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OH MLO practice questions

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Question 1Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Under the SAFE Act, a mortgage loan originator's license or registration must generally be renewed how often?

  1. Annually Correct answer.
  2. Every two years
  3. Every five years
  4. Every three years

Explanation

The SAFE Act requires MLO licenses and registrations to be renewed on an annual basis, and the renewal process includes completing continuing education and submitting to a criminal background check. This yearly cycle keeps the nationwide licensing system current.

Question 2Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

How many hours of pre-licensing education must a new mortgage loan originator complete under SAFE Act standards?

  1. 12 hours
  2. 20 hours Correct answer.
  3. 40 hours
  4. 8 hours

Explanation

The SAFE Act sets a minimum of 20 hours of pre-licensing education for new MLOs, including specified hours on federal law, ethics, and lending standards. States may impose additional requirements but cannot go below this floor.

Question 3Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A mortgage loan originator completes the required annual continuing education. What is the minimum number of hours per year?

  1. 8 hours Correct answer.
  2. 6 hours
  3. 10 hours
  4. 15 hours

Explanation

SAFE Act continuing education requires at least 8 hours annually, with at least some hours devoted to federal law and ethics. This is separate from and in addition to any state-specific requirements.

Question 4Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Which statute requires lenders to provide a Loan Estimate within three business days of receiving a mortgage application?

  1. Truth in Lending Act / Regulation Z Correct answer.
  2. Home Mortgage Disclosure Act
  3. Fair Credit Reporting Act
  4. Equal Credit Opportunity Act

Explanation

The TILA-RESPA integrated disclosure rules under Regulation Z require the Loan Estimate to be delivered within three business days of application. ECOA, HMDA, and FCRA govern different aspects of lending.

Question 5Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Under RESPA, when must the Closing Disclosure be provided to the borrower?

  1. Within three days after closing
  2. At least three business days before consummation Correct answer.
  3. At least seven business days before consummation
  4. On the day of closing

Explanation

RESPA requires the Closing Disclosure to be delivered at least three business days before consummation so the borrower can review final terms. This waiting period can be reset if certain changed circumstances occur.

Question 6Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Which law prohibits discrimination in credit on the basis of race, color, religion, national origin, sex, marital status, or age?

  1. Real Estate Settlement Procedures Act
  2. Home Mortgage Disclosure Act
  3. Equal Credit Opportunity Act Correct answer.
  4. Secure and Fair Enforcement for Mortgage Licensing Act

Explanation

The Equal Credit Opportunity Act bars discrimination in credit transactions on specified prohibited bases, including race, sex, marital status, and age. It also imposes notification and recordkeeping duties on creditors.

Question 7Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

The Home Mortgage Disclosure Act primarily requires covered financial institutions to do which of the following?

  1. Register mortgage loan originators in NMLS
  2. Provide every applicant with a Loan Estimate
  3. Guarantee a minimum number of mortgage loans to low-income borrowers
  4. Collect and report mortgage lending data to regulators Correct answer.

Explanation

HMDA requires covered institutions to collect, record, and report data about mortgage applications and originations, which regulators use to identify discriminatory or unmet credit needs. It does not mandate lending quotas or disclosures to individual applicants.

Question 8Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Under RESPA, which of the following is a prohibited practice?

  1. Giving a referral fee to a real estate agent for a settlement referral Correct answer.
  2. Charging a reasonable fee for an appraisal
  3. Providing a good-faith estimate of closing costs
  4. Paying a fee to a settlement service provider for services actually performed

Explanation

RESPA's anti-kickback provision prohibits giving or accepting anything of value in exchange for referrals of settlement service business. Fees must be for services actually performed and cannot be referral-based.

Question 9Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A lender denies a mortgage application. Under ECOA and Regulation B, what must the lender do?

  1. Notify the applicant of the adverse action within 30 days and state the reasons Correct answer.
  2. Wait 60 days before notifying the applicant
  3. Provide no notice unless the applicant asks
  4. Report the denial only to HMDA regulators

Explanation

Regulation B requires creditors to notify applicants of adverse action within 30 days and to provide a statement of reasons or a notice of the right to request them. This ensures applicants understand why credit was denied.

Question 10Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A mortgage applicant is charged a fee before receiving the Loan Estimate. Which statement best describes the compliance issue?

  1. This is permitted because fees may be collected at any time
  2. This is permitted only if disclosed in the Closing Disclosure
  3. This is permitted because the fee is refundable
  4. This is a potential violation because no fee may be imposed before the Loan Estimate is delivered Correct answer.

Explanation

Under Regulation Z, a creditor may not impose fees before the applicant receives the Loan Estimate, except a permissible credit report fee. Collecting other fees earlier can violate the disclosure timing rules.

Question 11Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A borrower's Closing Disclosure shows a changed annual percentage rate that exceeds the tolerance threshold. What is the effect?

  1. The lender must refund the entire closing cost
  2. No action is required because the Closing Disclosure was already issued
  3. A revised Closing Disclosure must be provided and a new three-business-day waiting period applies Correct answer.
  4. The loan may close immediately with no disclosure

Explanation

When a changed circumstance increases the APR beyond the allowed tolerance, the creditor must provide a corrected Closing Disclosure and the borrower must receive it at least three business days before consummation. This protects the borrower's ability to review final terms.

Question 12Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Which of the following best describes the ability-to-repay requirement under TILA?

  1. Lenders must verify a borrower's income, assets, employment, and debts before extending credit Correct answer.
  2. Lenders must offer the lowest available interest rate to every applicant
  3. Lenders must report all denials to HMDA within three days
  4. Lenders must approve any applicant who meets a 20 percent down payment

Explanation

The ability-to-repay rule requires creditors to make a reasonable, good-faith determination that the consumer can repay based on verified income, assets, employment, and debts. Offering the lowest rate or approving based solely on down payment is not the standard.

Question 13Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A mortgage loan originator is employed by a state-licensed nonbank lender. How is the MLO registered or licensed?

  1. Registered with the SEC
  2. Exempt from any registration
  3. Licensed by the Federal Reserve
  4. Registered in NMLS as a state-licensed MLO Correct answer.

Explanation

MLOs employed by nonbank lenders are state-licensed and registered in the Nationwide Multistate Licensing System. Depository institution employees are federally registered instead.

Question 14Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A creditor uses an automated underwriting system and denies an application. What does Regulation B require regarding the reasons for denial?

  1. The creditor may decline to give reasons because a computer made the decision
  2. The creditor must give reasons only after a written appeal
  3. The creditor must give reasons only if the applicant is a protected class member
  4. The creditor must provide the specific reasons even if the system generated the decision Correct answer.

Explanation

Regulation B requires creditors to provide specific reasons for adverse action even when an automated system made the decision. The creditor cannot hide behind the technology to avoid its notification duty.

Question 15Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Which of the following is a permitted basis for a creditor to request information about an applicant's marital status?

  1. To determine whether the applicant is likely to default
  2. To set a higher interest rate for unmarried applicants
  3. To comply with state property law requirements Correct answer.
  4. To decide whether to require a co-signer

Explanation

Regulation B permits inquiries into marital status only in limited circumstances, such as when necessary to comply with state property law or for certain community property states. Using marital status to price or underwrite is prohibited.

Question 16Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Under HMDA, which of the following data points must covered institutions report for a mortgage application?

  1. The applicant's credit score
  2. The applicant's employer name
  3. The applicant's race, ethnicity, and sex Correct answer.
  4. The applicant's net worth

Explanation

HMDA requires reporting of demographic data including race, ethnicity, and sex, along with loan characteristics and outcomes. Credit scores, employer names, and net worth are not HMDA reportable fields.

Question 17Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A settlement agent charges a borrower a fee for a service that was not actually performed. Under RESPA, this is best characterized as which violation?

  1. An unearned fee prohibited by RESPA Correct answer.
  2. A required disclosure error
  3. A permissible administrative fee
  4. A HMDA reporting error

Explanation

RESPA prohibits charging fees for services that were not actually performed. Such unearned fees are a form of kickback and are unlawful even if disclosed.

Question 18Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A lender's loan originator compensation plan pays a bonus based on the interest rate of the loans closed. What is the compliance concern?

  1. This may violate the prohibition on compensation based on loan terms Correct answer.
  2. This is required to align incentives
  3. This is permissible if disclosed on the Loan Estimate
  4. This is permissible because it rewards performance

Explanation

Regulation Z prohibits loan originator compensation that varies based on the terms of the transaction, such as the interest rate. Such arrangements create incentives to steer borrowers into higher-cost loans.

Question 19Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Which federal law requires that consumers receive a copy of their credit report disclosures and governs the accuracy of consumer reporting?

  1. Home Mortgage Disclosure Act
  2. Equal Credit Opportunity Act
  3. Fair Credit Reporting Act Correct answer.
  4. Real Estate Settlement Procedures Act

Explanation

The Fair Credit Reporting Act governs consumer reporting agencies and the accuracy, privacy, and disclosure of credit information. It also gives consumers rights to dispute inaccurate information.

Question 20Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A mortgage broker receives a fee from both the borrower and the lender for the same loan without proper disclosure. Which law is most directly implicated?

  1. Home Mortgage Disclosure Act
  2. Secure and Fair Enforcement for Mortgage Licensing Act
  3. Real Estate Settlement Procedures Act Correct answer.
  4. Fair Credit Reporting Act

Explanation

RESPA addresses kickbacks and unearned fees, and undisclosed dual compensation can violate its anti-kickback provisions. Proper disclosure and actual services are required.

Question 21Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Under the SAFE Act, which of the following would disqualify an individual from obtaining an MLO license?

  1. A prior misdemeanor traffic violation
  2. A change of residential address
  3. A prior felony conviction involving fraud or dishonesty within the past seven years Correct answer.
  4. Completion of pre-licensing education

Explanation

The SAFE Act requires that applicants not have certain disqualifying felony convictions, particularly those involving fraud, dishonesty, or breach of trust within the prior seven years. Traffic violations and address changes are not disqualifying.

Question 22Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A creditor receives a completed mortgage application on Monday and mails the Loan Estimate on Thursday. Assuming no changed circumstances, which statement is correct?

  1. The timing may be noncompliant because delivery must occur within three business days of application Correct answer.
  2. The timing is compliant because mailing is always permitted
  3. The timing is compliant because the Loan Estimate was mailed within three business days
  4. The timing is irrelevant because only the Closing Disclosure matters

Explanation

Regulation Z requires the Loan Estimate to be delivered or placed in the mail within three business days of receiving the application. Mailing on the fourth business day may exceed the deadline depending on how the days are counted.

Question 23Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A lender's HMDA data shows a statistically significant disparity in denial rates by race. What is the most likely regulatory consequence?

  1. Immediate loss of the lender's charter
  2. Automatic criminal prosecution of the loan originator
  3. Increased regulatory scrutiny and potential fair lending investigation Correct answer.
  4. No consequence because HMDA data is informational only

Explanation

HMDA data is used by regulators to identify possible fair lending violations, and significant disparities can trigger supervisory review or enforcement inquiry. It does not automatically result in criminal prosecution or charter loss.

Question 24Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A loan originator suggests that an applicant omit income from a spouse to help the application qualify. Which law is most directly implicated?

  1. Fair Credit Reporting Act
  2. Equal Credit Opportunity Act and Regulation B Correct answer.
  3. Real Estate Settlement Procedures Act
  4. Home Mortgage Disclosure Act

Explanation

Regulation B prohibits creditors from discouraging applicants or requiring spousal information in a discriminatory manner, and applicants have rights regarding separate creditworthiness. Steering an applicant to omit a spouse's income can violate ECOA.

Question 25Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A creditor's policy requires all applicants over age 62 to provide additional documentation before approval. Which statement is correct?

  1. This is permissible if disclosed to the applicant
  2. This is impermissible age discrimination under ECOA Correct answer.
  3. This is required by Regulation B for elderly applicants
  4. This is permissible because older applicants present higher risk

Explanation

ECOA prohibits discrimination on the basis of age, and creditors may not impose different requirements based on age unless justified by a permissible factor. Blanket extra documentation for older applicants is discriminatory.

Question 26Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Under the SAFE Act, an individual mortgage loan originator's license or registration record is maintained in which system?

  1. The Nationwide Multistate Licensing System and Registry (NMLS) Correct answer.
  2. The GSE automated underwriting system (AUS)
  3. The Federal Reserve's supervisory tracking database
  4. The Federal Housing Administration's Title II insurance system

Explanation

The SAFE Act requires states to participate in the Nationwide Multistate Licensing System and Registry and to maintain MLO records there, including fingerprints, credit reports, and testing and education results. Federal registration for bank MLOs also runs through NMLS. This centralizes licensing data so regulators and consumers can verify status.

Question 27Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Under RESPA Section 8, which arrangement is permissible?

  1. Paying a referral fee to a real estate agent for sending a buyer to the lender
  2. Charging a fee for a settlement service that is not performed
  3. Paying a fee to an attorney for actual settlement services rendered Correct answer.
  4. Splitting a settlement charge with a party who did no work on the loan

Explanation

RESPA Section 8 bars fees for referrals and unearned fee splits but permits bona fide compensation for services actually performed. Payment must bear a reasonable relationship to the goods or services provided. Paying an attorney for real settlement work therefore is lawful.

Question 28Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Which statement accurately describes the Loan Estimate requirement under Regulation Z?

  1. It may be delivered orally if the borrower consents
  2. It must be delivered only after the borrower signs the closing documents
  3. It must be provided within three business days of receiving a complete application Correct answer.
  4. It is required only for loans that exceed the conforming loan limit

Explanation

Regulation Z requires a creditor to deliver or place in the mail a Loan Estimate no later than three business days after receiving the consumer's application and no later than seven business days before consummation. The estimate uses good-faith estimates subject to tolerance rules.

Question 29Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Under ECOA and Regulation B, which characteristic is a protected class for credit decisions?

  1. Employment tenure
  2. Public assistance income status Correct answer.
  3. Loan-to-value tier
  4. Credit score band

Explanation

ECOA prohibits discrimination because an applicant receives income from a public assistance program, along with race, color, religion, national origin, sex, marital status, age, and good-faith exercise of rights. Credit score, tenure, and LTV are underwriting factors, not protected classes.

Question 30Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Under HMDA and Regulation C, a covered institution must report which data element for a mortgage application?

  1. The applicant's total annual income relied on Correct answer.
  2. The applicant's credit score
  3. The loan officer's NMLS identification number
  4. The property's appraised value

Explanation

Regulation C requires reporting of the income relied on in the credit decision, along with loan amount, property type, action taken, and demographic data. Credit scores and appraised values are not HMDA data fields, though they are part of the loan file.

Question 31Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A mortgage loan originator is employed by a federally insured bank. How is that originator registered under the SAFE Act?

  1. Through the Federal Housing Finance Agency
  2. Through the state licensing authority where the bank is chartered
  3. Through the Consumer Financial Protection Bureau's MLO licensing division
  4. Through the NMLS registry maintained by the employing bank Correct answer.

Explanation

Employees of insured depository institutions and their subsidiaries are registered with the NMLS through the employing institution rather than state-licensed. State licensing applies to nonbank MLOs. Registration still requires fingerprinting, background checks, and testing or education.

Question 32Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Which federal statute requires creditors to give applicants notice of the right to receive a copy of any appraisal used in connection with a mortgage application?

  1. Fair Credit Reporting Act
  2. Home Mortgage Disclosure Act
  3. Equal Credit Opportunity Act Correct answer.
  4. Real Estate Settlement Procedures Act

Explanation

ECOA and Regulation B require creditors to notify applicants of the right to receive copies of appraisals and other written valuations promptly upon completion, whether the loan is approved or denied. This is a separate requirement from disclosure of the credit score.

Question 33Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Under the SAFE Act, which individual is required to hold an MLO license or registration?

  1. A title company clerk who prepares settlement statements
  2. A real estate appraiser who values the collateral
  3. A loan processor who never speaks with the borrower
  4. An individual who takes a residential mortgage application and offers loan terms for compensation Correct answer.

Explanation

The SAFE Act defines a mortgage loan originator as an individual who takes a residential mortgage application and offers or negotiates terms of a loan for compensation. Administrative staff who do not perform those functions generally fall outside the definition.

Question 34Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A creditor must provide a Loan Estimate by what deadline after receiving a complete application?

  1. Within three business days of the application date Correct answer.
  2. Within ten business days of the application date
  3. Before the first payment is due
  4. Within five business days of the application date

Explanation

Regulation Z requires delivery or mailing of the Loan Estimate within three business days after receipt of the application and no later than seven business days before consummation. A complete application triggers the clock.

Question 35Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

An applicant's Closing Disclosure reflects a changed annual percentage rate that exceeds the tolerance threshold. What must the creditor do before consummation?

  1. Provide a revised Closing Disclosure and close immediately
  2. Provide a revised Closing Disclosure and wait three business days Correct answer.
  3. Provide a new Loan Estimate instead of a revised Closing Disclosure
  4. Provide only an oral explanation of the change

Explanation

When the APR changes beyond the allowed tolerance, the creditor must provide a corrected Closing Disclosure and observe a new three-business-day waiting period before consummation. This gives the borrower time to review the revised terms.

Question 36Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A creditor denies a mortgage application based on a credit report. Under Regulation B, what must the creditor provide?

  1. A verbal explanation within 30 days
  2. A new application form for reconsideration
  3. A copy of the credit report and the underwriter's notes
  4. A statement of specific reasons for denial or a disclosure of the right to request them Correct answer.

Explanation

Regulation B requires an adverse action notice containing specific reasons for the denial or a disclosure of the right to request those reasons within 60 days. The notice also tells the applicant about ECOA rights.

Question 37Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A loan originator's compensation plan pays a bonus based on the interest rate of each loan closed. What is the primary compliance concern?

  1. It triggers FCRA risk-based pricing notice requirements
  2. It requires RESPA Section 6 escrow disclosure
  3. It creates a prohibited incentive under Regulation Z loan originator compensation rules Correct answer.
  4. It violates HMDA reporting thresholds

Explanation

Regulation Z prohibits compensating loan originators based on a term or condition of the loan, including the interest rate, because that creates a steering incentive. Compensation must generally be based on the loan amount or a fixed percentage and cannot vary with rate or fees.

Question 38Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A mortgage broker receives compensation from both the borrower and the lender on the same transaction without proper disclosure. Which law is most directly implicated?

  1. Home Mortgage Disclosure Act
  2. Fair Housing Act
  3. Fair Credit Reporting Act
  4. Real Estate Settlement Procedures Act Correct answer.

Explanation

RESPA Section 8 addresses unearned fees and undisclosed dual compensation; charging both parties for the same service without disclosure can constitute an improper fee arrangement. Proper disclosure and bona fide services are required.

Question 39Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Which action would disqualify an individual from obtaining an MLO license under the SAFE Act?

  1. A lapse in continuing education of one hour
  2. A change of employer within the last year
  3. A felony conviction involving fraud or dishonesty within the past seven years Correct answer.
  4. A prior bankruptcy discharged five years ago

Explanation

The SAFE Act requires denial of a license where the applicant has a felony conviction involving fraud, dishonesty, or breach of trust within the preceding seven years. Other factors such as bankruptcy or employment changes are not automatic disqualifiers.

Question 40Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A lender's HMDA data show a statistically significant disparity in denial rates by race. What is the most likely regulatory consequence?

  1. Referral for fair lending review and potential ECOA enforcement Correct answer.
  2. Immediate loss of FHA approval
  3. Mandatory HMDA data resubmission only
  4. Automatic revocation of the lender's MLO licenses

Explanation

HMDA data are used by regulators and the public to identify possible fair lending violations. A significant disparity can prompt a fair lending examination and ECOA enforcement action, though it does not by itself establish discrimination.

Question 41Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A loan originator suggests an applicant omit the spouse's income to help the application qualify. Which law is most directly implicated?

  1. SAFE Act
  2. Home Mortgage Disclosure Act
  3. Fair Credit Reporting Act
  4. Equal Credit Opportunity Act Correct answer.

Explanation

ECOA and Regulation B prohibit creditors from requiring or encouraging applicants to omit spousal information or to alter an application in a discriminatory way. Advising omission of a spouse's income can constitute discrimination on the basis of marital status.

Question 42Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A creditor's policy requires all applicants over age 62 to provide additional documentation before approval. Which statute is most directly implicated?

  1. Home Mortgage Disclosure Act
  2. Real Estate Settlement Procedures Act
  3. Equal Credit Opportunity Act Correct answer.
  4. SAFE Act

Explanation

ECOA prohibits discrimination on the basis of age, and Regulation B limits when age may be considered. A blanket additional-documentation requirement based solely on age treats applicants differently because of a protected characteristic.

Question 43Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Under TILA's ability-to-repay rule, which factor must a creditor consider?

  1. The borrower's current or reasonably expected income and assets Correct answer.
  2. The appraiser's opinion of value alone
  3. The borrower's projected home appreciation
  4. The lender's secondary market sale plans

Explanation

The ability-to-repay rule requires creditors to consider eight underwriting factors, including the borrower's current or reasonably expected income and assets, monthly payment, and debt-to-income ratio. Projected appreciation or resale plans are not permissible substitutes.

Question 44Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A settlement agent charges a borrower for a service that was not performed. Under RESPA, how is this best characterized?

  1. A permissible administrative fee
  2. A tolerated tolerance violation under Regulation Z
  3. An unearned fee prohibited by Section 8 Correct answer.
  4. A required disclosure under Section 6

Explanation

RESPA Section 8 prohibits charging fees for services that are not actually performed. The prohibition applies regardless of whether the fee is split with another party.

Question 45Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Which statute requires covered financial institutions to report loan-level data on mortgage applications and originations to regulators?

  1. Equal Credit Opportunity Act
  2. Real Estate Settlement Procedures Act
  3. Home Mortgage Disclosure Act Correct answer.
  4. SAFE Act

Explanation

HMDA and Regulation C require covered institutions to collect and report loan-level data, including application outcomes, demographics, and loan terms. The data support fair lending oversight and public analysis.

Question 46Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A lender fails to provide the Closing Disclosure at least three business days before consummation. What is the most likely consequence?

  1. The lender must refund all closing costs
  2. The lender must report the error under HMDA
  3. The loan is void and must be refinanced
  4. The lender must redisclose and delay consummation to satisfy the waiting period Correct answer.

Explanation

Regulation Z requires the Closing Disclosure to be delivered at least three business days before consummation. If it is late or inaccurate beyond tolerance, the creditor must provide a corrected disclosure and restart the waiting period.

Question 47Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

Under the SAFE Act, which continuing requirement must an MLO satisfy to maintain an active license?

  1. Quarterly submission of borrower credit reports
  2. Annual completion of at least eight hours of NMLS-approved continuing education Correct answer.
  3. Annual sponsorship by a real estate broker
  4. Biennial completion of forty hours of general business training

Explanation

The SAFE Act requires at least eight hours of approved continuing education annually, including specific topics such as federal law and ethics. This maintains competence and license eligibility.

Question 48Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A lender's Loan Estimate discloses a 0 percent tolerance for a lender-paid settlement service, but the final charge increases by $400. What is the consequence?

  1. The lender must cancel the loan and require a new application
  2. No action is required because the borrower agreed to the increase
  3. The lender must cure the tolerance violation by refunding the excess to the borrower Correct answer.
  4. The lender may offset the increase with a discount elsewhere in the same category

Explanation

Zero-tolerance items cannot increase, and a violation requires a cure, typically a refund of the excess amount to the borrower within the regulatory timeframe. Offsets are not permitted for zero-tolerance categories.

Question 49Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

An MLO licensed in one state applies for a license in a second state where the employer is not licensed. Which statement best describes the SAFE Act requirement?

  1. The MLO may operate in the second state if the loan is sold to a GSE
  2. The MLO may operate in the second state under the first state's license
  3. The MLO must obtain a license in the second state before originating there Correct answer.
  4. The MLO may originate in the second state if the borrower resides in the first state

Explanation

The SAFE Act requires licensing in each state where the MLO conducts business, unless a valid reciprocity or temporary authority provision applies. The employer must also be licensed or registered as required in that state.

Question 50Federal Mortgage-Related Laws (SAFE Act, RESPA, TILA, ECOA, HMDA, etc.)

A mortgage loan originator employed by a non-depository mortgage lender is licensed in State A. The originator wants to take applications from borrowers for a property located in State B, where the lender holds no license and the originator holds no State B license. Under the SAFE Act and the state licensing system it established, which statement best describes the originator's authority?

  1. The originator may originate in State B without any license because the SAFE Act licensing requirement applies only to depository employees.
  2. The originator may originate in State B only if the borrower is a resident of State A, since licensing follows the borrower's domicile.
  3. The originator may originate in State B because a license issued in any state is valid nationwide under SAFE Act reciprocity.
  4. The originator may originate in State B under a temporary authority to operate while a State B license application is pending, subject to state conditions. Correct answer.

Explanation

The SAFE Act and the CSBS/NMLS licensing system require an MLO to be licensed in each state where the originator conducts business, unless a state grants temporary authority. Temporary authority lets a state-licensed originator operate for a limited period while a new state license application is pending, provided state-specific conditions are met. A license in one state does not carry nationwide effect, and the property or borrower location does not substitute for the state's own licensing requirement.