Federal Regulations and Ethics Flashcards
6 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 6 Federal Regulations and Ethics flashcards as text
Under the SAFE Act, an MLO license can be suspended or revoked for:
Answer: Fraud, misrepresentation, or a felony conviction involving dishonesty
SAFE Act grounds for license denial, suspension, or revocation include fraud, misrepresentation, and felony convictions related to dishonesty or financial crimes.
What is 'dual agency' in a real estate transaction, and why is it important to MLOs?
Answer: When a real estate agent represents both buyer and seller; MLOs should be aware to identify potential conflicts
Dual agency occurs when one agent represents both buyer and seller; MLOs should understand this arrangement as it may create conflicts that affect the transaction and require disclosure.
Under Dodd-Frank's ability-to-repay (ATR) rule, lenders must verify a borrower's ability to repay using:
Answer: Reasonably verified third-party documentation of income, assets, and debts
The ATR rule requires lenders to make a reasonable, good-faith determination using verified documents — not stated or projected income — that the borrower can repay the loan.
Which of the following is an example of 'predatory lending'?
Answer: Charging excessive fees or placing a borrower in a loan they cannot afford to benefit the lender
Predatory lending involves deceptive or abusive practices such as excessive fees, loan flipping, or placing borrowers in unsuitable products for the originator's financial gain.
The Fair Credit Reporting Act (FCRA) gives consumers the right to dispute inaccurate information in their credit report, and the credit bureau must investigate within:
Answer: 30 days
Under FCRA, credit bureaus must investigate consumer disputes within 30 days (extended to 45 days if the consumer provides additional information during that period).
Under the Homeowners Protection Act (HPA), automatic PMI termination on conventional loans must occur when LTV reaches what level based on the original amortization schedule?
Answer: 78%
HPA requires servicers to automatically cancel PMI on the date the loan is scheduled to reach 78% LTV based on the original amortization schedule and original property value.