Mortgage Loan Originator MLO 5

Question 1

Under the FHA loan program, the maximum seller concession (seller-paid closing costs) is limited to what percentage of the lesser of the appraised value or sales price?

Accepted Answer

6%

Answer

FHA allows sellers to contribute up to 6% of the lesser of the appraised value or sales price toward the buyer's closing costs and prepaid items.

Question 2

An MLO discovers mid-process that a borrower has misrepresented their employment on the application. What is the MLO's proper course of action?

Accepted Answer

Report the discrepancy to the underwriter and document it in the file; do not assist in covering it up

Answer

MLOs have a duty to report material misrepresentations to underwriting regardless of whether the borrower still qualifies; covering up fraud exposes the MLO to criminal liability.

Question 3

The Loan Estimate (LE) must be delivered or placed in the mail to the borrower no later than how many business days after receipt of a complete application under TRID?

Accepted Answer

3 business days

Answer

Under TRID (TILA-RESPA Integrated Disclosure), lenders must deliver or place the Loan Estimate in the mail within 3 business days of receiving a complete application.

Question 4

Which of the following is considered a 'trigger term' under TILA that requires full disclosure of other credit terms in an advertisement?

Accepted Answer

The amount of any down payment

Answer

Under TILA, advertising a specific down payment amount is a trigger term that requires disclosure of the APR, loan term, total of payments, and other specific credit terms.

Question 5

A borrower defaults on a mortgage and the lender sells the collateral at foreclosure for less than the outstanding loan balance. If the lender pursues the borrower for the remaining balance, this is known as:

Accepted Answer

A deficiency judgment

Answer

A deficiency judgment is a court order requiring the borrower to pay the lender the difference between the foreclosure sale proceeds and the remaining loan balance.

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Practice Test

Mortgage Loan Originator MLO 5