SAFE Origination Activities 3

Question 1

Which federal law requires MLOs to provide the Loan Estimate within 3 business days of receiving a complete loan application?

Accepted Answer

TRID (combining TILA and RESPA)

Answer

TRID (the TILA-RESPA Integrated Disclosure rule) requires delivery of the Loan Estimate within 3 business days of application.

Question 2

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?

Accepted Answer

3 business days

Answer

TILA grants borrowers a 3-business-day right of rescission for refinances and second mortgages on their primary residence.

Question 3

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?

Accepted Answer

3%

Answer

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.

Question 4

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:

Accepted Answer

Loan flipping

Answer

Loan flipping is the repeated refinancing of a loan primarily to generate fees and commissions, with little benefit to the borrower.

Question 5

Which of the following best describes the concept of 'steering' in mortgage lending?

Accepted Answer

Directing borrowers to loan products that benefit the MLO at the borrower's expense

Answer

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.

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

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

SAFE Origination Activities 3