nmls safe test Review Flashcards

A set of 69 question-and-answer flashcards covering RESPA, ECOA, TILA-RESPA, FHA/VA/USDA rules, appraisal concepts, SAFE Act licensing, fraud schemes, and other critical mortgage-industry exam topics.

What federal law/Regulation ensures consumers receive information on the nature and cost of the settlement process?

RESPA (Regulation X).

When qualifying rental income, what percentage of the gross rent is typically allowed?

75% of the rental income may be used.

What is Freddie Mac’s automated underwriting system called?

Loan Product Advisor.

Which regulation implements the Equal Credit Opportunity Act and bars credit discrimination?

Regulation B.

What rule governs misrepresentations in mortgage advertising?

The MAP Rule (Regulation N).

Which activity is NOT usually fraud for housing: asset fraud, income fraud, silent second, or flipping?

Flipping (it is linked more to predatory lending).

Which document conveys property with full ownership and a clear-title promise?

A warranty deed.

If an escrow account is short by more than one month of deposits, how long may the lender give the borrower to repay?

Up to 12 months.

A 1-year ARM starts at 4%, index 5%, margin 3%, caps 2/6. What is the new rate at first adjustment?

6% (limited by the 2% periodic cap).

Combining stated-income documentation with an interest-only loan is an example of what?

Risk layering.

Which loan type typically requires BOTH upfront and annual mortgage insurance premiums?

FHA loans.

The Secured Overnight Financing Rate (SOFR) is used as what in mortgages?

A possible ARM index.

Under Regulation X, the term “loan originator” includes which entities?

A mortgage broker or lender.

What insurance protects a lender against undisclosed title encumbrances?

Lender’s title insurance policy.

Within how many business days of application must borrowers get notice of their right to an appraisal copy?

Within three business days.

Under ECOA/HMDA, when may a lender ask a borrower’s race?

For monitoring purposes (the borrower may decline).

When a broker originates and closes a loan funded immediately by a purchasing lender, what is this called?

Table funding.

What is the most obvious ECOA violation among these: failing rescission notice, denying on economics, verifying citizenship, or declining due to race?

Declining a loan due to the borrower’s race.

For an FHA purchase, the seller may contribute up to what percent of sales price toward closing costs?

6% of the sales price.

Which regulation’s Loan Estimate and Closing Disclosure help consumers compare loan options?

Regulation Z (TILA-RESPA Integrated Disclosure Rule).

The VA funding fee is generally: refundable or non-refundable?

Non-refundable in most circumstances.

HOEPA high-cost loans: which situation is NOT an allowed balloon exception?

Borrower simply signs a waiver to accept the balloon.

Under the SAFE Act, must every MLO maintain an individual surety bond?

No. Employees may be covered by the employer’s bond or state fund.

If a borrower has $80k first, $20k HELOC with $5k left to draw, and $100k value, what is the CLTV?

95% CLTV.

In appraisal, “predominant value” means what?

The most common sales price in the neighborhood.

A loan amortized longer than its term, requiring a large final payment, is what type?

A balloon mortgage.

Is NMLS data on an originator’s employment or disciplinary history public?

Yes – it is not confidential and is publicly accessible.

On the Closing Disclosure, what question must be answered for each Loan Terms item?

“Can this amount increase after closing?”

Asking if income is from alimony/child support is restricted by which regulation?

Regulation B (ECOA).

If an applicant refuses demographic data, what must the lender do on the URLA?

Record sex, race, and ethnicity by visual observation or surname.

A deceptive act is one that is likely to mislead and is _.

Material.

Fannie Mae requires hazard insurance equal to what amount?

The lower of the replacement cost or the unpaid loan balance (at least 80% of insurable value).

After the borrower receives and accepts the Loan Estimate, when can a lender charge an appraisal fee?

Immediately (once intent to proceed is given).

Define a “straw buyer.”

Someone paid to let their identity be used on a loan application for another person.

What is the standard FHA maximum back-end DTI ratio?

43%.

Under the SAFE Act, state agencies may impose many sanctions but NOT what?

They cannot assess jail time (incarceration).

Annual interest on a $200,000 loan at 6% equals how much?

$12,000 per year.

With interest-rate caps, the new ARM rate can never exceed what?

The rate ceiling established by the caps.

A title company gifts a loan originator $25 for referrals. What RESPA violation is this?

An illegal kickback under Section 8.

Which item is NOT required on a Loan Estimate: loan term, purchase price, assumability, or first-five-year ARM rates?

Anticipated ARM rates for the first five years.

For FHA loans, what is true about the upfront MIP (UFMIP)?

A portion may be applied to a new FHA loan within three years.

Which of the following is NOT a settlement service: origination, appraisal, escrow, or servicing?

Servicing.

Primary borrower benefit of mortgage insurance is:

Ability to make a lower down payment.

Underwriting primarily reviews which two aspects?

The applicant and the collateral.

The market (sales comparison) approach values property by:

Comparing it to similar recently sold properties.

A clause demanding payoff when the property is sold is the clause.

Due-on-sale (alienation) clause.

Which of these is NOT stated in the deed of trust: borrower name, loan amount, legal description, or interest rate?

Interest rate (it appears in the note, not the deed of trust).

Conspiring industry insiders to inflate values for gain describes what fraud type?

Fraud for profit.

If a Loan Estimate is mailed Tuesday (office closed Sundays), what is the earliest consummation day?

The following Wednesday (7 business-day rule).

Do all new FHA loans (sampled) require monthly MIP at closing?

Yes – in each listed scenario monthly MIP applies.

Which loan type generally does NOT require mortgage insurance even at 100% LTV?

VA loan (uses a funding fee instead).

Which regulation now contains TRID disclosure requirements?

Regulation Z.

Refinancing the first mortgage while leaving a second in place usually requires what from the second-lien holder?

A subordination agreement.

For self-employed borrowers, which non-cash expense can be added back to income?

Depreciation.

Which SAFE Act requirement does NOT apply to a registered (depository) MLO?

Completion of 20 hours of pre-licensing education.

The residual income qualification method is unique to which loan program?

VA loans.

Negotiating a mortgage for a cousin requires licensing because the cousin is not .

An immediate family member (exemption does not apply).

Which statement about HUD is FALSE: It oversees the mortgage industry, or it runs FHA programs?

It oversees the mortgage industry (that oversight now belongs to CFPB).

Are FHA loans generally assumable without a due-on-sale clause?

Yes – FHA loans are assumable; a due-on-sale clause is not used.

Who now holds federal responsibility for SAFE Act interpretation and compliance?

The Consumer Financial Protection Bureau (CFPB).

Most deeds of trust require owner-occupants to move in within how many days of closing?

Within 60 days.

Does the ad phrase “Buy for less than rent” trigger TILA additional disclosures?

No – it contains no triggering terms.

If a borrower waives early delivery, when must the appraisal be provided?

At or before consummation.

Which fee is EXCLUDED from APR calculations: underwriting, closing, mortgage insurance, or title insurance?

Title insurance premiums.

The income (capitalization) approach is most appropriate when the purchaser will _.

Use the property to generate rental income.

VA funding fees are refundable only under what circumstance?

If the borrower was overcharged.

Who sets a lender’s prime rate?

Each individual lender sets its own prime rate.

Does the deed of trust/note specify exact tax and insurance dollar amounts?

No – actual amounts for taxes and insurance are not stated.

For FHA loans, annual MIP thresholds differ based on whether the term exceeds or is ≤ what length?

15 years.