MLO Flashcards
7 cards from real Mortgage Loan Originator practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 MLO flashcards as text
An MLO receives a $50 gift card from a real estate agent as a thank-you for referring clients. Under RESPA Section 8, this is:
Answer: Prohibited, as RESPA forbids any thing of value exchanged for referrals of settlement service business
RESPA Section 8 prohibits giving or receiving any thing of value—regardless of dollar amount—in exchange for referrals of settlement service business; there is no de minimis exception.
The SAFE Act requires state-licensed MLOs to complete how many hours of continuing education annually to maintain their license?
Answer: 8 hours
The SAFE Act mandates a minimum of 8 hours of annual continuing education for state-licensed MLOs, covering federal law, ethics, nontraditional mortgage products, and electives.
A lender charges a borrower a 4% origination fee on a $300,000 loan. Under the ATR/QM rule, which type of QM is most likely affected by this fee level?
Answer: General QM (Safe Harbor), as points and fees cannot exceed 3% of the total loan amount for loans of $100,000 or more
For General QM loans of $100,000 or more, total points and fees cannot exceed 3% of the total loan amount; a 4% origination fee alone would disqualify the loan as a General QM.
Under Regulation Z's HOEPA rules, a closed-end consumer credit transaction secured by a consumer's principal dwelling is a high-cost mortgage if its APR exceeds the APOR by more than how many percentage points for a first-lien loan?
Answer: 6.5 percentage points
A first-lien loan is a HOEPA high-cost mortgage if its APR exceeds the Average Prime Offer Rate (APOR) by more than 6.5 percentage points.
Which of the following correctly describes the difference between pre-qualification and pre-approval in the mortgage process?
Answer: Pre-qualification is an informal assessment based on unverified information; pre-approval involves verification of income, assets, and credit
Pre-qualification is a preliminary estimate based on self-reported data, while pre-approval involves a formal review of verified documents including credit report, income verification, and asset statements.
A borrower is 60 days delinquent and the servicer has not yet provided loss mitigation options. Under CFPB mortgage servicing rules (Regulation X), the servicer must make a good faith effort to establish live contact with the borrower within how many days of delinquency?
Answer: 36 days
Regulation X requires servicers to make good faith efforts to establish live contact with delinquent borrowers no later than the 36th day of delinquency.
Which of the following BEST describes a 'buydown' mortgage structure?
Answer: A temporary or permanent reduction in the interest rate achieved by paying discount points at closing
A buydown involves paying discount points upfront to reduce the interest rate either permanently (permanent buydown) or for an initial period (temporary buydown, e.g., 2-1 buydown).