NMLS Practice Exam 4 ( timer) - NMLS Mortgage Licensing Training

You're about to begin Practice Exam 4.
This exam contains 120 questions.
You will have THREE HOURS to complete this exam.
Good luck!

1.

Realtor Robin's client is Hispanic. Even though Robin's client wants to see properties all throughout the city, Robin primarily selects properties to show him that are located in Hispanic neighborhoods. What ethical failure, if any, is Realtor Robin committing?

Illegal steering

Bait and switch

Realtor Robin is not committing an ethical breach since people of a particular ethnicity generally prefer to reside amongst people of the same ethnicity

Blockbusting

1 out of 120

2.

In many states, a licensed loan originator may also act in the capacity of a licensed Realtor on the same transaction. If doing so is permitted by the state in which the subject property is located, what, if anything, must the real estate professional do?

There is nothing more or extra that a loan originator acting as both the MLO and Realtor needs to do

The loan originator must receive the borrower’s informed consent to act in both capacities

The loan originator should inform the borrower that they will be acting in both capacities

The loan originator should disclose the dual capacity to the borrower in writing

2 out of 120

3.

How many hours does a borrower who earns an hourly rate of $20 and is paid a bi-weekly salary of $1,600 work each week?

40

37.5

36

80

3 out of 120

4.

A recent illness has caused Edna to fall behind on her mortgage payments. When she approaches her mortgage servicer to discuss options to avoid foreclosure, her servicer's Loss Mitigation Specialist offers Edna an immediate forbearance during which Edna would not be required to remit any payments. At the forbearance's conclusion, Edna can expect her mortgage balance to be _______.

Higher

Lower

The same

Fully repaid

4 out of 120

5.

By allowing a borrower to retain possession of a property subject to a mortgage lien, the lender is participating in ...

Hypothecation

Indemnification

Allocation

Amortization

5 out of 120

6.

According to RESPA, how soon must a mortgage servicer acknowledge a written correspondence received by its customer service department?

Within five days

Within seven days

Within fourteen days

Within thirty days

6 out of 120

7.

One benefit of purchasing an owner's title policy is ...

Automatic death and disability coverage

A cheaper premium

The costs of the abstract and survey are included

A reissue rate

7 out of 120

8.

A UCC lien is attached to which of the following?

PUD

Investment property

Doublewide

Singlewide

8 out of 120

9.

Edna is putting 10% down on the purchase of a two-family investment property. She is buying the dwelling for $550,000 and asks you how much in seller's concessions she can request. What do you tell her?

$33,000

$11,000

$9,900

$29,700

9 out of 120

10.

Which entity establishes the FHA loan's underwriting parameters?

HUD

GNMA

FHA

FNMA

10 out of 120

11.

All but which of the following is not a super lien?

Defaulting soft second

Delinquent take back mortgage

Outstanding civil judgement

HOA dues arrearage

11 out of 120

12.

How long may a mortgage servicer, with cause, extend the timeframe by which it must resolve a customer complaint surrounding their payment's application?

45 days

10 days

15 days

20 days

12 out of 120

13.

An ARM containing a payment CAP can experience all but which of the following?

Recast

Payment shock

Negative amortization

Accelerated amortization

13 out of 120

14.

Jared is a mortgage loan originator working for Big Money Bank. How many hours of annual continuing education must Jared complete in order to maintain his mortgage loan originator’s license?

0

12

8

20

14 out of 120

15.

The

_______

requires the borrower to remit both the first mortgage and the second mortgage payments to the secondary lien holder.

Growth Equity Mortgage

Package Mortgage

Reduction Option Mortgage

Wraparound Mortgage

15 out of 120

16.

Basing a loan approval on the value of a home and not the applicant's qualifications is known as:

Equity stripping

Collateralization

Predatory lending

Equity-based lending

16 out of 120

17.

Of the following, who is not required to hold a valid MLO license?

A 1099 processor who only performs administrative functions

A Realtor who arranges for her clients' mortgage financing and is compensated for doing so by the lender

An MLO who originates mortgage loans for a non-accredited credit union

A Realtor who arranges for his clients' mortgage financing and is compensated for doing so by his employer

17 out of 120

18.

Joan is taking out a loan for $415,000 after putting down 17%. What is the price that she is paying for the home that she is purchasing?

$344,450

$70,550

$485,550

$500,000

18 out of 120

19.

Temporary Authority affords which of the following mortgage professionals the opportunity to originate mortgage loans prior to receiving their license.

An MLO was has passed the NMLS exam within the previous 90 days

An MLO whose previous license lapsed and is now reapplying after five years

An MLO who is seeking licensure in a different state

An MLO whose license suspension or revocation is under formal appeal

19 out of 120

20.

Which of the following would be considered a non-liquid asset?

Secured borrower funds

The cash value of a life insurance policy

Gift funds

A CD

20 out of 120

21.

During a licensee’s examination or investigation, records and documentation may be removed from the licensee’s physical control for all the following reasons except:

If the documents are likely to be altered or destroyed to impede the examination or investigation

If the licensee refuses to allow their removal

Under court order

With the Commissioner’s consent

21 out of 120

22.

Gretchen is applying for her very first mortgage. Her assets consist of $175,000 in a money market account, $25,575 in savings, and a mutual fund amounting to $227,500. What would the maximum sum of her costs to close be allowed to be in order for her lender to credit her with her mutual fund's total statement value?

$189,550

$159,250

$182,000

$428,075

22 out of 120

23.

If Amelia's 3/1 ARM adjusts with a new payment effective November 1st, by when must her mortgage servicer notify Amelia of her new rate and payment amount?

By no later than August 1st of the current year

By no sooner than October 1st of the current year

By no later than October 31st of the previous year

By no sooner than July 1st of the current year

23 out of 120

24.

Mortgage lenders and brokers must submit an activity report to the NMLS on a quarterly basis referred to as a/an:

Statement of Condition

Activity Report

Call Report

Activity Register

24 out of 120

25.

On a saleable loan, who ultimately earns the interest?

Servicer

Broker

Investor

Lender

25 out of 120

26.

When an action is finalized against a licensee’s surety bond:

The licensee will be required to file a new bond

The licensee’s license may be suspended until the matter is resolved

The licensee is only required to secure a new bond if a claim is ultimately paid

The licensee’s license may be revoked until the matter is resolved

26 out of 120

27.

Which of the following loans could never be conforming?

The 20-year fixed

The 30-year fixed

The 3/27

The 251

27 out of 120

28.

Good Intentions Mortgage Trust intends to close a reverse mortgage on Friday. On Wednesday, it discovers that the loan's actual APR is 5.875% whereas the final APR provided to the borrower the day before was 5.5%. What must Good Intentions now do?

Reissue the CD and extend the settlement another three business days

No other action need be taken

Nothing since the CD provided at the settlement will provide the final APR

Reduce the actual APR to match the previously-disclosed final APR

28 out of 120

29.

We Cheatem Good Mortgage Bankers were served notice of a claim being filed against their surety bond. What happens next?

Nothing will happen or be required until the claim is decided

The State Commissioner will temporarily suspend We Cheatem Good's license pending the claim's outcome

The State Commissioner will require We Cheatem Good to file a new surety bond

The State Commissioner may require We Cheatem Good to file a new surety bond

29 out of 120

30.

A Realtor offers a loan originator $100 for every referral that turns into a sale. Who violated RESPA?

Both the Realtor and the loan originator

Neither the Realtor nor the loan originator

The loan originator

The Realtor

30 out of 120

31.

Arnie's current payment is $1,059. His interest rate recently increased increasing his payment to $1,655.10. His ARM contains a $200 payment CAP. What is the most that Arnie could remit when he makes his next payment?

$1,259

$1,655

$1,059

His loan's remaining balance

31 out of 120

32.

Edgar Eagersell is a mortgage loan originator who loves closed loans. In a follow-up conversation with an applicant who applied for a 25-year mortgage to finance their primary residence, the borrower casually mentions to Edgar that they will be moving to a different state and using the subject property for rental purposes within two weeks after their loan closes. What, if anything, should Edgar do now that the borrower has shared this information?

Edgar should advise the borrower that he will have to restructure the transaction as an investment property loan

Edgar should do nothing since the borrower was only causally making conversation

Edgar should advise the borrower to stay in the property for no less than six months from the closing date

Edgar should simply ignore what he heard

32 out of 120

33.

Desktop Originator (DO) is used for loans destined to be delivered to:

Farmer Mac

Fannie Mae

Freddie Mac

Ginnie Mae

33 out of 120

34.

How many periodic payments does HOEPA permit to be financed into a high-cost mortgage?

Two

HOEPA prohibits the satisfaction of future periodic payments through the proceeds of any high-cost loan

Six

One

34 out of 120

35.

Which of the following activities would a non-contract mortgage processor be prohibited from performing?

Securing a written verification of employment

Explaining the loan’s terms to the borrower

Incorporating a float-down option into an already-originated loan

Collecting income documentation

35 out of 120

36.

When a borrower is obligated to pay alimony, what may a lender do to account for it?

Disregard the alimony if the applicant has not paid it within the most recent 12 months

Disregard the alimony if the party to whom the applicant owes alimony is romantically involved with someone else

Reduce the assets by the total obligation

Reduce the applicant's income by the amount owed per month

36 out of 120

37.

A loan originator is playing golf with a client and suggests that the client use a colleague's title services. Although there is no affiliate relationship between the title company and the mortgage company, two days later, the loan originator mails his client an ABAD. Which of the following statements is true?

The Loan originator was not compelled to issue an ABAD at all because the company to which he referred his client did not share any ownership interest with his own

The loan originator violated RESPA for socializing with his client

The loan originator violated RESPA for not issuing the ABAD the same day due to the face-to-face referral

The loan originator complied with RESPA for issuing the ABAD within three business days of the referral

37 out of 120

38.

A State Commissioner may do all the following except:

Rely on examinations conducted by government officials from other states

Incorporate independent audits into licensee investigations

Sentence a licensee convicted of violating state lending law to prison

Contract for the use of private analytical systems

38 out of 120

39.

A valid change of circumstance occurs on Tuesday resulting in a revised Loan Estimate being e-mailed to the applicant on Thursday. If the applicant acknowledges receipt and her ability to access it on Saturday, when is the earliest that the loan can close?

The very next Friday

The very next Monday

The Saturday on which the applicant confirms receipt and the ability to access the LE

The very next Tuesday

39 out of 120

40.

Who is technically responsible for issuing the Loan Estimate?

The lender

The broker

The MLO

The processor

40 out of 120

41.

Whose MLO license may be approved?

Ernie who was convicted of felony DUI six years prior

Linda whose MLO license was revoked in a different state twelve years prior but has no other derogatory concerns revealed through her background check and credit report review

James who was convicted of felony embezzlement fifteen years prior, had a misdemeanor conviction for petty theft six years prior, and who had a felony child neglect charge pardoned by the governor three years ago

Alice who has a medical collection judgement for $6,575, a foreclosure 48 months ago, and several credit card charge-offs five years prior

41 out of 120

42.

Alice writes to her mortgage servicer bringing an error to its attention. By when must the servicer resolve Alice's concern?

Within thirty days

Within forty-five days

Within five days

Within seven days

42 out of 120

43.

Sal's monthly mortgage payment is $3,575. What does his servicer tell him that his bi-weekly payment will be if he changes his loan to a bi-weekly plan?

$1,787.50

$7,150

$1,650

$137.50

43 out of 120

44.

Which of the following practices constitutes redlining?

An insurance company refuses to insure in areas prone to hurricanes

An insurance company charges higher premiums on properties in riskier locations

A residential mortgage company refuses to originate loans on dwellings containing more than four independent living units

A lender refuses to lend within zip codes known to be economically depressed

44 out of 120

45.

What does the FBI Mortgage Fraud Warning Notice caution?

That failure to comply with fair lending laws may cost an individual his or her license

That regulatory examiners are posing as customers to catch loan originators who violate regulations

That it is illegal for a person to attempt to influence the decision of a lending institution by making a false statement regarding income, assets, debt, and personal identification on a loan application

That all mortgage professionals must complete anti-money laundering training

45 out of 120

46.

All but which of the following refer to the same thing?

HOEPA loan

High-cost loan

HPML

Section 32 loan

46 out of 120

47.

Joe is a mortgage loan originator working for Creative Mortgage Financing. As an incentive to encourage higher revenue, Creative Mortgage Financing informs Joe that he will be paid 50 bps more on every loan that he sells that contains a pre-payment penalty. Which of the following statements correctly addresses this compensation structure?

Creative Mortgage Financing is completely within their rights to pay their loan originators extra for originating loans that contain a pre-payment penalty

Payment of the extra compensation is illegal

Joe may only earn the extra compensation if the loan survives the pre-payment period

Joe may only earn the extra compensation if the loan pays in full during the pre-payment period

47 out of 120

48.

Failing to issue a right of rescission at the closing of a rescindable loan is a violation of:

Reg B

FCRA

RESPA

Reg Z

48 out of 120

49.

A utility easement is referred to as a/an:

Easement by Necessity

Easement in Gross

Easement Appurtenant

Prescriptive Easement

49 out of 120

50.

Which of the following scenarios must adhere to ATR/QM considerations?

The financing of a parcel of vacant land

The financing of a non-owner-occupied four-family property

A loan issued through a creditor designated by HUD as a Community Housing Development Organization

The financing of a timeshare plan

50 out of 120

51.

What was one of the primary difficulties plaguing the mortgage industry prior to the establishment of the NMLS?

Mortgage loan origination was limited only to banks and credit unions

Lack of regulation led to higher interest rates

There were no regulations governing mortgage loan origination

Different states all had different requirements making conducting business in multiple states quite cumbersome

51 out of 120

52.

The legal doctrine of “Respondeat Superior” refers to:

An employer not being responsible for the actions of its employees

An employer being equally culpable for its employee’s actions

A mortgage professional’s sole accountability for his or her actions

An employer being solely responsible for its employees’ actions

52 out of 120

53.

$53,088 is most closely associated with:

General QM priced-based limits

The HOEPA points and fees threshold

The TSR/DNC penalty

HMDA lender applications

53 out of 120

54.

All but which is a component of the FTC Red Flags Rule?

Instances of identity theft must be reported to the FTC

Mortgage creditors must all create, implement, and maintain a formal identity theft prevention program

All mortgage creditors must maintain a physical copy of "The Guidance" on premises at all times

Annual reports must be issued to company executives

54 out of 120

55.

Realtor Raymond's nefarious plan is to approach homeowners in various neighborhoods and convince them to immediately sell their homes at reduced prices. He plans on motivating them through reports that "undesirables" are moving into the neighborhood which will dramatically reduce their properties' values and ultimately render their homes unsalable. Realtor Raymond's actions constitute ...

Flipping

Short sale abuse

Flopping

Blockbusting

55 out of 120

56.

A mortgage originator receives a call from a friend who wishes to rent a house to a potential renter. The friend does not wish to purchase a credit report but has authorization to access the applicant's credit. To avoid having to pay for a report, the friend asks the loan originator to order the potential tenant’s credit report on his behalf. The loan originator agrees to and does so. Consequently, the loan originator:

Complied with the law but should bill his friend for the cost of the credit report

Violated the FACTA

Violated the FCRA

Complied with the law since the applicant gave permission

56 out of 120

57.

A loan's first escrow analysis must be conducted by no later than

_______

from the date of consummation.

One year

60 days

45 days

30 days

57 out of 120

58.

Taking advantage of a borrower's lack of knowledge by communicating erroneous information on which of the following documents constitutes an ethical violation?

The Mortgage Servicing Disclosure

The Mortgage Counseling Disclosure

The Loan Estimate

The 4506-C

58 out of 120

59.

At 9:15 a.m., with a fresh pot of coffee having just brewed, an Asian customer enters a mortgage brokerage asking to speak with a loan originator about a new mortgage. While waiting, the customer is offered a cup of freshly-brewed coffee. At 4:15 that afternoon, another customer, also Asian, enters the brokerage asking to speak with a loan originator about a new mortgage. With the coffee being long gone, this customer is simply left to wait for the next available MLO. What ethical failure, if any, did the mortgage brokerage commit?

Disparate Treatment

Reverse redlining

No ethical failure occurred

Covert discrimination

59 out of 120

60.

The DTI ratio 29/41 represents the

_______

DTI guideline.

FHA

Conventional

USDA

VA

60 out of 120

61.

Ernie pays off his mortgage on the 2nd of July. By what date must his mortgage servicer return his escrow balance to him?

July 22nd

July 3rd

August 1st

July 17th

61 out of 120

62.

When a property is located in a title theory state, the trustor refers to the/a ...

Title Company

Lender

Neutral Third Party

Borrower

62 out of 120

63.

CAIVRS is most closely associated with:

Conventional/Non-Conforming

QM

203(b)

Subprime

63 out of 120

64.

An applicant who is compelled to disclose income that he or she earns through alimony, child support, or separate maintenance is applying for a/an ...

VA loan

FHA loan

USDA loan

Conventional Adjustable-Rate loan

64 out of 120

65.

Cindy wants to solidify the current rate at the time of her mortgage application. Her MLO believes that rates may go down further in the near future. In order to guarantee the currently-low rate while reserving the option to get a lower one should rates reduce before settlement, Cindy will need to .....

Request a float-down option

Pursue an adjustable-rate loan

Float her current interest rate and wait until they reduce further

Once the rate is locked, there is nothing further that can be done if rates decrease prior to settlement

65 out of 120

66.

How is an applicant's employment status typically confirmed?

WVOE

One month's most recent paystubs

Pay stub

VVOE

66 out of 120

67.

All but which of the following constitutes an unacceptable security risk in protecting a customer’s non-public, personal information?

An underwriter takes a customer’s file home to work on it

A loan originator leaves her laptop containing customer information on the front seat of her car while stopping off for dinner on her way home from work

A processor leaves his cubicle for a minute and neglects to tether-lock his laptop to his desk

A loan originator leaves his password-protected laptop in his locked office overnight

67 out of 120

68.

Bobby's 3/1 ARM has a start rate of 2.375% and a 3/1/6 CAP structure. Thirty months into her mortgage, Bobby's servicer mails her a letter informing her that, with her loan's index now trading at 4.08% and her loan's margin being 1.875%, her loan's interest rate will adjust to _______ in four months.

5.955%

8.375%

5.875%

5.375%

68 out of 120

69.

Which of the following is an example of non-traditional credit?

A three-month gym membership

An auto loan with less than 10 months remaining

A 12-month apartment rental history

A deferred student loan

69 out of 120

70.

Reps and Warrants refers to ...

An investor establishing mortgage product parameters

A lender's indemnification

AUS findings

A lender's approval of a mortgage application

70 out of 120

71.

A licensed mortgage loan originator who fails to maintain a valid license for a period of _______ months or more will be required to retake and pass the NMLS licensing examination in order to reactivate their mortgage loan originator’s license.

12

24

72

60

71 out of 120

72.

Which of the following is not a RESPA exemption?

Loan modification

Land loan

Bridge loan

Fully-qualifying assumption

72 out of 120

73.

Stephanie's mortgage balance is $198,790.36 at a rate of 6%. Her P&I payment is $1,199.10. What is the principal allocation of her next payment due?

$993.95

$33.13

$205.15

More information is needed to calculate this answer

73 out of 120

74.

Who is the party responsible for decisioning a mortgage application?

The loan originator

The processor

The closer

The underwriter

74 out of 120

75.

Sally is selling her home. Sally's Realtor Saul convinces Sally to refuse offers from any potential buyer who does not agree to use Saul's preferred title company. If Sally agrees and Saul's title company charges $1,000 for its services, what, if anything, might happen to Sally?

Sally might be fined $3,000

Sally might get a percentage of the title company's fee

Nothing since all of this is defined in advance and the buyer is free to choose a different home to buy

Saul might lose his license

75 out of 120

76.

PMI protects the ...

Lender

Borrower

Underwriter

Investor

76 out of 120

77.

Unbeknownst to his neighbor, a loan originator orders his neighbor's credit report to see the quality of his credit. What regulation(s), if any, did the loan originator violate?

GLBA

FCRA & GLBA

The loan originator did not violate any regulation

FCRA

77 out of 120

78.

Emma earns $1,175 bi-weekly. What is her income's semi-monthly equivalence?

$2,350

$1,084.62

$1,272.92

$587.50

78 out of 120

79.

Lowell owns a small mortgage brokerage that generates less than $5m in loans annually. As such, he does everything possible to keep expenses low. One of his cost-saving strategies is to avoid the excessive costs often associated with business bank accounts. Lowell finds it more economical to use his personal checking account for all business-related financial activities. What ethical breach, if any, is Lowell committing by doing this?

Lowell is acting compliantly as long as he maintains meticulous records accounting for all business and personal funds

Money laundering

Commingling funds

Bait and switch

79 out of 120

80.

A Closing Disclosure is e-mailed to the applicant on Monday, June 10th. Assuming that nothing further is heard from the applicant, what is the earliest date on which the loan could close?

Friday, June 14th

Tuesday, June 18th

Monday, June 17th

Wednesday, June 19th

80 out of 120

81.

Michelle is a Realtor who offers MLOs one contest entry ticket for every referral that she's given. At the end of the month, Michelle holds a raffle and the holder of the winning ticket receives free admission into an annual CE class that she conducts. By doing this, what can Michelle be accused of?

Offering kickbacks

Violating RESPA Section 8

Violating the SAFE Act

Michelle is fully compliant because the CE that she conducts is not a thing of value

81 out of 120

82.

Carrie issues her prospective borrower Julie an LE on Tuesday. Eight days later, Julie contacts Carrie desiring to proceed with the refinance application. Which fee may now differ from the fees disclosed on the original LE?

The appraisal

The credit report

The transfer tax

The interim interest

82 out of 120

83.

The USA PATRIOT Act is most closely related to:

TSR/DNC

MARS

BSA/AML

ECOA

83 out of 120

84.

A licensed loan originator is working on a file when he must suddenly leave town due to a family emergency. He turns the loan over to a colleague who is also licensed and authorized to originate loans in the state in which the property is located. After the loan closes, the two originators split the commission. Under what conditions is the commission’s split permitted?

Since they are both appropriately licensed, they may share the commission

As long as the borrower is not charged higher fees to accommodate the split, they’re allowed to do so

Under no circumstance may multiple loan originators split a commission

As long as the split accurately represents the percentage of work completed by each they may split the commission

84 out of 120

85.

HMDA requires all entities subject to its reporting requirements to report annually by ...

January

December

March

July

85 out of 120

86.

Which of the following third-party settlement service providers may a borrower select?

The flood cert company

The tax search company

The credit repository

The title company

86 out of 120

87.

The Secondary Market's purpose is to ...

Stabilize interest rates

Create investments

Sustain the housing market

Provide funds for lenders to lend

87 out of 120

88.

Which of the following is a zero-tolerance fee?

Transfer tax

Title insurance premium

Appraisal fee

Recording fee

88 out of 120

89.

Ellen originates mortgage loans for a local credit union. As such, she can be technically referred to as a:

Licensed loan originator

Tenured loan originator

Registered loan originator

Sanctioned loan originator

89 out of 120

90.

Ernie wants to buy a home for $380,000 and finance it through the 203(b) program. His DTI ratios are 25/30, his credit score is 578, he has significant reserves, and he's been consistently employed (W-2) for six years. What is the minimum down payment that Ernie would be required to make?

$13,300

$19,000

$38,000

$76,000

90 out of 120

91.

The FTC Red Flags Rule is a component of the _______ and requires all financial institutions to implement a formal _______.

BSA/AML // Red Flags Plan

FACTA // Identity Theft Prevention Program

FCRA // Anti-Money Laundering Program

GLBA // CIP

91 out of 120

92.

A borrower earns a weekly salary of $1,500, $125 in semi-monthly, non-taxed social security payments, and $250 in bi-weekly, court-ordered child support payments from his child’s non-custodial mother. With what monthly income do you credit this borrower assuming that all income has been consistently received for at least the previous year and is due to be received for more than three years?

$6,750

$7,354.16

$7,291.66

$7,000

92 out of 120

93.

Billy's 7/1 ARM is approaching the end of its six year. Billy has $75,000 from an inheritance that he would like to put against his mortgage balance. If he does this, what will happen?

Billy's future P&I payment will be lower than it would otherwise be

Billy will pay off his loan sooner than it was otherwise scheduled to be repaid

Billy will save money in overall interest spent

Billy will improve his credit scores

93 out of 120

94.

How long does the Telemarketing Sales Rule afford a company legitimately telemarketing through the use of robocalling to connect the call recipient to a live person upon the call recipient's request?

Two seconds

One minute

Thirty seconds

Ten seconds

94 out of 120

95.

A seller wants to provide the maximum allowable seller’s concessions to the buyer of his home who is pursuing conventional financing. The purchase price is $410,000, and the borrower is seeking a loan amount of $369,000. How much in seller concessions will the seller be permitted to provide?

$24,600

$41,000

$2,460

$22,140

95 out of 120

96.

A borrower’s TLTV is 83%. His home is worth $475,000. He has a first mortgage with an outstanding balance of $135,700 along with a home equity line of credit, the outstanding balance of which is $56,375. How much more can this borrower borrow from his HELOC?

$394,250

$282,925

$202,175

$258,550

96 out of 120

97.

The legal description of the property being financed appears on the:

Closing Disclosure

Title Binder Schedule B

Title Binder Schedule A

Mortgagee Clause

97 out of 120

98.

In

_______

the FHLMC was created with the purpose of

_______

.

1975 // stabilizing interest rates by creating competition

1965 // introducing the 15-year fixed rate mortgage

1968 // creating a securitization channel for government mortgages

1970 // assisting S&Ls

98 out of 120

99.

All financial companies are required to have a hard copy of which of the following documents on their premises at all times?

The FTC's Guideline on Identity Theft Detection, Prevention, and Mitigation

The DIDMCA

The CFPB's listing of all final rules

The Dodd Frank Act

99 out of 120

100.

The terms surrounding a loan's late fees are establisheddescribed on all but the ...

Closing Disclosure

Loan Estimate

Mortgage

Note

100 out of 120

101.

Edgar is considering an interest-only loan. By adding which of the following, could his MLO be accused of risk layering?

A float down option

An adjustable interest rate

A balance CAP

A recast point

101 out of 120

102.

A loan that prohibits direct payments to home improvement contractors may be referred to as a/an

_______

loan.

Section 32

Section 502

FHA 203(k)

FHA 255

102 out of 120

103.

In addition to income, which of the following is an employment consideration?

Whether or not the applicant's employer offers retirement contributions

Success of the employer's competitors

The length of time the applicant has worked for their employer

The age at which the applicant first started to work

103 out of 120

104.

Grand Junction Power & Gas may access Billy Bob's land without asking him due to what type of easement?

Appurtenant

Prescriptive

Gross

Necessity

104 out of 120

105.

The back-end DTI ratio of 43% represents:

The maximum back-end ratio tolerable under VA financing

The maximum back-end ratio tolerated by an FHA loan

The maximum back-end ratio tolerable through the refinancing of a non-standard mortgage loan

The maximum back-end ratio tolerable for a non-conforming loan

105 out of 120

106.

A lock-in agreement:

May never be extended

May never contain a float-down option

Commits a lender to a particular rate and cost for a specific duration

Requires the lender to close within a particular period of time

106 out of 120

107.

In the presence of a bona fide financial emergency, which of the following would not be able to be waived?

LE issuance timing

LE reissuance timing

CD Issuance timing

Right of rescission

107 out of 120

108.

The longer the lock-in period the:

Lower the cost of the lock

Higher the cost of the lock

Lower the interest rate

Higher the interest rate

108 out of 120

109.

Considering a mortgage applicant's ability to repay stems from ...

The Dodd-Frank Act

The SAFE Act

The ATR/QM Rule

The Guidance on Non-Traditional Mortgage Product Risks

109 out of 120

110.

A borrower’s housing expense ratio is 27%. Her monthly PITI consists of the P&I payment, real estate taxes, homeowner’s insurance, and HOA dues. Her monthly income amounts to $12,019. Her bi-weekly P&I payment is $895, her monthly real estate taxes amount to $855, and her monthly homeowner’s insurance is $310.97. How much is her monthly HOA dues?

$140

$1,184.16

$9,958.10

$56.46

110 out of 120

111.

MLO Mary reviews her customer’s credit report. She discovers multiple discrepancies, several inconsistencies, and many apparent errors. She advises her client that, to remedy this, she needs to order a:

Suspicious activity report

Tradeline verification

Rapid rescore

Full factual

111 out of 120

112.

Which of the following does not constitute non-public personal information protected by the Gramm-Leach-Bliley Act?

A non-published telephone number

A record of divorce

An equity line's account number

One's child's medical records

112 out of 120

113.

The TIP refers to ....

The point where the amount of money repaid equals the original loan amount

The cost of interest plus settlement fees

The cost of a loan's interest expressed as a percentage

The cost of the loan expressed as a percentage

113 out of 120

114.

A mortgage originator attends an open house held by a Realtor and brings bagels. How does the mortgage professional maintain regulatory compliance?

By only offering the bagels to the Realtor

By explaining to the Realtor that, since the bagels constitute a thing of value, they can only be eaten by prospective buyers and the Realtor may not eat any

By asking the Realtor not to mention the bagels to anyone

By realizing what he did and throwing them out before anyone eats any

114 out of 120

115.

If a limited cash-out refinance results in cash to the customer in excess of the greater of 1% of the loan amount or $2,000, the lender must:

Apply the difference between the actual amount due to the borrower and the allowable amount towards the loan’s principal balance

Re-underwrite the loan

Cancel the closing and require that the applicant reapply

Forgive the difference and issue it directly to the customer

115 out of 120

116.

All but which of the following may be financed into a loan?

PMI premium

Credit life insurance

Discount points

Future payments

116 out of 120

117.

What is the penalty for violating the TSR/DNC Rule?

$16,000 per violation

$71,544 per violation

$48,715 per violation

$53,088 per violation

117 out of 120

118.

Under what circumstance can a revised Loan Estimate be issued without violating accuracy tolerances?

In the presence of a valid change of circumstance

In the property's appraised value increases

If the borrower's credit score improves

Only at the borrower's request

118 out of 120

119.

A customer decides to apply for an adjustable rate mortgage since the loan’s start rate corresponds to an affordable payment. By the time that the interest rate adjusts, the borrower feels that he could simply refinance the loan if his income at that time does not support the new payment amount. Since he qualifies for the loan, the loan originator encourages him to pursue the product if it is the product that he feels best suits his needs. What else, if anything, should the loan originator do prior to completing the application?

Nothing … as long as the borrower qualifies there is nothing more that needs to be done

The loan originator should only encourage fixed-rate loans

The loan originator should encourage the borrower to think about the loan for at least another day before submitting his application

The loan originator should ensure that the borrower is aware of the loan’s worst-case scenario even if it is unlikely to occur

119 out of 120

120.

An annual real estate tax bill is paid in September for $3,000. In May of the following year the escrow account is analyzed. The following September, the lender receives and pays the tax bill in the amount of $3,500. How much will the borrower's escrow payment be after the next escrow analysis?

$250

$333.34

$375

$291.67

120 out of 120

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