Mortgage Loan Originator Flashcards
7 cards from real Mortgage Loan Originator practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Mortgage Loan Originator flashcards as text
Under RESPA, a Kickback occurs when an MLO receives a fee for referring a borrower to a settlement service provider without providing additional services. What is the penalty for a RESPA Section 8 violation?
Answer: Fine up to $10,000 and/or up to 1 year imprisonment
RESPA Section 8 violations can result in fines up to $10,000 and/or imprisonment of up to one year per violation.
A borrower's debt-to-income (DTI) ratio is calculated using gross monthly income. If a borrower earns $6,000/month gross and has total monthly debt obligations of $2,100, what is their DTI ratio?
Answer: 35%
DTI = $2,100 / $6,000 = 0.35, or 35%.
Which act requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a complete loan application?
Answer: TRID (TILA-RESPA Integrated Disclosure)
TRID, effective October 2015, requires the Loan Estimate to be delivered within three business days of application.
An MLO is offering a borrower a slightly higher interest rate in exchange for lender-paid closing costs. This arrangement is known as:
Answer: Yield spread premium
A yield spread premium is compensation paid by a lender to a broker when the borrower accepts an above-par interest rate.
Under the Homeowners Protection Act (HPA), a borrower with a conventional loan can request cancellation of PMI when the loan balance reaches what percentage of the original property value?
Answer: 80%
Under the HPA, borrowers can request PMI cancellation when the LTV ratio reaches 80% of the original purchase price.
A borrower applies for a loan and the lender denies the application. Under the Equal Credit Opportunity Act (ECOA), within how many days must the lender provide an adverse action notice?
Answer: 30 days
ECOA requires creditors to notify applicants of adverse action within 30 days of receiving a completed application.
Which type of mortgage index is considered the most stable because it is based on a moving average of Treasury yields over a longer period?
Answer: 11th District Cost of Funds Index (COFI)
The COFI is calculated as a weighted average of interest expenses for the 11th Federal Home Loan Bank District and changes slowly, making it the most stable common ARM index.