SAFE-NMLS-MLO-CA Exam Study (FULL
SET)2022\23
Fraud for profit is a complex scheme involving... - ANSWER-multiple parties,
including mortgage lending professionals, in a financially motivated
attempt to defraud the lender of large sums of money.
If a lender sells, transfers, or otherwise disposes of its interest in a mortgage and does
not service the mortgage, the lender shall... - ANSWER-provide a copy of the Closing
Disclosure to the new owner or servicer of the mortgage as a part of the transfer of the
loan file.
Under the Home Equity Loan Consumer Protection Act of 1988, if the disclosed terms
change... - ANSWER-the consumer can refuse to open the plan and is entitled to a
refund of fees paid in connection with the application.
The Right to Financial Privacy Act specifies that... - ANSWER-before any information is
released to the federal government, certain procedures, exemptions, limitations, and
requirements concerning the release of customer financial records must be met.
An Appraisal Report includes the... - ANSWER-identity of the client and any intended
users (by name or type), the intended use of the appraisal, the real estate involved, the
real property interest appraised, the purpose of the appraisal, and dates of the appraisal
and of the report.
What are principles that lenders use to evaluate the risk of making real estate loans. -
ANSWER-Underwriting guidelines (The guidelines are just that—guidelines. They are
flexible and vary according to loan program. If a borrower makes a small down payment
or has marginal credit, the guidelines are more rigid.)
One of the most obvious ways to classify loans is by their... - ANSWER-purpose—
purchase, refinance, or
cash out.
Lenders classify loans by the type of... - ANSWER-amortization—fixed-rate,
ARM, or GPM.
Any mortgage product other than a 30-year, fixed-rate mortgage is called a... -
ANSWER-nontraditional mortgage
The Panic of 1907 led to the passage of the... - ANSWER-Federal Reserve Act of 1913
that established the Federal Reserve System.
,The Federal Trade Commission (FTC) was created in 1914 in an attempt to... -
ANSWER-"bust up" trusts and break apart monopolies that discouraged competition
from smaller and less powerful businesses.
The two anti-trust laws in 1914 were the... - ANSWER-Federal Trade Commission Act
and the Clayton Act.
In 1933, the Banking Act of 1933 (Glass-Steagall Act) was passed that... - ANSWER-
separated commercial banking from investment banking.
What was passed to make housing
and home mortgages more affordable? - ANSWER-The National Housing Act of 1934
The National Housing Act of 1934 created the... - ANSWER-Federal Housing
Administration (FHA), Federal Savings and Loan Insurance Corporation (FSLIC) and
the United States Housing Authority
The United States Housing Authority's intent is to... - ANSWER-make low-interest, long
term loans to local public agencies for slum clearance and construction of low-
income dwellings.
The purpose of the Banking Act of 1935 was... - ANSWER-"to provide for the sound,
effective,
and uninterrupted operation of the banking system."
Under the U.S. Housing Act of 1937 (Wagner-Steagall Act or the Low-Rent Housing
Act)... - ANSWER-the federal government, through the Department of Housing and
Urban Development (HUD), provides subsidies to local public housing agencies (PHAs)
that rent housing to low-income families.
The stated purpose of each new law revolves around... - ANSWER-safety, sound
practices, stability, confidence, etc. in the financial system being regulated.
Passed by congress in 1977, the Community Reinvestment Act
(CRA)... - ANSWER-encourages regulated financial institutions to serve their immediate
community's needs.
Avoiding to lend in high-risk communities and neighborhoods is called... - ANSWER-
Redlining
When a lending institution is recognized by the Federal Reserve, what are the three
basic requirements that must be met? - ANSWER-(1) the institution must draw a map
that defines the community in which
it does business and post it visibly within its facilities.
(2) The institution must list the types of credit it
offers and make this list of loans available to the public.
,(3) the lender must post notice within its facilities that federal regulators are evaluating
the institution. This notice must provide
a forum for public comment on the institution's performance.
The Gramm-Leach-Bliley Act (GLBA) repealed part of the... - ANSWER-Glass-Steagall
Act prohibiting banks from affiliating with
securities firms.
Under GLBA, protections were put in place to... - ANSWER-safeguard consumers' non-
public personal information—the Financial Privacy Rule, the Safeguards Rule, and
Pretexting Protection.
The "Privacy Rule" requires... - ANSWER-clear disclosure by all financial institutions of
their privacy policy regarding the sharing of non-public personal information with both
affiliates and third parties.
Consumers must be given... - ANSWER-a notice to "opt-out" of sharing of non-public
personal information with nonaffiliated third parties.
Requires financial institutions to develop a written information security plan that
describes how the company
is prepared for, and plans to continue to protect clients' nonpublic personal information:
- ANSWER-Safeguards Rule
The 'Pretexting Protection' requires... - ANSWER-financial institutions to have a plan in
place to prevent unauthorized people from accessing non-public personal
information based on some pretex t.
the Consumer Financial Protection Bureau regulates... - ANSWER-sections 502 through
509, of the Gramm-Leach-Bliley Act.
In 2000, Fannie Mae was required by the Department of Housing and
Urban Development (HUD) to... - ANSWER-allocate 50% of its business to low- and
moderate-income families, with a goal of financing over $500 billion in Community
Reinvestment Act related business by 2010.
The Housing and
Economic Recovery Act (HERA), known as the Housing Stimulus Bill accomplished
what? - ANSWER-It authorized temporary measures to stimulate the housing market—
homebuyer tax credits, additional property tax deductions, seller-funded down payment
assistance programs and neighborhood revitalization funds for communities to purchase
foreclosed homes.
The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) can
be found where? - ANSWER-Title V of the Housing and Economic Recovery Act.
, The SAFE Act required... - ANSWER-all states to have a loan originator licensing and
registration system in place by August 1, 2010.
What does the SAFE Act provide? - ANSWER-uniform national licensing standards,
including minimum licensing and education. Additionally, it created a
comprehensive national licensing database to enable government
and consumers to track loan originators and help prevent fraud.
Loan originators registered in the national database are provided
with a... - ANSWER-Unique Identifier number.
A ________________ is defined as
an individual who "takes a residential mortgage loan application and also offers or
negotiates terms of a residential mortgage loan for compensation or gain". - ANSWER-
Loan Originator
HUD considers the Loan Originator to encompass any individual who... - ANSWER-for
compensation or gain, offers or negotiates pursuant to a request from and based on the
information provided by the borrower. (A person who performs only administrative or
clerical tasks in connection with loan origination is not considered a loan
originator.)
The SAFE Act's definition of "residential mortgage loan" includes... - ANSWER-a loan
secured by a consensual security interest on a dwelling as defined by the Truth in
Lending Act.
A dwelling is "a residential structure that contains... - ANSWER-1 to 4 units, whether or
not that structure is attached to real property. The term includes an individual
condominium unit, cooperative unit, mobile home, and trailer, if it is used as a
residence."
The SAFE Act is regulated by the _________ and implemented by __________ -
ANSWER-Consumer Financial Protection Bureau
Regulations G and H
The 2008 - Emergency Economic Stabilization Act did what? - ANSWER-creating a
$700 billion Troubled Assets Relief Program (TARP). TARP was established to stabilize
the United States financial system and prevent a systemic collapse.
The Reform Act bans the payment of... - ANSWER-yield spread premiums (YSPs) or
other originator compensation that is based on the interest rate or other terms of the
loans.
In general, a mortgage originator may not receive any origination fee, except from the...
- ANSWER-consumer
SET)2022\23
Fraud for profit is a complex scheme involving... - ANSWER-multiple parties,
including mortgage lending professionals, in a financially motivated
attempt to defraud the lender of large sums of money.
If a lender sells, transfers, or otherwise disposes of its interest in a mortgage and does
not service the mortgage, the lender shall... - ANSWER-provide a copy of the Closing
Disclosure to the new owner or servicer of the mortgage as a part of the transfer of the
loan file.
Under the Home Equity Loan Consumer Protection Act of 1988, if the disclosed terms
change... - ANSWER-the consumer can refuse to open the plan and is entitled to a
refund of fees paid in connection with the application.
The Right to Financial Privacy Act specifies that... - ANSWER-before any information is
released to the federal government, certain procedures, exemptions, limitations, and
requirements concerning the release of customer financial records must be met.
An Appraisal Report includes the... - ANSWER-identity of the client and any intended
users (by name or type), the intended use of the appraisal, the real estate involved, the
real property interest appraised, the purpose of the appraisal, and dates of the appraisal
and of the report.
What are principles that lenders use to evaluate the risk of making real estate loans. -
ANSWER-Underwriting guidelines (The guidelines are just that—guidelines. They are
flexible and vary according to loan program. If a borrower makes a small down payment
or has marginal credit, the guidelines are more rigid.)
One of the most obvious ways to classify loans is by their... - ANSWER-purpose—
purchase, refinance, or
cash out.
Lenders classify loans by the type of... - ANSWER-amortization—fixed-rate,
ARM, or GPM.
Any mortgage product other than a 30-year, fixed-rate mortgage is called a... -
ANSWER-nontraditional mortgage
The Panic of 1907 led to the passage of the... - ANSWER-Federal Reserve Act of 1913
that established the Federal Reserve System.
,The Federal Trade Commission (FTC) was created in 1914 in an attempt to... -
ANSWER-"bust up" trusts and break apart monopolies that discouraged competition
from smaller and less powerful businesses.
The two anti-trust laws in 1914 were the... - ANSWER-Federal Trade Commission Act
and the Clayton Act.
In 1933, the Banking Act of 1933 (Glass-Steagall Act) was passed that... - ANSWER-
separated commercial banking from investment banking.
What was passed to make housing
and home mortgages more affordable? - ANSWER-The National Housing Act of 1934
The National Housing Act of 1934 created the... - ANSWER-Federal Housing
Administration (FHA), Federal Savings and Loan Insurance Corporation (FSLIC) and
the United States Housing Authority
The United States Housing Authority's intent is to... - ANSWER-make low-interest, long
term loans to local public agencies for slum clearance and construction of low-
income dwellings.
The purpose of the Banking Act of 1935 was... - ANSWER-"to provide for the sound,
effective,
and uninterrupted operation of the banking system."
Under the U.S. Housing Act of 1937 (Wagner-Steagall Act or the Low-Rent Housing
Act)... - ANSWER-the federal government, through the Department of Housing and
Urban Development (HUD), provides subsidies to local public housing agencies (PHAs)
that rent housing to low-income families.
The stated purpose of each new law revolves around... - ANSWER-safety, sound
practices, stability, confidence, etc. in the financial system being regulated.
Passed by congress in 1977, the Community Reinvestment Act
(CRA)... - ANSWER-encourages regulated financial institutions to serve their immediate
community's needs.
Avoiding to lend in high-risk communities and neighborhoods is called... - ANSWER-
Redlining
When a lending institution is recognized by the Federal Reserve, what are the three
basic requirements that must be met? - ANSWER-(1) the institution must draw a map
that defines the community in which
it does business and post it visibly within its facilities.
(2) The institution must list the types of credit it
offers and make this list of loans available to the public.
,(3) the lender must post notice within its facilities that federal regulators are evaluating
the institution. This notice must provide
a forum for public comment on the institution's performance.
The Gramm-Leach-Bliley Act (GLBA) repealed part of the... - ANSWER-Glass-Steagall
Act prohibiting banks from affiliating with
securities firms.
Under GLBA, protections were put in place to... - ANSWER-safeguard consumers' non-
public personal information—the Financial Privacy Rule, the Safeguards Rule, and
Pretexting Protection.
The "Privacy Rule" requires... - ANSWER-clear disclosure by all financial institutions of
their privacy policy regarding the sharing of non-public personal information with both
affiliates and third parties.
Consumers must be given... - ANSWER-a notice to "opt-out" of sharing of non-public
personal information with nonaffiliated third parties.
Requires financial institutions to develop a written information security plan that
describes how the company
is prepared for, and plans to continue to protect clients' nonpublic personal information:
- ANSWER-Safeguards Rule
The 'Pretexting Protection' requires... - ANSWER-financial institutions to have a plan in
place to prevent unauthorized people from accessing non-public personal
information based on some pretex t.
the Consumer Financial Protection Bureau regulates... - ANSWER-sections 502 through
509, of the Gramm-Leach-Bliley Act.
In 2000, Fannie Mae was required by the Department of Housing and
Urban Development (HUD) to... - ANSWER-allocate 50% of its business to low- and
moderate-income families, with a goal of financing over $500 billion in Community
Reinvestment Act related business by 2010.
The Housing and
Economic Recovery Act (HERA), known as the Housing Stimulus Bill accomplished
what? - ANSWER-It authorized temporary measures to stimulate the housing market—
homebuyer tax credits, additional property tax deductions, seller-funded down payment
assistance programs and neighborhood revitalization funds for communities to purchase
foreclosed homes.
The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) can
be found where? - ANSWER-Title V of the Housing and Economic Recovery Act.
, The SAFE Act required... - ANSWER-all states to have a loan originator licensing and
registration system in place by August 1, 2010.
What does the SAFE Act provide? - ANSWER-uniform national licensing standards,
including minimum licensing and education. Additionally, it created a
comprehensive national licensing database to enable government
and consumers to track loan originators and help prevent fraud.
Loan originators registered in the national database are provided
with a... - ANSWER-Unique Identifier number.
A ________________ is defined as
an individual who "takes a residential mortgage loan application and also offers or
negotiates terms of a residential mortgage loan for compensation or gain". - ANSWER-
Loan Originator
HUD considers the Loan Originator to encompass any individual who... - ANSWER-for
compensation or gain, offers or negotiates pursuant to a request from and based on the
information provided by the borrower. (A person who performs only administrative or
clerical tasks in connection with loan origination is not considered a loan
originator.)
The SAFE Act's definition of "residential mortgage loan" includes... - ANSWER-a loan
secured by a consensual security interest on a dwelling as defined by the Truth in
Lending Act.
A dwelling is "a residential structure that contains... - ANSWER-1 to 4 units, whether or
not that structure is attached to real property. The term includes an individual
condominium unit, cooperative unit, mobile home, and trailer, if it is used as a
residence."
The SAFE Act is regulated by the _________ and implemented by __________ -
ANSWER-Consumer Financial Protection Bureau
Regulations G and H
The 2008 - Emergency Economic Stabilization Act did what? - ANSWER-creating a
$700 billion Troubled Assets Relief Program (TARP). TARP was established to stabilize
the United States financial system and prevent a systemic collapse.
The Reform Act bans the payment of... - ANSWER-yield spread premiums (YSPs) or
other originator compensation that is based on the interest rate or other terms of the
loans.
In general, a mortgage originator may not receive any origination fee, except from the...
- ANSWER-consumer
