Practice Test Geeks(SAFE) Certified Secure and Fair Enforcement Mortgage Loan Originator Practice Test
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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

  1. A borrower with limited English proficiency applies for a mortgage. Under fair lending laws, an MLO must:

    Answer: Provide equal service and access regardless of language proficiency

    Fair lending laws prohibit discrimination based on national origin, and limiting service based on language proficiency can constitute illegal discrimination.

  2. Under Regulation Z, what triggers the requirement to provide a new 3-business-day waiting period before consummation?

    Answer: An increase in APR above a threshold, loan product change, or addition of a prepayment penalty

    A revised Closing Disclosure triggers a new 3-business-day waiting period only when the APR increases beyond tolerance, the loan product changes, or a prepayment penalty is added.

  3. Which of the following is NOT one of the six pieces of information that define a completed loan application under TRID?

    Answer: Borrower's monthly income

    The six TRID application triggers are: name, income, SSN, property address, estimated value, and loan amount — monthly income stated this way is not one of the six triggers.

  4. An MLO originates a loan knowing the borrower falsified their income documents. The MLO could be charged with:

    Answer: Mortgage fraud, a federal criminal offense

    Knowingly participating in income document falsification constitutes mortgage fraud under federal law, which is a criminal offense.

  5. A borrower is purchasing a home with an FHA loan. The MLO notices the property appraisal shows significant deferred maintenance. What should the MLO do?

    Answer: Inform the borrower and work with the lender on repair requirements per FHA guidelines

    FHA guidelines require certain property conditions to be met; the MLO should inform the borrower and follow lender procedures for required repairs.

  6. What does the term 'yield spread premium' (YSP) historically refer to in mortgage origination?

    Answer: Compensation paid by lenders to brokers for originating loans at above-par interest rates

    YSP was compensation paid by lenders to mortgage brokers when they placed borrowers in loans with interest rates above the par rate, often without the borrower's knowledge.

  7. Under the Homeowner Protection Act (PMI Cancellation Act), when can a borrower request cancellation of private mortgage insurance?

    Answer: When the LTV ratio reaches 80% based on original value and the borrower has a good payment history

    The Homeowner Protection Act allows borrowers to request PMI cancellation when the LTV reaches 80% of the original purchase price or appraised value, whichever is lower, with a good payment history.