SAFE MLO FINAL EXAM GRADED A+

All but which of the following are not covered by RESPA? a) Simple assumptions b) The sale of loans on the secondary market c) Loans intended for sale to Freddie Mac d) Bridge loans - ANSWER-c) Loans intended for sale to Freddie Mac The requirement to include the credit repository's name and address on the adverse action notice is established through: a) ECOA b) FCRA c) ECOA & FCRA d) FACTA - ANSWER-b) FCRA Which regulation governs the issuance of the CHARM? a) TILA b) RESPA c) ECOA d) HMDA - ANSWER-a) TILA What is the maximum penalty that the Commissioner may impose against a licensee? a) $10,000 b) $25,000 c) One year in prison d) $5,000 - ANSWER-b) $25,000 Convincing an appraiser to fraudulently overvalue a property that is ultimately sold for the artificially-inflated price with the fraudulent proceeds split between the seller and the appraiser is an example of: a) Fraud for housing b) An air loan c) Fraud for profit d) Illegal property flipping - ANSWER-c) Fraud for profit An advertisement promoting a 3.5% interest rate should also disclose: a) Nothing else since 3.5% is a pretty great rate b) Whether the rate is fixed or adjustable c) Whether the rate is fully amortizing or may result in a balloon payment d) The APR, whether the rate is fixed or adjustable, if adjustable what the term is, and, if it contains a balloon component, those terms as well - ANSWER-d) The APR, whether the rate is fixed or adjustable, if adjustable what the term is, and, if it contains a balloon component, those terms as well Which of the following disclosures is not required by RESPA for a refinance transaction? a) HUD's Home Loan Toolkit b) Loan Estimate c) Mortgage Servicing Disclosure Statement d) ABAD - ANSWER-a) HUD's Home Loan Toolkit All but which of the following must be completed prior to securing a license to originate mortgages? a) Remitting payment of the appropriate fees b) Securing a letter of reference from a previous business contact c) Obtaining a unique identifier d) Completing the appropriate education - ANSWER-b) Securing a letter of reference from a previous business contact Which of the following is not a part of state supervisory authority? a) Examining, taking, and preserving testimony b) Suspending, terminating, or refusing renewal of a loan originator's license c) Administering oaths and affirmations d) Establishing maximum interest rate caps - ANSWER-d) Establishing maximum interest rate caps hat were the primary overseers of mortgage industry reform? a) The CSBS, HUD, and the FTC b) The CSBS, FTC, and the AARMR c) The CSBS, NMLS, and HUD d) The CSBS, HUD, and the AARMR - ANSWER-d) The CSBS, HUD, and the AARMR 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: a) Violated the FCRA b) Complied with the law since the applicant gave permission c) Complied with the law but should bill his friend for the cost of the credit report d) Violated the FACTA - ANSWER-a) Violated the FCRA The Safeguards Rule is a component of what federal regulation? a) The Gramm-Leach-Bliley Act b) The FTC Red Flags Rule c) The U.S.A. Patriot Act d) RESPA - ANSWER-a) The Gramm-Leach-Bliley Act An option loan affords all but which of the following four payment options: a) Interest only b) 20-year c) 30-year d) Minimum payment - ANSWER-b) 20-year Failing to issue a right of rescission at the closing of a rescindable loan is a violation of: a) FCRA b) Reg Z c) RESPA d) Reg B - ANSWER-b) Reg Z How would the reissuance of a Closing Disclosure affect the loan closing? a) The closing would not be allowed to occur until seven precise business days elapsed post issuance b) The closing would not be allowed to occur until three precise business days elapsed post issuance c) There would be no required change to the closing schedule d) The closing would not be allowed to occur until six precise business days elapsed post issuance - ANSWER-b) The closing would not be allowed to occur until three precise business days elapsed post issuance 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? a) The loan originator violated RESPA for not issuing the ABAD the same day due to the face-to-face referral b) The loan originator complied with RESPA for issuing the ABAD within three business days of the referral c) The loan originator violated RESPA for socializing with his client d) 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 - ANSWER-d) 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 A home buyer is considering buying a home and applying for a $275,000 mortgage at a 78% LTV. Assuming that the appraised value is identical to the purchase price, at what value did the home appraise? a) $352,564 b) $415,500 c) $1,250,000 d) $375,000 - ANSWER-a) $352,564 An ARM start rate that is less than three percent below FIAR is a/an: a) Teaser rate b) Incentive rate c) Discount rate d) Fully-indexed rate - ANSWER-c) Discount rate Anthony applies for a loan that exceeds the thresholds defining it as a HOEPA loan. What must his lender do in addition to everything else? a) Offer Anthony a different type of loan b) Provide Anthony with a special HOEPA-related disclosure no later than three business days prior to closing c) Provide Anthony with a special HOEPA-related disclosure no later than three business days from the date of application d) Nothing else must be done - ANSWER-b) Provide Anthony with a special HOEPA-related disclosure no later than three business days prior to closing Which of the following does not constitute a required standard of state licensing laws? a) a. Loan originator licensing requirements b) b. Requirements for supervising those who are licensed c) c. Requirements for establishing licensing fees d) d. A program for enforcing the law - ANSWER-c) Requirements for establishing licensing fees A loan may not close for: a) Three precise business days from the date that the Loan Estimate is issued b) Seven general business days from the date that the Loan Estimate is issued c) Seven precise business days from the date that the Loan Estimate is issued d) There is no restriction on when a loan may close after the issuance of a Loan Estimate - ANSWER-c) Seven precise business days from the date that the Loan Estimate is issued When must a Loan Estimate be issued to an applicant in accordance with TRID? a) Within three general business days from the day of application b) Within three precise business days from the day of application c) Within three precise business days of closing d) Within three general business days of closing - ANSWER-a) Within three general business days from the day of application The Latin doctrine of "Respondeat Superior" refers to: a) A mortgage professional's sole accountability for his or her actions b) An employer being as culpable for its employee's actions as the employee c) An employer being solely responsible for its employees' actions d) An employer not being responsible for the actions of its employees - ANSWER-b) An employer being as culpable for its employee's actions as the employee Which of the following documents establishes the debt? a) The mortgage b) The deed c) The promissory note d) The closing disclosure - ANSWER-c) The promissory note Deputy Dennis works the night shift at the local police department for which he earns an hourly rate of $42.50 plus a 10% shift differential. Assuming that he works and is paid for a standard 40-hour work week, what is his monthly income? a) $7,366.67 b) $8,103.33 c) $6,630.00 d) $9,100.00 - ANSWER-b) $8,103.33 If a 5/1 ARM's start rate is 3.375% with a cap structure of 2/6, what would the customer's interest rate become if, at the first change point, the index was 2.875% and the margin was 3%? a) 5.875% b) 5.375% c) 9.375% d) 6.375% - ANSWER-b) 5.375% Once a Closing Disclosure is issued: a) The lender may issue a revised Loan Estimate as long as the revisions are precipitated by a valid change of circumstance b) The lender may issue a revised Loan Estimate as long as the changes do not cause an increase of more than 10% to the cumulative sum of all fees charged c) The lender may not issue a revised Loan Estimates d) No fee changes are permitted once a Closing Disclosure is issued - ANSWER-c) The lender may not issue a revised Loan Estimates Model State Legislation: a) Is the governing doctrine of the mortgage industry b) Represents the minimum licensing standards c) Is the model after which all other legislation is created d) Defines a qualified borrower - ANSWER-b) Represents the minimum licensing standards By when must a revised Loan Estimate be reissued in the presence of a valid change of circumstance? a) As long as it is reissued prior to closing, there is no specific timeframe mandating when a revised Loan Estimate must be issued b) Revised Loan Estimates are never issued because the Closing Disclosure ultimately discloses the true costs c) Within three general business days from the closing date d) Within three general business days from the date of the valid change of circumstance - ANSWER-d) Within three general business days from the date of the valid change of circumstance Which of the following regulations requires all financial companies and some creditors to implement an identity theft prevention program? a) The U.S.A. Patriot Act b) The Gramm-Leach-Bliley Act c) The Privacy Protection/Do Not Call Rule d) The FTC's Red Flags Rule - ANSWER-d) The FTC's Red Flags Rule Which of the following is an example of non-traditional credit? a) A 12-month apartment rental history b) A deferred student loan c) A three-month gym membership d) An auto loan with less than 10 months remaining - ANSWER-a) A 12-month apartment rental history In January, 2018, Wanda Whiner unsuccessfully lodged a CFPB complaint against Marvelous Mortgage alleging that they declined her mortgage application without appropriate cause. In March, 2019, Wanda called Marvelous Mortgage to reapply. Having heard all about the issue that occurred back in January, 2018, Marvelous Mortgage's MLO Lenny Loanoriginator, desiring to avoid any potential issues, refused to work with Wanda referring her elsewhere. This time, Wanda's complaint to the CFPB had merit. What regulation, if any, did Lenny violate by refusing to work with Wanda? a) RESPA b) Fair Credit Reporting Act c) ECOA d) Fair and Accurate Credit Transactions Act - ANSWER-c) ECOA The cost of the interest owed from the day of funding through the end of the month in which the loan funds is referred to as: a) Interim interest b) Per diem interest c) Refracted interest d) Rescinded interest - ANSWER-a) Interim interest ______________ is when a mortgage balance grows with the remittance of the acceptable periodic payment while ______________ is the state of one's property value being lower than one's outstanding property debt. a) Negative equity / negative amortization b) Negative amortization / negative equity c) Positive amortization / positive equity d) Positive equity / positive amortization - ANSWER-b) Negative amortization / negative equity Which of the following constitutes a valid change of circumstance under TRID? a) When the title insurance company intended for use terminates operations during the transaction