CA State License Exam UPDATED ACTUAL
Questions and CORRECT Answers
Annual Audit - CORRECT ANSWER - a certified audit of a licensee's books, records, and
systems of internal control performed by an independent certified public accountant in
accordance with generally accepted accounting principles and auditing standards
Call report - CORRECT ANSWER - a report of condition on a residential mortgage lender
or mortgage servicer and its operations, including financial statements and production activity
volumes
Institutional investor - CORRECT ANSWER - this exceptionally broad term encompasses
governmental entities, government agencies, government-sponsored enterprises, depository
institutions, non-depository lenders, corporations, securities brokers, real estate brokers, and any
other partnership, business, or association that can purchase or sell investments, including
mortgage loans
Institutional lender - CORRECT ANSWER - in addition to residential mortgage lenders
and mortgage servicers licensed under the Residential Mortgage Lending Act, the law broadly
defines the term "institutional lender" to include governmental entities, depository institutions,
non-depository lenders, and corporations. These include:
An agency or instrumentality of the United States or any state, district, territory, city, or county,
including Fannie Mae and Freddie Mac
A bank, trust company, savings and loan, credit union, industrial loan company, insurance
company, or wholly-owned service or investment company
A publicly traded corporation
Lender - CORRECT ANSWER - a person that:
Is an approved lender for the Federal Housing Administration, Veterans Administration, Farmers
Home Administration, Ginnie Mae, Fannie Mae, or Freddie Mac
Directly makes residential mortgage loans, and
, Makes the credit decision in the loan transaction
Loan processor or underwriter - CORRECT ANSWER - an individual who performs
clerical or support duties as an employee at the direction and under the supervision of a mortgage
loan originator. Clerical and support duties include receiving, collecting, and distributing
information necessary to process a mortgage loan and communicating with a consumer to obtain
information necessary for loan processing, as long as the communication does not include any
offer or negotiation of lending terms and interest rates
Mortgage loan originator - CORRECT ANSWER - an individual who, for compensation or
gain, or in the expectation of compensation or gain, takes a residential mortgage loan application
or offers or negotiates terms of a residential mortgage loan
Mortgage servicer - CORRECT ANSWER - a person that:
Is an approved servicer for the Federal Housing Administration, Veterans Administration,
Farmers Home Administration, Ginnie Mae, Fannie Mae, or Freddie Mac, and
Directly services or offers to service mortgage loan
Registered mortgage loan originator - CORRECT ANSWER - meets the definition of a
"mortgage loan originator," and is registered with and maintains a unique identifier through the
NMLS. However, registered mortgage loan originators work for a depository institution, a
subsidiary that is owned and controlled by a depository institution and regulated by a federal
banking agency, or an institution regulated by the Farm Credit Administration
Servicing - CORRECT ANSWER - receiving more than three installment payments of
principal, interest, or other amounts placed in escrow pursuant to the terms of a mortgage loan,
and performing services relating to the receipt of payments, on behalf of the holder of the note
Sponsoring - CORRECT ANSWER - the maintenance of an employment relationship
between a mortgage loan originator and a residential mortgage lender or mortgage servicer in
which the loan origination activities are subject to the oversight of the lender or servicer
