Mortgage Loan Originator Mortgage Loan Originator MCQ 3 — Questions and Answers
Question 1: Which document replaced the HUD-1 Settlement Statement for most mortgage transactions under the TRID rule?
- Closing Disclosure (Correct answer)
- Loan Estimate
- Good Faith Estimate
- Truth-in-Lending Disclosure
Correct answer: Closing Disclosure
The Closing Disclosure replaced the HUD-1 Settlement Statement as part of the TRID rule effective October 2015.
Question 2: What is the maximum conforming loan limit for a single-family property in most U.S. counties (as set by FHFA)?
- $417,000
- $548,250
- $726,200
- $806,500 (Correct answer)
Correct answer: $806,500
As of 2025, the baseline conforming loan limit for a one-unit property in most counties is $806,500.
Question 3: Under the Equal Credit Opportunity Act (ECOA), a lender must notify applicants of a credit decision within how many days of a completed application?
- 15 days
- 30 days (Correct answer)
- 45 days
- 60 days
Correct answer: 30 days
ECOA requires lenders to notify applicants of the credit decision within 30 days of receiving a completed application.
Question 4: In mortgage lending, 'steering' is prohibited because it:
- Increases competition among lenders
- Directs borrowers to less favorable loans based on protected class characteristics (Correct answer)
- Allows lenders to offer better rates to preferred customers
- Speeds up the underwriting process
Correct answer: Directs borrowers to less favorable loans based on protected class characteristics
Steering is the illegal practice of directing borrowers toward loans that are not in their best interest based on protected characteristics.
Question 5: What does 'LTV' stand for in mortgage lending?
- Loan Term Value
- Lender Title Verification
- Loan-to-Value ratio (Correct answer)
- Long-Term Variable rate
Correct answer: Loan-to-Value ratio
LTV (Loan-to-Value) is the ratio of the loan amount to the appraised value or purchase price of the property, whichever is lower.
Question 6: Which type of mortgage loan is guaranteed by the U.S. Department of Veterans Affairs?
- FHA loan
- USDA loan
- VA loan (Correct answer)
- Conventional loan
Correct answer: VA loan
VA loans are mortgage loans guaranteed by the U.S. Department of Veterans Affairs for eligible veterans, active-duty service members, and surviving spouses.
Question 7: A prepayment penalty clause in a mortgage most directly affects a borrower who:
- Makes a late payment
- Pays off the loan earlier than scheduled (Correct answer)
- Misses an escrow payment
- Requests a loan modification
Correct answer: Pays off the loan earlier than scheduled
A prepayment penalty is a fee charged to borrowers who pay off their mortgage before the end of the loan term or make large principal payments.
Mortgage Loan Originator Mortgage Loan Originator MCQ 3
Which document replaced the HUD-1 Settlement Statement for most mortgage transactions under the TRID rule?