MLO-Federal Mortgage-Related Laws

Question 1

1. According to RESPA, the HUD-1 must be used for:
   a. all commercial and residential property.
   b. all residential property.
   c. business property.
   d. 1-4 residential property.

Answer 1

d. 1-4 residential property.

Question 2

2. The Truth in Lending Act applies to all real estate loans except:
   a. personal loans.
   b. business loans.
   c. family loans.
   d. two-unit income property to be owner occupied within a year.

Answer 2

b. business loans.
b. business loans.
Correct answer is (b).
Business, commercial, and agricultural loans are exempt from the Truth in Lending Disclosures. The Truth in Lending Act is found in 15 United States Code. Exempt transactions are found in Section 1603.

Question 3

3. Regulation B implements the:
   a. ECOA.
   b. HMDA.
   c. RESPA.
   d. TILA.

Answer 3

a. ECOA.

Question 4

4. According to the ECOA, which of the following does not have to be included in an adverse action notice?
   a. Appraiser
   b. Credit bureau
   c. Lender
   d. Regulator

Answer 4

a. Appraiser
Correct answer is (a).
Under ECOA, the credit bureau, lender, and federal regulator must be included on a statement of credit denial. The appraiser’s name does not have to be included even if the appraised value of the property was the reason for the denial of credit.

Question 5

5. The SAFE Act requires mortgage loan originators to complete all of the following in their pre-licensure
   education courses, except:
   a. 2 hours of standards on non-traditional mortgage lending.
   b. 3 hours of ethics, which must include fraud, consumer protection, and fair lending.
   c. 3 hours of federal law and regulations.
   d. 5 hours of appraisal standards.

Answer 5

d. 5 hours of appraisal standards.

Question 6

6. Which law requires the disclosure of the late payment charged or the method used to compute a late
payment charge?
a. ECOA
b. FCRA
c. RESPA
d. TILA

Answer 6

d. TILA
Correct answer is (d).
A late payment fee is a true cost of credit. Therefore, it must be disclosed to the consumer under the Truth in Lending Act.

Question 7

7. A few years ago, Bill became a victim of identity theft. Recently, Bill received a corrected credit clearance from Indent Credit Reporting Services. Indent accurately cleared Bill’s credit records of the harmful creditoriginating from the identity theft. The theft originated due to their incorrect maintenance of information collection procedures. Which federal law protected Bill’s consumer rights?
   a. Consumer Creditor Law
   b. Equal Consumer Law
   c. Fair Credit Reporting Act
   d. Truth in Lending Act

Answer 7

c. Fair Credit Reporting Ac
Correct answer is (c).
The Fair Credit Reporting Act (FCRA) is one of the most important laws that protect consumer identity and credit information. It is designed to promote the accuracy, fairness, and privacy of the information collected and maintained by credit reporting agencies.

Question 8

8. All of the following are SAFE Act requirements for state-licensed mortgage loan originators, except:
   a. undergo drug testing to ensure the competency of the mortgage loan originator.
   b. pass a written qualified test.
   c. submit fingerprints for a criminal background check.
   d. complete prelicensure education courses.

Answer 8

a. undergo drug testing to ensure the competency of the mortgage loan originator.
Correct answer is (a).
The SAFE Act requires state-licensed mortgage loan originators to pass a written qualified test, to complete prelicensure education courses, to take annual continuing education courses, and requires all MLOs to submit fingerprints to the Nationwide Mortgage Licensing System (NMLS) for submission to the FBI for a criminal background check.

Question 9

9. Which federal agency monitors compliance with the Equal Credit Opportunity Act?
   a. Federal Reserve Board
   b. Federal Trade Commission
   c. Housing and Urban Development
   d. Housing Finance Board

Answer 9

b. Federal Trade Commission
Correct answer is (b).
The FTC is the agency that monitors compliance with consumer protection laws of which the ECOA is one.

Question 10

10. On loans governed by RESPA, a buyer or seller may legally be charged for all of the following, except:
    a. preparation of the loan documents.
    b. conducting an appraisal prior to the loan.
    c. preparation of the Uniform Settlement Statement.
    d. preparation of credit reports.

Answer 10

c. preparation of the Uniform Settlement Statement.

Question 11

11. According to RESPA, when does the mortgage loan originator have to give the Special Information
    Booklet to a borrower applying for a mortgage to purchase a home?
    a. After closing the transaction
    b. Within 3 days of receiving the loan application
    c. Within 3 business days of receiving the loan application
    d. Within 7 business days of receiving the loan application

Answer 11

c. Within 3 business days of receiving the loan application

Question 12

12. How frequently must a company update its internal Do Not Call list?
    a. Weekly
    b. Monthly
    c. Quarterly
    d. Yearly

Answer 12

b. Monthly
Correct answer is (b).
An internal Do No Call List must be updated every 30 days.

Question 13

13. The length of time that adverse credit collection information may appear in a credit report is regulated by:
    a. Regulation B.
    b. Regulation C.
    c. Regulation V.
    d. Regulation X.

Answer 13

c. Regulation V.
Correct answer is (c).
The Federal Reserve Board’s Regulation V implements the Fair Credit Reporting Act, which limits the number of years that negative credit may be included in consumer credit reports.

Question 14

14. The Real Estate Settlement Procedures Act pertains to federally related loans used to purchase 1-4
    single-family property used as a personal residence. RESPA regulates:
    a. credit practices.
    b. disclosures regarding settlement costs.
    c. interest rate disclosures.
    d. all closing practices for real property sales.

Answer 14

b. disclosures regarding settlement costs
Correct answer is (b).
RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. When borrowers apply for a mortgage loan, mortgage brokers and/or lenders must give the borrowers certain disclosures regarding settlement procedures and costs. This helps consumers understand settlement services.

Question 15

15. The SAFE Act states that a waiting period of __________ calendar days is required prior to the candidate
    being allowed to retake a failed test component.
    a. 7
    b. 14
    c. 30
    d. 60

Answer 15

c. 30

Question 16

16. Under RESPA, a lender making a loan that includes escrowed payments, is able to collect a maximum of how many months at closing?
    a. None
    b. One
    c. Two
    d. Three

Answer 16

c. Two
Correct answer is (c).
A lender may collect up to 2-month’s worth of payments.

Question 17

17. Which of the following must be disclosed under TILA and is the relative cost of credit expressed as a
yearly rate?
a. Finance charge
b. Annual percentage rate
c. Payment terms
d. Total amount financed

Answer 17

b. Annual percentage rate

Question 18

18. RESPA applies to ALL:
    a. commercial real estate loans.
    b. real estate purchase transactions.
    c. collaterized business loans.
    d. real estate transactions for 1-4 unit residential dwellings.

Answer 18

d. real estate transactions for 1-4 unit residential dwellings.

Question 19

19. What law promotes the informed use of consumer credit by requiring disclosures about its terms and
costs?
a. Community Reinvestment Act
b. Fair Credit Reporting Act
c. Home Mortgage Disclosure Act
d. Truth-in-Lending Act

Answer 19

d. Truth-in-Lending Act

Question 20

20. Regulation Z requires creditors to make good faith estimates of the required mortgage disclosures, and deliver or place them in the mail:
    a. no later than 3 days after receiving a consumer’s application for a dwelling-secured closed-end loan.
    b. no later than 3 business days after receiving a consumer’s application for a dwelling-secured closed-end loan.
    c. no later than 7 days after receiving a consumer’s application for a dwelling-secured closed-end loan.
    d. no later than 7 business days after receiving a consumer’s application for a dwelling-secured closed-end loan.
21. The Housing and Economic Recovery Act (HERA)

Answer 20

b. no later than 3 business days after receiving a consumer’s application for a dwelling-secured closed-end loan.

Question 21

21. The Housing and Economic Recovery Act (HERA) was signed into law in July of:
    a. 2006
    b. 2007
    c. 2008
    d. 2009

Answer 21

c. 2008

Question 22

22. The SAFE Act requires all mortgage loan originators to pass the NMLS-developed SAFE Mortgage Loan
    Originator Test, including both national and state components, with a score of __________ or better on
    each component.
    a. 50%
    b. 70%
    c. 75%
    d. 80%

Answer 22

c. 75%

Question 23

23. According to TILA, for purposes of rescission and the 3-day or 7-day waiting period, how is a business
    day defined? A business day is defined as:
    a. all calendar days except Sundays and legal public holidays.
    b. a day in which the creditor’s offices are open to the public for carrying on substantially all of its business functions.
    c. Monday through Friday and 1/2 day on Saturday.
    d. all weekdays except legal holidays.

Answer 23

a. all calendar days except Sundays and legal public holidays.

Question 24

24. A loan officer knows that a prospective buyer will not qualify for a loan and tells the person not to waste
    the time applying for the loan. What law has been violated?
    a. CRA
    b. ECOA
    c. FCA
    d. NFIA

Answer 24

b. ECOA

Question 25

25. Prior to closing, the interest rates changed to a point of exceeding the tolerances. When must the borrower be provided with a revised GFE? a. Within 1 business day prior to closing b. Within 3 business days after discovering the changed circumstances c. Within 3 business days of closing d. Within 7 business days after discovering the changed circumstances

Answer 25

b. Within 3 business days after discovering the changed circumstances Correct answer is (b). When loan originators must provide a revised GFE, RESPA indicates that it should be done with three business days.

Question 26

26. The SAFE Act requires mortgage loan originators to: a. complete continuing education courses. b. obtain a college degree prior to licensing. c. pass an oral examination. d. do all of the above.

Answer 26

a. complete continuing education courses.

Question 27

27. The SAFE Act establishes licensing and registration requirements for: a. Mortgage Loan Brokers. b. Mortgage Loan Lenders. c. Mortgage Loan Officers. d. Mortgage Loan Originators

Answer 27

d. Mortgage Loan Originators

Question 28

28. According to SAFE requirements, how many hours of Nationwide Mortgage Licensing System (NMLS)- approved education is necessary prior to licensing? a. 5 b. 10 c. 15 d. 20

Answer 28

d. 20

Question 29

29. Under the ECOA, a lender has how many days to notify an applicant of an underwriting decision? a. 3 days b. 10 days c. 30 days d. 45 days

Answer 29

c. 30 days

Question 30

31. According to the FACT Act, which of the following acts could be considered a failure to secure private information? a. Disposing of old files monthly at a document destruction company b. Dumping old files in the trash bin behind the building c. Shredding documents before disposing of them in the trash d. Throwing shredded documents in a land fill

Answer 30

b. Dumping old files in the trash bin behind the building

Question 31

30. Which of the following practices by mortgage brokers is prohibited? a. Acting as a lender in the same transaction b. Charging higher interest rate than other mortgage brokers in the neighborhood c. Offering credit from only one lender d. Referring a real estate agent to a customer for a fee

Answer 31

d. Referring a real estate agent to a customer for a fee

Question 32

32. How is the Truth in Lending Act implemented? a. Regulation B b. Regulation Z c. HUD d. Title 1

Answer 32

b. Regulation Z

Question 33

33. In 1974, the Equal Credit Opportunity Act implemented a provision to protect consumers, with additional amendments added in 1976. The provision makes it unlawful for banks and other creditors to discriminate against creditworthy individuals based on sex or marital status. In addition, the provision protects consumers in receipt of public assistance. What is the provision called? a. Right to credit b. Right to rescind c. Regulation B d. Regulation Z

Answer 33

c. Regulation B

Question 34

34. Which of the following is not one of the federal mortgage-related laws covered in the national component of the SAFE Mortgage Loan Originator exam? a. Real Estate Settlement Procedures Act b. Truth-in-Lending Act c. Equal Credit Opportunity Act d. Securities Exchange Act of 1934

Answer 34

d. Securities Exchange Act of 1934

Question 35

``` 35. A person found guilty of giving or accepting kickbacks under RESPA, may be fined up to _______ for each violation. a. $5,000 b. $10,000 c. $15,000 d. $20,000 ```

Answer 35

b. $10,000

Question 36

36. Is it permissible for a loan originator to "gross up" child support received by an applicant? a. No, it cannot be grossed up, but 1/2 can be deducted from the house payment. b. Yes, it is always permissible to gross up any net income received by an applicant. c. No, child support cannot be grossed up because it is intended to support a child. d. Yes, it is permissible to gross up any verifiable net income that is likely to continue for three years or more.

Answer 36

d. Yes, it is permissible to gross up any verifiable net income that is likely to continue for three years or more. Correct answer is (d). Under ECOA all verifiable net incomes likely to continue for at least three years may be used and should be grossed up.

Question 37

37. Which of the following does not relate to one of the purposes of the SAFE Act? a. Enhancing consumer protection b. Improving mortgage interest rates c. Increasing integrity in the residential mortgage market d. Reducing fraud

Answer 37

b. Improving mortgage interest rates

Question 38

38. Prior to renewing a SAFE-compliant license, how many hours of continuing education are necessary? a. 3 b. 5 c. 8 d. 12

Answer 38

c. 8

Question 39

39. The SAFE Act is part of the: a. Consumer Protection Act. b. Financial Institutions Reform, Recovery, and Enforcement Act. c. Housing and Economic Recovery Act. d. Housing and Community Development Act.

Answer 39

c. Housing and Economic Recovery Act. Correct answer is (c). The SAFE Act is part of the Housing and Economic Recovery Act of 2008 (HERA).

Question 40

40. Which additional disclosure must be made if only the annual percentage rate is disclosed in an advertisement for property? a. The amount or percentage of the down payment b. The terms of repayment c. The amount of any finance charge d. Requires no additional disclosure

Answer 40

d. Requires no additional disclosure`

Question 41

41. The Fair and Accurate Credit Transactions Act of 2003 allows consumers to request and obtain a free credit report once every __________ from each of the three nationwide consumer credit reporting companies—Equifax®, Experian®, and TransUnion®. a. 12 months b. 6 months c. 3 months d. month

Answer 41

a. 12 months

Question 42

42. Under the Truth in Lending Act, the dollar amount of the finance charge is not required on: a. loans to be used for the purpose of financing the purchase of the borrower's dwelling. b. an agricultural loan to purchase of a farm tractor. c. a loan to purchase household furnishings. d. none of the above.

Answer 42

b. an agricultural loan to purchase of a farm tractor. Correct answer is (b). EXEMPT: business, commercial and agricultural loans. NOT EXEMPT: consumer and all real estate loans require a disclosure.

Question 43

43. What is the purpose of the SAFE Act? a. Creates a regional licensing database b. Helps ensure fraudulent activities c. Requires minimum licensing and education for loan originators d. Sets up a database to track loans

Answer 43

c. Requires minimum licensing and education for loan originators

Question 44

44. Which of the following properties is not an example of a “dwelling” as defined by the SAFE Act? a. Structure that contains one to four units b. Condo c. Office building d. Mobile home

Answer 44

c. Office building

Question 45

45. Which of the following course topics is not in compliance with the SAFE Act? a. Business development b. Commercial lending c. Financial planning d. All of the above

Answer 45

d. All of the above Correct answer is (d). The following course topics have been determined to not be in compliance with the SAFE Act: general self-improvement courses; financial planning courses; any courses related to selling, sales, marketing, lead-generation, or business development; loan product training, product marketing, or advertising; any courses related to consumer data mining, market segmentation, or minority marketing practices; any information technology-related course; commercial lending; and courses on federal, state, or local law not related to mortgage.

Question 46

46. Under the ECOA, a MLO has a completed application when the: a. applicant calls to inquire about loan programs. b. applicant requires a specific interest rate. c. MLO prepares a written application. d. MLO has received all the information that the creditor regularly obtains and considers in evaluating applications for a loan.

Answer 46

d. MLO has received all the information that the creditor regularly obtains and considers in evaluating applications for a loan.

Question 47

47. Of the following which is excluded from the calculation of the APR on the TIL Statement? a. Broker's origination fee b. Lender's discount points c. Mortgage insurance premium d. None of the above

Answer 47

d. None of the above Correct answer is (d). All of them are included, therefore none of them are excluded.

Question 48

48. The HOEPA addresses certain deceptive and unfair practices in home equity lending. It amends TILA and establishes requirements for certain loans with high rates and/or high fees. The rules for these loans are contained in what Section of Regulation Z? a. Section B b. Section X c. Section 23 d. Section 32

Answer 48

d. Section 32

Question 49

49. RESPA (Real Estate Settlement Procedures Act) applies to which of the following? a. First-lien residential loans for condominiums only b. Second-lien commercial loans c. First-lien residential loans for cooperatives, condominiums and one-to-four family homes d. None of the above

Answer 49

c. First-lien residential loans for cooperatives, condominiums and one-to-four family homes

Question 50

50. Under the SAFE Act, what organization must help develop and maintain a nationwide mortgage licensing system (NMLS)? a. Conference of State Bank Supervisors b. National Association of Home Builders c. National Association of Mortgage Bankers d. The Federal Reserve

Answer 50

a. Conference of State Bank Supervisors Correct answer is (a). The SAFE Act requires the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to establish and maintain a nationwide mortgage licensing system and registry system for the residential mortgage.

Question 51

51. To meet the educational requirements of the SAFE Act, mortgage loan originators must complete: a. pre-licensing courses only. b. continuing education courses only. c. pre-licensing and continuing education courses. d. pre-licensing courses and a college degree.

Answer 51

c. pre-licensing and continuing education courses.

Question 52

54. Even though it is unlawful to consider race when underwriting a loan, which federal law requires the inclusion of this information on the loan application? a. ECOA b. FCRA c. HMDA d. SAFE Act

Answer 52

c. HMDA Correct answer is (c). The Home Mortgage Disclosure Act requires this information in order to determine if discriminatory practices are being used.

Question 53

52. Which of the following deals with the regulation of prospecting activities? a. National Do Not Call law b. Do Not Fax rules c. CAN-SPAM Act of 2003 d. All of the above

Answer 53

d. All of the above Correct answer is (d). Anytime real estate solicitation involves the use of the telephone, cell phone, fax, or e-mail, the licensee must comply with applicable federal and state do not call, do not fax, and anti-spam laws.

Question 54

53. Regulation Z requires that consumers be informed of credit terms by the: a. real estate broker. b. trustee. c. creditor. d. escrow officer.

Answer 54

c. creditor.

Question 55

55. Each early TILA disclosure must include what statement? a. “TIL disclosure must reflect the terms of the legal obligation between the parties.” b. “TIL disclosure must state disclosure is an “estimate” when information necessary for an accurate disclosure is unknown.” c. “You are allowed to wait three (3) business days prior to signing loan documents.” d. “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”

Answer 55

Correct answer is (d). Statement of fact. 55. Each early TILA disclosure must include what statement? a. “TIL disclosure must reflect the terms of the legal obligation between the parties.” b. “TIL disclosure must state disclosure is an “estimate” when information necessary for an accurate disclosure is unknown.” c. “You are allowed to wait three (3) business days prior to signing loan documents.” d. “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”

Question 56

56. What must be included in a commercial e-mail message? a. Clear and conspicuous identification that the message is an advertisement or solicitation b. Valid and conspicuous phone number of the sender c. Clear and conspicuous notice that the recipient may not opt out of further commercial e-mail messages from the sender d. Clear and conspicuous identification of time and date of message

Answer 56

a. Clear and conspicuous identification that the message is an advertisement or solicitation

Question 57

58. Which of the following is not a SAFE Act licensing standard for state-licensed mortgage loan originators? a. Has had no felonies in the past 7 years b. Demonstrates no financial responsibility and lacks fitness c. Never had a loan originator license revoked d. Never had a felony involving fraud, dishonesty, breach or trust or money laundering

Answer 57

b. Demonstrates no financial responsibility and lacks fitness Correct answer is (b). All state-licensed mortgage loan originators must meet the following standards: never had a loan originator license revoked; has had no felonies in the past 7 years; never had a felony involving fraud, dishonesty, breach or trust or money laundering; demonstrates financial responsibility and general fitness; scores 75% or better on a national test; takes eight hours of continuing education annually; and maintain licensure through NMLS.

Question 58

57. The Department of Housing and Urban Development (HUD) defines “application” as a: a. means of relating one scenario to another. b. request from a borrower for an offer of mortgage loan terms. c. request from a loan originator for an offer of mortgage loan terms. d. software program.

Answer 58

b. request from a borrower for an offer of mortgage loan terms.

Question 59

59. The ECOA is implemented by: a. Regulation B. b. Regulation Z. c. the Board of Directors of NAR. d. the Board of Governors.

Answer 59

a. Regulation B. Correct answer is (a). The primary purpose of the ECOA, as implemented by Regulation B, is to prevent banks and other creditors from discriminating when granting credit by requiring them to make extensions of credit equally available to all creditworthy applicants with fairness, impartiality, and without discrimination on any prohibited basis. The regulation applies to consumer and other types of credit transactions.

Question 60

60. Of the following federal laws, which is NOT intended to primarily address issues of privacy and identity protection relating to credit? a. Gramm-Leach-Bliley b. FACTA c. ECOA d. FCRA

Answer 60

c. ECOA Correct answer is (c). Although all deal with consumer credit, the ECOA deals primarily with anti-discrimination in credit. The others deal directly with credit reporting and protecting the consumer's financial records and identity.

Question 61

61. Which act was responsible for creating the Secure and Fair Enforcement for Mortgage Licensing Act of 2008? a. State Mortgage Licensing Act (SMLA) of 2008 b. Housing Refinement Act (HRA) of 2008 c. Housing and Urban Development Act (HUDA) of 2008 d. Housing and Economic Recovery Act (HERA) of 2008

Answer 61

d. Housing and Economic Recovery Act (HERA) of 2008 Correct answer is (d). The Housing and Economic Recovery Act (HERA) of 2008 was signed into law on July 30. The Secure and Fair Enforcement for Mortgage Licensing Act is a key component of HERA.

Question 62

62. The Gramm-Leach-Bliley Act is also known as the: a. Fair and Accurate Credit Transaction Act. b. Financial Services Modernization Act. c. Fair Housing Initiatives Program. d. Housing and Economic Recovery Act.

Answer 62

b. Financial Services Modernization Act. Correct answer is (b). The Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, repealed part of the Glass-Steagall Act of 1933. The Gramm-Leach-Bliley Act allowed commercial banks, investment banks, securities firms, and insurance companies to consolidate.

Question 63

``` 63. RESPA allows for the borrower to inspect the HUD-1 Settlement Statement how many days prior to the actual settlement? a. 7 days b. 3 days c. 2 days d. 1 day ```

Answer 63

d. 1 day Correct answer is (d). RESPA allows the borrower to have at least 1 day to inspect the HUD-1 Settlement Statement.

Question 64

64. According to RESPA, which disclosure must be given to borrowers when they apply for a loan to purchase a home? a. Good Faith Estimate (GFE) of settlement costs b. Mortgage Servicing Disclosure Statement c. Special Information Booklet d. All of the above

Answer 64

Correct answer is (d). All of the documents are required at the time of application or the lender must mail them within 3 business days of receiving the loan application.

Question 65

65. HOEPA is also referred to as Section: a. 8. b. 16. c. 30. d. 32.

Answer 65

d. 32.Correct answer is (d). | The Home Ownership and Equity Protection Act (HOEPA) is contained in Section 32 of Regulation Z

Question 66

67. According to RESPA, when does the mortgage loan originator have to give the Special Information Booklet to a borrower applying to refinance his or her home? a. At the time of application b. Within 3 days of receiving the loan application c. Within 3 business days of receiving the loan application d. None of the above

Answer 66

d. None of the above Correct answer is (d). The Special Information Booklet is required for purchase transactions only, not for a refinance.

Question 67

66. A mortgage broker is not required by RESPA to provide a written GFE, when: a. exact settlement service fees are not known. b. interest rates are expected to fall prior to closing. c. one is presented orally at the time of application. d. the loan application is denied within three business days of the application.

Answer 67

d. the loan application is denied within three business days of the application.

Question 68

68. Which of the following are objectives of the SAFE Act? a. Providing uniform license applications and reporting requirements for state licensed-loan originators. b. Providing a comprehensive licensing and supervisory database. c. Providing increased accountability and tracking of loan originators. d. All of the above.

Answer 68

d. All of the above.

Question 69

69. The Home Mortgage Disclosure Act passed in 1975, is implemented by: a. the FTC. b. the FRB. c. Regulation C d. Regulation H.

Answer 69

c. Regulation C Correct answer is (c). The Federal Reserve Board's (FRB) Regulation C implements the Home Mortgage Disclosure Act. (HMDA)

Question 70

70. The red flag rules are part of: a. FHA. b. FACTA. c. MDIA. d. SAFE Act.

Answer 70

b. FACTA. Correct answer is (b). The FACT Act, section 114 is known as the Red Flag Rules.

Question 71

``` 71. According to the federal Truth in Lending Act, which fees may be included in the finance charge for a transaction secured by real property? a. Interest b. Credit report fees c. Title fees d. Appraisal fees ```

Answer 71

a. Interest Correct answer is (a). Regulation Z specifies the items included in the finance charge: interest, loan fees, assumption fees, finder's fees, and buyer's points. Regulation Z also specifies the items that are not to be included in the finance charge for a real estate loan are seller's points, title fees, fees for preparing documents, notary charges, appraisal fees and credit-report fees. [TILA 6500, 226.4(c)]

Question 72

72. TILA as modified by the Mortgage Disclosure Improvement Act, requires a waiting period prior to consummation of a transaction. How long is the waiting period? a. 3 days from the receipt of the TIL Statement by the consumer b. 3 business days from the mailing or delivery of the TIL Statement to the consumer. c. 7 business days from the mailing or delivery of the TIL Statement to the consumer. d. 7 days from the receipt of the TIL Statement by the consumer

Answer 72

c. 7 business days from the mailing or delivery of the TIL Statement to the consumer. Correct answer is (c). MDIA requires a seven business day waiting period prior to consummation from delivery or mailing of the TIL Statement to the consumer prior to consummation. This timing begins when a creditor mails or otherwise delivers the TIL Statement to the consumer. It is not based on receipt date or assumed receipt date by the consumer but rather mailing or delivery by the creditor.

Question 73

``` 73. Which law states that consumers are allowed 1 free credit report upon written request from the credit reporting bureaus? a. ECOA b. FACT c. FCRA d. SAFE ```

Answer 73

c. FCRA Correct answer is (c). The Fair Credit Reporting Act (FCRA) gives consumers this right. Choice "b" FACT looks correct, but the appropriate abbreviations for the Fair and Accurate Credit Transactions Act are FACT Act or FACTA...NOT simply FACT.

Question 74

74. Which disclosures are regulated by Regulation Z? a. Truth in Lending Disclosure Statement, Right of Rescission, and Section 32 loan b. Truth in Lending Disclosure Statement and Adjustable-Rate Disclosures c. Truth in Lending Disclosure Statement d. Truth in Lending Disclosure Statement, Adjustable-Rate Disclosures, Right of Rescission, and Section 32 loans

Answer 74

d. Truth in Lending Disclosure Statement, Adjustable-Rate Disclosures, Right of Rescission, and Section 32 loans

Question 75

75. Regulation V implements the: a. ECOA. b. FCRA. c. HMDA. d. TILA.

Answer 75

b. FCRA. Correct answer is (b). The Fair Credit Reporting Act is implemented by the Federal Reserve Board's Regulation V.

Question 76

76. Which of the following types of loans are exempt from RESPA? a. 4-unit residential building b. Condominiums c. Property with 25 acres or more d. Single-family property

Answer 76

Correct answer is (c). RESPA covers 1-4 residential property. It does not cover land tracts of 25 or more acres, whether there is a residence or not.

Question 77

77. The 20 hours of pre-licensing education approved by the Nationwide Mortgage Licensing System includes: a. 3 hours of federal law and regulations. b. 5 hours of United States financial history courses. c. 9 hours of macroeconomic courses. d. 10 hours of mathematical calculation courses.

Answer 77

a. 3 hours of federal law and regulations.

Question 78

78. Can a consumer waive the 7-day or 3-day waiting periods regarding the TIL Statement disclosure? a. No, the waiting period cannot be waived b. No, only the creditor can waive the waiting period c. Yes, if the consumer can show that it is a bona fide personal financial emergency d. Yes, if the creditor needs to close the transaction to meet monthly performance goals

Answer 78

c. Yes, if the consumer can show that it is a bona fide personal financial emergency

Question 79

79. In advertising the availability of real estate loans, using any of the following phrases by itself would be a violation of the federal Truth in Lending Act's Regulation Z, except: a. 5% down payment. b. 360 payments. c. easy terms available. d. 30-year loans.

Answer 79

c. easy terms available.

Question 80

80. Which act has the primary purpose of preventing banks and other creditors from discriminating when granting credit by requiring them to make extensions of credit equally available to all creditworthy applicants with fairness, impartiality, and without discrimination on any prohibited basis? a. ECOA b. FHLMC c. RESPA d. TILA

Answer 80

a. ECOA Correct answer is (a). The primary purpose of the Equal Credit Opportunity Act is to prevent banks and other creditors from discriminating when granting credit by requiring them to make extensions of credit equally available to all creditworthy applicants with fairness, impartiality, and without discrimination on any prohibited basis.

Question 81

81. Under the HMDA, which of the following information must be requested from borrowers? a. Applicants religion b. Applicants number of children c. Applicants national origin d. Applicants sexual orientation

Answer 81

c. Applicants national origin Correct answer is (c). HMDA requires lenders to ask applicants their race and national origin for monitoring purposes.

Question 82

82. The federal statute, that makes it a crime to use false or misleading methods to obtain customer information possessed by financial institutions is called the: a. Gordon-Leigh-Bailey Act. b. Fair Credit Reporting Act. c. Gramm-Leach Bliley Act. d. Fair and Accurace Credit Act.

Answer 82

c. Gramm-Leach Bliley Act. Correct answer is (c). The Gramm-Leach Bliley Act makes it a crime to use false or misleading methods to obtain customer information possessed by financial institutions.

Question 83

83. Which loan would exempt a lender from collecting statistical data under HMDA? a. A 1st on single-family residence b. A 1st on a small, 5-unit apartment building c. Refinancing a condominium d. A home equity loan

Answer 83

b. A 1st on a small, 5-unit apartment building Correct answer is (b). The Home Mortgage Disclosure Act (HMDA) applies to 1-4 residential property. Five units is considered commercial and is not subject to HMDA.

Question 84

84. Title V of HERA is more commonly known as the: a. FACT Act. b. FIRREA. c. SAFE Act. d. TILA.

Answer 84

Correct answer is (c). The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) is Title V of the Housing and Economic Recovery Act of 2008 (HERA).

Question 85

85. Regulation V implements the: a. Home Mortgage Disclosure Act. b. Gramm-Leach-Bliley Act. c. Fair Credit Reporting Act. d. Real Estate Settlement Procedures Act.

Answer 85

c. Fair Credit Reporting Act. Correct answer is (c). Regulation V of the FRB implements the Fair Credit Reporting Act.

Question 86

86. The federal Fair Housing Act covers all of the following, except: a. construction of a duplex. b. loan for a new truck used in construction. c. purchasing an existing home. d. leasing rental housing

Answer 86

b. loan for a new truck used in construction Correct answer is (b). The Fair Housing Act does not cover personal property, such as a vehicle.

Question 87

87. The main purpose of RESPA is to: a. regulate all real estate loans. b. choose a lender that can process applications for loans. c. regulate home improvement loans. d. require that disclosures be made by lenders that make loans on 1-to-4 unit dwellings.

Answer 87

d. require that disclosures be made by lenders that make loans on 1-to-4 unit dwellings. Correct answer is (d). RESPA's main purpose is to provide purchasers of real property with information to take the mystery out of settlement (closing) process.

Question 88

88. The SAFE Act helps reduce fraud by establishing licensing requirements for: a. appraisers. b. home inspectors. c. mortgage loan originators. d. real estate brokers.

Answer 88

c. mortgage loan originators. Correct answer is (c). The SAFE Act enhances consumer protection and reduces fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators.

Question 89

``` 89. Under Regulation Z, which advertisement would NOT trigger the requirement to disclose all finance charges and the APR? a. "5% 30-year mortgage" b. "Monthly payments under $800" c. "No money down" d. "Stop paying rent" ```

Answer 89

d. "Stop paying rent" Correct answer is (d). Choices (a) and (b) obviously are triggers. Choice (c) is also a trigger because "No money down" means $0 down payment. Reg. Z Sec. 226.24 Advertising (d)(1)(i) states that "the amount or percentage of any downpayment" is a triggering term. The advertisement should say "Low downpayment" to avoid the trigger.

Question 90

90. Which type of mortgage loan originator does not require registration according to SAFE Act requirements? a. Those employed by credit unions. b. Those employed by a federally insured depository institution. c. Those employed by banks owned and operated by another country. d. Those employed by a federally-supervised subsidiary.

Answer 90

c. Those employed by banks owned and operated by another country. Correct answer is (c). The SAFE Act states that a mortgage loan originator employed by a federally-insured depository institution, any credit union, or an owned and controlled subsidiary that is federally-supervised, must be registered.

Question 91

91. Unless state consumer protection laws conflict with a particular federal law, the: a. state law usually applies. b. state law never applies. c. county law applies. d. federal law applies.

Answer 91

a. state law usually applies.

Question 92

92. According to the SAFE Act, an individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain is known as a: a. loan broker. b. loan originator. c. loan processor. d. real estate broker.

Answer 92

b. loan originator.

Question 93

93. Under which federal law are negative amortization loans not permitted? a. ECOA b. FACTA c. HOEPA d. TILA

Answer 93

c. HOEPA Correct answer is (c). The Home Ownership and Equity Protection Act (HOEPA) does not permit loans that result in a negative amortization.

Question 94

94. A federal law requires a loan officer to provide information on an applicant's race or national origin if the applicant does not want to provide it voluntarily. Which law requires this? a. ECOA implemented by Reg. B b. HMDA implemented by Reg. C c. PCFI implemented by Reg. P d. FCRA implemented by Reg. V

Answer 94

b. HMDA implemented by Reg. C Correct answer is (b). The Home Mortgage Disclosure Act (HMDA) implemented by Reg.C requires the national origin, race, and sex of applicant be marked on every application.

Question 95

``` 95. Within ____________ after receiving an application for a mortgage loan, a creditor must mail or deliver disclosures to the borrower. a. 1 day b. 1 business day c. 3 days d. 3 business days ```

Answer 95

d. 3 business days Correct answer is (d). Both TILA (Reg. Z) and RESPA (Reg. X) require that disclosure are mailed within 3 business of receipt of a mortgage loan application.

Question 96

96. Which act ensures that all consumers are given an equal chance to obtain credit? a. Fair Credit Reporting Act b. Equal Credit Opportunity Act c. Truth in Lending Act d. Rights to Financial Privacy Act

Answer 96

b. Equal Credit Opportunity Act

Question 97

97. Which Act establishes procedures for correcting credit records, providing them for legitimate business needs only, and keeping them confidential? a. Equal Credit Opportunity Act b. Fair Credit Reporting Act c. Home Equity Loan Consumer Protection Act d. Section 32 Mortgages

Answer 97

b. Fair Credit Reporting Act Correct answer is (b). The Fair Credit Reporting Act establishes procedures for correcting mistakes on a person's credit record and requires that a consumer's record only be provided for legitimate business needs. It also requires that the record be kept confidential.

Question 98

98. Which loan would be exempt from Regulation Z? a. A loan for agricultural purposes made by a federally chartered bank. b. A loan for household purposes obtained from a credit union. c. A $90,000 mortgage from a savings association secured by a single-family residence. d. A $15,000 loan used to purchase an owner-occupied mobile home.

Answer 98

a. A loan for agricultural purposes made by a federally chartered bank. Correct answer is (a). Agricultural and other business loans are exempt from Regulation Z. Even though a mobile home may be considered personal property, if it is intended as the consumer's principal dwelling it is governed by Regulation Z.

Question 99

99. The main purpose of the Truth in Lending Act is to: a. minimize usury. b. establish the maximum annual percentage rate. c. limit the cost of credit available to consumers. d. promote the informed use of consumer credit.

Answer 99

d. promote the informed use of consumer credit. Correct answer is (d). The main purpose of the Truth in Lending Act is to promote the informed use of consumer credit by requiring creditors to disclose credit terms so consumers can make comparisons between different sources of credit.

Question 100

100. According to the Fair Credit Reporting act, with the exception of _________, 7 years is the maximum length of time that information can be reported on a credit report. a. collections b. credit card slow payments c. bankruptcy d. mortgage accounts

Answer 100

c. bankruptcy Correct answer is (c). A credit reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. There is no time limit on reporting information about criminal convictions.

Question 101

101. What is the main purpose of the FCRA? a. Create procedures to deny credit to creditworthy borrowers. b. Create procedures for consumers to dispute accurate information in their credit reports. c. Create procedures to ensure confidentiality and accuracy of consumer credit information. d. Require creditors to provide consumers copies of their credit reports.

Answer 101

c. Create procedures to ensure confidentiality and accuracy of consumer credit information. Correct answer is (c). The federal Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness and privacy of information in the files of consumer reporting agencies.

Question 102

102. Which of the following is not an objective of the SAFE Act? a. Providing uniform license applications and reporting requirements for state licensed-loan originators b. Providing no anti-fraud measures c. Providing a comprehensive licensing and supervisory database d. Providing increased accountability and tracking of loan originators

Answer 102

b. Providing no anti-fraud measures Correct answer is (b). Objectives of the SAFE Act include providing uniform license applications and reporting requirements for state licensed-loan originators; providing a comprehensive licensing and supervisory database; aggregating and improving the flow of information to and between regulators; providing increased accountability and tracking of loan originators; and others.

Question 103

103. Which of the following would be exempt from Regulation Z? a. Loan for agricultural purposes made by a federally chartered bank. b. Loan for household purposes obtained from a credit union. c. $90,000 mortgage from a savings and loan institution secured by a single-family residence. d. $15,000 loan used to purchase an owner-occupied mobile home.

Answer 103

a. Loan for agricultural purposes made by a federally chartered bank. Correct answer is (a). Agricultural and other business loans are exempt from Regulation Z. Even though a mobile home may be considered personal property, if it is intended as the consumer's principal dwelling, it is governed by Regulation Z.

Question 104

104. According to TILA, what is the rescission period for borrowers who have not been provided with full disclosure of the APR (within stated limits)? a. 3 days b. 3 weeks c. 3 months d. 3 years

Answer 104

d. 3 years Correct answer is (d). Under the Truth in Lending Act, if the APR stated in the TILA disclosure is greater than the specified limits (the greater of 0.5% of the loan amount or $100), the borrower has 3 years to rescind the contract.

Question 105

105. HOEPA is an addendum of: a. Regulation B. b. Regulation C. c. Regulation X. d. Regulation Z.

Answer 105

d. Regulation Z. Correct answer is (d). The Home Ownership and Equity Protection Act (HOEPA) is Section 32 of Regulation Z.

Question 106

106. Which of the following practices is not prohibited by RESPA? a. Seller-required title insurance b. Unlimited deposits into escrow accounts c. Earned fees d. Kickbacks and fee-splitting

Answer 106

c. Earned fees Correct answer is (c). Certain practices are prohibited under the Real Estate Settlement Procedures Act. These include kickbacks, fee splitting, unearned fees, seller-required title insurance, and unlimited deposits into escrow accounts.

Question 107

107. How is the conforming loan limit for conventional loans set each year? a. Fannie Mae and Freddie Mac determine the loan limits each year from the data collected in HMDA reports from the previous year. b. The Federal Housing Finance Agency (FHFA) uses the October to October percentage increase/decrease in average housing prices in the Monthly Interest Rate Survey of the Federal Housing Finance Agency (FHFA) to adjust the conforming loan limits for the subsequent year. c. The Federal Housing Administration (FHA), which is part of the U.S. Dept. of Housing and Urban Development (HUD) and administers various mortgage loan programs, determines which loans cannot exceed the statutory limit and adjusts the loan limits accordingly. d. The US Treasury Department uses the current housing trend to determine the current values and then adjusts the conforming loan amount for the subsequent year.

Answer 107

b. The Federal Housing Finance Agency (FHFA) uses the October to October percentage increase/decrease in average housing prices in the Monthly Interest Rate Survey of the Federal Housing Finance Agency (FHFA) to adjust the conforming loan limits for the subsequent year. Correct answer is (b). The Federal Housing Finance Agency (FHFA) publishes the conforming loan limits annually that apply to all conventional mortgages that are delivered to Fannie Mae, including both the general loan limits and the high-cost area loan limits. High-cost area loan limits vary by geographic location.

Question 108

108. The Truth in Lending Act is contained in the: a. Business and Profession Code. b. Federal Brokers Act. c. Federal Consumer Credit Protection Act. d. Federal Fair Housing Act.

Answer 108

c. Federal Consumer Credit Protection Act Correct answer is (c). The Consumer Credit Protection Act of 1968 was landmark legislation that launched Truth in Lending disclosures of the terms and costs of consumer credit - creditors had to state the cost of borrowing in a common language so that the consumer could determine what the charges are, compare the costs of loans, and shop for the best credit deal.

Question 109

109. The regulations of RESPA pertain to: a. all residential property. b. residential properties with 1-to-4 units. c. commercial properties only. d. agricultural and farm property.

Answer 109

b. residential properties with 1-to-4 units. Correct answer is (b). RESPA applies to all federally related mortgage loans made by lenders for the sale or transfer of 1-4 unit residential dwellings.

Question 110

110. Which statement regarding RESPA is incorrect? a. RESPA applies to all residential property. b. RESPA gives the buyer to inspect the settlement statement at least 1 day before closing. c. RESPA limits the amount of escrow reserves. d. RESPA requires a HUD booklet and GFE to be given to the buyer.

Answer 110

a. RESPA applies to all residential property. Correct answer is (a). RESPA applies to 1-4 family residences and condominiums.

Question 111

``` 111. Which of the following is a professional requirement for state-licensed Mortgage Loan Originators according to the SAFE Act? a. $1,000 licensing fee b. Criminal background check c. Possession of a college degree d. Submission of fingerprints to the CIA ```

Answer 111

b. Criminal background check Correct answer is (b). The SAFE Act requires all MLOs to submit fingerprints to the Nationwide Mortgage Licensing System (NMLS). Afterwards, the fingerprints are sent to the Federal Bureau of Investigation to complete a criminal background check.

Question 112

112. Which statement is not a purpose of the Real Estate Settlement Procedures Act? a. Help consumers get fair settlement services by requiring that key service costs be disclosed in advance. b. Protect consumers by prohibiting certain practices that increase the cost of settlement services. c. Protect consumers by eliminating kickbacks and referral fees that unnecessarily increase the costs of settlement services. d. Disclose the APR for a loan.

Answer 112

d. Disclose the APR for a loan. Correct answer is (d). The purposes of RESPA are to help consumers get fair settlement services by requiring that key service costs be disclosed in advance, to protect consumers by eliminating kickbacks and referral fees that unnecessarily increase the costs of settlement services, and to further protect consumers by prohibiting certain practices that increase the cost of settlement services.

Question 113

113. Under the ECOA, a lender must provide an applicant a copy of the appraisal report obtained in connection with the loan for which the applicant applied. Which statement is incorrect? a. The applicant must send a written request within a reasonable period of time of the application b. The lender must promptly send a copy of the appraisal report upon receiving the written request c. The applicant must pay for the cost of the appraisal in order to be entitled to a copy d. The lender may require the applicant to reimburse the lender for the cost of the appraisal

Answer 113

c. The applicant must pay for the cost of the appraisal in order to be entitled to a copy Correct answer is (c). Each creditor shall promptly furnish an applicant, upon written request by the applicant made within a reasonable period of time of the application, a copy of the appraisal report used in connection with the applicant's application for a loan that is or would have been secured by a lien on residential real property. The creditor may require the applicant to reimburse the creditor for the cost of the appraisal. [US Code, title 15, Chpt. 41, SubChpt. IV, Section 1691.(d)]

Question 114

114. What is the SAFE Act designed for? a. To assist the flow of the real estate market b. To enhance consumer protection and reduce fraud c. To implement safety standards in home inspection d. To help consumers seek better appraisals for their properties

Answer 114

b. To enhance consumer protection and reduce fraud Correct answer is (b). The SAFE Act is designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing and registration of state-licensed mortgage loan.

Question 115

115. Creditors must verify that an applicant can repay the mortgage loan under the: a. CRA. b. HMDA. c. HOEPA. d. HPA.

Answer 115

c. HOEPA. Correct answer is (c). The Home Ownership and Equity Protection Act (HOEPA) requires verification of the applicant's ability to repay a high-cost/high-interest loan.

Question 116

116. Which data is NOT part of the data collected for monitoring under Regulation C? a. Race b. Age c. National origin d. Sex

Answer 116

b. Age Correct answer is (b). The Federal Reserve Board's Regulation C implements the Home Mortgage Disclosure Act (HMDA). HMDA does not collect data on the borrower's age.

Question 117

117. RESPA requires that borrowers receive disclosures at various times. Which of the following disclosures usually is not made at the time of the loan application? a. Annual Escrow Loan Statement b. Good Faith Estimate of Settlement Costs c. Special Information Booklet d. Loan Servicing Disclosure Statement

Answer 117

a. Annual Escrow Loan Statement Correct answer is (a). When a potential homebuyer applies for a home loan, the lender must give the buyer a Special Information Booklet, Good Faith Estimate, and a Mortgage Servicing Disclosure Statement.

Question 118

118. Lenders submit Loan Application/Registers in order to comply with the: a. FTC. b. FACT Act. c. FCRA. d. HMDA.

Answer 118

Correct answer is (d). The Home Mortgage Disclosure Act (HMDA) requires lenders to track the ethnicity, race, and sex of borrowers for residential loans.

Question 119

``` 119. In which document does RESPA require that both the real estate broker commission and the mortgage broker compensation are disclosed? a. GFE b. HUD-1 c. TILA d. All of the above ```

Answer 119

b. HUD-1 Correct answer is (b). The HUD-1 Statement requires that sources of compensation for all parties to the transaction are disclosed.

Question 120

120. A commercial e-mail message is any one sent to: a. facilitate or confirm an existing commercial transaction. b. advertise or promote a product or service. c. provide notice about certain changes in a subscription, membership, an account or loan. d. confirm a transaction.

Answer 120

b. advertise or promote a product or service. Correct answer is (b). A commercial e-mail message is any electronic mail message, the primary purpose of which is the commercial advertisement or promotion of a commercial product or service. E-mail sent as part of an ongoing commercial transaction, called transactional e-mail messages, are excluded from the Act.

Question 121

``` 121. SAFE requires __________ hours of NMLS approved pre-licensure education to be completed. a. 5 b. 10 c. 15 d. 20 ```

Answer 121

d. 20

Question 122

122. According to the SAFE Act, states are encouraged to establish a system that keeps track of: a. mortgage interest rates around the country. b. mortgage loan originators offering the best loan programs. c. mortgage loan originators that meet SAFE Act requirements. d. real estate licensees with a negative employment history.

Answer 122

c. mortgage loan originators that meet SAFE Act requirements. Correct answer is (c). The SAFE Act encourages states to participate in the Nationwide Mortgage Licensing System and Registry, and requires states to have a system in place for licensing and registering loan originators that meet its requirements.

Question 123

123. The SAFE Act requires states to set minimum net worth or surety bond requirements or establish a: a. recovery fund paid for by consumers. b. recovery fund paid for by insurance companies. c. recovery fund paid for by loan originators. d. state-imposed tax to fund a recovery account.

Answer 123

c. recovery fund paid for by loan originators.

Question 124

124. Title VIII of the Civil Rights Act of 1968 and the Fair Housing Amendments Act of 1988, taken together constitute the: a. Civil Rights Act. b. Fair Housing Act. c. Fair Housing Initiative. d. Fair and Equal Housing Protection Act.

Answer 124

b. Fair Housing Act. Correct answer is (b). Title VIII of the Civil Rights Act of 1968 and the Fair Housing Amendments Act of 1988, taken together constitute the Fair Housing Act.

Question 125

125. | How many hours does the SAFE Act require of continuing education to be completed each year prior to renewal?

Answer 125

8

Question 126

On the initial TIL Statement the APR for an ARM is 6.55%. If the APR were to change to 7% prior to close, what is the waiting period after redisclosure? a. 3 days b. 3 business days c. 7 days d. 7 business days

Answer 126

Correct answer is (b). Any change to the initial APR for an ARM that changes more than 1/4% must be redisclosed, which triggers an 3-business day waiting period after the borrower received the updated disclosures.

Question 127

``` 127. Of the following, which is NOT asked on loan applications? a. National Origin b. Race c. Religion d. Sex ```

Answer 127

c. Religion

Question 128

128. The Financial Services Modernization Act of 1999: a. allowed commercial banks, investment banks, securities firms, and insurance companies to consolidate. b. is also known as the Gramm-Leach-Bliley Act. c. repealed part of the Glass-Steagall Act. d. is all of the above.

Answer 128

Correct answer is (d). The Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, repealed part of the Glass-Steagall Act of 1933. The Gramm-Leach-Bliley Act allowed commercial banks, investment banks, securities firms, and insurance companies to consolidate. d. is all of the above.

Question 129

129. Which situation would violate ECOA but is required by HMDA? a. Based on your customer's accent, you ask where he is from? b. Your customer's last name is Kim and you ask, "That's Korean, right?" c. You notice that your customer is wearing a beautiful cross and ask which church she attends. d. You ask a very pregnant customer if she plans to have more children.

Answer 129

b. Your customer's last name is Kim and you ask, "That's Korean, right?" Correct answer is (b). HMDA requires that race, ethnicity, and sex are noted by the lender based on visual observation and surname. If Mr. Kim chose not to complete Part X of the Uniform Residential Loan Application, the loan originator could mark "Asian" as Mr. Kim's race.

Question 130

130. TILA requires that disclosures must be: a. clear and conspicuous, in writing, retainable by the consumer, reflect terms of the legal obligation, and provided to the applicant within 3 business days after receipt of an application for credit. b. clear and conspicuous, in writing, retainable by the consumer, reflect terms of the legal obligation, use estimates appropriately (and if based on estimates indicate this fact), and provided to the applicant within 3 business days after receipt of an application for credit. c. clear and conspicuous, in writing, retainable by the consumer, use estimates appropriately (and if based on estimates indicate this fact), and provided to the applicant within 3 business days after receipt of an application for credit. d. clear and conspicuous, retainable by the consumer, reflect terms of the legal obligation, use estimates appropriately (and if based on estimates indicate this fact), and provided to the applicant within 3 business days after receipt of an application for credit.

Answer 130

b. clear and conspicuous, in writing, retainable by the consumer, reflect terms of the legal obligation, use estimates appropriately (and if based on estimates indicate this fact), and provided to the applicant within 3 business days after receipt of an application for credit. Correct answer is (b). TILA states that disclosures must be clear and conspicuous, in writing, retainable by the consumer, reflect terms of the legal obligation, use estimates appropriately (and if based on estimates indicate this fact), and provided to the applicant within 3 business days after receipt of an application for credit.

Question 131

131. If a loan originator has a SAFE-compliant license, the 20 hours education approved by the Nationwide Mortgage Licensing System: a. must be completed again to obtain licensing in another state. b. must be completed every year to maintain licensed status. c. does not have to be completed again. d. must be completed again unless a fee is paid.

Answer 131

Correct answer is (c). SAFE requires 20 hours of NMLS approved pre-licensure education to be completed. This education need only be completed or certified once, regardless of the number of states in which one is licensed.

Question 132

132. Under the SAFE Act, which person would not be considered a loan originator? a. Mortgage loan broker who takes applications b. Loan officer who calls prospective borrowers to discuss loan terms c. Loan processor who also negotiates the terms of loans d. Office manager of a mortgage company

Answer 132

d. Office manager of a mortgage company

Question 133

One of the most important laws protecting consumers' identities and credit information is the: a. Fair Credit Reporting Act. b. Fair Debt Collection Practices Act. c. Federal Trade Commission Act. d. Home Mortgage Disclosure Act.

Answer 133

a. Fair Credit Reporting Act. Correct answer is (a). All are important consumer protection laws, but the FCR protects credit information.

Question 134

Brad just took a listing on a three-bedroom fixer-upper home in a school district with high ratings. Brad wrote the following ads. Which ad follows acceptable advertising guidelines? a. “This is the best home in the neighborhood and is in an exceptional school district.” b. “Nice fixer, three-bedrooms, located by parks and schools with high ratings.” c. “Clean, bright, and move-in ready for the right family.” d. “Beautiful home near parks, in a Hispanic neighborhood.”

Answer 134

b. “Nice fixer, three-bedrooms, located by parks and schools with high ratings. Correct answer is (b). Choices (a), (c), and (d) use half-truths, offensive terms, inflated claims and/or ambiguous or superlative terms.

Question 135

134. If only the annual percentage rate (APR) is disclosed in an advertisement for property, which additional disclosures must be made? a. The amount or percentage of the down payment b. The terms of repayment c. The amount of any finance charge d. No other disclosures are required

Answer 135

d. No other disclosures are required

Question 136

136. In order to be eligible for a SAFE Act-compliant license, an applicant must not have a: a. bad credit history. b. felony conviction in the past seven years. c. minor traffic violation in the past seven years. d. real estate license.

Answer 136

Correct answer is (b). To be eligible for a license under the SAFE Act, an individual must not have been convicted of a felony within the past seven years or convicted of certain types of felonies at any time prior to application.

Question 137

137. Which of the following statements is true regarding the SAFE Act? a. A person can avoid the SAFE Act requirements by physically locating outside of the state b. A person can avoid the SAFE Act by physically locating out of state and conducting business via the internet c. A person can avoid the SAFE Act by physically locating out of state and conducting business via telephone d. If a person physically locates out of a state, he or she is not immune to the SAFE Act

Answer 137

d. If a person physically locates out of a state, he or she is not immune to the SAFE Act Correct answer is (d). According to the SAFE Act, each state is able to establish and enforce the provisions of the licensing system and prevents an individual from avoiding a state's requirements by physically locating outside of the state and conducting business by telephone or other means.

Question 138

The __________ ensures that all consumers are given an equal chance to obtain credit. a. Equal Credit Opportunity Act b. RESPA c. Rights to Financial Privacy Act d. Truth in Lending Act

Answer 138

a. Equal Credit Opportunity Act Correct answer is (a). The Equal Credit Opportunity Act (ECOA) ensures that all consumers are given an equal chance to obtain credit. This does not mean that all consumers who apply for credit receive it.

Question 139

HOEPA is enforced by the: a. FTC. b. FDIC. c. FIRPTA. d. FRB.

Answer 139

a. FTC. Correct answer is (a). HOEPA is enforced by the Federal Trade Commission, which is the primary federal agency tasked with enforcing consumer credit laws.

Question 140

The federal Truth in Lending Act promotes informed consumer credit usage. What directive was issued to accomplish the TILA objectives by requiring lenders to state the cost of borrowing in a common language so that consumers can figure out what the charges are, compare the costs of loans, and shop for the best credit deal? a. Equal Credit Opportunity Act b. Finance Act B c. Regulation B d. Regulation Z

Answer 140

d. Regulation Z Correct answer is (d). To accomplish the objectives of TILA, the Board of Governors of the Federal Reserve System issued a directive called Regulation Z. It requires creditors to give certain disclosures to the consumer before making a loan contract.

Question 141

HUD's Regulation __________ forbids a seller from requiring the use of a particular title company as a condition of the sale. a. B b. V c. X d. Z

Answer 141

c. X Correct answer is (c). HUD's Reg. X, Sec. 3500.16 Title companies states "No seller of property that will be purchased with the assistance of a federally related mortgage loan shall violate section 9 of RESPA (12 U.S.C. 2608)."

Question 142

Which of the following costs would be included in the calculation of the APR on the TIL Statement. a. Downpayment b. Private mortgage insurance c. Termite inspection d. Title insurance

Answer 142

b. Private mortgage insurance Correct answer is (b). The APR reflects the actual cost of borrowing money expressed as a percentage, which includes PMI. The other costs are settlement costs, which are not part of the financing.

Question 143

The __________ establishes procedures for correcting mistakes on a person's credit record and requires that a consumer's record only be provided for legitimate business needs. a. Right to Financial Privacy Act b. Fair Trade Commission Act c. Fair Credit Reporting Act d. Home Equity Loan Consumer Protection Act

Answer 143

c. Fair Credit Reporting Act Correct answer is (c). The Fair Credit Reporting Act establishes procedures for correcting mistakes on a person's credit record and requires that a consumer's record only be provided for legitimate business needs.

Question 144

The right of rescission under TILA is the right of the: a. creditor to cancel the contract. b. borrower to prepay the loan. c. creditor to calculate the APR. d. borrower to cancel the contract.

Answer 144

d. borrower to cancel the contract.

Question 145

The federal law that was written specifically to combat predatory lending is the: a. Real Estate Settlement Procedures Act. b. Truth in Lending Act. c. Home Ownership and Equity Protection Act. d. Fair Housing Act.

Answer 145

c.Home Ownership and Equity Protection Act. Correct answer is (c). While only one federal law—the Home Ownership and Equity Protection Act—is specifically designed to combat predatory lending, federal agencies have taken actions, sometimes jointly, under various federal consumer protection laws.

Question 146

A newly licensed MLO working for Best Mortgage was cold calling consumers. Of the 20 consumers called, 2 were listed on the National Do Not Call Registry. What is the maximum fine that Best Mortgage could pay? a. $4,000 b. $8,000 c. $16,000 d. $32,000

Answer 146

d. $32,000 Correct answer is (d). Best Mortgage could pay $16,000 for each infraction.

Question 147

By encouraging states to establish minimum standards for licensing for mortgage loan originators, the SAFE Act: a. ignores fraudulent practices in the mortgage industry. b. makes underwriting requirements less strict. c. helps to reduce fraud. d. minimizes consumer protection.

Answer 147

c. helps to reduce fraud. Correct answer is (c). The SAFE Act enhances consumer protection and reduces fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators.

Question 148

President Bush signed the Fair and Accurate Transactions Act of 2003 (FACT Act or FACTA), amending the FCRA. This regulation is enforced by the: a. OCC. b. FRB. c. FTC. d. HUD.

Answer 148

c. FTC. Correct answer is (c). The FACT Act or FACTA is enforced by the FTC.

Question 149

One of the key safeguards of the Federal Fair Credit Reporting Act (FCRA) is: a. running a consumer credit check without telling the subject violates FCRA and carries substantial civil penalties. b. requesting a credit check is ok as long as it is necessary for a background check. c. requesting a credit check is ok if it is needed in a workman's comp claim case. d. none of the above.

Answer 149

a. running a consumer credit check without telling the subject violates FCRA and carries substantial civil penalties. Correct answer is (a). Consumers must give permission to "run a credit check".

Question 150

Mortgage Fraud is investigated by the Federal Bureau of Investigation and is punishable by up to: a. 20 years in federal prison or $1,000,000 fine, or both. b. 25 years in federal prison or $1,000,000 fine, or both. c. 30 years in federal prison or $1,000,000 fine. d. 30 years in federal prison or $1,000,000 fine, or both.

Answer 150

d. 30 years in federal prison or $1,000,000 fine, or both. Correct answer is (d). The Fraud Enforcement and Recovery Act of 2009 increased the penalties for a federal conviction for mortgage fraud to a maximum of 30 years in prison and a fine of up to $1 million. FERA also increased the statute of limitations for mortgage fraud from five years to 10 years.

Question 151

Consumers can request and obtain a free credit report once every 12 months from each of the three nationwide consumer-credit reporting companies. This was made possible by the: a. Mortgage Reform and Anti-Predatory Act. b. Fair and Accurate Credit Transactions Act. c. Fair Housing Act. d. Fair Housing Amendments Act.

Answer 151

Correct answer is (b). The Fair and Accurate Credit Transactions Act of 2003 (FACTA or FACT Act) allows consumers to request and obtain a free credit report once every 12 months from each of the three nationwide consumer-credit reporting companies—Equifax®, Experian®, and TransUnion®.

Question 152

How many hours does the SAFE Act require of NMLS approved pre-licensure education to be completed? a. 20 b. 25 c. 30 d. 35

Answer 152

a. 20

Question 153

According to the SAFE Act, state-enacted legislation: a. must never exceed the SAFE Act. b. may exceed the SAFE Act. c. is not legal. d. is only legal if approved by all states.

Answer 153

Correct answer is (b). The SAFE Act's licensing and registration standards for mortgage loan originators represent minimum standards. States may add legislation that may exceed the minimum standards of the SAFE Act.

Question 154

Under the SAFE Act, mortgage loan originators must complete how many hours of Nationwide Mortgage Licensing System-approved pre-licensing education? a. 10 b. 20 c. 30 d. 40

Answer 154

b. 20 Correct answer is (b). State-licensed mortgage loan originators must complete 20 hours of NMLS approved education.

Question 155

All state licensed and federally registered mortgage loan originators must be registered with the: a. Federal Commissions Committee. b. Nationwide Mortgage Licensing System and Registry. c. State Licensing Board d. Federal Trade Commission.

Answer 155

b. Nationwide Mortgage Licensing System and Registry.

Question 156

156. The Fair and Accurate Credit Reporting Act requires businesses, such as financial institutions that rely on consumer reports, to detect, prevent, and mitigate identity theft. To help with this task, the Interagency Guidelines were developed to identify “red flags” that might indicate identity theft. Which of the following could be a red flag? a. A person notifies a credit card issuer of a change of address and soon thereafter, asks the card issuer for replacement cards b. Documents are submitted that include information that is inconsistent with the person applying for credit c. A person supplies a Social Security Number (SSN) that has not been issued or is listed on the Social Security Administration's Death Master File d. All of the above

Answer 156

d. All of the above Choices (a), (b), and (c) are all red flags. Other red flags include a consumer's notation on a credit report such as a fraud alert or credit freeze. Also, unusual patterns in the consumer's use of credit, such as a recent increase in inquiries or new credit accounts, changes in the use of credit, or accounts closed. In addition, suspicious documents that appear to be forged or reassembled, an address that either does not exist or is that of a mail drop or prison, a phone number that is invalid or associated with a pager or answering service, use of an account that has been inactive for a “reasonably lengthy period of time," or mail sent to the account holder that is returned while the transaction continues.

Question 157

Which Act established procedures for correcting mistakes on a person's credit record? a. Equal Credit Opportunity Act b. Fair Credit Reporting Act c. Real Estate Settlement Procedures Act d. Right to Financial Privacy Act

Answer 157

The Fair Credit Reporting Act established procedures for correcting mistakes on a person's credit record.

Question 158

On a federally related mortgage loan, RESPA which settlement fee is prohibited by RESPA? a. Attorney fees b. Loan origination fees c. Referral fees d. Credit report fees

Answer 158

c. Referral fees Correct answer is (c). RESPA prohibits referral fees. It allows fees for performance, such as attorney fees, credit report fees and loan origination fees.

Question 159

159. Based on the term, “loan originator”, what type of tasks are excluded from the SAFE Act? a. Administrative and clerical duties b. Matching a favorable loan program to a mortgage applicant c. Negotiating loan terms for a mortgage applicant d. Soliciting prospective mortgage consumers

Answer 159

a. Administrative and clerical duties Correct answer is (a). The SAFE Act describes activities in the residential mortgage process that are excluded from the definition of "loan originator. Activities that are excluded include administrative or clerical tasks.

Question 160

What three RESPA federally required disclosures must be provided within three days of receipt of the loan application for a purchase money loan? a. GFE, CHARM Booklet, and HUD-1 b. GFE, Mortgage Disclosure Servicing Statement, and a Special Information Booklet, which contains consumer information regarding various real estate settlement services c. GFE, Affiliate Business Arrangement, and Mortgage Disclosure Servicing Statement d. GFE, HUD-1, and the Truth in Lending Disclosures

Answer 160

Correct answer is (b). RESPA requires that within three days of receipt of the loan application for a purchase money loan, the GFE, Mortgage Disclosure Servicing Statement, and a Special Information Booklet must be given to the borrower.

Question 161

Under the Red Flag Rules, which could be considered a warning sign of identity theft? a. Suspicious account application documents b. Suspicious personal identifying information, such as a suspicious address c. Unusual account activity d. All of the above

Answer 161

d. All of the above The Interagency Guidelines on Identity Theft Detection, Prevention, and Mitigation are part of the Fair and Accurate Credit Transactions Act of 2003 (FACTA). Under the Red Flags Rules, financial institutions and creditors must develop a written program that identifies and detects the relevant warning signs—or “red flags”—of identity theft. These may include, unusual account activity, fraud alerts on a consumer report, attempted use of suspicious account application documents, suspicious address, or notices from customers, law enforcement authorities, or other businesses about possible identity theft in connection with covered accounts.

Question 162

Which federal agency enforces the FCRA? a. FACT b. FDIC c. FHA d. FTC

Answer 162

Correct answer is (d). The Fair Credit Reporting Act (FCRA) is enforced by the Federal Trade Commission (FTC) and state consumer protection agencies.

Question 163

Which Act requires a Mortgage Servicing Disclosure Statement? a. ECOA b. HOEPA c. RESPA d. TILA

Answer 163

c. RESPA Correct answer is (c). RESPA requires that borrowers are given a Mortgage Servicing Disclosure Statement to disclose that the servicing of the mortgage will be sold.

Question 164

On loans governed by RESPA, a buyer or seller may NOT legally be charged for: a. preparation of the loan documents. b. conducting an appraisal prior to the loan. c. preparation of the Uniform Settlement Statement. d. preparation of credit reports.

Answer 164

Correct answer is (c). As provided by RESPA, a lender may not assess a fee or charge anyone in connection with or on account of the preparation of the Uniform Settlement Statement.

Question 165

SAFE requires __________ hours of continuing education to be completed each year prior to renewal. a. 4 b. 8 c. 16 d. 24

Answer 165

b. 8 Correct answer is (b). SAFE requires 8 hours of continuing education to be completed each year prior to renewal.

Question 166

A person obtained 80% financing for an office building. Under TILA, what is the rescission period? a. 3 days b. 3 business days c. 7 business days d. There is no right of rescission.

Answer 166

d. There is no right of rescission. Correct answer is (d). TILA does not pertain to commercial loans.

Question 167

A creditor denied an applicant a loan. Which document must be sent to the applicant? a. Advice of Denied Application b. Adverse Action Notice c. Good Faith Notice d. HUD-1 Statement

Answer 167

b. Adverse Action Notice Correct answer is (b). An adverse action notice informs a consumer that he or she has been denied credit, employment, insurance, or other benefits based on information in a credit report. The notice should indicate which credit reporting agency was used, and how to contact them. This is required by the Fair Credit Reporting Act (FCRA).

Question 168

When are the funds disbursed for an owner-occupied residential refinance? a. At the time of closing b. After the 3-day rescission period c. Five days after closing d. The same day that the loan closes

Answer 168

b. After the 3-day rescission period Correct answer is (b). TILA gives owner-occupants of residential property until midnight of the 3rd business day to rescind. Therefore, lenders wait until the 4th business day after closing to disburse funds.

Question 169

According to the FACT Act, which person would most likely not add an ID alert to a credit report? a. Person is transferred from Texas to Michigan for a 2-year position b. Person's wallet is stolen and not retrieved by the police c. Person changes his or her name d. Marine goes overseas for military duty

Answer 169

c. Person changes his or her name Correct answer is (c). The ID Alert does not cover name changes.

Question 170

The SAFE Act provides which of the following information to consumers about mortgage loan originators? a. Current interest rates for all states b. Past disciplinary actions c. Types of loan programs offered d. Underwriting requirements for loan qualification

Answer 170

b. Past disciplinary actions Correct answer is (b). The SAFE Act provides consumers with accessible information on the employment history and disciplinary actions against mortgage loan originators.

Question 171

Which of the following is one of the Do Not Call Rules? a. Mortgage loan originators may use caller ID blocking. b. Mortgage loan originators must identify themselves before making the solicitation. c. Sender must have voluntarily received recipient's fax number. d. Transactional e-mail messages are excluded from the Act.

Answer 171

b. Mortgage loan originators must identify themselves before making the solicitation. Correct answer is (b). Mortgage loan originators must identify themselves before making the solicitation and must identify that the call is a solicitation. Mortgage loan originators may NOT use caller ID blocking. Choice (c) deals with Do Not Fax Rules and choice (d) deals with the CAN-Spam Act.

Question 172

What is the commonality of finance charge, APR, payment schedule, and amount financed? a. Holden Act b. Home Ownership and Equity Reduction Act c. Real Estate Settlement Procedures Act d. Truth in Lending Act

Answer 172

d. Truth in Lending Act Correct answer is (d). These are required disclosures under the Truth in Lending Act, implemented by Regulation Z.

Question 173

If the annual percentage rate provided in the good faith estimate is out of tolerance under TILA, creditors must provide a corrected TIL disclosure statement to a consumer: a. at the time of consummation of the transaction. b. one week before the consummation of the transaction. c. on or before the 3rd business day before consummation of the transaction. d. no more than 3 business days after the consummation of the transaction.

Answer 173

c. on or before the 3rd business day before consummation of the transaction. Correct answer is (c). If the annual percentage rate provided in the good faith estimates changes beyond a specified tolerance for accuracy (more than 1/8 of 1% in a regular transaction or 1/4 of 1% in an irregular transaction), creditors must provide corrected disclosures, which the consumer must receive on or before the third business day before consummation of the transaction.

Question 174

Under HOEPA, what is the fee threshold percentage that would trigger HOEPA disclosures? a. 6% b. 8% c. 10% d. 12%

Answer 174

b. 8% Correct answer is (b). A loan is covered under HOEPA if the total fees and points payable by the consumer at or before closing exceed the larger of $579 or eight percent of the total loan amount. (The $579 figure is for 2010.)

Question 175

The organization with the acronym FCRA whose purpose is to require that consumer-reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit: a. Fair Credit Reporting Agency b. False Credit Reporting Agency c. Federal Credit Repair Agency d. Federal Credit Repair Association

Answer 175

a. Fair Credit Reporting Agency Correct answer is (a). The acronym, FCRA, stands for the Fair Credit Reporting Agency.

Question 176

When advertising a property for sale, which of the following statements would place the loan originator in violation of the federal Truth-in-Lending Act? a. 3-bedroom, 2 bath, excellent FHA or VA financing available; total price $225,000 b. 4-bedroom, 2 baths, easy terms; total price $225,000 c. 3-bedroom, 2 bath, large lot, with 10% down; total price $225,000 d. 3-bedroom, 3 bath, owner will help finance; total price $225,000

Answer 176

Correct answer is (c). An ad must disclose all credit terms if it contains any one of the following four triggering terms: (1) the down payment, (2) the number, or term of payments, (3) the amount of any payment, or (4) the finance charge. In this case, the 10% down payment triggers the other disclosures.

Question 177

177. The Truth in Lending Act is Title 1 of the: a. 1866 Civil Rights Act. b. Civil Rights Act of 1968. c. Consumer Credit Protection Act of 1968. d. Equal Credit Opportunity Act.

Answer 177

c. Consumer Credit Protection Act of 1968. Correct answer is (c). The federal Truth in Lending Act (TILA) is Title 1 of the Consumer Credit Protection Act of 1968.

Question 178

A creditor is allowed to collect which fees from a consumer prior to the issuance of the initial TIL disclosure? a. Appraisal fee b. Credit report fee c. Inspection fee d. All of the above

Answer 178

b. Credit report fee Correct answer is (b). Under TILA, prior to the issuance of early disclosures, collection of fees from a mortgage applicant are limited to a reasonable credit report fee.

Question 179

179. Form 1003, Section X: Information for Government Monitoring Purposes must be completed to comply with the: a. CRA. b. FCRA. c. HMDA. d. TILA.

Answer 179

c. HMDA. Regulation C implements the Home Mortgage Disclosure Act (HMDA). One of the purposes of HMDA is to identify possible discriminatory lending patterns and enforce antidiscrimination statutes by requiring the collection and disclosure of data about applicant and borrower characteristics.

Question 180

180. The National Flood Insurance Reform Act, passed in 1994, is overseen by: a. FRB - Federal Reserve Board. b. FTC - Federal Trade Commission. c. HUD - Department of Housing and Urban Development. d. NFIP - National Flood Insurance Program.

Answer 180

a. FRB - Federal Reserve Board. Correct answer is (a). The Federal Reserve Board oversees the National Flood Insurance Reform Act through its Regulation H.

Question 181

The SAFE Mortgage Loan Originator Test consists of which two component types? a. Appraisal and Finance b. Federal and State Specific c. Math and English d. National and State-Specific

Answer 181

d.National and State-Specific Correct answer is (d). The SAFE Mortgage Loan Originator Test consists of two component types: National and State-Specific.

Question 182

What is the name of the process by which state agencies certify that licensed mortgage loan originators have successfully completed state education and/or state testing requirements? a. Disapproval process b. Certification c. Interviewing d. Licensing

Answer 182

Correct answer is (b). “Certification” is the process by which state agencies certify that licensed mortgage loan originators have successfully completed state education and/or state testing requirements in satisfaction of the SAFE Act prelicensing education and state test requirements.

Question 183

Which of the following statements about RESPA is true? a. It applies to all federally related home loans used to purchase or refinance a principal residence. b. It only applies to FHA-insured loans. c. It protects lenders by eliminating kickbacks and referral fees. d. It promotes unfair settlement services.

Answer 183

It applies to all federally related home loans used to purchase or refinance a principal residence. Correct answer is (a). RESPA applies to all federally related home loans used to purchase or refinance real property or improved real property of one-to-four units, providing the property includes the principal residence of the borrower.

Question 184

Sometimes TILA is referred to as: a. Regulation C. b. Regulation X. c. Regulation Y. d. Regulation Z.

Answer 184

d. Regulation Z.

Question 185

The SAFE Act prohibits employees of an agency-related institution from originating residential mortgage loans without first registering with the: a. Mortgage Association. b. Nationwide Mortgage Licensing System and Registry. c. State Commissioner's Registry. d. State Government Registry.

Answer 185

b. Nationwide Mortgage Licensing System and Registry. (NMLS)

Question 186

According the Gramm-Leach-Bliley Act, of the following which is most likely to be public information? a. Borrower's credit score b. Borrower's gross taxable income c. Borrower's sales price of current home d. Borrower's savings account number

Answer 186

Borrower's sales price of current home. Correct answer is (c). Borrower's credit scores taxable income, savings account numbers, and social security numbers are private information and must be protected.

Question 187

Under RESPA, an affiliated business arrangement (AfBA)disclosure must be provided: a. at the time of application, even if there are no AfBAs. b. at or prior to the time a referral is made, if there is an AfBA. c. within 3 days of settlement, even if there are no AfBAs. d. ten business days after closing, if there is an AfBA.

Answer 187

b. at or prior to the time a referral is made, if there is an AfBA. Correct answer is (b). RESPA requires an AfBA disclosure ( at or prior to the time of the referral) whenever a settlement service provider involved in a RESPA covered transaction refers the consumer to a provider with whom the referring party has an ownership or other beneficial interest.

Question 188

Which of the following is responsible for registering all state licensed and federally registered mortgage loan originators? a. Federal Commissions Committee b. Federal Reserve Board c. Nationwide Mortgage Licensing System and Registry d. Mortgage Licensing Association

Answer 188

c. Nationwide Mortgage Licensing System and Registry Correct answer is (c). All state licensed and federally registered mortgage loan originators must be registered with the Nationwide Mortgage Licensing System and Registry maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.

Question 189

On what document is the initial APR disclosed? a. GFE statement b. Initial escrow statement c. HUD-1 statement d. TIL statement

Answer 189

d. TIL statement Correct answer is (d). The Truth in Lending (TIL) statement discloses the annual percentage rate (APR) along with the total cost of the financing.

Question 190

.When is a loan originator not required to provide a GFE or TIL Statement to a borrower? a. The borrower applies to multiple lenders for the same loan. b. The borrower refuses to complete Section X of the Uniform Loan Application. c. The borrower withdraws the application within 3 business days. d. The borrower may not be approved for the loan.

Answer 190

c.The borrower withdraws the application within 3 business days. Correct answer is (c). If the borrower withdraws the application (or the lender turns down the loan)within 3 business days, the MLO does not have to provide the disclosure documents.

Question 191

A first-lien loan would be considered a Section 32 loan if the points and fees are greater than: a. 7.99% of the sale price. b. 8% of the sale price. c. 7.99% of the loan amount. d. 8% of the loan amount.

Answer 191

d. 8% of the loan amount. Correct answer is (d). A first-lien loan would be considered a Section 32 loan if the points and fees payable by the consumer at or before closing EXCEED 8% of the total loan amount. Exceed means 8.01% or more, therefore 7.99% of the loan amount would NOT be considered a Section 32 loan.

Question 192

Pre-licensing education requirements mandated by the SAFE Act call for state-licensed mortgage loan originators to complete courses approved by the: a. Nationwide Mortgage Loan System (NMLS) b. Nationwide Mortgage Licensure Society (NMLS) c. Nationwide Mortgage Licensing Selection Committee (NMLSC) d. Nationwide Mortgage Licensing System (NMLS)

Answer 192

d. Nationwide Mortgage Licensing System (NMLS) Correct answer is (d). Pre-licensing education requirements mandated by the SAFE Act call for state-licensed mortgage loan originators to complete courses approved by the Nationwide Mortgage Licensing System (NMLS).

Question 193

Which federal act includes the Privacy Rule? a. FIRREA b. Glass-Steagall Act c. Gramm-Leach-Bliley Act d. Robinson Patman Act

Answer 193

c. Gramm-Leach-Bliley Act Correct answer is (c). Title V - Privacy, of the Gramm-Leach-Bliley Act, requires clear disclosure by all financial institutions of their privacy policy regarding the sharing of non-public personal information with both affiliates and third parties.

Question 194

What are the penalties for not determining the flood status, not notifying the borrower of the status and insurance requirements, failing to escrow premium if an escrow account is required for the other payments and/or failing to force place insurance when required? a. $250 for each violation with no maximum amount b. $350 for each violation with a maximum $100,000 per calendar year c. $500 for each violation with a maximum $100,000 per calendar year d. $3,500 for each violation with a maximum $1,000,000 per calendar year

Answer 194

Correct answer is (b). Anyone who does not determine flood status of a property is subject to $350 for each violation with a maximum $100,000 per calendar year.

Question 195

Under the Do-Not-Call rules, at what time of day may a loan originator make cold calls? a. Only between 8:00 a.m. and 9:00 p.m. b. Anytime c. Only between 9:00 a.m. and 6:00 p.m. d. Never

Answer 195

Correct answer is (a). Under the Do-Not-Call rules, mortgage loan originators may make cold calls provided that the calls are only made between 8:00 a.m. and 9:00 p.m.

Question 196

The entities regulated by the FACT Act (FACTA)are: a. Consumer Reporting Agencies (CRAs), users of Consumer Reports, and furnishers of information to the Federal Trade Commission (FTC). b. Consumer Reporting Agencies (CRAs), users of Consumer Reports, and furnishers of information to Consumer Reporting Agencies (CRAs). c. Consumer Reporting Agencies (CRAs) and furnishers of information to Consumer Reporting Agencies (CRAs). d. Consumer Reporting Agencies (CRAs), users of Consumer Reports, and furnishers of information to The Department of Housing and Urban Development (HUD).

Answer 196

b. Consumer Reporting Agencies (CRAs), users of Consumer Reports, and furnishers of information to Consumer Reporting Agencies (CRAs) Correct answer is (b). The FACT Act regulates consumer-reporting agencies (CRAs), users of consumer reports, and furnishers of information to consumer reporting agencies (CRAs).

Question 197

Any individual who, for compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan application must be licensed or registered as a: a. Mortgage Loan Appraiser. b. Real Estate Broker. c. Mortgage Loan Originator. d. Real Estate Sales Associate.

Answer 197

c.Mortgage Loan Originator. Correct answer is (c). Any individual who, for compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan application must be licensed or registered as a Mortgage Loan Originator.

Question 198

Under HOEPA, what are the terms of the "cooling off" period? a. 3 days after closing b. 3 days prior to closing c. 7 days prior to closing d. 10 days after closing

Answer 198

Correct answer is (b). Under HOEPA, after calculating the final fees and signing a Section 32 disclosure, 3 days must pass before closing the loan and disbursing the funds.

Question 199

199. All residential mortgage loan originators must be __________ according to the SAFE Act. a. federally licensed b. nationally registered c. either state-licensed or federally registered d. state registered

Answer 199

Correct answer is (c). c. either state-licensed or federally registered According to the SAFE Act, all residential mortgage loan originators must be either state-licensed or federally registered.

Question 200

The SAFE Act is designed to: a. assist the flow of the real estate market. b. enhance consumer protection and reduce fraud. c. help consumers seek better appraisals for their properties. d. implement safety standards in home inspection.

Answer 200

b. enhance consumer protection and reduce fraud. Correct answer is (b). The SAFE Act is designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing and registration of state-licensed mortgage loan.

Question 201

Under ECOA, when qualifying a borrower for a mortgage loan, a lender might not consider which source of income? a. Alimony paid irregularly b. Annuity income c. Part-time employment d. Public assistance income

Answer 201

a. Alimony paid irregularly Correct answer is (a). When evaluating income, creditors may not refuse to consider reliable public assistance income, part-time employment, Social Security, pensions, or annuities. A creditor must consider reliable alimony, child support, or separate maintenance payments, but may ask for proof that the income is received consistently.

Question 202

.In general, the Do Not Call rules do not apply to calls made: a. containing a commercial solicitation. b. if an established business relationship already exists. c. for business purposes. d. during normal business hours.

Answer 202

b. if an established business relationship already exists. Correct answer is (b). Do Not Call rules apply to calls containing a commercial solicitation (most cold calls). The rules do not apply to calls made if an established business relationship already exists.

Question 203

Which of the following loans is exempt from the Truth in Lending Act on the basis of the type of loan itself? a. Agricultural loan b. FHA loan to buy a home c. VA loan to refinance a veteran's home d. $25,000 loan from a credit union for home improvement purposes

Answer 203

a. Agricultural loan Correct answer is (a). Business loans and agricultural loans are exempt from the Truth in Lending Act.

Question 204

Pursuant to the Federal Fair Credit Reporting Act, a consumer's credit report must contain consumer information bearing on which of the following: a. credit capacity. b. credit standing. c. credit worthiness. d. all of the above.

Answer 204

d. all of the above. Correct answer is (d). A consumer's credit report must contain information regarding a person's credit capacity, credit standing, and credit worthiness.

Question 205

A state law requires that interest is paid on escrow accounts. This is: a. not in violation of RESPA, so the state could enforce the law. b. inconsistent with RESPA, so the state cannot enforce the law. c. in direct violation of RESPA, so the state law is invalid. d. similar to the RESPA requirement, so should pose no problem.

Answer 205

a. not in violation of RESPA, so the state could enforce the law. Correct answer is (a). RESPA neither requires nor prohibits payment of interest on an escrow account.

Question 206

Under TILA, what is the relative cost of credit expressed as a yearly rate? a. APR b. ARM c. CPI d. GDP

Answer 206

Correct answer is (a). The annual percentage rate (APR) is the relative cost of credit expressed as a yearly rate. Expressed as a percentage, it is the relationship of the total finance charge to the total amount financed.

Question 207

What network of lenders provides financing alternatives for a borrower who is seeking to purchase a rural property for agricultural production? a. Farmer's Home Administration (FmHA) b. Farm Credit System c. WRAP d. American Farm Workers

Answer 207

b. Farm Credit System Correct answer is (b). The Farm Credit System is a national network of lenders that work together to provide funds to foster agricultural production and finance the purchase of rural property.

Question 208

The process by which state agencies certify that licensed mortgage loan originators have successfully completed state education and/or state testing requirements in satisfaction of the SAFE Act Prelicense Education and state test requirements is known as: a. approval process. b. certification. c. licensing. d. screening.

Answer 208

Correct answer is (b). Certification is the process by which state agencies certify that licensed mortgage loan originators have successfully completed state education and/or state testing requirements in satisfaction of the SAFE Act PE and state test requirements.

Question 209

The SAFE Act was passed on: a. July 30, 2008. b. August 30, 2008. c. September 30, 2008. d. October 30, 2008.

Answer 209

Correct answer is (a). a. July 30, 2008. The SAFE Act was passed on July 30, 2008.

Question 210

The SAFE Act requires agencies to jointly develop and maintain a system for registering residential mortgage loan originators who are employees of agency-related institutions including all of the following, except: a. Farm Credit System institutions. b. home inspectors' association. c. national and state banks. d. savings associations.

Answer 210

b. home inspectors' association. Correct answer is (b). The SAFE Act requires agencies to jointly develop and maintain a system for registering residential mortgage loan originators who are employees of agency-related institutions including national and state banks, savings associations, credit unions, and Farm Credit System institutions.

Question 211

The main purpose of TILA is to: a. eliminate or minimize usury. b. establish the maximum annual percentage rate. c. limit the cost of credit available to consumers. d. require disclosure of credit terms so consumers can compare loans.

Answer 211

d. require disclosure of credit terms so consumers can compare loans. Correct answer is (d). The main purpose of the Act is to promote the informed use of consumer credit by requiring creditors to disclose credit terms so consumers can make comparisons between different sources of credit. The Act is implemented by Regulation Z.

Question 212

Broker Tom offers extensive sales training classes in his office. During a recent office session, he discussed a Federal act, which protects consumers from unfair closing practices. Tom, placed emphasis on kickback fees, fee splitting, referral fees and non-disclosure of closing costs. What is the Federal law? a. National Credit Protection Law b. Real Estate Settlement Procedures Act c. Regulatory Credit Settlement Act d. Right to Credit Settlement Act

Answer 212

b. Real Estate Settlement Procedures Act correct answer is (b). The purpose of RESPA is to help consumers get fair settlement services by requiring that key service costs be disclosed in advance. To protect consumers by eliminating kickbacks and referral fees that unnecessarily increase the costs of settlement services and to further protect consumers by prohibiting certain practices that increase the cost of settlement services. HUD's Office of Consumer and Regulatory Affairs is responsible for enforcing RESPA.

Question 213

The SAFE Act affects subprime mortgage lending by offering: a. alternative financing for subprime borrowers. b. bailout assistance for failing subprime lenders. c. lines of credit to create subprime mortgages. d. training and examination requirements.

Answer 213

d. training and examination requirements. Correct answer is (d). The SAFE Act facilitates responsible behavior in the subprime mortgage market by providing training opportunities and examination requirements related to subprime mortgage lending.

Question 214

Which is not a requirement under the Gramm-Leach-Bliley Act's Safeguards Rule? a. Protect the confidentiality of personal consumer information b. Protect the integrity of personal consumer information c. Protect consumers by allowing them to add their phone numbers to a list that prohibits unauthorized calls d. Protect against unauthorized access to use of consumer information

Answer 214

c. Protect consumers by allowing them to add their phone numbers to a list that prohibits unauthorized calls Correct answer is (c). Under the Gramm-Leach-Bliley Act, the Safeguards Rule, enforced by the Federal Trade Commission, requires financial institutions to have a security plan to protect the confidentiality and integrity of personal consumer information.

Question 215

Which of the following financial information is not reflected on the TIL Statement? a. Amount financed b. Finance charges c. Note rate d. Total of payments

Answer 215

c. Note rate Correct answer is (c). The APR is required on the TIL Statement, but not the note rate.

Question 216

What is the waiting period that the SAFE Act requires prior to a candidate being allowed to retake a failed test component? a. 7 calendar days b. 30 calendar days c. 60 calendar days d. 90 calendar days

Answer 216

b. 30 calendar days Correct answer is (b). The SAFE Act states that a waiting period of 30 calendar days is required prior to the candidate being allowed to retake a failed test component (either National or State).

Question 217

Ads should not have words that state or imply a preference with regard to race, color, religion, handicap, sex, or familial status. What words and phrases are considered clearly offensive? a. Gated b. Parks nearby c. Singles only d. Nice

Answer 217

c. Singles only Correct answer is (c). Ads should not have words that state or imply a preference or limitation with regard to race, color, religion, handicap, sex, or familial status. Some words are clearly objectionable while other words and phrases are marginally objectionable because they convey a wrong signal, particularly to those who have been victims of discrimination in the past.

Question 218

All of the following course topics have been determined to not be in compliance with the SAFE Act, except (in other words which topic is in compliance with the SAFE Act): a. commercial lending. b. fair lending. c. financial planning courses. d. loan product training.

Answer 218

b.fair lending. Correct answer is (b). The following course topics have been determined to not be in compliance with the SAFE Act: general self-improvement courses; financial planning courses; any courses related to selling, sales, marketing, lead-generation, or business development; loan product training, product marketing, or advertising; any courses related to consumer data mining, market segmentation, or minority marketing practices; any information technology-related course; commercial lending; and courses on federal, state, or local law not related to mortgage.

Question 219

Which of the following statements about RESPA is not true? a. It applies to all federally related home loans used to purchase or refinance a principal residence. b. It protects consumers by eliminating kickbacks and referral fees that increase settlement service costs. c. It only applies to FHA-insured loans. d. It helps consumers get fair settlement services by requiring the advance disclosure of key service costs.

Answer 219

Correct answer is (c). RESPA applies to all federally related home loans used to purchase or refinance real property or improved real property of one-to-four units, providing the property includes the principal residence of the borrower.

Question 220

Which organization develops the written exam that state-licensed mortgage loan originators must take and pass? a. Nationwide Mortgage Loan System (NMLS) b. Nationwide Mortgage Licensure Society (NMLS) c. Nationwide Mortgage Licensing Administrators (NMLA) d. Nationwide Mortgage Licensing System (NMLS)

Answer 220

d. Nationwide Mortgage Licensing System (NMLS) Correct answer is (d). The SAFE Act requires state-licensed mortgage loan originators to pass a qualified written test developed by the Nationwide Mortgage Licensing System (NMLS) and administered by an approved test provider.

Question 221

Which federal law does not allow a lender to consider the borrower's family size when qualifying income for the borrower. a. ECOA b. FCRA c. HMDA d. RESPA

Answer 221

Correct answer is (a). | The ECOA does not all discrimination based on family size.

Question 222

Section 32 of Regulation Z covers: a. . high cost, high interest loans. b. red flags. c. discrimination in lending. d. cold calling potential customers.

Answer 222

a.. high cost, high interest loans | Reg. Z, Section 32 is part of TILA and covers high cost/high interest loans.

Question 223

The sharing of non-public confidential information between financial institutions is addressed in the: a. ECOA. b. FCRA. c. GLBA. d. TILA.

Answer 223

c. GLBA. Correct answer is (c). The Gramm-Leach-Bliley Act sets specific guidelines on the sharing of non-public confidential information between financial institutions.

Question 224

Under the Fair Credit Reporting Act, what must a lender do if an adverse action is taken against a credit applicant based on information in the applicant's credit report? a. Give the applicant a copy of the credit report. b. Explain that the credit reporting agency was the decision maker, not the lender. c. Give the consumer the contact information of the credit reporting agency that issued the report. d. Remind the applicant that good credit is his or her responsibility.

Answer 224

c. Give the consumer the contact information of the credit reporting agency that issued the report. Correct answer is (c). Under FCRA, the lender must provide the contact information of the credit reporting agency to the applicant.

Question 225

Which of the following situations would not apply to the SAFE Act? a. A loan originator negotiating the terms of mortgage loan with a prospective borrower b. A loan originator negotiating the terms of a mortgage loan with a lender c. An attorney who is negotiating the terms of a mortgage loan with a client d. An attorney employed by a loan originator who is negotiating the terms of a loan with a client

Answer 225

c. An attorney who is negotiating the terms of a mortgage loan with a client Correct answer is (c). The Safe Act's definition of a “loan originator” generally would not apply to, for example, a licensed attorney who negotiates terms of a residential mortgage loan with a prospective lender on behalf of a client, unless the attorney is compensated by a lender, mortgage broker, or other mortgage loan originator or by an agent of such lender, mortgage broker, or other loan originator.

Question 226

Under RESPA, how often must a creditor reconcile its escrow accounts to be sure that excess funds are not being kept (excess funds are returned to the borrower? a. Monthly b. Quarterly c. Semi-annually d. Annually

Answer 226

Correct answer is (d). | RESPA requires creditors to perform an annual escrow account analysis and return any excess over $50 to the borrower.

Question 227

Of the following, which does the FTC enforce? a. TILA b. ECOA c. FCRA d. All of the above

Answer 227

Correct answer is (d). The Federal Trade Commission (FTC) enforces laws that protect consumers, which includes Truth in Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, and others.

Question 228

The acronym FCRA stands for: a. Formal Credit Reporting Agency b. Federal Criminal Reporting Act c. Fair Credit Reporting Act d. Federal Credit Reporting Act

Answer 228

c. Fair Credit Reporting Act Correct answer is (c). The acronym FCRA stands for the Fair Credit Reporting Act.

Question 229

In addition to a criminal background check, state-licensed mortgage loan originators must give authorization to the Nationwide Mortgage Licensing System (NMLS) to obtain a: a. driving record. b. previous employer verification. c. credit report. d. social security number verification.

Answer 229

c. credit report. Correct answer is (c). The SAFE Act also requires all mortgage loan originators to submit fingerprints to the Nationwide Mortgage Licensing System (NMLS) for submission to the FBI for a criminal background check. In addition, state-licensed originators must provide authorization for NMLS to obtain an independent credit report.

Question 230

According to HMDA, what must be forwarded to the regulator by March 1 of each year? a. Adverse Action Notices b. Do Not Call List c. Loan/Application Register d. Red Flags Policy

Answer 230

c. Loan/Application Register Correct answer is (c). According to the Home Mortgage Disclosure Act, by March 1 following the calendar year for which the loan data are compiled, a financial institution shall send its complete loan/application register to the agency office. [203.5 (a)]

Question 231

How many days after the initial loan application, does RESPA require the borrower to sign the GFE? a. Within 30 days b. Within 3 days c. Within 3 business days d. Never

Answer 231

d. Never Correct answer is (d). RESPA does not require the borrower to sign the Good Faith Estimate. They must receive it within 3 business days.

Question 232

What was the landmark legislation that launched Truth in Lending disclosures in 1968? a. Community Reinvestment Act b. Consumer Credit Protection Act c. Equal Credit Opportunity Act d. Real Estate Settlement Procedures Act

Answer 232

b. Consumer Credit Protection Act The Consumer Credit Protection Act of 1968, which launched Truth in Lending disclosures, was landmark legislation. This Act forces the creditors to state the cost of borrowing in a common language so that consumers can figure out what the charges are, compare the costs of loans, and shop for the best credit deal.

Question 233

HUD's Regulation X implements: a. FCRA. b. RESPA. c. SAFE. d. TILA.

Answer 233

b. RESPA. Correct answer is (b). HUD's Reg. X implements the Real Estate Settlement Procedures Act (RESPA).

Question 234

What is a creditor NOT permitted to ask borrowers when taking a loan application? a. Name of employer b. Home address c. Pay child support d. Receive child support

Answer 234

Correct answer is (d). Under ECOA, creditors may ask "Is there additional income you would like to use as a basis for repaying this obligation?" The applicant may choose to disclose child support or separate maintenance income.

Question 235

On July 30, 2008, the __________ Act created the SAFE Act. a. Housing and Urban Development b. Housing and Community Development c. Housing and Economic Recovery d. Housing and Ethical Financial Reinforcement

Answer 235

c. Housing and Economic Recovery (HERA) Correct answer is (c). On July 30, 2008, the Housing and Economic Recovery Act of 2008 was signed into law, and includes the Secure and Fair Enforcement for Mortgage Licensing Act.

Question 236

The SAFE Act is part of the: a. Financial Institutions Reform, Recovery, and Enforcement Act. b. Gramm-Leach-Bliley Act. c. Housing and Economic Recovery Act. d. Troubled Assets Relief Program.

Answer 236

Correct answer is (c). | The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) is part of the Housing and Economic Recovery Act.

Question 237

HMDA is also referred to as: a. Regulation B. b. Regulation C. c. Regulation X. d. Regulation Z.

Answer 237

Correct answer is (b). The Home Mortgage Disclosure Act (HMDA) was enacted by Congress and implemented by the Federal Reserve Board's Regulation C. Compliance with HMDA is enforced by the Federal Deposit Insurance Act for national banks.

Question 238

What does TILA consider the tolerance for accuracy of the annual percentage rate? a. Not less than 1/8 of 1% in a regular transaction b. Not more than 1/8 of 1% in an irregular transaction c. Not more than 1/8 of 1% in a regular transaction d. Not more than 1/2 of 1% in an irregular transaction

Answer 238

Correct answer is (c). As a general rule, the annual percentage rate is considered accurate if it is not more than 1/8 of 1 percentage point above or below the annual percentage rate. In an irregular transaction, the annual percentage rate is considered accurate if it is not more than 1/4 of 1 percentage point above or below the annual percentage.

Question 239

Which federal law protects against discrimination in the sale, rental, or financing of residential property on the basis of race, color, national origin, religion, sex, familial status, or handicap? a. CRA of 1977 b. ECOA of 1976 c. FHA of 1988 d. MDIA of 2008

Answer 239

c. FHA of 1988

Question 240

Which of the following is a violation of the Federal Fair Credit Reporting Act: a. Not informing the subject of a consumer credit check b. Not informing the subject of the contents of their credit check c. Not informing the subject of the intended use of their credit check d. All of the above

Answer 240

d. All of the above | All of the choices violate the FCRA.(Federal Fair Credit Reporting Act)

Question 241

Reg. B Section 202.5 of the Equal Credit Opportunity Act states that you cannot discourage an application for which of the following reasons? a. Information regarding a spouse, marital status, income from alimony/child support, sex of applicant, dependent information, color, religion, or origin b. Information regarding marital status, income from alimony/child support, sex of applicant, dependent information, race, color, religion, or origin c. Information regarding a spouse, marital status, income from alimony/child support, sex of applicant, dependent information, race, color, religion, or origin d. Information regarding a spouse, marital status, sex of applicant, dependent information, race, color, religion, or origin

Answer 241

Correct answer is (c). Reg. B states that you cannot discourage an application on information regarding a spouse, marital status, income from alimony/child support, sex of applicant, dependent information, race, color, religion, or national origin.

Question 242

What is the purpose of FACTA? a. Prevent lending discrimination b. Allow equity skimming c. Prevent identity theft d. Discourage predatory lending

Answer 242

c. Prevent identity theft | The Fair and Accurate Credit Transaction Act of 2003 (Fact Act or FACTA) helps prevent identity theft.

Question 243

What is the passing score that the SAFE Act requires all mortgage loan originators to pass with on the NMLS-developed SAFE Mortgage Loan Originator Test for each component? a. 65% b. 75% c. 85% d. 95%

Answer 243

b. 75% Correct answer is (b). The SAFE Act requires all mortgage loan originators to pass the NMLS-developed SAFE Mortgage Loan Originator Test, including both national and state components, with a score of 75% or better on each component.

Question 244

Under which directive is a creditor required to furnish consumers with certain disclosures prior to a contract for loan? a. Fannie Mae guidelines b. Freddie Mac guidelines c. Regulation Z d. Equal Credit Opportunity Act

Answer 244

c.Regulation Z Correct answer is (c). Regulation Z (Reg. Z) requires a creditor to furnish certain disclosures to the consumer before a contract for a loan is made.

Question 245

Which of the following would not be considered a creditor under the ECOA? a. Real estate brokers who arrange financing to purchase real property b. Banks and finance companies c. Credit card companies d. Individuals offering credit terms when selling their personal property, such as cars

Answer 245

d. Individuals offering credit terms when selling their personal property, such as cars ECOA applies to any organizations or people who regularly extend credit, including banks, small loan and finance companies, retail and department stores, credit card companies, credit unions, and even real estate brokers who arrange financing. The ECOA does not apply to individuals who do not regularly extend financing.

Question 246

Regulation X prohibits: a. finance charges. b. licensing and certification. c. payment of unearned fees. d. trust accounts.

Answer 246

RESPA, implemented by Regulation X, prohibits unearned fees. Therefore, a mortgage broker or lender cannot refer a real estate agent to a customer for a fee or pay a fee to a real estate agent or developer for referring a borrower.

Question 247

The educational requirements of the SAFE Act require a mortgage loan originator to complete pre-licensing courses and: a. a college degree. b. continuing education courses. c. additional courses by the Department of Housing and Urban Development. d. additional courses developed by the Federal Reserve.

Answer 247

b. continuing education courses. Correct answer is (b). The SAFE Act requires that state-licensed mortgage loan originators (MLOs) complete pre-licensure education (PE) and annual continuing education (CE) courses.

Question 248

Of the following, which is NOT required under RESPA? a. GFE given at time of loan application b. Data regarding race of applicant voluntary given by applicant at time of loan application c. Special Information Booklet given at time of loan application d. HUD-1 statement given to buyer and seller

Answer 248

b. Data regarding race of applicant voluntary given by applicant at time of loan application The Homeowners Mortgage Disclosure Act (HMDA) is the federal law that requires lenders to collect information about the race, national origin, and sex of the applicant.

Question 249

The Home Ownership and Equity Protection Act is specifically designed to combat: a. predatory lending. b. guidelines for adjustable-rate mortgages. c. loan limits. d. junk fees.

Answer 249

a. predatory lending. Correct answer is (a). The federal Home Ownership and Equity Protection Act (HOEPA) is specifically designed to combat predatory lending.

Question 250

The educational requirements of the SAFE Act require a mortgage loan originator to complete pre-licensing courses and: a. a college degree. b. continuing education courses. c. additional courses by the Department of Housing and Urban Development. d. additional courses developed by the Federal Reserve.

Answer 250

Correct answer is (b). The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 establishes requirements for the licensing and registration of all Mortgage Loan Originators (MLOs).

Question 251

The act that established licensing and registration requirements for Mortgage Loan Originators is the: a. National Mortgage Act of 2008. b. Secure and Fair Enforcement for Mortgage Licensing Act of 2008. c. Secure Mortgage Licensing Act of 2009. d. Mortgage Relief Act of 2008.

Answer 251

Correct answer is (b). The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 establishes requirements for the licensing and registration of all Mortgage Loan Originators (MLOs).

Question 252

How does the SAFE Act handle consumer complaints against mortgage loan originators? a. It creates an online forum where consumers can post complaints regarding mortgage loan originators. b. It determines whether or not the complaint is valid through a court hearing. c. It facilitates the collection and disbursement of complaints on behalf of state mortgage regulators. d. It privately investigates each consumer complaint and responds accordingly.

Answer 252

Correct answer is (c). | The SAFE Act facilitates the collection and disbursement of consumer complaints on behalf of state mortgage regulators.

Question 253

The Mortgage Loan Originator examination consists of which of the following components? a. International and national component b. State-specific and national component c. International and state-specific component d. National component only

Answer 253

b. State-specific and national component Correct answer is (b). The SAFE Mortgage Loan Originator exam consists of a national and state-specific component.

Question 254

The SAFE Act establishes and maintains: a. a database of prospective mortgage borrowers. b. nationwide lending criteria for evaluating borrowers. c. a nationwide mortgage licensing system and registry. d. underwriting criteria for lenders.

Answer 254

c. a nationwide mortgage licensing system and registry. The SAFE Act is designed to establish and maintain a nationwide mortgage licensing system and registry for the residential mortgage industry.

Question 255

Which law requires a loan originator to provide a Special Information Booklet to a borrower? a. FIRREA b. GLBA c. RESPA d. TILA

Answer 255

c. RESPA RESPA requires that a lender or mortgage broker provide the borrower with a special information booklet prepared by HUD within three business days of receiving a mortgage loan application.

Question 256

The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) establishes and maintains a: a. nationwide mortgage licensing system and registry. b. database of national mortgage interest rates. c. list of criteria for underwriting guidelines. d. list of ethical practices when soliciting prospective borrowers.

Answer 256

a. nationwide mortgage licensing system and registry. Correct answer is (a). The SAFE Act requires the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to establish and maintain a nationwide mortgage licensing system and registry system for the residential mortgage .

Question 257

What type of e-mail is excluded from the CAN-SPAM Act of 2003? a. Business e-mail message b. Commercial e-mail message c. Transactional e-mail message d. Written e-mail message

Answer 257

A commercial e-mail message as “any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service.” E-mails sent as part of an ongoing commercial transaction, called transactional e-mail messages, are excluded from the Act.

Question 258

Which of the following is not a SAFE Act requirement for state-licensed mortgage loan originators? a. Complete prelicensure education courses b. Pass a written qualified test c. Submit fingerprints for a criminal background check d. Undergo drug testing to ensure the competency of the mortgage loan originator

Answer 258

d. Undergo drug testing to ensure the competency of the mortgage loan originator The SAFE Act requires state-licensed mortgage loan originators to pass a written qualified test, to complete prelicensure education courses, to take annual continuing education courses, and requires all MLOs to submit fingerprints to the Nationwide Mortgage Licensing System (NMLS) for submission to the FBI for a criminal background check.

Question 259

Jack, a MLO, left a customer's file that contained a social security number, on his desk when he went to lunch. This carelessness violates the: a. ECOA. b. FACT Act. c. FCRA. d. FDIC.

Answer 259

b. FACT Act. Correct answer is (b). The FACT Act, passed in 2007, requires lenders to secure consumers' files.

Question 260

Which act has the primary purpose of preventing banks and other creditors from discriminating when granting credit by requiring them to make extensions of credit equally available to all creditworthy applicants with fairness, impartiality, and without discrimination on any prohibited basis? a. ECOA b. FHLMC c. RESPA d. TILA

Answer 260

a. ECOA Correct answer is (a). The primary purpose of the Equal Credit Opportunity Act is to prevent banks and other creditors from discriminating when granting credit by requiring them to make extensions of credit equally available to all creditworthy applicants with fairness, impartiality, and without discrimination on any prohibited basis.

Question 261

Under TILA, how long are creditors required to retain records? a. 2 years b. 3 years c. 4 years d. 5 years

Answer 261

a. 2 years | TILA requires creditors to maintain records for two years.

Question 262

To help states comply with the SAFE Act, the act establishes a: a. code of ethics based on international mortgage laws. b. database of affordable interest rates. c. nationwide mortgage licensing system and registry. d. software program to track their own mortgage originators.

Answer 262

c. nationwide mortgage licensing system and registry. Correct answer is (c). To help facilitate state compliance with the SAFE Act, the Act directs the establishment of a Nationwide Mortgage Licensing System and Registry (NMLS).

Question 263

If the APR on a fixed-rate loan exceeds the initial TIL disclosure by more than _________, the borrower has an additional 3-business day waiting period. a. 1/8% b. 1/4% c. 1/2% d. 3/4%

Answer 263

Correct answer is (a). a. 1/8% If the APR exceeds the initial TIL disclosure by 1/8% (0.125), a new TIL disclosure must be made. This triggers another 3-business day waiting period.

Question 264

A consumer is entitled to a free copy of his or her credit report every __________, assuming there has been no fraud or adverse action. a. 6 months b. year c. 18 months d. 2 years

Answer 264

b. year The Fair Credit Reporting Act allows consumers to obtain 1 free credit report every 12 months, upon request from the nationwide credit reporting bureaus.

Question 265

For a federally-related mortgage loan, how much can a lender charge to prepare escrow account statements? a. Up to $100 b. 0.25% of the loan c. Hourly wage d. No fee

Answer 265

d. No fee Hud's Reg. X [Sec. 3500.12 No fee.] No fee shall be imposed or charge made upon any other person, as a part of settlement costs or otherwise, by a lender in connection with a federally related mortgage loan made by it (or a loan for the purchase of a manufactured home), or by a servicer for or on account of the preparation and distribution of the HUD-1 or HUD-1A settlement statement, escrow account statements, or statements required by the Truth in Lending Act.

Question 266

HMDA data allows government agencies to: a. evaluate lender compliance with anti-discrimination laws. b. determine where government funding be issued for low income housing and urban development. c. determine who is conducting predatory lending practices. d. monitor other agencies using "checks and balances".

Answer 266

a. evaluate lender compliance with anti-discrimination laws. Home Mortgage Disclousure act. HMDA requires lenders to collect and report data on an annual basis

Question 267

Which federal agency enforces the ECOA? a. FDIC b. FIRPTA c. FTC d. FRB

Answer 267

c. FTC The Federal Trade Commission (FTC), the nation's consumer protection agency, enforces the Equal Credit Opportunity Act (ECOA), which prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or because you get public assistance.

Question 268

TILA is overseen by: a. HUD - The Department of Housing and Urban Development b. FTC - The Federal Trade Commission c. FRB - Federal Reserve Board d. FBI - Federal Bureau of Investigation

Answer 268

Correct answer is (c). TILA is overseen by the Federal Reserve Board, implemented by Regulation Z, and enforced by the Federal Trade Commission.

Question 269

RESPA applies to all of the following loans, except: a. loans to purchase a condominium unit. b. loans for construction of the borrower's home, that is convertible to permanent financing. c. loans to purchase a 3-unit residential building. d. temporary construction loans.

Answer 269

d. temporary construction loans. RESPA covers loans made by federally related lenders that are secured with a mortgage placed on a one-to four-family residential property, including a condominium unit, a cooperative share, a time share or a manufactured home (mobile home) located on the real property securing the lender's interest. A construction loan is covered if it is used as or may be converted to permanent financing by the same lender; its term is two years or more, and it is not to a bona fide builder; or the lender issues a commitment for permanent financing. A temporary construction loan is not covered.

Question 270

When was the SAFE Act passed? a. 2006 b. 2007 c. 2008 d. 2009

Answer 270

c. 2008

Question 271

Which department ensures that a state's licensing requirements meet the SAFE Act's federally-mandated standards? a. The Federal Reserve b. National Association of Realtors c. Department of Housing and Urban Development (HUD) d. National Association of Home Builders

Answer 271

c. Department of Housing and Urban Development (HUD) The SAFE Act states that the Department of Housing and Urban Development (HUD) must determine whether an individual state's mortgage loan originator licensing standards meet the federally-mandated minimum standards.

Question 272

Which is the FTC authorized website that consumers can use to obtain their annual free credit report? a. www.freecreditreport.ftc b. www.annualcreditreport.com c. www.freeannualcreditreport.gov d. www.freecreditreport.com

Answer 272

The only FTC authorized vendor is www.annualcreditreport.com.

Question 273

RESPA applies to which of the following? a. First-lien residential loans for condominiums only b. Second-lien commercial loans c. First-lien residential loans for cooperatives, condominiums and one-to-four family homes d. None of the above

Answer 273

c. First-lien residential loans for cooperatives, condominiums and one-to-four family homes RESPA applies to first-lien residential mortgages for one-family to four-family homes, cooperatives, and condominiums.

Question 274

The Privacy Rule requires that financial institutions provide consumers with the institution's Consumer Privacy Policy disclosure: a. at least annually during the continuation of the relationship. b. only at the at the time of establishing a customer relationship. c. only if the institution revises the Privacy Policy. d. by affixing the policy in an obvious and visible wall in the main office of the institution.

Answer 274

a. at least annually during the continuation of the relationship. The privacy policy disclosure of a financial institution's privacy policy is required to take place at the time of establishing a customer relationship with a consumer and not less than annually during the continuation of such relationship.

Question 275

The Equal Credit Opportunity Act is overseen by: a. the FTC. b. the FTC (Federal Trade Commission) for mortgage brokers, and the OCC (Office of the Comptroller of the Currency) for mortgage bankers. c. HUD (Department of Housing and Urban Development) for mortgage brokers, and FTC (Federal Trade Commission) for mortgage bankers d. HUD - the Department of Housing and Urban Development for mortgage brokers, and OCC - The Office of the Comptroller of the Currency for mortgage bankers

Answer 275

b. the FTC (Federal Trade Commission) for mortgage brokers, and the OCC (Office of the Comptroller of the Currency) for mortgage bankers. The Equal Credit Opportunity Act is overseen by the FTC and by the Office of the Comptroller of the Currency. The FTC oversees mortgage brokers and the OCC oversees mortgage bankers.

Question 276

According to the SAFE Act, all residential mortgage loan originators must be: a. federally licensed. b. nationally registered. c. state registered. d. either state-licensed or federally registered.

Answer 276

d. either state-licensed or federally registered. According to the SAFE Act, all residential mortgage loan originators must be either state-licensed or federally registered.