MLO EXAM QUESTIONS WITH 100%
CORRECT ANSWERS
What is the minimum number of comps required by most secondary lenders to ensure
an accurate estimate of value when performing the sales comparison approach? -
Answer- 3
At closing, the buyer realizes that the lender changed the terms of the loan, but since he
was facing foreclosure, he felt he had no choice but to go ahead with the refinance or
lose the house. This could be an example of - Answer- predatory lending
Where do the funds for FHA loans come from? - Answer- Federal Home Loan Mortgage
Corporation
A buyer makes an offer of $156,000 on a house that was appraised for $162,000. If the
seller accepts his offer, how much will he have to pay down on an FHA loan (assuming
a credit score of at least 580)? - Answer- B. $5,460
Which of the following is an acceptable condition on which to base a mortgage loan
originator's compensation? - Answer- A fixed percentage of the loan amount
A Chapter 7 bankruptcy could show on a credit report for a maximum of - Answer- 10
Years
Which is NOT a triggering term according to TILA, requiring additional disclosing in
advertising? - Answer- D. "Terms to fit your budget"
Which statement is correct? - Answer- Regulation B is also known as the Equal Credit
Opportunity Act.
What regulation forbids the seller to require the use of a particular title company as a
condition of sale? - Answer- Regulation X
ABC Mortgages makes a loan with consumer even though he is unlikely to repay it,
anticipating that they'll eventually foreclose and get the borrower's equity in the
property. This is an example of - Answer- A. predatory lending.
A lender who does not cancel PMI when the LTV reaches 78% is in violation of which
federal law? - Answer- D. Homeowners Protection Act
,Which Act amended the Truth in Lending Act, establishing disclosure requirements and
prohibiting equity stripping and other abusive practices in connection with "high-cost"
mortgages? - Answer- Home Ownership and Equity Protection Act (HOEPA)
Which participant in the loan process would be most likely to overvalue a property? -
Answer- appraiser
Which of the following is NOT included as a protected class by the Equal Credit
Opportunity Act? - Answer- sexual orientation
An applicant for a mortgage loan is a salaried employee who is paid $1,350 every two
weeks. In addition, she indicates that she receives $500 a month in alimony. What is the
gross monthly income you can use to qualify her? - Answer- $3,425
Steering consumers to loan products that would result in greater compensation for a
MLO is prohibited by what legislation? - Answer- A. Dodd -Frank Act
A borrower closed a loan last week with ABC Mortgage Company. Her name is on the
National Do Not Call Registry and on ABC's internal do not call list. ABC - Answer-
cannot call her because she is on ABC's internal list.
According to the Fair Credit Reporting Act, if adverse action is taken against a credit
applicant because of information on a credit report, the lender who used that report is
required to - Answer- provide to the consumer the name, address, and telephone
number of the consumer reporting agency that furnished the report.
When qualifying a borrower, an installment debt does not need to be included in the
debt ratio when the balance of the term of repayment is less than how many months? -
Answer- 10
A Latina applies to a mortgage company for a home loan. She is refused based on the
reputation of the neighborhood for a high number of foreclosures. This is an example of
what illegal practice? - Answer- redlining
The rate that is used to amortize the mortgage loan and determine the monthly loan
payments is known as the - Answer- note rate.
An applicant for a mortgage has recurring monthly debt of $425 and a gross monthly
income of $3,850. For a conforming loan, what is the maximum house payment—
including principal, interest, taxes, and insurance—for which she qualifies? - Answer- A.
$961.00 = 3850-425*.28
The federal Truth in Lending Act - Answer- regulates advertising with references to
mortgage interest rates.
, Which would LEAST LIKELY be a changed circumstance that would trigger the need to
provide a new GFE to a borrower? - Answer- The mortgage loan originator learns that
the alimony the borrower receives (which was not included in her income analysis) will
cease after she is
remarried next month.
What fact about a borrower may an underwriter take into consideration when approving
a
mortgage loan application? - Answer- likelihood of continued income
ABC Bank receives a change of address request from a consumer. What requires the
bank to
follow up with him to verify the validity of the request? - Answer- Red Flag Rules
In a purchase transaction closing, hypothecation occurs. This is described as - Answer-
Using property as collateral without surrendering use or possession of it.
Each of these loans would be excluded under the definition of a higher-priced loan
EXCEPT - Answer- a purchase loan.
If a mortgage loan originator or real estate agent suggests to a client that he move to a
particular
area to reside in a community that he will "fit into," that MLO or real estate agent would
be guilty
of - Answer- Steering.
A Truth in Lending Statement must be given to a consumer no later than ________
business
days prior to closing a home loan. - Answer- 7
A borrower has an additional three-business day waiting period before the loan closes if
the true
APR on a fixed rate loan deviates from the initial TIL by more than - Answer- 1/8%.
The tradeoff table is a tool to assist consumers that appears on the - Answer- Good
Faith Estimate.
A mortgage loan originator hands the borrower a GFE and a TIL in his office the day
after the
application was completed. The MLO can charge the borrower for an appraisal -
Answer- That day.
Of these, who is responsible for the accurate accounting of all monies due to and from
the parties
in a real estate sale? - Answer- Settlement or escrow agent
CORRECT ANSWERS
What is the minimum number of comps required by most secondary lenders to ensure
an accurate estimate of value when performing the sales comparison approach? -
Answer- 3
At closing, the buyer realizes that the lender changed the terms of the loan, but since he
was facing foreclosure, he felt he had no choice but to go ahead with the refinance or
lose the house. This could be an example of - Answer- predatory lending
Where do the funds for FHA loans come from? - Answer- Federal Home Loan Mortgage
Corporation
A buyer makes an offer of $156,000 on a house that was appraised for $162,000. If the
seller accepts his offer, how much will he have to pay down on an FHA loan (assuming
a credit score of at least 580)? - Answer- B. $5,460
Which of the following is an acceptable condition on which to base a mortgage loan
originator's compensation? - Answer- A fixed percentage of the loan amount
A Chapter 7 bankruptcy could show on a credit report for a maximum of - Answer- 10
Years
Which is NOT a triggering term according to TILA, requiring additional disclosing in
advertising? - Answer- D. "Terms to fit your budget"
Which statement is correct? - Answer- Regulation B is also known as the Equal Credit
Opportunity Act.
What regulation forbids the seller to require the use of a particular title company as a
condition of sale? - Answer- Regulation X
ABC Mortgages makes a loan with consumer even though he is unlikely to repay it,
anticipating that they'll eventually foreclose and get the borrower's equity in the
property. This is an example of - Answer- A. predatory lending.
A lender who does not cancel PMI when the LTV reaches 78% is in violation of which
federal law? - Answer- D. Homeowners Protection Act
,Which Act amended the Truth in Lending Act, establishing disclosure requirements and
prohibiting equity stripping and other abusive practices in connection with "high-cost"
mortgages? - Answer- Home Ownership and Equity Protection Act (HOEPA)
Which participant in the loan process would be most likely to overvalue a property? -
Answer- appraiser
Which of the following is NOT included as a protected class by the Equal Credit
Opportunity Act? - Answer- sexual orientation
An applicant for a mortgage loan is a salaried employee who is paid $1,350 every two
weeks. In addition, she indicates that she receives $500 a month in alimony. What is the
gross monthly income you can use to qualify her? - Answer- $3,425
Steering consumers to loan products that would result in greater compensation for a
MLO is prohibited by what legislation? - Answer- A. Dodd -Frank Act
A borrower closed a loan last week with ABC Mortgage Company. Her name is on the
National Do Not Call Registry and on ABC's internal do not call list. ABC - Answer-
cannot call her because she is on ABC's internal list.
According to the Fair Credit Reporting Act, if adverse action is taken against a credit
applicant because of information on a credit report, the lender who used that report is
required to - Answer- provide to the consumer the name, address, and telephone
number of the consumer reporting agency that furnished the report.
When qualifying a borrower, an installment debt does not need to be included in the
debt ratio when the balance of the term of repayment is less than how many months? -
Answer- 10
A Latina applies to a mortgage company for a home loan. She is refused based on the
reputation of the neighborhood for a high number of foreclosures. This is an example of
what illegal practice? - Answer- redlining
The rate that is used to amortize the mortgage loan and determine the monthly loan
payments is known as the - Answer- note rate.
An applicant for a mortgage has recurring monthly debt of $425 and a gross monthly
income of $3,850. For a conforming loan, what is the maximum house payment—
including principal, interest, taxes, and insurance—for which she qualifies? - Answer- A.
$961.00 = 3850-425*.28
The federal Truth in Lending Act - Answer- regulates advertising with references to
mortgage interest rates.
, Which would LEAST LIKELY be a changed circumstance that would trigger the need to
provide a new GFE to a borrower? - Answer- The mortgage loan originator learns that
the alimony the borrower receives (which was not included in her income analysis) will
cease after she is
remarried next month.
What fact about a borrower may an underwriter take into consideration when approving
a
mortgage loan application? - Answer- likelihood of continued income
ABC Bank receives a change of address request from a consumer. What requires the
bank to
follow up with him to verify the validity of the request? - Answer- Red Flag Rules
In a purchase transaction closing, hypothecation occurs. This is described as - Answer-
Using property as collateral without surrendering use or possession of it.
Each of these loans would be excluded under the definition of a higher-priced loan
EXCEPT - Answer- a purchase loan.
If a mortgage loan originator or real estate agent suggests to a client that he move to a
particular
area to reside in a community that he will "fit into," that MLO or real estate agent would
be guilty
of - Answer- Steering.
A Truth in Lending Statement must be given to a consumer no later than ________
business
days prior to closing a home loan. - Answer- 7
A borrower has an additional three-business day waiting period before the loan closes if
the true
APR on a fixed rate loan deviates from the initial TIL by more than - Answer- 1/8%.
The tradeoff table is a tool to assist consumers that appears on the - Answer- Good
Faith Estimate.
A mortgage loan originator hands the borrower a GFE and a TIL in his office the day
after the
application was completed. The MLO can charge the borrower for an appraisal -
Answer- That day.
Of these, who is responsible for the accurate accounting of all monies due to and from
the parties
in a real estate sale? - Answer- Settlement or escrow agent
