Mortgage Loan Originator Trivia 5

Question 1

What act established the Nationwide Multistate Licensing System (NMLS) and required state-licensed MLOs to meet minimum education and testing standards?

Accepted Answer

SAFE Mortgage Licensing Act

Answer

The SAFE (Secure and Fair Enforcement for Mortgage Licensing) Act of 2008 created the NMLS and set federal minimum standards for MLO licensing.

Question 2

What is the maximum loan-to-value (LTV) ratio allowed for a cash-out refinance on a primary residence under standard conventional guidelines?

Accepted Answer

80%

Answer

Standard conventional guidelines generally cap cash-out refinance LTV at 80% for primary residences to manage default risk.

Question 3

What is the name of the process by which a lender reviews a completed loan file to determine if it meets all approval criteria?

Accepted Answer

Underwriting

Answer

Underwriting is the evaluation process where the lender assesses the borrower's creditworthiness and the property's value to make a final loan decision.

Question 4

Which of the following is NOT a valid trigger term under Regulation Z that requires full APR disclosure in an advertisement?

Accepted Answer

Annual Percentage Rate

Answer

APR itself is not a trigger term; it is what must be disclosed when a trigger term (like monthly payment, down payment, or number of payments) appears in an ad.

Question 5

What is a 'teaser rate' in the context of adjustable-rate mortgages?

Accepted Answer

An initially low introductory rate designed to attract borrowers

Answer

A teaser rate is an artificially low initial interest rate on an ARM, designed to attract borrowers, which resets higher after the introductory period ends.

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Trivia 5