Mortgage Loan Originator Trivia 4

Question 1

Which federal agency is primarily responsible for enforcing the SAFE Act's MLO licensing requirements at the federal level?

Accepted Answer

Consumer Financial Protection Bureau (CFPB)

Answer

The CFPB oversees federal compliance with the SAFE Act and maintains the Nationwide Multistate Licensing System (NMLS) standards.

Question 2

What is a 'jumbo loan' in mortgage lending?

Accepted Answer

A loan that exceeds conforming loan limits set by the FHFA

Answer

A jumbo loan exceeds the conforming loan limits established by the Federal Housing Finance Agency and cannot be purchased by Fannie Mae or Freddie Mac.

Question 3

What is the purpose of Private Mortgage Insurance (PMI) on a conventional loan?

Accepted Answer

It protects the lender if the borrower defaults

Answer

PMI protects the lender against loss if the borrower defaults; it is typically required when the down payment is less than 20%.

Question 4

Under the Truth in Lending Act (TILA), what is the right of rescission?

Accepted Answer

The right to cancel a refinance within three business days of closing

Answer

TILA grants borrowers the right to cancel certain refinance transactions (on primary residences) within three business days of closing without penalty.

Question 5

What is the term for a mortgage loan that is not backed by any government agency and must meet GSE guidelines to be sold on the secondary market?

Accepted Answer

Conforming conventional loan

Answer

A conforming conventional loan meets Fannie Mae and Freddie Mac guidelines (including loan limits and underwriting standards) so it can be sold on the secondary market.

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Trivia 4