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
Under the Dodd-Frank Act's loan originator compensation rules, an MLO's compensation may NOT be based on:
Answer: The interest rate or other loan terms
Regulation Z prohibits MLO compensation from being based on the terms of the loan, including interest rate, APR, or loan type, to prevent steering incentives.
A borrower applies for a mortgage but the MLO fails to provide the Loan Estimate within 3 business days. Under TRID, what is the consequence?
Answer: The lender cannot charge fees that exceed those on the untimely disclosure
If the Loan Estimate is not provided timely, the lender cannot collect fees that were not properly disclosed, limiting what can be charged at closing.
Which of the following would be considered a 'red flag' indicating potential mortgage fraud during the origination process?
Answer: A purchase price significantly higher than comparable sales with seller-paid concessions equal to the difference
An inflated purchase price offset by large seller concessions is a classic sign of property flipping fraud or value inflation schemes.
What is the role of an MLO when a borrower is not approved for a mortgage and receives an adverse action notice?
Answer: The MLO should explain the adverse action notice and discuss potential steps to improve the borrower's eligibility
While the adverse action notice is issued by the lender, ethical MLOs explain the notice and help borrowers understand steps they may take to qualify in the future.
The Home Mortgage Disclosure Act (HMDA) requires lenders to collect and report data primarily to:
Answer: Help identify discriminatory lending patterns and ensure lenders serve their communities
HMDA data is collected to help regulators, public officials, and the public identify discriminatory lending patterns and assess whether lenders are meeting community credit needs.
A borrower wants to include gift funds for the down payment on a conventional loan. What documentation is typically required?
Answer: A signed gift letter stating the funds are a gift and not a loan, plus evidence of transfer
Conventional loan guidelines require a signed gift letter confirming the funds are not a loan and documentation showing the transfer of funds from donor to borrower.
Under the S.A.F.E. Act, which of the following individuals must be licensed as an MLO?
Answer: An individual who negotiates mortgage terms directly with consumers for compensation
The S.A.F.E. Act requires licensing for any individual who takes a residential mortgage loan application or offers or negotiates terms of a mortgage for compensation.