Mortgage Loan Originator Mortgage Loan Originator 5

Question 1

A borrower wants to take cash out of their primary residence. The home is valued at $400,000 and has a current mortgage balance of $200,000. If the lender's maximum cash-out LTV is 80%, how much cash can the borrower receive?

Accepted Answer

$120,000

Answer

80% of $400,000 = $320,000 max loan; $320,000 - $200,000 existing balance = $120,000 maximum cash out.

Question 2

Which term describes the illegal practice of an MLO steering a borrower toward a higher-cost loan for which they qualify for better terms, in order to earn greater compensation?

Accepted Answer

Steering

Answer

Steering occurs when an MLO directs a borrower to a loan product that is not in their best interest primarily to increase the originator's compensation.

Question 3

The FHA requires a minimum down payment of 3.5% for borrowers with a credit score of at least:

Accepted Answer

580

Answer

FHA allows a 3.5% minimum down payment for borrowers with credit scores of 580 or higher; scores between 500-579 require 10% down.

Question 4

An MLO's compensation is set at 1% of the loan amount by the lender. The MLO cannot legally receive additional compensation from which source?

Accepted Answer

The borrower

Answer

Under Regulation Z's loan originator compensation rules, an MLO cannot receive compensation from both the lender and the borrower on the same transaction.

Question 5

A loan with a balloon payment requires the remaining principal balance to be paid in full at a set date. Under the Qualified Mortgage (QM) rule, balloon payment loans are generally:

Accepted Answer

Only permitted for small creditors in rural or underserved areas meeting specific criteria

Answer

Under the QM rule, balloon payment mortgages can qualify as QMs only for small creditors operating in rural or underserved areas that meet specific CFPB criteria.

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Mortgage Loan Originator 5