NMLS TEST FINAL EXAM 2 VERSIONS (VERSION A
AND B) ACTUAL EXAM COMPLETE ACCURATE EXAM
QUESTIONS WITH DETAILED VERIFIED ANSWERS
When advertising, the APR must be present when __________? -
ANSWER -A rate is quoted or present
RESPA was put in place to? -ANSWER -Limit amounts in escrow,
eliminate kickbacks , and educate the borrowers on the closing cost, it
does NOT regulate interest rates
According to RESPA guidelines, failure to comply with Section 8 could
result in a penalty of? -ANSWER -$10,000 and/or 1 year prison terms
for each incident
Redlining is best defined as: -ANSWER -Failing to end to certain
geographic areas
Who created and monitors a companies Red Flag Rules? -ANSWER -
Federal Trade Commission (FTC Red Flag Rules)
At what point in a conventional will the PMI be removed? -ANSWER -
When the principal balance reaches 78% of the original value or
purchase price
When does a referring party have to provide the ABA form to the
borrower? -ANSWER -Before or at the time of the referral
Advertising a mortgage loan product that a lender is not able to offer is
a violation of what federal law? -ANSWER -TILA/reg Z
, What is the Act that requires a financial entity to provide customers
with a privacy notice, as well as an "opt out notice", regarding the
customer's personal information? -ANSWER -Gramm-Leach Bliley Act
Under the GLB Act, nonpublic information can only be shared with
affiliates of the financial institution or affiliates of related third parties,
even if the customer does not opt out. (T/F) -ANSWER -TRUE
What information must be provided to the borrower when referrals take
place between affiliated businesses? -ANSWER -An Affiliated Business
Disclosure Statement as mandated by RESPA
What is the primary purpose of the Gramm-Leach Bliley Act? -
ANSWER -Notice of right to financial privacy and right to opt out of
sharing personal information
Along with the Fair and Accurate Credit Transactions Act Disposal
Rule, what GLB Act provision ensures that customer's information is not
handled or maintained carelessly and is disposed of properly? -
ANSWER -GLB Act's Safeguards rule
What is the difference between the GLB Act Safeguards Rule and the
FACT Act Disposal Rule? -ANSWER -GLB Act's Safeguards Rule
requires all companies to design, implement, and maintain safeguards to
protect customer information from theft... FACT Act requires businesses
to take appropriate measures to safeguard from theft in the disposal of
consumer report
, What is a "Federally Related Loan"? -ANSWER -Loans secured by a
first or subordinate lien on a residential property that meets stated
RESPA criteria. The definition is so broad it covers virtually every home
loan secured by a mortgage.
Most of HUD's enforcement actions result due to section 8 of RESPA.
What is addressed in Section 8? -ANSWER -Prohibited against giving
or receiving a fee, kickback, or anything of value pursuant to an
agreement or understanding for the referral of settlement business
What is an affiliated business arrangement? -ANSWER -An
arrangement in which one person refers applicants to a settlement
service provider with whom the referring person has an ownership
interest of 1% or more
What customer protection does Section 10 of RESPA provide? -
ANSWER -Protect consumers by ensuring borrowers know the amount
they are to deposit into escrow by preventing lenders from overcharging
borrowers for escrow deposits
What are the consequences for violating Section 8 of RESPA? -
ANSWER -Up to $10,000 and/or one year in prison
What is the primary aim of Regulation B? -ANSWER -ECOA is
intended to promote availability of credit to all creditworthy applicants
and prohibit discrimination
A copy of the Closing Disclosure must be provided to the borrower how
many days prior to closing? -ANSWER -3 days prior to closing
, Under the ECOA, is it lawful to turn down an applicant because part of
his/her income is derived from public assistance? -ANSWER -It is
unlawful not to accept an application due to the type of income it is not
however unlawful to turn them down if the income is not enough to
qualify them for the repayment
What is the letter of the regulation by which the ECOA is also referred?
-ANSWER -Regulation B (B for Borrower is protected)
To whom does the TIL Act apply? -ANSWER -All businesses and
individuals that regularly extend consumer credit that is primarily for
family or household purposes. Regularly extend credit means more than
5 mortgages per year
What is the RESPA prohibition on "mark ups" designed to prevent? -
ANSWER -A lender or service provider marking up 3rd party costs for
the purpose of retaining the additional funds
Under the ECOA, you must notify an applicant of Notice of Action
Taken within what time period? -ANSWER -30 days from receipt of a
loan application
TILA requires that mortgage broker fees are ______________ included
in the finance charge? -ANSWER -ALWAYS
Credit denial letters do not require the disclosure of
_________________? -ANSWER -Credit Scores
AND B) ACTUAL EXAM COMPLETE ACCURATE EXAM
QUESTIONS WITH DETAILED VERIFIED ANSWERS
When advertising, the APR must be present when __________? -
ANSWER -A rate is quoted or present
RESPA was put in place to? -ANSWER -Limit amounts in escrow,
eliminate kickbacks , and educate the borrowers on the closing cost, it
does NOT regulate interest rates
According to RESPA guidelines, failure to comply with Section 8 could
result in a penalty of? -ANSWER -$10,000 and/or 1 year prison terms
for each incident
Redlining is best defined as: -ANSWER -Failing to end to certain
geographic areas
Who created and monitors a companies Red Flag Rules? -ANSWER -
Federal Trade Commission (FTC Red Flag Rules)
At what point in a conventional will the PMI be removed? -ANSWER -
When the principal balance reaches 78% of the original value or
purchase price
When does a referring party have to provide the ABA form to the
borrower? -ANSWER -Before or at the time of the referral
Advertising a mortgage loan product that a lender is not able to offer is
a violation of what federal law? -ANSWER -TILA/reg Z
, What is the Act that requires a financial entity to provide customers
with a privacy notice, as well as an "opt out notice", regarding the
customer's personal information? -ANSWER -Gramm-Leach Bliley Act
Under the GLB Act, nonpublic information can only be shared with
affiliates of the financial institution or affiliates of related third parties,
even if the customer does not opt out. (T/F) -ANSWER -TRUE
What information must be provided to the borrower when referrals take
place between affiliated businesses? -ANSWER -An Affiliated Business
Disclosure Statement as mandated by RESPA
What is the primary purpose of the Gramm-Leach Bliley Act? -
ANSWER -Notice of right to financial privacy and right to opt out of
sharing personal information
Along with the Fair and Accurate Credit Transactions Act Disposal
Rule, what GLB Act provision ensures that customer's information is not
handled or maintained carelessly and is disposed of properly? -
ANSWER -GLB Act's Safeguards rule
What is the difference between the GLB Act Safeguards Rule and the
FACT Act Disposal Rule? -ANSWER -GLB Act's Safeguards Rule
requires all companies to design, implement, and maintain safeguards to
protect customer information from theft... FACT Act requires businesses
to take appropriate measures to safeguard from theft in the disposal of
consumer report
, What is a "Federally Related Loan"? -ANSWER -Loans secured by a
first or subordinate lien on a residential property that meets stated
RESPA criteria. The definition is so broad it covers virtually every home
loan secured by a mortgage.
Most of HUD's enforcement actions result due to section 8 of RESPA.
What is addressed in Section 8? -ANSWER -Prohibited against giving
or receiving a fee, kickback, or anything of value pursuant to an
agreement or understanding for the referral of settlement business
What is an affiliated business arrangement? -ANSWER -An
arrangement in which one person refers applicants to a settlement
service provider with whom the referring person has an ownership
interest of 1% or more
What customer protection does Section 10 of RESPA provide? -
ANSWER -Protect consumers by ensuring borrowers know the amount
they are to deposit into escrow by preventing lenders from overcharging
borrowers for escrow deposits
What are the consequences for violating Section 8 of RESPA? -
ANSWER -Up to $10,000 and/or one year in prison
What is the primary aim of Regulation B? -ANSWER -ECOA is
intended to promote availability of credit to all creditworthy applicants
and prohibit discrimination
A copy of the Closing Disclosure must be provided to the borrower how
many days prior to closing? -ANSWER -3 days prior to closing
, Under the ECOA, is it lawful to turn down an applicant because part of
his/her income is derived from public assistance? -ANSWER -It is
unlawful not to accept an application due to the type of income it is not
however unlawful to turn them down if the income is not enough to
qualify them for the repayment
What is the letter of the regulation by which the ECOA is also referred?
-ANSWER -Regulation B (B for Borrower is protected)
To whom does the TIL Act apply? -ANSWER -All businesses and
individuals that regularly extend consumer credit that is primarily for
family or household purposes. Regularly extend credit means more than
5 mortgages per year
What is the RESPA prohibition on "mark ups" designed to prevent? -
ANSWER -A lender or service provider marking up 3rd party costs for
the purpose of retaining the additional funds
Under the ECOA, you must notify an applicant of Notice of Action
Taken within what time period? -ANSWER -30 days from receipt of a
loan application
TILA requires that mortgage broker fees are ______________ included
in the finance charge? -ANSWER -ALWAYS
Credit denial letters do not require the disclosure of
_________________? -ANSWER -Credit Scores
