Quiz 5: Federal Laws Governing
Mortgage Practice Questions and
Answers Graded A+
All of the following can be expressed as points EXCEPT
yield spread premiums.
late fee.
mortgage broker fee.
loan origination fee. - Correct answer-Fees that may be expressed as points include
a loan origination fee, a mortgage broker's fee, discount points and yield spread
premiums, which are all percentages of the loan amount, or loan balance.
Under RESPA, who would be subject to fines and penalties if a kickback is paid?
the person who received the kickback
the person who initiated the kickback arrangement
all parties paying or receiving a kickback
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,the person who paid the kickback - Correct answer-RESPA banned a number of
practices involving kickbacks, fee splitting, and unearned fees by parties involved
in or related to a real estate transaction.
A mortgage loan originator knows that the applicant's source of income is public
assistance, so he tells the applicant not to waste his time filling out an application
for a mortgage loan. What federal law has the MLO violated?
The MLO has not violated any federal law.
CRA
HMDA
ECOA - Correct answer-In 1976, ECOA was amended to make it unlawful to
discriminate in any credit transaction based on race, color, religion, national origin,
age, receipt of public assistance, or the good faith exercise of rights under the
Consumer Protection Act.
For an FHA 30-year loan with a minimum down payment, the annual MIP
will be canceled when the borrower's equity reaches 22% of the purchase price or
appraised value at the time of purchase, regardless of the length of time he has paid
the annual MIP.
must be paid until the loan is paid off.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,will be canceled when the loan balance is down to 78% of the purchase price or
appraised value at the time of purchase, provided the borrower has paid annual
MIP for at least five years.
will be canceled when the borrower's equity reaches 20% of the purchase price or
appraised value at the time of purchase, provided he has paid the annual MIP for at
least five years. - Correct answer-For any mortgage involving an original principal
obligation (excluding financed UFMIP) with an LTV greater than 90 percent, FHA
will assess the annual MIP until the end of the mortgage term or for the first 30
years of the term, whichever occurs first.
According to TILA's ATR Rule, in making a Qualified Mortgage (QM), required
underwriting standards include calculation of monthly payments using the
maximum interest rate that may apply during the loan's first ____ years.
three
five
two
four - Correct answer-The correct answer is five. According to TILA's ATR Rule,
in making a Qualified Mortgage (QM), required underwriting standards include
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, calculation of monthly payments using the maximum interest rate that may apply
during the loan's first five years.
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?
Red Flag Rules
Federal Reserve
Truth in Lending Act
SAFE Act - Correct answer-The Fair and Accurate Credit Transactions Act
(FACTA) contained provisions aimed at creating policies and procedures to help
identity theft prevention. The rules relating to identity theft are referred to as the
Red Flags Rules. The rules are designed to identify in advance any red flags
relating to identity theft. In so doing, a business can be better prepared to spot
suspicious patterns that may occur and take steps to prevent potential problems
from escalating into a costly identity theft event for a consumer.
Payment of which of the following would reduce a borrower's interest rate?
Discount points
Mortgage broker fee
Yield spread premium
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
Mortgage Practice Questions and
Answers Graded A+
All of the following can be expressed as points EXCEPT
yield spread premiums.
late fee.
mortgage broker fee.
loan origination fee. - Correct answer-Fees that may be expressed as points include
a loan origination fee, a mortgage broker's fee, discount points and yield spread
premiums, which are all percentages of the loan amount, or loan balance.
Under RESPA, who would be subject to fines and penalties if a kickback is paid?
the person who received the kickback
the person who initiated the kickback arrangement
all parties paying or receiving a kickback
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,the person who paid the kickback - Correct answer-RESPA banned a number of
practices involving kickbacks, fee splitting, and unearned fees by parties involved
in or related to a real estate transaction.
A mortgage loan originator knows that the applicant's source of income is public
assistance, so he tells the applicant not to waste his time filling out an application
for a mortgage loan. What federal law has the MLO violated?
The MLO has not violated any federal law.
CRA
HMDA
ECOA - Correct answer-In 1976, ECOA was amended to make it unlawful to
discriminate in any credit transaction based on race, color, religion, national origin,
age, receipt of public assistance, or the good faith exercise of rights under the
Consumer Protection Act.
For an FHA 30-year loan with a minimum down payment, the annual MIP
will be canceled when the borrower's equity reaches 22% of the purchase price or
appraised value at the time of purchase, regardless of the length of time he has paid
the annual MIP.
must be paid until the loan is paid off.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,will be canceled when the loan balance is down to 78% of the purchase price or
appraised value at the time of purchase, provided the borrower has paid annual
MIP for at least five years.
will be canceled when the borrower's equity reaches 20% of the purchase price or
appraised value at the time of purchase, provided he has paid the annual MIP for at
least five years. - Correct answer-For any mortgage involving an original principal
obligation (excluding financed UFMIP) with an LTV greater than 90 percent, FHA
will assess the annual MIP until the end of the mortgage term or for the first 30
years of the term, whichever occurs first.
According to TILA's ATR Rule, in making a Qualified Mortgage (QM), required
underwriting standards include calculation of monthly payments using the
maximum interest rate that may apply during the loan's first ____ years.
three
five
two
four - Correct answer-The correct answer is five. According to TILA's ATR Rule,
in making a Qualified Mortgage (QM), required underwriting standards include
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, calculation of monthly payments using the maximum interest rate that may apply
during the loan's first five years.
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?
Red Flag Rules
Federal Reserve
Truth in Lending Act
SAFE Act - Correct answer-The Fair and Accurate Credit Transactions Act
(FACTA) contained provisions aimed at creating policies and procedures to help
identity theft prevention. The rules relating to identity theft are referred to as the
Red Flags Rules. The rules are designed to identify in advance any red flags
relating to identity theft. In so doing, a business can be better prepared to spot
suspicious patterns that may occur and take steps to prevent potential problems
from escalating into a costly identity theft event for a consumer.
Payment of which of the following would reduce a borrower's interest rate?
Discount points
Mortgage broker fee
Yield spread premium
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
