SAFE Act and CSBS/AARMR Model State Law PrepXl Flashcards
The NMLS was established by:
A.HUD
B.The Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators
C.The Federal Reserve
D.Each state regulator
The answer is :
the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators. The NMLS is a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for licensing and registering loan originators.
To renew his or her license, a mortgage loan originator must:
A.Complete no less than ten hours of continuing education coursework
B.Submit a written application to the state licensing agency
C.Submit the renewal application no later than December 1st
D.Continue to meet the minimum standards for licensure
The answer is continue to meet the minimum standards for licensure.
A licensed mortgage loan originator must renew the license each year between November 1 and December 31 through the NMLS. He or she must continue to meet the minimum standards for licensure and satisfy the continuing education requirement by completing at least 8 hours of coursework approved by the NMLS.
In order to meet the federal S.A.F.E. Act requirements, a state licensing agency must provide for all of the following, except:
A.Participation in the NMLS
B.The creation of a separate agency
C.Setting renewal or reporting dates
D.Conducting background checks
The answer is the creation of a separate agency. The states are required to have in place a system of licensing residential mortgage loan originators through the NMLS that meets national definitions and minimum standards. A separate agency for that purpose is not required. The system must include, among other things, standards for criminal history and credit background checks, pre-licensing education and testing, continuing education, and a minimum net worth or surety bond amount or an option for participation in a recovery fund.
Which of the following is NOT true about the Consumer Financial Protection Bureau (CFPB)?
A.The CFPB was authorized under the Dodd-Frank Act
B.The CFPB provides approval for loan originator education content
C.The CFPB promotes education about financial issues for consumers
D.The CFPB is the federal agency that takes complaints from consumers who feel they have been harmed by a mortgage licensee
The answer is The CFPB provides approval for loan originator education content. The Consumer Financial Protection Bureau (CFPB) was authorized under the federal Dodd-Frank Act. The mission of the CFPB is to make markets for consumer financial products and services safe for Americans. The CFPB is charged with overseeing federal consumer financial laws by, among other things, writing rules and enforcing federal consumer financial protection laws, restricting unfair, deceptive, or abusive acts or practices, taking consumer complaints, promoting financial education, and monitoring financial markets for new risks to consumers. The NMLS provides the approval for education content and licensing examinations.
An applicant for a loan originator license cannot have been convicted of any felony within what period of time prior to applying for the license?
A.Two years
B.Seven years
C.Three years
D.Five years
The answer is Seven years.
An individual may not be granted a loan originator license if he or she has been convicted of or pled guilty or nolo contendere to any felony within the preceding seven years, or been convicted of a felony involving an act of fraud, dishonesty, a breach of trust, or money laundering at any time prior to application.
As part of the licensing and registration process, Jack Horner must furnish the NMLS with information concerning his identity, including:
A.Fingerprints
B.A copy of his driver’s license
C.A copy of his birth certificate
D.College transcripts
The answer is fingerprints.
An applicant for a mortgage loan originator license must provide information to the NMLS concerning his or her identity, including fingerprints so a criminal history background check can be performed, and personal history and experience, including authorization for the NMLS to obtain independent credit report information related to any administrative, civil, or criminal findings by any governmental jurisdiction.
Under the S.A.F.E. Act, a loan originator:
A.Is an individual who takes residential mortgage loan applications for compensation
B.Is any individual who takes loan applications secured by real property for compensation
C.Is any person who takes loan applications secured by real property
D.Can be an individual or a business entity
The answer is is an individual who takes residential mortgage loan applications for compensation.
The S.A.F.E. Act defines a mortgage loan originator as an individual who takes a residential mortgage loan application and offers or negotiates the terms of a residential mortgage loan for compensation or gain.
To qualify for licensing as a state-licensed loan originator, an applicant must meet certain minimum standards. Among these is a requirement to:
A.Meet a net worth or surety bond requirement
B.Pay an amount equaling 2% of the dollar value of loans originated as a first-time application fee
C.Have completed high school
D.Be at least 21 years of age
The answer is meet a net worth or surety bond requirement. To qualify for licensing or registration as a state-licensed mortgage loan originator, an applicant must meet certain minimum standards. These include education and testing standards and minimum financial responsibility requirements. Such requirements may include a minimum net worth, surety bond acquisition requirements, or establishment of a recovery fund paid into by mortgage loan originators.
The answer is meet a net worth or surety bond requirement.
To qualify for licensing or registration as a state-licensed mortgage loan originator, an applicant must meet certain minimum standards. These include education and testing standards and minimum financial responsibility requirements. Such requirements may include a minimum net worth, surety bond acquisition requirements, or establishment of a recovery fund paid into by mortgage loan originators.
Under the S.A.F.E. Act, states are required to do background checks as part of their effective supervision. A background check includes all of the following, except:
A.Criminal history
B.Education history
C.Credit history
D.Civil or administrative records
The answer is education history.
An applicant for a mortgage loan originator license must provide information to the NMLS concerning his or her identity, including fingerprints so a criminal history background check can be performed, and personal history and experience, including authorization for the NMLS to obtain independent credit report information related to any administrative, civil, or criminal findings by any governmental jurisdiction.
State supervisory authority includes all of the following, except:
A.Conducting annual examinations of mortgage loan originators
B.Issuing licenses in a form approved by the NMLS
C.Reporting violations of state law related to origination activities to the NMLS
D.Maintaining individual databases
The answer is maintaining individual databases. Under the S.A.F.E. Act, a state agency has a duty to enact licensing standards that meet S.A.F.E. Act requirements, including pre-licensing education courses, conducting pre-license testing, and issuing licenses. While the state agency must report violations of mortgage law to the NMLS, it is not required to maintain other individual databases related to mortgage professionals outside of the NMLS.
Steve Scofflaw has entered into a contract that allows him to earn a fee for locating a suitable loan for the Misers. However, despite his best efforts, he was unable to locate a loan that suited their financial situation. Do the Misers owe Steve a fee?
A.Yes, they owe him a fee for his best efforts
B.The Misers do not owe Steve a fee for the loan, but must pay an application withdrawal fee to compensate for his time
C.No; it is prohibited for a mortgage loan originator to earn a fee for best efforts when no loan is obtained
D.Yes, because they entered into a contract with Steve
The answer is No. It is prohibited for a mortgage loan originator to earn a fee for best efforts when no loan is obtained. It is prohibited for a mortgage loan originator to earn a fee simply for best efforts to obtain a loan on behalf of a consumer.
Within the 20 hours of pre-licensing education required for a loan originator license are a minimum of:
A.Three hours of federal laws
B.Two hours of ethics
C.Four hours of nontraditional mortgage products
D.Two hours of consumer protection law
The answer is three hours of federal laws.
The S.A.F.E. Act specifies that pre-licensing education must include at least:
- 3 hours of federal law and regulations,
- 3 hours of ethics, including instruction on fraud, consumer protection and fair lending issues, and
- 2 hours of training related to lending standards for the nontraditional mortgage product (i.e., any mortgage product other than a 30-year fixed-rate mortgage) marketplace.
What is used to permanently identify a loan originator?
A.Social Security Number
B.License number
C.Mortgage processor identification number
D.Unique identifier
The answer is Unique identifier.
A unique identifier is a number that permanently identifies each mortgage loan originator, whether he or she is licensed or merely registered. It is assigned by the NMLS to make it easier to track mortgage loan originators electronically and to see the employment history and records of any disciplinary and enforcement actions.
S.A.F.E. Act requirements apply to loans to purchase:
A.Dwellings as rental properties
B.Apartment buildings
C.Dwellings if secured by mortgages, but not if secured by trust deeds
D.Mobile homes to be used as residences, even if they are not attached to the land
The answer is mobile homes to be used as residences, even if they are not attached to the land.
The S.A.F.E. Act applies to residential mortgage loans. Residential mortgage loans include those loans secured for the purpose of purchasing a dwelling as defined in the Truth-in-Lending Act. A dwelling is a residential structure that contains one to four 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.
Ralph Nerdle has attempted three times to pass the NMLS mortgage loan originator licensing test. After failing his third test, Ralph must wait how long before testing again?
A.30 days
B.60 days
C.90 days
D.180 days
The answer is 180 days. An individual may take the loan originator licensing test three times. If he fails, he must wait at least 30 days after the date of the preceding test to retake it. If he fails three consecutive tests, he must wait at least 180 days (six months) before taking the test again.
