Mortgage Uniform State Content 4 — Questions and Answers
Question 1: Under Regulation B (ECOA), which of the following is a lender PERMITTED to ask on a mortgage application?
- The applicant's religion
- Whether the applicant plans to have children
- The applicant's marital status when applying for a joint loan (Correct answer)
- The applicant's country of origin
Correct answer: The applicant's marital status when applying for a joint loan
Regulation B permits asking about marital status (as married, unmarried, or separated) when it is relevant to the creditworthiness evaluation, such as for joint loan applications.
Question 2: A mortgage loan is classified as a 'High-Cost Mortgage' under HOEPA when which threshold is exceeded?
- The APR exceeds the prime offer rate by 1.5 percentage points for a first-lien loan
- The APR exceeds the average prime offer rate by more than 6.5 percentage points for a first-lien loan (Correct answer)
- The loan amount exceeds $726,200
- The loan-to-value ratio exceeds 80%
Correct answer: The APR exceeds the average prime offer rate by more than 6.5 percentage points for a first-lien loan
Under HOEPA, a first-lien loan is high-cost if its APR exceeds the average prime offer rate (APOR) by more than 6.5 percentage points.
Question 3: What is the primary purpose of the Nationwide Multistate Licensing System (NMLS)?
- To set interest rate caps for mortgage loans in all states
- To provide a single system for licensing, registration, and supervision of mortgage professionals (Correct answer)
- To maintain the federal registry of all residential mortgage loans
- To process mortgage loan applications on behalf of lenders
Correct answer: To provide a single system for licensing, registration, and supervision of mortgage professionals
The NMLS is a central registry and licensing platform for mortgage loan originators and companies, enabling state regulators to coordinate supervision.
Question 4: Under RESPA, which document replaced the HUD-1 Settlement Statement for most residential mortgage closings after October 3, 2015?
- Closing Cost Worksheet
- Closing Disclosure (Correct answer)
- Settlement Summary Form
- Final Truth-in-Lending Statement
Correct answer: Closing Disclosure
The Closing Disclosure replaced the HUD-1 Settlement Statement for most transactions under the TRID rule effective October 3, 2015.
Question 5: Which of the following is an example of 'steering' in the mortgage industry?
- Recommending a loan product that best fits the borrower's financial needs
- Directing a borrower to a higher-cost loan for which they qualify for a lower-cost product in order to earn higher compensation (Correct answer)
- Explaining the difference between fixed-rate and adjustable-rate mortgages
- Referring a borrower to a HUD-approved housing counselor
Correct answer: Directing a borrower to a higher-cost loan for which they qualify for a lower-cost product in order to earn higher compensation
Steering occurs when an MLO directs a borrower to a loan product that is not in their best interest, typically to earn higher compensation.
Question 6: An MLO's unique identifier assigned through NMLS must appear on which documents?
- Only the MLO's business cards
- All residential mortgage loan application forms and solicitations (Correct answer)
- Only closing documents filed with the state regulator
- Internal underwriting worksheets only
Correct answer: All residential mortgage loan application forms and solicitations
Under the SAFE Act, an MLO's NMLS unique identifier must appear on all residential mortgage loan application forms and any solicitation materials.
Question 7: Under the Ability-to-Repay (ATR) rule, which factor is a lender required to consider when making a mortgage loan?
- The borrower's neighborhood property values only
- The borrower's current or reasonably expected income and current debt obligations (Correct answer)
- The borrower's expected future salary increases
- The lender's internal portfolio yield targets
Correct answer: The borrower's current or reasonably expected income and current debt obligations
The ATR rule requires lenders to verify and consider a borrower's income, assets, employment, credit history, and current debt obligations before extending credit.
Mortgage Uniform State Content 4
Under Regulation B (ECOA), which of the following is a lender PERMITTED to ask on a mortgage application?