Prep 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 Prep flashcards as text
A Qualified Mortgage (QM) generally cannot have a DTI ratio exceeding what threshold?
Answer: 43%
Under the general QM definition, the borrower's total DTI ratio cannot exceed 43% at the time of origination.
What is the SAFE Act's primary requirement for Mortgage Loan Originators?
Answer: Registration or state licensure with background checks and testing
The SAFE Act requires MLOs to be either state-licensed or federally registered, including passing a background check and a national exam.
Which loan type is specifically designed to help veterans purchase homes with no down payment?
Answer: VA loan
VA loans are guaranteed by the Department of Veterans Affairs and allow eligible veterans, service members, and surviving spouses to purchase homes with no down payment.
What is the purpose of Private Mortgage Insurance (PMI)?
Answer: Protects the lender if the borrower defaults when LTV exceeds 80%
PMI protects the lender—not the borrower—against loss if the borrower defaults, and is typically required when the LTV ratio exceeds 80%.
Under ECOA, how many days does a lender have to notify an applicant of adverse action after receiving a completed application?
Answer: 30 days
ECOA requires creditors to notify applicants of adverse action within 30 days of receiving a completed credit application.
Which document replaced the HUD-1 Settlement Statement for most closed-end mortgages after October 2015?
Answer: Closing Disclosure
The Closing Disclosure replaced the HUD-1 Settlement Statement for most closed-end mortgages as part of the TRID (TILA-RESPA Integrated Disclosure) rule effective October 3, 2015.
What is the maximum loan limit for a single-unit FHA-insured property in a standard-cost area for 2024?
Answer: $498,257
The 2024 FHA loan limit for a single-unit property in a standard-cost (floor) area is $498,257.