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NMLS SAFE,PRACTICE,BOOK AND REVIEWS EXAM BUNDLE WITH COMPLETE SOLUTIONS
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NMLS SAFE EXAM 2023 Graded A+
Primary Mortgage Market - ANSWER-Where credit institutions originate loans C. The maximum the rate can increase over the life of the loan - ANSWER-When ... [Show More] an ARM has rate caps of 5/2/6, the 6 refers to what? A. The maximum rate increase at the initial adjustment B. The start rate for the loan C. The maximum the rate can increase over the life of the loan D. The rate maximum the rate can decrease over the life of the loan B. The borrower qualified at the buydown rate - ANSWER-When utilizing a temporary buydown to lower the interest rate on a FHA loan, which of the following are correct A. The borrower qualified at the note rate B. The borrower qualified at the buydown rate C. The rate cannot be more than 2% below the note rate D. Seller or builder can pay the discount points to buydown the rate A. Age - ANSWER-All of the following are violations of the Fair Housing Act EXCEPT A. Age B. National Origin C. Disability D.Religion Encrumbrance - ANSWER-Claim against property held by one who is not the legal owner Trigger Term - ANSWER-Advertised term that requires additional disclosures Advertising Disclosure - ANSWER-An advertisement must be presented "clearly and conspicuously" to keep from being deceptive, unfair, or otherwise violate a Commission rule Waving Right of Rescission - ANSWER-Extenuating circumstances such as "bona fide personal financial emergency Right of Rescission - ANSWER-Right that borrowers have to cancel a loan or line of credit with a lender within three days of closing Business Day - ANSWER-When creditors office is open to the public, a calendar working day except Sunday or a federal holiday Application - ANSWER-Financial information used for purposes of obtaining an extension of credit Disclosure - ANSWER-The act of making new information known FTC Federal Trade Commission - ANSWER-Mission is to promote consumer protection and eliminate and prevent anticompetitive business practices CFPB Consumer Financial Protection Bureau - ANSWER-Regulatory agency charged with overseeing financial products and services offered to consumers TILA Truth in Lending Act - ANSWER-Enacted 1968 promotes the informed use of consumer credit by requiring disclosures about terms and costs and standardizes the manner in which costs with borrowing are calculated and disclosed Per Diem Interest - ANSWER-Interest charged on a loan for one or more days Annual Interest Rate Formula - ANSWER-Principal (X) Interest Rate = Annual Interest Rate Interest Only Mortgage - ANSWER-Mortgage where the mortgagor is only required to pay off the interest that arises from the principal that is borrowed for a set period Permanent Buydown - ANSWER-Borrower chooses to pay additional "discount points" to buy down the interest rate for the life of the mortgage note 2/1 Buydown - ANSWER-Used on fixed rate loans over two years Set of two initial temporary-start interest rates that increase in stair-step fashion until a permanent interest rate is reached Discount Point - ANSWER-A form of pre-paid interest which effectively increases the yield on the loan above the amount of the stated interest rate CLTV Combined Loan to Value - ANSWER-An amount in addition to the Loan to Value, which simply represents the first position mortgage or loan as a percentage of the property's value LTV Loan to Value - ANSWER-Ratio of a loan to the value of an asset purchased PITI - ANSWER-Principal, Interest, Taxes, Insurance Refers to the components of a mortgage payment DIF - ANSWER-Housing to Debt Ratio that measures an individual's ability to manage monthly payment and repay debts Forbearance - ANSWER-Agreement between the lender and the borrower to delay foreclosure Loan Modification - ANSWER-A permanent restructuring of the mortgage where one or more of the terms of a borrower's loan are changed to provide a more affordable payment Foreclosure - ANSWER-Legal process to collect debt on mortgaged property Satisfaction of Mortgage Letter - ANSWER-Document generated and signed by a mortgage lender, acknowledging that the borrower has paid off the mortgage loan in full and the mortgage is not a lien on the property Subordination Agreement - ANSWER-When two mortgages are on a property, this specifies which mortgage takes precedence Payoff Statement - ANSWER-Provides homeowner proof the mortgage is paid off Constructive Note - ANSWER-Legal presumption that anything recorded in a public record can be known by anyone Actual Note - ANSWER-Direct knowledge that one has of the property Inquiry Note - ANSWER-Information that should compel a reasonable person to make further inquiries about some aspect of the property Title Record - ANSWER-Serves as a central repository of information about a parcel of land SRP Service Release Premiums - ANSWER-Payment received by lender after selling a loan Based on market value GNMA Government National Mortgage Association - ANSWER-Created in 1968, goal to expand affordable housing under HUD FNMA Federal National Mortgage Association - ANSWER-Created 1968 works with Fannie Mae to increase affordable lending FHA Federal Housing Administration - ANSWER-Insures banks real estate loans and charges borrowers a small premium HELOC Home Equity Line of Credit - ANSWER-A loan in which the lender agrees to lend a maximum amount within an agreed period and is also an open-ended mortgage transaction that is secured HECM Home Equity Conversion Mortgage - ANSWER-A FHA insured reverse mortgage that allows the conversion of equity in a home to cash Balloon Mortgage - ANSWER-A mortgage in which a large portion of the borrowed principal is repaid in a single payment at the end of the loan period and does not amortize ARM Interest Rate Adjustment - ANSWER-Margin + Interset = Rate COFI Cost of Fund Index - ANSWER-Regional average of interest expenses incurred by financial institutions which in turn is used as a base for calculating variable rate loans ARM Adjustable Rate Mortgage - ANSWER-Loan that is lower than fixed rate in beginning Loan payment changes over time Adjustable caps that vary Used to obtain a higher loan amount Fixed Rate - ANSWER-Interest rate that remains the same over the life of the loan Non-Conforming Loan - ANSWER-Does not meet Freddie Mac or Fannie Mae guidelines Conforming Loan - ANSWER-Conforms to terms and conditions set by government Conventional Loan - ANSWER-Not guaranteed or insured by the government but can still follow federal guidelines Acceleration Clause - ANSWER-Accelerated loan repayment if property is in default Exculpatory Clause - ANSWER-Relieves one party form liability due to actions of another party Defeasance Clause - ANSWER-Creditor can obtain title without foreclosure process Late Payement Penalty - ANSWER-When fees are attached to late payment Pre-Payment Penalty - ANSWER-Fixed sum added to loan if loan is paid off early Contract of Deed - ANSWER-Complete financing and sales contract agreed upon by seller and seller with no note attached Note - ANSWER-Promise to repay debt Mortgage - ANSWER-Pledge of collateral to secure a loan Reconveyance - ANSWER-A document issued by a mortgage holder indicating that the borrower is released from the mortgage debt and transfers the property title from the lender Conveyance - ANSWER-The act of transferring an ownership interest in real property from one party to another Mortgage Lock-In-Rate - ANSWER-A guarantee a lender will deliver a specific combination of interest rate and points if the mortgage closes by a specified date Approval letter - ANSWER-A document that states the loan amount a lender is willing to make a borrower Pre-Qualification Letter - ANSWER-Estimate of loan amount a borrower can get with limited financial information Commitment Letter - ANSWER-Indicates a borrower has passed lenders underwriting guidelines and that they are willing to offer the borrower a home loan Mortgage Approval Letter - ANSWER-Letter subject to property specified for a loan and dependent on an appraisal AUS Automated Underwriting System - ANSWER-A computer generated loan underwriting decision, using completed loan application information Capacity - ANSWER-A borrowers income assets Credit - ANSWER-The ability of a borrower to obtain goods or services before payment, based on the trust that payment will be made in the future Collateral - ANSWER-Property a borrower can provide as security for a loan Income Verification - ANSWER-Provides verification a borrower has the means for repayment of debt Infile Credit Report - ANSWER-One national credit bureau report Tri-Credit Report - ANSWER-All three credit bureau reports Factual Data Credit Report - ANSWER-two or three credit bureau reports Credit Bureau - ANSWER-Clearinghouse that exchanges information with credit grantors about a borrowers bill paying habits and history 1004 Market Conditions Addendum - ANSWER-Designed to enhance the transparency of the market trends, conditions and conclusions made by the appraiser Appraisal Approaches - ANSWER-Sales Comparison/Market Data Cost Income Appraisal - ANSWER-Estimate of a properties value FNMA Fannie Mae Loan Application - ANSWER-A 1003 document requires originator to provide unique loan originator identifier provided by NMLS phone number, company ID and company address Ways to obtain a Loan Application - ANSWER-Face to Face Internet Mail/Fax Telephone Loan Application - ANSWER-Basis for entire loan package A legal document FEMA Federal Emergency Management Agency - ANSWER-Coordinates the response to a disaster that has occurred in the United States NFIA National Flood Insurance Act - ANSWER-In acted 1968 after hurricane Betsy NFIP National Flood Insurance Program - ANSWER-Made flood insurance available for first time part of NFIA FDPA - ANSWER-In 1973 this made the purchase of flood insurance mandatory for the protection of property located in special flood hazard areas Title Insurance - ANSWER-Used to protect agents, two types Owners- insures title is free of defects Lenders-benefit purchaser if loan is sold PMI Private Mortgage Insurance - ANSWER-Protects lenders if borrower stops making payments borrower pays until 20% of loan value is paid Forced Place Insurance - ANSWER-Insurance policy placed by lender on a home when the property owners own insurance is cancelled New Construction Loan - ANSWER-Finances the cost of a new construction Pays while being constructed, then new loan taken out Requires Freddie Mac form 442 Requires Fannie Mae form 1004D Power of Sale - ANSWER-Grants lender the ability to secure full legal title to property Trust - ANSWER-Right of property to be held for the benefit of another Truster - ANSWER-Person who grants the right to trust Trustee - ANSWER-Holds the property of a trust Specific Lien - ANSWER-Debts tied to single property Highest priority lien holder has first rights to collect First in time, first in line Involuntary Lien - ANSWER-Lien imposed upon the owner of real property Voluntary Lien - ANSWER-Mortgage owner willingly entered into an agreement of lien against their property Lien - ANSWER-An interest or encumbrance held by a creditor in a debtee's real or personal property Secondary Mortgage Market - ANSWER-Where originated loans are sold to warehouse lenders Origination fee is charged to warehouse lenders Oral Rate Disclosures - ANSWER-When a borrower orally asks about a credit plan lender must state the APR TILA Document Retention 1026.25 - ANSWER-Creditor must retain the Escrow Closing Notice and the Partial Payment Disclosure, both of which are new disclosures, for two years TILA Document Retention 1026.25 - ANSWER-Requires a creditor to maintain for three years records sufficient to evidence all compensation it pays to a loan originator Regulation Z - ANSWER-Most of the specific requirements imposed by TILA are found in CHARM Booklet Consumer Handbook On Adjustable-Rate Mortgages - ANSWER-This is an informational booklet containing general information on Adjustable Rate Mortgages (ARM's) that is provided by the lender to the loan applicant at the time of application for certain adjustable mortgage loans Dodd-Frank Act - ANSWER-Promotes the financial stability of the United States Passed in 2010 CFPB Consumer Financial Protection Act Title X Bureau - ANSWER-Regulates consumer financial products GAO Government Accountability Office - ANSWER-An agency of the U.S. government that monitors and audits government spending and operations Title XIV, 14 Dodd-Frank - ANSWER-Establishes minimum standards for all mortgage products Requires all originators to be properly qualified, registered and licensed TILA Regulation 129(c) - ANSWER-This requires creditors to determine a consumer's ability to repay a "residential mortgage loan" and establishes new rules and prohibitions on prepayment penalties. ATR Ability to Repay Regulation Z 1026.43(c) - ANSWER-Determines whether the creditor makes a reasonable and good faith determination at or before. consummation that the consumer will have a reasonable ability to repay the loan according to its terms FTCA [Show Less]
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NMLS Practice Test Hard Questions and Answers 2023 Graded A+
A discount point is BEST described as a charge the borrower pays to: A.) A lender to decrease the interest rate on the mortgage loan B.) A mortgage bro... [Show More] ker at the time of application to obtain a favorable rate C.) The seller as part of the closing costs of a loan D.) A lender to ensure against foreclosure - ANSWER-A.) A lender to decrease the interest rate on the mortgage loan A buyer has made an earnest money payment of $5,000. The buyer pays an additional $2,000 in option money to be credited at closing on property with sale price of $160,000. If the required down payment is 20%, how much additional money will the buyer need to provide toward the down payment at closing? A.) $32,000 B.) $27,000 C.) $30,000 D.) $25,000 - ANSWER-D.) $25,000 $160,000 x .20 (20%) = 32000 - $7,000 = $25,000 If an applicant works 40 hours every week and is paid $13.52 per hour, what is the applicant's monthly income? A.) $2,163.20 B.) $2,343.47 C.) $2,379.52 D.) $2,487.68 - ANSWER-B.) $2,343.47 $13.52x 40 hours = $540.8 x 52 weeks = $28,121.6 annually /12month = $2,343.47 Monthly income The requirement for private mortgage insurance is generally is continued when the loan-to-value ratio falls below: A.) 20% B.) 50% C.) 80% D.) 90% - ANSWER-C.) 80% Which of the following documents itemizes all settlement costs including lender charges? A.) Agreement of sale B.) HUD-1/closing Disclosure C.) Form 1003 D.) Forbearance agreement - ANSWER-B.) HUD-1/closing Disclosure According to the Truth-in-Lending Act (TILA), the term "refinance" applies to A.) A change in a payment schedule B.) A reduction in annual percentage rate C.) The renewal of a single payment obligation with no change in the original terms D.) The satisfaction of an existing obligation and its replacement by a new obligation - ANSWER-D.) The satisfaction of an existing obligation and its replacement by a new obligation What does a loan originator use to determine the estimated value of a property based on an analytical comparison of similar property sales? A.) An appraisal B.) A market survey C.) An area survey D.) A Cost-benefit analysis - ANSWER-A.) An appraisal Which of the following methods of disclosure does NOT meet the requirements of Equal Credit Opportunity Act (ECOA)? A.) E-mail B.) Mailed letter C.) Telephone D.) Faxed letter - ANSWER-C.) Telephone Term "20 basis points" expressed as a percentage is: A.) 0.2% B.) 0.20% C.) 2.00% D.) 20.00% - ANSWER-B.) 0.20% one hundredth of one percent, used chiefly in expressing differences of interest rates. 0.01 so 0.01 x20 = 0.2 According to the Truth-in-Lending Act (TILA), which if the following fees is EXCLUDED from the calculation of the annual percentage rate? A.) Hazard insurance B.) Wire transfer C.) Prepaid interest D.) Mortgage insurance premiums - ANSWER-A.) Hazard insurance FHA loans are: A.) Partially guaranteed B.) 100% insured C.) Exempt D.) Entitled - ANSWER-A.) Partially guaranteed The late fee for a conventional loan is: A.) 3% of principle and interest B.) 4% of principle and interest C.) 5% of principle and interest D.) 10% of principle and interest - ANSWER-C.) 5% of principle and interest A funding fee if required for a: A.) FHA loan B.) VA loan C.) Jumbo loan D.) Conventional loan - ANSWER-B.) VA loan A Mortgage Insurance Premium is required on: A.) FHA loan B.) VA loan C.) Jumbo loan D.) Conventional loan - ANSWER-A.) FHA loan The mortgagee is the: A.) Borrower B.) Lender C.) Closing agent D.) Mortgage broker - ANSWER-B.) Lender The borrower does NOT sign which document: A.) Deed B.) HUD-1/Loan Disclosure C.) Mortgage D.) Note - ANSWER-A.) Deed Which documents is usually NOT recorded A.) Assignment of mortgage B.) Note C.) Deed D.) Mortgage - ANSWER-B.) Note A mortgage title insurance policy is NOT A.) Based on the loan amount B.) Transferable C.) Optional D.) Required by the lender - ANSWER-C.) Optional Which parties sign the deed? A.) Grantor, grantee and two witnesses B.) Grantor and two witnesses C.) Grantee and two witnesses D.) Grantee only - ANSWER-B.) Grantor and two witnesses When the mortgagor and the mortgagee title insurance policies are issued at the same time, this is known as: A.) Simultaneous issue B.) Concurrent issue C.) Subsequent issue D.) Dual issue - ANSWER-A.) Simultaneous issue A shrubbery hedge is one example of an: A.) Encumbrance B.) Easement C.) Entitlement D.) Acceptable title impediment - ANSWER-D.) Acceptable title impediment A loan on personal property only known as: A.) Package mortgage B.) Chattel mortgage C.) Furnishing mortgage D.) Exotic mortgage - ANSWER-B.) Chattel mortgage Investopedia Chattel mortgage is a legal term used to describe a loan arrangement in which an item of movable personal property is used as security for the loan. The movable property, or chattel, guarantees the loan in this type of mortgage. This differs from a conventional mortgage in which the loan is secured by a lien on real property. Which of the following is NOT a characteristic of a Tenants in Common form of ownership: A.) Equal shares B.) Buy at different times C.) Right survivorship D.) Ability to will share - ANSWER-C.) Right survivorship PITI payments do NOT include which of the following: A.) Principle B.) Funding Fee C.) Hazard Insurance D.) Interest - ANSWER-B.) Funding Fee Who does Fannie Mae hold responsible for the quality of an appraisal? A.) Appraiser B.) Borrower C.) Mortgage broker D.) Lender - ANSWER-D.) Lender Which law is known as Regulation B? A.) Truth-in-Lending B.) Real Estate Settlement Procedures Act C.) Equal Credit Opportunity Act D.) Patriot Act - ANSWER-C.) Equal Credit Opportunity Act Which law prohibits discrimination by lenders? A.) Truth-in-Lending B.) Real Estate Settlement Procedures Act C.) Equal Credit Opportunity Act D.) Patriot Act - ANSWER-C.) Equal Credit Opportunity Act A property sold for $200,000 and was appraised at $180,000. The borrower received a loan for $150,000. What is the loan-to-value? A.) 75% B.) 83.3% C.) 90% D.) 92.4$ - ANSWER-B.) 83.3% How many days does a lender have to send an adverse action notice? A.) 5 B.) 10 C.) 30 D.) 60 - ANSWER-C.) 30 The GFE/Loan Estimate must be mailed or given to the borrower within how many days after rceiving the signed application? A.) 3 business days B.) 7 business days C.) 10 business days D.) 30 business days - ANSWER-A.) 3 business days The enforcement of a lien is known as: A.) Closing B.) Foreclosure C.) Warranty inspection D.) Police Action - ANSWER-B.) Foreclosure The minimum percentage of ownership in a related service required a conflict of interest disclosure? A.) 5% B.) 10% C.) 25% D.) 50% - ANSWER-B.) 10% What minimum percentage o ownership qualifies an individual as self-employed? A.) 5% B.) 10% C.) 25% D.) 50% - ANSWER-C.) 25% A salaried employee may have to produce which of the following documents to obtain a loan? A.) 90 day pay stubs [Show Less]
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NMLS 2023 Book 250 Q&A pt.3 (tres) Solved 100% Correct
Which of the following is not exempted from the Fair Housing Act? A) Rental of a room in a dwelling with no more than 4 independent units B) Housing oper... [Show More] ated by private organizations C) Housing operated by private clubs D) Multi-family home without the use of a broker or real estate agent - ANSWER-The answer is D The specific exemptions to the Fair Housing Act are: -rental of a room in a dwelling with no more than 4 independent units - Housing operated by private organizations/clubs -Single family purchase without a mortgage broker Which of the following is the most common reported complaint related to mortgage lending? A) Mortgaging service B) Misapplied funds C) Contract errors D) Contract filing - ANSWER-The answer is A The majority of complaints are related to mortgage services Which of the following is not an acceptable practice for a mortgage loan officer acting on behalf of the lender? A) Gather income information B) Prescreen the applicant for approval C) Submit the application to lender D) Gather employment information - ANSWER-The answer is B The loan officer has specific duties in preparing the application from the borrower to the lender. The act of encouraging repeated refinancing of a loan without any real benefit to the borrower is which of the following practices? A) Redlining B) Steering C) Flipping D) Ballooning - ANSWER-The answer is C Flipping is when a borrower is encouraged to refinance without any real benefits Which of the following fees are not allowed for the VA loan? A) Discount points B) Attorney fees charged by lender C) Lender fee D) Title insurance - ANSWER-The answer is B The attorney fee cannot be charged by the lender and is not available When a power of attorney is granted for a real estate transaction, which of the following defines the role of the principal? A. The person granting authority to someone else B. The person gaining authority C. The attorney to process the transaction D. The agent to process the transaction - ANSWER-The answer is A When a power of attorney is used, a person named the principal, grants the authority to someone else to act on their behalf. According to the Equal Credit Opportunity Act, which of the following is not an acceptable reason for the lender to request the credit report of a spouse? A) The spouse will be permitted to use the account B) The spouse is contractually liable for the account C) The applicant is relying on the spouse's income for repayment D) The applicant has been married for over 2 years - ANSWER-The answer is D There is no duration requirement for the marriage. As per the SAFE Mortgage Licensing Act, which of the following is not a state requirement for the system of licensing for residential mortgage loan originators? A) Criminal history B) Continuing education C) Pre-approval D) Pre-licensing - ANSWER-The answer is C SAFE requires a process for MLO licensing such as: - Criminal history -continuing education -pre-licensing The Loan Originator rule regulates compensation paid to the loan originator in most closed end transactions which includes all of the following except: A) Prohibition of the terms of compensation from being based on the terms of the transaction B) Prohibition of compensation due to bonuses related to mortgage activities C) Permitting certain compensation methods such as retirement pans based on mortgage-related profits D) Prohibition of compensation by a 2nd party - ANSWER-The answer is B The Loan Origination Rule dictates regulations related to compensation including: - Prohibition of the terms of compensation from being based on the terms of the transaction - Permitting certain compensation methods such as retirement pans based on mortgage-related profits - Prohibition of compensation by a 2nd party CFPB civil penalties are assessed in which of the following ways? A) Single limp sum penalty B) Penalty for each infraction C) Penalty only for an infraction in which the regulation was knowingly violated D) Penalty for each day during which the violation continues - ANSWER-The answer is D CFPB civil penalties are assessed no more than the prescribed maximum per day that the violation continues. What is not a true statement regarding the characteristics of NMLS unique identifiers? A) The entitiy's unique ID can only be changed by request once per year B) The numbers are assigned sequentially C) Each branch within a company is assigned a unique ID D) Each natural person is assigned with a unique ID - ANSWER-The answer is A The characteristics of NMLS identifiers can be found on the website, once assigned the number cannot be changed. As per SAFE Act requirements, a Mortgage Loan Originator must submit all of the following except: A) Finger prints for background check B) Social Security Number C) Financial services employment history for prior 10 years D) Disclosure and justification of time of unemployment - ANSWER-The answer is D SAFE Act requires MLO's of Federally regulated institutions to submit to the Registry: - Finger prints for background check - Social Security Number - Financial services employment history for prior 10 years The NMLS Registry has the intended purpose of all of the following except: A) Providing licensing database B) Enhance consumer protections C) Ensure individualized license applications D) Facilitate the collection and disbursement of consumer complaints - ANSWER-The answer is C [Show Less]
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NMLS 2023 Exam Review with Complete Solutions
What is a Mortgage? - ANSWER-Is an agreement between a borrower and a lender in which the borrower conveys an interest in a property to the lender as secur... [Show More] ity for a loan. Mortgage Bankers - ANSWER-They are financial intermediaries that serve parties on opposite ends of the mortgage lending transaction by moving capital or money. Originating - ANSWER-Developing marking plans, Educating clients about loan programs, Taking applications, Providing disclosures and Preparing the loan file. Processing - ANSWER-Reviewing loan files and requesting needed documents. Verifies everything that is on the file. Underwriting - ANSWER-Analyzing credit worthiness and willingness to pay. Reviewing compensating factors and making the final decision to approve or deny the loan. Do processors and underwriters need a license? - ANSWER-No, unless they are a contractor or work for multiple lenders. Closing - ANSWER-Preparing, assembling and reviewing all closing documents. Verifying that all closing conditions are met and that all fees, cost and premiums have been collected. Why does an MLO have to be licensed? - ANSWER-They are the ones who are talking and communicating with the consumer. They have the most exposure to the consumer. What ACT deals with the licensing of an MLO? - ANSWER-SAFE ACT What year was the SAFE ACT passed? - ANSWER-2008 How would someone be exempt from taking the NMLS test? - ANSWER-If they were federally supervised and exempt from licensure. How many hours of education must be fulfilled for Pre-licensing? - ANSWER-20 Hours What is a kickback? - ANSWER-A receipt of anything of value in exchange for referring business. Which ACT deals with kickbacks? - ANSWER-RESPA - Regulation X Which ACT deals with advertising? - ANSWER-TILA What regulation letter is TILA? - ANSWER-Regulation - Z What are the 2 qualifying standards for Debt-to-Income ratios? - ANSWER-Total Debt-to-Income Ratio and Housing Expense Ratio. With Housing Expense Ratio, what does PITI stand for? - ANSWER-Principal, Interest, Taxes and Insurance. What is the Housing Expense Ratio? - ANSWER-Total of housing payment divided by gross monthly income. What is the debt-to-income ratio? - ANSWER-Total of all debts divided by gross monthly income. A borrower earns $4,500 per month in gross income. If their housing ratio is 28%, what is the maximum housing payment they can qualify for? - ANSWER-$1,260 The total housing payment should not exceed what percentage of their gross monthly income? - ANSWER-28% The total monthly debt obligations should not exceed what percentage of their gross monthly income? - ANSWER-36% What is an accrued expense? - ANSWER-An expense that is owed but not yet paid. What is a prepaid expense? - ANSWER-An expense that has been paid but is not yet due. What is Per Diem Interest? - ANSWER-Interest that counts the days from the day of closing to the end of the month. What examples of debt would not count toward the Debt-to-Income ratio? - ANSWER-Life Insurance premiums, Utilities and Cell Phones. Are conventional loans guaranteed/insured by federal government? - ANSWER-No, they are financed solely by a bank or institutional lender. What are examples on Non-Conventional loans? - ANSWER-FHA, VA and USDA. PMI will remain until the loan is paid down to what percentage? - ANSWER-78% What is a Fully Amortizing Loan? - ANSWER-A loan that includes payments which fully pay down the entire loan balance over the life of the loan. The standards for evaluation of an application for an FHA loan include the following (4 C's)? - ANSWER-Credit history, Capacity to repay the loan, Cash assets and Collateral. In a VA loan, what percentage must the consumer pay back to the bank in case of a default? - ANSWER-25% How old must you be to qualify for a reverse mortgage? - ANSWER-62 years old. What is a NOTE? - ANSWER-Contains borrower's promise to pay. What does a Deed do? - ANSWER-It transfers ownership interests in property. What is a limited warranty deed? - ANSWER-A deed which warrants some rights, but not all. What is a Quitclaim deed? - ANSWER-A person conveys any rights he or she has, known and unknown, without warranting any right at all. What is a Fiduciary or (Judicial deed)? - ANSWER-A deed by operation of a court order which may or may not warrant any rights. What are the two different ways a property can be transferred without a deed? - ANSWER-Descent (gives it to the next legal heir), if there is no will or by Devise which is the transfer by operation of a legal, valid will. Which type of lien come first before all other liens? - ANSWER-A Government lien. What does encroachment mean? - ANSWER-When someone on one lot builds something that encroaches onto a neighboring lot. Who is the MORTGAGOR? - ANSWER-The Borrower Who is the MORTGAGEE? - ANSWER-The Lender What is a Interest Only Note? - ANSWER-Borrower pays only interest in installment payments. Principal remains outstanding. What is an Installment Note? - ANSWER-Are payment installments that are typically equal or change according to schedule. What is a Fully Amortizing Installment Note? - ANSWER-Regular periodic payments include a principal amount. At the end of the loan term, the principal is fully repaid. What is a Purchase Money Mortgage? - ANSWER-Any mortgage used to purchase a property, not just one for seller-financing. ECOA is what letter regulation? - ANSWER-Regulation B [Show Less]
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NMLS Exam Review 2022/2023 Latest Updated with Complete Solutions
What law deals with credit, APR, and advertising of consumer loans? - ANSWER-TILA/Regulation Z Which regulation prohibits kickbacks? - ANSWER-RESPA/Regu... [Show More] lation X Which regulations requires the lender to cancel PMI when the loan reaches 78% LTV? - ANSWER-HPA/Homeowners Protection Act Which regulation prohibits fee splitting? - ANSWER-RESPA/Regulation X "X" is the letter used to describe which regulation? - ANSWER-RESPA RESPA is the acronym used to describe which law? - ANSWER-Real Estate Settlement Procedures Act What type of mortgage requires a nonrefundable funding fee? - ANSWER-VA loan What is the provision in a mortgage enabling a lender to demand full repayment if the borrower DEFAULTS on the loan? - ANSWER-Acceleration Clause What is the provision in a mortgage enabling a lender to demand full repayment if the borrower TRANSFERS the loan? - ANSWER-Alienation Clause What does CFPB stand for? - ANSWER-Consumer Financial Protection Bureau What 2 laws created the CFPB? - ANSWER-Dodd Frank Act and Consumer Finance Protection Act Which regulations is designed to help meet the credit needs of the communities in which it operates? - ANSWER-CRA/Community Reinvestment Act Under ECOA rules and regulations, how many days does the borrower have to request a copy of an appraisal report if the application was denied? - ANSWER-90 days Under ECOA rules and regulations, how many days does the lender have to provide a copy of an appraisal report, once requested by the borrower? - ANSWER-30 days If a loan application is APPROVED, under ECOA rules and regulations, when MUST a copy of the appraisal be provided to the borrower? - ANSWER-3 business days Conforming loans follow the guidelines of which regulators? - ANSWER-Fannie Mae and Freddie Mac Which regulation requires the lenders to "be equal" when extending credit to borrowers? - ANSWER-ECOA/Regulation B How old must a borrower be to qualify for a reverse Mortgage? - ANSWER-62 years old Which regulations has the primary function of preventing identity theft? - ANSWER-FACT Act/Fair and Accurate Credit Transactions Which regulation has Section 114 Rules? - ANSWER-FACT Act Which regulations requires the creditor to verify the VALIDITY of any change of address received? - ANSWER-Section 114 of the FACT Act What is the payment method used in a reverse mortgage that allows the homeowners to receive a monthly check while living in the property? - ANSWER-Tenure Method What is the fraud scheme where a borrower uses someone else's name to purchase the property, but that person will not be living at the property? - ANSWER-Straw borrower What government lender insures mortgages? - ANSWER-FHA/Federal Housing Administration What government lender guarantees mortgages? - ANSWER-VA loans What government lender loans money to fund purchases in rural areas? - ANSWER-USDA/Dept. of Agriculture [Show Less]
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