MLO Revolutionary Guide To Exam NMLS Dumps [Q66-Q82]

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MLO Revolutionary Guide To Exam NMLS Dumps

MLO Free Study Guide! with New Update 123 Exam Questions

QUESTION 66
Prepaid charges include which of the following items?

Origination fee

Credit report fee

Conveyance tax

Per diem interest

Prepaid charges refer to certain upfront costs paid at closing. These include:
* Per diem interest (D), which covers the interest from the closing date to the end of the month.
Other items like origination fees (A), credit report fees (B), and conveyance taxes (C) are not considered prepaid charges; they are typically categorized as closing costs or settlement fees.
References:
* Real Estate Settlement Procedures Act (RESPA)
* TILA-RESPA Integrated Disclosures (TRID)

QUESTION 67
According to the Equal Credit Opportunity Act (ECOA), which of the following terms is defined as a refusal to grant credit based on the requested loan terms, an unfavorable change in loan terms, or a termination of an account/application?

Adverse action

Account closure

Credit closure

Denial of credit

Under the Equal Credit Opportunity Act (ECOA), the term adverse action is defined as a refusal to grant credit based on the requested loan terms, an unfavorable change in loan terms, or a termination of an account
/application. This can include:
* Denying a credit application.
* Offering credit on terms different from those requested.
* Closing an existing credit account.
Lenders must provide a formal notice of adverse action, explaining the reasons for the denial or change in terms, to comply with ECOA’s requirements for transparency and fairness.
Other options:
* Account closure (B) and credit closure (C) are not specific ECOA terms.
* Denial of credit (D) is a form of adverse action but does not cover all situations like a change in loan terms.
References:
* Equal Credit Opportunity Act (ECOA), 15 U.S.C. §1691(d)
* Regulation B (12 CFR Part 1002)

QUESTION 68
Which of the following is not a primary function for compensation undertaken by a mortgage loan originator on an FHA loan?

Taking an application

Offering or negotiating credit terms

Assisting a consumer in applying for credit

Performing real estate brokerage activities

Real estate brokerage activities are not a primary function of a mortgage loan originator (MLO). The MLO’s primary role is to assist consumers in taking an application (A), offering or negotiating credit terms (B), and helping consumers apply for credit (C).
* Real estate brokerage activities, such as negotiating real estate transactions, are separate from the loan origination process and require different licensing and qualifications.
References:
* SAFE Act, 12 USC §5101
* NMLS MLO Licensing Guidelines

QUESTION 69
Which of the following services is included in the definition of a settlement service?

Flood insurance

Homeowners association fees

Title company/escrow agent services

Sale of the mortgage loan on the secondary market

Under RESPA (Real Estate Settlement Procedures Act), settlement services include activities related to closing the mortgage loan, such as title company services and escrow agent services. These services are integral to the settlement process and ensure that the transaction is completed legally and correctly.
* Flood insurance (A) is required for properties in flood zones but is not considered a settlement service.
* Homeowners association fees (B) and the sale of the mortgage loan on the secondary market (D) are also not part of the settlement services.
References:
* RESPA (Real Estate Settlement Procedures Act), 12 USC §2602
* CFPB RESPA Guidelines on settlement services

QUESTION 70
Which of the following lender payments is prohibited according to Real Estate Settlement Procedures Act (RESPA)?

A payment to an attorney for services actually rendered

A payment to a real estate agent for loan referral activities

A payment to its own employees for lender referral activities

A payment to the lender’s duly appointed agent or contractor for services actually performed in the origination, processing or funding of a loan

Under RESPA (Real Estate Settlement Procedures Act), Section 8 prohibits any payment, kickback, or unearned fee in exchange for loan referrals. This includes payments to real estate agents or other third parties for referring business to lenders or mortgage brokers. Such payments are illegal because they could inflate the cost of settlement services and are not tied to any actual services rendered.
* Payments for actual services (A, D), such as payments to attorneys or contractors for legitimate work, are allowed under RESPA, but paying for loan referrals (B) is strictly prohibited.
References:
* RESPA (Real Estate Settlement Procedures Act), Section 8
* CFPB RESPA Guidance

QUESTION 71
Which of the following loan types is regulated by the Home Ownership and Equity Protection Act (HOEPA)?

Refinance

Construction

Reverse mortgage

USDA Rural Development

The Home Ownership and Equity Protection Act (HOEPA) applies to certain types of high-cost loans, particularly refinance and home equity loans, that meet specific APR and fee thresholds. HOEPA was enacted to protect consumers from predatory lending practices in loans that carry excessive fees, high interest rates, or abusive terms.
* HOEPA mainly covers:
* Refinance loans
* Home equity loans
* Closed-end home equity loans
* Certain purchase-money mortgages under specific conditions
Loans like construction loans (B), reverse mortgages (C), and USDA Rural Development loans (D) are generally excluded from HOEPA coverage.
References:
* Home Ownership and Equity Protection Act (HOEPA), 15 U.S.C. § 1639
* CFPB HOEPA Guidelines

QUESTION 72
According to Regulation Z, which of the following is a prohibited act?

Including undocumented child support payments made by the borrower

Issuing disclosures to applicants

Redisclosing a Loan Estimate immediately after locking the rate

Advertising rates not currently available to applicants

Under Regulation Z, which implements the Truth in Lending Act (TILA), it is a prohibited act to advertise mortgage rates that are not currently available to applicants. This rule ensures transparency in advertising, preventing lenders from misleading consumers with rates or terms that they cannot actually offer.
* Advertising must reflect current, accurate rates and must not mislead borrowers about the costs or availability of loans.
Other options:
* Including undocumented child support (A) may violate documentation standards but is not prohibited under Regulation Z.
* Issuing disclosures (B) and re-disclosing Loan Estimates (C) are required actions under TILA and TRID.
References:
* Regulation Z (TILA), 12 CFR Part 1026
* CFPB Advertising Rules under TILA

QUESTION 73
Which of the following scenarios describes an assumable loan?

A borrower has an option to take out a second mortgage

A borrower has an option to choose a loan servicer.

A purchaser of a property may be able to take over the existing loan payments.

A loan holder can sell the loan.

An assumable loan is a loan in which a purchaser of a property has the option to take over the existing loan payments under the same terms as the original borrower. This can happen with certain types of loans, such as FHA or VA loans, which allow the buyer to assume the mortgage, potentially at a more favorable interest rate than current market rates.
* Options like taking out a second mortgage (A), choosing a loan servicer (B), or selling the loan (D) do not describe assumable loans.
References:
* FHA Guidelines on Assumable Loans
* VA Loan Assumption Guidelines

QUESTION 74
A licensed mortgage loan originator (MLO) sharing his commission with another licensed MLO at his company for actual services performed on a loan is considered which of the following terms?

Tip sharing

Fee splitting

Single fee method

Double fee method

When a licensed mortgage loan originator (MLO) shares their commission with another licensed MLO at the same company for actual services performed on a loan, it is referred to as fee splitting.
* Fee splitting is legal and permissible under certain conditions, such as when both MLOs are licensed and have contributed to the loan’s origination, processing, or closing in a meaningful way. This is different from illegal kickbacks, which are prohibited under RESPA.
* Fee splitting must comply with all applicable state laws and company policies to ensure transparency and that all compensation is based on legitimate work performed.
References:
* Real Estate Settlement Procedures Act (RESPA) Section 8 (regulating kickbacks and fee splitting)
* National Mortgage Licensing System (NMLS) guidelines on compensation

QUESTION 75
A mortgage loan originator (MLO) originates a 5/1 ARM where the indexed rate is likely to be higher than the introductory rate. The Truth in Lending Act (TILA) states that an MLO must calculate a borrower’s monthly Payment amount based on which of the following?

Payment amount during the fixed introductory period

An average of the varying payment amounts over the life of the loan

The total amount of the payments

Fully indexed rate of the loan

Under the Truth in Lending Act (TILA), for adjustable-rate mortgages (ARMs) like a 5/1 ARM, the MLO must calculate the borrower’s monthly payment amount based on the fully indexed rate, not the introductory rate. The fully indexed rate is the sum of the index and the margin at the time of origination, reflecting the potential payment increases after the introductory period ends.
* This requirement ensures borrowers understand what their payments could be after the rate adjusts, helping them evaluate the true affordability of the loan.
References:
* Truth in Lending Act (TILA), 12 CFR Part 1026 (Regulation Z)
* CFPB ARM Guidelines

QUESTION 76
According to the Truth in Lending Act (TILA), which of the following advertising statements does not require additional disclosures to supplement the advertisement?

“Payments as low as $600 for a $100,000 mortgage”

“Only 1 point up front to get you in a home”

“15-year and 30-year mortgages available”

“Come in today for your free consultation”

Under TILA’s advertising rules (Regulation Z), general statements such as “Come in today for your free consultation” do not trigger the requirement for additional disclosures. This type of advertisement does not include specific loan terms like payment amounts, interest rates, or other terms that would require further explanation.
* Advertisements with terms like “Payments as low as $600” (A) or “1 point up front” (B) are triggering terms under TILA and would require additional disclosures about the APR, loan term, and other conditions.
References:
* Truth in Lending Act (TILA), 12 CFR Part 1026 (Regulation Z)
* CFPB Advertising Guidelines on TILA

QUESTION 77
During the loan application process, which of the following documents specifies the time period that a mortgage lender agrees to hold the mortgage interest rate at a certain percentage?

Loan application

Preapproval letter

Closing Disclosure

Rate lock agreement

A rate lock agreement is the document that specifies the time period during which a mortgage lender agrees to hold the interest rate at a certain percentage for the borrower. It guarantees that the rate will not change, even if market interest rates fluctuate, as long as the loan closes within the agreed-upon timeframe.
* The loan application (A) initiates the mortgage process, but it does not secure the interest rate.
* A preapproval letter (B) gives a preliminary loan approval but does not lock the rate.
* The Closing Disclosure (C) provides final loan terms but does not set the rate lock.
References:
* Fannie Mae and Freddie Mac rate lock policies
* CFPB Guidelines on rate lock agreements

QUESTION 78
Which of the following documents is a real estate conveyance?

Quit claim deed

Promissory note

Mortgage instrument

Occupancy certificate

A quit claim deed is a legal document used in real estate transactions to convey ownership or interest in a property from one party to another. It transfers the grantor’s interest in the property without any warranties or guarantees about the property’s title.
* Promissory notes (B) represent a borrower’s promise to repay a loan.
* Mortgage instruments (C) create a lien on the property but do not convey ownership.
* Occupancy certificates (D) certify that a property complies with regulations for occupancy but are not involved in transferring ownership.
References:
* Real Estate Law on property conveyances
* Fannie Mae Deed and Title Transfer Guidelines

QUESTION 79
How many days after loan consummation does a lender have to refund an excess charge subject to the 10% aggregate tolerance?

45 days

50 days

60 days

90 days

Under TILA-RESPA Integrated Disclosure (TRID) rules, if a lender overcharges the borrower by more than the allowable 10% aggregate tolerance on certain closing costs, the lender must refund the excess amount to the borrower within 60 days of loan consummation. The 10% tolerance applies to certain fees like title insurance and government recording fees, ensuring that the lender provides accurate estimates on the Loan Estimate (LE) and does not exceed allowable variances at closing.
References:
* TILA-RESPA Integrated Disclosure Rule (TRID), 12 CFR §1026.19(f)
* CFPB Guidelines on refund timelines

QUESTION 80
Which of the following reasons is acceptable for denying a loan under the Equal Credit Opportunity Act (ECOA)?

Receipt of child support

Immigration status

Marital status

Country of birth

Under the Equal Credit Opportunity Act (ECOA), lenders can deny a loan based on immigration status, as it directly relates to the borrower’s ability to legally reside and work in the country. Lenders must ensure that the borrower has the legal capacity to enter into a binding contract and that they are authorized to work in the U.S. for the loan’s duration.
* Receipt of child support (A), marital status (C), and country of birth (D) are protected characteristics under ECOA, meaning a lender cannot deny credit based on these factors.
References:
* Equal Credit Opportunity Act (ECOA), 15 U.S.C. §1691
* CFPB Regulation B

QUESTION 81
When a mortgage loan originator notices multiple Social Security number discrepancies within the same loan file, it is considered a red flag of:

fair lending.

mortgage fraud.

a forgetful borrower.

pricing discrepancies.

When multiple discrepancies in a borrower’s Social Security number (SSN) are found within the same loan file, it raises concerns of mortgage fraud. The Social Security number is a critical identifier used to verify a borrower’s identity, credit history, and employment. Inconsistent or altered SSNs may suggest attempts to hide the true identity of the borrower, which can be an indicator of fraudulent activity.
* Mortgage fraud involves deliberate misrepresentation of information on loan applications, documents, or other parts of the mortgage process. SSN discrepancies can point to identity theft or attempts to use multiple identities to obtain a loan fraudulently.
* This is a serious concern under the Fair Credit Reporting Act (FCRA) and can lead to legal action if discovered during underwriting or later in the loan process.
Mortgage loan originators (MLOs) must report such discrepancies as they may violate federal laws like RESPA and TILA and lead to further investigation.
References:
* Federal Trade Commission (FTC) guidelines on identity theft
* Mortgage Acts and Practices (MAP) Rule

QUESTION 82
Offering or negotiating the terms of a loan includes which of the following actions?

Providing general explanations or descriptions in response to a consumer’s inquiry

Making an underwriting decision about whether an applicant qualifies for a loan

Presenting particular loan terms to an applicant verbally, in writing, or otherwise

Arranging the loan closing or other aspects of the loan process

Under the SAFE Act, offering or negotiating the terms of a loan includes presenting specific loan terms to an applicant, whether verbally, in writing, or through any other communication method. This activity directly involves discussing or negotiating loan details like interest rates, loan amounts, and repayment terms, which requires licensure as a mortgage loan originator (MLO).
* Providing general explanations (A) and arranging loan closings (D) do not require an MLO license because they do not involve negotiating or offering specific loan terms.
* Making underwriting decisions (B) is also a separate activity not considered “offering or negotiating” loan terms.
References:
* SAFE Act, 12 USC §5101
* NMLS Guidelines on MLO licensure requirements

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