Mortgage Loan Originator Prep 5

Question 1

What type of fraud involves a borrower overstating their income on a mortgage application?

Accepted Answer

Fraud for housing

Answer

Fraud for housing occurs when a borrower misrepresents information such as income or employment to obtain a mortgage they might not otherwise qualify for.

Question 2

A borrower wants to remove PMI from their conventional loan. Under the Homeowners Protection Act, when can they request cancellation?

Accepted Answer

When LTV reaches 80% based on original value and payment schedule

Answer

The Homeowners Protection Act allows borrowers to request PMI cancellation when the principal balance reaches 80% of the original value based on scheduled payments.

Question 3

Which loan program is backed by the federal government and targets rural and suburban homebuyers with low-to-moderate incomes?

Accepted Answer

USDA Rural Development loan

Answer

USDA loans are guaranteed by the U.S. Department of Agriculture and offer 100% financing to eligible borrowers in designated rural and suburban areas.

Question 4

What is the 'net tangible benefit' test used for in mortgage lending?

Accepted Answer

To determine if a refinance genuinely benefits the borrower

Answer

The net tangible benefit test ensures that a refinance transaction provides a genuine financial benefit to the borrower, such as a lower rate, shorter term, or reduced payment.

Question 5

An MLO's NMLS license requires how many hours of continuing education annually?

Accepted Answer

8 hours

Answer

State-licensed MLOs must complete 8 hours of NMLS-approved continuing education annually, including specific required topics.

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Prep 5