MLO, TX Practice Test 1 Questions and Answers with
complete solution
Higher-Priced Mortgage Loans (HPML) are defined as closed-end residential mortgage
loans secured by the consumer's principal dwelling with an APR that exceed the
average prime offer rate (APOR) for comparable transactions by:
2.5 percentage points for a first lien jumbo residential mortgage loan
The Truth-In Lending Act requires residential mortgage loan originators to make certain
"material disclosures" on loans subject to the Real Estate Settlement Procedures Act
within three:
Business days after receipt of the written application.
Lenders must report under the HMDA the applicant's ethnicity, race, and sex. When
conducting a face-to-face interview in which the applicant refuses to provide the
required HMDA information; the loan officer must provide the information based on:
Appearance and surname
An Affiliated Business Arrangement disclosure is required to be given to the consumer?
At or prior to the time of referral
Under the TILA the consumer has a right of rescission in a credit transaction involving:
Refinance of a principle dwelling.
The Fair Credit Reporting Act allows consumers all of the following except:
Demand all references to bankruptcies be removed from their report after 5 years from
the date of discharge.
Under ECOA, when is a disclosure concerning the applicant's right to obtain a copy of
the appraisal report due the consumer?
Within three business day after receipt of the written application.
Under the Red Flags Rules, mortgage loan originators must develop a written program
that identifies and detects the warning signs of:
Identity theft.
This booklet must be given to every applicant considering an Adjustable Rate Mortgage:
Consumer Handbook on Adjustable Rate Mortgages.
All of the following inquiries are considered discriminatory under ECOA except:
Immigration status
The Truth in Lending Act's advertising provisions require that if an advertisement
promoting "closed-end credit" contains a "triggering term," three specific disclosures
must also be included in the advertisement. Which of the following is not considered a
"triggering term" under Regulation Z?
APR
ECOA requires that a copy of the appraisal must be given to the applicant:
Promptly upon its completion or three business days before consummation.
The Homeowners Protection Act is a consumer protection law that requires services to:
Automatically discontinue PMI when the borrower reaches 78% LTV as long as there
are no late payments in the past 12 months.
Under the TILA, when a consumer rescinds a transaction, the security interest giving
rise to the right of rescission becomes void and:
The consumer will no longer be liable for any amount, including any finance charge.
, Which of the following is not an event that would require a new waiting period for the
Closing Disclosure?
Unexpected discoveries on a final walk-through requiring a seller credit to the buyer.
In order to comply with ECOA, a Statement of Credit Denial, Termination, or Change
form must be retained by the creditor for at least:
25 months.
A transaction is a HOEPA high-cost mortgage if its APR (measured as of the date the
interest rate for the transaction is set) exceeds the Average Prime Offer Rate (APOR)
for a comparable transaction on that date by more than:
6.5 percentage points for first-lien transactions $50,000 and above.
If an applicant is denied credit, the lender must give notice to the applicant. Within
_____ days after receipt of a completed application for credit, a creditor shall notify the
applicant of its action on the application.
30 days.
The CFPB's Final Rule prohibits residential mortgage loan originator compensation be
based on which of the following?
Interest rate of the mortgage loan.
RMLOs are required to file suspicious activity reports ("SAR") with the Financial Crimes
Enforcement Network (FinCen):
No later than 30 calendar days after the date of the initial detection.
Which of the following transactions are covered by the TILA-RESPA rule?
Construction-only loans.
A transaction is a HOEPA mortgage if its points and fees exceed the following
threshold:
5 percent of the total loan amount for a transaction with a loan amount of $21,549 or
more.
The Mortgage Acts and Practices Advertising Rule (MAP Rule) prohibits any material
misrepresentation, whether made expressly or by implication, in any commercial
communication, regarding any term of any mortgage credit product. The MAP Rule
mortgage lenders to maintain records of all advertisements for:
24 months.
According to the Truth in Lending Act, which of the following fees is excluded from the
calculation of the annual percentage rate?
Attorney fee.
What landmark legislation represents a sweeping restructuring of United States financial
regulation in response to the worst financial crisis in the United States since the Great
Depression?
The Dodd-Frank Wall Street Reform and Consumer Protection Act.
Which is the correct definition of Business Day for the Initial Loan Estimate?
Any day in which the Creditor is open to the public.
The particular activities carried out by the HUD's Office of Fair Housing and Equal
Opportunity include implementing and enforcing the:
Fair Housing Act.
Regulation Z, for purposes of rescinding a loan transaction, defines "business days" as
every day of the week except:
Sundays and federal holidays.
complete solution
Higher-Priced Mortgage Loans (HPML) are defined as closed-end residential mortgage
loans secured by the consumer's principal dwelling with an APR that exceed the
average prime offer rate (APOR) for comparable transactions by:
2.5 percentage points for a first lien jumbo residential mortgage loan
The Truth-In Lending Act requires residential mortgage loan originators to make certain
"material disclosures" on loans subject to the Real Estate Settlement Procedures Act
within three:
Business days after receipt of the written application.
Lenders must report under the HMDA the applicant's ethnicity, race, and sex. When
conducting a face-to-face interview in which the applicant refuses to provide the
required HMDA information; the loan officer must provide the information based on:
Appearance and surname
An Affiliated Business Arrangement disclosure is required to be given to the consumer?
At or prior to the time of referral
Under the TILA the consumer has a right of rescission in a credit transaction involving:
Refinance of a principle dwelling.
The Fair Credit Reporting Act allows consumers all of the following except:
Demand all references to bankruptcies be removed from their report after 5 years from
the date of discharge.
Under ECOA, when is a disclosure concerning the applicant's right to obtain a copy of
the appraisal report due the consumer?
Within three business day after receipt of the written application.
Under the Red Flags Rules, mortgage loan originators must develop a written program
that identifies and detects the warning signs of:
Identity theft.
This booklet must be given to every applicant considering an Adjustable Rate Mortgage:
Consumer Handbook on Adjustable Rate Mortgages.
All of the following inquiries are considered discriminatory under ECOA except:
Immigration status
The Truth in Lending Act's advertising provisions require that if an advertisement
promoting "closed-end credit" contains a "triggering term," three specific disclosures
must also be included in the advertisement. Which of the following is not considered a
"triggering term" under Regulation Z?
APR
ECOA requires that a copy of the appraisal must be given to the applicant:
Promptly upon its completion or three business days before consummation.
The Homeowners Protection Act is a consumer protection law that requires services to:
Automatically discontinue PMI when the borrower reaches 78% LTV as long as there
are no late payments in the past 12 months.
Under the TILA, when a consumer rescinds a transaction, the security interest giving
rise to the right of rescission becomes void and:
The consumer will no longer be liable for any amount, including any finance charge.
, Which of the following is not an event that would require a new waiting period for the
Closing Disclosure?
Unexpected discoveries on a final walk-through requiring a seller credit to the buyer.
In order to comply with ECOA, a Statement of Credit Denial, Termination, or Change
form must be retained by the creditor for at least:
25 months.
A transaction is a HOEPA high-cost mortgage if its APR (measured as of the date the
interest rate for the transaction is set) exceeds the Average Prime Offer Rate (APOR)
for a comparable transaction on that date by more than:
6.5 percentage points for first-lien transactions $50,000 and above.
If an applicant is denied credit, the lender must give notice to the applicant. Within
_____ days after receipt of a completed application for credit, a creditor shall notify the
applicant of its action on the application.
30 days.
The CFPB's Final Rule prohibits residential mortgage loan originator compensation be
based on which of the following?
Interest rate of the mortgage loan.
RMLOs are required to file suspicious activity reports ("SAR") with the Financial Crimes
Enforcement Network (FinCen):
No later than 30 calendar days after the date of the initial detection.
Which of the following transactions are covered by the TILA-RESPA rule?
Construction-only loans.
A transaction is a HOEPA mortgage if its points and fees exceed the following
threshold:
5 percent of the total loan amount for a transaction with a loan amount of $21,549 or
more.
The Mortgage Acts and Practices Advertising Rule (MAP Rule) prohibits any material
misrepresentation, whether made expressly or by implication, in any commercial
communication, regarding any term of any mortgage credit product. The MAP Rule
mortgage lenders to maintain records of all advertisements for:
24 months.
According to the Truth in Lending Act, which of the following fees is excluded from the
calculation of the annual percentage rate?
Attorney fee.
What landmark legislation represents a sweeping restructuring of United States financial
regulation in response to the worst financial crisis in the United States since the Great
Depression?
The Dodd-Frank Wall Street Reform and Consumer Protection Act.
Which is the correct definition of Business Day for the Initial Loan Estimate?
Any day in which the Creditor is open to the public.
The particular activities carried out by the HUD's Office of Fair Housing and Equal
Opportunity include implementing and enforcing the:
Fair Housing Act.
Regulation Z, for purposes of rescinding a loan transaction, defines "business days" as
every day of the week except:
Sundays and federal holidays.
