Mortgage Loan Originator Federal Regulations and Ethics

Question 1

The SAFE Act requires mortgage loan originators to be registered or licensed under which system?

Accepted Answer

NMLS

Answer

The SAFE Act established the Nationwide Multistate Licensing System (NMLS) as the centralized registry for MLO licensing and registration.

Question 2

Under the SAFE Act, which of the following is a pre-licensure education requirement for a state-licensed MLO?

Accepted Answer

20 hours including 3 hours of federal law, 3 hours of ethics, and 2 hours of nontraditional mortgage lending

Answer

The SAFE Act requires 20 hours of pre-licensure education covering federal law, ethics, nontraditional mortgage products, and electives before an MLO can obtain a state license.

Question 3

The Equal Credit Opportunity Act (ECOA) prohibits discrimination in credit transactions based on all of the following EXCEPT:

Accepted Answer

Loan amount requested

Answer

ECOA prohibits credit discrimination based on race, color, religion, national origin, sex, marital status, age, and receipt of public assistance income — not the loan amount itself.

Question 4

What is 'steering' as defined under the Dodd-Frank Act's loan originator compensation rules?

Accepted Answer

Directing borrowers to loan products not in their interest to increase MLO compensation

Answer

Steering refers to directing consumers toward loan products that are not in their best interest primarily because doing so yields higher compensation for the loan originator.

Question 5

Under the Fair Housing Act, which is an example of 'redlining'?

Accepted Answer

Denying mortgage credit to applicants in minority neighborhoods regardless of creditworthiness

Answer

Redlining is the illegal practice of denying services or increasing requirements in minority or low-income neighborhoods, regardless of individual applicants' qualifications.

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Federal Regulations and Ethics