Under which of the following circumstances, if any, is an interest-only loan considered a qualified mortgage under the Consumer Financial Protection Bureau (CFPB) guidelines?
Rationale
Interest-only loans are not qualified mortgages (D) due to their risky nature, per CFPB guidelines.
Which of the following loans is financing where interim draws are provided at various stages of home construction and is subsequently converted to a single final loan after the completion of the home?
Rationale
Construction-to-permanent loans (D) provide interim draws during construction and convert to a final loan. Bridge loans (A) are short-term, purchase money loans (B) are for home purchases, and home improvement loans (C) are for renovations.
Which of the following items is a liquid asset?
Rationale
Publicly traded stocks (B) are liquid assets, easily convertible to cash. Jewelry (A), business net worth (C), and automobiles (D) are less liquid.
A lender is permitted to accept the employment information provided by the borrower on the initial loan application without asking for a letter of explanation in which of the following circumstances?
Rationale
Stable employment for three years (B) typically doesn"t require explanation. Lack of industry history (A), high-level positions for graduates (C), or distant residences (D) may raise underwriting concerns.
A mortgage loan originator's (MLO's) unique identifier is used to facilitate electronic tracking of the MLO; is their identification for public access to review their employment history and adjudicated disciplinary and enforcement actions; and is:
Rationale
The MLO"s unique identifier is restricted to SAFE Act purposes (D), not for credit reports (A), modification (B), or government inquiries (C).
Claiming in an advertisement that a product offered is a government loan or loan program or is otherwise endorsed or sponsored by any government entity when it, in fact, has no government affiliation is:
Rationale
False government affiliation claims are prohibited in dwelling-secured credit ads (A). Commercial property (B) is irrelevant, and single-family (C) or lender knowledge (D) don"t exempt violations.
Locking file cabinets, keeping passwords private and encrypting sensitive customer information are basic practices used to protect borrowers' personal information and comply with the:
Rationale
The Gramm-Leach-Bliley Act (A) requires safeguarding borrower information. TILA (B) covers disclosures, HMDA (C) covers data collection, and RESPA (D) covers settlement practices.
How often does the points and fees threshold change for a qualified mortgage?
Rationale
The points and fees threshold for qualified mortgages changes annually (C), per CFPB rules.
Which of the following settlement costs is considered a prepaid item?
Rationale
Real estate taxes (D) are a prepaid item, often escrowed. Closing fees (A), recording fees (B), and title insurance (C) are not prepaid.
Which of the following statements best describes the purpose of lender's title insurance?
Rationale
Lender"s title insurance protects against ownership claims (D). Physical damage (A), default (B), and borrower death (C) are not covered.
Altering a borrower's income verification to increase the likelihood of loan approval is:
Rationale
Altering income verification is fraud and prohibited by federal law (A). Underwriting waivers (B), no-income/no-asset loans (C), and government-sponsored loans (D) do not permit this.
The Consumer Handbook on Adjustable-Rate Mortgages booklet states that to calculate the change in payment for an ARM, the lender must know the:
Rationale
ARM payment changes require the index and margin (B). Floors/ceilings (A), principal/APR (C), and loan dates (D) are not sufficient.
After closing, a mortgage loan originator (MLO) believes that a borrower has engaged in suspicious activity during the mortgage application process. The MLO files a Suspicious Activity Report (SAR). The MLO is permitted to discuss the SAR with:
Rationale
SARs can only be discussed with the compliance officer (C) due to confidentiality. Discussing with borrowers (A), processors (B), or escrow officers (D) is prohibited.
Under the Home Mortgage Disclosure Act (HMDA), which of the following data may be collected about a borrower?
Rationale
HMDA allows collection of race (A) to monitor fair lending compliance. Religion (B), marital status (C), and number of children (D) are not permitted.
A mortgage loan originator gives a real estate agent baseball tickets in exchange for referrals. This activity is prohibited under which of the following acts?
Rationale
Giving tickets for referrals is a RESPA violation (D). TILA (A) covers disclosures, ECOA (B) covers discrimination, and HMDA (C) covers data reporting.
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