Uniform State Content Flashcards

Under the SAFE Act, which activity requires an individual to be licensed as a mortgage loan originator?

Answer: Taking a residential mortgage loan application and offering or negotiating loan terms

The SAFE Act requires licensure for any individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan.

Which federal law requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a loan application?

Answer: Truth in Lending Act (Regulation Z)

TILA (Regulation Z), as amended by the TRID rule, requires the Loan Estimate be delivered within three business days of application.

A mortgage loan originator who knowingly makes a false statement on a mortgage application could face which consequence under federal law?

Answer: Criminal penalties including fines and up to 30 years imprisonment under 18 U.S.C. § 1014

Under 18 U.S.C. § 1014, making false statements on mortgage applications is a federal crime punishable by fines and up to 30 years in prison.

Which of the following best describes 'net tangible benefit' in the context of mortgage refinancing?

Answer: A demonstrable advantage to the borrower such as lower monthly payments or a shorter loan term

Net tangible benefit requires that a refinance provide a real, measurable advantage to the borrower, which is a key anti-predatory lending standard.

Under ECOA (Equal Credit Opportunity Act), within how many days must a lender notify an applicant of adverse action on a completed credit application?

Answer: 30 calendar days

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

Which characteristic is NOT a protected class under the federal Fair Housing Act?

Answer: Income level

Income level is not a federally protected class under the Fair Housing Act; the protected classes include race, color, religion, sex, national origin, familial status, and handicap.

Under RESPA, a mortgage lender is prohibited from paying a fee or 'kickback' to a real estate agent for referring a borrower. This prohibition is found in which section of RESPA?

Answer: Section 8

RESPA Section 8 prohibits kickbacks, fee splits, and unearned fees in connection with federally related mortgage loan settlement services.

A borrower applies for a mortgage and is denied. The lender must provide a written adverse action notice that includes which of the following?

Answer: The specific reasons for denial or notice of the right to request those reasons

ECOA and the Fair Credit Reporting Act require that adverse action notices state specific reasons for denial or inform the applicant of their right to request those reasons.

Under the NMLS system, an MLO license can be transferred to a new employer through which process?

Answer: The MLO submits a sponsorship request through NMLS and the new employer approves it

An MLO transfers their license through the NMLS by requesting sponsorship from their new employer, who then approves the association.

Which type of loan is generally exempt from the Home Mortgage Disclosure Act (HMDA) reporting requirements?

Answer: A business-purpose loan secured by a commercial property

HMDA reporting covers loans for home purchase, home improvement, and refinancing on dwelling-secured loans; business-purpose loans on commercial properties are generally excluded.

A lender charges a borrower a fee for paying off their mortgage early. Under federal law, which loan type restriction applies to prepayment penalties?

Answer: Prepayment penalties on higher-priced mortgage loans are restricted under Regulation Z

Regulation Z restricts prepayment penalties on higher-priced mortgage loans and prohibits them entirely on most qualified mortgages after three years.

Under the SAFE Act, the term 'nontraditional mortgage product' includes which of the following?

Answer: An interest-only loan or a payment-option adjustable-rate mortgage

Nontraditional mortgage products include interest-only loans and payment-option ARMs because they defer principal repayment and carry higher risk of payment shock.

Which agency is primarily responsible for enforcing the Truth in Lending Act for non-bank mortgage lenders?

Answer: Consumer Financial Protection Bureau (CFPB)

The CFPB has primary enforcement authority over TILA for non-bank mortgage lenders and other consumer financial products.

An MLO collects a $400 application fee from a borrower at the time of application. Under which circumstance may the lender retain this fee if the loan does not close?

Answer: If the fee is for a bona fide third-party service already performed, such as a credit report or appraisal

Lenders may retain fees for bona fide third-party services actually rendered (e.g., appraisals, credit reports) even if the loan does not close.

Under Regulation B (ECOA), which of the following is a lender PERMITTED to ask on a mortgage application?

Answer: The applicant's marital status when applying for a joint loan

Regulation B permits asking about marital status (as married, unmarried, or separated) when it is relevant to the creditworthiness evaluation, such as for joint loan applications.

A mortgage loan is classified as a 'High-Cost Mortgage' under HOEPA when which threshold is exceeded?

Answer: The APR exceeds the average prime offer rate by more than 6.5 percentage points for a first-lien loan

Under HOEPA, a first-lien loan is high-cost if its APR exceeds the average prime offer rate (APOR) by more than 6.5 percentage points.

What is the primary purpose of the Nationwide Multistate Licensing System (NMLS)?

Answer: To provide a single system for licensing, registration, and supervision of mortgage professionals

The NMLS is a central registry and licensing platform for mortgage loan originators and companies, enabling state regulators to coordinate supervision.

Under RESPA, which document replaced the HUD-1 Settlement Statement for most residential mortgage closings after October 3, 2015?

Answer: Closing Disclosure

The Closing Disclosure replaced the HUD-1 Settlement Statement for most transactions under the TRID rule effective October 3, 2015.

Which of the following is an example of 'steering' in the mortgage industry?

Answer: Directing a borrower to a higher-cost loan for which they qualify for a lower-cost product in order to earn higher compensation

Steering occurs when an MLO directs a borrower to a loan product that is not in their best interest, typically to earn higher compensation.

An MLO's unique identifier assigned through NMLS must appear on which documents?

Answer: All residential mortgage loan application forms and solicitations

Under the SAFE Act, an MLO's NMLS unique identifier must appear on all residential mortgage loan application forms and any solicitation materials.