California Mortgage Loan Originator (MLO) License Practice Test

These questions are part of the practice quiz. Start practicing

• What is the requirement under Fair Lending, Fair Housing, and ECOA?
• What type of properties are FHA loans restricted to?
• Which action might a borrower take if they suspect identity theft?
• What does RESPA stand for?
• What does the acronym ECOA stand for?
• What is one of the purposes of the Loan Estimate?
• What purpose does the CHARM booklet serve?
• What items are mandatory on the Loan Estimate?
• What is required for a High-Cost loan in addition to tax and insurance escrows?
• Which statement best defines the purpose of reserves in mortgage lending?
• What is a benefit of having a borrower with high credit scores regarding mortgage insurance?
• What is an entity that has the power to regulate the mortgage industry known as?
• In mortgage terminology, what typically happens if a property fails the appraisal?
• Under the Homeowners Protection Act, what is a requirement for loans exceeding 80% Loan-to-Value (LTV)?
• What is the report called that must be filed if fraud or AML is detected?
• What items are included in the 10% Tolerance items?
• What does LIBOR stand for?
• Are principal payments required on Home Equity Lines of Credit (HELOCs)?
• Which of the following is not a discriminatory item under ECOA?
• How many months of reserves are typically needed for non-owner-occupied properties?
• What is the required timeframe to send an adverse action notice?
• Which type of loan requires a large final payment because it does not fully amortize?
• What does phishing or pre-texting involve?
• How many parties are needed to exercise the Right of Rescission for a loan?
• Which of the following areas should never be inquired about in a loan application?
• How many days must pass after signing the application for initial disclosures to be delivered?
• What provides a Safe Harbor for lenders?
• Which of the following items requires no tolerance?
• What does a Tri-Merge credit report consist of?
• Which three bases are protected under the Fair Housing Act not covered by ECOA?
• What is the requirement concerning public assistance during the loan qualification process?
• Which loan type has the highest allowable seller-paid closing costs?
• Which law was amended by the Fact Act?
• What items are essential for refinancing a mortgage loan?
• What must be included in advertising according to TILA regulations?
• Which of the following best describes a loan term?
• Which authority must be contacted if a borrower appears on the OFAC watch list?
• Which item is included under the eight aspects covered by TILA?
• What does HPA stand for in the context of mortgage loans?
• Which demographic factors cannot be used to assess loan eligibility according to ECOA?
• What is the Reg Letter associated with the Fair Credit Reporting Act?
• When does the foreclosure process typically commence?
• How long is the confidentiality period for SAR information?
• How long must a Suspicious Activity Report (SAR) be retained after it is filed?
• What is a characteristic of mandatory counseling for reverse mortgages?
• What may occur if a lender does not meet QM Standards?
• How do you calculate the payment on a student loan if there isn't a loan payment on the credit report for Fannie Mae and FHA loans?
• Under UDAAP guidelines, how should an advertisement be structured?
• What type of loan is characterized by interest rates that can change at scheduled times?
• What does GLB stand for?
• What does the Mortgage Disclosure Improvement Act (MDIA) primarily focus on?
• In terms of mortgage terms, what does 'APR' signify?
• What is the primary purpose of an appraisal?
• What is a fraud alert?
• What does the Average Prime Offered Rate (APOR) represent?
• How many copies of the Right of Rescission are required to be given to borrowers?
• What is required of a borrower if there is a shortage on the escrow analysis?
• What is the primary purpose of the Safe-Guard Rules?
• What is an essential requirement for borrowers under interest-only loans?
• What does 360/180 imply in loan terms?
• What is the penalty if you close a Conventional Conforming loan without QM approval?
• How does an appraisal affect the borrower's mortgage options?
• What is an acceptable method for digital delivery verification?
• What represents an example of a non-liquid asset?
• Which form indicates that the borrower must occupy the property as their primary residence?
• What are the five parts of an ARM loan?
• What does UDAAP stand for?
• If a loan is declined due to credit issues among three borrowers, which score is used?
• Which of the following are types of title policies?
• How often must the aggregate accounting escrow be reviewed?
• What is the role of FNMA in the mortgage market?
• Which practice is a violation of the Gramm-Leach-Bliley Act?
• What defines a non-liquid asset?
• When considering a borrower, which credit score should be used?
• Which of the following is NOT included in the Zero Tolerance items on the Loan Estimate?
• Which body oversees the data collected under HMDA?
• What is the Fannie Mae document used for self-employed income calculation?
• Where is the prepayment penalty typically disclosed?
• When can the delivery method for initial disclosures be changed?
• What law governs Balloon Loans and what is the minimum balloon period?
• How is per diem interest calculated for conventional loans?
• What does "no tolerance" mean in the context of mortgage loan origination?
• After someone requests you to put them on your DNC List, how many days do you have to comply?
• Which types of loans do not allow assumptions?
• Which of the following best describes the purpose of title insurance?
• What does the Sales Comparison Approach in an appraisal involve?
• What is the maximum time frame for issuing an adverse action notice after a loan decision?
• Which type of properties does TILA, RESPA, ECOA, and HMDA apply to?
• What qualifies as a changed circumstance in loan processing?
• Which agency monitors compliance with Fair Lending and Fair Housing regulations?
• Which of the following is a duty of the CFPB?
• How long is the exemption period for an existing business relationship under DO-NOT-CALL?
• Which factors can affect mortgage interest rates?
• Which requirement is NOT typically part of employee training regarding breaches?
• What are the methods by which initial disclosures can be delivered to borrowers?
• Which of the following Flood Zones requires Flood Insurance?
• Which items are classified as ZERO tolerance items?
• What are the maximum seller-paid closing costs for FHA/USDA loans?
• What is the main role of the Appraisal Foundation?
• What does the term "Initial Disclosures" refer to?
• What must lenders do when they decline a loan application?
• What does Safe Harbor mean?
• What information does the Initial Disclosure include?
• After delivering the signed Intent to Proceed, how long must a borrower wait to close on the loan?
• Which of the following items is NOT specifically mentioned as part of TILA guidelines?
• Which item is considered a Zero Tolerance item on the Loan Estimate?
• Which items fall under the No Tolerance category?
• When might a lender require a second appraisal?
• When does the Right of Rescission become effective after closing?
• What is a potential consequence for a company that fails to comply with HMDA reporting?
• Which agency is responsible for enforcing the Bank Secrecy Act?
• What is the Freddie Mac form used for calculating self-employed income?
• What must occur if a borrower needs to revert to hard copy after digital delivery?
• What does a borrower receive on the third business day prior to closing?
• What is the duration that a lender can wait before contacting someone on the DNC list again?
• What is one of the common items verified through a 4506T form?
• What is the debt to income ratio for VA loans?
• What does CRA stand for in financial regulations?
• What must happen if there is an overage on the escrow analysis?
• What is the primary purpose of an appraisal in the mortgage lending process?
• What is the definition of a consumer in the context of financial services?
• What is a hybrid loan?
• What could be a consequence of not disclosing a prepayment penalty?
• What happens if the APR tolerances are exceeded during the loan process?
• How many free credit reports is a consumer entitled to each year?
• Which guidelines must appraisers follow?
• What law is LO Comp covered under?
• What is a primary goal of the Equal Credit Opportunity Act (ECOA)?
• What does the Acceleration Clause allow a lender to do?
• Who is authorized to access a SAR file after it has been reported?
• What does MSA stand for in mortgage lending?
• What does the acronym MDIA stand for?
• What are the five components that define a reverse mortgage?
• What does the term "AS IS" indicate on an appraisal?
• Can a borrower be informed that a Suspicious Activity Report (SAR) has been filed against them?
• What is required by Mortgage Acts and Practices in advertising?
• Which of the following items are restricted under HOEPA?
• How long do the fees and charges remain valid from the issue date of the Loan Estimate?
• What is the purpose of PMI in loans over 80% LTV?
• How must a lender treat income from public assistance?
• Who benefits from the requirements established by the CRA?
• What is required from the borrower for Digital Delivery to occur?
• How many loans are involved in a Construction Permanent loan?
• What does the term 'excessive value' refer to in appraisals?
• What is defined as a surety bond?
• Which factor can lead to negative amortization in a reverse mortgage?
• Which type of income document is used for self-employed borrowers?
• Which of the following is not one of the five parts of ECOA?
• What does LO Comp stand for?
• Which of the following situations would require a new closing disclosure (CD) and a 3 business day delay?
• Which of the following is a protected basis under the Fair Housing Act that is different from those covered by ECOA?
• Which term refers to the amount of interest charged per day on a loan?
• Which type of loan structure is characterized by "Construction with a Permanent take-out"?
• What financial information is crucial for mortgage loan underwriting?
• What is the regulation associated with high-cost loans?
• Which of the following factors is least likely to affect a property’s appraisal value?
• What year was the Dodd-Frank Act created?
• What are the adjustment caps on an ARM designed for?
• Which agency is responsible for regulating and enforcing the DO-NOT-CALL list?
• What does the term 'prepayment penalty' refer to in mortgage loans?
• What is required before a company changes a consumer's personal information?
• What is the purpose of the ECOA?
• Under what circumstances are balloon payments not allowed in a High-Cost loan?
• Which of the following is NOT a question that can be asked on a mortgage application?
• What type of properties commonly require a special appraisal?
• What is the main requirement of the Community Reinvestment Act?
• What is one requirement for a Higher-Priced Loan?
• What is required to utilize electronic signatures according to regulations?
• Who is responsible for delivering the Loan Estimate to the borrower?
• What is the typical use for a cost appraisal?
• How long before the interest adjustment must the first ARM disclosure be sent to the borrower?
• What is a common characteristic of income-producing appraisal types?
• What is a common consequence of a low appraisal?
• Who is responsible for publishing the APOR Index?
• What is the primary purpose of the Loan Estimate (LE)?
• For conventional conforming loans over 80% LTV, what is required?
• What is the implication of a non-recourse mortgage in the context of a reverse mortgage?
• What identification is required from borrowers under the U.S. Patriot Act?
• Which of the following lists the three stages of a mortgage loan life cycle?
• Which types of riders are typically included in mortgage documentation?
• What does ECOA stand for?
• When is PMI required to be dropped under the Homeowners Protection?
• When is the Preferred Providers List supposed to be delivered to the borrower?
• What key issues does Title VII address?
• What is typically the age threshold for borrowers to access reverse mortgages?
• What does QM stand for?
• How many days prior to closing should the appraisal be delivered to the borrower?
• What are Mortgage-Backed Securities?
• Which document formally obligates the borrower to proceed with the loan?
• What does a new Loan Estimate need to reflect after a changed circumstance?
• What is the definition of a settlement service per RESPA?
• What is a limitation on bonuses as mentioned in the context?
• What defines a non-warrantable condo?
• Who can file a Suspicious Activity Report?
• Why is it considered discriminatory to deny a loan based on disability under the Fair Housing Act?
• Which agency is responsible for regulating Red Flags?
• What is the fine for violating the Red Flags Rule?
• What does TILA stand for?
• Which of the following is a requirement for advertising under TILA?
• What defines a changed circumstance in mortgage lending?
• What does the term Table Funding refer to in the context of mortgage lending?
• What does TRID stand for?
• What is the function of the FTC in relation to mortgage regulations?
• What are the permissible solicitation hours according to regulations?
• What is a homeowner's warranty designed to cover?
• What are the two booklets required within three business days of the signed application?
• How long does an underwriter have to make a decision after receiving a complete underwriting package?
• What methods can be used to verify employment when processing a mortgage application?
• Which of the following are examples of involuntary liens?
• Which type of coverage is provided by plain language title insurance?
• What is the Reg Letter for RESPA?
• What is the role of a mortgage broker?
• Which entity regulates the Safe-Guard Rules?
• Which information is required on the Adjustable-Rate Mortgage ARM disclosure?
• When can a lender order an appraisal?
• What are the penalties for violating Dodd-Frank Tier One, Federal Consumer Financial Laws?
• What is generally included in a standard appraisal report?
• What is the cost associated with placing a fraud alert or credit freeze?
• What type of information does the Gramm-Leach-Bliley Act aim to protect?
• What does collateral refer to in mortgage lending?
• When is an MLO or company not liable under the 10% tolerance rule?
• What is meant by truncation in relation to credit transactions?
• What is the debt-to-income ratio for Housing (up-front) on a Conventional Conforming Loan?
• When must an adverse action notice be sent after a loan is declined or canceled?
• Which agencies do not allow prepayment penalties?
• What is considered Net Monthly Income?
• In relation to High-Cost loans, what option is not permitted?
• What does CFPB stand for?
• What key components does the cost approach include?
• What does the Alienation Clause specify?
• What type of appraisal compares a property to similar properties?
• Why is it important to lock up files when they are not in use?
• What does a Credit Freeze do?
• What key information does the Loan Estimate provide to borrowers?
• What is the maximum overall debt limit when calculating the Qualified Mortgage?
• What does the acronym OFAC represent?
• What is the maximum back-end debt-to-income ratio for VA loans?
• What kind of insurance does a surety bond resemble?
• Upon discovering a conflict of interest, how quickly must the Preferred Providers List be given to the borrower?
• If no proceeds are drawn from a HELOC, is interest charged?
• When determining the amount for bonuses or retirement donations, which of the following criteria is considered?
• When inspecting a property, which of the following is typically NOT assessed?
• How much is title insurance coverage on a reverse mortgage?
• On what basis can commissions for an MLO be calculated?
• Which index is the most common today for ARM loans?
• In regards to lien priority, lenders prefer which position?
• How many days must a lender wait after sending a Loan Estimate before charging any fees?
• What are the two exemptions for solicitations under the DO-NOT-CALL rules?
• If an anti-money laundering (AML) issue is detected, who should it be reported to?
• What represents evidence of disparate impact?
• What is the significance of the 'Primary Market' stage in the mortgage loan life cycle?
• What is the purpose of a real estate indemnity agreement?
• What verification is required for child support in FHA loans?
• To obtain the Fully-Indexed Rate, which two numbers must be added together?
• What is the minimum period for a balloon mortgage?
• What fees are permissible according to mortgage regulations?
• Which condition is typically true for a property to qualify for FHA loans?
• Which of the following is NOT covered under TILA?
• What may happen to rates and fees on non-owner-occupied loans?
• What are the two ways a conventional conforming loan can meet QM Standards?
• When a consumer requests no solicitations via letter or email, what must the company do?
• Under the Fair Housing Act, why is age not a discriminatory factor?
• What is the maximum allowable time for a mortgage application to be valid before re-evaluation is necessary?
• Which types of loans are assumable?
• What constitutes an in-house Do-Not-Call list?
• What adjustments are permissible with the Sales Comparison Approach?
• Which organizations are required to file a HMDA report?
• What is a "due on sale" clause?
• Which adjustment cap is applied to comparables in real estate transactions?
• What could be the consequence for violating the Bank Secrecy Act?
• How do you calculate bonus income if the bonus income reduced in the last two years?
• What type of mortgage typically results in negative amortization?
• What is the legal definition of consummation in a mortgage loan process?
• What is one of the primary responsibilities of HUD?
• How many business days before the closing must the borrower receive the initial closing disclosure?
• If someone on the Do Not Call (DNC) List contacts you, how long can you continue calling them?
• In what scenario might a borrower be responsible for ordering an appraisal?
• What is a Loan Estimate (LE)?
• Under ECOA, what is prohibited regarding discriminatory items?
• What does the term "appraisal contingency" refer to in a real estate contract?
• What does the term 'LTV' commonly refer to in mortgage lending?
• What is the required retention period for loan files according to regulations?
• How is ownership transferred among joint tenants upon death?
• What role does the Fair Housing Administration play in the context of HUD?
• Which of the following describes equity stripping?
• What is the purpose of Private Mortgage Insurance (PMI)?
• What does LTV stand for in mortgage terms?
• What is the penalty for violating Section 8 of RESPA regarding anti-kickback rules?
• What benefit does Private Mortgage Insurance provide to borrowers?
• What does HUD stand for?
• What length of coverage does a homeowner's warranty typically provide for major structural defects?
• What is the primary purpose of an engineer's certification of foundation in real estate transactions?
• Within what timeframe must servicing loan estimates be provided?
• How often do telemarketers update the Do Not Call (DNC) list?
• What percentage of a VA Loan is guaranteed?
• Once files are digitized, what can be done with the hard copies?
• Can rental income be used to qualify a borrower?
• If a breach is determined, what must the company do within 30 days?
• What does Lien Priority refer to?
• Which of the following is not a national credit agency?
• What is the maximum penalty for violating Dodd-Frank Tier Three, Federal Consumer Financial Laws?
• What is the minimum down payment for an FHA loan?
• What is the overall debt (back-end) ratio for a Conventional Conforming Loan?
• Which organizations oversee the NMLS?
• What type of interest rate is typically associated with HELOCs?
• Which types of companies are covered by the Bank Secrecy Act?
• What is the required amount for fire/hazard insurance in relation to a mortgage?
• What is a "desktop appraisal"?
• What is required if a borrower is found on the OFAC watch list?
• What is the purpose of the MU1 application?
• What should a borrower do if they find an error in their credit report?
• What does REG P refer to in association with Gramm-Leach-Bliley?
• What does a 'mechanic's lien' typically pertain to?
• Which of the following is NOT a payment option for Adjustable Rate Mortgages (ARMs)?
• What is defined as a loan that occurs between the termination of one mortgage and the beginning of the next?
• What is the primary role of the Compliance Officer related to SARs?
• How is the Annual Percentage Rate (APR) expressed?
• How long does a Chapter 11 or 13 bankruptcy remain on a credit report?
• What is Fair Market Value?
• How long must advertising materials be retained under TILA?
• How do you determine if a loan exceeds the higher-priced mortgage limits?
• What does AQB stand for?
• What should happen to loan files after their retention period ends?
• Which of the following is NOT a characteristic of FHA loans?
• What is the "Opt-Out" provision under GLB?
• What is a notice of transfer in mortgage servicing?
• Which fee is NOT included in the zero tolerance category?
• What affects Private Mortgage Insurance (PMI)?
• What indicates that a borrower is obligated to the loan?
• What does the right of rescission allow a borrower to do?
• What is the role of the Federal Reserve Board in relation to mortgage interest rates?
• What is required if an appraisal waiver is issued?
• At what minimum age can a borrower apply for a reverse mortgage?
• What is the Reg Letter for the Fair Credit Reporting Act?
• Which items are considered core components of the Truth in Lending Act (TILA)?
• What constitutes a business day for the purpose of closing?
• What is one potential consequence of failing to meet Ability to Repay (ATR) requirements?
• What does the acronym HMDA stand for?
• Do Fannie Mae and Freddie Mac allow non-owner-occupied loans?
• What method is NOT included in Digital Delivery?
• For how long must solicitation records be retained?
• What is the role of a certified appraiser?
• Which of the following are considered TILA trigger terms?
• How is a 10% tolerance determined in the context of borrower fees?
• What are the three categories for fees presented on the Loan Estimate (LE)?
• What does the Fair Housing Act state regarding familial status?
• When are Loan Estimate (LE) requirements not required?
• What happens to the borrower's credit when a Credit Freeze is applied?
• In an interest-only loan, what is the monthly payment obligation of the borrower?
• What is the maximum number of payments remaining on a debt for it to not count in the Debt to Income ratio?
• Under which law and regulation is the Home Ownership Equity Protection Act (HOEPA) categorized?
• Who are considered major participants in the secondary mortgage market?
• What is a Purchase Money Second?
• What percentage of income can be counted from rental property for loan qualification?
• Which individual is primarily responsible for managing SAR files and the disclosure of information?
• What kind of claims does plain language title insurance protect against?
• How many business days before closing is the Final Loan Estimate required to be received by the borrower?
• What is the duration for which a Chapter 7 bankruptcy is recorded on a credit report?
• Which type of occupancy requires Right of Rescission during a mortgage transaction?
• What does MIP stand for?
• Which three items are necessary to calculate the mortgage payment?
• Which option is NOT a benefit of the CFPB?
• What constitutes comparative evidence of disparate treatment?
• What is generally a characteristic of a PUD (Planned Unit Development)?
• What defines a non-conforming loan?
• What is a common penalty for violating RESPA?
• What is included in the initial escrow disclosure?
• What is the primary purpose of plain language title insurance?
• Which of the following is a characteristic of an FHA appraisal?
• What does the acronym PENCIL represent in mortgage documentation?
• What marital statuses can be asked during the loan application process?
• What is the Chain of Title?
• How often is HMDA data required to be reported?
• What is the definition of an assumption in mortgage terms?
• What are the triggers for higher-priced lending?
• What is a common characteristic of subprime lending?
• Which of the following is NOT a characteristic that cannot be used for discrimination in lending?
• Which agency allows the use of 1/2% of the balance for student loan calculations on the credit report?
• Who does the CFPB answer to?
• What is typically included in standard property inspections?
• What are the financing requirements for manufactured homes?
• In the context of fraud detection, what is required to take action?
• What value does an appraisal provide to lenders?
• How many days after a changed circumstance must a new Loan Estimate be delivered?
• What items can LO Compensation be paid on?
• What is the significance of the initial disclosure timing as outlined by MDIA?
• What is a mortgage service agreement?
• In terms of a 10% tolerance, when is the borrower liable for additional costs?
• What law mandates that the appraisal must be delivered 3 business days before closing?
• What additional information must be provided on a Credit Score Disclosure?
• Which of the following is NOT a trigger for high-cost lending?
• What is typically considered ‘HUD Data Plate’ in context to manufactured homes?
• For how long does a conventional loan owner typically agree to occupy the property?
• What does the acronym AML stand for in the mortgage industry?
• Which of the following is a critical security practice when a breach is identified?
• Do mortgage brokers have a duty to report HMDA data?
• What happens if a borrower has a higher loan level price adjustment?
• What is the term used for the transfer of ownership of real property?
• What does NPPI stand for?
• How often can consumers get a free credit report?
• What type of loans must be reported on the HMDA report?
• What does HELOC stand for in mortgage terminology?
• How do you calculate bonus income if the bonus income increased over the last two years?