Origination Activities Flashcards
7 cards from real SAFE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Origination Activities flashcards as text
Which federal law requires MLOs to provide the Loan Estimate within 3 business days of receiving a complete loan application?
Answer: TRID (combining TILA and RESPA)
TRID (the TILA-RESPA Integrated Disclosure rule) requires delivery of the Loan Estimate within 3 business days of application.
A borrower is refinancing their primary residence. Under TILA's right of rescission, how long does the borrower have to cancel the transaction after closing?
Answer: 3 business days
TILA grants borrowers a 3-business-day right of rescission for refinances and second mortgages on their primary residence.
What is the maximum number of points and fees allowed under the CFPB's Qualified Mortgage (QM) rule for a loan of $100,000 or more?
Answer: 3%
Under the CFPB's QM rule, total points and fees cannot exceed 3% of the total loan amount for loans of $100,000 or more.
An MLO advises a senior borrower with a paid-off home to take out a cash-out refinance every two years to generate commission income. This practice is called:
Answer: Loan flipping
Loan flipping is the repeated refinancing of a loan primarily to generate fees and commissions, with little benefit to the borrower.
Which of the following best describes the concept of 'steering' in mortgage lending?
Answer: Directing borrowers to loan products that benefit the MLO at the borrower's expense
Steering involves directing borrowers to unsuitable or higher-cost products — particularly products that pay the MLO more — rather than the best product for the borrower.
A borrower receives a Loan Estimate showing a 6% interest rate. At closing, the lender wants to charge 6.5%. Under TRID, which category does interest rate fall into regarding tolerance?
Answer: Zero tolerance — cannot increase
Under TRID, the interest rate disclosed on the Loan Estimate is a zero-tolerance item and cannot increase at closing unless a valid changed circumstance exists.
What is the primary purpose of the NMLS (Nationwide Multistate Licensing System)?
Answer: To provide a uniform licensing and registration system for MLOs across states
The NMLS was created under the S.A.F.E. Act to provide a single, centralized system for licensing and registering mortgage loan originators across states.