Download NMLS Module 2 Final Practice Exam: Mortgage Loan Originator Knowledge and more Exams Forensics in PDF only on Docsity!
NMLS MODULE 2 FINAL PRACTICE EXAM
WITH CORRECTLY ANSWERED QUESTIONS
"Balloon payment qualified mortgages - CORRECT ANSWER May be made by small creditors in
rural/underserved areas" "Which of the following loan programs does not require repayment as long as the homeowner lives in the home.
HELOC, Option-ARM, Subprime mortgage, reverse mortgage - CORRECT ANSWER Reverse
mortgage"
"Construction loans generally come in two different forms. They are - CORRECT ANSWER
Construction-to-permanent and standalone construction loans" "Which of the following is an example of an open-ended credit? Qualified Mortgage HELOC Fixed-rate purchase money mortgage
Adjustable-rate mortgage to finance a home purchase - CORRECT ANSWER HELOC"
"Name another term for a junior lien - CORRECT ANSWER Subordinate lien"
"Which of the following best describes a loan used to finance a property in an amount that exceeds Fannie Mae, and Freddie Mac's loan limits? Jumbo loan Non-conventional loan FHA loan
VA loan - CORRECT ANSWER Jumbo Loan"
"USDA loans are primarily for properties located in - CORRECT ANSWER rural areas"
"Examples of loans that are typically secured by a subordinate lien include - CORRECT
ANSWER A purchase money mortgage"
"Concerning ARMs, margin is best defined as: - CORRECT ANSWER A number, expressed as a
percentage, that represents a lenders operating costs and profit margin"
"Why are FHA loans beneficial to lenders? - CORRECT ANSWER They are insured by the
federal government" "A(n)__________ is a loan with an interest rate that can adjust monthly and also offers a borrower a number of payment choices such as 30 or 15 year P&I, interest-only, or a 1% minimum
payment, which may result in negative amortization. - CORRECT ANSWER Option-ARM"
"Interest-only loans were popular when borrowers could qualify for them based on - CORRECT
ANSWER the introductory rate"
"What does APR mean? - CORRECT ANSWER Annual Percentage Rate"
"This loan offers backing from the federal government without using taxpayer dollars. -
CORRECT ANSWER FHA loans"
"Which of the following loan types is best described as a loan with a payment schedule made up
of a series of small periodic payments and a larger lump sum due upon maturity? - CORRECT
ANSWER A loan with a balloon payment provision"
"The Ability to Repay Rule applies to - CORRECT ANSWER Most lending transactions other
than those for reverse mortgages and open-end loans" "The Cost of Funds Index is traditionally associated with interest rate calculations for which of the following: ARMs Home equity line of credit 15 and 30 year fixed rate program
Reverse Mortgage - CORRECT ANSWER ARMs"
"A borrower has applied for a refinance on her property valued at $235,000. She currently has a HELOC with a $47,000 limit and currently owes $25,850. The borrower has applied for a first mortgage of $164,500. Which of the following LTV, CLTV, and HLTV are accurate based on this information? 70%/83%/100% 70%/81%/90% 65%/80%/91%
70%/80%/95% - CORRECT ANSWER 70%/81%/90%"
"PMI is used to serve what purpose? - CORRECT ANSWER To cover the risk of lending to a
consumer without a sufficient down payment" "The disadvantage of holding an interest in property as a leasehold instead of holding it in fee
simple is that - CORRECT ANSWER Holding property as a leasehold does not give the
consumer unconditional power of disposition of the propert during his/her life and the ability to pass teh law property onto his/her heirs"
"A borrower asks for the definition of a "point." It is.... - CORRECT ANSWER 1% of the loan
amount, it is used to reduce the rate" "A borrower would be required to receive a CHARM Booklet, and an ARM disclosures for all, BUT which of the following. Following application, a borrower chooses an adjustable-rate loan A borrower floats in order to obtain the best interest rate but finally decides to lock in with a 3/ ARM. During the loan processing period, the borrower switches from a 30-year-fixed rate to a 5/1 ARM
A borrower chooses a fixed-rate loan with a 15-year term - CORRECT ANSWER A borrower
chooses a fixed-rate loan with a 15-year term" "Appraisals that use the sales comparison approach include which of the following? An analysis of what it would cost to rebuild the property. Comparison of the national average home value against the subject property
Comparison of value for three similar, recently sold properties
Review of recently-listed real estate prices within a specific geographic area - CORRECT
ANSWER Comparison of value for three similar, recently sold properties"
"WHen calculating finance charges in compliance with TILA, alll of the following are included, BUT Private Mortgage Insurance Premiium Broker Fees Settlement Fees
Closnig agent fees, when the borrower chooses the closing agent - CORRECT ANSWER closing
agent fees, when the borrower chooses the closing agent." "Which of the following is included when calculating finance charges? Seller points Appraisal fees paid to an apraiser chosen by the borrower charges payable in a comparable cash trasaction
interest - CORRECT ANSWER interest"
"A lender must advice a loan applicant about the status of their loan application within -
CORRECT ANSWER 30 days"
"This involves conspiratorial involvement of mortgage professionals using the mortgage market
to benefit financially from criminal behavior. - CORRECT ANSWER Fraud for profit"
"RESPA applies to - CORRECT ANSWER Federally regulated loans
Virtually all residential mortgages secured by real property." "According to fair lending laws, which of the following may loan applicants be asked to disclosure for HDMA data collection? If they will stop working after they have children Their race If they want more than one child
Their religion - CORRECT ANSWER Their race"
Underwriting fee Appraisal fee Credit report fee
application fee - CORRECT ANSWER Credit Report Fee"
"Does the closing disclosure need to be in writing? - CORRECT ANSWER YES"
"Under the Gramm-Leach-Bliley Act, which of the following is considered nonpublic information? Assessed value of a subject property Borrower's current loan balances Former owners of property
The street address of intended purchase - CORRECT ANSWER Borrower's current loan
balance"
"Which federal agency has supervisory responsibility for TILA compliance? - CORRECT
ANSWER CFPB"
"The Gramm-Leach-Bliley Act specifiec that a consumer must be given_____to opt out before personal financial information is disclosed to a 3rd party. 90 days 15 days A reasonable opportunity
Seven business day - CORRECT ANSWER A reasonable opporunity"
"Why did Congress enact the Home Mortgage Disclosure Act (HMDA)? - CORRECT ANSWER To
help identify patterns of discriminatory lending" "Which federal agency is responsible for implementation and enforcement of the USA Patriot
Act? - CORRECT ANSWER The treasury department"
"Who is responsible for ensuring that the LE is provided? - CORRECT ANSWER Mortgage Loan
Originator"
“Which of the following is available to a borrower when the subject property is located in a flood
zone and flood insurance is required? - CORRECT ANSWER FEMA's National Flood Insurance
Program" "Which of the following best represents a loan that fails to meet Fannie Mae and Freddie Mac's underwriting guidelines? A non-conforming loan A conventional loan for $150, A conforming loan
A subprime loan - CORRECT ANSWER A non-conforming loan"
"Which of the following is true of VA loans? They are only available for 30-year terms They require a 5.5% borrower investment They require mortgage insurance premium
They are assumable - CORRECT ANSWER They are assumable"
"In order for a small creditor balloon payment mortgage to be qualified mortgage, the small
creditor must hold the loan in its portfolio for: - CORRECT ANSWER Three years"
"Community Mortgage Bank (CMB) is a small creditor in a rural area. CMB holds the loans it originates in its portfolio until they are paid in full. CMB tries to limit its transtacions to those for qualified mortgages. In a balloon payment QM transaction, the transaction must meet all of the following criteria, BUT: The loan must have a fixed interest rate The loan term must be at least five years old, and no more than 30 years The borrower must have a DTI of no more than 43%
The borrower must have an established ability to repay - CORRECT ANSWER The borrower
must have a DTI of no more than 43%" "Which of the following would detail the principal and interest payments due on a loan? Provisions for lifetime rate caps the index the amortization schedule
the margin - CORRECT ANSWER The amortization schedule"
"VA loans require which of the following? Mortgage insurance premium
FEMA's Nationwide Flood Initative Program
FEMA's National Flood Insurance Program - CORRECT ANSWER FEMA's National Flood
Insurance Program" "A borrower is obtaining a refinance through a lender who requires payment of PMI on first lien mortgages with LTV ratios over 80%. The property is valued at $221,000, and the borrower has a HELOC with a balance of $46,000. The borrower has applied for a first mortgage if $175,000 with a 15-year fixed rate of 6.5%. Which of the following statements is correct? The lender will not require mortgage insurance The LTV is 100% The lender will require mortgage insurance
The LTV is 90% - CORRECT ANSWER The lender will not require mortgage insurance"
"Which of the following pieces of personal information is a borrower asked to provide voluntarily on the loan application? Marital status/age Sex/childbearing plans Race/ethnicity/sex
Race/age/marital status - CORRECT ANSWER Race/ethnicity/sex"
"John and Jane Brown are co-owners of a property that is their principal residence, and are entering into a refinance transaction that is subject to rescission. John is provided with one copy
of the Notice of Right to Cancel, and Jane receives none. What is their deadline for rescission? -
CORRECT ANSWER Midnight on the third day following closing"
"Five siblings have ownership rights to a property. If a refinance transaction affecting the property is subject to rescission, how many of these individuals must submit a rescission notice in
order to void the loan? - CORRECT ANSWER Any one of the five"
"It is legal for settlement service provider A to pay settlement service provider B a portion of fees charged to a borrower only when.... Service provider B has performed bona fide services to earn the fee The consumer is aware the service providers are splitting fees Both service providers have a written agreement to split fees
The service providers are seperate entities and not affiliated in any way - CORRECT ANSWER
Service provider B has performed bona fide services to earn the fee"
"Mr. Jones' loan application has been denied, and the loan originator provides him with an adverse action notice as required by ECOA. The notice would include all of the following EXCEPT Credit score description of credit requested info on the CRA if adverse action is based on credit report
reasons for denial of credit - CORRECT ANSWER credit score"
