MLO practice test 6/16/16
Terms in this set (20)
The Homeownership Equity Protection Act does NOT require a lender to verify a borrower's ability to repay the loan if the
the loan is temporary or a bridge loan for 12 months or less
Which fee can be collected prior to delivery of a Loan Estimate and Closing Disclosure?
credit report fee only
"Higher-priced loans" are defined by which law?
TILA: truth in lending act
Which statement about loan origination fees on a Loan Estimate is FALSE?
lender and mortgage broker fees for the same transaction must be itemized
What type of loan is a 30 year fixed rate ?
Which act provides a specific definition of a nontraditional loan?
SAFE ACT: Secure and Fair Enforcement Mortgage Licensing Act
A mortgage broker hands the borrower a Loan Estimate in his office the day after the application was completed. The broker can charge the borrower for an appraisal
What information is a mortgage loan originator NOT allowed to ask a borrower who is applying for a home mortgage?
receipt of public assistance:A mortgage loan originator may not ask a borrower if the source of income is public assistance. The other issues may be asked in order to comply with the Home Mortgage Disclosure Act.
Each of these loans would be excluded under the definition of a higher-priced loan EXCEPT
A purchase loan: if it meets the mandated triggers, could qualify as a higher-priced loan under the Mortgage Disclosure Improvement Act.
Which of the following is an acceptable condition on which to base a mortgage loan originator's compensation?
a fixed % of the loan: The new Federal Reserve Mortgage Loan Originator Compensation Rule prohibits a MLO from being paid based on any loan terms other than the loan amount. Any payment based on the fees or costs or other such loan terms is illegal.
A borrower elects to buy down the interest rate on his mortgage loan. This appears on the Loan Estimate as a
charge to the borrower: A buydown such as this is money out of the borrower's pocket at closing, so it appears on the Loan Estimate as a charge.
A loan on a borrower's primary dwelling where the APR exceeds at least 1.5% of the applicable average prime offer rate for a first lien loan is known as a
higher-priced loan: This is a higher-priced loan as defined by the Mortgage Disclosure Improvement Act.
How soon after a borrower is provided with all required disclosures may a loan close?
on the 7th business day after the disclosures were provided: The amended Truth in Lending Act requires a 7-business day waiting period before a loan can close.
A mortgage loan originator who supplies a revised Loan Estimate to a borrower must maintain the related documentation for at least
3 yrs: RESPA requires loan originators to document the reason for the revised Loan Estimate and then retain that documentation for no less than three years after settlement.
A mortgage broker rents office space from a title company at a discount in exchange for referring customers for settlement services. Which federal law does this arrangement violate?
RESPA: This would be considered a kickback or thing of value, and it is prohibited under Section 8 of RESPA.
A mortgage loan originator is NOT required to provide a Loan Estimate if the borrower
If the applicant withdraws the application or the lender turns down the loan before the end of the three business-day period after application: RESPA does not require the loan originator to provide a Loan Estimate.
At what point can a lender collect a loan origination fee?
3 business days after mailing the required disclosures:
How long does a lender have to cure a tolerance violation?
at settlement or within 30 calendar days after settlement: allows lenders to cure the tolerance violation by reimbursing to the borrower the amount by which the tolerance was exceeded
In order for a junior mortgage on a primary residence to be considered a higher-priced loan, the APR must exceed the applicable average prime offer rate by at least
3.5%: The Mortgage Disclosure Improvement Act defines a higher-priced junior mortgage loan as one that exceeds the applicable average prime offer rate by at least 3.5%.
Your applicant receives child support for her seven-year-old son. Can you gross up the child support payments she receives?
Yes: gross up all net income if it is verified and likely to continue for three years