Mortgage Regulations Quiz

SAFE Act General Fitness Requirements (Except)

• Showing consistent profitability for a set period
• Paying into a state fund
• Meeting net worth requirements
• Meeting surety bond requirements

Loan Modification Cancellation Period

• Within three business days after the agreement date
• At any time

Residential Mortgage Loan Transactions

• Person acting on behalf of another principal lending manager in residential mortgage loans: Mortgage loan originator

Mortgage and Financial Fraud Unit Location

• Department of Financial Institutions

Common Underwriting Pitfalls (Except)

• Including alimony or child support in debts
• Sales contract not fully executed
• Undocumented assets
• Failing to disclose secondary financing

Central Database for Mortgage Professionals

• National Mortgage Licensing System & Registry (NMLS)

Principal Lending Managers' Duties

• Supervising all ALMs and BLMs

License Revocation Waiting Period

• Ten years

Fair Housing Act Protected Classes

• Race, sex, color, religion, handicap
• Handicap, familial status, sex, national origin, religion, color, race
• Race, sex, color, religion, age, familial status, handicap
• Race, color, religion, sex, age

Repayment Ability Determination (Except)

• The equity the borrower already has in the dwelling
• The credit history of the borrower
• The borrower's monthly debt-to-income ratio
• The borrower's current employment status

Federal Government Endorsement in Advertising

• Regulation Z

Exempt Employee Characteristics

• Exempt from tax withholding requirements
• Ineligible for overtime pay
• Ineligible for Social Security withholdings
• Exempt from salary recordkeeping requirements

Utah Mortgage and Financial Fraud Unit

• Detects, investigates, prosecutes, and deters mortgage fraud
• Other major financial fraud crimes in Utah

RESPA Prohibited Actions

• Referral Fees
• Premiums charged on fees for third-party services
• Reasonable fees paid for services actually performed
• Kickbacks

RESPA Primary Intent

• Protecting the privacy of a borrower's personal financial information
• Eliminating unearned fees, such as referral fees, kickbacks, and fee splitting
• Protecting borrowers from misleading advertising
• Providing the borrower an opportunity to rescind certain types of loans

Mortgage Professional Qualification Standards

• USPAP
• FIRREA
• The S.A.F.E. Act
• The Gramm-Leach-Bliley Act

Flood Insurance Mandate Indicators

• B, C, and D
• A and D
• A and V
• V and D

Advertising and Marketing Materials Review

• Control person
• Compliance specialist
• Designated officer
• Lending manager

Affiliated Business Arrangements for Excessive Fees

• Sham affiliated business arrangement
• False settlement service markup
• Kickbacks
• Table funding

Lending Manager Inactivity

• Their license remains valid for 30 days and then becomes inactive
• Their license is immediately revoked
• Their license is immediately inactive
• Their license is immediately suspended

Branch Manager Limitations and Responsibilities

• Serve as the manager for up to three licensed branch offices at the same time
• Utah state law requires the appointment of branch managers for licensed locations that are not in the same place of business as the main location

Responsibility for Record Disposal

• Records must be returned to the Division
• Records must be returned to consumers about whom information has been maintained
• Control person

Principal Lending Manager Liability Avoidance

• Attempts made to prevent or mitigate damage when learning of a violation
• Attempts to conceal damage when learning of a violation
• Existence of written policies to prevent violations
• The fact that the PLM did not attempt to avoid learning of a violation

Licensed Loan Originator Entity Relationships

• He or she can only work for the licensed entity with which he or she is currently employed
• He or she can work for only one other entity, and that entity must be exempt
• He or she can work for only one other entity, and that entity must also be licensed
• He or she cannot work with a licensed entity and must work as an individual MLO

Pre-Licensing Education Hours

• 15
• 40
• 35
• 20

Primary Concern of Federal Law

• Disclosures and advertising
• The Real Estate Settlement Procedures Act
• The Equal Credit Opportunity Act
• The Truth-in-Lending Act
• The Home Mortgage Disclosure Act

Lending Manager Qualification Requirements

• Ten years of verifiable financial responsibility
• At least three years of full-time experience originating mortgages
• A history of work experience as a lending manager
• A credit score of at least 780

Mortgage Fraud License Penalties

• Is automatically revoked
• Is temporarily revoked and may be permanently revoked after a hearing
• Is put on inactive for twice as long as the violator's sentence of imprisonment
• May be suspended for up to five years

Seller Concessions for VA Loans

• 3%
• 0%
• 6%
• 4%

Closing Disclosure Due Date

• No later than one business day prior to consummation
• No later than ten business days prior to consummation
• No later than seven business days prior to consummation
• No later than three business days prior to consummation

Reinstatement Date

• January 1
• November 1
• December 31
• February 28

Recovery Fund Liability Limit

• $45,000
• $20,000
• $15,000
• $35,000

Violations Resulting in License Revocation

• Failure to complete education requirements
• Mortgage fraud
• Failure to secure a sponsor
• High-cost mortgage loan origination

Qualifying Individual Designation

• Control person
• Lending manager
• Branch officer
• Responsible party

Loan Application Property Information Location

• Section II
• Section III
• Section XV
• Section X

Initial Escrow Statement Timing

• At settlement
• At the same time that a Loan Estimate is issued
• Within three business days after issuing a Closing Disclosure
• Within three business days after receiving a completed application

PLM License Inactivity Consequences

• The PLM must obtain a new license to become active again
• The PLM may never serve as a PLM again
• The PLM may not conduct mortgage business
• The PLM may not act as a lending manager but may act as a loan originator

Overtime Income Consideration

• It has been consistent for at least two years and is likely to continue
• The earnings have been reported as wages
• It is being paid in the same paycheck
• It has been consistent for at least two years and is likely to continue

Negative Amortization Definition

• The payment amounts increase over time as the interest rate decreases
• The payments steadily reduce the amount of interest due each month, so the unpaid balance decreases instead of increasing
• The payment amounts decrease over time as the interest rate decreases
• The payments are not enough to cover the interest due, so the unpaid balance increases instead of decreasing

Additional Annual Course Requirements

• Utah law
• Mortgage fraud
• Consumer protection
• Nontraditional products

Third-Party Settlement Service Provider Fee Tolerance

• 2%
• 5%
• 0%
• 10%

Pre-Licensing Education Hours for New Applicants (No License in Jurisdiction)

• 15 hours
• 40 hours
• 35 hours
• 20 hours

Mortgage Loan Originator Experience Requirement

• Evidence of having completed lending manager qualification counseling
• Up to 15 additional points according to the experience points schedule
• Evidence of having originated at least 30 first lien residential mortgage loans

Unverifiable Borrower Ability to Repay

• Bank records
• Voided checks
• W-2 forms
• Payroll statements

Federal Labor Law Regarding Safety and Health Conditions

• The Occupational Safety and Health Act

TILA Concerns

• Red flags
• Trigger terms
• Unique identifiers
• Business names

Presumption of Compliance Applies To

• Compliance specialist

Higher-Priced Mortgage Loan Definition

• Qualified mortgages that are higher-priced mortgage loans
• Non-qualified mortgages
• Qualified mortgages that are subprime mortgages
• Qualified mortgages that are prime mortgages

Definition of Finance Charge

• Finance charge is defined as the cost of credit expressed as a dollar amount
• Annual percentage rate
• Prepayment penalty
• Yield spread premium

Mortgage Loan Originator Business Conduct

• The ALM
• Themselves
• The sponsoring entity
• The PLM

License Status if Not Engaged in Business

• Dormant
• Inactive
• Suspended
• In escrow

Conforming Loan Definition

• The loan conforms to standards that are regulated in place

Party Responsibility of Proper Record Disposal After Utah Business Cessation

• Records must be returned to the Division
• Records must be returned to consumers about whom information has been maintained
• The control person

Affirmative Duty of Principal Lending Managers

• Supervising all ALMs and BLMs,
• Supervising only ALMs

Mortgage Loan Originator License Revocation (Other State) Requirements

• Ten years
• Three years
• Five years
• A license cannot be obtained

Appraisal Red Flags and Exceptions

• Blurry photos
• Adjustments that exceed guidelines
• Appraisal dated prior to the sales contract
• Comparables within one mile of the subject property sold within one year

Mortgage Loan Originator License Application Eligibility

• Evidence of having completed lending manager qualification counseling
• Up to 15 additional points according to the experience points schedule
• Evidence of having originated at least 30 first lien residential mortgage loans
• Additional full-time experience according to the equivalency calculation

Borrower Rescission Eligibility

• Bank records
• Voided checks
• W-2 forms
• Payroll statements

Minimum Loan Amount for Mortgage Fraud Class

• A Class A misdemeanor
• A third-degree felony
• A gross misdemeanor
• A second-degree felony

VA Loan Requirements

• VA appraiser premium
• Eligibility fee
• Mortgage insurance premium
• Funding fee

VA Loan Availability

• They are only available for 30-year terms
• They require a mortgage insurance premium
• They are assumable
• They require a 5.5% borrower investment

Principal Lending Manager Licensing Requirements

• Proof that he or she has obtained a sponsor
• Proof of completion of at least five years of experience as a mortgage loan originator
• Proof of the completion of 40 hours of Utah-specific education during the 12-month period preceding the application
• Proof that he or she meets the general qualifications for licensure that are applicable to mortgage loan originators

Loan to Finance Property Exceeding Guidelines

• Jumbo loan
• FHA loan
• VA loan
• Non-conventional loan

Licensed Mortgage Entity Name Change Requirements

• The DFI must be notified within ten days
• The DRE must be notified within ten days
• The DRE must be notified within five days
• The DFI must be notified within five days

Loan Point Definitions

• .1% of the loan amount; used to pay an origination fee
• 1% of the loan amount; used to pay an origination fee
• .1% of the loan amount; used to reduce the interest rate
• 1% of the loan amount; used to reduce the interest rate

Loan Modification Agreement Legality Requirements

• The transaction is illegal – loan modification specialists are not permitted to enter into agreements with consumers
• The transaction is legal – Utah does not regulate loan modification activities
• The transaction is legal - as long as the agreement provides for the right to cancel within three business days -
• The transaction is illegal - the state of Utah does not permit loan modifications to be handled by anyone but federally-regulated depository institutions

Loan Discount Point Considerations

• The loan amount
• Pricing hits
• The break-even point
• The cost

Prohibited Acts Under Utah State Law

• Altering an appraisal of real property
• Giving an appraisal report to the borrower
• Encouraging default on an existing loan
• Obtaining title insurance without a license

Notice to DRE of Bankruptcy Filing

• Five days
• Five business days

Caps on Adjustable Rate Mortgages (ARMs)

• Are mandatory for any lender offering ARM products
• Prevent a lender from calling a loan due if there is delinquency
• Limit the amount the interest rate or payment may change
• Limit whether a loan is eligible for prepayment

Sponsorship Termination Record Retention Requirements

• The originator must maintain all records in his or her possession for at least two years after termination
• The originator must turn all records in his or her possession over to the NMLS
• The originator must turn all records in his or her possession over to the sponsoring entity when sponsorship is terminated
• The originator must destroy all records in his or her possession

Prepayment Penalties Applicability

• Higher-priced mortgage loans
• Subprime loans regulated by HOEPA
• Fixed-rate qualified mortgages
• All loans secured by a borrower's principal residence

Principal Lending Manager Affirmative Duty Exclusions

• Ensuring that licensees do not offer high-cost mortgage loans
• Establishing and following procedures for responding to consumer complaints
• Reviewing all advertising and marketing for compliance with federal and state law
• Establishing and maintaining an adequate quality control plan

Mortgage Professional Record Retention Period

• Four years from closing
• Four years from the date of loan application
• Two years from closing
• Two years from the date of loan application

Loss Payee Clause Protection

• The property
• The lender
• The borrower
• The servicer

Negative Amortization Implication

• Negative equity
• Negative amortization
• Amortizing payments
• Lower credit scores

Fees for Early Debt Repayment

• Prepayment penalty
• Finance charges

Invalid License Types

• Mortgage servicer
• Mortgage entity
• Mortgage branch office
• Mortgage loan originator

APR Definition

• A measure of the cost of credit expressed as a nominal yearly rate
• The cost of credit expressed as a dollar amount
• The most that an interest rate may change from year to year
• The most that an interest rate may change over the life of the loan

Debt-to-Income Ratio Rule

• The HOEPA Rule
• The ATR Rule
• The Valuations Rule
• The HPML Appraisal Rule

Loan-to-Value Ratio Calculation

• The property value and the purchase price
• The loan amount and the property value or purchase price (whichever is less)
• The loan amount and the loan term
• The property value or purchase price (whichever is less) and the loan term

Trustee's Foreclosure Right

• Deed in lieu
• Power of attorney
• Right to mortgage
• Power of sale

Revised Loan Estimate Requirements

• A delay caused by the consumer
• A change in the interest rate
• A change requested by the consumer
• A change in the borrower's eligibility

New Home Construction Appraisal Approach

• Cost approach
• Market approach
• Income approach
• Sales comparison approach

High-Cost Home Loan Act Disclosure Requirements

• Specifies that the consumer may not qualify for a loan if he or she does not obtain counseling
• Provides a comprehensive summary of settlement and loan closing documents
• Advises that the consumer is not required to complete the loan agreement and warns against default
• Reviews the fees and charges associated with the high-cost loan transaction

Rescission Definition and Application

• Restores each party in a contract to the position held prior to the transaction
• Allows the borrower to modify his or her loan to avoid foreclosure
• Is the time at which a consumer becomes contractually obligated on a credit transaction
• Allows the borrower to cease being obligated to make mortgage payments

Principal Lending Manager and Control Person Differences

• There is no difference between a principal lending manager and a control person
• A principal lending manager is always required to be licensed; a control person is not
• A control person is always required to be licensed; a principal lending manager is not
• A control person has education requirements; a principal lending manager does not

Federal Labor Law Regarding Wages and Overtime

• The Family Medical Leave Act
• The Federal Employees' Compensation Act
• The Fair Labor Standards Act
• The Occupational Safety and Health Act

Mortgage Professional Practice of Steering

• Steering
• Dual compensation
• Reverse redlining
• Redlining

Federal Law Regarding Data Collection on Applications

• Privacy of consumer information
• Inappropriate charging of fees
• Mortgage fraud and money laundering
• Honesty in advertising

Mortgage Loan Originator License Requirements

• At least 15 first lien residential mortgages
• At least 30 first lien residential mortgages
• At least 45 first-lien residential mortgages
• At least 50 first-lien residential mortgages

MIP Applicability Scenarios

• A non-conforming loan
• VA loan with less than a 10% down payment
• An FHA loan with a 3.5% down payment
• A conventional loan with a down payment of less than 20%

Income Consideration for Mortgage Eligibility

• Debt-to-asset ratio
• Front-end ratio
• Loan-to-value ratio
• Back-end ratio

Test your knowledge on the SAFE Act requirements and key components of residential mortgage transactions. This quiz covers general fitness requirements, loan modification rules, and common pitfalls in underwriting. Discover essential information for mortgage professionals.