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NMLS Test Outline
RESPA disclosures? due dates? - correct answer 3 days after application: Home loan tool kit Loan estimate List of HUD counselors Mortgage Servicing Disclosure Statement Know before you owe booklet Special Info Booklet 3 days before consummation: Initial Closing Disclosure AfBA disclosure At consummation: Final Closing Disclosure Initial Escrow Statement (45 days after closing) After closing: Annual Escrow Statement Servicing Transfer Statement (sent 15 days before transfer) RESPA covers which loan types? exempt loan types? - correct answer FHA,VA,conventional, USDA,purchase loans, REFI, HELOC all cash sales
RESPA 4 sections - correct answer Section 6: Mortgage Servicing Disclosure Statement: mortgage servicers are required to correct errors and work with home buyers if payments aren't being made. Section 8: No kickbacks/referral fees Section 9: Seller cannot require borrower use a specific title insurance company Section 10: limits amounts a lender can require a borrower to put into escrow account to 1/12 disbursement and 2 reserves. Requires annual escrow analysis. RESPA properties types? exempt? - correct answer owner occupied 1-4 unit residential property Agricultural 25+ acres Businesses Commercial Temporary Financing Vacant Land Assumes existing 1st lien The Loan Estimate combines which old disclosures? - correct answer GFE and Initial TIL Statement How long are Loan Estimate terms available? - correct answer 10 business days What if the changed circumstance causes third party charges subject to a cumulative 10% tolerance to increase? - correct answer creditor must send a revised Loan Estimate and refund excess money within 60 days Are there any restrictions on how many days before consummation a revised Loan Estimate may be provided? - correct answer - receives revised LE at least 4 business days before consummation
- cannot provide revised LE after providing closing disclosure What is a "changed circumstance"? - correct answer Event beyond the control
How long do they have to deliver it? - correct answer ECOA 30 days after application ECOA definition - correct answer ensures all consumers have an equal chance to obtain credit. What is the correct way to ask about marital status? under which law? - correct answer Are you married, unmarried or separated? ECOA How long do you have to retain ECOA disclosures? why? - correct answer 25 months because consumers can take you to court for ECOA violations Penalties for: RESPA TILA ECOA Red Flag Rules State Regulatory Authorities Fraud DNC - correct answer RESPA - $10,000/1 year imprisonment for each violation TILA - $10,000 per day of noncompliance ECOA - $10,000 for each violation Red Flag - $3,500 per incident State Reg. - $25,000 each act or ommission Fraud - $1,000,000/30 years imprisonment for each violation DNC - $16,000 each The borrower has how long to request a copy of his appraisal report?
How long does the creditor have to deliver the appraisal report? This is under which law? - correct answer 90 days 30 days ECOA Which law allows the borrower to challenge the value? Where is this stated? - correct answer ECOA appraisal While looking at your customer's pay check stubs, you see that child support is being paid, what is the correct way to ask? according to which act? - correct answer Do you pay child support, alimony or separate maintenance? ECOA TILA definition things to remember? - correct answer requires lenders to disclose the cost of credit to consumers.
- established 3 day right of rescission:
- HOEPA section 32 & 35
- Loan Originator Compensation
- Mortgage Disclosure Improvement Act - 3/7/3 Rule TILA applies to transactions with how many intallments? - correct answer more than 4 aka 5+ installments = TILA TILA disclosures - correct answer loan estimate
- Revised disclosures must be received 3 days before consummation Which items are required to appear on the TIL Statement? - correct answer APR amount financed (loan amount) finance charges APR definition includes: generally not included? - correct answer relationship between total cost of borrowing and actual amount borrowed loan costs (lender/broker fees) interest rate mortgage insurance
- appraisal fee, hazard insurance, property taxes, credit report, title insurance Qualified Mortgage definition year started? things to remember? characteristics? - correct answer creates new categories of mortgages and imposes underwriting standards. 2014 ATR requirements, safe harbor Max DTI = 43% Max points/fees = 3% Max term = 30 years
ARMs underwritten to max interest rate first 5 years NO negative amortization, prepayment penalties, interest only loans, NINA loans, No doc loans, teaser rates Safe harbor under which law? - correct answer protect lenders against lawsuits by borrowers who claim they received credit without verifying they had met ATR requirements. Qualified Mortgage Rules Ability to Repay info: - correct answer 1. current income/assets
- current employment status
- credit history
- current monthly mortgage payment
- other monthly mortgages payments
- monthly payments for mortgage expenses
- other debts
- max DTI = 43% HOEPA restrictions - correct answer Prohibits:
- negative amortization
- prepayment penalties after 2 years
- balloon payment
- increasing interest rate after default
- REFI high cost loan into another high cost loan within 1 year unless in consumer's best interest
- financing points and fees
- modification fees
- due on demand features
- Late fees >4%
- Home improvement
- Temporary loans Exempt:
- New construction loans
- Reverse Mortgage Reverse Mortgage Purchase Mortgage HELOC business loans Which law prohibits making a loan to a customer without verifying the customer's ability to repay the loan? - correct answer HOEPA Section 35 stands for? triggers? things to remember? - correct answer Higher Priced Loan APR > APOR
- 1.5% 1st lien
- 2.5% jumbo oan
- 3.5% subordinate lien requires escrow account for minimum of 5 years Loan Originator Compensation Rule Purpose? month/year started?
things to know? - correct answer Prohibits:
- upselling
- steering
- compensation based on terms
- dual compensation - only receive from lender or consumer April 2011 Regulates affiliated party fees - (No unaffiliated 3rd parties) What is considered consumer's money? What is not considered consumer's money? Under which law? - correct answer - seller paid closing costs
- cash back from equity in the home
- consumer money before closing YSP Loan Originator Compensation Rules Acronyms: BPO LPO SRP YSP - correct answer BPO - borrower paid origination - all compensation paid by borrower LPO - lender paid origination - all compensation is paid by lender. SRP - servicing released premium - paid to creditor as secondary transaction YSP - yield spread premium - lender pays 3rd party originator to lock borrower's rate higher than par. overage credited to consumer
- estimated property value
- loan amount
- Form 1003 - Fannie Mae or
- Form 65 - Freddie Mac What are the record retention requirements for the TILA-RESPA rule? - correct answer Escrow Cancellation Notice - 2 years Partial Payment Policy - 2 years loan estimate - 3 years closing disclosure - 5 years Important Dates: TRID Dodd Frank Act HPA - correct answer Aug 1, 2015 2010 1998 Which transactions are subject to TRID? exempt? - correct answer home equity loan closed end secured by real property HELOC reverse mortgages chattel dwelling - not attached to real property (mobile home) Which type of loans are subject to TILA but not RESPA under TRID? - correct answer construction only vacant land agriculture 25+ acres
Credit extended for taxes/estate planning TRID delivery method and timing: Loan Application Revised Loan Application Loan Estimate Revised LE Closing Disclosure Revised CD - correct answer LA - mail,email, over phone, in person. No timing LE- hand deliver or put in mail 3 days after application and 7 days before consummation Revised LE - hand deliver or put in mail 3 days after changed circumstance and 4 days before consummation. CD - mail,email (electronic signatures of global and national commerce), in person. Consumer receives 3 days before consummation Revised CD - mail, email, in person. Consumer receives 30 days after consummation. Bona Fide personal financial emergency - correct answer emergency that requires the credit transaction before the end of the waiting period. All Business day definitions - correct answer Loan Estimate - any day a creditor is open Revised Loan Estimate 3 business days - any day a creditor is open Revised Loan Estimate 4 business days - any day except Sunday and legal holidays Closing Disclosure - any day except Sunday and legal holidays
Who is responsible for providing the Closing Disclosure to a _________in a purchase transaction? - correct answer settlement agent seller Name some valid change in circumstances that require you to revise the Closing Disclosures? - correct answer changes before consummation w/ 3 day waiting period
- change in APR
- change loan product
- add prepayment penalty changes before consummation w/o waiting period
- consumer requests revised CD - at consummation
- any other changes changes after consummation
- event causes inaccurate info for consumer or seller - 30 days after consummation
- non numerical clerical errors - 60 days after consummation
- creditors refund money to cure tolerance violations - 60 days after consummation Are there exceptions to the disclosure requirements for loans secured by a timeshare transactions? - correct answer yes
- earliest consummation is 3 days after application
- only requires closing disclosure at consummation (not Loan Estimate) Can creditors provide estimates of costs and terms to consumers before the Loan Estimate is provided? - correct answer yes, but the estimate must state, "Your actual rate, payment and costs could be higher. Get an official Loan Estimate before choosing the loan." What is the special info booklet? When must creditors deliver the special information booklet? - correct answer helps consumers understand settlement costs
3 day after application Which disclosures does TILA-RESPA require? - correct answer Loan Estimate Closing Disclosure Special Info Booklet Escrow Closing Notice Servicing Transfer Notice Partial Payment Notice What transactions are subject to the Escrow Closing Notice requirement? When must the Escrow Closing Notice be provided? - correct answer home equity loan (closed end) secured by 1st lien real property 3 days before cancellation if requested by consumer. Otherwise 30 days before cancellation. If you are required to provide ____________________, you must also provide the partial payment policy - correct answer mortgage transfer notice Can the consumer be charged an appraisal review fee? - correct answer Only if the review fee is disclosed on the Loan Estimate When are Home Owner Association (HOA) dues disclosed? - correct answer only after the fee is known HMDA definition? reg? found where? things to know? - correct answer home mortgage disclosure act - identify discriminatory lending patterns by collecting consumer ethnicity, sex, race.
If denied credit, the borrow must be provided with? according to what law? - correct answer name, address and phone of agency providing credit report FCRA According to which law, how many days does a credit information provider usually have to respond to the consumer after receiving a notice of a dispute? - correct answer FCRA 30 days Under which law, how long does the creditor have to send an applicant an adverse action disclosure? - correct answer FCRA 30 days after application FACTA stands for? things to know? - correct answer Fair and Accurate Credit Transaction Act
- Section 114/ Red Flag Rules/ Identity theft Rules - card issuers must verify change of address
- Free credit report every 12 months - www.annualcreditreport.com
- 3 Requirements:
- businesses truncate credit/debit card receipts
- consumer can place fraud alerts and credit freezes
- burn, shred, keep locked Red Flag Rules definition? month/year started?
Penalty? - correct answer written identity theft prevention program plan to detect and prevent identity theft. Dec, 2010 $3,500 per incident DNC stands for? things to know? national list? interanl list penalty? - correct answer Do Not Call List
- consumers who purchased from you or have an EBR can be contacted for 18 months after transaction
- consumers who inquires from you can be contacted for 3 months.
- consumers can file complaints with FTC national list - updated every 3 months internal list - updated every 30 days penalty - $16,00 per incident EBR - correct answer established business relationship - LO has 18 months to contact them even if on the National Do Not Call list. Dodd Frank Act responsibilities? why created? what year? things to know? - correct answer 5 responsibilities:
- created CFPB to give consumers accurate info to shop for mortgages.
- Established QM, verify borrowers have ATR
- Prohibits unfair lending practices and established penalties for irresponsible lending.
- Expands protection for Section 32 loans.
- Housing Counseling
