Mortgage Loan Originator Trivia 2 — Questions and Answers
Question 1: What federal law requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a loan application?
- RESPA
- TILA-RESPA Integrated Disclosure (TRID) (Correct answer)
- HMDA
- Equal Credit Opportunity Act
Correct answer: TILA-RESPA Integrated Disclosure (TRID)
TRID, which took effect in October 2015, requires lenders to deliver the Loan Estimate within three business days of application receipt.
Question 2: Which government-sponsored enterprise (GSE) was originally known as the Federal National Mortgage Association?
- Freddie Mac
- Ginnie Mae
- Fannie Mae (Correct answer)
- Sallie Mae
Correct answer: Fannie Mae
Fannie Mae is the nickname for the Federal National Mortgage Association, established in 1938 to expand the secondary mortgage market.
Question 3: In mortgage lending, what does the acronym DTI stand for?
- Down-payment to Income
- Debt-to-Income (Correct answer)
- Default-to-Interest
- Deferred Tax Installment
Correct answer: Debt-to-Income
DTI (Debt-to-Income) ratio compares a borrower's monthly debt payments to their gross monthly income.
Question 4: What is the maximum seller concession allowed on a conventional loan with a down payment between 10% and 24.99%?
- 3%
- 4%
- 6% (Correct answer)
- 9%
Correct answer: 6%
For conventional loans with 10%–24.99% down, Fannie Mae and Freddie Mac allow seller concessions up to 6% of the purchase price.
Question 5: Which act prohibits discrimination in residential real estate transactions based on race, color, religion, national origin, sex, familial status, or disability?
- Community Reinvestment Act
- Fair Housing Act (Correct answer)
- Equal Credit Opportunity Act
- Home Mortgage Disclosure Act
Correct answer: Fair Housing Act
The Fair Housing Act (Title VIII of the Civil Rights Act of 1968) protects buyers and renters from discrimination in housing-related transactions.
Question 6: What is the term for the practice of denying loans or insurance to residents of certain neighborhoods based on racial or ethnic composition?
- Steering
- Blockbusting
- Redlining (Correct answer)
- Churning
Correct answer: Redlining
Redlining refers to the discriminatory practice of refusing credit or services to residents in areas deemed 'hazardous,' often along racial lines.
Question 7: Under HMDA, what is the primary purpose of data collection by mortgage lenders?
- To set interest rate limits
- To identify discriminatory lending patterns (Correct answer)
- To calculate property tax assessments
- To determine flood zone requirements
Correct answer: To identify discriminatory lending patterns
HMDA (Home Mortgage Disclosure Act) requires lenders to collect and report loan data so regulators can identify potential discriminatory lending patterns.
Mortgage Loan Originator Trivia 2
What federal law requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a loan application?