MLO-Uniform State Test Flashcards
.
For purposes of the SAFE Act, the term “individual” means:
a. a person.
b. a natural person.
c. natural person, corporation, company, LLC, partnership, or association.
d. natural persons and corporations only.
b. a natural person.
Correct answer is (b).
The term “individual” means a natural person.
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 in satisfaction of the SAFE Act PE and state test requirements?
a. Approval process b. Screening c. Licensing d. Certification
d. Certification
Correct answer is (d).
“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.
The Federal Financial Institutions Examination Council is referred to as the:
a. Bureau. b. Council. c. Fed. d. Agency.
b. Council.
Correct answer is (b).
The Federal Financial Institutions Examination Council is referred to as the Council.
The educational requirements of the SAFE Act require a mortgage loan originator to complete pre-licensing courses and:
a. a college degree.
b. take annual continuing education.
c. additional courses by the Department of Housing and Urban Development.
d. additional courses developed by the Federal Reserve.
b. take annual continuing education.
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.
Under the SAFE Act, what organization must help develop and maintain a nationwide mortgage licensing system (NMLS)?
a. The Federal Reserve b. Conference of State Bank Supervisors c. National Association of Mortgage Bankers d. National Association of Home Builders
b. Conference of State Bank Supervisors
Correct answer is (b).
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.
Upon completion of the SAFE MLO test, a candidate is given a printed score report. The score is considered official when the:
a. printed score report is presented to the candidate by the Test Center Administrator. b. test results are posted on the Prometric website. c. printed score report is mailed to the NMLS. d. test results are posted in NMLS.
d. test results are posted in NMLS.
Correct answer is (d).
Before departing the test center, a printed score report is presented to the candidate by the TCA. The score report given at the test center is not official until the test results are posted in NMLS.
The SAFE Act establishes licensing and registration requirements for:
a. Mortgage Loan Officers. b. Mortgage Loan Originators. c. Mortgage Loan Brokers. d. Mortgage Loan Lenders.
b. Mortgage Loan Originators.
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).
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 pre-licensure education courses.
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 pre-licensure 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.
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)
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).
Jim was convicted of a financial industry-related felony, but was pardoned. Is Jim ineligible to obtain a MLO license?
a. Yes, the felony conviction makes him ineligible. b. Yes, regardless of the pardon, Jim is still ineligible. c. No, the pardon wipes the slate clean as if it never happened and Jim does not need to include it on Form MU4. d. No, the pardon removes the ineligibility, but Jim should disclose the conviction on Form MU4 and provide supporting documentation.
Correct answer is (d).
d. No, the pardon removes the ineligibility, but Jim should disclose the conviction on Form MU4 and provide supporting documentation
A pardon removes the ineligibility and the individual can be granted a license providing he or she meets all of the other requirements. However, the applicant should disclose the conviction on Form MU4, and submit the supporting material indicating the pardon.
The Commissioner may refuse to renew the license of a loan originator for all of the following, except:
a. a default on a student loan. b. conduct demonstrating lack of character or financial responsibility. c. an outstanding judgment for medical bills owing. d. a conviction of a felony.
c. an outstanding judgment for medical bills owing.
Correct answer is (c).
An application for license renewal may be denied if the licensee has been convicted of, or pled guilty or nolo contendere to, a felony in any jurisdiction during the term of the license; is in violation of the SAFE Act, has engaged in conduct demonstrating his or her lack of good moral character or financial responsibility; or is in default on a student loan. An application may be denied if the licensee has outstanding judgments, unless they are the result of medical bills owing.
All of the following course topics have been determined to not be in compliance with the SAFE Act, except:
a. financial planning courses. b. loan product training. c. commercial lending. d. fair lending.
d. fair lending.
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.
Under Regulation H of the Consumer Financial Protection Bureau, a state must do all of the following to show that it is providing effective supervision and enforcement of mortgage loan originators, except:
a. participate in the MLSR. b. renew or refuse to renew existing loan originator licenses for violations of state or Federal law. c. investigate loan originator licensees in a systematic manner based on identified risk factors or on a periodic schedule. d. discipline loan originator licensees with appropriate enforcement actions.
a. participate in the MLSR.
Correct answer is (a).
For the Bureau to determine that a state is providing effective supervision and enforcement, a supervisory authority must meet the performance standards indicated in choices (b), (c), and (d). Additionally, it must participate in the Nationwide Mortgage Licensing System and Registry (NMLS).
The SAFE Act requires that a credit report be obtained for each applicant to determine if the applicant demonstrates:
a. responsibility in the management of his or her personal finances. b. an acceptable FICO® score. c. responsibility in the performance of his or her duties at the workplace. d. all of the above.
a. responsibility in the management of his or her personal finances.
Correct answer is (a).
The SAFE Act requires that applicants authorize the NMLS to obtain a credit report from a consumer reporting agency. The SAFE Act prohibits the licensing of an MLO if an applicant has demonstrated a lack of financial responsibility by showing disregard in the management of his or her own financial condition.
When Pat was 27, she worked as an escrow agent for a large independent firm in northern California. Her firm was involved in a large real estate fraud scam and she (along with the other employees of the escrow firm) was charged with wire fraud. However, only the principals of the firm were found guilty of financial industry-related felony. Now Pat wants to become a mortgage loan originator. Is she eligible to obtain a MLO license?
a. No, because she was charged with wire fraud for a financial industry-related misdemeanor. b. No, because the principals of the firm were found guilty. c. Yes, she was charged, but not found guilty. d. Yes, because her activities as an escrow agent were irrelevant to her MLO license application.
c. Yes, she was charged, but not found guilty.
Correct answer is (c).
An individual will not be granted a MLO license who has any felony convictions or a conviction of a misdemeanor involving fraud, dishonesty, or any financial industry-related misdemeanor. Financial industry-related includes real estate agents, closing agents, appraisers, title offices, escrow agents, and others.
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. c. 9 hours of macroeconomics. d. 10 hours of mathematical calculations.
a. 3 hours of federal law and regulations.
Correct answer is (a).
State-licensed Mortgage Loan Originators (MLOs) must complete 20 hours of NMLS approved education, including 3 hours of federal law and regulations.
Of the following, which would not contribute to a person’s adverse credit history?
a. Personal bankruptcy within the previous year b. Outstanding mortgage on his or her home, paid current c. Outstanding tax lien or other governmental lien d. Outstanding judgment based upon grounds of fraud
b. Outstanding mortgage on his or her home, paid current
Correct answer is (b).
A person may have an adverse credit history if he has, among other things, a, bankruptcy within the previous year of any organization for which the applicant was a control person, an, or an outstanding judgment entered against him based upon grounds of fraud, embezzlement, misrepresentation, or deceit.
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. state-imposed tax to fund a recovery account. c. recovery fund paid for by insurance companies. d. recovery fund paid for by loan originators.
d. recovery fund paid for by loan originators
Correct answer is (d).
The SAFE Act requires states to set minimum net worth or surety bond requirements or establish a recovery fund paid into by loan originators.
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)
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.
.
When checking into the test center, what type of identification should a candidate provide?
a. An identification card issued by the mortgage company for whom the candidate will be working that includes the candidate’s photo and signature
b. Government-issued driver’s license that has expired
c. An identification card issued by the government that includes the candidate’s photo and signature
d. A Certificate of Identity issued by a court of competent jurisdiction
c. An identification card issued by the government that includes the candidate’s photo and signature
Correct answer is (c).
All candidates must bring one form of a current (non-expired) government-issued identification that includes the candidate’s photo and signature. The name on the appointment must match the candidate’s identification.
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
c. Office building
Correct answer is (c).
The SAFE Act’s definition of “dwelling” closely follows the definition offered by Regulation Z, which implements the Truth in Lending Act. According to the definition, a “dwelling” means “a residential structure that contains 1 to 4 units, whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence.”
For purposes of the SAFE Act, what is a mortgage product other than a 30-year fixed rate mortgage?
a. Traditional mortgage product b. Nontraditional mortgage product c. Conventional mortgage product d. A-paper mortgage products
b. Nontraditional mortgage product
Correct answer is (b).
The term ‘‘nontraditional mortgage product’’ means any mortgage product other than a 30-year fixed rate mortgage.
Fred is a candidate taking the SAFE MLO test at a testing center. Which of these actions could result in Fred being denied the license?
a. Fred used a calculator provided by the test center. b. Fred used his cell phone during a restroom break. c. Fred removed the score report provided by the center staff from the test center. d. Fred attested that he was the person taking the test.
b. Fred used his cell phone during a restroom break.
Correct answer is (b).
A candidate who violates the NMLS Rules of Conduct when taking the NMLS test may be subject to disciplinary action, including denial or revocation of the license(s). The NMLS Rules of Conduct # 5 state, ‘I must not use or attempt to use a telephone, cellular phone, pager, hand held computer or other device, electronic or otherwise, during the test or restroom breaks.”
The SAFE Act requires the states to set minimum net worth or surety bond requirements for MLOs. In the case of a company that employs more than one mortgage loan originator:
a. each MLO must be bonded separately. b. the bonding requirement may be met at the company level. c. both MLOs and the company must have separate bonds. d. only the individual MLOs must have surety bonds.
b. the bonding requirement may be met at the company level.
Correct answer is (b).
Section 1508(d)(6) of the SAFE Act provides that states must set minimum net worth or surety bond requirements or establish a recovery fund paid into by loan originators. HUD has determined that a state may comply with the SAFE Act requirement by providing that, in the case of a company that employs more than one loan originator, the bonding requirement may be met at the company level. Individual loan originators would not have to be bonded separately. The MSL incorporates this interpretation in section XX.XXX.140(1).
. 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. 85%
c. 75%
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.
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.
In addition to the annual renewal, the MLO’s information must be updated within 30 days of the occurrence of any of the following events, except:
a. a change in the registrant's name. b. the registrant ceases to be an employee of the Agency-regulated institution. c. any of the registrant’s responses to the information required for original registration continue to be accurate. d. any of the registrant’s responses to the certain of the information required for original registration become inaccurate.
c. any of the registrant’s responses to the information required for original registration continue to be accurate.
Correct answer is (c).
In addition to the annual renewal, the MLO’s information must be updated within 30 days of the occurrence of any of the following events: (1) a change in the registrant’s name; (2) the registrant ceases to be an employee of the Agency-regulated institution; or (3) any of the registrant’s responses to the certain of the information required for original registration become inaccurate.
The NMLS allows a candidate to cancel or reschedule an appointment for a test:
a. 24 hours prior to the scheduled test appointment. b. 2 days prior to the scheduled test appointment. c. 2 business days prior to the scheduled test appointment. d. never.
c. 2 business days prior to the scheduled test appointment.
Correct answer is (c).
The NMLS allows a candidate to cancel or reschedule an appointment for a test 2 business days prior to the scheduled test appointment.
What is the basis for state mortgage loan licensing?
a. Mortgage Bankers Registry b. Nationwide Mortgage Licensing System and Registry c. National Mortgage Lenders System Regulations d. SAFE Site
Correct answer is (b).
The NMLS is the basis for state licensing. It contains a single license record for each mortgage loan lender, broker, branch, and mortgage loan originator (MLO) that can be used to apply for, amend, and renew a license in any state.
A licensee who files for bankruptcy must notify the Commissioner within __________ days.
a. 5 b. 15 c. 30 d. 60
Correct answer is (c).
A mortgage loan originator, mortgage broker or mortgage lender licensee must notify the state regulatory agency in writing within 30 days of the occurrence of several significant events, including a voluntary or involuntary bankruptcy filing.
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. real estate sales associate. b. real estate broker. c. mortgage loan originator. d. real property appraiser.
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.
Which of the following is not a SAFE Act licensing standard for state-licensed mortgage loan originators?
a. Never had a loan originator license revoked b. Has had no felonies in the past 7 years c. Never had a felony involving fraud, dishonesty, breach or trust or money laundering d. Demonstrates no financial responsibility and lacks fitness
d. Demonstrates no financial responsibility and lacks fitness
Correct answer is (d).
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.
All state licensed and federally registered mortgage loan originators must be registered with the:
a. Nationwide Mortgage Licensing System and Registry. b. Federal Trade Commission. c. Federal Commissions Committee. d. State Licensing Board.
a. Nationwide Mortgage Licensing System and Registry.
Correct answer is (a).
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 Regulator
Which of the following is a qualification to obtain a MLO license?
a. The applicant has never had a mortgage loan originator license revoked in any governmental jurisdiction. b. The applicant pled nolo contendere to a felony in court. c. The applicant has shown that he or she is not financially responsible. d. All of the choices are qualifications to obtain a MLO license.
a. The applicant has never had a mortgage loan originator license revoked in any governmental jurisdiction.
Correct answer is (a).
The Commissioner shall not issue a mortgage loan originator license unless the Commissioner makes at a minimum the following findings: no license revocation, no felony conviction, character and fitness, pre-licensing education, written test, and net worth or surety bond. [MSL 60 (1) through (6)].
Prior to renewing a MLO license, how many hours of continuing education are necessary?
a. 3 b. 5 c. 8 d. 12
Correct answer is (c).
SAFE requires 8 hours of continuing education to be completed each year prior to license renewal.
A mortgage loan originator is prohibited from negligently making a false statement or knowingly or willfully making an omission of material fact in connection with:
a. information or reports filed with the NMLS. b. an investigation conducted by a regulatory official. c. an investigation conducted by governmental agency. d. all of the above.
d. all of the above.
A MLO under may not negligently make a false statement or knowingly or willfully make an omission of material fact in connection with an investigation conducted by the regulatory official or another governmental agency.
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.
b. may exceed the SAFE Act.
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.
Which of the following is responsible for registering all state licensed and federally registered mortgage loan originators?
a. Federal Commissions Committee b. Nationwide Mortgage Licensing System and Registry c. State Licensing Board d. U.S. Government
b. Nationwide Mortgage Licensing System and Registry
Correct answer is (b).
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.
