Prep 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 Prep flashcards as text
What type of fraud involves a borrower overstating their income on a mortgage application?
Answer: Fraud for housing
Fraud for housing occurs when a borrower misrepresents information such as income or employment to obtain a mortgage they might not otherwise qualify for.
A borrower wants to remove PMI from their conventional loan. Under the Homeowners Protection Act, when can they request cancellation?
Answer: When LTV reaches 80% based on original value and payment schedule
The Homeowners Protection Act allows borrowers to request PMI cancellation when the principal balance reaches 80% of the original value based on scheduled payments.
Which loan program is backed by the federal government and targets rural and suburban homebuyers with low-to-moderate incomes?
Answer: USDA Rural Development loan
USDA loans are guaranteed by the U.S. Department of Agriculture and offer 100% financing to eligible borrowers in designated rural and suburban areas.
What is the 'net tangible benefit' test used for in mortgage lending?
Answer: To determine if a refinance genuinely benefits the borrower
The net tangible benefit test ensures that a refinance transaction provides a genuine financial benefit to the borrower, such as a lower rate, shorter term, or reduced payment.
An MLO's NMLS license requires how many hours of continuing education annually?
Answer: 8 hours
State-licensed MLOs must complete 8 hours of NMLS-approved continuing education annually, including specific required topics.
What is the APR designed to represent to help consumers compare loan offers?
Answer: The true cost of credit expressed as a yearly rate, including fees and charges
APR (Annual Percentage Rate) expresses the total cost of credit as a yearly rate, incorporating the interest rate plus certain fees and charges, allowing for easier comparison shopping.
Under the Fair Housing Act, which of the following is a protected class?
Answer: Familial status
Familial status (having children under 18 or being pregnant) is one of seven protected classes under the Fair Housing Act.