Laws and Regs
Law established in 2001 that aims to prevent terrorism through anti-money laundering and identity verification procedures. Requires CIP (Consumer Identity Program) for all financial institutions.
USA Patriot Act
An MLO must provide demographic data based on these two assumptions according to HMDA regulation C if the borrower refuses on the URLA.
Visual observation and surname
A loan originator is not lacking compliance with the SAFE Act if they do not forget to:
A) Display their NMLS ID number on documents
B) Share personal social media with clients
C) Provide a physical business card
D) File tax returns with the state
A) Display their NMLS ID number on documents
Characteristics of this type of loan meets Fannie Mae and Freddie Mac standards including loan limits.
Conventional conforming loan
43. How should an MLO respond to a borrower complaint regarding misleading terms?
A. Ignore the complaint unless it’s written
B. Report to the lender and document the complaint
C. Advise the borrower to speak with legal counsel
D. Offer a discount in exchange for silence
B. Report to the lender and document the complaint
Regulation N established in 2011 Prohibits deceptive advertising practices in mortgage marketing. Applies to ANY commercial communication. The CFPB and FTC enforce.
MAP rule or Mortgage Acts and Practices
Approach to property appraisal that compares recent sales of similar homes in the area.
Market approach
Which of the following is not an element of PITI if the lender does not miscalculate?
A) Principal
B) Title Insurance
C) Interest
D) Taxes
B) Title Insurance
Specific loan type used to finance the building of a home.
Construction loan
7. What is the minimum required flood insurance coverage on a property in a flood zone?
A. Full property value
B. Loan amount or value of improvements, whichever is less
C. Property’s full replacement cost
D. 80% of the appraised value
B. Loan amount or value of improvements, whichever is less
Act established in 1991/2003 enforced by the FTC/FCC that protects consumers from unsolicited phone calls from telemarketers including mortgage services.
TCPA or Telephone Consumer Protection Act or Do Not Call
The function of this report reveals liens or ownership issues.
Title report
A borrower would not be disqualified from a conventional loan if they don’t neglect to:
A) Provide 2 years of tax returns when self-employed
B) Have PMI with 60% LTV
C) Offer a gift letter for down payment from friend
D) Provide W-2s from 7 years ago
A) Provide 2 years of tax returns when self-employed
This type of funding is when the closing agent receives funds directly from the investor at closing.
Table funding
What federal law requires reporting of suspicious financial activity?
A. FACTA
B. BSA/AML
C. TILA
D. HMDA
B. BSA/AML
Regulation X section that requires lenders to perform an annual escrow review and sets constraints on what lender can collect for escrow account. No more than 1/12 of the annual taxes and insurance per month.
RESPA regulation X section 10
This disclosure explains the relationship between a lender and a settlement service provider.
ABA (Affiliated Business Arrangement) disclosure
An appraisal is not considered credible if it does not avoid:
A) Independent third-party engagement
B) Adjustments for comparable properties
C) Use of outdated MLS photos
D) Geographic competence by the appraiser
C) Use of outdated MLS photos
This feature (insurance) protects the lender if the borrower defaults with high LTV on conventional loans.
PMI
Which regulation contains provisions for high-cost mortgage protections?
A. Regulation C
B. Regulation X
C. Regulation Z
D. Regulation B
C. Regulation Z (TILA)
Regulation Z section that covers ATR (Ability to Repay) and discloses when the APR exceeds the APOR on a first lien by more than 1.5% or when the APR exceeds the APOR on a JUMBO first lien by more than 1.5%.
TILA regulation Z section 35
This federal rule requires the use of an independent, unbiased appraiser.
AIR (Appraisal Independence Requirements)
A conventional conforming loan is not considered nonstandard if it does not exceed:
A) $806,500 in most areas
B) $1 million loan balance
C) 97% LTV
D) DTI of 50%
A) $806,500 in most locations
An agreement that allows a second mortgage to take priority over the first.
Subordination agreement
What is a common tolerance violation scenario?
A. Prepaid interest increased
B. Borrower changed loan type
C. Fees from an affiliate exceeded 10% tolerance
D. Hazard insurance premium fluctuated
C. Fees from an affiliate exceeded 10% tolerance