Practice Questions

Question 1

The practice of getting people to sell their homes at bargain prices by suggesting that certain
ethnic groups are going to move into the area is nicknamed:

Answer 1

4.Blockbusting

Question 2

You and the borrower believe an Adjustable Rate Mortgage would be best for the borrower. What
is the name of the booklet you are required to give?

Answer 2

1.CHARM Booklet

Question 3

How many days in advance of transferring a loan to another lender must the current mortgage
servicer inform that customer of the transfer to another lender who will subsequently be
servicing the loan?

Answer 3

15

Question 4

After meeting with the borrowers to complete a loan application, you return to your office and
order a Tri-Merged credit report. Now that you have a credit report, what Loan Disclosure must
you now prepare and mail (or give) to them?

Answer 4

1.Notice to Home Loan Applicant

Question 5

.In a face-to-face application, what do you do if the borrower refuses to fill out the race, ethnicity
and gender section on Section X of the 1003?

Answer 5

3.Use your best guess and complete the information in Section X of the 1003.

Question 6

6. Which is not part of the original loan application?
7. Borrower’s marital status
8. ECOA disclosure
9. Borrower provided ethnicity
10. Borrower provided birth date

Answer 6

2

Question 7

Which is not an application disclosure?

1. Servicing disclosure
2. Environmental hazard disclosure
3. Appraisal disclosure
4. APR disclosure

Answer 7

2

Question 8

.How many days prior to this loan transfer does the current mortgage servicer have to inform the
customer?

Answer 8

15

Question 9

What is not likely to happen if the lender/investor finds fraud?

1. A 1% interest rate increase on the loan
2. The lender and/or broker will be required to repurchase the loan
3. The entire loan can be called due and payable
4. The loan officer must pay back any premium made on the loan

Answer 9

1

Question 10

.What is the maximum penalty for providing false information on a federally related loan?

Answer 10

4.Up to $1,000,000 fine and jail time

Question 11

What law requires the lender to collect borrower information for first mortgages and home
improvement loans?

Answer 11

HMDA

Question 12

HMDA requires the lenders to obtain which of the following information for each borrower?

1. Age and Race
2. Race and Sex
3. Marital status and Sex
4. Marital status and Age

Answer 12

2

Question 13

16. Which of the following does RESPA require on a purchase?
17. Lead paint notice
18. A 1008
19. APR disclosure
20. Settlement cost booklet

Answer 13

4

Question 14

18.What is the minimum amount of time that a lender has to inform the borrower that they are
transferring servicing?
1.15 days
2.45 days
3.10 days
4.60 days

Answer 14

1

Question 15

19.A yield spread premium is disclosed on which document?

Answer 15

2.Good faith estimate

Question 16

20.Which is the primary law that affects mortgage loan closings?

Answer 16

3.RESPA

Question 17

If a loan officer were to take a loan application Tuesday at 1:00 p.m., what is the last day that the
good faith estimate must be mailed or disclosed?

Answer 17

3.Friday before midnight

Question 18

If you are a seller, it is acceptable to REQUIRE the use of a specific title provider:
1.if the requriement pertains to the sellers own policy only.
2.if the other service provider is an affiliate.
3.as long as you provide the borrower with the appropriate disclosure within three
business days of the loan application.
4.only if the service provider is licensed.

Answer 18

1

Question 19

RESPA imposes requirements about or prohibits all of the following except:
1.legal kickbacks and referral fees.
2.the loan origination fee.
3.the amount of prepaids.
4.information that must be disclosed to the borrower at the loan application or within 3
business days of the application

Answer 19

2

Question 20

Regulation Z requires:

1. disclosure of the settlement costs to buyers and sellers.
2. disclosure of the impound accounts and the prepaids of the borrower(s).
3. computation and disclosure of the APR to the borrowers.
4. disclosure of servicing information on the loan.

Answer 20

3

Question 21

If a borrower and a co-borrower are refinancing a home that they both occupy, at the closing -
who must receive a copy of the rescission disclosure?

Answer 21

1.Both borrowers

Question 22

If a loan is a refinance, and the loan is improperly closed and funded in one day with no three day
rescission period, how long do the borrowers have to rescind the transaction?

Answer 22

3 years

Question 23

27. What is not included in the APR calculations?
28. Mortgage insurance premium
29. Origination fee
30. Processing fee
31. Hazard/Fire insurance premium

Answer 23

4.Hazard/Fire insurance premium

Question 24

Regulation B allows all of the following except:

1. inquiries about the ages of dependents.
2. inquiries about citizenship and residency status.
3. inquiring about receiving child support and/or alimony.
4. using the terms husband or wife when inquiring about a potential co-borrower.

Answer 24

4

Question 25

f an applicant has been denied credit, how long does the lender have to get a letter of adverse action to him/her?

Answer 25

30 days

Question 26

30.If the file is inactive, for borrower non-performance a declination letter must be sent within?

Answer 26

30 days

Question 27

33. A Good Faith Estimate: 1. must be within $500 of the final costs. 2. is an estimate only and is not required to reflect the actual settlement costs. 3. should exhibit a reasonable relationship to the actual final settlement costs. 4. be within $1,000 of the final costs.

Answer 27

3.should exhibit a reasonable relationship to the actual final settlement costs.

Question 28

``` 34.If a home is purchased with an FHA owner-occupied loan, what type of FHA refinance can the borrower use to refinance? 1.FNHMA 2.USFA 3.IRRRL 4.Streamline ```

Answer 28

4.Streamline

Question 29

Which of the following must be provided to the client on an ARM loan? 1. The “Consumer Handbook on Adjustable Rate Mortgages” 2. The “ARM Handbook” 3. “When Your Home is on the Line" 4. "Your Settlement Costs and You” booklet by HUD

Answer 29

1.The “Consumer Handbook on Adjustable Rate Mortgages”

Question 30

The CHARM booklet was prepared by: 1. the CFPB. 2. The Dept. of Housing and Urban Development. 3. The Federal Housing Administration. 4. The Federal Reserve Board.

Answer 30

Correct Choice:4

Question 31

38. The following two disclosures are required by RESPA, if applicable: 1. 1003 and AfBA 2. LE and AfBA 3. 1003 and 1008 4. Borrower’s Signature Authorization and GFE

Answer 31

2.LE and AfBA

Question 32

Which of the following are functions of FACTA? (Select all that apply) 1. To improve consumer access to credit information 2. To improve resolution of consumer disputes with credit agencies 3. To prevent identity theft and restore credit history to victims of identity theft 4. All of the above

Answer 32

4.All of the above

Question 33

43. What is the objective of FCRA? 1. To assure fairness, relevancy, confidentiality, and accuracy 2. To assure all borrowers have no access to credit information 3. To make sure that obsolete information cannot be deleted 4. Insure that credit reports are never seen by the borrower

Answer 33

1.To assure fairness, relevancy, confidentiality, and accuracy

Question 34

Under the FCRA, when must credit reporting agencies delete obsolete information?

Answer 34

.10 years from the date opened, except for bankruptcies

Question 35

46.When is it legal and/or acceptable for the loan originator to provide the consumer with a copy of his/her credit report? 1.Never 2.When the customer pays for it 3.When the customer requests it 4.When contracts with the credit reporting agency do not prohibit it

Answer 35

4.When contracts with the credit reporting agency do not prohibit it

Question 36

48. Regulation B does which of the following? 1. Protects a borrower from fraudulent use of their information 2. Requires Upfront Mortgage Insurance on all FHA loans 3. Provides equality in the extension of credit 4. Regulates advertising of APR

Answer 36

3.Provides equality in the extension of credit

Question 37

.Who provides the Annual Escrow Account Disclosure Statement?

Answer 37

The Servicing Lender

Question 38

When is an Affiliated Business Agreement required?

Answer 38

.If an affiliated business is providing services

Question 39

.Which of the following is a purpose of RESPA? 1. To regulate interest rates 2. To monitor high cost loans 3. To eliminate kickback and referral fees 4. To track real estate settlement trends

Answer 39

3.To eliminate kickback and referral fees

Question 40

52. What is a purpose of the Truth in Lending Act? 1. To enable consumers to compare the cost of credit from lender to lender 2. To keep loan officers honest 3. To prevent kickback and referral fees 4. To oversee commercial lending

Answer 40

1.To enable consumers to compare the cost of credit from lender to lender

Question 41

If an advertisement contains TRIGGER TERMS, what must then be disclosed? 1. APR only 2. APR and payment amount 3. Interest rate, term, balance, and APR 4. Interest rate, closing costs, and APR

Answer 41

3.Interest rate, term, balance, and APR

Question 42

55. Which of the following is not a prepaid finance charge? 1. Origination fee 2. Discount point 3. Upfront Mortgage Insurance Premium 4. Appraisal fee

Answer 42

4.Appraisal fee

Question 43

56. What is the purpose of HMDA? 1. To detect discriminatory lending 2. To prevent high cost loans 3. To regulate Home Mortgage Appraisals 4. To oversee the FHA

Answer 43

1.To detect discriminatory lending

Question 44

57. Regulation B is affiliated with which act? 1. TILA 2. ECOA 3. HMDA 4. HOEPA

Answer 44

2.ECOA

Question 45

ECOA prevents discrimination based on 1. Income 2. Marital Status 3. Location 4. Employment

Answer 45

2.Marital Status

Question 46

The practice of denying home financing in certain neighborhoods is called: 1. Redlining 2. Bait and switch 3. Dart boarding 4. Skimming

Answer 46

1.Redlining

Question 47

How long must a brokerage owner keep records?

Answer 47

3 years

Question 48

61. Which of the following is an example of a subprime loan?1.2/28 2. 3/1 3. 5/1 4. 7/1

Answer 48

1.2/28

Question 49

62. A 360/180 best describes what type of loan? 1. Subprime 2. FHA 3. Balloon 4. ARM

Answer 49

3.Balloon

Question 50

63. How often must a borrower receive an annual privacy notice according to the GLBA? 1. As long as they are customers 2. Every 6 months 3. Only at closing 4. With initial disclosures, then annually for the first 5 years

Answer 50

1.As long as they are customers