1. In a "Lien Theory" state the borrower retains:

    a) ownership held in trust that can be inherited

    b) both the legal and equitable title which gives the lender the right to have the property sold in the event of default

    c) equitable title only and provides access to inspections by the lender in event of default

    d) control of the property yet conveys their equitable title to the grantor
  2. The correct answer is "B"
  3. In a lien theory state
    the borrower retains the title. It is not transferred to a trustee (Deed of Trust). It is sometimes more difficult for a lender to foreclose in the event of a default by the borrower
  4. What Act requires that you provide the applicant with a copy of the appraisal?

    a) FCRA

    b) FHA

    c) FACTA

    d) ECOA
  5. The correct answer is "D"
  6. ECOA requires a lender or mortgage broker to inform the applicant that they have a right to get a copy of the appraisal report. The notice will also tell the applicant how and when they can ask for a copy. For more see the settlement cost booklet at www.hud.gov/
    page 35.
  7. What act helps determine if lenders are serving the housing needs of communities and assists public officials with identifying discrimination patterns?

    a) HOEPA

    b) FHA

    c) ECOA

    d) HMDA
  8. The correct answer is "D"
  9. To ensure that the purposes of HMDA are being met
    the FFIEC (the Federal Financial Institutions Examination Council) is charged with compiling data annually and publishing the results
  10. What act requires you to provide your customer with your company's privacy policy?

    a) GLBA

    b) TSR

    c) USAPA

    d) none of the above
  11. The correct answer is "A"
  12. The Gramm-Leach-Bliley Act requires businesses to give their customers a copy of their privacy policies
    which includes the option for consumers to “opt out” of the company’s information sharing policies. The FTC explains
  13. The privacy notice also must explain that consumers have a right to say no to the sharing of certain information - credit report or application information - with the financial institution's affiliates. An affiliate is an entity that controls another company
    is controlled by the company
  14. The GLB Act provides no opt-out right in several other situations: For example
    an individual cannot opt out if:
  15. 1. a financial institution shares information with outside companies that provide essential services like data processing or servicing accounts;
  16. 2. the disclosure is legally required;
  17. 3. a financial institution shares customer data with outside service providers that market the financial company's products or services.”
  18. What fair lending law was intended to encourage depository institutions to help meet the credit needs of communities including low to moderate income neighborhoods?

    a) HMDA

    b) HOEPA

    c) CRA

    d) FHA
  19. The correct answer is "C"
  20. The Community Reinvestment Act (CRA)
    enacted by Congress in 1977 (12 U.S.C. 2901) and implemented by Regulations 12 CFR parts 25
  21. If a borrower is paid $1
    659.25 biweekly their monthly gross income is:

    a) $3

    b) $3

    c) $3

    d) $3
  22. The correct answer is "D"
  23. The formula to convert biweekly pay to the monthly equivalent is (Bi Weekly Pay X 26 ÷ 12). In the scenario above
    the formula would work out like this ($1
  24. Fred is a Mortgage Loan Originator with XYZ Mortgage Brokers. He was originating a loan for the Lathan family. When he pulled credit
    there was a discrepancy in the address on their application and the one listed in their credit report. The Lathans found a better rate and withdrew the application. Which of the following is true?

    a) Fred must notify the new lender of the problem.

    b) Even though the application was withdrawn
    Fred has to clear the address discrepancy.

    c) Since they withdrew the application
    Fred does not have to do anything to clear the address discrepancy.

    d) Fred needs to notify the credit bureau of possible identity theft.
  25. The correct answer is "C"
  26. According to The Fair and Accurate Credit Transactions Act
    The Red Flags Rule
  27. John and Greta decided to purchase a home. This would be the first home they ever owned. Before showing them a house
    their realtor decided to get a pre qualification from a mortgage company to see how much John and Greta could afford. Which of the following laws do not apply in this instance:

    a) The Truth in Lending Act

    b) The Equal Credit Opportunity Act

    c) The Fair and Accurate Credit Transactions Act

    d) The Real Estate Settlement Procedures Act
  28. The correct answer is "D"
  29. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process
    and is enforced by HUD. The Real Estate Settlement Procedures Act applies to all transactions involving a federally regulated mortgage loan
  30. When a borrower exercises their right to rescind a loan transaction
    which of the following statements is true?

    a) To be effective the rescission must be in the hand of the lender within three business days

    b) Rescinding the transaction voids any security interest the lender has in the property being refinanced

    c) The right to rescind is covers all transactions a lender might conduct with a borrower

    d) All of the above
  31. The correct answer is "B"
  32. The rescission has to be mailed within three business days to be effective. Thus
    it may not be in the hands of the lender within three business days. Rescinding a transaction does void any security interest the lender has in a property. This is the problem when either a rescission has been improperly issued or the disclosures were materially incorrect. This extends the rescission period from 3 days to three years! So an incorrect or an improperly issued rescission could result in a lender losing all of their security interest in a property after the loan has been funded and the money has been spent.
  33. When a consumer says they are paid biweekly
    how many pay periods do they have each year?

    a) 24

    b) 26

    c) 12

    d) 52
  34. The correct answer is "B"
  35. Biweekly means every two weeks. When a borrower is paid biweekly
    this means they are paid every other week or 26 times a year.
  36. If a Consumer tells you they are paid twice a month this is referred to as:

    a) semi-monthly

    b) bi-monthly

    c) biweekly

    d) semi-weekly
  37. The correct answer is "A"
  38. Semi-monthly means two times a month. If a borrower is paid semi-monthly or twice a month
    then they will receive 24 paychecks every year.
  39. What are the VA loan debt ratios?

    a) 29% over 43%

    b) 31% over 41%

    c) 29% over 45%

    d) 41%
  40. The correct answer is "D"
  41. The VA guidelines generally look at total debt ratios instead of front end and back end ratios. 41% is the standard total debt ratio
    however the underwriter will look at the files "Whole Picture" and any compensating factors to determine an individual's allowable total debt ratio.
  42. What are the allowable debt ratios on a USDA-RD purchase money loan?

    a) 43% total debt ratio

    b) 28% over 36%

    c) 29% over 41%

    d) 31% over 45%
  43. The correct answer is "C"
  44. Standard qualifying ratios are 29% front and 41% back end debt ratios. It is possible to exceed these ratios with compensating factors.
  45. What is Ginnie Mae?

    a) a rural housing insurance program

    b) a guarantor of GNMA mortgage backed securities

    c) an agency dedicated to rural and urban low cost housing

    d) none of the above
  46. The correct answer is "B"
  47. Ginnie Mae (GNMA) is backed by the full faith of the US Treasury and is the guarantor of GNMA mortgage backed securities
    known as pass-through certificates serviced by banks and S & L's. This is a government owned corporation within HUD and guarantees mortgage backed securities mainly issued by FHA
  48. If a borrower has a Chapter 13 bankruptcy how long will it remain on their credit report?

    a) 10 years from date of filing

    b) 10 years from date of discharge

    c) 7 years from date of filing

    d) 7 years from date of discharge
  49. The correct answer is "C"
  50. A discharged Chapter 13 bankruptcy will remain on an individual's credit report for seven years from the date of filing
    not the date of discharge. A Chapter 7 or 11 bankruptcy will remain on the credit report for 10 years from date of filing.
  51. What are the "Prior Bankruptcy" minimums for Chapter 7 and Chapter 13 seasoning requirements?

    a) 7 is 2 years / 13 is 7 years

    b) 7 is 2 years / 13 is 4 years

    c) 7 is 4 years / 13 is 2 years

    d) 7 is 10 years / 13 is 7 years
  52. The correct answer is "C"
  53. In a manual underwriting of a file with a prior Chapter 7 bankruptcy there is a 4-year waiting period and with a prior Chapter 13 bankruptcy there is a 2 year waiting period from the date of discharge. When there are extenuating circumstances
    the underwriter may make an exception and reduce the Chapter 7 waiting period down to two years.
  54. Your borrower comes to you for a loan to buy a $225
    000 home. They request a 15 year fixed rate 1st mortgage and are bringing $25

    a) The monthly PMI will cover every dollar borrowed above 80% LTV.

    b) The upfront MIP and the monthly MIP can be dropped in 5 years and 78% LTV.

    c) The borrower must pay for upfront MIP and there is no monthly MIP required.

    d) All FHA borrowers must pay the upfront MIP premium and because this is a 15 year term below 90% LTV the monthly MIP can be canceled as soon as the LTV reaches 78%. There is no 5-year consideration.
  55. The correct answer is "C"
  56. The FHA program is self-funding and every borrower is required to pay the upfront premium when applying for a FHA loan. On 30 year FHA loans the borrower must also pay a monthly MIP payment for a minimum of 5 years and down to 78% LTV. On 15 year loans at 90% LTV or greater
    the monthly MIP is canceled at 78% LTV with no 5 year minimum rule. However
  57. Which of the five federal regulatory agencies has primary oversight of the national SAFE Act?

    a) HUD

    b) The Federal Reserve Board

    c) The FDIC

    d) The OCC
  58. The correct answer is "A"
  59. HUD has been given primary oversight by Congress. HUD must determine: That the state’s mortgage loan originator licensing standards meet the federally mandated minimums
    and that the state is participating in NMLS&R. If HUD determines that a state not in compliance with both of these items
  60. Which Federal agency(ies) are charged with developing and maintaining a system for registering employees of federally insured depositories and subsidiaries they own and control
    and employees of Farm Credit Administration regulated entities

    a) Federal Banking Agencies

    b) Federal Financial Institutions Examination Council

    c) Farm Credit Administration

    d) All of the above
  61. The correct answer is "D"
  62. Federal Banking agencies are the Federal Reserve Board
    the Federal Deposit Insurance Corporation
  63. Which of the following is not true of “registered” Mortgage Loan Originators?

    a) Registered Mortgage Loan Originators will be assigned a unique identifier.

    b) Registered Mortgage Loan Originators will have to pass a proficiency test

    c) Both A and D

    d) Registering with NMLS requires registered loan officers to submit fingerprints for a state and federal background check and personal history and experience.
  64. The correct answer is "B"
  65. Registered Mortgage Loan Originators are required to undergo background checks
    including fingerprints. They will also have a unique identifier issued. However
  66. The National Mortgage Licensing System and Registry is mandated with certain duties by the Secure and Fair Enforcement for Mortgage Licensing Act. Which of the following are not part of those duties?

    a) develop a qualified written test and approve test providers

    b) require surety bonds in federally mandated minimums

    c) develop a mortgage call report

    d) provide public access to licensing information
  67. The correct answer is "B"
  68. States set surety bonding and net worth requirements. The other three duties are all mandated by the Secure and Fair Enforcement for Mortgage Licensing Act. NOTE: A NMLS&R Mortgage Call Report is a statement of condition on the company and its operations including financial statements and production activity volumes reported on a per state basis.
  69. Which best describes the Secure and Fair Enforcement for Mortgage Licensing Act’s standards?

    a) The standards set forth in the ACT are minimum standards. State law can add to those standards.

    b) The standards set forth in the Secure and Fair Enforcement for Mortgage Licensing Act must be followed exactly by state legislation

    c) The standards in the Secure and Fair Enforcement for Mortgage Licensing Act are loose guidelines and may be tweaked as all of the states see fit.

    d) None of the above
  70. The correct answer is "A"
  71. the Secure and Fair Enforcement for Mortgage Licensing Act sets minimum standards which each of the states must meet or exceed. HUD says
    “The SAFE Act is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators.”
  72. It is clear that the act allows states to exceed those standards. The most common place that one might see the standards exceeded are in required education hours. Many states require hours in Prelicensing Education and Continuing Education which go beyond those mandated in the Secure and Fair Enforcement for Mortgage Licensing Act.
  73. 3577 Incorrect Degree of Difficulty 100.00% If you allow your MLO license go inactive you can remain inactive for _________ before you have to retest to reactivate it.

    a) 1 year

    b) 2 years

    c) 3 years

    d) 5 years
  74. The correct answer is "D"
  75. The Secure and Fair Enforcement for Mortgage Licensing Act says
    “RETEST AFTER LAPSE OF LICENSE.—A State-licensed loan originator who fails to maintain a valid license for a period of 5 years or longer shall retake the test
  76. How many years must documentation of any reasons for providing a new or revised GFE be retained after settlement?

    a. 1

    b. 3

    c. 5

    d. none of the above
  77. b. 3 years
  78. If the originator discovers charges at settlement that exceed teh charges on the GFE by more than the permitted tolerances
    the originator must cure this violation within ___calendar days after settlement.

    a. 3

    b. 7

    c. 10

    d. 30
  79. d. 30 days
  80. There are 3 distinct pages to the new GFE. The first page is referred to as the "Summary" page. The second is the "Adjusted Origination Charges" page and page three is the

    a. "Tolerance"page

    b. "shopping Comparison" page

    c. "Instructions" page

    d. "trade-off table" page
  81. c. "Instructions" page
  82. In general
    front end & back end ratio that can qualify for a conventional loan?
  83. 28%/36%
  84. What are the maximum front-end/back-end debt ratios for FHA?
  85. 29%/41%
  86. When calculating income
    which of the following does not need to be "grossed up"?

    a. child support

    b. alimony

    c. social security

    d. disability
  87. b. alimony
  88. If you are paid biweekly
    how many times a year do you receive a paycheck?
  89. 26
  90. The residential mortgage where the whole loan is guaranteed by the federal government is a

    a. VA loan

    b. FHA loan

    c. community housing loan

    d. affordable housing loan
  91. a. VA loan
  92. The law that prohibits a loan officer from discouraging anyone from applying for a loan is

    a. FCRA

    b. MLA

    c. RESPA

    d. ECOA
  93. d. ECOA
  94. The law that requires a credit denail or adverse action letter is

    a. MLA

    b. ECOA

    c. FCRA

    d. PLA
  95. b. ECOA
  96. The maximum cushion a loan servicer is allowed to hold in the escrow account is

    a. 1/6 of the annual discbursements

    b. 1/12 of the annual dishursements

    c. 1/16 of the annual disbursements

    d. none of the above
  97. a. 1/6 of the annual discbursements
  98. Regulation "B" refers to:

    a. federal bankruptcy laws

    b. a bi-lingual application

    c. Equal Credit Opportunity Act (ECOA)

    d. Fair Housing Act (FHA)
  99. c. Equal Credit Opportunity Act (ECOA)
  100. What Act requires that you provide the applican with a copy of the appraisal?

    a. FCRA

    b. FHA

    c. FACTA

    d. ECOA
  101. d. ECOA
  102. The 1998 regulation "C" refers to

    a. HMDA

    b. HOEPA

    c. FHA

    d. ECOA
  103. a. HMDA
  104. The three-party legal theory whereby the mortgagor conveys legal title until the debt is paid

    a. title theory

    b. trustee state

    c. lien theory

    d. trust-in-lieu of deed
  105. a. title theory
  106. The superior position of the first lien lien holder is based upon the doctrine of

    a. "first in time
    first in line"

    b. "first in line is first in time"

    c. "first in time
    first in right"

    d. both a & b
  107. c. "first in time
    first in right"
  108. What is the upfront VA guarantee fee called and how much does it cost?

    a. VA guarantee fee & it costs 3%

    d. VA funding fee & it cost 5%

    c. VA funding fee & 2.15% for 0 to 4.99% down payments

    d. There are no upfront fees
    the VA funding fee is paid monthly
  109. c. VA funding fee & 2.15% for 0 to 4.99% down payments
  110. VA loans are:

    a. government insured loans

    b. government guaranteed loans

    c. government funded loans

    d. government serviced loans.
  111. b. government guaranteed loans
  112. The standard VA entitlement is?
  113. 36k
  114. Note: 36k * 4=144k max.
  115. Are there any upgfont fees on USDA-RD loans?
  116. Yes
    there is a 2% "guarantee fee"
  117. Government sponsored loans are:

    a. loans note directly lent by
    or through a government agency

    b. loans underwritten and serviced by a government agency

    c. underwritten
    lent and serviced by a government agency

    d. all of the above
  118. a. loans note directly lent by
    or through a government agency
  119. On VA guaranteed loans
    the veteran can receive gift fund for cash requirements and the seller can contribute ____% of the sales price?
  120. 4%
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