Mortgage Loan Originator Federal Regulations and Ethics 3

Question 1

Under the SAFE Act, an MLO license can be suspended or revoked for:

Accepted Answer

Fraud, misrepresentation, or a felony conviction involving dishonesty

Answer

SAFE Act grounds for license denial, suspension, or revocation include fraud, misrepresentation, and felony convictions related to dishonesty or financial crimes.

Question 2

What is 'dual agency' in a real estate transaction, and why is it important to MLOs?

Accepted Answer

When a real estate agent represents both buyer and seller; MLOs should be aware to identify potential conflicts

Answer

Dual agency occurs when one agent represents both buyer and seller; MLOs should understand this arrangement as it may create conflicts that affect the transaction and require disclosure.

Question 3

Under Dodd-Frank's ability-to-repay (ATR) rule, lenders must verify a borrower's ability to repay using:

Accepted Answer

Reasonably verified third-party documentation of income, assets, and debts

Answer

The ATR rule requires lenders to make a reasonable, good-faith determination using verified documents — not stated or projected income — that the borrower can repay the loan.

Question 4

Which of the following is an example of 'predatory lending'?

Accepted Answer

Charging excessive fees or placing a borrower in a loan they cannot afford to benefit the lender

Answer

Predatory lending involves deceptive or abusive practices such as excessive fees, loan flipping, or placing borrowers in unsuitable products for the originator's financial gain.

Question 5

The Fair Credit Reporting Act (FCRA) gives consumers the right to dispute inaccurate information in their credit report, and the credit bureau must investigate within:

Accepted Answer

30 days

Answer

Under FCRA, credit bureaus must investigate consumer disputes within 30 days (extended to 45 days if the consumer provides additional information during that period).

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Federal Regulations and Ethics 3