Trivia 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 Trivia flashcards as text
Which federal agency is primarily responsible for enforcing the SAFE Act's MLO licensing requirements at the federal level?
Answer: Consumer Financial Protection Bureau (CFPB)
The CFPB oversees federal compliance with the SAFE Act and maintains the Nationwide Multistate Licensing System (NMLS) standards.
What is a 'jumbo loan' in mortgage lending?
Answer: A loan that exceeds conforming loan limits set by the FHFA
A jumbo loan exceeds the conforming loan limits established by the Federal Housing Finance Agency and cannot be purchased by Fannie Mae or Freddie Mac.
What is the purpose of Private Mortgage Insurance (PMI) on a conventional loan?
Answer: It protects the lender if the borrower defaults
PMI protects the lender against loss if the borrower defaults; it is typically required when the down payment is less than 20%.
Under the Truth in Lending Act (TILA), what is the right of rescission?
Answer: The right to cancel a refinance within three business days of closing
TILA grants borrowers the right to cancel certain refinance transactions (on primary residences) within three business days of closing without penalty.
What is the term for a mortgage loan that is not backed by any government agency and must meet GSE guidelines to be sold on the secondary market?
Answer: Conforming conventional loan
A conforming conventional loan meets Fannie Mae and Freddie Mac guidelines (including loan limits and underwriting standards) so it can be sold on the secondary market.
What does PITI stand for in the context of mortgage payments?
Answer: Principal, Interest, Taxes, Insurance
PITI represents the four components of a typical monthly mortgage payment: Principal, Interest, Taxes, and Insurance.
What is a 'bridge loan' in real estate financing?
Answer: A short-term loan that bridges the gap between buying a new home and selling an existing one
A bridge loan provides short-term financing to help a borrower purchase a new home before their existing property has sold.