NMLS S.A.F.E. Exam 7

Loans are purchased as investments in the:

A. Secondary mortgage market
B. Primary mortgage market
C. Reverse mortgage market
D. Subprime mortgage market

A. Secondary mortgage market

The acronym "CHARM" stands for:

A. Cost Handbook for Adjustable-Rate Mortgages
B. Credit History on Adjustable-Rate Mortgages
C. Consumer Handbook on Adjustable-Rate Mortgages
D. Customer Highlights for Adjustable-Rate Mortgages

C. Consumer Handbook on Adjustable-Rate Mortgages

Which of the following is a limit on the amount that the payment can change on any adjustment date from the current or previous payment amount on an ARM?

A. Initial rate cap
B. Payment cap
C. Periodic rate cap
D. Lifetime rate cap

B. Payment cap

Loans that do not meet guidelines established by Fannie Mae and Freddie Mac are known as:

A. Unconventional
B. Government
C. Nonpermissible
D. Nonconforming

D. Nonconforming

Which appraisal approach is most commonly used to appraise new home construction?

A. The income approach
B. The cost approach
C. The sales comparison approach
D. The market approach

B. The cost approach

Under ECOA, a broker is defined as:

A. A person who regularly refers applicants to creditors, or selects or offers to select creditors to whom requests for credit can be made
B. Any person who sells mortgage loans in the secondary market
C. Any person who regularly extends, renews, or continues credit
D. A natural person or entity who regularly extends closed-end or open-end credit

A. A person who regularly refers applicants to creditors, or selects or offers to select creditors to whom requests for credit can be made

Which of the following is subject to a 10% tolerance?

A. Third-party provider fees for which the consumer was allowed to shop off of the creditor's list of service providers
B. Fees paid for third-party provider services for which the consumer was not allowed to shop off of the creditor's list of service providers
C. Amounts required to be placed into escrow accounts
D. Fees paid to the creditor

A. Third-party provider fees for which the consumer was allowed to shop off of the creditor's list of service providers

The front-end ratio compares:

A. Monthly mortgage payments to monthly gross income
B. Total monthly debts unrelated to housing expenses to monthly gross income
C. Total monthly housing expenses (including principal, interest, taxes, and insurance) to monthly gross income
D. Total monthly debts (including housing expenses plus other debts) to monthly gross income

C. Total monthly housing expenses (including principal, interest, taxes, and insurance) to monthly gross income

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. $2,500
B. $2,307.70
C. $1,153.85
D. $532.55

A. $2,500

Which of the following would not be required for an adjustable-rate home equity plan?

A. What You Should Know about Home Equity Lines of Credit
B. Disclosure of APR, fees, and transaction requirements
C. Disclosure of frequency of APR changes and a description of how the APR will be determined
D. Loan Estimate and Closing Disclosure

D. Loan Estimate and Closing Disclosure

In lien theory states, the _____ holds the title to the home securing a mortgage throughout the loan term.

A. Borrower
B. Lender
C. Title company
D. Loan servicer

A. Borrower

What is the primary intent of RESPA?

A. Protect borrowers from misleading advertising
B. Eliminate unearned fees, such as referral fees, kickbacks, and fee splitting
C. Protect the privacy of a borrower's personal financial information
D. Provide the borrower an opportunity to rescind certain types of loans

B. Eliminate unearned fees, such as referral fees, kickbacks, and fee splitting

Under the S.A.F.E. Act, a mortgage loan originator must submit to the NMLS:

A. Reports of condition
B. Financial reports
C. Business organization documentation
D. Trust account information

A. Reports of condition

Van Gordon, who works in the tech industry, has decided to sell his house. He is offering to carry the contract himself and does all the negotiating necessary to reach agreement on the terms of the mortgage loan. Must Van be licensed?

A. Van does not need to be licensed unless he negotiates more than one loan during any 12-month period
B. Van is exempt from the requirement to be licensed as the property on which he is negotiating the terms of the mortgage loan was his own residence
C. Yes, any individuals who offer or negotiate the terms of any residential mortgage loan must be licensed
D. Van must be licensed because he will receive compensation as a result of the transaction

B. Van is exempt from the requirement to be licensed as the property on which he is negotiating the terms of the mortgage loan was his own residence

Which of the following statements offers the most accurate description of the effect of using a "trigger term" in an advertisement for a loan?

A. Use of a trigger term requires the clear and conspicuous disclosure of other relevant terms with equal prominence
B. Use of a trigger term in an advertisement violates Regulation Z
C. Use of a trigger term requires clear and conspicuous disclosure of HUD-approved housing counselors
D. Use of a trigger term requires the disclosure of all the lending terms of the mortgage described in the advertisement

A. Use of a trigger term requires the clear and conspicuous disclosure of other relevant terms with equal prominence

The S.A.F.E. Act requires which of the following to fulfill responsibilities including participating in the NMLS, conducting background checks, and writing rules and regulations?

A. A state legislature
B. A state Attorney General
C. A state licensing agency
D. The federal government

C. A state licensing agency

Taneka is licensed and has received her unique identifier from the NMLS. Taneka must clearly show her unique identifier on all of the following, except:

A. Residential mortgage loan applications
B. Solicitations and advertisements
C. Websites
D. Interoffice communications

D. Interoffice communications

Which of the following mortgage loan types creates a presumption that the loan complies with ability-to-repay standards?

A. Reverse mortgage
B. Qualified mortgage
C. Balloon mortgage
D. Fixed-rate mortgage

B. Qualified mortgage

Which of the following fees is not included in the calculation of the finance charge for a mortgage?

A. Origination fees charged by the creditor
B. Charges for title work by an affiliate of the creditor
C. Use of a closing attorney required by the creditor
D. Fees charged by an unaffiliated appraiser

D. Fees charged by an unaffiliated appraiser

The Fair Housing Act prohibits discrimination based on:

A. Handicap, familial status, sex, national origin, religion, color, race
B. Race, color, religion, sex, age
C. Race, sex, age, color, religion, handicap
D. Race, sex, color, religion, age, familial status, handicap

A. Handicap, familial status, sex, national origin, religion, color, race

Appraisers are often pressured by homeowners, originators, or real estate agents to:

A. Provide appraisals in as short a time period as possible
B. Include the borrower's name on the appraisal
C. Inflate the value in order to make the deal work
D. Provide the names and numbers of former customers

C. Inflate the value in order to make the deal work

The legal document that authorizes one person to act on behalf of another is called:

A. Legal prerogative
B. Power of attorney
C. Fiduciary authorization
D. Proxy agreement

B. Power of attorney

If a borrower intends to use rental income for qualification, what amount of that income is allowable?

A. The first $750
B. 100% if the home is unencumbered
C. The income is not allowable unless a lease has been in effect for five years or more
D. 75% of the rental income

D. 75% of the rental income

Debt ratios for an FHA loan are:

A. 31% / 41%
B. 28% / 36%
C. 28% / 41%
D. 31% / 43%

D. 31% / 43%

Which of the following loan types is exempt from the HPA?

A. FHA loans
B. Fixed-rate loans
C. Conventional loans
D. Non-conforming loans

A. FHA loans

Which of the following is required for ARMs and is intended to provide borrowers with information to prepare them for interest rate adjustments that will result in changes in payment amounts?

A. Loan Estimate
B. Closing Disclosure
C. Initial Rate Change Disclosure
D. Your Home Loan Toolkit

C. Initial Rate Change Disclosure

When Michael wanted to purchase a home in 2006, his mortgage broker told him that his income was insufficient to qualify for the mortgage. When Michael insisted on trying to purchase the home, his mortgage broker suggested that he complete an application for a stated-income loan, and told him the minimum income level that he needed to include on the application in order to qualify for a mortgage. Michael completed the loan application, adding $20,000 to the minimum amount that his broker suggested. The broker reviewed the application and Michael signed it. Which of the following statements most accurately describes the liability that can arise from this scenario?

A. The mortgage broker is solely liable because he encouraged Michael to misrepresent his income
B. Neither Michael nor the mortgage broker is liable since it was common practice in 2006 to exaggerate a loan applicant's income level
C. Michael is solely responsible for misrepresentation since he inflated his income more than was necessary to secure the loan
D. Michael and the mortgage broker are liable for submitting a loan application that contains false information

D. Michael and the mortgage broker are liable for submitting a loan application that contains false information

All of the following are responsibilities of the closing agent, except:

A. Verify identity and notarize documents
B. Explain the risks and benefits of the ARM product on which the client is closing
C. Coordinate the closing process
D. Verify that all parties have copies of forms and disclosures required for settlement

B. Explain the risks and benefits of the ARM product on which the client is closing

What is the difference between seller financing and seller concessions?

A. Seller concessions are a gift from the seller used to pay closing costs and do not have to be paid back; seller financing is a loan from the seller that functions as a second mortgage and must be repaid
B. Seller concessions are a gift from the seller used to pay closing costs and do not have to be paid back; seller financing is the same as purchasing discount points to lower the interest rate
C. Seller concessions are the same as purchasing discount points to lower the interest rate; seller financing is a gift from the seller to pay closing costs and does not have to be paid back
D. Seller financing and seller concessions function in the same way and serve the same purpose

A. Seller concessions are a gift from the seller used to pay closing costs and do not have to be paid back; seller financing is a loan from the seller that functions as a second mortgage and must be repaid

Edna Eager is planning an ad campaign to draw more business to her company. In order to avoid trouble with her advertising, Edna must comply with the advertising requirements of the:

A. Truth-in-Lending Act and Regulation Z
B. Real Estate Settlement Procedures Act and Regulation X
C. Equal Credit Opportunity Act
D. Federal Trade Act

A. Truth-in-Lending Act and Regulation Z

When a homeowner allows his/her insurance to lapse, what can the lender do to insure the property?

A. Mortgage insurance
B. State-placed insurance
C. Optional credit life
D. Force-placed insurance

D. Force-placed insurance

The TRID Rule's zero tolerance for variances between estimated and actual charges applies to which of the following fees?

A. Fees paid to non-affiliated third-party settlement service providers chosen by the borrower and not included on the creditor's recommended list of providers
B. Fees paid for prepaid interest
C. Fees paid to third-party providers of optional insurance products, such as credit life and credit disability insurance
D. Fees paid to a creditor

D. Fees paid to a creditor

Which of the following statements most accurately describes HOEPA's prepayment penalty threshold for high-cost mortgages?

A. A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, and requires the prepayment penalties to exceed 2% of the amount prepaid
B. A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid
C. A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 24 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid
D. A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 24 months after consummation, and requires the prepayment penalties to exceed 3% of the amount prepaid

B. A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid

Tom and Cindy Lewis are buying a house with a $300,000 sale price and their LTV will be 80%. They paid $3,600 in discount points. How many total points did they pay?

A. 2
B. 4
C. 1.5
D. 2.5

C. 1.5

Which of the following describes a state where the lender holds legal title until the debt is paid?

A. Lien theory
B. Conveyance theory
C. Due-on-sale clause
D. Title theory

D. Title theory

John Walker's loan application was denied by XYZ Mortgage. XYZ is required to provide a(n) _____ within _____.

A. Valuation Results Report; three days of denial
B. Notice of Adverse Action; 30 days of application
C. Derogatory Action Notice; three days of application
D. Notice of Action Taken; 60 days of application

B. Notice of Adverse Action; 30 days of application

Payments for qualified mortgages must be based on:

A. The maximum interest rate that will apply over the life of the loan
B. The fully-indexed rate
C. The introductory rate
D. The maximum interest rate that will apply during the first five years after the date of the first payment

D. The maximum interest rate that will apply during the first five years after the date of the first payment

Costs anticipated to be charged in a loan transaction, such as origination fees, processing fees, appraisal fees, title fees, and recording fees are called:

A. Total costs
B. Estimated closing costs
C. Purchase price
D. Pre-paids

B. Estimated closing costs

Under the Homeowners Protection Act, borrowers can request that lenders cancel PMI when their loan balance is less than _____, or a lender may collect PMI until _____ loan-to-value ratio is reached.

A. 65%; 50%
B. 78%; 62%
C. 80%; 78%
D. 80%; 65%

C. 80%; 78%

Which of the following regulates advertising for credit?

A. HPI or Regulation C
B. TILA or Regulation Z
C. FCRA or Regulation B
D. FACTA or Regulation H

B. TILA or Regulation Z

If a purchase loan closes on January 20th, how many days of per diem interest must be collected to put the loan on schedule?

A. 12
B. 10
C. 20
D. 31

A. 12

In accordance with Section 8 of the Real Estate Settlement Procedures Act, a mortgage broker may lawfully receive compensation for which of the following?

A. The reasonable value of goods and/or services actually performed or provided
B. Referring a borrower to a real estate agent
C. Taking information to be used in a loan application and submitting the file to processing
D. Submitting a loan to a lender

A. The reasonable value of goods and/or services actually performed or provided

An incorrect calculation of income can result in:

A. The borrower being denied a loan after it is sent to underwriting
B. All of these answers are correct
C. The borrower needing to put more money down to lower the DTI
D. The loan being delayed because of the inaccurate calculation

B. All of these answers are correct

A piggyback loan is most often used:

A. As a bridge from one property to the next
B. In the event a borrower is upside down on his/her loan
C. To finance home improvement projects
D. In order to avoid paying PMI

D. In order to avoid paying PMI

A borrower is purchasing a $200,000 home, using VA eligibility for the first time. What is the minimum down payment required?

A. $4,000
B. $0
C. $7,000
D. $9,600

B. $0

With regard to fiduciary duties in mortgage lending, the borrower is the _____, and the broker is the _____.

A. Agent; borrower
B. Principal; agent
C. Fiduciary; agent
D. Fiduciary; principal

B. Principal; agent

Which of the following would be a red flag of attempted mortgage fraud?

A. The consumer is fairly young but makes a substantial salary, as stated on the loan application and W-2s
B. The consumer's Social Security Number begins with zero
C. The applicant runs a small business from home and only lists a home phone number
D. The property owner and the property seller are two different individuals

D. The property owner and the property seller are two different individuals

All but which of the following must be completed prior to engaging in the business of mortgage loan origination?

A. Payment of licensing fees
B. Obtain a unique identifier
C. Completing pre-licensing education
D. A letter of recommendation from a former employer

D. A letter of recommendation from a former employer

Which of the following loans are covered by RESPA?

A. First liens
B. Both first and subordinate liens
C. Subordinate liens
D. Neither first nor subordinate liens

B. Both first and subordinate liens

Originators who mislead borrowers about the contents of their credit histories and/or their credit scores in an effort to steer them into disadvantageous loans are in violation of:

A. ECOA
B. FHA
C. HPA
D. FCRA

D. FCRA

The Federal Home Loan Mortgage Corporation is also known as:

A. Fannie Mae
B. Ginnie Mae
C. Freddie Mac
D. Freddie Mae

C. Freddie Mac

Mishandling and/or improperly managing a borrower's funds is a practice prohibited by:

A. RESPA
B. TILA
C. GLB
D. FNMA

A. RESPA

This federal law was enacted with the intent to make it easier to prosecute mortgage fraud.

A. The Fraud Enforcement and Recovery Act
B. The Dodd-Frank Act
C. The Consumer Financial Protection Act
D. The Mortgage Acts and Practices Act

A. The Fraud Enforcement and Recovery Act

A mortgage broker advertises a 30-year fixed-rate loan at a 2.00% rate. After the borrower arrives at the office and begins an application, the broker explains that the 2.00% is no longer available, as his office was only able to do a limited number of them. This broker is in violation of what law?

A. RESPA
B. FCRA
C. TILA
D. Fair Housing Act

C. TILA

Which of the following loans may include a prepayment penalty?

A. An adjustable-rate qualified mortgage
B. A fixed-rate qualified mortgage that is not a higher-priced mortgage loan
C. An adjustable-rate qualified mortgage that is not a high-cost mortgage
D. A fixed-rate qualified or non-qualified mortgage

B. A fixed-rate qualified mortgage that is not a higher-priced mortgage loan

A transaction in which the seller provides all or most of the financing is best known as:

A. Self-financing
B. Owner buy-back
C. Seller carry-back
D. Rent credit

C. Seller carry-back

Which of the following compensation practices is allowed under the Loan Originator Compensation Rule?

A. Paying originators a commission for originating a loan at a higher rate than the rate for which the loan applicant qualified
B. Allowing a mortgage broker to accept an origination fee from a borrower and a commission from the lender that funds the loan
C. Paying all originators a 3% commission for every loan originated, regardless of the loan amount or the terms and conditions of the loan
D. Implementing a policy that encourages loan originators to originate refinances with prepayment penalties

C. Paying all originators a 3% commission for every loan originated, regardless of the loan amount or the terms and conditions of the loan

Bankruptcy information will remain on a consumer's credit report for up to:

A. Two years
B. Five years
C. Seven years
D. Ten years

D. Ten years

A borrower obtains an ARM with a start rate of 2%. The ARM has an initial cap of 1%, a periodic cap of 2%, and a lifetime cap of 4%. Assume that the ARM will adjust three times, and that at each adjustment, the rate will increase by the maximum amount possible. What is the maximum amount that the interest rate can reach?

A. 6%
B. 2%
C. 5%
D. 7%

A. 6%

Which of the following statements accurately describes the APR threshold used to identify loans regulated by HOEPA?

A. A first-lien loan with an APR that is 10 percentage points above Treasury securities with a comparable rate
B. A subordinate-lien loan with an APR that is 8 percentage points above the rate for Treasury securities with a comparable rate
C. A subordinate-lien loan with an APR that is 6.5 percentage points above the average prime offer rate for comparable transactions
D. A first-lien loan with an APR that is 6.5 percentage points above the average prime offer rate for comparable transactions

D. A first-lien loan with an APR that is 6.5 percentage points above the average prime offer rate for comparable transactions

Kelsey and Matt have just signed a contract to purchase a home for $360,000. Their mortgage loan is an HPML. Their creditor has discovered that the seller purchased the home four months earlier. The creditor will require a second appraisal if the seller's purchase price was:

A. $300,000
B. $310,000
C. $320,000
D. $330,000

A. $300,000

A borrower is purchasing a house with a sale price of $212,000. It appraises prior to settlement for $210,000, leading to an adjustment in the purchase price. The borrower is making a 10% down payment. What are the loan amount and LTV ratio?

A. $190,800; 91%
B. $200,000; 91%
C. $210,000; 91%
D. $189,000; 90%

D. $189,000; 90%

Which of the following is responsible for determining whether to issue a license approval?

A. The NMLS
B. The Governor
C. The Legislature
D. The Commissioner

D. The Commissioner

Which of the following correctly demonstrates how to calculate the annual interest on a mortgage loan?

A. Interest rate / loan balance = annual interest
B. Periodic rate / 365 = annual interest
C. Periodic rate × 365 = annual interest
D. Interest rate × loan balance = annual interest

D. Interest rate × loan balance = annual interest

Which of the following federal agencies is responsible for the enforcement of Regulation X?

A. FTC
B. FDIC
C. CFPB
D. NCUA

C. CFPB

Which regulation details seven specific advertising prohibitions?

A. Regulation B
B. Regulation C
C. Regulation X
D. Regulation Z

D. Regulation Z

The FTC Disposal Rule requires a loan originator to use _____ to ensure that unauthorized access to or use of consumer information cannot occur as a result of its disposal.

A. Extraordinary measures
B. Third-party certified disposal
C. Locked cabinets
D. Reasonable methods

D. Reasonable methods

The TRID Rule includes a provision stating that a consumer's intent to proceed with a lending transaction:

A. Must be stated in writing
B. Is made when the consumer submits a completed loan application
C. Must be submitted on a form provided by the creditor
D. May be oral or written

D. May be oral or written

There is a _____ accuracy tolerance for amounts stated on the Loan Estimate and the actual closing costs if the consumer is allowed to shop for his/her own settlement service provider.

A. 0%
B. 10%
C. 5%
D. 15%

B. 10%

In order to engage in the business of a loan originator, a loan processor who is working for a mortgage broker must:

A. Secure a license as a loan originator
B. Request the supervision of a licensed loan originator
C. Secure new employment with a depository institution, such as a bank
D. Learn how to perform a mortgage loan repayment analysis

A. Secure a license as a loan originator

A state-licensed loan originator who fails to maintain a valid license for a period of _____ years or longer shall be required to retake the NMLS test.

A. Three
B. Seven
C. Five
D. Ten

C. Five

The ratio of the total balance of all mortgage liens against a property to the total property value is called:

A. TLTV
B. HLTV
C. LTV
D. CLTV

D. CLTV

After a cursory examination by the state, it is determined that Quick Dollar Mortgage Co., in all probability, is engaging in prohibited activities. To ensure that Quick Dollar's files and records are not tampered with during the investigation, state examiners may do which of the following?

A. Place all records in a separate location undisclosed to the licensee until the investigation is over
B. Require that all records be transferred to the NMLS for review and safekeeping
C. Take complete physical control of all records and prohibit the licensee from any access during the investigation
D. Take possession of records or designate a specific person to control access

D. Take possession of records or designate a specific person to control access

If a homebuyer is using an ARM to finance his/her home, the _____ is a mandatory disclosure.

A. AARMR
B. CSBS
C. HUD
D. CHARM

D. CHARM

A credit report includes all of the following information, except:

A. Future inquiries
B. Applicant information
C. Public records
D. Current derogatory trade lines

A. Future inquiries

How is the margin determined?

A. The broker determines margin based on the commission structure on the loan
B. The lender sets the margin by choosing an index to tie it to
C. The borrower chooses which margin he or she prefers
D. The lender sets the margin based on its costs and sought-after profit margin

D. The lender sets the margin based on its costs and sought-after profit margin

Loan processors and underwriters who are exempt from licensure may not:

A. Communicate with consumers to obtain information necessary for loan processing
B. Collect information required to document a loan application
C. Distribute disclosures required in accordance with federal law
D. Take a loan application in the absence of a loan originator

D. Take a loan application in the absence of a loan originator

Which of the following is required if a borrower receives an Adverse Action Notice?

A. A suggestion of a loan product for which the consumer may be eligible
B. A referral to a lender who offers subprime products
C. A statement that ECOA prohibits discrimination against credit applicants
D. A statement of the minimum credit score required for loan approval

C. A statement that ECOA prohibits discrimination against credit applicants

How are FHA loan limits established?

A. The FHFA establishes loan limits for FHA loans
B. The FHA uses loan limits based on CFPB loan limit guidance
C. Loan limits are set by Ginnie Mae
D. HUD establishes loan limits for FHA loans based on county-by-county conforming limits

D. HUD establishes loan limits for FHA loans based on county-by-county conforming limits

Ella Ellerby's lender failed to provide her with the required rescission notice when she refinanced her home. Ella has not transferred or sold her interest in the property, but is beginning to have second thoughts about the refinance. Under these circumstances, Ella can rescind the loan:

A. For three years after consummation
B. For two years after consummation
C. For five years after consummation
D. At any time she sees fit

A. For three years after consummation

Which of the following federal agencies is responsible for the enforcement of Regulation B?

A. FTC
B. FDIC
C. NCUA
D. CFPB

D. CFPB

The Onyewus are purchasing a home with an agreed-upon sales price of $320,000. They are putting down 20%, and have agreed to pay two points in discount to lower their rate, and two points in origination fees to their lender. What is the total cost of their points?

A. $10,240
B. $12,800
C. $5,120
D. $6,400

A. $10,240

Examples of loans that are typically secured by a subordinate lien include all but which of the following?

A. A home equity line of credit
B. A home equity loan
C. A purchase money mortgage
D. A piggyback loan

C. A purchase money mortgage

Appraisers make adjustments to comparables used in an appraisal based on:

A. Size, age, and color
B. Location, owners, and age
C. Proximity, date of sale, and physical characteristics
D. Season, size, and age

C. Proximity, date of sale, and physical characteristics

The Qualified Mortgage Rule establishes a debt-to-income ratio standard of _____ for qualified mortgages.

A. 60%
B. 43%
C. 78%
D. 80%

B. 43%

A subordinate lien that allows a borrower to pay down principal and continue to make withdrawals is known as:

A. A reverse mortgage
B. An ARM
C. A home equity line of credit
D. A piggyback loan

C. A home equity line of credit

All of the following are examples of nontraditional mortgage products, as defined by the S.A.F.E. Act, except:

A. A fixed-rate loan with a term of 30 years
B. An interest-only loan with a term of 40 years
C. An adjustable-rate mortgage with a term of 30 years
D. A fixed-rate loan with a term of 15 years

A. A fixed-rate loan with a term of 30 years

Revisions to a Loan Estimate are:

A. Allowed when certain changed circumstances arise
B. Always allowed
C. Never allowed
D. Allowed only when the interest rate was not locked and rates have changed

A. Allowed when certain changed circumstances arise

Which of the following is not true regarding qualified mortgages?

A. They generally may not have a DTI ratio of more than 43%
B. They must have a fixed interest rate
C. The loan term may not exceed 30 years
D. The loan may not include a feature that permits negative amortization

B. They must have a fixed interest rate

An appraiser uses any one of three appraisal approaches to determine the value of a property. They are:
A. Sales comparison, market comparison, and subject comparison
B. Market comparison, cost comparison, and investment approach
C. Sales, cost, and comparable
D. Sales comparison (or market), cost, and income

D. Sales comparison (or market), cost, and income

Renewal of a loan originator license is the responsibility of:

A. The loan originator
B. The loan originator and the sponsoring entity
C. The sponsoring entity
D. The sponsoring entity and the state regulator

A. The loan originator

Which of the following is not a qualified mortgage?

A. A mortgage with a 40-year loan term
B. VA loan
C. FHA loan
D. A mortgage with a debt-to-income ratio of 43%

A. A mortgage with a 40-year loan term

Which of the following would be considered grounds for license denial?

A. Payment of licensing fees
B. Conviction of a felony within the seven years immediately preceding application
C. Compliance with the pre-licensing education requirements
D. Providing records of previous loan files

B. Conviction of a felony within the seven years immediately preceding application

In order to consider overtime pay for an hourly employee, it must:

A. Be at least 1.5 times the normal rate
B. Have at least a consistent two-year history and be likely to continue
C. Be paid in a separate paycheck documenting the hours
D. Be consistently worked for the next three years

B. Have at least a consistent two-year history and be likely to continue

What type of loan is a jumbo loan?

A. Nonconventional
B. Non-government
C. Nonconforming
D. Conforming

C. Nonconforming

Which of the following transactions would be most likely to raise concern over tangible net benefit to the borrower?

A. The refinance of a mortgage loan that originated ten years ago
B. The origination of a mortgage loan with a fixed interest rate for a borrower with a high salary and low debt
C. The refinance of a high-cost mortgage loan that was originated six months ago
D. The origination of an adjustable-rate mortgage loan

C. The refinance of a high-cost mortgage loan that was originated six months ago

Goh Getter has developed an advertisement he wants to use to solicit more business. In the advertisement, Goh is stating specific terms relating to a mortgage loan product. Is this permissible?

A. No, the terms of a particular product may not be included in an ad
B. This is permissible if those stated terms actually are or will be arranged for a consumer
C. It is permissible if the terms are identified as being for illustrative use only
D. This is not permissible as the terms of the loan may change

B. This is permissible if those stated terms actually are or will be arranged for a consumer

A borrower 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. 80% and no
D. Need to know the term

C. 80% and no

Caps on ARMs:

A. Are mandatory for any lender offering ARM products
B. Prevent a lender from calling a loan due if there is delinquency
C. Limit whether a loan is eligible for prepayment
D. Limit the amount the interest rate or payment may change

D. Limit the amount the interest rate or payment may change

Information that would be protected as nonpublic personal information under the Gramm-Leach-Bliley Act includes which of the following?

A. A consumer's credit report
B. Information in government real estate records
C. Listed telephone numbers provided by consumers
D. Government records of recorded liens

A. A consumer's credit report