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NMLS final exam

Terms in this set (115)

Who is responsible for ensuring that the Closing Disclosure is delivered to the consumer?
A.The creditor
B.The loan processor
C.The consumer
D. The CFPB
A. the creditor
Which law restricts the sharing of information given when a consumer applies for a mortgage loan?
A. Fair Credit Reporting Act
B. FTC Disposal Rules
C. Gramm-Leach-Bliley Act
D. Consumer Regulatory Protection Act
C. Gramm-Leach-Bliley Act
Which document actually contains the borrower's promise to repay the loan?
A. The deed
B. The mortgage
C. The note
D. The TIL Disclosure
C. The note
The practice of intentionally targeting borrowers in poor or underserved areas with predatory loans is known as:
A. Redlining
B. Steering
C. Misappropriation
D. Reverse redlining
D. Reverse redlining
If a lender wants to obtain copies of a borrower's tax returns, the borrower is asked to sign what?
A. 4506-T
B. A waiver of financial information
C. 1003
D. 1040
A. 4506-T
An increase in fees and issuance of a revised Loan Estimate to reflect the new amounts is permitted in which of the following cases?
A. The creditor failed to provide an accurate estimate of transfer taxes and wants to issue a revised Loan Estimate showing actual costs
B. The consumer is not allowed to shop for flood zone determination services and the actual costs are more than the estimated costs
C. The title company affiliated with the lender decides to charge more for its services than initially disclosed
D. The consumer has failed to respond to a loan officer within ten business days and the lending terms have changed
D. The consumer has failed to respond to a loan officer within ten business days and the lending terms have changed
All of the following are true of FHA fixed-rate loans, except:
A. They require upfront MIP on all loans
B. They are available in 15- and 30-year terms
C. The borrower is only required to carry MIP until the LTV reaches 78%
D. The borrower must make at least a 3.50% investment
C. The borrower is only required to carry MIP until the LTV reaches 78%
Previously used as compensation for mortgage professionals, yield spread premiums must now be used:
A.As referral fees paid to the broker by a settlement service provider
B. As credits to the borrower to help pay settlement costs
C. As commissions paid in addition to mortgage broker compensation
D. As credits off of the interest rate of the loan
B. As credits to the borrower to help pay settlement costs
On which portion of the loan application would one find a street address and legal description of the property?
A. Section X
B. Section II
C. Section XV
D. Section III
B. Section II
Which of the following best describes the legal consequences of providing an inflated description of income on a loan application?
A. It is not an illegal act, but may impact the consumer's credit score
B. It is a violation of multiple federal lending laws and constitutes fraud
C. It is not a violation of criminal laws, and any penalties imposed are civil, not criminal
D. It is not illegal if the applicant inflates his or her income to secure approval for the loan but fully intends to repay the obligation
B. It is a violation of multiple federal lending laws and constitutes fraud
Which of the following is permitted as a result of a referral?
A. A free monthly pass to the gym with each closing
B. A well-written thank you note
C. A coffee card for each client
D. The names, phone numbers, and annual incomes of clients who have applied for loans
B. A well-written thank you note
What agency ensures that GSEs are using sound financial practices and have adequate capital to engage in the mortgage business?
A. The Federal Housing Finance Agency
B. The Department of Housing and Urban Development
C. The Office of the Comptroller of the Treasury
D. The Office of Federal Housing Enterprise Oversight
A. The Federal Housing Finance Agency
What is the maximum fee that may be charged for preparation of the Closing Disclosure?
A. $50
B. .1% of the loan amount
C. $0
D. 1% of the loan amount
C) $0
Don is refinancing his home in order to save money. If the loan goes through, his payment will drop from $2,000 per month (PITI) to $1,500 per month (PITI). Don's gross income each month is $6,800, but he has a $300 car payment, a $150 credit card payment, and monthly alimony payments of $1,300. What is Don's housing ratio on the proposed loan?
A.29%
B.31%
C.48%
D. 22%
D) 22%


In this case, his proposed housing expense (PITI) will be $1,500/month. $1,500 / $6,800 = 22%
Mishandling borrowers' funds or improperly managing their funds is a practice prohibited by:
A. TILA
B. FNMA
C. RESPA
D. GLB
C. RESPA
When a loan is characterized as "conforming," it means the loan:
A. Requires no PMI
B. Meets guidelines established by Fannie Mae and Freddie Mac
C. Meets standards for a government program
D. Is a 30-year fixe
B. Meets guidelines established by Fannie Mae and Freddie Mac
A buyer pays $200,000 for a home and gets a fixed-rate loan from his lender at 5.75%. He puts $40,000 down. What is the LTV on this loan, and does the buyer have to pay PMI?
A. 80% and YES
B. 90% and YES
C. Unknown - need to know the term of the loan to determine
D. 80% and NO
D. 80% and NO
Which of the following is true of disclosures required by the Homeowners Protection Act?
A. Borrowers can accelerate payment and request to cancel MIP as soon as they reach 80% LTV
B. Lenders can require homeowners to purchase PMI if they have an LTV of less than 80% under certain circumstances
C. High-risk loans do not meet the guidelines of FHA, VA, or USDA
D. Borrowers with lender-paid PMI are not protected by the HPA
D. Borrowers with lender-paid PMI are not protected by the HPA
An appraiser uses any one of three appraisal approaches to determine the value of a property. They are:
A. Sales comparison (or market), cost, and income
B Sales, cost, and comparable
C. Market comparison, cost comparison, and investment approach
D. Sales comparison, market comparison, and subject comparison
A. Sales comparison (or market), cost, and income
A VA loan referred to as an "IRRRL" is an:
A. Interest Reduction and Refinance Loan
B. Interim Rate Refinance Reduction Loan
C. Interest Rate Reduction Refinance Loan
D. Interest Rate Refinance Return Loan
C. Interest Rate Reduction Refinance Loan
The Smiths are buying a house for $200,000. After their 10% down payment, they've decided to pay two discount points. What is the dollar amount of the discount points?
A. $2,000
B. $4,000
C. $3,600
D. $3,800
C. $3,600
The most commonly used type of reverse mortgage is known as a:
A. Home Equity Line of Credit
B. Home Equity Conversion Loan
C, Home Equity Conversion Mortgage
D. Home Equity Consolidation Mortgage
C, Home Equity Conversion Mortgage
The Guidance on Nontraditional Mortgage Product Risks examined and made recommendations on the use of what types of loans?
A. Interest-only, payment-option ARMs, and other nontraditional adjustable-rate mortgages
B. Interest-only, payment-option ARMs, and reverse mortgages
C. 30-year and 15-year fixed loans made to elderly borrowers
D. Payment-option ARMs, limited documentation loans, and reverse mortgages
A. Interest-only, payment-option ARMs, and other nontraditional adjustable-rate mortgages
The Telemarketing Sales Rule prohibits calls made to consumers:
A. After 8:00 a.m. or before 9:00 p.m.
B. Who have established a business relationship within the last 12 months
C. Who have specifically asked a mortgage professional not to contact them
D. Not listed on the Do-Not-Call Registry
C. Who have specifically asked a mortgage professional not to contact them
Businesses that conduct telemarketing are required to access the Do-Not-Call Registry every _______ in order to maintain an updated database of people on the Do-Not-Call List.
A. 60 days
B. 45 days
C. 31 days
D. Three months
C. 31 days
The front end ratio is
A. A comparison of the borrower's total monthly obligations and gross monthly income
B. A comparison of the value of the property and the amount of the loan
C. A comparison of the borrower's monthly housing expense and his or her income
D. A comparison of the amount of the loan and the borrower's income
A) A comparison of the borrower's total monthly obligations and gross monthly income
The regulations issued for the implementation of ECOA are known as:
A. Regulation X
B. Regulation C
C. Regulation B
D. Regulation E
C. Regulation B
In accordance with Section 8 of the Real Estate Settlement Procedures Act, a mortgage broker may receive compensation for which of the following?
A. Taking information to be used in a loan application and submitting the file to processing
B. Referring a borrower to a real estate agent
C. Submitting a loan to a lender
D. The reasonable value of goods and/or services actually performed or provided
D. The reasonable value of goods and/or services actually performed or provided
All of the following are part of the underwriter's review of collateral, except:
A. Sales contract
B. Flood zone verification
C. Bank statements
D. Appraisal
C. Bank statements
The initial Loan Estimate must be delivered at least how many days prior to consummation?
A.Seven business days
B.There is no timing requirement
C.Three business days
D.One business day
A.Seven business days
Under RESPA, the initial escrow account statement:
A. Is due no later than the time of settlement
B.Is due no later than the time of application
C.Is due no later than 45 days after settlement
D. Is due no later than 45 days after application
C.Is due no later than 45 days after settlement
Each violation of federal law prohibiting bank fraud may lead to a penalty of up to ________, imprisonment for up to ________, or both.
A. $50,000; 40 years
B. $100,000; 50 years
C. $1 million; 30 years
D. $2 million; 10 years
C. $1 million; 30 years
Which of the following individuals would not be permitted to hold POA for a borrower?
A.The borrower's parent
B. The borrower's child
C. The borrower's mortgage loan originator
D. The borrower's fiancé
C. The borrower's mortgage loan originator
An ARM loan has a 4.00% start rate, and it is time for the first adjustment to be made. It has a periodic cap of 1% and a lifetime cap of 5%. Assuming that the rate is going to increase, what will the rate be after its first adjustment?
A. 9.00%
B. 4.00%
C. 7.00%
D. 5.00%
D. 5.00%
A mortgage broker structures a higher-priced loan with two points in borrower credit because the borrower has limited cash to close, and suggests the borrower use the premium generated to subsidize the closing costs. After consideration, the borrower agrees and moves forward. This is:
A. Illegal and ethical
B. Illegal and unethical
C.Legal and unethical
D. Legal and ethical
D. Legal and ethical
This is calculated by dividing PITI by the borrower's monthly gross income:
A. Net tangible benefit
B. Housing expense ratio
C. Total debt ratio
D. Loan suitability
B. Housing expense ratio
Regulations in Section 32 of Regulation Z deal strictly with:
A. Licensing standards placed in effect by the Housing and Economic Recovery Act
B. The interactions between mortgage professionals and real estate agents
C. Consumer protections triggered by high-cost loan scenarios
D. The amount a borrower should expect to be charged as an annual percentage rate
C. Consumer protections triggered by high-cost loan scenarios
A buyer pays $200,000 for a home and gets a fixed-rate loan from his lender at 5.75%. He puts $40,000 down. What is the LTV on this loan, and does the buyer have to pay PMI?
A. 90% and YES
B. 80% and YES
C. 80% and NO
D. Unknown - need to know the term of the loan to determine
C. 80% and NO
When may a homeowner request PMI to be cancelled?
A. When the lender informs him/her that it is terminating PMI
B. As soon as his/her equity position reaches at least 22%
C. As soon as the five-year required minimum is met
D. As soon as his/her equity position is 20% or greater
D. As soon as his/her equity position is 20% or greater
In an adjustable-rate mortgage, this term refers to the maximum amount by which the interest rate may vary during its lifetime.
A. Lifetime cap
B. Payment cap
C. Periodic rate adjustment cap
D. Annual cap
A. Lifetime cap
An FHA loan is insured by the federal government against:
A. Flood or other hazard
B. Market fluctuation
C. Fraud or misappropriation
D. Foreclosure
D. Foreclosure
The generally accepted appraisal standards in the United States are known as:
A.ASB
B. FinCEN
C. USPAP
D. USASB
C. USPAP
(Uniform Standards of Professional Appraisal Practice)
You have taken a loan application from a customer with an excellent credit score. When should you advise him/her about the status of the application?
A. Within 90 days
B. Within one week
C. Within three days
D. Within 30 days
D. Within 30 days
In an ARM, margin is determined by:
A. The underwriter, and it represents the percentage of error allowable for debt-to-income ratio
B. The lender, and it represents the lender's operating costs and profit margin
C. The lender, and it represents the amount of commission paid to the broker
D. The broker, and it is the amount of profit split between the broker and lender
B. The lender, and it represents the lender's operating costs and profit margin
Two federal laws that relate to the confidentiality of personal financial information are:
A. RESPA and FTC Disposal Rule
B. GLB Safeguards Rule and FTC Disposal Rule
C. GLB Safeguards Rule and RESPA
D. FTC Disposal Rule and FNMA Application Rule
B. GLB Safeguards Rule and FTC Disposal Rule
Tom and Cindy Lewis are buying a house with a $300,000 sales price and their LTV will be 80%. They paid $3,600 in discount points. How many total points did they pay?
A. 2
B. 2.5
C. 4
D. 1.5
D. 1.5

80% of 300,000 is 240,000

3600/2400000= .015 --> convert to percentage= 1.5
he Smiths are buying a house for $200,000. After their 10% down payment, they've decided to pay two discount points. What is the dollar amount of the discount points?
A. $4,000
B.$3,600
C. $2,000
D. $3,800
B.$3,600

10% of 200,000 is 20,000. ($20,000 is already paid off)

2 discount points= 2%

200,000-20,000= 180,000

2% of 180,000= $3,600
On what page of the Closing Disclosure would the consumer find information about the cash needed to close, in comparison to information on the Loan Estimate?

A. Page three
B. Page two
C. Page four
D. Page one
A. Page three
How long do consumers have to file a lawsuit over alleged violations of section 6 of RESPA?

A. 6 months
B. 1 year
C. 3 years
D. 7 years
C. 3 years
A home equity installment loan falls under HOEPA when the APR of the original mortgage on the home is at least ____ percentage points above the rates for Treasury securities with comparable maturities.

A. 5
B. 8
C. 10
D. 12
B. 8
Which federal law requires that the Good Faith Estimate be provided to the borrower within three business days of the time a loan application is taken?

A. RESPA
B. TILA
C. HMDA
D. ECOA
A. RESPA
What type of scam entails homeowners who are encouraged to refinance their property over and over until little or no equity remains?

A. loan flipping
B. reverse equity
C. property skimming
D. extreme lending
A. loan flipping
After a loan closing, funds are disbursed. When are the funds disbursed for an owneroccupied, residential refinance?

A. after the three business-day rescission period
B. right before the loan closing
C. five business days after the closing
D. at the time of the loan closing
A. after the three business-day rescission period
What is the adjustable number used to compute the interest rate on an ARM called?

A. index
B. prepayment
C. margin
D. cap
A. index
A borrower is buying a house for $180,000. He provides a down payment of $40,000. If he pays three discount points, what is the total cost of the points?

A. $4,200
B. $6,000
C. $5,400
D. $4,667
A. $4,200
Which is NOT a purpose for the Mortgage Servicing Disclosure Statement?

A. to inform the consumer the likelihood that the mortgage could be sold
B. to inform the consumer the likelihood that the servicing of the mortgage will be sold
C. to explain the resolution of �servicing complaints� required by law
D. to disclose the percentages of the loan closings this lender has serviced in the last three years
A. to inform the consumer the likelihood that the mortgage could be sold
A Latina applies to a mortgage company for a home loan. She is refused based on the reputation of the neighborhood for a high number of foreclosures. This is an example of what illegal practice?

A. redlining
B. steering
C. puffing
D. blockbusting
A. redlining
Which act establishes disclosure requirements and prohibits equity stripping and other abusive practices in connection with high cost mortgages?

A. Home Ownership and Equity Protection Act (HOEPA)
B. Homeowners Protection Act (HPA)
C. Home Mortgage Disclosure Act (HMDA)
D. Community Reinvestment Act (CRA)
A. Home Ownership and Equity Protection Act (HOEPA)
The type of mortgage that can provide the borrower with a monthly check instead of the borrower paying a monthly payment is known as

A. reverse mortgage.
B. nonconforming loan.
C. graduated payment mortgage.
D. conforming loan.
A. reverse mortgage.
According to the Fair Credit Reporting Act, if adverse action is taken against a credit applicant because of information on a credit report, the lender who used that report is required to

A. provide to the consumer the name, address, and telephone number of the consumer reporting agency that furnished the report.
B. revise the inaccuracy in the credit report.
C. provide a copy of the credit score to the consumer.
D. inform the applicant that the reporting agency was the decision maker, and to dispute the decision in writing at the address provided.
A. provide to the consumer the name, address, and telephone number of the consumer reporting agency that furnished the report.
define: Bona fide discount point
discount points paid by the borrower which reduce the interest rate
An annual escrow analysis is used to do which of the following?
A. Reduce burden on the servicer
B. Ensure the loan is properly amortized
C. Report underwriting errors
D. Prevent escrow overages
D. Prevent escrow overages
Under the USA Patriot Act, which of the following is NOT obtained by a mortgage broker from a borrower for customer identification purposes?
A. Passport number
B. Credit card number
C. Tax payer identification number
D. Alien identification number
B. Credit card number
According to the Truth In Lending (TILA) which of the following notices by the creditor informs the customers about their rights to cancel a loan?

A. Good Faith Estimate
B. Notice of right to rescind
C. Servicing disclosure statement
D. Affiliated business arrangement disclosure
B. Notice of right to rescind
A mortgage company advertises on a real estate agent's website by paying the required fees. Which company is in violation of RESPA?

A. The mortgage broker only
B. The real estate agent only
C. Both are in violation
D. Neither are in violation
D. Neither are in violation
If a consumer reporting agency makes an inquiry related to a joint credit account of a borrower and the spouse, which of the following information can be provided under the Equal Credit Opportunity Act (ECOA)?

A. Information about the borrower only
B. Information about the spouse only
C. Information on the borrower and the spouse
D. Information cannot be provided about either person
C. Information on the borrower and the spouse
A homeowner's equity position reaches 20% of the original value o the property. Which of the following statements is true pertaining to the cancellation of the Private Mortgage Insurance (PMI)?

A. The lender must automatically cancel the PMI
B. The homeowner can request cancellation of the PMI
C. The PMI gets automatically cancelled after 30 days
D. The PMI gets cancelled 20 days after the request is submitted
B. The homeowner can request cancellation of the PMI
The purpose of the Fair Credit Reporting Ace (FCRA) is to:

A. Reduce home insurance costs
B. Ensure the accuracy of the information in the consumer reports
C. Help consumer receive lower interest rates
D. Provide consumers with many finance options to choose from
B. Ensure the accuracy of the information in the consumer reports
According to RESPA, which of the following relationships between a lender and a settlement service provider does NOT require disclosures on the Good Faith Estimate?

A. Provider is an associate of the lender
B. Provider has an outstanding loan with the lender
C. The lender and the provider use the same attorney for legal services
D. The lender has repeatedly used the services of the provider in the last 12 months
B. Provider has an outstanding loan with the lender
How does Freddie Mac benefit the consumer?

A. Consumers can take more than one mortgage
B.Freddie Mac does not ask for PMI
C. If a consumer is unable to pay the installments, they can approach Freddie Mac for time
D. By making mortgage products available to consumers
D. By making mortgage products available to consumers
A mortgage broker licensee charges a fee that exceeds the fee initially disclosed to the borrower. What MUST the mortgage broker provide the borrow provide the borrower three days prior to the signing of the closing documents?

A. A copy of the borrower's rights under the Consumer Loan Act
B. A redisclosure of the fee including a clear written explanation for the increase
C. The details of the mortgage broker's trust account including subaccounts
D. The details of the mortgage broker;s surety bond company and the amount of the bond
B. A redisclosure of the fee including a clear written explanation for the increase
A mortgage company displays its sign at a real estate licensee's office. Who is in violation of RESPA?

A. Only the mortgage company is
B. Only the real estate licensee
C. Both
D. Neither
D. Neither
A mortgage broker refers clients to a title company providing them with an Affiliated Business Disclosure. The mortgage broker owns 10% of the title company. The title company performs services and pays the mortgage broker a commission. The title company pays the mortgage broker annual dividends based on the amount of business that was referred to the title company. Which of the statements is Correct?

A. Only the mortgage company is in violation of RESPA
B. Only the title company is in violation of RESPA
C. Both are in violation of RESPA
D. Neither are in violation of RESPA
D. Neither are in violation of RESPA
Truth in lending act (TILA) requires disclosure of:

A. Number of days to process the loan
B. Credit history of the borrower
C. Key details of the property on which the loan was taken
D. Key terms of the credit transaction
D. Key terms of the credit transaction
In whose name is a loan closed that is "table-funded"

A. Loan originator
B. Independent contractor
C. Mortgage broker licensee
D. Designated mortgage lender
D. Designated mortgage lender
Under the Fair Credit Reporting Act, who is responsible for ensuring that the reporting of consumer's credit standing and reputation protects the consumer's rights and privacy?

A. Mortgage broker
B. Consumer credit counseling agencies
C. Credit reporting agencies
D. Board of Governors of the Federal Reserve Systems
C. Credit reporting agencies
TILA is designed to protect consumers in:

A. property offers
B. credit card transactions
C. real estate practices
D. property evaluations
B. credit card transactions
A lender provides a borrower with an intial amortization schedule for PMI as well as the disclosure's at loan closing for a adjustable- rate mortgage. The lender MUST also provide a written notice stating the:

A. borrower's right to refuse PMI
B. Borrower's right to cancel PMI
C. Lender's right to extend the time for monthly payments for a PMI
D. Lender's right to increase the monthly payment amount for PMI
B. Borrower's right to cancel PMI
A mortgage broker has advertised "$1200 down" for a house in a local newspaper. According to TILA which of the following information must be disclosed in the same advertisement?

A. location of the house
B. the total area of the house
C. the annual percentage rate
D. the annual property taxes
C. the annual percentage rate
What is the purpose of a Subordination Clause found in a mortgage of deed of trust that is a junior lien?

A. Provides a mechanism where the current 1st lien can be refinanced
B. Allows real estate taxes to become a junior lien
C. Does not allow the 1st lien to be assumed by a new buyer
D. Allows the 2nd lien lender to drop back into a subordinate position if the borrower refinances the senior lien
D. Allows the 2nd lien lender to drop back into a subordinate position if the borrower refinances the senior lien
What is the minimum amount of a home's appraised value required as a down payment to avoid taking PMI?

A. 10%
B. 15%
C. 20%
D. 30%
C. 20%
The Homeowner's Protection Act is applicable to all but which of the following:

A. Lenders
B. Loan Servicers
C. Appraisers
D. PMI Companies
C. Appraisers
Which of the following statements violates ECOA?

A. Since your credit score is 610, I do not have a product to offer you
B. I think you should close out some of those dormant accounts before you apply
C. What is your race, sex, national, origin?
D. Since you're 17 years old, you'll need to wait until your 18th birthday to apply
B. I think you should close out some of those dormant accounts before you apply

ECOA prohibits discouraging anyone from applying for a mortgage. Refusing to take an application from someone under legal age is permitted. Asking an applicant about their race, national origin, and sex is required under HMDA and therefore allowable under ECOA and establishing an across-the-board policy whereby a lender refuses to lend to anyone at or below a certain credit score threshold is also permitted. Discouraging someone from applying due to the quality of their credit and not their score based on an across-the-board policy, however, is a violation of ECOA.
Sue Johnson is a receptionist for a construction company. She receives bi-weekly pay in the amount of $1,153.85. What is her monthly qualifying income?

A. $543.55
B. $1143.85
C. $2307.70
D. $2500.00
D. $2500.00

Multiplying her bi-weekly income of $1,153.85 by 26 results in an annual income of $30,000. Dividing $30,000 by 12 results in a monthly income of $2,500.
Each of the following are key differences found in the FHA loan program when compared to the conforming, conventional loan program except:

A. The maximum loan amount is determined by the county in which the property is located
B. More liberal acceptance of borrowers with credit history problems
C. Down payments of as low as 3.5%
D. Mortgage insurance premium is required
D. Mortgage insurance premium is required

In the FHA loan program, qualification is not credit-score driven and as little as 12 months of clean credit history may qualify a borrower. FHA down payment requirements are as low as 3.5%. FHA's maximum loan amount is set for each county in the U.S. The MIP must be paid for a minimum of 11 years on loans having an initial LTV less than 90% . Both FHA and conventional loan programs require mortgage insurance under certain conditions.
Payment shock is defined as:

A. The reaction to learning the payment amount of the loan one is considering
B. The difference between the proposed loan's P&I and PITI payments
C. The difference between the borrower's current housing expense and the proposed housing expense through the loan they;re considering
D. The difference between the borrower's current back-end-ratio and the back-end-ratio they'd endure if they pursued the loan they're considering
C. The difference between the borrower's current housing expense and the proposed housing expense through the loan they;re considering

Payment shock concerns itself with the borrower's current housing expense and their proposed housing expense. If an individual's housing expense increases significantly beyond what they're currently paying, they might ultimately experience difficulty making their payments.
Which of the following was one purpose of the HERA?

a. Pursuing and prosecuting terrorists
B. Establishing the NMLSR
C. Improving the stock market
D. Giving Wall Street greater autonomy
B. Establishing the NMLSR

Title Five of the Housing and Economic Recovery Act establishes the SAFE Act. One of the components of SAFE is to establish the Nationwide Mortgage Licensing System and Registry (NMLSR), a national system for regulating and monitoring mortgage professionals.
All of the following are true of FHA fixed-rate loans except:

A. They're available in 15- and 30- year terms
B. They require upfront MIP on all loans
C. Borrower must make at least a 3.5% investment
D. The borrower is only required to carry MIP until the load's LTV reaches 78%
D. The borrower is only required to carry MIP until the load's LTV reaches 78%
A state licensing agency is conducting an examination of a company's loan origination activities. In doing so, it may do all of the following, except:

A. Require the company to compile reports related to their mortgage loan transactions
B. Subponea books and records
C. Close the company down for the period of the examinationn
D. Control access to the company's books and records
...
At what LTV is a mortgage servicer required to remove PMI on a "high-risk" loan, assuming the borrower's loan is current?

A. 22%
B. 80%
C. 78%
D. 77%
D. 77%

The HPA requires mortgage servicers to automatically remove PMI on any loan designated as "high-risk" once the loan's LTV reaches 77% and assuming that the borrower's loan is current.
What are discount points or points?
A. They are a fee paid by the bank to the government for guaranteeing the loan against default.
B. They are a fee paid by the lender to the seller to help reduce closing costs.
C. They are a fee paid by the borrower to the lender to reduce the interest rate on the loan
D. They are a fee paid by the seller to the borrower to cover the down payment on the home.
C. They are a fee paid by the borrower to the lender to reduce the interest rate on the loan

A discount point is in the US, one-time fee paid by a home buyer (usually at the time a home mortgage loan is advanced) to compensate the lender for the difference between the market interest rate and the lower rate applicable to home buyers. One discount point is equal to one percent of the principal, and number of discount points charged on the loans varies with the market. Amount paid as discount points is tax deductible, either in installments over the loan period or as a lump sum.
The primary purpose of Truth in Lending is to:
A. Control the true costs to close a transaction.
B. Disclose the true costs of only an FHA loan.
C. Control interest rates on behalf of the consumer.
D. Disclose the true costs of obtaining credit.
D. Disclose the true costs of obtaining credit.

Truth in Lending, otherwise known as Regulation Z, is intended to do away with deceptive financing tactics, especially those involving hidden costs--for example, advertising a $250 car lease as zero-down and then tacking a $1,200 upfront payment at the time of contract disguised as an "incidental" acquisition fee.
The recording of an instrument gives:
A. Documented notice
B. Constructive notice
C. Legal notice
D. Actual notice
B. Constructive notice

Constructive Notice attaches once a document is recorded. Once recorded, subsequent buyers will be deemed to have received "Constructive Notice" regarding the document and its effect on the property in question. This could also be taken by taken possession. Actual Notice is when an individual has first-hand knowledge of something. [For example, if a buyer has knowledge that someone has taken possession of the property that is for sale.]
The total collection of rights which may be claimed by private ownership is best described as:
A. The fee simple system.
B. An estate.
C. Freehold.
D. The bundle of rights.
D. The bundle of rights.

The bundle of rights contain all the rights one obtains with the ownership of real property, which include the right to enter, use, lease, sell, give away the real estate or the right not to do any of these things.
After the buyer's offer was accepted by the seller, the broker cashed the buyer's deposit check and put the money in his office safe pending the close of escrow. The seller demanded the deposit money but the broker refused to give it to him. Assuming only the above facts:
A.The broker had legal justification to refuse to give the deposit money to the seller
B. The broker had legal justification to hold only one-half of the deposit; he must give the their half to the seller
C. This conduct would probably subject the broker to disciplinary action by the real estate commissioner
D. The broker needs to look out for the best interest of the seller at all times, even if that means performing acts against the sellers will.
C. This conduct would probably subject the broker to disciplinary action by the real estate commissioner


If a broker refused to give a deposit to a seller when the seller demanded it, this conduct would subject the broker to disciplinary action by the Real Estate Commissioner. You must remember; the deposit belongs to the seller.
In order to be valid all exclusive listings must include:
A. a forfiture clause
B. a definite date of expiration.
C. permission for the listing broker to appoint subagents.
D. an automatic renewal clause.
B. a definite date of expiration.

Listing agreements must have specific "from-to" dates attached. Moreover, they may not be automatically renewed, but must be renegotiated. (Usually that's just a routine extension, but a new agreement, nonetheless.)
Freehold estate includes:
A. estates for years
B. periodic tenancy
C. leasehold estates
D. life estates
D. life estates

The distinctive characteristic of the freehold estate is that they endure for an interminable duration.
For the past 30 years, the Ls have operated a neighborhood grocery store. Last week the city council passed a zoning ordinance that prohibits packaged food sales in the area where the Ls' grocery store is located. The store is now an example of a/an:
A. nonconforming use.
B. violation of eminent domain.
C. variance of the zoning laws.
D. illegal enterprise.
A. nonconforming use.

This is an example of "grandfathering" that's common when new zoning rules are put into place. Basically it means that businesses and buildings that were in compliance before the new code was established may continue to operate or exist under their present owners. However, if the Ls want to sell their business, it must be to an enterprise that meets the new requirement.
When must the Servicing Disclosure Statement be provided to the borrower?

A. Within 3 days of the application
B. Within 3 days after signing
C. Within 7 days after signing
D. At time of closing
A. Within 3 days of the application
What law deals with credit, APR, and advertising of consumer loans?
TILA
What regulation prohibits kickback?
RESPA
Which regulations requires the lender to cancel PMI when the loan reaches 78% LTV?
Homeowners Protection Act
Which regulation prohibits fee splitting?
RESPA
What is the provision in a mortgage enabling a lending to demand full repayment if the borrower DEFAULTS on the loan?
acceleration clause
What is the provision in a mortgage enabling a lending to demand full repayment if the borrower transfer on the loan?
alienation clause
What law gives you the right to dispute information on your credit report?
FCRA

fair credit reporting act
REGULATION V
What are the 3 credit reporting agencies?
Equifax, Experian, TransUnion
What are the 3 laws under the Gramm Leach Bliley Act?
1) Safeguarding- policy stating how credit card institution must keep our credit card info safe

2) Pretexting- policy to keep others from getting access to our information under false pretenses
i.e: security questions

3) Financial Privacy- policy that governs the collection of nonpublic information and how its shared with affiliates
A borrower who is paid $14.50 per hour and works 30 hours per week, received _________ per month?

A. $2,320
B. $1,885
C. $1,740
D. $2,550
B. $1,885

($14,50 x 30 x 52)/ 12= 1885
A borrower who receives a biweekly fixed salary of $1000 received a monthly income amount of ___________?

A. $2500
B. $4000
C. $3322
D. $2166.67
D. $2166.67

(1000*26)/12= $2166.67
Conventional loan front and back end ratio?????
Top: 28%
Bottom: 36%
FHA loan front an back end ratio?????
Top: 31%
Bottom: 43%
VA loan front and back end ratio?????
Top: N/A
Bottom: 41%
USDA loan front and back end ratio????
Top: 29%
Bottom: 41%
A one-year ARM has a 6.00% start rate and is locked for three years. Its adjustment caps are set at 2/1/5. In what year could this loan reach its rate ceiling?
A) 4th year
B) 11th year
C) 7th year
D) 6th year
C) 7th year

If every year we utlized that year's maximum rate, we can solve the soonest possible year that the loan could reach its rate ceiling.
Rate ceiling= 11%. --- (6% starting rate + 5% life time cap)

-First 3 years the rate will be 6%.
-In the 4th year the range that the rate could possibly be is anywhere between 4%-8% (the 2 in 2/1/5)
-Highest possible rate going into year 5 is 8%. The new range for year 5 is 7%-9% (The 1 in 2/1/5)
-Year 6 rate will 9%. range will be 8%-10%
-Year 7 rate=10%. range will be 9%- 11% . THE CEILING RATE HAS BEEN REACHED
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