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NMLS Exam > Regulations > Flashcards

Regulations Flashcards

1
Q

what is the Safeguard rule?

A

instructs lenders/businesses on how to keep their Customer’s information safe

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2
Q

what is the pretexting policy?

A

keeps others from gaining information from false pretenses (pretending)

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3
Q

what regulation does the Opt-Out Rule belong to?

A

Gramm Leach Bliley (GLBA)

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4
Q

which section of RESPA prohibits Kickbacks?

A

RESPA Section 8

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5
Q

what does section 6 of RESPA cover?

A

Servicing

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6
Q

What is the penalty for violating section 9 of RESPA?

A

Seller can be sued up to 3x the amount they charged the buyer (Treble Damages)

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7
Q

What does RESPA section 9 cover?

A

Title/ Title Insurance

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8
Q

what does RESPA section 10 cover?

A

Escrow Account Limits

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9
Q

what is the limit on escrow accounts?

A

Monthly limit (1/12 of annual amount)

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10
Q

how much escrow can be collected at closing?

A

up to 2 months

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11
Q

what is the amount of excess in escrow that will be returned to the borrower after the annual escrow analysis?

A

any amount $50 or more will be returned to the borrower

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12
Q

what are the application steps?

A
  1. address
  2. Loan amount
  3. Income
  4. Estimated Value
  5. Name
  6. Social Security Number
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13
Q

within how many days must the must the Initial Disclosure be given to the borrower?

A

within 3 business days of the application

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14
Q

what are the exceptions that could stop the initial disclosure?

A
  1. the borrower withdraws

2. the Lender turns down the loan within 3 business days

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15
Q

what information must the lender provide the borrower during the initial disclosure?

A
  • Home loan Toolkit
  • Loan Estimate
  • Mortgage servicing disclosure
  • HUD approved counselor List
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16
Q

what information is provided to the borrower before signing?

A
  • any affiliated business arrangement disclosure (AFBA)

- closing disclosure

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17
Q

how much ownership of a business must a broker have to require an AFBA?

A

at least 1% ownership

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18
Q

what must be provided to the borrower at closing?

A
  • Final Closing Disclosure

- Initial Escrow Statement

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19
Q

How long after closing must the Initial Escrow Statement be provided?

A

45 days

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20
Q

when does the servicer provide the servicing transfer statement?

A
  • 15 days prior to leaving the borrower

- 15 days prior to servicing the new borrower

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21
Q

what transactions does RESPA not cover?

A
  1. Agriculture (25 acres or more)
  2. Business/ commercial
  3. Cash sale
  4. Temporary financing
  5. Vacant land
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22
Q

what should the lender provide the borrower when selling them an ARM loan?

A

CHARM Booklet

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23
Q

what is another name for the APR?

A

the Effective Rate

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24
Q

what is another name for the interest rate?

A

Note rate/ Nominal rate

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25
Q

what are the penalties for violating TILA?

A
  • $5,000 for a single violation
  • $25,000 for reckless violation
  • $1,000,000 for knowingly violating
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26
Q

what is the amount of time for a W2/ self-employed borrower to meet underwriting income standards?

A

2 years

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27
Q

what is the anti flip policy on FHA loans?

A

a borrower cannot purchase a home from a seller that recently bought a property within the past 90 days

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28
Q

what does the MARS rule prevent?

A

prevents any upfront/ unearned fees

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29
Q

how many installments on a transaction until TILA regulations kick in?

A

anything more than 4 installments

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30
Q

if a borrower decides to rescind, how long does the lender have to return any money collected related to the loan?

A

within 20 calendar days

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31
Q

when does the 3 day cooling period begin?

A

the day after signing

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32
Q

when do funds reach the borrower after the cool off period ends?

A

midnight of the third day

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33
Q

what how many copies of the disclosure must each borrower receive?

A

2 copies for EACH borrower on the loan

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34
Q

what are the exceptions to the 3 day cool off period?

A
  1. Purchases
  2. 2nd home
  3. construction/ commercial property
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35
Q

what happens to the right of rescission if the borrower is not properly notified?

A

Extends to 3 years

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36
Q

what fee can be collected before any disclosures?

A

Credit report fee

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37
Q

how long must TILA disclosures be kept?

A

2 years

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38
Q

how long must the Loan estimate be kept?

A

3 years

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39
Q

How long must the Closing Disclosure be kept?

A

5 years

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40
Q

what are the 3 credit reporting bureaus?

A
  1. Equifax
  2. Experian
  3. TransUnion
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41
Q

what form is used to verify tax records?

A

4506T

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42
Q

what the purpose of the Patriot Act?

A
  • to identify terrorist threats

- run background checks

43
Q

what is the borrower entitled to if denied based on their credit report?

A
  • a copy of the credit report

- the information on the credit agency that was used to provide their information

44
Q

what are the reasons for a borrower to receive a free copy of their credit report?

A
  • if denied due to Adverse Action
  • if a victim of Identity Theft
  • if a victim of Fraud
  • if on Public Assistance
45
Q

how long does negative information stay on a credit report?

A

7 years

46
Q

how long does a bankruptcy stay on a credit report?

A

10 years

47
Q

how long do criminal convictions remain on a credit report?

A

Forever

48
Q

what HOEPA section is a high Cost loan?

A

section 32

49
Q

what HOEPA section is a high Priced loan?

A

section 35

50
Q

what is the rate trigger for a high priced loan?

A

if the APR exceeds the APOR by:

  • 6.5% on the first lien
  • 8.5% on the 2nd lien
51
Q

what is the 1st trigger test for higher priced loans?

A

if (loan amount) x (points and fees) exceed the threshold

-

52
Q

what is the second trigger test for higher cost loans?

A

if the APR > (APOR + 1st lien trigger)

53
Q

what is the 3rd trigger test for higher priced loans?

A

if the Lender charges pre-payment penalty greater than 2%

OR

if Lender charges pre-payment penalty longer than 36 months

54
Q

what are the protected classes according to ECOA?

A
  • sex
  • race
  • religion
  • color
  • national origin
  • age
  • marital status
  • public assistance
55
Q

how long does the lender have to notify the borrower of their decision after receiving the application?

A

30 days

56
Q

how long does the borrower have to request the appraisal report?

A

90 days (3 months)

57
Q

how long does the lender have to send the appraisal report after it has been requested by the borrower?

A

30 days (1 month)

58
Q

what is sent if the lender decides to move forward?

A

the commitment letter

59
Q

how long must ECOA disclosures be kept?

A

25 months

60
Q

what is the penalty for violating ECOA?

A

$10,000 per violation

61
Q

what is the earliest day to sign after disclosures are delivered?

A

the 7th business day

62
Q

when is the Initial Disclosure required after receiving the application?

A

within 3 business days

63
Q

how many days before closing must any change of circumstance be sent to to the borrower?

A

4 days

64
Q

how much can the APR vary from the initially disclosed rate on a traditional 30 year mortgage?

A

1/8 (.125) on a fixed

65
Q

how much can the APR vary on a non-traditional mortgage?

A

1/4 (.25) on an ARM

66
Q

what does MAP prohibit?

A

any deceptive or misleading advertising

67
Q

how long are government appraisals?

A

6 months

68
Q

how long are conventional appraisals?

A

4 months

69
Q

when is the appraisal provided to the borrower?

A

3 days before close

70
Q

what are the 3 methods of appraisals?

A
  1. cost approach
  2. income approach
  3. sales comparison
71
Q

how does the income approach measure value?

A

measures value through rental income

72
Q

how does the sales comparison find value?

A

uses comparable properties within 1 mile that have been sold in the past 6 months

73
Q

what does the cost approach refer to?

A

land

74
Q

what are the adjustment limits on a sales comparison?

A

cannot exceed more than 25% of the gross

and 15% of the net

75
Q

which type of title insurance is ALWAYS required on a transaction?

A

Lender’s title insurance

76
Q

how soon must errors on a closing disclosure be corrected?

A

within 30 days

77
Q

who does ownership extend to in Tenancy in Common?

A

ownership rights extend to estate/heirs, not partnership

78
Q

who does ownership extend to in Tenancy in Entirety?

A

spousal ownership

79
Q

who does ownership extend to in Joint Tenancy?

A

ownership extends to partners

80
Q

what is the Anti-Steering form?

A

the form disclosing 3 mortgage options

81
Q

what is the GFE under TRID?

A

Loan Estimate

82
Q

what is the HUD1 under TRID?

A

the Closing Disclosure

83
Q

what section of TILA is HOEPA?

A

section 32

84
Q

what is the Acceleration Clause

A

when the lender can demand full payment of borrower defaults

85
Q

what is the Alienation Clause?

A

when the borrower decides to sell home, the lender can demand payment

86
Q

what are the VA funding fees?

A
  • 3.6% (cash out)
  • .5% (IRRRL)
  • 0% for 10% disability or more
  • 2.3% (first time)
  • 1.4% (for 10% or more down payment)
87
Q

what is the FHA funding fee?

A

1.75% UFMIP

88
Q

what are the Qualified Mortgage qualifications?

A
  • 3% of loan amount if >$110,260
  • $3,308 if >$66,150 but <110,260
  • 5% of loan amount if >$22,052
  • $1,103 if > $13,737 but < $22,052
  • 8% of loan amount if < $13,783
89
Q

what regulation considers child support and alimony as income ?

A

Regulation B ECOA

90
Q

how long must child support continue to be considered as income?

A

3 years

91
Q

what act allows the borrower to freeze their credit?

A

FACTA

92
Q

what is a silent 2nd?

A

a 2nd mortgage not reported on credit report, but will show up on the title

93
Q

processor vs underwriter?

A
  • Processor gathers information to send to underwriter

- Underwriters use the information to write rules

94
Q

What begins March 1st?

A

HMDA

95
Q

what are the different names for an application?

A
  • URLA
  • 1003
  • 65
96
Q

what is ZERO Tolerance?

A

“on the lender”

-the amount does not change

97
Q

what is 10% tolerance?

A

the amount can vary up to 10% if the lender chooses the lender option

98
Q

what is NO Tolerance?

A

“on the buyer”

-the amount can vary to any amount

99
Q

what is form 1004

A

the Appraisal

100
Q

what is form 1005?

A

VOE- employment

101
Q

what is form 1006

A

VOD- Deposit

102
Q

what is form 1008?

A

the Summary

103
Q

what is CAVERS?

A

a report ran to see if there’s any Federal Debt

NMLS Exam (4 decks)

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