MLO Exam 2 Flashcards
For license renewal, an MLO is required annually to complete a minimum of how many hours of continuing education on the topic of federal law?
3 Hours
The Red Flag Rule falls under which law?
FACTA
Which rule mandates disclosure to consumers that mortgage relief providers have no connection to any government program or agency?
MARS
Which form is used most frequently for residential appraisals?
Form 1004 - URAR
There are two borrowers, one is White and the other is African American. They have very similar credit profiles. The White applicant is approved, and the African American is denied. These loans were approved and denied at the discretion of the lender and an automated underwriting system was not used. This is an example of:
Comparative Evidence
How many days does the lender have to notify the applicant of Adverse Action after they give a counter offer?
90 Days
A lender has a minimum loan amount of $150,000. The lender serves a large area including a minority neighborhood. The minority neighborhood’s home value is usually $125,000 or less. This policy is an example of:
Disparate Impact
APR must be disclosed on all advertisements falls under which rule?
HOEPA
What was the purpose of the Homeowners Protection act of 1998?
It gives buyers the right to cancel or terminate PMI
Borrower(s) may decide to disclose income from child support or alimony. What federal law states that a lender cannot refuse to consider alimony or child support as income?
ECOA
Through the life of a loan, the servicer is allowed to cushion a borrower’s escrow account. What is true about that cushion?
It can’t exceed 1/6 of the estimated total annual payment
Which was the first major legislation to directly affect equal rights to ownership of real property?
Civil Rights act of 1964
If a credit card company has a written policy that anyone who is between age 20-30 can only have a credit line of $1,000 but anyone over 30 gets an automatic line of $5,000, this is an example of:
Overt Discrimination
What are MLOs never permitted to do in reference to an appraisal
Tell an appraiser the min value needed to approve a loan.
A Mortgage Servicing Disclosure Statement is required by what law?
RESPA
Lenders submit Loan/Application Registers in order to comply with what law?
HMDA
HMDA is implemented as what Regulation?
Reg C
After the crisis of the Great Recession according to VA underwriting when can a borrower repurchase again after a Chapter 7 bankruptcy?
2 years
After the crisis of the Great Recession according to Conventional underwriting when can a borrower repurchase again after a Chapter 7 bankruptcy?
4 Years
How many days prior to consummation or closing is the final Loan Estimate required to be provided to the borrower?
4 days
After the crisis of the Great Recession according to Conventional underwriting when can a borrower repurchase again after a short sale?
4 years
Relevant financial information about an applicant who applies for an FHA or conventional residential mortgage is entered on:
FNMA Form 1003
Under which federal legislation does the consumer have the right to receive a copy of the appraisal report on a dwelling that is to be used as collateral for a loan?
ECOA
Why was Regulation Z enacted?
Give borrowers disclosures regarding the APR on a transaction and to protect consumers
What is a Form 1008?
Transmittal Summary for a loan package
How long does a borrower have to request a reason for denial from a lender?
60 days
A yield spread premium occurs when:
An interest rate is charged above the par rate and is a credit to the borrower.
One purpose of the Fair and Accurate Credit Transaction Act is to prevent:
Identity Theft
When a trust deed (or deed of trust) is recorded what happens?
A lien is created
Section 32 which covers high cost loans is part of which federal law?
TILA
What is HOEPA also known as?
Section 32 (Part of TILA)
An MLO is required to protect a borrower’s non-public personal information, per what federal law?
GLBA / Reg P
An MLO is looking over a borrower’s credit report and sees a fraud alert, under the Economic Growth, Regulatory Relief and Consumer Protection Act, how long can a fraud alert be on a borrower’s credit report?
90 days to 1 year
What law requires the lender to collect a borrower’s demographic information for first mortgages and home improvement loans?
HMDA
Under what law is a lender required to provide an adverse action disclosure if the borrower’s credit is the reasoning for all or part of the decision to deny the loan application:
Fair Credit Reporting Act / Reg V
According to the Fair and Accurate Credit Transaction Act, when are borrowers entitled to get a copy of their credit scores for no reason?
Once a year / never for free
What is the name of Fannie Mae’s automated underwriting system?
Desktop Underwriter
An MLO has a borrower come in who is a veteran, the borrower is looking to obtain a VA loan. The borrower has never received a VA loan before and intends to put 0% down, what would be this borrower’s funding fee?
2.3%
USDA loans include a guarantee fee, what is the initial guarantee fee?
1%
An MLO is working with a borrower who wants to purchase a home using an FHA loan, what is the maximum LTV allowed on an FHA loan?
3.5% down or 96.5% LTV
When you order an Insurance binder on a borrower’s loan file, the one-page sheet that summarizes all the insurance information is known as the:
Declaration Page
How is rental income calculated when the borrower owns rental properties other than the subject property?
75% of the income less PTI
