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Mortgage Loan Origination (SAFE MLO) Exam Version: Demo [ Total Questions: 10] Web: www.dumpscafe.com Email: support@dumpscafe.com NMLS MLO https://www.dumpscafe.com https://www.dumpscafe.com/Braindumps-MLO.html IMPORTANT NOTICE Feedback We have developed quality product and state-of-art service to ensure our customers interest. If you have any suggestions, please feel free to contact us at feedback@dumpscafe.com Support If you have any questions about our product, please provide the following items: exam code screenshot of the question login id/email please contact us at and our technical experts will provide support within 24 hours.support@dumpscafe.com Copyright The product of each order has its own encryption code, so you should use it independently. Any unauthorized changes will inflict legal punishment. We reserve the right of final explanation for this statement. NMLS - MLOPass Exam 1 of 8Verified Solution - 100% Result A. B. C. D. A. B. Question #:1 A mortgage loan originator (MLO) received a salary of 1% per loan plus a bonus of $5,000 for closing the most loans in the office last year. In addition, he received a trip to Hawaii based on closing 100 or more transactions with an interest rate of 5% or higher. Is the MLO's compensation prohibited? His compensation is permitted as compensation only includes salary and his salary is not based on loan terms. His compensation is permitted as compensation only includes salary and bonuses and his salary and bonus is not based on loan terms. His compensation is not permitted as compensation only includes salary and his salary is based on loan terms. His compensation is not permitted as compensation includes all financial incentives and his trip was awarded based on closing the most loans with certain loan terms. Answer: D Explanation Under Dodd-Frank Act regulations and Regulation Z (TILA), mortgage loan originators (MLOs) cannot be compensated based on the terms of the loan, such as interest rates, loan amount, or product type. This includes any financial incentives, like bonuses or rewards, tied to loan terms. In this case: The trip to Hawaii was awarded based on closing loans with an interest rate of 5% or higher, which directly ties the MLO's compensation to a specific loan term (the interest rate). This violates the Loan Originator Compensation Rule, which prohibits compensating MLOs based on the terms or conditions of a loan, in order to protect borrowers from steering into unfavorable loan products. Therefore, all forms of compensation—including bonuses, trips, or other rewards—are scrutinized if they are tied to loan terms, making the MLO's trip to Hawaii an illegal incentive under current law. References: Dodd-Frank Act - Loan Originator Compensation Rules TILA/Regulation Z - Anti-Steering and Loan Terms Compensation Rules Question #:2 Which of the following responses describes the purpose of an appraisal in satisfying requirements for underwriting? To ensure that the home is not an outlier to its comparables NMLS - MLOPass Exam 2 of 8Verified Solution - 100% Result B. C. D. A. B. C. D. To ensure that the market value is appropriate for the loan amount To allow the seller a final opportunity to cancel the transaction To allow the borrower a final opportunity to negotiate terms of the loan Answer: B Explanation The purpose of an appraisal in mortgage underwriting is to determine the current market value of the property being used as collateral for the loan. This is to ensure the loan amount does not exceed the value of the property and to protect the lender’s interest in case of default. “An appraisal provides an opinion of the property’s market value, which is essential for the lender to determine if the property adequately secures the loan.” — Fannie Mae Selling Guide, B4-1.1-03: Appraisal Report Forms and Exhibits References: Fannie Mae Selling Guide, Appraisal Requirements =========== Question #:3 When applying for a home equity line of credit (HELOC), consumers should review documentation carefully and be sure that they consider: if the HELOC is insured by HUD. if the HELOC requires private mortgage insurance if the company offering the HELOC has deposit accounts insured by the FDIC. the APR and the costs of acquiring and maintaining the HELOC. Answer: D Explanation When applying for a Home Equity Line of Credit (HELOC), consumers should carefully review the APR and the total costs of acquiring and maintaining the HELOC. The APR reflects the overall cost of borrowing, including interest and certain fees, and is crucial for understanding the long-term expense of the HELOC. Additionally, consumers should consider fees associated with setting up and maintaining the HELOC, such as annual fees, transaction fees, and closing costs. NMLS - MLOPass Exam 3 of 8Verified Solution - 100% Result A. B. C. D. A. While HUD insurance (A) and FDIC deposit insurance (C) are unrelated to HELOCs, and private mortgage insurance (B) is generally not required for HELOCs, the APR and fees are critical factors that directly impact the cost of borrowing. References: Truth in Lending Act (TILA) disclosure requirements for HELOCs CFPB HELOC Guide Question #:4 The ability to originate loans under temporary authority applies to which of the following? Previously licensed real estate brokers Previously registered mortgage loan originators (MLOs) An MLO who has scheduled their test but not completed it An MLO who is still waiting for their credit check to be completed Answer: B Explanation Temporary authority to originate loans applies to registered MLOs (from a depository institution) who become employed by a state-licensed mortgage company, as well as to state-licensed MLOs seeking licensure in another state, provided they meet all SAFE Act requirements. “Temporary authority to originate loans applies to… registered mortgage loan originators seeking state licensure and state-licensed MLOs seeking licensure in a new state.” — SAFE Act, 12 U.S.C. § 5117; NMLS Temporary Authority Guidelines It does not apply to real estate brokers or those who have not passed required testing/background checks. References: NMLS, Temporary Authority to Operate SAFE Act, 12 U.S.C. § 5117 Question #:5 Under the SAFE Act, which of the following individuals is not a "mortgage loan originator"? NMLS - MLOPass Exam 4 of 8Verified Solution - 100% Result A. B. C. D. A. B. C. D. An individual who takes a loan application for compensation An individual who quotes interest rates to a consumer for compensation An individual who negotiates credit terms on behalf of a consumer for compensation An individual who handles the collection of a mortgage payment from a consumer for compensation Answer: D Explanation The SAFE Act defines a mortgage loan originator (MLO) as someone who takes a residential mortgage loan application and offers or negotiates terms for compensation or gain. An individual who only handles the collection of mortgage payments is not acting as an MLO under the Act. “Mortgage loan originator means an individual who (i) takes a residential mortgage loan application; and (ii) offers or negotiates terms of a residential mortgage loan for compensation or gain. The term does not include an individual who only performs administrative or clerical tasks or who only collects mortgage payments.” — SAFE Act, 12 U.S.C. § 5102(4); NMLS Uniform State Content Outline References: SAFE Act, 12 U.S.C. § 5102(4) =========== Question #:6 A mortgage loan originator (MLO) is in the process of taking an application for a 30-year mortgage, and the borrowers are over 72 years old. Which of the following actions must the MLO take? The MLO must present them with a reverse mortqaqe. The MLO must present them with a home equity line of credit (HELOC). The MLO must complete the application andproceed as normal. The MLO must inquire about the ability to repay in the event of a borrower's death. Answer: C Explanation Under the Equal Credit Opportunity Act (ECOA), age cannot be a basis for discrimination in the loan application process. If borrowers are over 72 years old, the MLO must complete the application and proceed as normal, treating them the same as any other applicant. The MLO should not make assumptions about the NMLS - MLOPass Exam 5 of 8Verified Solution - 100% Result A. B. C. D. borrowers' needs, such as automatically suggesting a reverse mortgage (A) or a home equity line of credit (B). Similarly, there is no obligation for the MLO to inquire specifically about the borrower's ability to repay in the event of death (D), as this would be age discrimination. References: Equal Credit Opportunity Act (ECOA), 15 U.S.C. §1691 CFPB Guidelines on age and lending practices Question #:7 A woman and her son meet with a mortgage loan originator (MLO) about refinancing the mother's home. During the meeting, the MLO senses that the mother is against the transaction and may be being unfairly coerced into the procedure. In which of the following ways should the MLO proceed? Ask to speak to the mother privately to inquire whether she Is a willing participant in the transaction [Consider the issue to be a private family matter and proceed with the next steps in the application process Suggest that the son be listed as a co-borrower on the mortgage to ensure he assumes part of the risk of the loan Tell the mother that she needs to sign a power of attorney so that her son may complete the transaction on her behalf Answer: A Explanation When an MLO suspects that a borrower, such as the mother in this case, may be under duress or being coerced into a transaction, they have a duty to ensure that all parties are willingly participating. The ethical approach would be to ask to speak privately with the mother to verify her intentions and comfort level with the transaction. This ensures that the loan is compliant with consumer protection laws such as the Truth in Lending Act (TILA) and the Equal Credit Opportunity Act (ECOA), which protect against unfair lending practices. Ignoring the situation (Option B) could lead to participation in a coerced or fraudulent transaction. Suggesting that the son be a co-borrower (Option C) or signing a power of attorney (Option D) are inappropriate if the mother is unwilling to proceed. Verifying her willingness safeguards the integrity of the loan process and ensures compliance with fair lending practices. References: Truth in Lending Act (TILA) NMLS - MLOPass Exam 6 of 8Verified Solution - 100% Result A. B. C. D. A. B. C. D. Equal Credit Opportunity Act (ECOA) CFPB guidelines on elder financial abuse Question #:8 Prepaid charges include which of the following items? Origination fee Credit report fee Conveyance tax Per diem interest Answer: D Explanation Prepaid charges refer to certain upfront costs paid at closing. These include: Per diem interest (D), which covers the interest from the closing date to the end of the month. Other items like origination fees (A), credit report fees (B), and conveyance taxes (C) are not considered prepaid charges; they are typically categorized as closing costs or settlement fees. References: Real Estate Settlement Procedures Act (RESPA) TILA-RESPA Integrated Disclosures (TRID) Question #:9 Which of the following characteristics is unique to a home equity line of credit (HELOC)? A borrower is permitted to receive additional advances. A borrower is permitted to make interest-only payments for the term of the loan. A borrower is permitted to borrow more than the property is worth. A borrower is permitted to sell the property without paying off the loan. Answer: A Explanation NMLS - MLOPass Exam 7 of 8Verified Solution - 100% Result A. B. C. D. A home equity line of credit (HELOC) is a revolving form of credit secured by the equity in the borrower's home. What is unique about a HELOC, compared to traditional closed-end loans, is that the borrower can take multiple draws or advances up to the credit limit during the draw period. “A HELOC is a line of credit extended to a homeowner that uses the borrower’s home as collateral. The distinguishing feature of a HELOC is that the borrower may take additional advances at his or her discretion, up to the approved credit limit, during the draw period.” — SAFE MLO National Test Study Guide Other answers: Interest-only payments can occur in some loan types but are not unique to HELOCs. Borrowing more than the property is worth (being "underwater") is not allowed. Selling the property without paying off the loan is not permitted; the HELOC must be satisfied at sale. References: CFPB, What is a HELOC? SAFE MLO National Test Study Guide =========== Question #:10 Which of the following statements describes an advantage of a purchase money second mortgage? The borrower pays two mortgage payments. The borrower avoids paying into the escrow account. The borrower avoids paying private mortgage insurance The borrower's loan closes faster than a regular mortgage. Answer: C Explanation A purchase money second mortgage allows a borrower to avoid paying private mortgage insurance (PMI) by using a second loan to cover part of the down payment. This structure, often referred to as a "piggyback loan", is commonly used when a borrower does not have a 20% down payment but wants to avoid PMI, which is typically required for loans with less than 20% down. The borrower makes payments on both the primary mortgage and the second mortgage, but by keeping the loan-to-value (LTV) on the first mortgage below 80%, they can avoid PMI. NMLS - MLOPass Exam 8 of 8Verified Solution - 100% Result References: Fannie Mae Selling Guide on purchase money mortgages Freddie Mac Guidelines on private mortgage insurance About dumpscafe.com dumpscafe.com was founded in 2007. 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