Mortgage Uniform State Content (USC) 2 — Questions and Answers
Question 1: Under USC provisions, which of the following actions constitutes 'steering' a borrower?
- Recommending a loan product that fits the borrower's stated needs
- Directing a borrower to a higher-cost loan when they qualify for a better product to increase compensation (Correct answer)
- Explaining the differences between fixed and adjustable-rate mortgages
- Presenting multiple loan options to a borrower
Correct answer: Directing a borrower to a higher-cost loan when they qualify for a better product to increase compensation
Steering occurs when an MLO directs a borrower toward a loan product that is not in their best interest, typically to earn higher compensation.
Question 2: What is the maximum civil money penalty per violation under the SAFE Act for unlicensed mortgage origination activity?
- $10,000
- $25,000 (Correct answer)
- $50,000
- $100,000
Correct answer: $25,000
The SAFE Act authorizes civil money penalties of up to $25,000 per violation for unlicensed mortgage loan origination.
Question 3: A borrower claims an MLO promised to lock in a specific interest rate verbally but did not document it. Under USC standards, which principle applies?
- Verbal agreements are fully enforceable in mortgage transactions
- Rate lock commitments must be documented in writing to be binding (Correct answer)
- The MLO's verbal promise supersedes any written disclosure
- Borrowers must prove the verbal promise with two witnesses
Correct answer: Rate lock commitments must be documented in writing to be binding
USC standards require that rate lock commitments and material representations be documented in writing to protect both parties.
Question 4: Which federal law, incorporated by reference into USC education requirements, prohibits discrimination based on race, color, religion, national origin, sex, familial status, or disability in residential real estate transactions?
- Equal Credit Opportunity Act (ECOA)
- Community Reinvestment Act (CRA)
- Fair Housing Act (FHA) (Correct answer)
- Home Mortgage Disclosure Act (HMDA)
Correct answer: Fair Housing Act (FHA)
The Fair Housing Act prohibits discrimination in residential real estate transactions based on those seven protected classes.
Question 5: Under USC, what must an MLO do if they discover that information on a loan application they previously submitted was inaccurate?
- Ignore it if the loan has already closed
- Wait to see if the lender notices on their own
- Correct the information immediately and notify the appropriate parties (Correct answer)
- Only correct it if the inaccuracy would affect the interest rate
Correct answer: Correct the information immediately and notify the appropriate parties
MLOs have an ongoing duty to ensure accuracy and must correct any known inaccuracies in loan applications regardless of loan stage.
Question 6: When a state issues an MLO license under the SAFE Act framework, which registry must the licensee be registered in?
- Federal Reserve Licensee Database
- NMLS Consumer Access Registry (Correct answer)
- HUD National Mortgage Registry
- CFPB Lender Verification System
Correct answer: NMLS Consumer Access Registry
All SAFE Act-licensed MLOs must be registered in the NMLS (Nationwide Multistate Licensing System) Consumer Access Registry, which is publicly accessible.
Question 7: A licensee moves from one employer to another. Under USC transfer of license rules, what must generally happen?
- The license automatically follows the licensee to the new employer
- The licensee must reapply from scratch as if newly licensed
- The licensee must submit a sponsorship transfer through NMLS and meet any state-specific requirements (Correct answer)
- The licensee must wait 90 days before originating loans with the new employer
Correct answer: The licensee must submit a sponsorship transfer through NMLS and meet any state-specific requirements
When changing employers, an MLO must submit a sponsorship/employment transfer through NMLS and satisfy any state-specific transition requirements before originating loans.
Mortgage Uniform State Content (USC) 2
Under USC provisions, which of the following actions constitutes 'steering' a borrower?