NMLS Exam-with 100% verified solutions 2024-2025, Exams of Advanced Education

Download NMLS Exam-with 100% verified solutions 2024-2025 and more Exams Advanced Education in PDF only on Docsity! NMLS Exam-with 100% verified solutions 2024-2025 Tutor verified Fraud for money Laundering -Criminal uses scheme known as value tampering -Criminal offers to buy house at reduced rate -Seller must sell at appraised value on paper, but after closing, seller give the criminal the difference in cash. Adverse Action An unfavorable credit decision rendered against a consumer made on the basis of information contained on the credit application. If a lender takes adverse action against an applicant, the lender must notify the applicant in writing. If the adverse action is taken as a result of information contained on the credit report, the notice must also provide the name, address and toll-free phone number of the credit bureau that supplied the information. American Association of Residential Mortgage Regulators (AARMR): A national association of individuals who are charged with administering and regulating various aspects of residential mortgage lending. It played a major role in the formation of the NMLS-R and in the drafting of the model licensing law. Annual percentage rate (APR): Does NOT include...TEN ACT- (Title,Escrow,Notary,Appraisal,Credit Report,Termite)A measurement of the total cost of the credit, expressed as an annual rate. The APR includes those paid at the time of closing and those paid over the term of the loan. It includes all items that are part of the finance charge, such as interest, discount points, mortgage insurance premiums and administrative fees. Application A request for a residential mortgage loan and includes the borrower-related information that lenders commonly use when considering the request. Someone who takes an application from a consumer is generally considered to be acting as a loan originator, even when gathering application information over the phone or Internet ARM Disclosure: A disclosure required to be presented to the applicant within three days of application on any ARM loan. This disclosure provides the applicant with information about the specific ARM product for which they are applying, such as a historical index value Balloon mortgage: A nonprofit financial institution that is owned by its members and organized for their benefit. Deed of trust: A deed to real property, which serves the same purpose as a mortgage, involving three parties instead of two. The third party holds naked title for the benefit of the lender. Beneficiary (Lender), Trustor (Borrower), Trustee (Third Party) Defeasance clause: A portion of a lending agreement that requires the lender to execute a release of lien or satisfaction of mortgage document upon full payment of the debt. Disparate impact: occurs when an employer creates a seemingly fair employment practice that has a negative impact on members of a protected class. Disparate treatment: intentional discrimination that occurs when people are purposely not given the same hiring, promotion, or membership opportunities because of their race, color, sex, age, ethnic group, national origin, or religious beliefs. Example, offering coffee to one visitor to your office but not to another; should those people be of different races, genders, ethnicities, etc., disparate treatment may have occurred. Dodd-Frank Act: legislation passed in 2010 aimed at reforming the banking industry and offering consumers greater protection.A federal law that addresses several aspects of mortgage lending and other financial regulatory matters. It created the Consumer Financial Protection Bureau (CFPB) and amended many other mortgage-related laws. Dual compensation: A prohibited act under the CFPB's Loan Originator Compensation Rule, this refers to a broker receiving compensation from multiple parties (such as the lender AND the borrower) on the same transaction. Easement: Formal right to traverse or use real property without ownership or possession. Often granted to utility companies so that they may maintain infrastructure located on a property. Recorded with the county in which the property is located, easements will appear on the title report and, in certain limited circumstances, may raise questions from an underwriter or attorney. Encroachment: A fixture, such as a fence, that crosses the boundary line of one property onto another. It can create adverse possession issues and a cloud on the property's title. Equitable right of redemption: The right of a defaulted property owner to recover the property prior to, or at the time of its sale by paying the appropriate fees and charges. Equity stripping: A practice whereby the applicant's equity is taken away by a mortgage lender. Equity stripping can come in many forms, but in all cases, is viewed as predatory lending and must be avoided. Fair Credit Reporting Act: A federal law regulating the users and use of consumer credit information. Parts of the law are now implemented and enforced by the Consumer Financial Protection Bureau, but parts of it remain with the Federal Trade Commission. Fannie Mae: The common name for the "Federal National Mortgage Association," which is a government- sponsored enterprise that acts as a quasi-governmental agency for the purpose of creating a secondary market for mortgages. It purchases loans on the secondary market and turns groups of loans into mortgage-backed securities (MBS) through the securitization process. Federal Home Loan Bank (FHLB) system: A system of GSEs owned by over 8,000 community financial institutions. It provides advances to financial institutions in order for those institutions to make residential mortgage loans. Fiduciary relationship: a relationship founded on trust and confidence Financing contingency date: In real estate transactions, the contractually determined date by which the buyer's financing must be in place Fraud for profit: Inside job where the loan originator, real estate agents or appraisers do it for their benefit of making profit Fraud for property: Also called "fraud for housing," this is a willful misrepresentation of material facts on a loan application with the intent of gaining property. This type of fraud is more likely to be perpetuated by borrowers and result in less damage to the creditor(s) involved because the loan is typically paid in a timely manner. Freddie Mac: "Federal Home Loan Mortgage Corporation," which is a government-sponsored enterprise that was intended to provide a secondary market for mortgages originated by savings and loan associations and create competition to Fannie Mae. Like Fannie Mae, Freddie Mac also issues mortgage-backed securities (MBS). Ginnie Mae: Government National Mortgage Association; pools mortgages for investors Government-sponsored enterprise (GSE): A quasi-governmental agency. Fannie Mae and Freddie Mac are examples of GSEs. Hedging: In mortgage lending, the attempt to minimize interest-rate risk by purchasing a Treasury security or MBS to offset large movements in the rate markets. High-cost mortgage loan: A mortgage loan with an annual percentage rate exceeding the Average Prime Offer Rate (APOR) by more than 6.5% for a first-lien transaction or 8.5% for a second-lien transaction, OR a mortgage loan with total points and fees exceeding 5% of the loan amount. ALL high- cost loans must be compliant with the Home Ownership and Equity Protection Act (HOEPA). Home Mortgage Disclosure Act (HMDA): A federal law that requires lenders to annually disclose the number of loan applications and loans in certain areas, thus eliminating the practice of "redlining." Home Ownership and Equity Protection Act (HOEPA): A federal law that sets rules for high-cost loans. A loan that is subject to HOEPA cannot feature a balloon payment, negative amortization or a prepayment penalty and cannot be A fee or charge for the work involved in the evaluation, preparation and submission of a proposed mortgage loan. The origination fee is limited to 1% of the loan amount for FHA and VA loans Overt discrimination: A method of identifying illegal discrimination. Occurs when a business has a known policy that refuses to serve, or provides different levels of service to, members of a protected class based solely on their membership in the protected class (i.e., refusing service to Hispanic borrowers). Promissory note: A document that evidences the borrower's obligation to repay the debt to the lender. Unlike the mortgage, the promissory note does not state that the property will be used as collateral in order to obtain the loan. Reconciliation: The process by which an appraiser examines several estimates of value and bases the property's final estimate of value on the intended use of the property. Securitization: Pooling loans into standardized securities backed by those loans, which can then be traded like any other security. Service release premium: Fees which lenders may receive for selling or transferring their right to service a mortgage loan State In regard to the SAFE Act, any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands and the Northern Mariana Islands State-licensed loan originator: A loan originator who is licensed by his or her state, registered with the NMLS-R and isn't employed by entities mentioned in the definition of "registered loan originator." If you are reading this study guide, you are likely planning on becoming (or have already become) a state-licensed loan originator State Regulatory Registry, LLC: A wholly owned subsidiary of CSBS that runs the NMLS-R Statutory right of redemption: The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges.The ability to cure a foreclosure even after a judicial sale has occurred Suspicious activity reports (SARs): Reports that must be filed with the Treasury Department whenever a person engages in suspicious aggregate transactions of $5,000 or more. These reports are required by the Bank Secrecy Act. Subprime loan: A loan in which the borrower represents too high of a risk for it to be sold to Fannie Mae or Freddie Mac Thrift: Sometimes known as a "savings and loan," a mutual or stock association chartered and regulated by the Office of the Comptroller of the Currency. Traditionally, deposits are invested in residential mortgage loans. Title insurance: A policy that protects the insured against loss or damage due to defects in title. Title report: A report issued after a title search by a title insurance company, listing all defects and encumbrances of record Total interest percentage (TIP): The total amount of interest paid over the life of the loan expressed as a percentage of the loan amount. It appears on both the Loan Estimate and Closing Disclosure. Trigger terms: Items in an advertisement that automatically require the disclosure of other items in the same advertisement. Trigger terms are the amount or percentage of down payment, the number of payments or period of repayment, the amount of any payment and the amount of any finance charge. Undisclosed concessions: Monies related to a purchase transaction passing between buyer and seller that are not disclosed on the Closing Disclosure or HUD-1 settlement statement (for loans not using the CD). ALL credits and concessions must be listed on the settlement statement. VA funding fee: An amount paid by a veteran in order to help defray the costs of the VA loan program. The size of the fee will depend on several factors, including the loan-to-value ratio, the purpose of the loan, the veteran's status and the number of times the veteran has obtained a VA loan. Warehouse line of credit: A revolving line of credit used by mortgage brokers in order to fund loans Wholesale lenders: Entities that purchase and sell loans that have been originated by third parties. Wholesale lenders may purchase loans with the intent to package the loans for sale to secondary market investors; or they may purchase loans in order to service the loans themselves 5 rights under FACRA 1. Right to adverse action notice 2. Free copy of credit report 3. Request credit score 4. The right to dispute incomplete or inaccurate information 5. Limit prescreened offers What is a Qualified mortgage No terms longer than 30 years, No risky features, DTI 43% (back end), fees costs and points 3% or less, Income and verify ability to repay TILA penalitites $5,000/day single violation, $25, 000/day reckless violation, 1 million/day knowingly violation TRID RESPA transactions not covered *All cash sale *Sale where the individual seller takes back the mortgage *Rental property transaction *Property of 25 acres or more *Vacant or unimproved property (unless a dwelling will be constructed or moved on within 2 yrs. * Commercial properties *Bridge and construction loans What does BSA stand for and also known as? Bank Secrecy Act..aka as the "anti-money laundering act" The BSA requires financial institutions to to keep records of cash purchases, file reports of cash transactions exceeding how much? $10,000 (daily aggregate amount) The Bank Secrecy Act says you must report suspicious activity that might signify money laundering, tax evasion or other criminal activities to who? The Financial Crimes Enforcement Network, FinCEN Who says that Financial institutions are required to file a SAR report no later than 30 calendar days after the date of initial detection of facts (delayed filing no more than 60 days) Financial Crimes Enforcement Network under the Bank Secrecy Act Under non-bank activates, RMLOs are required for transactions that involve aggregates funds or other assets of at least how much, to make a SARs report? $5000 Types of Mortgage Fraud *Submission of inaccurate information *Forgery of docs *Failure to provide proper disclosures to borrowers in accordance with Federal and State laws *Dating of documents with dates different from actual date *Signing any document on behalf of the borrower Illegal property flipping Fraudulently and repeatedly selling of property between individuals. The price is artificially driven up through false appraisals or consecutive sales between the two. Fraud for shelter (property) Borrower intends to live in property, but uses false personal/financial information to get a larger mortgage, but their income can't support. Usually, within 2 years the homes is foreclosed on because the criminals can't make payments. Fraud for Profit also known as Industry Insider Fraud -Involve multiple partners and are designed to manipulate the lender. -Partners involved may include appraiser, builders, real estate agents, mortgage companies, etc. -Appraisal inflated, seller is taking less than stated on contact, so seller and buyer and appraiser all benefit from inflated value. equity stripping the unethical practice of extending a loan to a distressed homeowner who cannot afford the loan payments, resulting in the lender taking possession of the home Flipping Lender refinances borrowers loans frequently w/in a short period of time. Each time, borrower is charged high closing cost. What is automated underwriting? Loan processing completed through computer based system that evaluates PAST CREDIT HISTORY to determine if a loan should be approved Chattels Personal A movable article of personal property other than land, buildings, and other things annexed to land. What does COFI stand for? Cost of Funds Index What do closing costs include? Title insurance fees, Lender fees (underwriting, processing, doc prep, flood cert., tax service, wire transfer, courier), Escrow, attorney or closing agent fees, recording fees, Inspection and appraisal fees, real estate commission, pre-paid interest, property tax if due, hazard insurance, PMI When must the unique identifier be shown? The unique identifier of any person originating a residential mortgage loan shall be clearly shown on all residential mortgage loan application forms, solicitations or advertisements, including business cards or websites, and any other documents as established by rule, regulation or order of the Commissioner.