Mortgage Loan Originator MLO 3

Question 1

The Dodd-Frank Act established the Consumer Financial Protection Bureau (CFPB). Which of the following best describes the CFPB's primary authority over mortgage lending?

Accepted Answer

Rulemaking, supervision, and enforcement of federal consumer financial protection laws for large non-bank entities and banks over $10 billion

Answer

The CFPB has authority to write rules, supervise financial institutions, and enforce federal consumer financial protection laws, with primary supervisory authority over non-banks and large banks.

Question 2

An MLO is structuring a loan and intentionally divides a loan amount that would trigger HOEPA thresholds into two smaller loans to avoid disclosure requirements. This practice is known as:

Accepted Answer

Loan splitting or structuring

Answer

Loan splitting or structuring involves deliberately dividing a transaction to avoid regulatory thresholds and is illegal under HOEPA and anti-evasion provisions of Dodd-Frank.

Question 3

Which federal law requires lenders to provide borrowers with a Uniform Residential Loan Application (Form 1003) and sets standards for its completion?

Accepted Answer

No single federal law mandates the 1003; it is required by the GSEs (Fannie Mae/Freddie Mac) for conforming loans

Answer

The Uniform Residential Loan Application (Form 1003) is required by Fannie Mae and Freddie Mac for conforming loans, not by a specific federal statute, though HMDA governs data collected from it.

Question 4

A VA-eligible borrower is purchasing a home. Which of the following fees is the seller prohibited from paying on behalf of the veteran under VA loan rules?

Accepted Answer

The VA funding fee

Answer

The VA funding fee must be paid by the veteran or financed into the loan; sellers are prohibited from paying it, though veterans with service-connected disabilities may be exempt from it entirely.

Question 5

Under the Equal Credit Opportunity Act (ECOA), how long must a creditor retain records of a completed credit application?

Accepted Answer

25 months from the date the creditor notifies the applicant of the action taken

Answer

ECOA requires creditors to retain records for 25 months after notifying applicants of action taken, allowing time for regulators and applicants to investigate potential discrimination.

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Practice Test

Mortgage Loan Originator MLO 3