Mortgage Loan Exam with complete
Define Primary and Secondary
Primary: Businesses that lend borrowers money to pay for real estate. They are referred
to as originator. Primary market lenders include: commercial banks, savings and loans,
life insurance, credit unions.
Secondary: Investors do not lend money. They purchase mortgage notes as
investments to earn a return.
The Gramm-Leach-Bliley Act requires financial institutions to provide consumers with a
notice of their information sharing policies. Which of the following is not an acceptable
means of providing the required privacy notice?
Posting notice in on an office wall.
3. After a loan closing, funds are disbursed. When are the funds disbursed for an
owner-occupied, residential refinance?
(a) After the three business-day rescission period
Violations of Section 8's anti-kickback, referral fees and unearned fees provisions of
RESPA are subject to criminal and civil penalties. In a criminal case, a person who
violates Section 8 may be fined up and imprisoned:
(b) Up to $10,000 and up to 1 year in prison.
Which of the following allows a prepayment penalty during the first three years after the
loan is consummated?
High Priced Mortgage Loan
HPML may have a prepayment penalty during the first 3 years after the loan
consummated. After 3 years a payment penalty is not allowed. The penalty must not
exceed the following percentages of the amount of the outstanding balance pre-paid.
2% if incurred during the first two years following consummation. 1% if incurred during
the 3rd year following consummation.
A borrower is buying a house for $180,000. He provides a down payment of $40,000. If
he pays three discount points, what is the total cost of the points?
180,000 X .03 = 5400
40,000 X .03=1200
=4,200
Discount points lower your interest rate in exchange for paying an upfront fee
Which is NOT a purpose for the Mortgage Servicing Disclosure Statement?
To inform the consumer the likelihood that the mortgage could be sold
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?
Redlining - Violates ECOA and FHA
As defined by the S.A.F.E. Mortgage Licensing Act of 2008, all of the following
mortgage products are considered as a non-traditional mortgage product except:
30 year fixed rate mortgages
,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?
(c) Home Ownership and Equity Protection Act (HOEPA)
Which of the following fees is not considered a prepaid finance charge and is not
included in the APR calculation under Regulation Z?
Discount Points
Mortgage Insurance Premiums
Tax Service Fee
Point Fees Paid by Seller****
The type of mortgage that provides an elderly borrower with a monthly check instead of
the borrower paying a monthly payment is known as a(n):
Reverse
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:
Provide to the consumer the name, address, and telephone number of the consumer
reporting agency that furnished the report.
Lenders that generate mortgage loans may receive some degree of legal protection
against borrower Ability to Repay lawsuits. The level of protection they receive will
depend on the type of loan they make. What type of mortgage loan gives the lender the
greatest level of protection against borrower lawsuits?
Safe Harbor Qualified Mortgage Loan
In the promissory note, what gives the lender the right to charge the borrower a fee for
paying off the loan early?
Prepayment penalty
Which statement is correct?
(a) Regulation B is also known as the Equal Credit Opportunity Act
(b) Regulation V is also known as the Home Mortgage Disclosure Act
(c) Regulation X is also known as the Truth in Lending Act
(d) Regulation Z is also known as the Real Estate Settlement Procedures Act
Answer is A: ⦁ What allows the borrowers to challenge the value? ECOA - Reg B
Which item is NOT included in the calculation that determines the annual percentage
rate?
(d) The title insurance premium
Not included in APR:
Title fee, attorney, notary, document prep, home inspection fee, recording fee, transfer
fee, credit report, appraisal fee.
18. Under RESPA, who would be subject to fines and penalties if a kickback is paid?
(d) All parties paying or receiving a kickback
A conforming loan is a loan that:
(b) Follows the secondary market criteria set by Fannie Mae/Freddie Mac.
According to the Home Mortgage Disclosure Act, what may never be asked about
during the loan application process?
, Religion***
Ethnicity, Marital status, Race, Sex and Gross Annual Income.
TRID requires creditors to retain copies of the Closing Disclosure (and all documents
related to the Closing Disclosure) for
(c) Five years after consummation.
The annual percentage rate (APR) as required to be disclosed under the Truth in
Lending Act is the:
The APR is the cost of borrowers credit calculated as an annual rate. The APR shown
on the LE and the closing disclosure often exceeds the interest rate quoted on the note
and mortgage.
Which of the following is NOT included as a protected class by the Equal Credit
Opportunity Act?
Gender
Who must receive a Notice of Right to Rescind in a refinance transaction?
(a) Anyone with ownership interest in the property
Under what circumstances is a creditor permitted to provide a consumer with an
updated Loan Estimate?
Revisions to the credit terms or the settlement are requested by the consumer
A subordination clause in a mortgage:
(a) Allows a debt or claim which has priority to take second position behind another
debt, particularly a new loan. This would be found in a second mortgage or a home
equity loan. A subordination clause allows a lender to move or take a lower lien position.
Where do the funds for FHA loans come from?
Federal Housing Administration
Knowns as FHA - Insures mortgages on single family and multifamily homes including
manufactured homes.
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?
GMI 3850 X 36% = 1386 - 425 = $961
The term "registered loan originator", as defined under the SAFE Act, means any
individual who meets the definition of loan originator and is an employee of:
(d) A depository institution regulated by a federal banking agency.
What is the loan-to-value if the loan amount is $139,500, the appraised value is
$164,117 and the sales price is $155,000?
90%
$139,000 divided by $155,000 = .90%
LA divided by SP or AV whichever is less
To comply with the FACTA, a Residential mortgage loan originator should:
Implement a written identity theft prevention program
The SAFE Act requires all MLOs seeking state-licensure to pass the NMLS-developed
Mortgage Loan Originator Test with a score of
Define Primary and Secondary
Primary: Businesses that lend borrowers money to pay for real estate. They are referred
to as originator. Primary market lenders include: commercial banks, savings and loans,
life insurance, credit unions.
Secondary: Investors do not lend money. They purchase mortgage notes as
investments to earn a return.
The Gramm-Leach-Bliley Act requires financial institutions to provide consumers with a
notice of their information sharing policies. Which of the following is not an acceptable
means of providing the required privacy notice?
Posting notice in on an office wall.
3. After a loan closing, funds are disbursed. When are the funds disbursed for an
owner-occupied, residential refinance?
(a) After the three business-day rescission period
Violations of Section 8's anti-kickback, referral fees and unearned fees provisions of
RESPA are subject to criminal and civil penalties. In a criminal case, a person who
violates Section 8 may be fined up and imprisoned:
(b) Up to $10,000 and up to 1 year in prison.
Which of the following allows a prepayment penalty during the first three years after the
loan is consummated?
High Priced Mortgage Loan
HPML may have a prepayment penalty during the first 3 years after the loan
consummated. After 3 years a payment penalty is not allowed. The penalty must not
exceed the following percentages of the amount of the outstanding balance pre-paid.
2% if incurred during the first two years following consummation. 1% if incurred during
the 3rd year following consummation.
A borrower is buying a house for $180,000. He provides a down payment of $40,000. If
he pays three discount points, what is the total cost of the points?
180,000 X .03 = 5400
40,000 X .03=1200
=4,200
Discount points lower your interest rate in exchange for paying an upfront fee
Which is NOT a purpose for the Mortgage Servicing Disclosure Statement?
To inform the consumer the likelihood that the mortgage could be sold
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?
Redlining - Violates ECOA and FHA
As defined by the S.A.F.E. Mortgage Licensing Act of 2008, all of the following
mortgage products are considered as a non-traditional mortgage product except:
30 year fixed rate mortgages
,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?
(c) Home Ownership and Equity Protection Act (HOEPA)
Which of the following fees is not considered a prepaid finance charge and is not
included in the APR calculation under Regulation Z?
Discount Points
Mortgage Insurance Premiums
Tax Service Fee
Point Fees Paid by Seller****
The type of mortgage that provides an elderly borrower with a monthly check instead of
the borrower paying a monthly payment is known as a(n):
Reverse
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:
Provide to the consumer the name, address, and telephone number of the consumer
reporting agency that furnished the report.
Lenders that generate mortgage loans may receive some degree of legal protection
against borrower Ability to Repay lawsuits. The level of protection they receive will
depend on the type of loan they make. What type of mortgage loan gives the lender the
greatest level of protection against borrower lawsuits?
Safe Harbor Qualified Mortgage Loan
In the promissory note, what gives the lender the right to charge the borrower a fee for
paying off the loan early?
Prepayment penalty
Which statement is correct?
(a) Regulation B is also known as the Equal Credit Opportunity Act
(b) Regulation V is also known as the Home Mortgage Disclosure Act
(c) Regulation X is also known as the Truth in Lending Act
(d) Regulation Z is also known as the Real Estate Settlement Procedures Act
Answer is A: ⦁ What allows the borrowers to challenge the value? ECOA - Reg B
Which item is NOT included in the calculation that determines the annual percentage
rate?
(d) The title insurance premium
Not included in APR:
Title fee, attorney, notary, document prep, home inspection fee, recording fee, transfer
fee, credit report, appraisal fee.
18. Under RESPA, who would be subject to fines and penalties if a kickback is paid?
(d) All parties paying or receiving a kickback
A conforming loan is a loan that:
(b) Follows the secondary market criteria set by Fannie Mae/Freddie Mac.
According to the Home Mortgage Disclosure Act, what may never be asked about
during the loan application process?
, Religion***
Ethnicity, Marital status, Race, Sex and Gross Annual Income.
TRID requires creditors to retain copies of the Closing Disclosure (and all documents
related to the Closing Disclosure) for
(c) Five years after consummation.
The annual percentage rate (APR) as required to be disclosed under the Truth in
Lending Act is the:
The APR is the cost of borrowers credit calculated as an annual rate. The APR shown
on the LE and the closing disclosure often exceeds the interest rate quoted on the note
and mortgage.
Which of the following is NOT included as a protected class by the Equal Credit
Opportunity Act?
Gender
Who must receive a Notice of Right to Rescind in a refinance transaction?
(a) Anyone with ownership interest in the property
Under what circumstances is a creditor permitted to provide a consumer with an
updated Loan Estimate?
Revisions to the credit terms or the settlement are requested by the consumer
A subordination clause in a mortgage:
(a) Allows a debt or claim which has priority to take second position behind another
debt, particularly a new loan. This would be found in a second mortgage or a home
equity loan. A subordination clause allows a lender to move or take a lower lien position.
Where do the funds for FHA loans come from?
Federal Housing Administration
Knowns as FHA - Insures mortgages on single family and multifamily homes including
manufactured homes.
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?
GMI 3850 X 36% = 1386 - 425 = $961
The term "registered loan originator", as defined under the SAFE Act, means any
individual who meets the definition of loan originator and is an employee of:
(d) A depository institution regulated by a federal banking agency.
What is the loan-to-value if the loan amount is $139,500, the appraised value is
$164,117 and the sales price is $155,000?
90%
$139,000 divided by $155,000 = .90%
LA divided by SP or AV whichever is less
To comply with the FACTA, a Residential mortgage loan originator should:
Implement a written identity theft prevention program
The SAFE Act requires all MLOs seeking state-licensure to pass the NMLS-developed
Mortgage Loan Originator Test with a score of
