NMLS EXAM PART 2

Question 1

26. FACTA requires an Initial Fraud Alert to be kept in a consumer’s file for what period of time?

Answer 1

26. ONE YEAR

Question 2

27. NMLS was developed and maintained by: __________ and ____________.

Answer 2

27. CSBS and AARMR (Conference of State Bank Supervisors; American Assoc. of Residential Mortgage Regulators)

Question 3

28. What was the first law Congress enacted to combat predatory lending?

Answer 3

28. TILA, HOEPA, Fair Housing Act, or RESPA? HOEPA

Question 4

29. The ATR Rule, overseen by the ______, applies to all ____________________________, and must include:
    a. _____________
    b. _____________
    c. _____________
    d. _____________

Answer 4

29. CFPB; all credit transactions secured by a dwelling; and must include:
    a. First AND subordinate lien loans
    b. Secured by principal residence OR vacation home OR investment property
    c. Refinances
    d. Closed-End home equity loans

Question 5

30. The transactions that aren’t covered by the ATR Rule include:
    a. _____________
    b. _____________
    c. _____________
    d. _____________
    e. _____________

Answer 5

30. Transactions NOT covered by the ATR Rule are:
    a. Open-end home equity loans
    b. Reverse mortgages
    c. Bridge loans of 12 months or less
    d. Construction loans
    e. Loans made by a housing finance agency

Question 6

31. What are the 8 factors that creditors must consider when evaluating the ATR?
    a. _____________
    b. _____________
    c. _____________
    d. _____________
    e. _____________
    f. _____________
    g. _____________
    h. ¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬_____________
    i. All 8 factors must be ________________
    j. A borrower’s DTI cannot be higher than ___________%.

Answer 6

31. 8 factors creditors must consider:
    a. Income and assets
    b. Employment status
    c. Monthly payments on the loan
    d. Other monthly credit payments
    e. Other debts like alimony or child support
    f. Insurance and tax payments
    g. Front-end and back-end ratios
    h. Credit history
    i. “verified”
    j. 43 %

Question 7

32. The Safeguards Rule ensures the protection of personal information through an _______________________ , and must do the following 4 requirements:
    a.
    b.
    c.
    d.

Answer 7

32. “Effective Security Program”;
    a. Establish a program coordinator
    b. ID risks
    c. Regular testing
    d. Oversight of 3rd-party service-providers

Question 8

33. List the 3 indexes used in ARMs.
    a. _____________
    b. _____________
    c. _____________

Answer 8

33. Indexes:
    a. Libor (London Interbank Offered Rate)
    b. Treasury Index
    c. Subordinate Rate Index

Question 9

34. What law amended HOEPA?

Answer 9

34. Dodd-Frank Act

Question 10

35. High-Cost Mortgages are subject to __________, and includes nearly all loan types EXCEPT: _____________.

Answer 10

35. HOEPA; Reverse Mortgages

Question 11

36. What are the APR thresholds for a HCM? First lien and 2nd lien?

Answer 11

36. For a FIRST-LIEN mortgage, the APR is 6.5% higher than the prime rate; For a Subordinate-LIEN mortgage, if the APR exceeds 8.5% of the prime rate

Question 12

37. What are the Points and Fees thresholds?
    a. Loans of $________ or more and cannot exceed _____% of total loan amount
    b. Loans of less than $________ and cannot exceed _____% of total loan amount

Answer 12

37. Points and fees threshold:
    a. $21,980; 5%
    b. $21,980; 8%

Question 13

38. How long is a prepayment penalty in place on a HCM?

Answer 13

38. 36 months

Question 14

39. Prepayment penalties cannot exceed _____% of the amount pre-paid

Answer 14

39. 2%

Question 15

40. HCM’s DO NOT include:
    a. ________________
    b. ________________
    c. ________________
    d. ________________

Answer 15

`40. HCM’s DO NOT include:

a. Reverse mortgages
b. Bridge loans for new-home construction
c. Loans originated by small rural creditors
d. USDA loans

Question 16

41. A HPML (Higher-Priced Mortgage Loan), as defined by section _________ of Regulation ____, is overseen by the office of the _____________.

Answer 16

41. Section 35; Z- TILA; CFPB

Question 17

42. HPML’s are _____________ loans that are secured by ________________, and exceeds the prime offer rate by:
    a. _______% for first-lien loans that DO NOT EXCEED the conforming loan limit of ______ or _________ in high-cost areas
    b. _______% for first-lien loans that DO EXCEED the conforming loan limit
    c. _______% for loans secured by a _________________

Answer 17

42. HPML’s are Closed-End Loans that are secured by a principal dwelling; and exceeds the prime offer rate by
    a. 1.5%; $510,400 or $765,600
    b. 2.5%
    c. 3.5% secured by a subordinate lien

Question 18

43. HPML’s have 2 sets of requirements:
    a. Must establish a ______________ for real estate taxes and hazard insurance for ____ years; and
    b. Establishes special rules that apply to ________________

Answer 18

43. 2 Requirements for HPML’s:
    a. Must establish an ESCROW account for 5 years
    b. Appraisals

Question 19

44. When do HPML’s require a second appraisal?
    a. The seller acquired the home __________days prior to the consumer’s agreement to purchase it, and it is ___________ % more than the price paid by the seller;
    b. The seller acquired the home __________days prior to the consumer’s agreement to purchase it, and it is ___________ % more than the price paid by the seller

Answer 19

44. 2nd Appraisal requirements for HPML’s if:
    a. 90 days or less; 10%
    b. 91-180 days; 20%

Question 20

45. When must an escrow account be established for a HPML?

Answer 20

45. Before consummation of the loan

Question 21

46. How long must a HPML have an escrow account?

Answer 21

46. At LEAST 5 years, after which, if the LTV is less than 80%, it can be removed if the customer requests it.

Question 22

47. Explain prepayment penalties for HPML’s

Answer 22

47. HPML’s do not contain any prepayment penalties

Question 23

48. Who oversees the FCRA?

Answer 23

48. CFPB

Question 24

49. Explain a 7/1 ARM

Answer 24

49. Initial rate locked for the first 7 years; then it adjusts every 1 year after that

Question 25

50. Is fiduciary duty a state or federal law?

Answer 25

50. STATE LAW.