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MLO Mortgage Loan Origination (SAFE MLO) Exam Questions and Answers

Questions 4

If a mortgage loan includes a prepayment penalty, it must be included on which of the following disclosures?

Options:

A.

Loan Estimate only

B.

Closing Disclosure only

C.

Uniform Residential Loan Application

D.

Both the Loan Estimate and Closing Disclosure

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Questions 5

Which of the following applicant characteristics is legally permitted to be considered in evaluating credit risk?

Options:

A.

Whether the applicant seems likely to have children

B.

Whether the applicant has a phone number listing in their name

C.

Whether the applicant's age makes them ineligible for credit-related insurance

D.

Whether the alimony payments the applicant relies on for income are likely to continue and to be consistently made

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Questions 6

The Equal Credit Opportunity Act (ECOA) defines the term "elderly" as anyone:

Options:

A.

60 years of age or older.

B.

62 years of age or older.

C.

65 years of age or older.

D.

70 years of age or older.

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Questions 7

A borrower is approved for an 80/20 loan. Which of the following describes the lien priority for the 20% loan?

Options:

A.

First

B.

Second

C.

First as it will be combined with the 80% loan

D.

Second but combined with any other liens

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Questions 8

A mortgage loan originator (MLO) originates a 5/1 ARM where the indexed rate is likely to be higher than the introductory rate. The Truth in Lending Act (TILA) states that an MLO must calculate a borrower's monthly Payment amount based on which of the following?

Options:

A.

Payment amount during the fixed introductory period

B.

An average of the varying payment amounts over the life of the loan

C.

The total amount of the payments

D.

Fully indexed rate of the loan

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Questions 9

Prepaid charges include which of the following items?

Options:

A.

Origination fee

B.

Credit report fee

C.

Conveyance tax

D.

Per diem interest

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Questions 10

How many days after loan consummation does a lender have to refund an excess charge subject to the 10% aggregate tolerance?

Options:

A.

45 days

B.

50 days

C.

60 days

D.

90 days

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Questions 11

The loan-to-value ratio for an FHA loan is calculated by dividing the loan amount by:

Options:

A.

the purchase price of the property.

B.

the appraised value of the property.

C.

the lesser of the purchase price or appraised value.

D.

the purchase price, plus the mortgage insurance for FHA loans.

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Questions 12

Which of the following fees is a finance charge?

Options:

A.

A notary fee

B.

An origination fee

C.

An appraisal fee

D.

A late payment fee

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Questions 13

Which of the following statements describes an advantage of a purchase money second mortgage?

Options:

A.

The borrower pays two mortgage payments.

B.

The borrower avoids paying into the escrow account.

C.

The borrower avoids paying private mortgage insurance

D.

The borrower's loan closes faster than a regular mortgage.

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Questions 14

Maximum available flood insurance structure coverage for a residential property from the National Flood Insurance Program is what amount?

Options:

A.

£250,000

B.

£500,000

C.

$750,000

D.

$1,000,000

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Questions 15

If an applicant provides a waiver for the requirement to receive their appraisal three business days prior to a loan's consummation and the transaction ends up not closing at all, a creditor must still provide a copy of the appraisal no later than how many days after the creditor determines consummation will not occur?

Options:

A.

10 days

B.

30 days

C.

45 days

D.

60 days

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Questions 16

A mortgage loan originator (MLO) cannot be approved for licensure if the applicant has:

Options:

A.

been convicted of a felony within the past seven years.

B.

had an MLO license suspended in any governmental jurisdiction.

C.

taken and failed the SAFE MLO National Test three times within the last year.

D.

never been licensed or registered as an MLO in any governmental jurisdiction.

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Questions 17

The upfront premium charged on an FHA mortgage transaction to protect a creditor in the event of borrower default is an example of:

Options:

A.

optional credit life insurance.

B.

force-placed hazard insurance.

C.

government mortgage insurance.

D.

private mortgage insurance

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Questions 18

According to the Truth in Lending Act (TILA), a dwelling includes which of the following?

Options:

A.

An unimproved lot

B.

A six-unit apartment complex

C.

An individual condominium unit

D.

A timeshare

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Questions 19

How many days before consummation must a borrower receive a revised Loan Estimate?

Options:

A.

4 business days

B.

5 business days

C.

7 business days

D.

10 business days

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Questions 20

Which of the following fees or charges is an allowable closing cost typically found on a Closing Disclosure?

Options:

A.

Origination charge

B.

Referral fee

C.

Servicing fee

D.

Yield-to-loan fee

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Questions 21

When does the Loan Estimate expire?

Options:

A.

After the 3rd business day

B.

After the 5th business day

C.

After the 7th business day

D.

After the 10th business day

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Questions 22

A borrower who knowingly makes false statements on a federally related mortgage loan to obtain property may be:

Options:

A.

imprisoned for 10 to 16 months

B.

fined up to JB10,000 or imprisoned for 6 months.

C.

fined up to $1 million and imprisoned for 30 years.

D.

fined up to the total purchase price of their home.

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Questions 23

In a federally related mortgage loan on a principal dwelling, which of the following parties has the right to rescind the transaction?

Options:

A.

Only the borrower who makes the most income

B.

Only the borrower with the majority interest in the transaction

C.

Only the person who will actually occupy the property

D.

Any person who has an ownership interest in the property

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Questions 24

Which of the following responses describes the required amount of flood insurance coverage?

Options:

A.

The original appraised value of the home

B.

The outstanding principal balance of the loan

C.

The minimum amount of National Flood Insurance Program coverage available

D.

The property value on file with the county property valuation administrator office

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Questions 25

The debt-to-income analysis should assess a borrower's total monthly housing related payments as a percentage of the:

Options:

A.

net monthly income

B.

gross monthly income.

C.

taxable income.

D.

loan amount.

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Questions 26

Non-qualified mortgages offer more options for borrowers who:

Options:

A.

are unemployed.

B.

are self-employed.

C.

have no down payment.

D.

are currently living with their parents.

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Questions 27

Which of the following activities is a function of the Consumer Financial Protection Bureau (CFPB)?

Options:

A.

Regulating the federal funds rate at which money is lent to banks

B.

Regulating the number of mortgage loan originators in the mortgage industry

C.

Regulating mortgage lenders on their mortgage origination practices and procedures

D.

Deciding what quantity of mortgage-backed securities are purchased by the government

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Questions 28

Which of the following services is included in the definition of a settlement service?

Options:

A.

Flood insurance

B.

Homeowners association fees

C.

Title company/escrow agent services

D.

Sale of the mortgage loan on the secondary market

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Questions 29

Which of the following loan types may be considered a qualified loan under ability-to-pay rules

Options:

A.

An interest-only mortgage

B.

A loan with a balloon payment

C.

A loan with negative amortization

D.

A mortgage with an adjustable rate

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Questions 30

How often must a nonexempt telemarketing entity check their call list against the National Do Not Call Registry?

Options:

A.

Every 7 days

B.

Every 2 weeks

C.

Every 31 days

D.

Annually

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Questions 31

The appraiser valuation independence obligates appraisers to perform their duties in a manner free from outside influence through which of the following actions?

Options:

A.

Encouraging a target value

B.

Withholding payment from an appraiser

C.

Asking the appraiser to substantiate a value

D.

Communication directly between the loan officer and the appraiser

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Questions 32

Which of the following reasons is acceptable for denying a loan under the Equal Credit Opportunity Act (ECOA)?

Options:

A.

Receipt of child support

B.

Immigration status

C.

Marital status

D.

Country of birth

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Questions 33

Which of the following sources of funds is acceptable to utilize for down payments, closing costs or financial reserves?

Options:

A.

Virtual currency funds

B.

Community second funds

C.

Personal unsecured loans

D.

Foreign assets located outside of the U.S. or its territories

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Questions 34

An easement:

Options:

A.

is a mortgage modification.

B.

is a right to cross or otherwise use someone else's land for a specified purpose.

C.

allows a loan applicant to close on a loan even if all the stipulations have not been met.

D.

allows a borrower to make less than the required payments without going through a full mortgage modification.

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Questions 35

Under the TILA-RESPA Integrated Disclosure rule (TRID), what is the minimum time period that must pass between a borrower's receipt of a Loan Estimate and the closing of a mortgage loan?

Options:

A.

7 business days

B.

15 business days

C.

30 business days

D.

45 calendar days

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Questions 36

Which of the following is an origination fee?

Options:

A.

Appraisal fee

B.

Underwriting fee

C.

Title insurance fee

D.

Prepaid Interest fee

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Exam Code: MLO
Exam Name: Mortgage Loan Origination (SAFE MLO) Exam
Last Update: Dec 5, 2024
Questions: 120

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