MLO Practice Test
An Approve/Eligible determination:
1. Is an indication that a property appraised for its sales price
2. Authorization to release funds in a refinance transaction
3. An automated loan approval from t
...
MLO Practice Test
An Approve/Eligible determination:
1. Is an indication that a property appraised for its sales price
2. Authorization to release funds in a refinance transaction
3. An automated loan approval from the Fannie Mae Du system
4. A recommendation that is received by the Freddie Mac loan prospector automated underwriting
system. - ANS - 3. An automated loan approval from the Fannie Mae Du system.. this means that the
borrower meets the credit requirements and all other loan factors are acceptable. The LP
recommendations are mostly one word answers and the equivalent recommendation under LP would be
Accept.
If a lender agrees to subordinate a loan, what has occurred?
1. The borrower has a first and second and has refinanced the first.
2. The loan has been denied
3. The second has been paid off
4. The borrower is in foreclosure - ANS - 1. The borrower has a first and second and has refinanced the
first...when the borrowed refinanced a first and there is an existing second the second becomes the first
when the old loan is paid off. To avoid this from happening the second position lender will subordinate
and remain in second position.
Which of the following are you permitted to ask loan applicants under the fair lending laws?
1. Their race
2. Their religion
3. If they plan to have additional children
4. Will they continue to work after they have children - ANS - 1. Their race, a HMDA requirement.
The National Credit Score Disclosure Form provides the following:
1. Statement that the credit score determines loan approval
2. Four reason codes for the credit score
3. A reason for the loan approval status
4. The reason for the loan denial - ANS - 2. Four reason codes for the credit score.
The income approach used in valuing property during an appraisal considers the following:
1. The replacement cost of the property
2. The average meridian income levwels of the community
3. The fair market rental earnings of similar homes
4. The qualifying income potential borrowers - ANS - 3. The fair market rental earnings of similar
homes
A mortgage broker decides to solicit business from a previous customer who closed on a home purchase.
Which action could result in a $16,000 fine?
1. Contacting the customer 17 months after the purchase transaction closed
2. Verifying that the customer is not in the no-call-registry before making a sales call 2 years after the
purchase transaction closed
3. The client is listed on the company no-call list and the loan originator calls the customer just shy of 18
months after the purchase transaction closed.
4. The customer is on the no-call-register and the loan originator calls 14 months later - ANS - 3. The
client is listed on the company no-call list and the loan originator calls the customer just shy of 18
months after the purchase transaction closed. If the customer has requested not to be called then it is a
violation to call the customer.
Which of the following is not a factor in determining an interest rate?
1. Age
2. Time
3. Points
4. Margin - ANS - 1. Age..age is a prohibited basis under ECOA and can't be used to determine interest
rates. Points are discount fees that are charged to lower the rate, the longer the time generally higher the
rate and margin is the lenders profit built into the rate
Interest-only mortgages can be all of the following EXCEPT:
1. Can be fixed rate mortgages
2. Can be adjustable rate mortgages
3. Can be junior liens
4. Fully amortized loans - ANS - 4. Fully amortized loans..means that the amortization will pay out the
loan. With interest only, payments contribute to interest only and the principal is not reduced.
Which of the following would not be a penalty for violating RESPA section 8 relating to kickbacks?
1. Three times the value of the referral relating to the kickback and/or unearned fees.
2. The attorneys fees for the affected person
3. The affected person would have the right to rescind the loan transaction
4. A $10,000 fine and/or 1 year in prison for each violation. - ANS - 3. The affected person would have
the right to rescind the loan transaction..civil & criminal liability is provided for violating the prohibition
against kickbacks and unearned fees, including: *Civil liability to the parties affected, equal to three
times the amount of the referral fee, kickback and/or unearned fee*. *The possibility that the costs
associated with any court proceeding and reasonable attorneys fees could be recovered*. *a fine of no
more than $10,000 or imprisonment for no more than 1 year or both, for each violation.
Who much receive a Notice of Right to Can
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