Mortgage Loan Originator Prep 3

Question 1

A Qualified Mortgage (QM) generally cannot have a DTI ratio exceeding what threshold?

Accepted Answer

43%

Answer

Under the general QM definition, the borrower's total DTI ratio cannot exceed 43% at the time of origination.

Question 2

What is the SAFE Act's primary requirement for Mortgage Loan Originators?

Accepted Answer

Registration or state licensure with background checks and testing

Answer

The SAFE Act requires MLOs to be either state-licensed or federally registered, including passing a background check and a national exam.

Question 3

Which loan type is specifically designed to help veterans purchase homes with no down payment?

Accepted Answer

VA loan

Answer

VA loans are guaranteed by the Department of Veterans Affairs and allow eligible veterans, service members, and surviving spouses to purchase homes with no down payment.

Question 4

What is the purpose of Private Mortgage Insurance (PMI)?

Accepted Answer

Protects the lender if the borrower defaults when LTV exceeds 80%

Answer

PMI protects the lender—not the borrower—against loss if the borrower defaults, and is typically required when the LTV ratio exceeds 80%.

Question 5

Under ECOA, how many days does a lender have to notify an applicant of adverse action after receiving a completed application?

Accepted Answer

30 days

Answer

ECOA requires creditors to notify applicants of adverse action within 30 days of receiving a completed credit application.

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Prep 3