MLO Practice Test with Complete Solutions | A+ Grade
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Course
MLO
Institution
MLO
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 a...
MLO Practice Test with Complete Solutions | A+ Grade An Approve/Eligible determination: 1. Is an indication that a property appraised for its sales price 2. Authorization to releas e 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. - ✔✔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 - ✔✔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 - ✔✔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 - ✔✔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 proper ty 2. The average meridian income levwels of the community 3. The fair market rental earnings of similar homes 4. The qualifying income potential borrowers - ✔✔3. The fair market rental earnings of similar homes A mortgage broker decides to solicit busine ss 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-registe r and the loan originator calls 14 months later - ✔✔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 t hen 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 - ✔✔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 - ✔✔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. - ✔✔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 Cancel in a refinance transaction? 1. Anyone with ownership interest in the property 2. Only parties who are on the new loan 3. Only parties with 51% or more ownership in the property 4. Only the primary borrower - ✔✔1. Anyone with ownership interest in the property...all persons that sign the security instrument must receive a notice of the right to cancel in any transaction where the security interest in the property is being used to secure new financing Under the Gram m Leach Bliley Act, which of the following is considered non public information? 1. Previous owners of a particular party 2. The street address of a property 3. A current loan balance 4. The assessed value of a subject property - ✔✔3. A current loan balan ce..this would be considered non public information The following refinance transactions are transactions that are designed to provide cash back Except: 1. Debt consolidation 2. Rate and term 3. Limited cash -out 4. Cash -out refinance - ✔✔2. Rate and term..a rate and term refinance transaction is designed to either reduce the rate or reduce the term
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