Mortgage Uniform State Content 2 — Questions and Answers
Question 1: Under the SAFE Act, which activity requires an individual to be licensed as a mortgage loan originator?
- Referring a borrower to a lender without discussing loan terms
- Taking a residential mortgage loan application and offering or negotiating loan terms (Correct answer)
- Processing loan documents under the supervision of a licensed MLO
- Performing title searches for residential properties
Correct answer: Taking a residential mortgage loan application and offering or negotiating loan terms
The SAFE Act requires licensure for any individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan.
Question 2: Which federal law requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a loan application?
- Equal Credit Opportunity Act
- Real Estate Settlement Procedures Act
- Truth in Lending Act (Regulation Z) (Correct answer)
- Home Mortgage Disclosure Act
Correct answer: Truth in Lending Act (Regulation Z)
TILA (Regulation Z), as amended by the TRID rule, requires the Loan Estimate be delivered within three business days of application.
Question 3: A mortgage loan originator who knowingly makes a false statement on a mortgage application could face which consequence under federal law?
- Only a civil fine of up to $500
- Criminal penalties including fines and up to 30 years imprisonment under 18 U.S.C. § 1014 (Correct answer)
- License suspension for 30 days only
- A warning letter from the CFPB with no financial penalty
Correct answer: Criminal penalties including fines and up to 30 years imprisonment under 18 U.S.C. § 1014
Under 18 U.S.C. § 1014, making false statements on mortgage applications is a federal crime punishable by fines and up to 30 years in prison.
Question 4: Which of the following best describes 'net tangible benefit' in the context of mortgage refinancing?
- The lender's profit margin on a refinance transaction
- A demonstrable advantage to the borrower such as lower monthly payments or a shorter loan term (Correct answer)
- The difference between the appraised value and the loan amount
- The borrower's equity position after closing
Correct answer: A demonstrable advantage to the borrower such as lower monthly payments or a shorter loan term
Net tangible benefit requires that a refinance provide a real, measurable advantage to the borrower, which is a key anti-predatory lending standard.
Question 5: Under ECOA (Equal Credit Opportunity Act), within how many days must a lender notify an applicant of adverse action on a completed credit application?
- 3 business days
- 10 business days
- 30 calendar days (Correct answer)
- 60 calendar days
Correct answer: 30 calendar days
ECOA requires lenders to notify applicants of adverse action within 30 days of receiving a completed credit application.
Question 6: Which characteristic is NOT a protected class under the federal Fair Housing Act?
- Familial status
- National origin
- Income level (Correct answer)
- Handicap (disability)
Correct answer: Income level
Income level is not a federally protected class under the Fair Housing Act; the protected classes include race, color, religion, sex, national origin, familial status, and handicap.
Question 7: Under RESPA, a mortgage lender is prohibited from paying a fee or 'kickback' to a real estate agent for referring a borrower. This prohibition is found in which section of RESPA?
- Section 6
- Section 8 (Correct answer)
- Section 10
- Section 12
Correct answer: Section 8
RESPA Section 8 prohibits kickbacks, fee splits, and unearned fees in connection with federally related mortgage loan settlement services.
Mortgage Uniform State Content 2
Under the SAFE Act, which activity requires an individual to be licensed as a mortgage loan originator?