Nationwide Multistate Licensing System Mortgage Loan Originator Examination

1.Nora meets applicants, completes the residential mortgage application, and negotiates the rate and term. She is paid a commission when the loan closes. What does the SAFE Act require?

2.Eli scans pay stubs, orders flood certificates when asked, and schedules closings for a licensed lender. He never quotes a rate or discusses loan terms. Which statement is correct?

3.Before a person applies for a state mortgage loan originator license, how many hours of pre-license education are required?

4.Which set of courses satisfies the required content of the 20-hour pre-license education?

5.A licensed originator asks how many hours of continuing education are required each year.

6.Which annual plan meets the continuing-education requirement?

7.Twelve years ago, Andre was convicted of felony bank fraud. He completed the sentence. Can that conviction still bar a mortgage loan originator license?

8.Pat was convicted of felony assault 6 years ago. The crime did not involve fraud, dishonesty, money laundering, or breach of trust. What is the licensing effect?

9.Nine years ago, an applicant was convicted of a felony that did not involve fraud, dishonesty, money laundering, or breach of trust. Which statement matches the felony rule?

10.Where must the originator's unique Nationwide Multistate Licensing System identifier appear?

11.A creditor has the consumer's name, income, Social Security number to pull credit, property address, estimated value, and loan amount sought. Tax returns are still missing. For TRID, what does the creditor have?

12.A shopper gives a name, income, Social Security number, an estimated home value, and a desired loan amount, but has not identified a property. What is true?

13.A TRID application arrives on Monday. The creditor's offices are open Monday through Friday and closed Saturday and Sunday. There is no federal holiday. When is the Loan Estimate due?

14.Consummation of a purchase loan is scheduled for Thursday, and there is no federal holiday that week. When must the borrowers receive the Closing Disclosure?

15.Luis refinances the mortgage on the house that is his principal dwelling. The new loan is not a purchase. What rescission right does he generally have?

16.The Cho family signs a loan to buy the house they will occupy as their home. Which rescission statement is correct?

17.A principal-dwelling refinance closed, and the creditor never delivered the required rescission notices. How long can the right to rescind last?

18.Which fact is a prohibited basis for denying a mortgage under the Equal Credit Opportunity Act?

19.An originator asks an applicant whether she plans to have children and intends to deny the loan if the answer is yes. Which law does that break?

20.On a purchase application, the originator asks for ethnicity, race, and sex for government monitoring. The applicant does not want to answer. What is allowed?

21.An applicant sitting with the originator declines to give ethnicity, race, and sex. What is the proper step for this in-person application?

22.A title company offers an originator $400 for each buyer the originator sends to that company. What does RESPA Section 8 say?

23.A lender owns part of a title agency. Borrowers may choose another title company. The lender wants its loan officers to offer the affiliate. What must happen?

24.Servicing of a mortgage will transfer on July 1. Which notice timing follows the servicing-transfer rule?

25.A servicing transfer is effective on June 1. The current servicer wants the advance notice to be given exactly 15 days before that date. What is that calendar date?

26.A servicing transfer is effective on June 1. By which date must the new servicer notify the borrower?

27.A borrower sees an annual percentage rate and asks why it is not the purchase price of the house. What does that rate reflect?

28.An advertisement offers a mortgage payment of $1,450 a month. Under Truth in Lending advertising rules, what else must that ad include?

29.Before approving a covered mortgage, what must the creditor determine about repayment?

30.Which description of a qualified mortgage is accurate?

31.An originator is paid 1.00% of the loan amount on every closing, and that percentage does not change with the interest rate. The loan amount is $250,000. What is true?

32.A plan pays the originator an extra 0.50% of the loan amount only when the borrower's interest rate is above par. Why is that plan a problem?

33.A borrower qualifies for a lower-cost loan. The originator pushes a more expensive loan because that choice increases the originator's pay. What rule applies?

34.The purchase contract is $415,000. The originator tells the appraiser, 'Hit $415,000 or we will not send you more work.' What is the originator's duty?

35.A fixed-rate mortgage has a principal-and-interest payment of $1,642. An adjustable-rate index rises. What happens to this fixed principal-and-interest payment?

36.Principal and interest on a fixed-rate loan do not change. The county raises property taxes, and taxes are escrowed. What can change?

37.An adjustable-rate note uses an index of 3.125% and a margin of 2.500%. What is the fully indexed rate?

38.An adjustable-rate loan starts at 5.000%. The caps are 2 percentage points at the first change, 2 points at later changes, and 5 points over the life of the loan. At the first change, the index plus margin is 8.000%. What rate applies?

39.A seller will not sign the purchase contract unless the buyer uses a title insurance company the seller names. Which rule applies?

40.A first-time buyer will use an FHA-insured loan from a local lender. Who insures the loan, and who provides the money in the ordinary case?

41.A qualified FHA borrower buys a $200,000 home and makes the minimum down payment of 3.5%. How much cash is that down payment?

42.Under the SAFE Act definition used for education, which loan is a nontraditional mortgage product?

43.An eligible veteran with full entitlement wants to buy a home and asks whether a VA loan always requires a down payment. What may the lender do?

44.An eligible veteran has a service-connected disability that exempts the veteran from the VA funding fee. What is true about that fee?

45.A loan has ordinary monthly payments and then one large payment of the remaining principal at month 84. The borrower may not have the cash for that final amount. What should the originator explain?

46.A $300,000 loan is interest-only at 6% a year. The borrower pays the interest-only amount on time for 12 months and pays no extra principal. What is the principal balance then?

47.A borrower locked 6.125% for 30 days. On day 31 the lock has not been extended, and the rate available that day is 6.500%. What is the result?

48.The appraisal comes in lower than the value used on the Loan Estimate, and the lower value means mortgage insurance must be added. May the creditor revise the Loan Estimate for that insurance?

49.Nothing about the borrower or the loan has changed. The branch manager still wants a higher origination charge on a revised Loan Estimate because the branch wants more profit. Is that allowed?

50.An originator prints a full application, including income and the Social Security number, and leaves it on a printer shared by the office. What should happen?

51.In a crowded lobby, a coworker starts reading a borrower's debts and account numbers out loud. What is the appropriate response?

52.A loan file raises a money-laundering concern, and the company will file a suspicious-activity report. What may the originator tell the customer?

53.A 68-year-old homeowner wants a home equity conversion mortgage, a type of reverse mortgage, on the home the owner occupies. What is required before the loan proceeds?

54.A homeowner takes draws on a reverse mortgage and does not make repayments while interest accrues. What generally happens to the loan balance?

55.A friend who is not applying for a loan asks an originator to pull a neighbor's credit report to see whether the neighbor is wealthy. What is the lawful response?

56.A creditor denies a mortgage based on information in a credit report. What must the creditor give the applicant?

57.A borrower admits that a $12,000 annual bonus on the application will not be paid, then asks the originator to leave the bonus in the income. What should the originator do?

58.A borrower will not live in the property but asks the originator to mark the application owner-occupied to get better pricing. What should the originator do?

59.A coworker says to leave a $480 monthly auto loan off the application so the debt ratios look lower. The borrower confirms that the auto loan exists and is being paid. What should the originator do?

60.To make a short job history look longer, a borrower asks the originator to enter a start date two years earlier than the true date. What is the correct action?

61.Chris is employed by an insured depository institution, takes residential mortgage applications, and negotiates rates for pay. How does Chris meet the SAFE Act?

62.A loan processor is an independent contractor, not a company employee, and is paid to perform residential mortgage processing. What does the SAFE Act require of that processor?

63.Dana applies for a 30-year adjustable-rate mortgage on the home Dana lives in. Which booklet is part of the early adjustable-rate disclosures?

64.A license candidate has finished 3 hours of federal law, 3 hours of ethics, 2 hours on nontraditional products, and 10 elective hours. How many elective hours are still needed?

65.Eight years ago, an applicant was convicted of a felony involving dishonesty. The applicant asks whether the 7-year felony rule clears it. What is the answer?

66.Servicing transferred on March 1. On March 20 the borrower sent that month's payment to the old servicer, and the payment arrived on time. What protection applies?

67.Three years ago, an applicant was convicted of a felony for breach of trust as a trustee and has finished probation. What is the licensing effect?

68.A 74-year-old applicant has the capacity to contract, a stable pension, and verified debts that meet the creditor's usual standards. An originator wants to deny the loan only because of age. Is that permitted?

69.An applicant's verified income includes a public-assistance benefit that is likely to continue. A coworker says to ignore it because of the source. What does ECOA require?

70.An originator refuses to take an application because the person is divorced. Which law does that refusal violate?

71.A creditor will not take mortgage applications in several neighborhoods because of the race of the residents. Applicants with similar incomes from other neighborhoods are accepted. What is that practice?

72.An applicant disputed an error on an old credit account, exercising a right under the Consumer Credit Protection Act. The creditor wants to deny a new mortgage solely because of that dispute. Is the denial allowed?

73.A creditor has a completed mortgage application. How soon must it notify the applicant of the action taken?

74.A borrower applies for an open-end home-equity line of credit secured by the borrower's principal home. Which disclosure statement is correct?

75.A principal-dwelling refinance is consummated on Monday. The required rescission notices and material disclosures are delivered the same day. There is no federal holiday that week. When does the 3-business-day rescission period end?

76.A borrower refinances a rental house. The rental is not the borrower's principal dwelling. Which rescission statement is correct?

77.Two spouses both own and live in the home, and both may rescind a refinance. One spouse delivers a proper rescission notice on time. The other does not. What is the result?

78.On one loan, the borrower pays the originator a fee, and the creditor also pays that originator a commission. What does the compensation rule say?

79.The borrower has received the Loan Estimate and has not indicated an intent to proceed. Which fee may the creditor impose now?

80.The six items that create a TRID application arrived this morning. The creditor still wants pay stubs and the purchase contract. When must the Loan Estimate go out?

81.The Loan Estimate shows the creditor's origination charge as $1,800. No changed circumstance occurs. The Closing Disclosure shows $2,050 for that same charge. What is required?

82.Recording fees and a title service the borrower was allowed to shop for were estimated at $800 and $1,200. The borrower chose a provider on the creditor's written list. Actual charges are $840 and $1,250. Are the charges within the 10% tolerance?

83.The borrower may shop for a settlement service and selects a provider that is not on the creditor's written list. How do the TRID tolerance buckets treat that charge?

84.After the Closing Disclosure is issued, the annual percentage rate on this regular transaction increases by more than one-eighth of one percentage point. What must happen before consummation?

85.The Closing Disclosure described a fixed-rate loan. The borrower later switches to an adjustable-rate loan, and a corrected disclosure is prepared. What waiting period applies?

86.A fixed-rate loan has a balance of $200,000 at 6% annual interest. This month's principal-and-interest payment is $1,199. How is that payment split, and what is the new balance?

87.A loan balance is $100,000 at 6% annual interest. This month the interest due is covered only in part: the borrower pays $400. What is the new balance if the unpaid interest is added to the loan?

88.The note rate is 7%. A 2-1 temporary buydown lowers the rate the borrower pays by 2 percentage points in year 1 and by 1 percentage point in year 2. Which rates does the borrower pay?

89.On a standard adjustable-rate note, the index moves when the market moves. What is true of the margin?

90.An adjustable-rate loan has a discounted start rate of 4.000%. The fully indexed rate is 6.750%, and the initial cap allows an increase of 2 percentage points. If the fully indexed rate is still 6.750% at the first change, what rate can apply then?

91.A conventional loan has borrower-paid private mortgage insurance. The balance has reached 80% of the original value, and the borrower is current. What can the borrower request under the Homeowners Protection Act?

92.A borrower seeks a $240,000 loan secured by a home valued at $300,000. What is the loan-to-value ratio?

93.The purchase price is $400,000. The borrower will put 5% down, and no fees are financed. What are the down payment and the base loan amount?

94.A conventional loan amount is above the conforming loan limit that applies to that county in the year of the application. What is the usual name for that loan, without using a dollar limit?

95.A quote shows a VA funding fee of 2% on a $200,000 base loan. The veteran is not exempt. What is the fee in dollars?

96.Another eligible veteran is borrowing $200,000 with no down payment and is exempt from the VA funding fee because of a service-connected disability. A non-exempt quote on that amount would be 2%. What fee is charged?

97.A qualified borrower uses the minimum FHA down payment on a $160,000 purchase price. What is the down payment, and what is the base loan before any financed mortgage insurance?

98.A lender quotes an annual mortgage-insurance premium of 0.50% of a $180,000 balance. What is the annual premium, and what is the monthly amount?

99.During an interest-only period, the balance is $240,000 and the annual rate is 5%. The borrower pays only the interest due. What is the monthly payment, and what happens to principal?

100.A flood determination shows that the house securing the loan is in a Special Flood Hazard Area. The lender is making a designated loan on that building. What insurance is required?

101.One discount point is 1% of the loan amount. How much does the borrower pay for 1.5 discount points on a $400,000 loan?

102.Monthly principal and interest are $1,400, property taxes $250, hazard insurance $100, and association dues $50. Gross monthly income is $6,000. What is the housing-expense ratio for these items?

103.Housing expense is $1,800 and gross monthly income is $6,000. The borrower also pays $400 a month on a car and $200 a month on student loans. What is the ratio of these debts to income?

104.A relative will provide $15,000 that the borrower must repay every month. The borrower asks the originator to call the money a gift so the repayment does not appear as a debt. What should the originator do?

105.An appraisal is below the contract price. The borrower has two recent sales on the same block that were not mentioned in the report. What may the originator do?

106.A consumer submits a mortgage application and authorizes a credit pull. The originator obtains that consumer's credit report to underwrite the application. Is there a permissible purpose?

107.A denial is based in part on a consumer report from a nationwide credit bureau. Which content belongs in the adverse-action notice?

108.A borrower asks the originator to enter a large cash amount as a gift and to leave the source undocumented. The request looks suspicious under the company's policy. What should the originator do?