NMLS Study Guide 2

  1. The interest rate stated on the financing instrument is the
    note rate.
  2. A Direct Endorser is a lender who is authorized to underwrite what type of loan applications?
  3. The fact that a borrower's income will require verification explains what is meant by the underwriting concept of
  4. Which rule allows consumers to opt out of having their private information shared?
    Financial Privacy Rule
  5. According to the Truth in Lending Act, which of these would be EXCLUDED from the finance charge?
    seller's points
  6. The Fair Housing Act requires what to be posted in all institutions where mortgage loans are made?
    Equal Housing Opportunity House logo
  7. According to 2013 updates related to the qualified mortgage definition, what is the maximum percentage (%) limit on the total obligation debt-to-income (DTI) ratio for a qualified mortgage?
  8. The Federal National Mortgage Association (Fannie Mae) is designed to
    increase availability of money to primary lenders.
  9. The Fair Housing Act requires a lender to use what term in any advertisement broadcast over the airwaves?
    Equal Housing Lender
  10. According to the 2013 amendment to TILA related to loan originator compensation requirements, a loan originator must retain records sufficient to evidence all compensation it pays to a loan originator for ____ years after the date of payment.
  11. A Mortgage lender is any person who
    makes a residential mortgage loan OR lends money secured by a mortgage or deed of trust.
  12. Rural Development loans are administered by what government agency?
    Department of Agriculture
  13. Which type of survey marks out the driveways, walks, and foundation?
  14. The NMLS was created by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR), beginning operations in
  15. The annual percentage rate (APR) is also referred to as
    effective rate of interest.
  16. What methods might be used to determine the value of a duplex being purchased as an investment property?
    cost approach, income approach, or sales comparison approach
  17. A buyer of a house with a sales price of $100,000 is paying a $10,000 down payment as well as 2 discount points and 2 points for loan origination fees. What is the total cost of the points?
  18. What is the first step in taking the loan application?
    completing the 1003
  19. While reviewing a sales contract, you note the sale price as $125,000. The loan amount is $105,000 and buyer's closing costs total $4,720. The seller is completing $2,000 in repairs before closing. What is the acquisition cost of this transaction?
    The acquisition cost includes the sale price plus the buyer's closing costs: $125,000 + $4,720 = $129,720
  20. A borrower who has a FICO score below 580, is required to make a minimum down payment of at least _____% for an FHA loan.
  21. A mortgage loan originator must make the settlement charges detailed in a Loan Estimate available for how many business days?
    The settlement charges in the Loan Estimate must be available for 10 business days.
  22. If Bob pays $695.20 for principal and interest every month for 30 years on his $110,000 loan, how much interest will he pay over the life of the loan?
    Bob will pay $140,272 in interest for that 30-year loan (695.20 x 12 months x 30 years = $250,272 total payment - $110,000 principal = $140,272 interest).
  23. The legislation that restricts the circumstances under which a financial institution may disclose a consumer's personal financial information to non-affiliated third parties is the
    Gramm-Leach-Bliley Act.
  24. Which monthly debt may not show up on a credit report?
    alimony payment
  25. According to the interim final rule on Valuation Independence, a creditor who has information about appraiser misconduct must file a report with the
    appropriate state licensing authority.
  26. After investigating an advertising violation against the High Dollar Mortgage Company, the State Regulatory Authority notifies High Dollar in writing of the disapproval of a particular print ad they have been using. To be in compliance, High Dollar Mortgage Company must
    immediately cease publication of the disapproved print advertisement
  27. At what point is a lock-in agreement binding?
    as soon as both the applicant and the lender sign it
  28. A lender can reasonably assume the borrower has the ability to repay a high cost loan if the borrower's scheduled monthly payments on the loan, combined with the scheduled payments for all other debts, do not exceed _____ of the borrower's documented and verified gross monthly income.
  29. Loan Originator Compensation Requirements is a set of amendments to which federal Act?
    Truth in Lending Act (TILA)
  30. The 3/7/3 Rule is associated with which law?
    • Regulation Z
    • The disclosure and waiting requirements of the Truth in Lending Act are known as the 3/7/3 Rule.
  31. If the consumer elects not to have an escrow account:
    Disclose zero in that field
  32. The Loan ID # is:
    The creditor's identification number
  33. The 1988: Fair Housing Amendments Act - (Title VIII)--added prohibition of discrimination based on
    familial status.
  34. One of the many tasks of the Consumer Financial Protection Bureau (CFPB) is to
    ensure borrowers understand the fine print that explains the risks involved in using financial services.
  35. Which law allows a consumer who has had her credit card used by an identify thief to place a freeze on her credit report?
    FACT Act
  36. The purpose of the Loan Estimate is to
    give the customer an estimate of the closing costs that will be charged on the loan.
  37. The requirement that a borrower will have to pay a prepayment penalty must be disclosed under what federal legislation?
  38. An objective of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 is to
    eliminate unfair practices relating to compensation paid to mortgage loan originators (The Loan Originator Compensation Rule).
  39. Which information is NOT required to be included on the Closing Disclosure?
    property appraised value
  40. A verification of deposit verifies what?
    down payment and/or reserves
  41. What does the Federal Housing Administration (FHA) do?
    insures mortgage lenders against default through HUD
  42. Funds for FHA loans are provided by
    qualified lending institutions.
  43. Under the SAFE Act, each state has the authority to
    write state-specific rules or regulations or adopt procedures related to licensing of persons covered under this Act.
  44. A recorded deed or recorded note and mortgage are considered to be a(n)
    constructive notice of title.
  45. On the Loan Estimate, charges for loan origination services are
  46. An occupancy certificate means the borrower
    has permission to move into the home from the zoning department.
Card Set
NMLS Study Guide 2