Mortgage Loan Originator MCQ 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 MCQ flashcards as text
Under Regulation Z (Truth in Lending Act), the Annual Percentage Rate (APR) differs from the interest rate because it includes:
Answer: Certain fees and costs in addition to the interest rate
The APR reflects the true cost of borrowing by incorporating the interest rate plus certain fees such as points and origination charges.
Which agency maintains the Nationwide Multistate Licensing System & Registry (NMLS)?
Answer: Conference of State Bank Supervisors (CSBS)
The NMLS is managed by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR).
A balloon mortgage typically requires:
Answer: A large lump-sum payment at the end of a shorter loan term
A balloon mortgage has smaller monthly payments for a set term, followed by a large 'balloon' payment of the remaining balance at maturity.
Under HMDA, which institutions are required to collect and report loan data?
Answer: Covered financial institutions meeting asset and activity thresholds
HMDA requires covered depository and non-depository financial institutions that meet certain asset size and loan activity thresholds to collect and report mortgage data.
What is the minimum down payment required for an FHA-insured loan for borrowers with a credit score of 580 or higher?
Answer: 3.5%
Borrowers with a credit score of 580 or above are eligible for an FHA loan with a minimum down payment of 3.5%.
In mortgage underwriting, what does the term 'compensating factors' refer to?
Answer: Positive borrower attributes that offset weaknesses in the application
Compensating factors are strengths in a borrower's application—such as large reserves or a low LTV—that can offset a higher DTI or other weaknesses.
The Right of Rescission under the Truth in Lending Act applies to:
Answer: Refinance transactions involving the borrower's primary residence
The right to rescind gives borrowers 3 business days to cancel a refinance transaction secured by their primary residence, but it does not apply to purchase transactions.