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NMLS MLO Exam (Latest Update) Questions
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What must a borrower do to avoid having late payments reported to a credit bureau? Pay within 30 days of due date Max penalty if a borrower is required to use a specific title company or settlement agent? 3 times the fee What should not be over-weighted in an analysis of borrower repayment capacity? Credit scores Max prepayment penalty on residential mortgages in the first year of the loan 3% What must condominium associations do with respect to property insurance? Keep a "blanket" policy that protects the entire structure If a lender is planning on referring a borrower to a title company that the lender has ownership in, when must the AFBA must be provided to the borrower? Before the referral to the title company is made
Website to obtain copy of your credit report that the credit bureaus are required to provide once per year at no charge annualcreditreport.com 2/3/6 caps ARM initial adjustment max is 2%, subsequent adjustment period max is 3%, and lifetime cap of 6% What does FHLB stand for and what do they provide? Federal Home Loan Bank, and they provide advances to financial institutions for residential mortgage loans According to the Dodd-Frank Act, how much risk must be retained by the securitizer for a loan that does not meet QRM guidelines? 5% On a purchase transaction, what document contains the purchase price for a property? Sales Contract After a loan has been closed and funded, the creditor notices a tolerance violation with a fee between the LE and CD. How long does the creditor have to reimburse the borrower for the overcharge before being considered in violation of the TRID rule? 60 days after closing According to the Dodd-Frank Act, how much risk must be retained by the securitizer for a loan that does not meet QRM guidelines?
Verification of cash used in a closing is documented by: last 2-3 months bank statements The finance charge is the total cost of: the loan in dollars, including points and mortgage insurance What IRS forms would you requrest from a borrower who is 40% shareholder in a C-Corporation? Form 1120 Impersonating someone else in an attempt to obtain their personal financial information is called: Pretexting What type of funding occurs when a lender obtains funds from a line of credit at a commercial bank? Warehouse funding Late fee for FHA and VA loans 4% Ginnie Mae _____ loans Guarantees A mortgage on personal property is:
Chattel mortgage Who can transfer title insurance policy? Mortgagee What document is NOT recorded? The Note The borrower's IOU is: The Note Escheat When a property owner dies without a will and the state is unable to locate any heirs, so the state claims the property. Disintermediation The withdrawal of funds out of savings accounts and into stocks and bonds Eminent Domain The condemnation of private property for public good Warranty Deed
Which parties sign the deed? Grantor and 2 witnesses When the mortgagor and mortgagee title insurance policies are issued at the same time, this is known as: Simultaneous issue What minimum % of ownership in a related service requires a conflict of interest disclosure? 10% What law defines the right of rescission? Truth-in-Lending How long after the application date must social security payments continue to be received in order to count as income? 3 years Which appraisal approach is most suitable for an office building? Income Capitalization Approach Term Mortgage
Short-term mortgage (usually less than 5 years) where the loan is not fully amortized, instead the borrower makes interest only payments for the term of the loan. At the end of the term, the entire principle is due in a lump sum payment aka balloon payment Who is responsible for completing the HUD-1/Loan Disclosure? The closing agent A mortgagor's title insurance policy is based on purchase price. True or False? True What clause in a mortgage prevents the lender from recovering additional assets from the mortgagor if there is a shortfall in the foreclosure proceeds? Exculpatory The APR appears in the lock-in agreement. True or False? False Fannie Mae allows what amount of fees to be charged to a credit card? 1% of the loan amount plus $500 for the appraisal and credit report Alimony payments must continue to be received for how long after the application date if they are to be included as income? 3 years
The first page of an advertiser's fax must include what? opt-out instructions Individuals submit an annual Report of Foreign Bank and Financial Accounts to ___________. IRS What happens if the acceptable variance between the GFE and the HUD-1 is exceeded? The excess is refunded to the borrower within 30 days What happens if the acceptable variance between the LE and CD is exceeded? The excess if refunded to the borrower within 60 days A lender won't lose money funding what type of loan? FHA A loan originator who accepts an upfront fee for negotiating a loan modification is violating which law? MARS A lender that works with licensed loan originators is a: Wholesale lender
What type of valuation takes into account annual rent as well as other generated income? GIM (Gross Income Multiplier) What type of mortgage fraud occurs when a loan originator submits and closes one loan application with multiple lenders? Chunking Blockbusting Spreading a rumor that a specific ethnic group is planning to move into the neighborhood and advises residents to sell before property values drop Sweat Equity When a lender allows a tenant's improvements to be a applied toward a down payment Zoning Local laws that control the use of the land Quitclaim deed A deed that transfers ownership without making any guarantee of clear title ECOA applies to the extension of credit for: Residential, business, commercial, and agricultural loans
How long is the grace period that borrowers have after their loan servicer has transferred servicing responsibilities to someone else? 60 days A lender requires a borrower to submit his W2's and tax returns prior to receiving the Loan Estimate. This is illegal, the borrower cannot be required to submit any documents prior to the delivery of the estimate. Section 9 of RESPA Prohibits the seller from picking the title company and requiring the buyer to purchase the services. Whoever picks the title company pays for it Trigger Terms Interest Rate, Down Payment, Payment Amount, Number of Payments, Term of Repayment, Amount of any Finance Charge Under HMDA, lending institutions must submit their LAR's (Loan Application Registers) to the _______________ every year. FFIEC (Federal Financial Institutions Examination Council) The Ability-to-Repay law doesn't apply to: HELOCs, Reverse Mortgages, Construction Loans, Vacant Land, or Timeshare Plans
A borrower is entitled to request and obtain a copy of the HUD-1 Settlement Statement how many days before closing? 1 day ECOA allows an applicant to have a copy of his or her: Property Appraisal Report (NOT Credit score, Credit report, and Bank records) HMDA was implemented by the: Federal Reserve Board How many days does a lender have to send a statement of reasons for an adverse action after receiving a request from an applicant? 30 days Which Act includes provisions to protect consumers' personal financial information held by financial institutions? Gramm-Leach-Bliley Which Act allows consumers one free credit report per year from each repository? FACTA How many business days before loan consummation is a borrower entitled to see a revised Closing Disclosure that did not trigger an additional 3-day waiting period?
lis pendens aka Notice of Default, is when a foreclosure lawsuit is initiated on the property Fannie Mae 1006 Form signed by the applicant to authorize the lender to verify bank balances Fannie Mae 1005 Form signed by the applicant to authorize the lender to verify payroll information The appraisal approach that best applies to vacant land is: Sales Comparison Approach The appraisal approach that best applies to a school is: Cost Approach In a completion escrow account, what is the minimum estimated repair cost held in trust by a lender? 120% A legally binding letter from the lender to the mortgagor stating the terms of the loan is: A commitment letter
Who handles complaints regarding mortgage loan rejections? CFPB Mortgagor's title insurance policy It is for the amount of the purchase price, is optional, and is not transferable. It is NOT based on loan amount Property Surveys are not certified to: Real estate brokers. They ARE certified to lenders, title insurers and buyers Business Day Any day the creditor is open to the public for the initial loan estimate and disclosures under RESPA. Any day except Sundays and Federal Holidays for Closing Disclosure and Reg Z disclosures except the LE. RESPA disclosures Loan Estimate, Home Loan Tool Kit, Servicing intent, AFBA, Required Service Providers, Notification of Homeownership Counseling, Closing Disclosure, Initial Escrow Analysis, Yearly Escrow Analysis, Notice of Transfer of Servicing SNARLY CHIN Servicing Intent, Notification of Homeownership Counseling, AFBA, Required Service Providers, Loan Estimate, Yearly Escrow Analysis, Closing Disclosure, Home Loan Tool Kit, Initial Escrow Analysis, Notice of Transfer of Servicing (RESPA disclosures) Who's title insurance policy is transferable?
Who is ultimately responsible for ensuring that the borrower receives a CD? the Creditor Does an originator's unique identifier have to be shown on a company's business signage? No, the NMLS does not require an individual originator's unique identifier to be placed on company materials. MCR Mortgage Call Report aka Reports of condition, MCR was created to provide timely, comprehensive, and uniform information concerning the financial condition of licensed mortgage companies, their mortgage loan activities, and the production information of their mortgage loan originators. Every mortgage licensee must submit an MCR to the NMLS. Who is responsible for enforcing violations as a result of an interstate call? FTC Average charges may not be used for: any type of insurance. Average charges MAY be used for credit reports, home inspections, and appraisals Does the right to rescind a loan apply to a refinancing of credit with the same creditor that made the loan being refinanced? No, unless on certain and RARE cases where it is in the borrower's best interest Does the right to rescind a loan apply to a transaction for a HELOC secured by a principal residence?
Yes Does the right to rescind a loan apply to a transaction for the refinance of a loan that is secured by a vacation home? No A company is required is required to take corrective action after conducting self-testing and discovering that a violation of ECOA: more likely than not occurred Section 8 of RESPA deals with the prohibition against giving or receiving anything of value pursuant to an agreement or understanding. (Referrals) What is the Initial Escrow Statement? A statement of the estimated taxes, insurance premiums, and other charges the borrower will pay from the escrow fund during the first 12 months of the loan What federal legislation requires that an originator ask for info to be collected that may help determine if discriminatory lending practices are being employed? HMDA Are high-cost mortgages permitted to have a prepayment penalty, negative amortization, or a balloon payment? No
