Safe 20 Practice Exam 2 Flashcards
Which of the following is NOT a loan origination activity?
a. Assisting in a refinance
b. Assisting in a purchase
loan
c. Assisting in a loan
modification
d. Changing the name of
debtors on an existing loan
c. Assisting in a loan
modification
A unilateral contract is binding on:
a. One party
b. Two parties
c. The neighbor
d. No one
a. One party
Loan originator organizations must keep compensation records for how many years?
a. One
b. Two
c. Three
d. Four
c. Three years
Mortgage companies must submit a residential loan origination report to the NMLSR every
a. Month
b. Three months
c. Six months
d. Year
b. Three months
How many years must loan originator applicants wait after a felony fraud conviction in order to qualify for a license?
a. One year
b. Two years
c. Five years
d. They aren’t eligible for
licensing
d. They aren’t eligible for
licensing
How many years must loan originator applicants wait after having a loan origination license revoked in another state, in order to qualify for a license?
a. One year
b. Two years
c. They aren’t eligible for
licensing
d. They can qualify
immediately
c. They aren’t eligible for
licensing
Who chooses force-placed hazard insurance companies?
a. Lender
b. Homeowner
c. Attorney
d. Loan originator
a. Lender
Which of the following is required for an FHA Streamline refinance loan?
a. Credit verification
b. New appraisal
c. Current on mortgage
payments for the last three
month
d. Income and debt
verification
c. Current on mortgage
payments for the last three
month
What law addresses loan originators’ compensation issues
a. Truth-in-Lending
b. Loan Origination Rule
c. Equal Credit Opportunity
Act
d. Mortgage Compensation
Act
b. Loan Origination Rule
Commercial telemarketers are restricted to calling:
a. Only on weekends
b. Between 10 AM and 10 PM
c. Between 8 AM and 9 PM
d. There no restrictions
c. Between 8 AM and 9 PM
Commercial telemarketers must search the Do-Not-Call registry
a. Every 7 days
b. Every 31 days
c. Every 180 days
d. Once a year
b. Every 31 days
In order to send a fax advertisers must:
a. Have an established
business relationship with
recipient
b. Only fax t toll-free numbers
c. Include a personal cell
phone number on the
cover sheet
d. Not send faxes across state
lines
a. Have an established
business relationship with
recipient
The first page on an advertisers fax must include
a. Company’s mailing address
b. Company’s email address
c. Company’s phone number
d. Opt-out instructions
d. Opt-out instructions
What type of real estate co-ownership is only for married couples
a. Tenants in common
b. Joint tenancy
c. Tenancy by the entirety
d. Spousal tenancy
c. Tenancy by the entirety
Increasing neighborhood crime exemplifies what type of depreciation?
a. Economic obsolescence
b. Functional obsolescence
c. Physical deterioration
d. Unstable deterioration
a. Economic obsolescence
What agency was established to respond to consumer financial complaints?
a. Federal Deposit Insurance
Company
b. Federal Insurance office
c. Financial Stability Oversight
Council
d. Consumer Financial
Protection Bureau
d. Consumer Financial
Protection Bureau
What law protects homeowner from foreclosure-prevention scams?
a. Foreclosure Mediation Rule
b. Mortgage Assistance Relief
Services Rule
c. Truth-in-Lending Act
d. Homeowner’s Protection
Act
b. Mortgage Assistance Relief
Services Rule
Individuals must file a report when they transport how much cash out of the country?
a. $5,000 or more
b. $10,000 or more
c. $50,000 or more
d. $100,000 or more
b. $10,000 or more
What type of federal report is filed when financial institutions detect suspicious activity?
a. Suspicious Activity Report
b. Treasure Alert Report
c. Unaccounted Funds Report
d. Unexplained behavior
Report
a. Suspicious Activity Report
What agency becomes the receiver for some failing financial institutions?
a. Federal Deposit Insurance
Company
b. Federal Insurance Office.
c. Financial Stability Oversight
Council
d. Consumer Financial
Protection Bureau
a. Federal Deposit Insurance
Company
The ability-to-repay regulation applies to:
a. Equity lines of credit
b. Reverse mortgages
c. Investment home
purchases
d. Construction loans
c. Investment home
purchases
Which of the following is NOT a feature of a qualified mortgage?
a. Positive amortization
b. 30 year maximum loan
term
c. Maximum debt-to-income
ratio of 50 percent
d. No interest only periods
c. Maximum debt-to-income
ratio of 50 percent
Individuals submit an annual Report of Foreign Bank and Financial Accounts to:
a. IRS
b. Mortgage lender
c. Federal Trade Commission
d. Fannie Mae
a. IRS
Which of the following is part of the Mortgage Assistance Relief Services Rule
a. Negotiators may be paid
an up-front fee
b. Borrowers must pay a fee
if they cancel their contract
with the negotiator
c. Negotiators can't interfere
with communication
between borrowers and
lenders
d. Negotiators only have to
present reasonable lender
offers to the borrower
c. Negotiators can’t interfere
with communication
between borrowers and
lenders
Loan originators are’t allowed to receive compensation:
a. Based on loan terms
b. From a consumer
c. From a lender
d. Based on the performance
of the loan
a. Based on loan terms
High-cost home loans require a borrower to:
a. Receive quotes from
multiple lenders
b. Receive homeownership
counseling
c. Receive free flood
insurance
d. Receive 3% seller
concessions
b. Receive homeownership
counseling
The Truth-in-Lending Disclosure does NOT include
a. APR
b. Finance charge
c. Total amount of payments
d. Borrower’s credit score
d. Borrower’s credit score
Which of the following is NOT true of high-cost home loans?
a. Borrower must have a
documented ability to pay
the loan
b. Borrower must have a
minimum credit score of
650
c. Prepay penalties are
prohibited
d. Most balloon payments are
prohibited
b. Borrower must have a
minimum credit score of
650
Which of the following does NOT have zero variance between the GFE and HUD-1
a. Title insurance
b. Real estate transfer taxes
c. Loan origination fees
d. Interest Rate
a. Title insurance
Which of the following can have an unlimited variance between the GFE and HUD-1
a. Hazard insurance
b. Recording fees
c. Appraisal
d. Credit report fee
a. Hazard insurance
What happens if the acceptable variance between the GFE and HUD-1 is exceeded?
a. Loan originator faces
criminal penalties
b. The loan can't be funded
c. The excess is refunded to
the borrower with 30 days
d. The excess is refunded to
the borrower with 60 days
c. The excess is refunded to
the borrower with 30 days
Which law requires businesses to print only the last five card numbers on a credit card receipt?
a. Homeowner Protection Act
b. Fact Act
c. Gramm-Leach-Bliley
d. Dodd-Frank
b. Fact Act
What happens if the acceptable variance between the Loan Estimate and the Closing Disclosure is exceeded
a. Loan originator faces
criminal penalties
b. The loan can't be funded
c. The excess is refunded to
the borrower with 30 days
d. The excess is refunded to
the borrower with 60 days
d. The excess is refunded to
the borrower with 60 days
A higher-priced home loan is one that has
a. More than 5% in fees and
points
b. More than 8% in fees and
points
c. APR exceeds the average
prime rate by at least 1.5%
for the first-lien loans
d. Interest rate is higher than
10%
c. APR exceeds the average
prime rate by at least 1.5%
for the first-lien loans
What is the shortest time in which a mortgage purchase loan can close?
a. 3 business days
b. 7 business days
c. 14 days
d. 30 days
b. 7 business days
What type of loan gives a borrower money each month?
a. Graduated payment
mortgage
b. Reverse mortgage
c. Package mortgage
d. Wholesale mortgage
b. Reverse mortgage
What type of loan is a non-recourse loan
a. Graduated payment
mortgage
b. Reverse mortgage
c. Package mortgage
d. Wholesale mortgage
b. Reverse mortgage
A lender won’t lose money funding what type of loan?
a. FHA
b. VA
c. Conventional
d. Construction
a. FHA
A lender that offers mortgage loans directly to the public is a:
a. Participating lender
b. Private lender
c. Wholesale lender
d. Retail lender
d. Retail lender
Which disclosure can be initially sent to the borrower within 45 days after closing?
a. Affiliated Business
Arrangement
b. Good Faith Estimate
c. Truth-in-Lending
d. Initial Escrow Statement
d. Initial Escrow Statement
What type of loan is short-term with money advanced in stages?
a. Package
b. Construction
c. Wraparound
d. Balloon
b. Construction
A loan originator who accepts an upfront fee for negotiating a loan modification is violating which law
a. RESP
b. TILA
c. HMDA
d. MARS
d. MARS
A lender that works with licensed loan originators is a:
a. Participating lender
b. Private lender
c. Wholesale lender
d. Retail lender
c. Wholesale lender
What type of mortgage is not guaranteed or insured by the government
a. FHA
b. VA
c. USDA
d. Conventional
d. Conventional
What agency became the conservator of Fannie Mae and Freddie Mac
a. Federal Housing Finance
Agency
b. Consumer Financial
Protection Bureau
c. U.S. Department of
Housing
and Urban Development
d. Internal Revenue Service
a. Federal Housing Finance
Agency
HMDA requires lenders to submit their loan application register to the:
a. Library of Congress
b. Federal Financial
Institutions Examination
Council
c. Federal department of
Books and Records
d. Nationwide Mortgage
Licensing System and
Registry
b. Federal Financial
Institutions Examination
Council
MIP is associated with what type of loan?
a. FHA
b. VA
c. Interest-Only
d. Conventional
a. FHA
UFMIP is associated with what type of loan
a. FHA
b. VA
c. Interest-Only
d. Conventional
a. FHA
What law requires ARM borrowers to receive the Consumer Handbook on Adjustable Rate Mortgages?
a. RESP
b. ECOA
c. Gramm-Leach-Bliley
d. TILA
d. TILA
What law allowed the government to assume control over Fannie Mae and Freddie Mac?
a. Homeowners Protection
Act
b. Housing and Economic
Recovery Act
c. Home Mortgage Disclosure
Act
d. Truth-in-Lending Act
b. Housing and Economic
Recovery Act
What law passed in 2010 in response to the financial meltdown and recession?
a. Truth-in-Lending
b. Gramm-Leach-Bliley
c. Dodd-Frank Wall Street
Reform and Consumer Act
d. Home mortgage
Disclosures Act
c. Dodd-Frank Wall Street
Reform and Consumer Act
Lenders must maintain an escrow account for higher-priced mortgages for a:
a. 1 year
b. 3 years
c. 5 years
d. No escrow account is
required
c. 5 years
How much of a down payment does a borrower need if he doesn’t want to pay PMI?
a. 5%
b. 10%
c. 15%
d. 20%
d. 20%
Borrowers with a high-cost loan can rescind the loan with how many business days?
a. 3
b. 7
c. 15
d. There is no rescission
period
a. 3
Acceptable income for loan qualification includes:
a. 1 year of sales commissions
b. Disability benefits with 2
years remaining
c. 1 year of unemployment
benefits
d. 2 years of bonuses
d. 2 years of bonuses
Who determines the underwriting guidelines for conforming loans?
a. Federal Housing Finance
Agency
b. Federal Trade Commission
c. U.S. Department of
Housing
and Urban Development
d. Fannie Mae
d. Fannie Mae
Which appraisal method subtracts a value for depreciation?
a. Sales Comparison
b. Cost
c. Income Capitalization
d. Gross Income Multiplier
b. Cost
What is the Fannie Mae appraisal report form?
a. USPAP
b. HVCC
c. USAPP
d. URAR
d. URAR
What lien has the highest priority and is paid off first when a property is sold?
a. Property tax
b. Senior mortgage lien
c. Mechanics lien
d. Judgement lien
a. Property tax
What document is assigned along with mortgage
a. Deed
b. GFE/Loan Estimate
c. HUD-1/Closing Disclosure
d. Promissory note
d. Promissory note
When does the borrower pay the first year of hazard insurance premium?
a. Each month for 12 months
b. Before or at closing
c. 6 months premium paid at
closing; 6 month premium
due 30 day after closing
d. Every 2 months for a total
of 6 payments during the
first year after closing
b. Before or at closing
How many times may a loan originator receive credit for the same continuing education coarse?
a. 1
b. 2
c. 3
d. No limit
a. 1
What type of valuation takes into account annual rent as well as other generated income?
a. Sales comparison
b. Cost
c. GRM
d. GIM
d. GIM
What term describes the process of a senior mortgage lien-holder voluntarily changing into a junior mortgage lien holder?
a. Demotion
b. Assignment
c. Alienation
d. Subordination
d. Subordination
Which of the following is an appropriate adjustment in a market data appraisal?
a. The comp has a two-car
garage and the subject has
a on-car garage. Subtract
$5,000 from the comp's
sale price
b. The subject has a pool and
the comp doesn't. Subtract
$15,000 from the subjects's
estimated value
c. The comp has a fireplace
and subject doesn't. Add
$1,200 to the comp's sale
price
d. The subject has a dirty
yard, and the comp is
professionally landscaped.
Add $8,000 to the
subjects estimated value.
a. The comp has a two-car
garage and the subject has
a on-car garage. Subtract
$5,000 from the comp's sale
priceWhich of the following is NOT a valid component of a contract
a. Competent parties
b. Mutual agreement
c. Down payment
d. Legal object
c. Down payment
Which of the following is NOT a valid requirement for a deed
a. Names of the seller and the
buyer
b. Must be signed in blue ink
c. Legal description of the
property
d. Signed by grantor and two
witnesses
b. Must be signed in blue ink
Which of the following is NOT required for self-employed qualification?
a. 2 years business tax returns
b. 60 day pay stub
c. Company balance sheet
d. Company profit and loss
statement
b. 60 day pay stub
Ginnie Mae:
a. Buys and sells loans
b. Regulates loan originators
c. Guarantees Ginnie-Mae
Mortgage-backed
securities
d. Sets guidelines for
government loans
c. Guarantees Ginnie-Mae
Mortgage-backed securities
Which law requires lenders to train employees to recognize the Red Flags of Identity.
a. Homeowner's Protection
Act
b. Fact Act
c. Gramm-Leach-Bliley
d. Dodd-Frank
b. Fact Act
A California residential loan originator referred a borrower to a Florida residential loan originator. The California loan originator can receive a referral fee.
a. Only if he is also licensed in
Florida
b. Only if the Florida loan
originator is a licensed in
California
c. Only with written
permission from the lender
d. Never
d. Never
Which law requires loan originators to shred credit reports?
a. Homeowner's Protection
Act
b. Fact Act
c. Gramm-Leach-Bliley
d. No such law
d. No such law
Higher-priced loans for a flipped home require a second appraisal that is:
a. Performed by a different
appraiser at no charge to
the borrower
b. Performed by a different
appraiser and paid for by
the borrower
c. Performed by the same
appraiser using different
comparables at no charge
to the borrower
d. Performed by the same
appraiser using different
comparables and paid for
by the borrower
a. Performed by a different
appraiser at no charge to the
borrower
If a consumer makes an inquiry to a company, the company can call for:
a. 6 weeks
b. 3 months
c. 6 months
d. 18 months
b. 3 months
Which of the following is NOT a loss mitigation option?
a. Loan modification
b. Refinance
c. Deed-in-leu
d. Foreclosure
d. Foreclosure
Which of the following is NOT part of the primary mortgage market?
a. Commercial bank
b. Seller financier
c. Insurance company
d. Credit union
c. Insurance company
Which is NOT a possible indication of a short sale fraud?
a. Buyer is a business partner
of the seller
b. Seller has a poor credit
history
c. Seller has an excellent
credit history
d. The property appraised
significantly below
neighboring properties
b. Seller has a poor credit
history
An individual with a good credit history who is paid to represent himself as a buyer is a :
a. Straw buyer
b. Particular buyer
c. Promotion buyer
d. Demotion buyer
a. Straw buyer
A deficiency judgement occurs when a:
a. Borrower needs additional
down payment funds
b. Seller wins a breach of
contract lawsuit against
the buyer
c. Lender sues for borrower's
personal assets to pay
balance of the note
d. Borrower needs additional
private mortgage insurance
c. Lender sues for borrower’s
personal assets to pay
balance of the note
What type of fraud occurs when a loan originator submits and closes on loan application with multiple lenders?
a. Chunking
b. Equity skimming
c. Buy and bail
d. Phantom sale
a. Chunking
What type of fraud occurs when a loan originator changes a borrower’s birth date to make him appear older
a. Reverse mortgage
b. Equity skimming
c. Buy and bail
d. Phantom sale
a. Reverse mortgage
What type of of funding occurs when a lender borrows money from an investor and assigns the mortgage and note to the investor immediately after closing?
a. Warehouse
b. Table
c. Direct investor
d. Temporary
b. Table
What is the practice called when a real estate agent only shows Hispanic buyers properties in Hispanic neighborhoods?
a. Redlining
b. Steering
c. Blockbusting
d. Conversion
b. Steering
What is the practice called when a real estate agent spreads rumor that a specific ethnic group is planning to move into the neighborhood and advises residents to sell before property values drop?
a. Redlining
b. Steering
c. Blockbusting
d. Conversion
c. Blockbusting
What is the term used when a lender allows a tenant’s improvements to be applied toward down payment funds when the tenant purchase the home?
a. Home improvement funds
b. Restoration funds
c. Sweat equity
d. Good faith money
c. Sweat equity
Anything that affects title to a property such as liens, easements or restrictions is a (an):
a. Encumbrance
b. Barrier
c. Covenant
d. Egress
a. encumbrance
What is the general term for the security pledged for the payment of a loan?
a. Repository
b. Collateral
c. Transaction account
d. Good faith
b. Collateral
Purchase issues that must be resolved before closing are called
a. Dynamics
b. Resolutions
c. Contingencies
d. Operations
c. Contingencies
Local laws that control the use of the land are called:
a. Dynamics
b. Resolutions
c. Contingencies
d. Zoning
d. Zoning
Which of the following is NOT characteristic of a warranty deed?
a. Guarantees the seller is
true owner of the property
b. Guarantees the seller has
the legal right to sell
c. Guarantees that there are
no undisclosed lies on the
property
d. Guarantees that the sale
price is fair and reasonable
d. Guarantees that the sale
price is fair and reasonable
Monthly income before taxes and other deductions is known as:
a. Gross income
b. Net income
c. Assured income
d. Household income
a. Gross income
What protects lenders against losses when a borrower defaults on a loan?
a. Transactional account
b. Mortgage insurance
c. Deed restrictions
d. Title insurance
b. Mortgage insurance
Which federal agency guarantees mortgage back securities that are based on FHA and VA loans?
a. FHA
b. VA
c. Ginnie Mae
d. Fannie Mae
c. Ginnie Mae
The lowest possible interest rate for an ARM loan is known as the:
a. Floor
b. Basin
c. Basement
d. Ground
a. Floor
An FHA reverse mortgage loan is a:
a. FHARM
b. HECM
c. RMFHA
d. UFFHA
b. HECM
What type of deed transfers ownership without making any guarantee of clear title?
a. General warranty deed
b. Special warranty deed
c. Power of attorney deed
d. Quitclaim deed
d. Quitclaim deed
What is the difference between the purchase price and the mortgage amount
a. Good faith money
b. Escrow
c. Down payment
d. Discount points
c. Down payment
What is a claim against a property for the payment of a debt?
a. Lien
b. Title
c. Egress
d. Arbitration
a. Lien
What is the interest rate commercial banks charge their most creditworthy customers?
a. Partial rate
b. Prime rate
c. Premium rate
d. Preferred rate
b. Prime rate
What is the current name for the Federal Home Loan Mortgage Corporation?
a. Fannie Mae
b. Freddie Mac
c. FHA
d. Fed
b. Freddie Mac
