SAFE - Certified Secure and Fair Enforcement Mortgage Loan Originator Loan Origination Activities Questions and Answers

Question 1

An MLO is working with a borrower on a refinance.
During the application process, the borrower asks if they can waive the three-day right to rescind after closing because they need the funds immediately to pay for a medical emergency.
What is the MLO's proper course of action?

Accepted Answer

Inform the borrower they can waive the right by providing a written statement detailing the bona fide personal financial emergency.

Answer

Advise the borrower that the right to rescind cannot be waived under any circumstances.

Answer

Tell the borrower to sign a pre-printed waiver form at closing.

Answer

Instruct the borrower that only the lender, not the borrower, can initiate a waiver of the rescission period.

Question 2

According to the SAFE Act, which of the following activities is NOT considered part of 'taking a residential mortgage loan application'?

Accepted Answer

Responding to a consumer's general question about interest rates without collecting any borrower-specific information.

Answer

Receiving the borrower's information in any form, electronic or written, for the purpose of deciding on a loan.

Answer

Assisting a borrower in completing an application form.

Answer

Inputting borrower information into an online application or database.

Question 3

A loan originator is pre-qualifying a self-employed borrower who has been in business for 18 months. The borrower's income has been increasing steadily. Which of the following is the most appropriate action for the MLO to take when analyzing the borrower's income?

Accepted Answer

Average the income over the 18 months the business has been operating.

Answer

Use the most recent month's income and project it for the next 12 months.

Answer

Use the income from the most recent tax return only.

Answer

Decline the application immediately as the borrower does not have a two-year history of self-employment.

Question 4

During the loan origination process, a mortgage loan originator is responsible for all the following activities EXCEPT:

Accepted Answer

Making the final credit decision to approve or deny the loan.

Answer

Providing the borrower with a Loan Estimate within three business days of application.

Answer

Ensuring the borrower's application is complete and accurate.

Answer

Assisting the borrower in selecting an appropriate loan product.

Question 5

A prospective borrower calls an MLO to inquire about a mortgage. The MLO gathers the borrower's name, Social Security Number, gross monthly income, the property address, an estimate of the property's value, and the desired loan amount. At this point, what is the MLO required to do?

Accepted Answer

Provide a Loan Estimate within three business days.

Answer

Order a full property appraisal.

Answer

Provide a Closing Disclosure.

Answer

Issue a pre-approval letter.

Question 6

Which of the following best describes a loan originator's responsibility regarding the analysis of a borrower's credit report?

Accepted Answer

To make the final determination of the borrower's creditworthiness based solely on the credit score.

Answer

To ignore any disputes on the credit report as they are not relevant to the credit decision.

Answer

To obtain a letter of explanation from the borrower for any significant derogatory credit items.

Answer

To independently verify every single tradeline listed on the credit report with the original creditor.

An MLO is working with a borrower on a refinance.During the application process, the borrower asks if they can waive the three-day right to rescind after closing because they need the funds immediately to pay for a medical emergency.What is the MLO's proper course of action?

An MLO is working with a borrower on a refinance.
During the application process, the borrower asks if they can waive the three-day right to rescind after closing because they need the funds immediately to pay for a medical emergency.
What is the MLO's proper course of action?