Mortgage Loans : NMLS Annual Test

Which of the following scenarios would MOST LIKELY indicate income misrepresentation may be occurring and require additional investigation/verification?

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The borrower's paystubs reflect accurate withholding amounts

The borrower's prior year's earnings and withholding are all even dollar amounts

The borrower is self-employed

The borrower has a history of working two jobs

If an event occurs in the 30-day period after consummation that causes the Closing Disclosure to become inaccurate with a change to costs incurred by the consumer, the creditor must re-issue a corrected Closing Disclosure within:

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30 days of learning of the change

10 days of learning of the change

15 days of learning of the change

45 days of learning of the change

What is the maximum allowable late charge that can be assessed to a borrower on an FHA loan when the borrower's payment is received

more than 15 days after the due date?

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5% of the overdue principal and interest payment

4% of the overdue principal and interest payment

Late fees are not allowed on FHA loans

2% of the overdue principal and interest payment

Which of the following statements is TRUE regarding the valuation provisions of the HPA when the borrower requests cancellation of PMI?

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The borrower must receive a copy of any valuation ordered by the creditor

The borrower must order an appraisal from an appraiser of his or her choosing

The creditor is not permitted to require a valuation of the property

The creditor must pay for any valuation it wishes to use

A consumer is purchasing a home where the seller has been on title for less than 90 days. The purchase will be financed with a higher-priced mortgage loan that is not a Qualified Mortgage. A second appraisal will be required if the new sales price exceeds the seller's acquisition cost by more than:

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10%

50%

30%

20%

A Qualified Mortgage is:

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All of the above

A loan with characteristics that make it more likely borrowers will be able to make their payments

A loan that avoids negative amortization

A category of loans that have certain, more stable features

What is the proper course of action if you discover that your borrower has provided you with a paystub containing misrepresentation?

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Tell the applicant you've uncovered the misrepresentation and demand money to not report the incident

See if the loan can close without using the income from that applicant and, if so, discard the paystub and proceed

Gather all documentation and bring it to the person in your company responsible for suspicious activity reporting

Immediately accuse your borrower of fraud and call the FBI

Under the automatic termination provisions, as long as the borrower is current on their loan the servicer must cancel PMI when the loan reaches _______ of the original value based on the amortization schedule.

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75%

50%

80%

78%

Under the provisions of the HPA, when must the INITIAL PMI disclosure be provided to the borrower?

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Before the first payment is due on the loan

Within three business days of application

Before the PMI payment plan is selected by the applicant

At closing/consummation of the loan

Which of the following statements is TRUE regarding a borrower whose tax returns show rental income on a property listed as a second home?

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Second homes are treated identically to investment properties and therefore rental income should generally be present

This is always fraudulent because second homes can never be rented out

The borrower is not permitted to own more than two properties if there is any rental income listed for a second home

Rental income on a second home is not an indicator of misrepresentation as long as the borrower occupies the property for some portion of the year

If a borrower sells their home within 9 years of purchase and realizes a gain from the sale of the home, a portion of the Mortgage Credit Certificate benefit may be subject to:

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Luxury tax

Transfer tax

Recapture tax

Property tax

Which of the following fees may a creditor charge to a loan applicant prior to delivery of a Good Faith Estimate or a Loan Estimate (whichever form applies to a given transaction) and receiving the borrower's intent to proceed?

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An application fee

A credit report fee

An appraisal fee

No fees may be charged prior to delivery

Money given to someone by a government or a non-profit organization to be used for a specific purpose, such as purchasing a house is referred to as a:

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Grant

Loan

None of these

Donation

The maximum penalty for mortgage fraud under Federal statute is up to ______________ in fines and _____________ years in prison.

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$500,000 / 25

$150,000 / 10

$1,000,000 / 30

$25,000 / 3

In mortgage fraud, a "material fact" is one that is:

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All of these

Relevant

Essential

Important

Which of the following scenarios regarding asset statements is a

potential red flag for misrepresentation?

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An applicant with a bank balance that seems to be too large for their salary level

Bank balances end in even dollar amounts for consecutive months

All of these

Dates of bank statements are out-of-sequence

Which of the following restricts access to an individual's credit report and will not allow a potential creditor to access it unless and until the individual contacts the credit bureau to provide authorization?

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A deed-in-lieu

A fraud alert

A credit freeze

A 1003

Once a creditor has obtained all the information it normally considers in making a credit decision, the application is considered complete and the creditor has 30 days in which to:

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Provide an underwriter with the file.

Originate a loan.

Run a credit report.

Notify the applicant of a credit decision.

When reviewing an appraisal, an underwriter would generally expect the subject property's indicated value to be _________ the sale prices for all of the comparable sales. If it is not, this is a red flag for potential fraud or misrepresentation that should be addressed.

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lower than

bracketed by

equal to

higher than

If a loan is a Qualified Mortgage, it is assumed that the lender followed:

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RESPA

The Ability-to-Repay rule

The HMDA requirements for small creditors

All of the requirements in TILA

Since January 1, 2014, lenders are required to make a good-faith effort to:

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Determine that borrowers have sufficient rental references

Send all application documents electronically

Send the borrower a Loan Estimate within three days of application

Determine that borrowers have the ability to repay a mortgage loan before credit is extended

Which of the following borrowers may benefit from non-QM loans?

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Real estate investors

All of these

Foreign nationals

Self-employed borrowers

If neither the automatic termination nor the borrower-requested termination provisions of the HPA are met, when is the latest that PMI would be required to terminate on a loan subject to the Act?

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At the midpoint of the amortization schedule

The servicer may elect to keep PMI coverage in force

for the life of the loan.

When the loan has been paid down to 67% LTV

When the loan enters its 17th year

With the most recent amendments to the Qualified Mortgage rule,

the 43% debt-to-income ratio limit was replaced by a:

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Price-based threshold using the APOR

Loan amount restriction

Requirement that all applicants go to HUD counseling

Prohibition on all ARM loans

In order to rise to the level of mortgage fraud, any misstatement

or omission must be ____________ to the transaction.

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Material

Irrelevant

None of these

Extraneous

The two categories of mortgage fraud are called:

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Manipulative fraud and coercive fraud

Fraud for housing and fraud for profit

Constructive fraud and ex post facto fraud

Serial fraud and opportunity fraud

Which of the following loans on a one-unit primary residence

would NOT be subject to the provisions of the

Homeowners Protection Act?

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A jumbo ARM loan

An FHA loan

A loan with negative amortization

A loan sold to Fannie Mae or Freddie Mac

If all of the requirements for borrower-requested cancellation

under the HPA have been met, the servicer cannot require further PMI payments from the borrower after:

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15 days

30 days

3 business days

60 days

Housing is considered to be affordable when a family's housing expense does not exceed what percentage of its gross monthly income?

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Which of the following is NOT an example of an adverse action?

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The lender offers a loan with a different payment duration than requested.

The lender agrees to fund the loan as requested.

The lender offers a loan with a different interest rate than requested.

The application is denied.

9/20/2023

NMLS Annual Test