Retrainer Flashcards
The basic idea of the new TRID requirements is which of the following:
A. To impose specific penalties on MLOs who are in violation of the new requirements.
B. To provide more information to the consumer so they can make better decisions.
C. To allow consumers to escape liability for loan obligations.
D. To raise the level of competition among MLOs.
The correct answer is B. These requirements are for the benefit of the consumer.
Which of the following best defines appraisal:
A. Same as price
B. An estimate of value
C. Same as cost
D. An estimate of market value
The correct answer is D. There is nothing wrong with “B” as an answer, but in the context of residential mortgages, “D” is the best answer and will contribute to your point total.
With an ARM, what is the difference between a hard prepayment penalty and a soft prepayment penalty:
A. A hard prepayment penalty is a penalty to be paid for prepaying the loan for any reason
B. A soft prepayment penalty is a penalty to be paid only if the borrower refinances the loan
C. A soft prepayment penalty would not require a fee if the property is sold
D. All of these are true
Answer: D. This is correct. Prepayment penalties on ARMS may exist for the first 3-5 years of the loan, and may require fees even if only a partial prepayment is made.
According to Regulation Z, all of the following terms would not trigger additional disclosures in an ad, except: A. Terms to fit your budget. B. 7% APR loan available here. C. 30-year financing available. D. Easy monthly payments.
The correct answer is C. Yes, this would trigger full disclosure.
If the settlement agent takes responsibility for delivery of the Closing Disclosure, he may do which of the following:
A. Deliver a copy of the borrower’s disclosure to the seller.
B. Provide a copy of the Closing Disclosure to the seller even if the disclosure contains only charges and costs of the borrower.
C. Provide a copy of the borrower’s Closing Disclosure to the seller only if it also contains the seller’s charges and costs.
D. If the seller signs a separate Closing Disclosure, the settlement agent need not deliver a copy to the creditor.
The correct answer is C. This is a statement of fact.
15) Which of the following does the Closing Disclosure reveal about negative amortization:
A. If the borrower is scheduled to make payments that do not pay all interest due in a given month.
B. If the borrower may have monthly payments that do not pay all interest due in a given month.
C. If the borrower does not have a negative amortization feature in the mortgage.
D. All of the above.
The correct answer is D. One of the boxes on the form will be checked, indicating one of these answers.
In which of the following ways might a government worker be involved in a fraud scheme:
A. Falsifying deeds or other records
B. Inflating property values
C. Preparing false sales contracts
D. Providing phony accounting documents
The correct answer is A. This is correct.
^^^The final rule, propagated by the Federal Reserve Board in anticipation of the Dodd-Frank amendments to TILA, took effect on what date:
A. July, 2010
B. January, 2010
C. April, 2011
D. January, 2012
C
^^When a loan application has been properly completed, what further information does a lender seek:
A. Insurance
B. Borrower analysis
C. Property analysis
D. All of the above
Answer: D. Yes, all of this information needs to be fleshed out to see the full picture of acceptable risk.
According to RESPA, what is a loan application:
A. A form that presents the borrower’s financial information
B. The submission of a borrower’s financial information in anticipation of a credit decision
C. Primarily information about the property in question
D. It is primarily a statement of the net worth of the
Answer: B. Yes, this is the best definition of a loan application among these answer choices.
The HOEPA notice contains which of the following statements:
A. You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.
B. If you obtain this loan, the lender will have a mortgage on your home.
C. You could lose your home, and any money you have put into it, if you do not meet your obligations under this loan.
D. All of the above.
The correct answer is D. Yes, all of these statements and more are included in the HOEPA notice.
Which of the following best describes obligatory advances regarding construction loans:
A. It is funds paid to the builder as various phases of the construction project are completed.
B. It is the way funds used to be distributed to the builder; however, now all funds are released upfront.
C. Obligatory advances occur when the builder makes payments on the construction loan.
D. Obligatory advances refer to a builder paying subcontractors at the appropriate time.
The correct answer is A. Lenders have learned that projects are more likely to be completed if builders do not receive all of the funds from a construction loan upfront.
Under the Integrated Disclosures, When providing a revised Loan Estimate due to changed circumstances, which of the following is an acceptable definition of business day:
A. Any day the creditor’s offices are open to the public to transact substantially all of the creditor’s business.
B. All calendar days except Sundays and legal public holidays as defined by Reg. Z.
C. Same as calendar days.
D. Any day except Sunday.
Answer B
When providing the initial Loan Estimate, definition A applies. When providing a revised Loan Estimate due to changed circumstances, definition B applies.
According to TILA, the finance charge includes fees and amounts charged by a third party under which of the following circumstances:
A. If the creditor requires the use of the third party as a condition of the extension of credit.
B. If the creditor retains a portion of the third-party charge.
C. So long as the creditor retains none of the third-party charge.
D. A & B.
The correct answer is D.
All of the following statements are true about APR, except:
A. With an ARM, the loan still has one APR.
B. TILA requires that the APR be disclosed to a consumer when they call for an interest rate quote.
C. TILA does not require that the APR be disclosed on an Internet inquiry for a rate.
D. The APR will be a bit more than the interest rate on the note.
The correct answer is C. TILA does require that the APR be disclosed on an Internet inquiry for a rate.
According to the SAFE Act, which of the following do not need to have a unique identifier number to work as an MLO:
A. An employee of an insured depository institution
B. An MLO working under the authority of the DRE
C. An MLO working under the authority of the DBO
D. None of the above
The correct answer is D. All MLO’s need a unique identifyer number. The employee of an insured depository institution, however, is registered with the NMLS, not licensed.
Which of the following is the equivalent of discharge papers for a VA loan:
A. COE
B. DD-214
C. UFMIP
D. AMI
Answer: B. The DD-214 is either Discharge Papers or the Report of Separation issued by the Department of Defense.
Which of the following topics comprise 25% of the MLO exam?
A. Federal mortgage-related laws
B. General mortgage knowledge
C. Mortgage loan origination activities
D. Ethics
The correct answer is C. This is a statement of fact.
According to the SAFE Act, administrative and clerical tasks that do not require an MLO designation include all of the following except:
A. The receipt and collection of information common for the processing or underwriting of a residential mortgage loan
B. Collecting information on behalf of the consumer with regard to a residential mortgage loan
C. The distribution of information common for the processing or underwriting of a residential mortgage loan
D. Communication with a consumer to obtain information necessary for the processing and underwriting of a residential mortgage loan
The correct answer is B. The correct answer involves obtaining information for the consumer from various industry sources. This is part of MLO activities and requires an MLO designation. The other answer choices involve receiving, collecting, distributing, and communicating with the consumer to obtain information from the consumer for the purpose of putting together the loan application package. This is clerical in nature.
If a borrower takes out a $200,000 loan at 6% fixed-rate for 30 years and wants to buy down the rate to 5.75%, what will be the effect on the loan and the borrower:
A. The borrower will lower his/her P&I payment by $41.67
B. The borrower will have to stay in the loan for eight years to realize the advantages of the buydown
C. If the borrower sells or refinances sooner than eight years, he/she will not recapture what they paid in the upfront discount points
D. All of the above are true
Answer: D. One discount point equals one percent of the loan amount. To lower the interest rate 1/8 of one percent on a 30-year loan requires one point, so to lower the interest rate ¼ of one percent as in this question, the borrower must pay 2 points, or $4,000 up front. $4,000 ÷ $41.67 = 96 months, or eight years to break even.
The estimate of the charges and terms for all settlement services must be available for which of the following periods of time:
A. At least 5 business days.
B. At least 10 days.
C. At least 10 business days.
D. At least 15 business days.
The correct answer is C. Keep in mind this does not apply to the interest rate or charges and terms dependent on the interest rate, like per diem interest, or adjusted origination charges, or the charge or credit for the interest rate chosen.
In qualifying a borrower, a lender looks at all of the following, except:
A. Income
B. Debt
C. Character
D. Assets
Answer: C. The level of a person’s character may be inferred from the credit report, but is not otherwise observable in this context. Also assets, liabilities, and qualifying ratios are under examination.
*** According to the FCRA, which of the following is true regarding a credit reporting agency limiting access to a consumer’s credit file:
A. A credit reporting agency would be overstepping its bounds to limit access to a consumer’s credit file.
B. A credit reporting agency may not give out a consumer’s credit file to anyone without the verbal consent of the consumer.
C. A credit reporting agency may not give out a consumer’s credit file to a prospective employer without the written consent of the consumer.
D. The FCRA does not specify which parties are considered to have a valid need to request a consumer’s credit file.
The correct answer is C
The FCRA does specify which parties are considered to have a valid need to request a consumer’s credit file.
Which of the following is information unique to the Loan Estimate form:
A. APR.
B. LTV.
C. TIP.
D. MIP.
The correct answer is C. TIP is the total interest percentage, the total amount of interest the borrower will pay over the loan term as a percentage of the loan amount.