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 borrower receives a Loan Estimate on Monday. By when must they receive the Closing Disclosure before closing?
Answer: Three business days before consummation
Under TRID, lenders must provide the Closing Disclosure at least three business days before loan consummation.
Which of the following is NOT a permissible basis for denying a mortgage application under ECOA?
Answer: Applicant's national origin
ECOA prohibits credit discrimination based on national origin, race, color, religion, sex, marital status, age, or receipt of public assistance.
What does the term 'points' refer to in mortgage lending?
Answer: Prepaid interest paid at closing to reduce the interest rate
One point equals 1% of the loan amount paid at closing, typically to buy down the interest rate (discount points) or as origination fees.
An MLO receives a referral fee from a title company for steering clients their way. Under RESPA, this is:
Answer: Illegal — RESPA prohibits kickbacks for referrals of settlement services
RESPA Section 8 strictly prohibits kickbacks or unearned fees between settlement service providers for referring business.
What is the primary difference between a fixed-rate mortgage and an adjustable-rate mortgage (ARM)?
Answer: Fixed-rate has a constant interest rate; ARM's rate changes periodically based on an index
A fixed-rate mortgage maintains the same interest rate for the life of the loan, while an ARM's rate adjusts periodically based on a market index plus a margin.
Under TRID, the Loan Estimate must be delivered to the applicant within how many business days of receiving a completed loan application?
Answer: Three business days
Lenders must deliver or place in the mail the Loan Estimate no later than three business days after receiving the consumer's loan application.
Which entity maintains the Nationwide Multistate Licensing System (NMLS) used for mortgage licensing?
Answer: Conference of State Bank Supervisors (CSBS)
The NMLS is maintained by the Conference of State Bank Supervisors (CSBS) and is the system through which MLOs apply for and maintain their licenses.