.

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When would you be investigated?

When a complaint is made

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What loans have to be reported under HDMA (reg C) and who collects that data?

All loans and FFIEC

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According to the Fair Credit Reporting Act, a Chapter 7 bankruptcy could remain on a credit report for how long?

10 years

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What act restricts the disclosure of non-public information?

The GLBA

Who gets the YSP and what does it stand for

Yield Spread Premium - The Broker

The Nationwide Multistate Licensing System and Registry is developed and maintained by

Both the CSBS and AARMR were responsible for the creation of the NMLS.

How long before closing do you have to deliver the appraisal?

3 business days

What federal law states that a lender cannot refuse to consider alimony or child support as income?

Equal Credit Opportunity Act

What form is used most commonly for residental appraisals?

Form 1004 / URAR (Uniform Residential Appraisal Form)

How much does the APR have to increase to trigger a new 3 day waiting period?

1/8th of a percent (.125)

How long do you have to make an underwriting decision under ECOA?

30 days - approved, cancelled, or rejected

How do you determine discount points and origination fee?

First determine down payment. Subtract down payment from total purchase price. Then take origination percentage and loan discount points from the loan amount.

A loan originator who applies to be licensed again must

complete the Continuing Education requirements for the last year in which the license was held.

What is TILA?

The Truth in Lending Act

The red flag rule was mandated by what?

FACTA

How long after a notice does the borrower have to opt out of having their NPI shared?

30 days from notice

What is DTI

Debt to Income

How does Continuing Education break down?

3hr Fed / 2hr Ethics / 2hr Non-traditional / 1hr Elective

How long do you have to deliver the loan estimate from a signed application?

3 Business Days - Or can prove it was mailed within 3 business days if not electronic.

How long do you have to keep records on borrowers?

All Files for 3 years / Closing disclosures 5 years

What else is RESPA known as

Regulation X

Is the CFPB a federal banking agency?

What does Amortization Mean?

To Die slowly - Schedule of payments

Who is exempt from the DNC list?

You can call any client for upto 18 months after the last business transaction with you.

There are two exceptions when dealing with an adverse action notice, what happens if the lender provides a counteroffer and the applicant does not accept it?

The lender has 90 days to provide the adverse action notice

What does PUD stand for?

Planned Unit Development

What is the fine for violating section 8 of RESPA?

$10,000 and up to 1 year in jail

What is the period between adjustments on an ARM known as?

Adjustment Period

What is Freddie Mac's automated underwriting system?

Loan Product Advisor

How long does a foreclosure have to be seasoned before obtaining a conventional loan?

7 years

What is the most dangerous type of ARM loan

Minimum payment ARM - Payment doesn't even cover interest

What is the maximum fine for calling the do not call registry?

43,792 per instance

How long do you have to deliver the adverse action notice?

30 days from it being rejected or cancelled

What is RESPA?

Real Estate Settlement Proceedures Act

What does MDIA stand for?

Mortgage Disclosure Improvement Act

What are the 4 common Indexs?

COFI / CMT / SOFR / LIBOR

What is the maximum back-end DTI ration for a conventional loan that is manually written?

36%

What is included in DTI?

Revolving Credit, Car Loans, Student Loans, ect

What is Fannie Mae's automated underwriting system?

Desktop Underwriter

What is Disparate Impact?

a facially neutral policy or practice is applied equally to all applicants, but the policy or practice disproportionately excludes or burdens certain groups of people on a prohibited basis.

At closing, the borrower should receive a notice of the right to rescind. If two copies are not provided to the borrower at closing, the right to rescind extends from 3 days to:

3 years

What fee is not included in the Loan Estimate?

Real Estate Broker Fee

What does Negative Net Lease mean?

The rent received for that property is equal or less than the mortgage payment for it.

What is LIBOR?

London Interbank Offered Rate

Repairs can be completed by the seller after the closing as long as money is held in what?

Escrow Holdback account

On which two documents would a pre-payment penalty need to be disclosed?

Closing document and Loan Estimate

What is a HELOC?

Home Equity Line of Credit

What is not considered cost of credit?

Title insurance

HOEPA is also known as

Section 32

If there are two borrowers on the loan but the two borrowers are unmarried, they would be considered what:

Co-mortgagors / only married people are co-borrowers

How long can you call a pre-qual if they are on the DNC list after the last contact?

90 days - Note: all calls must be documented and that documentation kept for 2 years.

How often do companies that fund loans have to file a HDMA (Reg C) report?

quarterly

What is the shortest a balloon loan can be?

5 years

What does IRRRL mean?

Interest Rate Reduction Refinancing Loan

Which part of the ARM calculation never changes?

Margin

What is the Home Loan Tool Kit?

Must be given to all borrowers.

Which rule applies the 3/7/3 and what does it mean?

3 business days from application borrower must receive the disclosures, Closing has to be at least 7 days from the signed intent to proceed, 3 business day delay after any changes to the Closing Disclosure - MDIA Rule

PMI is required on conforming mortgage loans when LTV is what?

Over 80%

Who enforces the red flag rule under FACTA?

FTC (Federal Trade Commission)

5/25 or 7/23 is what type of loan?

Balloon

What questions can be asked about Marital Status?

Married, Unmarried, Separated only

What does HUD stand for?

Housing and Urban Development

What does the SAFE act not outline?

Compensation

A Mortgage Lender shall maintain capital of not less than $______ per licensed location:

Surety Bond and Net Worth requirements are outlined by the state regulatory authority at their discretion. The SAFE Act does not outline a minimum requirement.

What is a CHARM Booklet?

Must be delivered to all borrowers of an ARM loan within 3 business days.

What does PMI Stand for?

Private Mortgage Insurance

What regulation regulates advertising?

TILA (Regulation Z)

What makes up the fully indexed rate?

Index plus the margin

What does HMDA stand for?

Home Mortgage Disclosure Act

What does the opt-out rule require

initial, opt-out, annual and revised privacy notices.

Once your license has been revoked can you ever hold it again

Can public assistance be considered as income for a loan?

Yes as long as it meets underwriting guidelines

What are the two factors to give safe harbor to the mortgage company?

Either 43% max DTI and no more than 3% in fees OR Approved Eligible from Fannie or Freddie and must meet high priced lending limits

What does SRP mean?

Service Release Premium - It is generally based on the market value of the mortgage note

A loan originator is:

an individual who for compensation or gain or in the expectation of compensation or gain; takes a residential mortgage loan application; or offers or negotiates terms of a residential mortgage loan.

In a typical mortgage loan, what are the mortgage note and the property called?

Security instrument/collateral

What is COFI?

Cost of Funds Index

RESPA requires the disclosure of what to a consumer?

Any affiliated business arrangement (AfBA)

If the borrower is denied due to an incomplete application what needs done?

Written notice has to be sent within 30 days of last action.

What is the funding fee for a first time VA buyer?

2.3%

How do you calculate ARM increases?

Margin plus rate at time of increase not to be more than specified rate

How long after a loan is sold can you continue to contact a previous client that is on the Do Not Call Registry?

18 months

What must be delivered to all borrowers on any ARM loan within 3 business days?

CHARM booklet

What is the fee threshold for High Priced Loans? (Section 35 of TILA)

1.5% for first mortgages and 3.5% for 2nd mortgages

What is a Graduated Payment Mortgage?

Payment increases over time

What is the current Funding fee on an IRRRL?

.50%

When are HMDA reports due to the regulator?

March 1

Why was the HDMA created?

To prevent Redlining and Blockbusting

What is form 4506-T

It confirms tax return numbers through the IRS

What is the maximum fee percentage paid by a consumer for a loan to be considered a qualified Mortgage? (QM)

Who can give Gift Funds for FHA?

Employer and Blood Relative

What is the UFMIP on an FHA loan?

1.75%