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NMLS Questions And Answers
NMLS Questions And Answers
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NMLS Questions And AnswersAcceleration Clause - Answer Allows lenders to demand payment in full if the borrower
defaults on the loan (can be construed as predatory lending)
Alienation Clause (Due on Sale Clause) - Answer Says you must repay your mortgage if you
sell your home to a new owner (loan is not assumable)
Appraiser Independance Requirements replaced HVCC - Answer home valuation code of
conduct
Due on Demand Clause - Answer (Considered a predatory practice) The lender can demand
repayment of the loan in full at anytime for any reason
HOEPA - Answer Home Ownership and Equity Protection Act (Reg Z Sec 32) Amends TILA
Nonrecourse Agreement - Answer Loan agreement under which the collateral securing a loan is
the unltimate source of repayment, and the lender cannot hold the borrower personably liable in
the event of default. Lender can seize (and sell) the collateral but cannot seize non-pledged asset
or property.
ReConveyance - Answer Method in which a lein is removed from a property when payment is
made in full.
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 - Answer Purpose is to
promote the financial stability of US by improving accountability and transparency in the
financial system. Created the Consumer Financial Protection Bureau. Changed MLO
compensation rules
Housing and Economic Recovery Act (HERA) of 2008 - Answer Signed by GW Bush. Est.
national minimum standards for mortgage training, including prelicensing and annual continuing
education. Also, under the SAFE Act, all MLO's must beither state-licensed or federally
registered.
SAFE Act - Secure and Fair Enforcement for Mortgage Licensing Act: part of HERA of 2008 -
Answer Requires all states to implement a MLO licensing process that meets standards through
the Nationwide Mortgage Lending System & Registry (NMLS) In CA that compliance act is
called SB - 36.
SAFE Act Objectives - Answer *Provide uniform license applications and reporting
requirements
*Provide licensing database
*Improve flow of info to and between regulators
*Provide increased accountability and tracking of MLO's
*Streamline the licensing process
*Enhance consumer protection and support anti-fraud measures
*Provide consumers info about MLO's
,NMLS Questions And Answers
*Require MLO's to act in "the best interest of the client"
*Facilitate responsible behavior in the subprime mkt
*Facilitate the collection and disbursement of consumer complaints
NMLS - Answer Started in 2004 by the Conference of State Bank Supervisors (CSBS) and the
American Assoc. of Residential Mortgage Regulators (AARMR) They wrote model legislation
reviewed by HUD for states to follow
Mortgage Loan Originator Definition - Answer Someone who for compensation or gain or
expectation thereof: takes a residential mortgage loan application or offers or negotiates terms of
a residential mortgage loan
Independent Contractor - Answer May not engage in residential mortgage loan activities as a
loan processor or underwriter unless state licensed
Unique Identifier - Answer *Required by the SAFE Act for all state licensed MLO's or
federally registered MLO's employed by a depository institution regulated by a federal banking
agency or regulated by the Farm Credit Admin.
*Required on all mktg materials, applications, required disclosures & business cards
FINRA Financial Industry Regulatory Authority - Answer Built and maintains the online
NMLS system
RESPA (X) Real Estate Settlement Procedures Act 0f 1974 - Answer *Enforced by HUD
*Intended to help consumers become better shoppers for settlement services and eliminate
unnecessary increases in the costs of certain settlement services
MLO License Not Required - Answer *Purely administrative or clerical tasks for a licensee
*Only performing real estate brokerage work
*Time share credit work
*Loan processor or underwriter who does not represent to the public that they perform MLO
work
Federal Banking Agencies - Answer The Board of Gov.'s of the Fed. Reserve System,
Comptroller of the Currency, Dir. of the Office of Thrift Supervision, National Credit Union
Administration and the FDIC.
Depository Institution - Answer Any bank or savings assoc. including credit union
Non-Traditional Mortgage Product - Answer Any mortgage product other than a 30 yr fixed
rate
Residential Mortgage Loan - Answer Any loan primarily for personal, family or household use
that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a
, NMLS Questions And Answers
dwelling or residential real estate upon which a dwelling is constructed or is intended to be
constructed a dwelling
MLO Licensing Requirements - Answer * Submit to a background check
*Provide personal history
*Provide authorization for a credit report
*Never had MLO license revoked
*No conviction or pled nolo contendere for a felony during past 7 yrs preceeding date of
application
*No fraud, breach of trust, or money laundering ever
*A pardon is not a conviction
MLO personal financial responsibility - Answer No:
*Current outstanding judgments
*Current outstanding tax liens
*Foreclosures in the past 3 years
*Pattern of seriously delinquent accounts in past 3 yrs
MLO pre-licensing education - Answer Federal Law & regulation (3 hours)
Ethics (3 hours)
Nontraditional mortgage products (2 hours)
Electives (12 hours)
MLO Exam - Answer Federal Mortgage related laws 35%
General Mortgage knowledge 25%
MLO activities 25%
Ethics 15%
Fail 3 times then must wait 6 months
MLO License renewal requirements - Answer Federal Law & regulation (3 hours)
Ethics (2 hours)
Nontraditional mortgage products (2 hours)
Electives (1 hours)
MLO Compensation Rules - Answer Dodd-Frank Compensation Changes:
*Compensation can't be based different cause it is a different kind of loan
*Comp. can't be based on loan terms such as interest rate, apr or LTV
*Can't get comp. directly from consumer and another source on the same loan
*no pricing concessions
*no "point banks"
*MLO can't be penalized for GFE violations
*Can't base comp on terms of previous transaction
Safe Harbor Loan - Answer If the consumer is presented with loan options for each type loan,
including:
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