NMLS Test Prep Latest Updated with Complete Solution

Reg B - ANSWER ECOA Reg C - ANSWER HMDA Reg G - ANSWER SAFE - registered Reg H - ANSWER SAFE - licensed Reg N - ANSWER MAP Rule Reg P - ANSWER GLB Act Reg V - ANSWER FCRA Reg X - ANSWER RESPA Reg ...

Reg B - ANSWER ECOA Reg C - ANSWER HMDA Reg G - ANSWER SAFE - registered Reg H - ANSWER SAFE - licensed Reg N - ANSWER MAP Rule Reg P - ANSWER GLB Act Reg V - ANSWER FCRA Reg X - ANSWER RESPA Reg Z - ANSWER TILA LE - ANSWER Requires business days to include all days open Does count for business days for CD include Saturdays? - ANSWER No - requires business days to include all but Sun/Holidays Elements of a Completed Application - ANSWER Name Address Subject property Value of property Income Loan amount Material Disclosures - ANSWER APR Finance charges Total of payments Payment schedule HOEOA discl (if HCM) Finance Charges - ANSWER (C)losing agent, settlement (O)rigination, processing, UW - anything creditor keeps (I)nterest & insurance - MIP, PIM (M)ortgage broker fees Foreclosure Right of Recision tolerances - ANSWER - understated by $35 or less - more than needed to be disclosed - broker fee wasn't included in finance charges - proper format not used for discl REG Z/TILA Right of Rescission - how long does a borrower have to excercise RoR? - ANSWER 3 days - excl Sun/holiday Right of Rescission - covers - ANSWER - Open and closed for primary dwelling - refi w/ new lender Right of Rescission - copies - ANSWER Requires 2 to all with ownership interest at closing Right of Rescission - exercising - ANSWER Only requires one person to cancel When can the 3 day waiting period for the Right of Rescission be waived? - ANSWER Financial emergency only, requires lender approval Right of Rescission - extension - ANSWER 3 yrs if not given all Material Disclosures Right of Rescission - time to return funds - ANSWER 20 days Penalty for violation of Do Not Call - ANSWER $16k Penalty for Fraud - ANSWER $1M and/or 30 years Penalty for violation of SAFE Act - ANSWER $25k Penalty for referral violation - ANSWER $10k and/or 1 year CFPB has regulatory authority for all but... - ANSWER Patriot Act Do Not Call Fair Housing Act APR Tolerance under TILA - regular loan - ANSWER 1/8% APR Tolerance under TILA - irregular loan - ANSWER 1/4% Finance Charge tolerance under TILA - ANSWER 1/2% or $100 Finance Charge tolerance under TILA - refi with new lender - ANSWER 1% or $100 Loan Estimate Accuracy Tolerance - ANSWER 10% aggregate Closing Disclosure - what loans does it not apply to? - ANSWER Not ROT - Reverse Open Trailer Closing Disclosure - when is it due? - ANSWER 3 days before closing (excl Sun/holiday) Closing Disclosure - can you charge a prep fee? - ANSWER No Closing Disclosure - what changes trigger a new discl/waiting period? - ANSWER APP requires another 3! APR Product Prepay penalty added Closing Disclosure - tolerances? - ANSWER 0% if not shopped 10% if shopped 60 days to return overpayment Closing Disclosure - who is responsible for providing to seller and when? - ANSWER Closing agent must provide at closing Loan Estimate - what loans does it not apply to? - ANSWER Not ROT Reverse Open Trailer Loan Estimate - timeframes? - ANSWER 3 open days after application Considered rec'd in 3 business days if mailed 7 days before closing (excl Sun/holidays) Loan Estimate - when is it not required? - ANSWER Determination made within 3 days that loan is not approved Loan Estimate - what fees can you collect before providing? - ANSWER ONLY credit report fee Loan Estimate - what is the Good Faith tolerance? - ANSWER 0% if not shopped/paid to creditor AND origination fees 10% if shopped Loan Estimate - when is revised copy required? - ANSWER Day of change if interest rate changes AND day locked in Other changes: w/in 3 days of getting info, 4 days before closing Loan Estimate - what is on what pages? - ANSWER Terms - pg 1 Costs - pg 2 Addtnl Info - pg 3 Loan Estimate - what fees CAN change? - ANSWER Prepaid interest Property ins premium Escrow amount 3rd party bore chose 3rd party not req Loan Estimate - what fees CAN'T change? - ANSWER Credit/broker affiliates Can't shop fees Transfer taxes Higher priced mortgage loans - who regulates? - ANSWER TILA/Reg Z Higher priced mortgage loans - what loans are covered? - ANSWER Closed-end Primary dwelling Higher priced mortgage loans - what interest rate makes it HPML? - ANSWER 1st, conforming: 1.5% over prime 1st, non-conforming: 2.5% over prime Subprime: 3.5% over prime Higher priced mortgage loans - what additional requirements do they have? - ANSWER Escrow account for longer - at least 5 years Additional appraisal requirements Higher priced mortgage loans - what is additional appraisal requirement? - ANSWER Need a 2nd if: 10% increase w/in 90 days 20% increase in 91-180 days What is known as the data collection law? - ANSWER HMDA/Reg C What is the purpose of HMDA? - ANSWER Identify discrimination What loans does HMDA apply to? - ANSWER Closed Purchase HIP Refi How is data collected submitted to regulators? - ANSWER Loan App Register (LAR) Is it ok not to ask for HMDA data? - ANSWER NO - mandatory to ask, voluntary to answer. Must guess if taken in person and borrower doesn't want to answer. Why was SAFE Act implemented? - ANSWER Address foreclosure crisis What larger act is SAFE Act part of? - ANSWER HERA - Housing and Economic Recovery Act What are pre-licensing education requirements? - ANSWER 3/3/2 FEN 3 Federal Laws 3 Ethics 2 Non-traditional 12 miscellaneous What are continuing education requirements? - ANSWER 3/2/2 FEN 3 Federal laws 2 Ethics 2 Non-traditional What do you need to pass SAFE test? /waiting periods? - ANSWER 75% 30/30/6 mo wait if failed What does HPA cover? - ANSWER PMI What are the cancellation requirements for PMI under HPA? - ANSWER Borrower can request at 80% LTV Must cancel automatically at 78% LTV What type of dwellings does HPA cover? - ANSWER Primary dwellings only What sort of loans does HPA NOT apply to? - ANSWER Government insured (FHA, VA) When is final termination of PMI per HPA? - ANSWER Midpoint of amortization period (ie day 1 of Year 16 on 30 year loan) What HPA disclosures are due at closing? - ANSWER Initial Amort Sched Notice you can cancel PMI @ 80% Notice of auto cancel @ 78% Acceleration notice Notice of termination date What is required when PMI is cancelled? - ANSWER Notice within 30 days Return of any balance within 45 days What are three purposes of LO Compensation Rule? - ANSWER Discourage: - term based pay - dual compensation - steering Who is considered an LO under the LO Compensation Rule? - ANSWER Anyone who takes an app or helps fill out an app What loans does LO Compensation Rule cover? - ANSWER Most closed loans secured by a dwelling What is the purpose of HOEPA? - ANSWER Prevent equity based lending Discourage subprime abuse Who regulates HOEPA? - ANSWER CFPB What loans are covered by HOEPA? - ANSWER High cost mortgage loans What disclosures does HOEPA require? - ANSWER HOEPA stmnt Balloon pymt Amount borrowed Inclusion of Ins Prem Variable Rate Discl What is prohibited under HOEPA? - ANSWER Pymt to contractors Loan flipping Financing points/fees Recommending default on loan Loan mod/defer fees Late fees Fee to provide payoff stmnt What bigger law is HOEPA covered by? - ANSWER TILA Who regulates TILA? - ANSWER CFPB What's the purpose of TILA? - ANSWER Disclose costs/terms Uniformity to allow and promote shopping Truthful advertising Right to rescind established Who is covered under TILA? - ANSWER Anyone who regularly extends credit for personal use that includes finance charges and more than 4 installment payments What loans are exempt from TILA? - ANSWER Business Ag Organizational Student loans Retirement plans Utility/fuel plans What disclosures are required by RESPA? - ANSWER Loan program CHARM booklet Rate change (ARMs) "What You Should Know" (home eq) What is prohibited by TILA? - ANSWER Changing index used, terms, or APR Terminating/demanding payment What is the purpose of ECOA? - ANSWER Prevent discrimination Who regulates ECOA? - ANSWER CFPB Who is covered by ECOA? - ANSWER Anyone who extends credit regularly Who is exempt from ECOA? - ANSWER Nobody! What disclosures are required by ECOA? - ANSWER Notice of Action Right to Appr Verbal demographics What is prohibited by ECOA? - ANSWER Discrimination Disparate treatment Prohibited inquiries Discouragement Not including public assurance as income What is the purpose of RESPA? - ANSWER No unearned fees Let borrowers shop Limit escrow accounts Who regulates RESPA? - ANSWER CFPB What loans are covered by RESPA? - ANSWER Federally related loans What loans are exempt from RESPA? - ANSWER Ag Business Commercial What disclosures are required under RESPA? - ANSWER Purchase booklet ABA Transfer notices Escrow (initial/annual) Loan Est Closing Discl What is prohibited by RESPA? - ANSWER Referral fees Fee splitting Sham ABAs What section if Dodd-Frank applies directly to mortgage loan originators? - ANSWER Title XIV - Mortgage Reform and Anti-Predatory Lending Act What is the purpose of the Patriot Act? - ANSWER Prevent terrorism through laundered money What federal agency is responsible for implementation and enforcement of the Patriot Act? - ANSWER Treasury Department What does the Patriot Act require? - ANSWER Consumer ID program Anti-$ laundering program Suspicious activity reports (SAR) Report of receipt of over $5k in currency What is the title # associated with the Patriot Act? - ANSWER Title III What is the purpose of GLB? - ANSWER GLB = POS Privacy Notices (initial/30 & annual) Opt Out Notice (30) Safeguards What is the purpose of the MAP Rule? - ANSWER Address misrepresentation in advertising How long must records of communication be kept for purpose of MAP Rule? - ANSWER 24 months Who regulates the Do Not Call Rule? - ANSWER Interstate: FTC Intrastate: FCC How often are updates requires per Do Not Call Rule? - ANSWER Every 31 days What is the fine for a violation of the Do Not Call Rule? - ANSWER $16k How long must you keep records under the Do Not Call Rule? - ANSWER 24 months What hours does the Do Not Call Rule allow you to call customers? - ANSWER 8am to 9pm How long can you call a consumer after an established relationship per the Do Not Call Rule? - ANSWER 18 months How long can you call a consumer after an inquiry per the Do Not Call Rule? - ANSWER 3 months What are the two major fraud laws? - ANSWER Fraud for Profit Fraud for Housing Which type of fraud involves an insider? - ANSWER Fraud for Profit What type of fraud is committed by a borrower without insider knowledge? - ANSWER Fraud for Housing Who investigates/prosecutes Fraud for Profit & Housing? - ANSWER Investigators: FBI, HUD, IRS Prosecution: DoJ What is the penalty for fraud? - ANSWER Up to $1 million and/or 30 years What is the recordkeeping requirement for the ATR Rule? - ANSWER 3 years What loans are exempt from the ATR Rule? - ANSWER Bridge Open Timeshares Home Equity When calculating payment under the ATR Rule, what rate must be used? - ANSWER Fully-indexed rate What is residual income? - ANSWER Income left after all monthly debts are satisfied What makes a loan a Qualified Mortgage? - ANSWER Three 3s, no BIN! 30 year 3% max fees 43 DTI No balloon payments No interest only loans No negative amortization What are the two types of compliance under the Qualified Mortgage Rule? - ANSWER Presumption of Compliance (if meets all standards, assumed to be in compliance) Rebuttal of Compliance (easier for borrowers to rebut) What types of loans are not covered under the Qualified Mortgage Rule? - ANSWER Bridge Open Timeshare HECM Who are examples of Prudential Regulators? - ANSWER Board of Governors of Federal Reserve FDIC NCUA OCC OTS HUD FTC What are prudential regulators? - ANSWER Have limited advisory authority to CFPB What are the thresholds for a High Cost Mortgage? - ANSWER APR for 1st mort: 6.5% > avg Submprime: 8.5% > avg Points: > 5% of loan if loan over $20,350 Prepay penalty: > 36 mo, > 2% of the amount prepaid What loans cannot be a High Cost Mortgage? - ANSWER Reverse Mortgages What regulations establish guidelines for High Cost Mortgages? - ANSWER Reg Z / Section 32 What are the three affirmative requirements under HOEPA? - ANSWER Evaluate ATR Counseling Notice to Assignees/Purchasers What three things must be considered to determine if a referral violation has been committed? - ANSWER Thing of Value? Offer and acceptance? Work done? How much is a discount point? - ANSWER 1% of loan amount What's another word for a discount point? - ANSWER Buydown What does a discount point do? - ANSWER Reduces the interest rate What does PFC stand for? - ANSWER Prepaid Finance Charge What does POC stand for? - ANSWER Paid Outside of Closing What is the Power of Sale Clause? - ANSWER Gives lender right to foreclose What is reconveyance? - ANSWER Conveys the title to the borrower once mortgage is paid off What is the difference between a Deed of Trust and a Mortgage? - ANSWER Who has ownership interest - Trustee = Deed of Trust Mortgage = Lender What rule creates a safe harbor from liability for the lender? - ANSWER Qualified Mortgage Rule What are the three types of reverse mortgages? - ANSWER Single purpose (determined by lender) HECM (FHA) Proprietary (allow borrower to get more than HECM) What situations cause a reverse mortgage to become due and payable? - ANSWER Die/sell/abandon the home Move out for more than 1 year Fail to repair, insure or pay property taxes Commit fraud/misrepresentation Eminent domain or condemnation proceedings What are the common attributes across all type of reverse mortgages? - ANSWER Must be 62 years old Must live in the home Loan is payable if sold or all borrower die Interest on the balance is added to debt Debt increases with advances or accrued interest What is not allow with an ARM? - ANSWER Prepayment penalty How often does the rate of a 1 year ARM change? - ANSWER Every 1 year What is a fully-indexed rate? - ANSWER Index + Margin What type of ARM loan is no longer permitted? - ANSWER Payment option / neg am/ interest only What are three common indices used? - ANSWER Treasury Bill Index 11th District Cost of Funds Index (COFI) London Interbank O