Mortgage Loan Originator (MLO) National Exam – Artricia Woods Practice Exam

These questions are part of the practice quiz. Start practicing

• Which of the following indicates a situation where fraud for housing might occur?
• What does RESPA define as the costs charged to a borrower for creating a mortgage loan?
• Which of the following entities is NOT considered a major player in the secondary loan market for real estate?
• What does the "Total finance charges" refer to in the Federal Box?
• How is the accuracy of the Annual Percentage Rate (APR) determined under MDIA?
• Which of the following provides consumer protection against unwanted solicitation?
• What term is used for a buyer that uses the identity of a willing third party in a loan transaction?
• What does FinCEN stand for?
• What is the primary focus of the Real Estate Settlement Procedures Act (RESPA)?
• What does the principle of substitution state regarding property valuation?
• What has been an overriding goal of GFE updates?
• What does the Real Estate Settlement Procedures Act (RESPA) primarily aim to do?
• Which clause allows lenders to call the full loan amount due if the borrower conveys any ownership interest in the property?
• Which is NOT a unique covenant included in a general warranty deed?
• What does the Mortgage Disclosure Improvement Act (MDIA) stipulate about initial disclosures?
• What financial aspect can be included in an escrow account according to RESPA?
• What are the current qualifying ratios for an FHA loan?
• Which law is key in preventing predatory lending?
• A borrower looking to keep his CLTV below 90% on a home appraised at $200,000 could qualify for what?
• What is the Fair Credit Reporting Act (FCRA) also known as?
• Fraud for Housing schemes usually involve all EXCEPT which of the following?
• What is a common disadvantage of adjustable-rate mortgages (ARMs)?
• Which of the following must be disclosed before settlement occurs?
• The equation, Gross Potential Income minus Vacancies and Collection Losses, provides what figure?
• Which of the following is NOT considered a type of adjustment in appraisal?
• Which of the following charges shown on the GFE must match the HUD-1?
• Calculate the monthly income of an applicant working 40 hours a week at $13.52 per hour.
• How must gift funds be properly documented for mortgage purposes?
• What does the Truth in Lending Act (TILA) primarily regulate?
• ECOA is also known by which Regulation?
• A person closing on an income property has a daily interest per diem of $56.00. How much per diem interest must they bring to closing if the closing date is June 10th?
• Which entity typically oversees the compliance of mortgage loan originators?
• The term "Business Day" as defined by the MDIA excludes which of the following?
• What law can be violated by a practice that has a discriminatory effect even if it was not adopted for discriminatory purposes?
• Which of the following is covered under RESPA?
• What is a Fee Simple estate?
• Which document serves as a personal promise to repay the loan?
• How is site (land) value typically established in the cost approach to appraisal?
• When calculating a total monthly house payment, which of the following is NOT included?
• What does Section 10 of RESPA set limits on?
• Which factor is NOT typically considered when determining a borrower's creditworthiness?
• What term is used to describe a lender's temporary permission to suspend monthly mortgage payments?
• Which of the following income sources cannot be used to qualify an applicant?
• The Appraiser Independence Requirements allow for what regarding appraisals?
• When is private mortgage insurance typically discontinued?
• Gift funds can be used by the borrower at settlement in all circumstances EXCEPT when
• What information is NOT required in the Federal Box of TILA disclosures?
• How is the monthly income calculated for a person earning $13.52 per hour usually workers 40 hours a week?
• Which action is NOT typically a way a lender can facilitate a closing?
• Which of the following is considered a violation under RESPA?
• Which characteristic does NOT describe a level payment fixed rate mortgage?
• Which of the following loans is subject to the 3-day right of rescission under the TILA?
• What is something a mortgage lender may NOT do?
• If a borrower has $37,500 available for a down payment and wants to avoid mortgage insurance, what is the maximum price of a house they can afford?
• How is a per diem rate calculated for an annual expense of $1500 in July?
• Which of the following is considered an "irregular transaction" under TILA?
• What is necessary for obtaining borrower income tax information directly from the IRS?
• What happens if a borrower has an excess balance of $50 or more in their escrow account according to RESPA?
• Which of the following is NOT a requirement for MLO licensing?
• Which statement about flood insurance is TRUE?
• When is it appropriate for a borrower to request changes to their loan?
• What must be disclosed when a borrower defaults on a loan?
• What document is typically used to assess creditworthiness in mortgage applications?
• Which mortgage lending regulation is NOT governed by the Federal Reserve Act?
• What is the primary purpose of the Real Estate Settlement Procedures Act (RESPA)?
• What term describes the coverage that protects a lender against losses from a borrower's default?
• What is a discount point primarily used for in mortgage lending?
• What does SAFE in the SAFE Mortgage Licensing Act of 2008 stand for?
• Which requirement is true for a borrower to qualify for a Federal Housing Administration (FHA) loan?
• Under which federal law must a consumer receive notice of an entity's privacy practices annually?
• A borrower files a written complaint with the servicer regarding a fee. When can the borrower sue under RESPA?
• Which of the following items is NOT requested on a 1003 loan application?
• What highly unethical practice involves placing prime-rate-eligible borrowers into subprime loans?
• What method does a loan originator use to estimate the value of property based on sales of similar properties?
• What is the primary purpose of a loan origination fee?
• Which of the following statements is true about the SAFE Act?
• Loan officer Sally is taking a loan application from a couple with foreign accents. Is this a violation of ECOA?
• What kind of loans does TILA section 35 specifically address?
• What is the primary purpose of the Truth in Lending Act (TILA)?
• What potential consequences can arise from violating RESPA?
• What role does the Federal Housing Finance Administration (FHFA) NOT play?
• What term describes a financial institution that purchases mortgage loans?
• A service release premium (SRP) must be?
• If a GFE is mailed to a borrower on Thursday, January 5, by what day does RESPA consider the GFE to have been delivered?
• A VA funding fee is
• Which entity oversees the implementation of the Bank Secrecy Act (BSA) compliance in financial institutions?
• For which type of transaction is the APR variance maximum set at 1/4% (.25)?
• What distinguishes actual cash value from replacement cost coverage in insurance?
• What is the significance of providing an estimate of property value during the loan application process?
• What type of loan typically requires PMI when the down payment is less than 20%?
• According to TILA, what does "refinance" mean?
• What is the importance of a stacking order in mortgage documentation?
• Which settlement charges can change without the need for a new GFE?
• What is a primary purpose of the Good Faith Estimate (GFE)?
• What does RESPA Section 10 regulate?
• What is one of the most effective actions a borrower can take to raise their credit score?
• Which of the following is not a primary lender?
• Which activity does NOT exempt a person from required mortgage loan originator licensing?
• What fee may be charged prior to delivering the loan estimate form?
• What is the earliest day a loan can be consummated after disclosures are mailed according to the MDIA?
• A credit report will contain all of the following information, except what?
• Which federal law mandates lenders to capture and report sensitive applicant information including race and gender?
• What is a common consequence of failing to provide accurate borrower information?
• What does HOEPA stand for?
• What does RESPA Section 6 primarily focus on?
• Which document is typically used to transfer ownership of real property?
• A lender must notify the borrower of its credit decision within how many days?
• What is the definition of "an application" in the context of mortgage lending?
• Which law regulates the use of consumer credit reports?
• Which of the following should raise a red flag for potential fraud in a loan transaction?
• Which scenario is NOT eligible for a VA loan?
• Which is a primary objective of the Truth in Lending Act (TILA)?
• What must a lender do if an applicant refuses to provide details about race and gender during a face-to-face application?
• What is the maximum variance in APR that is permissible for a "regular transaction" under TILA?
• Which disclosure method does NOT satisfy the requirements of the Equal Credit Opportunity Act?
• What does the term 'reconciliation' refer to in the context of property valuation?
• Who is the entity that primarily services a loan?
• If a consumer dispute about data accuracy is not resolved, what right may they exercise?
• FHA is part of which government agency?
• What does an exculpatory clause typically do?
• In terms of advertising, what must be included if any triggering terms are mentioned?
• Which of the following describes a lien theory state?
• Which of the following is NOT a requirement of the SAFE Act and NMLS?
• Which of the following would NOT be considered a "changed circumstance"?
• When disclosing Adjusted Origination Charges on the GFE, which statement is false?
• The Credit Score Disclosure Notice to the Home Loan Applicant can help the borrower focus on improving their credit scores by
• Which regulation ensures that borrowers are informed of their credit rights?
• The Fair Credit Reporting Act (FCRA) is also known as?
• What is not included in the definition of "front-end debt-to-income ratio"?
• Which of the following is NOT one of the six required items of information for loan processing?
• What is the role of a mortgage broker?
• Which entity is NOT required to abide by the Red Flag Rules?
• What must lenders provide at least three days before closing?
• According to RESPA, how much cushion can lenders collect at the time of closing for an escrow account?
• When qualifying an applicant, is it allowed for an MLO to inquire about the number of children a newly married couple intends to have?
• What is a valid reason for hiring an independent loan processor?
• What is included in the "Amount financed" according to the TILA?
• Which statement about credit reports is NOT true?
• Which option does NOT contain one of the six pieces of information required to officially begin a loan application?
• Secondary market activities include which of the following?
• What is the purpose of the loan-to-value (LTV) ratio?
• Which of the following is not essential in a deed?
• Which practice is prohibited under RESPA Section 8?
• In what situation can a credit officer inquire about a mortgage applicant's marital status?
• How long must mortgage lenders maintain adverse action documentation according to the FCRA?
• Which of the following costs is classified as a prepaid category of borrower costs?
• Which of the following is NOT an example of potential violation penalties by the FTC?
• What is the only fee that may be collected prior to providing a borrower a Good Faith Estimate (GFE)?
• If a buyer has made an earnest money payment of $5,000 and additional option money of $2,000 for a property priced at $160,000 with a required down payment of 20%, how much more is needed at closing?
• What does TILA (Reg. Z) primarily regulate?
• Which of the following is true about prepayment penalties?
• What is the main aim of the ECOA?
• How much cash does a borrower need to bring to closing if the purchase price is $157,000 and the buyer's loan covers 75% of the LTV, with 4% seller contribution and closing costs of $5,250?
• Which of the following laws was NOT implemented in part to help stem discrimination in mortgage lending?
• What is the borrower's housing expense ratio if PITI is $1,025 and weekly income is $925?
• What advantage does a fixed-rate mortgage offer borrowers?
• Which of the following best describes a fixed rate mortgage?
• What does the Uniform Residential Appraisal Report not require from the appraiser?
• Which of the following is NOT true of Fannie Mae?
• Under the Equal Credit Opportunity Act (ECOA), what is the primary purpose of regulating credit decisions?
• In the context of acquiring a mortgage, what does "option money" refer to?
• According to FACTA, how must lenders inform applicants of their right to dispute incorrect credit information?
• Which type of loan requires a down payment of at least 20% to avoid private mortgage insurance (PMI)?
• How long must lenders or servicers retain the HUD-1 statements after settlement?
• Illegal property flipping is best described as?
• Which of the following is NOT specified by the Mortgage Disclosure Improvement Act?
• What is one purpose of the Good Faith Estimate (GFE)?
• The National Do Not Call restrictions do not apply to which of the following?
• Which of the following fees is excluded from the calculation of the annual percentage rate according to the Truth-in-Lending Act (TILA)?
• Which factor is usually considered when assessing a borrower's creditworthiness?
• Which of the following is NOT a reason to compile a complete loan application the first time?
• According to RESPA, how long does a borrower have the right to receive a copy of the HUD-1 statement before closing?
• The Mortgage Disclosure Improvement Act mandates initial disclosure within how many business days of receiving a completed application?
• Which of the following scenarios is a RESPA violation?
• Which document outlines the terms of a mortgage agreement?
• What do deductibles in an insurance policy specify?
• A borrower is closing on a home on April 14. The estimated annual property taxes are $3,883.33. What amount should show on his HUD-1?
• Under TILA, how many copies of the Notice of Right to Rescind must a borrower receive?
• Which borrower disclosure is NOT required within three business days of taking an application?
• What effect does paying discount points have on the mortgage loan?
• Which of the following loan types is exempt from TILA regulations?
• Which method of holding title is suitable for a husband and wife who want to own 10% and 90% of a property respectively?
• What is typically included in the closing costs for a mortgage?
• Which formula correctly calculates the cost of discount points?
• An appraiser follows the standards for writing and presenting an appraisal report from _______________________.
• What is the maximum percentage of the purchase price that can typically be financed using a conventional loan?
• What documents does Desktop Underwriter use to analyze a loan application and deliver findings?
• During underwriting, a lender is most interested in ________________.
• Which of the following actions does RESPA NOT specifically prohibit?
• An MLO is NOT required to provide disclosures if which of the following occurs?
• What is one requirement for renewing an MLO license?
• Which of the following statements about charges on the GFE is NOT true?
• What is the role of a Mortgage Loan Originator (MLO)?
• If a borrower works 37 hours a week at $75 per hour, what is her gross monthly income?
• What does it mean when charges in the GFE have a 10% tolerance?
• HOEPA is part of which sections?
• Which of the following is NOT a triggering term for advertisements under TILA?
• TILA section 35 loans protect consumers by:
• All of the following participants are involved in the loan process and have the potential to be involved in committing loan fraud, except:
• If PITI is $1,275 and gross monthly income is $5,600, what is the maximum allowable amount for other monthly obligations to remain within guidelines?
• ECOA (Regulation B) protects borrowers against discrimination in lending based on all of the following EXCEPT:
• What is the primary purpose of the Truth in Lending Act (TILA)?
• What is the penalty for noncompliance with TILA?
• What is true about the mortgagor and mortgagee?
• Which Federal Reserve action would pump money into the economy?
• Which document must a borrower receive outlining costs and fees they are likely to incur?
• What is a key feature of the Loan Estimate form?
• What type of compensation might indicate a potential conflict of interest in a mortgage loan transaction?
• What is typically required to validate a borrower's income for a mortgage application?
• What is an example of a question prohibited under ECOA for a lender or mortgage loan originator?
• While verifying a payment arrangement with an applicant's medical facility, the broker learns that the borrower has a terminal illness. How should the broker react to finding out this information?
• Each of the following pieces of information would be found in a Promissory Note EXCEPT?
• What is the purpose of the SAFE Act in relation to mortgage loan originators?
• What is the standard total debt ratio for FHA loans?
• What is the definition of a business day according to TILA?
• What type of expense is included in the calculation of the housing expense ratio?
• Section 10 of RESPA prohibits the lender from maintaining no more than how many months of cushion in escrow for anticipated charges?
• What are some of the most recent changes to the GFE?
• What happens if there is a significant variance in the APR prior to the consummation of a loan?
• What principle does NOT generally apply to a level payment mortgage?
• The appraisal report is generally used to determine what?
• Which law was enacted to regulate the use of consumer credit reports?
• What is the purpose of the Good Faith Estimate (GFE) as mandated by RESPA?
• Which of the following is NOT a disclosure required by RESPA?
• What is one of the initial items of information necessary for a creditor to make a lending decision?
• How many hours of elective education are needed for MLOs to meet SAFE pre-licensing education guidelines?
• Which regulation primarily governs the disclosure of settlement costs?
• Which of the following is a CRA obligation when the borrower disputes information in their credit report?
• What indicates a borrower has been approved for a mortgage?
• Which document outlines the borrower's rights in the loan transaction?
• What is the main purpose of the Home Mortgage Disclosure Act (HMDA)?
• Which of the following transactions is NOT covered under RESPA?
• How many pieces of information are required for a creditor to evaluate a loan application?
• What does RESPA Section 9 allow?
• What does the term 'LTV' stand for in mortgage financing?
• Under TILA, how soon must creditors provide the required disclosures to consumers?
• Which of the following is NOT one of the five essential elements for a valid real estate contract?
• If the VA appraised value of a property is less than the sales price, what is the likely outcome?
• Which of the following is included in the six initial items required by a creditor?
• Which statement about the HUD-1 statement is NOT true?
• Loans covered by Section 32 of the TILA, also known as the Home Ownership and Equity Protection Act, do NOT require which of the following?
• RESPA Section 9 prohibits sellers from requiring buyers to use a specific title insurance company as a condition of sale. What recourse do home buyers have if this is not followed?
• What is considered an acceptable debt-to-income ratio for most mortgage lenders?
• What is a key difference between a Note and a Mortgage?
• Which of the following is true regarding fraud for housing?
• How many residential property units does RESPA (Reg. X) cover?
• The Home Mortgage Disclosure Act (HMDA) is also known as what?
• The term "20 basis points" is equivalent to what percentage?
• Which of the following is NOT considered a key financial factor for qualifying a borrower?
• RESPA's Section 8 specifically addresses which of the following?
• What does the Federal Housing Administration (FHA) primarily do?
• Net operating income is defined as?
• Borrowing money to own real estate does NOT make sense when
• A force-placed policy is
• Which of the following best defines an Affiliated Business Arrangement (AFBA)?
• Section 8 of RESPA prohibits which of the following?
• How long does a creditor have to return any money collected related to a rescinded loan?
• When can a borrower waive the waiting period for receiving a corrected disclosure under MDIA?
• What is the role of the mortgage loan originator?
• Which characteristic is least likely to affect insurance premiums?
• The anti-coercion provision of RESPA protects which of the following?
• What is the maximum loan-to-value (LTV) ratio mentioned for the mortgage?
• In which flood zone is flood insurance always required?
• What does MLO stand for in the context of mortgage lending?
• What is one overall theme shared by both ECOA and FCRA?
• MLOs are required to provide disclosures within how many business days of a completed application?
• Which document details all settlement costs, including lender charges?
• Which common form of mortgage insurance is required for FHA loans?