NMLS 2023 National Exam

Blockbusting

The practice of getting people to sell their

homes at bargain prices by suggesting that

certain ethnic groups are going to move into

the area is nicknamed:

CHARM Booklet

You and the borrower believe an Adjustable

Rate Mortgage would be best for the

borrower. What is the name of the booklet

you are required to give?

15

How many days in advance of transferring a

loan to another lender must the current

mortgage servicer inform that customer of

the transfer to another lender who will

subsequently be servicing the loan?

Notice to Home Loan

Applicant

After meeting with the borrowers to

complete a loan application, you return to

your office and order a Tri-Merged credit

report. Now that you have a credit report,

what Loan Disclosure must you now

prepare and mail (or give) to them?

fill out the information

based on visual

observation.

If a loan originator is in a face-to-face loan

interview with the applicant, and the

applicant does not wish to answer the

questions in Section 10 on the 1003 , the

loan officer must:

Qualified Mortgage

Dodd-Frank mandated which of the

following rules that now appear under TILA:

Environmental hazard

disclosure

Which is not a disclosure required within 3

business days of receiving an application?

3 years

In compliance with the general provisions of

Regulation Z, how long is a lender required

to maintain records?

A 1% interest rate increase

on the loan

What is NOT likely to happen if the

lender/investor finds fraud?

Up to $1,000,000 fine and

jail time

What is the maximum penalty for providing

false information on a federally related

loan?

HMDA

What law requires the lender to collect a

borrower's demographic information for

first mortgages and home improvement

loans?

Race and Sex

HMDA requires the lenders to obtain what

information for each borrower?

An illegal practice

An MLO purchases tickets for a sporting

event and provides those tickets to a local

real estate agent as a thank you for a

referral and also in the hopes that that real

estate agent will continue to send clients,

this would be considered:

Vacant Land

RESPA does not apply to:

$10,000 per incident plus

one year jail time

What are the penalties for violating Section

8 of RESPA?

The Disposal Rule

Which rule dictates how instructions are

required to dispose of consumer's

information?

within three business days

of the loan application.

The Borrower is entitled to the disclosure of

the costs of a mortgage loan through the

Loan Estimate:

1 year

An MLO is looking over a borrower's credit

report and sees a fraud alert, under the

Economic Growth, Regulatory Relief and

Consumer Protection Act, how long can a

fraud alert be on a borrower's credit report?

Realtor's commission

Which of the following is NOT calculated

into the APR?

Regulation V

Under what law is a lender required to

provide an adverse action disclosure if the

borrower's credit is the reasoning for all or

part of the decision to deny the loan

application:

Underwriter

Who of the following would be an

appropriate person to discuss the

borrower's credit with to determine

whether they qualify for the proposed loan

or not?

the Community

Reinvestment Act.

The responsibility of financial institutions to

meet both the deposit and credit needs of

the community, including the needs of low-

income families, is called?

Always referring to the

man as borrower and the

woman as co-borrower

According to Regulation B, which of the

following is not recommended?

A borrower has no right to

a free copy of his credit

scores

According to the Fair and Accurate Credit

Transaction Act, when are borrowers

entitled to get a copy of their credit scores?

Regulation P

An MLO is required to protect a borrower's

non-public personal information, per what

federal law?

Classify the property as a

rental property even

though the borrower

intends to reside there

part of the year.

A borrower wants to purchase a second

home and tells you that they intend to rent

the property out when they are not living in

it. You have reviewed their financial

information and realize that the borrower

would qualify for financing if the property is

classified as a second residence. However, if

the property is classified as an investment

property, the borrower is unlikely to

qualify. What should you do?

legal but unethical.

A potential client is shopping around for a

competitive rate and a 15-day lead time to

close. The brokerage you work for offers

highly competitive rates, has an average

lead to close time of 30 days, and a fast lead

to close time of 21 days. Understanding

these figures, you tell the client you can

meet their demands and secure their

business. This action is:

legal and ethical.

Considering the legislation of the Secure

and Fair Enforcement Act (S.A.F.E. Act) of

2008, originating a loan for a family

member or other blood relation is

considered:

refer the realtor to the

borrower.

You are working on a file referred to you by

a realtor. The realtor calls you to see if there

is going to be any problem getting the

customer qualified. The realtor wants to

know what the borrower's credit scores are

before presenting the offer. The most

appropriate course of action is:

illegal and unethical.

You are working with a customer who has

disclosed they have new payment

obligations that do not appear on their

credit report. You realize that your

customer qualifies for a loan based on

figures calculated using only payment

obligations reported on their credit. In

order to ensure your client qualifies, you

decide to exclude the payment obligations

that do not appear on the credit report. This

action is:

Legal and ethical

You have a customer who has been

approved by the lender and is ready to

close. The customer backs out at the last

minute because of a recent interest rate

drop and opts to go with a different loan

officer. You paid for the appraisal and want

to invoice the customer and be reimbursed.

This course of action would be considered:

legal but unethical.

You have been working with a client for the

past six months who has finally been

approved by the lender and is ready to

close. Two days before closing, interest

rates drop and you explain to your

customer that you are unable to go with a

different lender at the better rate because

of the standing commitment to the current

lender. You also inform your client that

breaking a rate with a lender is very

damaging to the broker-lender relationship.

illegal and unethical.

You have completed the necessary Pre-

licensure education, testing, and application

requirements to obtain your mortgage

license. You have been hired by a brokerage

and expect your background check to clear

shortly. You have a friend who is eager to

proceed with a loan application and your

manager at the brokerage has said that you

can start the file under his/her name, then

switch it back to your name once your

license arrives. This action is:

Legal and ethical

You have a customer who has been

approved by the lender and is ready to

close. The customer backs out at the last

minute because of a recent interest rate

drop and opts to go with a different loan

officer. You paid for the appraisal and want

to invoice the customer and be reimbursed.

This course of action would be considered:

illegal and unethical.

You have completed the necessary Pre-

licensure education, testing, and application

requirements to obtain your mortgage

license. You have been hired by a brokerage

and expect your background check to clear

shortly. You have a friend who is eager to

proceed with a loan application and your

manager at the brokerage has said that you

can start the file under his/her name, then

switch it back to your name once your

license arrives. This action is:

legal and ethical.

On a Federal Residential Loan

Application: You initially disclose a rate of

5% to the customer but are floating the

rate. Over the next few days, rates improve

and you have the option to lock the

customer in at a rate of 4.75% and earn the

same compensation. This behavior would

be considered:

have the customer sign a

Borrower's Authorization

form and then pull credit.

You interview a customer and collect all the

information needed to fill out the 1003 and

run credit. Before running credit, you

specifically ask the client if it is okay to run

their credit, and they consent. You should

now:

proceed; it is ok to for you

to pay for their meals.

You just closed a loan with a customer and

would like to take them out to dinner to

celebrate their new home purchase.

Midway through the meal, you realize

paying for your clients' meals may be

considered a violation of RESPA. You

should:

legal and ethical (except

for communal property

sales).

You pull credit on a husband and wife. It

turns out their debt-to-income ratio is too

high. You notice the majority of the debts

belong to the husband. You also note that

the wife has enough income to qualify on

her own. You remove the husband from the

loan, with permission from the borrower,

submit the file, and receive approval. This

action is:

disclose and document

deposits for the borrower

and non-borrower.

Your borrower has a joint-asset account

with another person. Most of the money in

the account belongs to the non-borrower.

The lender requires two months of bank

statements. Under this circumstance, the

documentation needed by the lender

requires you to:

Pay the $500 cost and lock

the rate

Your customer calls you in the morning and

tells you to lock the interest rate at the 5.5%

you initially disclosed. You commit to lock

the rate, but your day becomes busy and

you aren't able to lock it until later in the

day. When you go to lock the rate, you

notice that the pricing has changed since

this morning and the rate of 5.5% is now

going to cost an additional $500.00. What is

the most appropriate course of action?

To verify the absence of

property flipping

A history showing the title changes

regarding a property is required by an

underwriter for what purpose?

Illegal Property Flipping

A transaction where the buyers have signed

a contract to purchase real property, but

have the intention of immediately selling it

to another buyer can be a sign of:

Buy and Bail

A borrower is looking to purchase a new

home, this new home is smaller than their

current home and less expensive. They tell

the MLO that they intend to sell their

current home once they've gotten a new

home. The borrower closes on their new

home and promptly defaults on their old

home, this is called:

The borrower will

experience a rate increase

If fraud is discovered by the servicer, what is

LEAST likely to occur?

The MARS Rule

What rule made it illegal to charge upfront

fees and requires disclosures in ads for

mortgage assistance relief providers?

Chunking

An investor is pitching the sale of properties

as opportunities to new real estate

investors, promising improbably high

returns and loan risks, this could be

considered:

When the information

supplied by the applicant

appears fraudulent

When is a loan officer authorized to refuse

to accept a loan application?

FACTA and GLBA

An MLO leaves a borrower's file open on his/her desk for just a moment. An Identity thief sees the borrower's credit report which contains a huge amount of information. Fortunately the MLO quickly returns. What potential Federal laws is the MLO violating?

3 months

A potential borrower calls you for rates and programs. Assume that they are on the DNC Registry. You are allowed to call them back for what period of time?

Disparate Impact

A lender has a minimum loan amount that they will lend on, that minimum loan amount is $150,000. The average home value to a minority in the neighborhood is $100,000, so the lender does not help anyone in that minority lender, this would be:

Overt discrimination

A credit card company has a written policy that anyone between the age of 21-27 can only have a credit limit of $1,000 and anyone over 30 automatically gets a credit limit of $5,000. This is an example of

Title Insurance

The APR includes all fees that are required in order to get the loan. Not included is

real estate purchase contract

In an effort to become an informed borrower, each borrower should receive from the lender all of the following EXCEPT

$2,471.73

If an applicant works 40 hours a week and is paid $14.26 per hour, what is the applicant's average monthly income

Terminated

The Homeowners Protection Act states that when a loan-to-value falls below 78% PMI is to be:

0.20%

the term "20 basis points" expressed as a percentage is:

1%

USDA loans include a guarantee fee, what is the initial guarantee fee?

2.30%

An MLO has a borrower come in who is a veteran, the borrower is looking to obtain a VA loan. The borrower has never received a VA loan before and intends to put 0% down, what would be this borrower's funding fee?

Planned Unit Development.

PUD is the acronym for:

Principal, Interest, Taxes, Insurance.

PITI is the acronym for:

96.50%

An MLO is working with a borrower who wants to purchase a home using an FHA loan, what is the maximum LTV allowed on an FHA loan?

Margin

There are two main components of determining the interest rate on an ARM, which part of an ARM is set at the beginning and never changes?

Home Equity Line Of Credit

HELOC

From seller to borrower

What is an unacceptable source of gift funds on an FHA loan?

It encumbers the borrower's title to the real estate.

Which of the following is the most correct concerning a mortgage or deed of trust?

The Uniform Residential Loan Application

The 1003 is which of the following?

A cash advance from a credit card if it doesn't show on the credit report

Which of the following is not an acceptable source for the borrower's down payment on a Fannie Mae loan?

Balloon Mortgage

A 5/23 or 7/23 is what type of mortgage:

Monthly utility bills

Which is not included in debt-to-income ratio?

Product Advisor

What is the name of Freddie Mac's automated underwriting system?

A borrower's income

Credit scores are determined by all the following EXCEPT:

Desktop Underwriter

What is the name of Fannie Mae's automated underwriting system?

a lender to decrease the interest rate on a mortgage loan

A discount point is best described as a charge that the borrower pays to:

2yrs from the discharge date

If a borrower comes in and is looking to do an FHA purchase. The MLO pulls their credit and discovers a Chapter 7 bankruptcy. How long in the past does that bankruptcy have to be discharged before the borrower can qualify for an FHA loan?

Closing Disclosure and Loan Estimate

On which two documents would a Pre- Payment Penalty be disclosed?

Send a written notice of incompleteness within 30 days of the last action taken or of the incompleteness

If a borrower is going to be denied financing based on an incomplete application, which of the following can be done?

$5,670

The borrower is putting 10% down on a $180,000 sales price. She is paying 2.5 discount points and a 1% origination fee. What is the total of the origination fee and discount points she is paying?

$5,250

For an interest only loan of $180,000 with a 5% interest rate, how much is the dollar amount of interest for 7 months?

$9,550

A borrower purchases a home for $120,500 and is putting 10% down. If he has already paid $2,500 in earnest money, what is the rest of the down payment at closing?

6.00%

On an FHA annually adjusting ARM, assume that the starting rate was 5%; the margin is 2.5%; the index in 6 months is 3%; the index in 12 months is 3.5%; the index in 18 months is 3.25%. What is the borrower's interest rate in 18 months?

6%

What is the note rate for a $150,000 loan with a 2/1 buy down when the borrowers start with a payment rate of 4% for 12 months; then 5% for another 12 months; then 6% for the rest of the payment term?

75%

What is the HCLTV (HTLTV) assuming a $200,000 value, a $100,000 first mortgage loan, and a $50,000 Home Equity Line of Credit second mortgage with a drawn amount of $30,000?

Real estate broker fee

What fee is not included in the Loan Estimate?

28%

What is the housing ratio for a borrower who makes $24,000 a year with a payment amount of $560?

Loan Estimate

The lender discloses the prepayment penalty on which of the following documents?

If the borrowers can verify a minimum of two years income on their tax returns and still own the asset

Under what circumstances would it be possible to consider capital gains as income for a Fannie Mae or Freddie Mac loan?

75% of the income less the PITI. If the net is positive, include as income; if the net is negative, include as a monthly debt

How is rental income calculated when the borrower owns rental properties other than the subject property?

$1,820

Calculate the borrower's maximum housing payment if the qualifying ratios are 28/36, the husband's income is $48,000 per year, and the wife makes $2,500 per month?

Co-mortgagors

If there are two borrowers on the loan but the two borrowers are unmarried, they would be considered what

Declaration Page

When you order an Insurance binder on a borrower's loan file, the one-page sheet that summarizes all the insurance information is known as the

Escrow Holdback.

The lender is requiring repairs on the home to be completed. Those repairs can be done after the loan closes by including them in a(n):

The original loan amount

A borrower has an Interest Only mortgage loan and wishes to make the minimum monthly payments required. If the homeowner decides to payoff the loan at the end of the loan term, what will the homeowner be required to pay?

the rents are equal to or less than the mortgage amount due each month.

Your customer owns several rental properties, one-third of which have a Negative Net Lease. Therefore, you can conclude that:

The Promissory Note and the Deed of Trust or mortgage

What are two of the most important documents that the borrower signs at settlement?

7 years

If an MLO has a borrower who has had a foreclosure in the past and is looking to obtain a conventional mortgage, how long does that foreclosure have to be seasoned on the credit report before the borrower can qualify?

above 80%

Private Mortgage Insurance is required on conforming 1st mortgage loans when the Loan-To-Value is:

The interest rate is a factor of the SRP

Which of the following is true concerning Service Release Premium (SRP)?

3 years

At closing, the borrower should receive a notice of the right to rescind. If two copies are not provided to the borrower at closing, the right to rescind extends from 3 days to:

18.30%

If the borrower's monthly gross income was $6,000 and the monthly housing expense was: first mortgage payment, $900; monthly property tax $110; monthly hazard insurance $28; and monthly mortgage insurance $60, what is the housing ratio or front-end ratio?