Florida Mortgage Broker School


1. Define business day per F.S. 494:
a. Monday through Friday days only.
b. any calendar day except Sunday or a legal holiday.
c. any day Monday through Sunday.
d. any day except Sundays.

2. An Associate Mortgage Broker:
a. works at a Mortgage Broker Business as either an employee
(W-2) or and Independent Contractor (1099).
b. works for a Correspondent Lender as an employee (W-2).
c. works for a Mortgage Lender as an Independent Contractor
(1099).
d. A & C.

3. Truth in Lending is otherwise titled:
a. the rule of APR.
b. Regulation O.
c. ECOA.
d. Regulation Z.

4. Which of the following types of credit transactions are not covered by ECOA?
a. Business loans.
b. Medical expenses.
c. Home improvement loans.
d. Auto loans.

5. A completed Mortgage Broker contract should be executed within:
a. one business day of application.
b. three business days of application.
c. five business days of application.
d. seven business days of application.

6. Which form of discrimination is not covered by ECOA?
a. Marital status.
b. Age.
c. National Origin.
d. None of the above.

7. Adjustable Rate Financing:
a. is never safe.
b. always costs less than fixed rate financing.
c. never has a balloon feature.
d. can have an interest-only feature.

8. A Loan Originator:
a. works for a Mortgage Brokerage Business as an employee.
b. works for a Correspondent Lender as an employee and/or an
account representative of a wholesaler.
c. works for a Mortgage Lender as an Independent Contractor.
d. works for a Mortgage Brokerage Business as an Independent Contractor.

9. Which of the following statements are true?
a. All non-conforming loans are risky.
b. Adjustable Rate Mortgages cannot be sold to Fannie Mae.
c. A borrower must make a 20% down payment to have a
conforming loan.
d. Standards for conforming loans are set by Fannie Mae and
Freddie Mac.

10. The right to rescind a home refinance transaction is effective for how long?
a. One year.
b. Three days.
c. Three weeks.
d. 24 hours.

11. To do commercial mortgages without a broker license, which applies?
a. The Lender must be an institutional investor and the borrower a
private individual.
b. The Lender must be a non-institutional investor and the
borrower a Corporation.
c. The Lender must be a non-institutional investor and the
borrower a private individual.
d. The Lender must be an institutional investor and the borrower
must be a Corporation.

12. Which of the following statements is true?
a. Securities issued by Fannie Mae are backed by the U.S.
government.
b. Non-conforming loans can be sold to Freddie Mac.
c. The U.S. government guarantees non-conforming loans.
d. Treasury securities are guaranteed by the U.S. government.

13. How long must I maintain loan files?
a. One year from the date of original entry.
b. Two years from the date of original entry.
c. Three years from the date of original entry.
d. Four years from the date of original entry.

14. How long must I maintain copies of advertisements I use?
a. One year from the first publication or broadcast.
b. Two years from the first publication or broadcast.
c. Three years from the first publication or broadcast.
d. Four years from the first publication or broadcast.

15. The Florida specific law that deals with predatory lending is the:
a. Fair Lending Act.
b. Florida Truth in Lending Act.
c. Florida Fair Lending Act.
d. Fair and True Credit Act.

16. A Florida Mortgage Brokerage Business can be located:
a. only in Florida.
b. in the Northern Hemisphere.
c. only in the United States.
d. anywhere in the world.

17. All of the following is true about Mortgage Broker Contracts except:
a. disclose the services to be provided by the Mortgage Broker.
b. disclose the amount of compensation to be received by the broker.
c. must be in writing.
d. must state the broker is in good standing with the Office of Financial Regulation.

18. Which of the following statements is false?
a. RESPA covers home refinance transactions.
b. mortgage loan assumptions are covered by RESPA.
c. home improvement loans are covered by RESPA.
d. None of the above

19. When must I disclose a conflicting interest, per F.S. 494?
a. When you or anyone you are related to owns 5% or more of
any business providing a service in connection with the loan.
b. When you or anyone you are related to owns 10% or more of
any business providing a service in connection with the loan.
c. Only for mortgage deals in excess of $50,000.
d. Only for mortgage deals in excess of $100,000.

20. Who runs a Mortgage Brokerage Branch Office?
a. Principal Mortgage Broker.
b. Branch Broker.
c. Branch Manager.
d. Broker/Originator.

21. Under RESPA kickbacks may be paid to:
a. realtors.
b. relatives.
c. no one.
d. title companies.

22. Predatory Lending laws are promulgated to protect:
a. predators.
b. lenders.
c. consumers.
d. All of the above

23. The Federal Trade Commission coordinates federal efforts to monitor:
a. violations of Section 32.
b. credit scores.
c. identity theft.
d. HUD-1.

24. Experion, Trans Union, and Equifax are known as:
a. data storage units.
b. credit repositories.
c. government monitors.
d. medical data bases.

25. Which of the following would be considered an unethical practice?
a. Taking a Realtor to dinner.
b. Charging a two percent origination fee.
c. Charging a prepayment penalty.
d. Intentionally understating the closing costs on a Good Faith Estimate.

26. Conforming loans have which of the following characteristics?
a. Credit scores are used to underwrite creditworthiness.
b. The loans are secured by residential properties.
c. A & B.
d. Neither A nor B.

27. With regard to operating a mortgage brokerage business, which applies?
a. Must have a sign on or about the entrance to the office.
b. Must have a sign posted and an occupational license.
c. Must have an office in Florida.
d. None of the above.

28. The Office of Financial Regulation has the power to enforce:
a. F.S. 494 only.
b. F.S. 494 and applicable rules.
c. F.S. 494 and federal laws to include RESPA, ECOA, etc.
d. F.S. 494, applicable rules, and federal laws RESPA, ECOA, etc.

29. Interest only mortgages:
a. can be fixed rate mortgages.
b. can be adjustable rate mortgages.
c. can be junior liens.
d. All of the above.

30. What percentage of a persons credit scores are based on his payment history?
a. 30%
b. 35%
c. 40%
d. 45%

31. Which of the following will affect the pricing of a loan?
a. The loan to value.
b. The property type.
c. The borrowers credit scores.
d. All of the above.

32. The interest rate on Home Equity loans:
a. is fixed for a certain period of time.
b. is higher than the rate on the first mortgage.
c. is usually tied to the ten year cost of funds index.
d. may use LIBOR as its index.

33. When fraud is suspected:
a. it should be reported.
b. it should be hidden from the underwriter.
c. it should be hidden from the loan committee.
d. All of the above.

34. The results of a quality control process:
a. should be reviewed by senior management.
b. should be reviewed by the loan production manager.
c. should be kept secret.
d. Only A & B.

35. When should a business (broker or lender) license a branch office?
a. When a brokers business card lists that as their office address.
b. When the office phone is forwarded to an associateÕs home.
c. If loan files are ever taken to it.
d. When it is more than 20 miles from the main office.

36. What commission monies must be disclosed to a client?
a. Only mortgage brokerage commissions (i.e. front-end money).
b. Only back-end money (i.e. par plus, lender participation).
c. Both front-end mortgage brokerage commissions and back-end monies.
d. None of the above.

37. Which of the following are not part of a credit application?
a. Credit report.
b. Income statement.
c. Birth certificate.
d. Employment information.

38. Regulation Z does not govern disclosures for the following:
a. Adjustable Rate mortgages.
b. Interest rate disclosures.
c. Advertising.
d. purchase agreements.

39. The Good Faith Estimate will provide what information?
a. Points paid by the borrower.
b. An estimate of title insurance fees.
c. An estimate of the cost for an appraisal.
d. All of the above.

40. Smart consumers should:
a. avoid aggressive lenders.
b. not borrow money.
c. borrow only for luxury items.
d. None of the above.

41. Consumer reporting agencies are also known as:
a. fair credit agencies.
b. credit data banks.
c. credit bureaus.
d. credit scoring matrices.

42. Compliance with lending regulations is:
a. suggested.
b. ethical.
c. mandatory.
d. against the law.

43. Conforming loan limits:
a. never change.
b. change every five years.
c. include jumbo mortgages.
d. are established by Fannie Mae, Freddie Mac, FHA, and VA.

44. Excess liquidity in the mortgage market:
a. makes mortgage loans harder to sell.
b. makes interest rates go up.
c. holds interest rates down.
d. has no effect on interest rates.

45. Negative amortization refers to:
a. past due mortgage payments.
b. interest only mortgages.
c. deferred interest.
d. deferred principal.

46. The length of credit accounts for what percentage of a credit score?
a. 5%
b. 15%
c. 35%
d. 50%

47. Bankruptcies will remain on a credit report for how long?
a. 7 years
b. 10 years
c. 12 years
d. 15 years

48. Which is a true statement about a NINA loan?
a. Income is not verified.
b. Income is verified.
c. Assets are verified.
d. This loan is only available through the FHA.

49. A disadvantage of a Home Equity line of credit could be:
a. a balloon feature.
b. negative amortization.
c. variable interest rates can move up appreciably.
d. closing costs are excessive.

50. Fraud in Mortgage Lending:
a. rarely happens.
b. is harmless.
c. can be promulgated within the lenders office.
d. None of the above.

51. An Approve Eligible determination:
a. is an indication that a property appraised for its sale price.
b. authorization to release funds in a refinance transaction.
c. a loan approval from one of the government sponsored entities.
d. None of the above.

52. I am an out-of-state mortgage brokerage business. Where must my escrow account be held?
a. Any states bank, S & L, or credit union.
b. Any Florida bank, S & L, or credit union which is insured by the federal government.
c. Any Florida bank which is insured by the federal government.
d. Any Florida bank, or S & L which is insured by the federal government.

53. Who may not be classified as a creditor?
a. A person who participates in the credit decision.
b. A person who honors a credit card.
c. A lender.
d. A person who refers clients or applicants to creditors.

54. Disclosure of the Annual Percentage Rate applies to:
a. all loans.
b. commercial loans only.
c. residential loans.
d. only loans to U.S. citizens over the age of 21.

55. RESPA does not cover which types of real estate transaction?
a. Refinances.
b. Apartment leases.
c. Home improvement loans.
d. Loan assumptions.

56. Under HOEPA bonafide discount points are defined as:
a. discount points that are paid by the seller.
b. discount points that are paid to lower the benchmark interest rate.
c. discount points that are not included in APR.
d. None of the above.

57. Under F.S. 494 a mortgage loan application means:
a. submission of a borrowers financial information in anticipation of a credit decision on a specific property.
b. pre-qualification of a borrower.
c. whenever the borrowers credit is pulled.
d. All of the above.

58. Can an employer obtain a copy of an employees credit report?
a. Yes, but he must pay for it.
b. Yes, only if the employee is in a critical occupation.
c. Yes, if the employee agrees.
d. Only if the employee requests overtime.

59. The Code of Ethics and the law:
a. are totally separate.
b. only have commonality when the law is a federal statute.
c. often coincide.
d. often conflict.

60. Non-conforming loans are made by which of the following organizations?
a. Federal National Mortgage Association.
b. Federal Housing Administration.
c. Federal Home Loan Mortgage Corporation.
d. None of the above.

61. LIBOR (London Interbank Offered Rate) is:
a. another name for an interest only mortgage.
b. an index by which many adjustable rate mortgages are adjusted.
c. usually a half percent above the one year Treasury rate.
d. usually a half percent below the one year Treasury rate.

62. As a correspondent Lender or Mortgage Lender, my net worth drops below the minimum prescribed by law. Which applies?
a. Immediately shut down business.
b. Notify the state within 48 hours and cease taking applications.
c. Continue to operate for 60 days pending a final state audit.
d. Continue to operate for 120 days pending a final state audit.

63. EMPERICA is a registered trademark of:
a. CBA.
b. Fair Isaac.
c. Trans Union.
d. TRW.

64. A loan that requires no income verification is called:
a. FISA.
b. FICO.
c. LISA.
d. NINA.

65. Interest on Home Equity Loans:
a. is always income tax deductible.
b. is never income tax deductible.
c. may be income tax deductible.
d. is income tax deductible only if the proceeds are used
for college expenses.

66. Supplying false information on a loan application:
a. is okay if the loan is rejected.
b. is just a white lie.
c. is usually discovered.
d. is fraud.

67. If a loan approval comes from Fannie Mae:
a. post closing quality control is waived.
b. pre-closing quality control is waived.
c. the file will receive an Approve Eligible determination.
d. the file will receive a Refer determination.

68. How soon must third-party escrow funds be deposited?
a. One business day after receipt.
b. Three business days after receipt.
c. Seven business days after receipt.
d. Ten business days after receipt.

69. Once a loan application has been taken, how soon must it be logged into the mortgage brokerage and lending transactional journal?
a. One business day after receipt.
b. Three days business days after receipt.
c. Seven business days.
d. Ten business days.

70. When changing offices as an Associate Broker what must I do?
a. Notify the state within 15 days.
b. File DBF Form 401/JTLMSQ-5 and attach the business license of the new office.
c. Take one month off. You deserve it.
d. None of the above.

71. Which of the following would be considered a person for purposes of obtaining credit?
a. A partnership.
b. An estate.
c. Neither A nor B.
d. Both A and B.

72. When a loan transaction is rescinded the following occurs:
a. the borrower pays the lenders origination fee.
b. the loan documents are canceled.
c. the lender funds the loan.
d. the interest rate is reduced by one half percent.

73. Section 6 of RESPA is related to:
a. property surveys.
b. mortgage loan servicing.
c. mortgage loan closing.
d. refinance transactions.

74. Under HOEPA common fees included as closing costs or points include:
a. yield spread premiums.
b. documentation preparation fees.
c. origination fees.
d. All of the above.

75. How long can a CRA report negative information?
a. Normally one year.
b. Normally five years.
c. Normally seven years.
d. Normally twelve years.

76. Which of these lenders is subject to the Codes and Cannons and Ethics?
a. Credit Unions.
b. Mortgage Brokers.
c. Federally chartered banks.
d. All of the above.

77. Interest rates for non-conforming loans generally:
a. are lower than interest rates of conforming loans.
b. are higher than interest rates for conforming loans.
c. are adjustable.
d. None of the above.

78. A foreign national will typically:
a. have a green card.
b. pay more for a home.
c. make a larger down payment than a resident.
d. qualify for FHA financing.

79. If incorrect derogatory information is reported to the credit agency the consumer should?
a. Sue Equifax.
b. Notify the repository of the inaccuracy.
c. Order a free credit report.
d. Write to his congressman.

80. Risk based underwriting relies upon:
a. verification of employment.
b. the borrowers probability for repayment.
c. Fannie Mae underwriting guidelines.
d. volatility of interest rates.

81. Proceeds from Home Equity loans:
a. can be used to avoid mortgage insurance.
b. can be used to purchase an automobile.
c. can be used to bail someone out of jail.
d. All of the above.

82. A person involved in mortgage fraud:
a. can be prosecuted at the state level.
b. can be prosecuted at the federal level.
c. will not be ordered to pay restitution.
d. Both A and B.

83. Telephone verification of employment prior to a loan closing is part of:
a. loan underwriting.
b. loan origination.
c. post funding Quality Control.
d. pre-funding Quality Control.

84. Exact yield service release premiums must be disclosed to the borrower:
a. within 24 hours of application.
b. within three business days of the Good Faith Estimate.
c. within three business days after the broker is made aware of the exact amount.
d. when the broker gets ready to disclose that information.

85. Each licensee shall report any action in bankruptcy within:
a. one business day.
b. three business days.
c. seven business days.
d. ten business days.

86. ECOA is regulated by:
a. dept. of Housing and Urban Development.
b. the Congress of Racial Equality.
c. the Federal Reserve Board.
d. the NAACP.

87. The HUD-1 will not show the cost of which item?
a. State documentary stamps.
b. Courier fees.
c. Roof inspection.
d. Kickbacks to third parties.

88. The Fair Credit Reporting Act deals with:
a. APR disclosures.
b. Regulation Z.
c. accuracy of credit reports.
d. violations of NAFTA.

89. In order for a lock-in to be valid, which of the following must happen?
a. Must be signed by the lender.
b. Must be signed by the borrower.
c. Must have funds escrowed in warehouse.
d. All of the above.

90. An example of unethical practices might be:
a. charging points on a mortgage loan transaction.
b. mail away closing.
c. changing the terms of a loan transaction without notifying the borrower.
d. notarizing documents that are not completely filled out.

91. Borrowers with impaired credit:
a. should use a no-income verification program.
b. should wait to buy a house until their credit clears up.
c. can only qualify for an interest only loan.
d. may have to make a larger down payment.

92. Yield Service Release Premiums shall be disclosed on the broker contract:
a. as a range of fees using percentages.
b. as a range of fees either in dollars or as percentages.
c. as a range of fees using dollars amounts.
d. None of the above.

93. A person who does not pay their bills on time:
a. will experience diminished credit scores.
b. may have trouble obtaining credit.
c. may pay a high interest rate.
d. All of the above.

94. Higher layers of risk might involve:
a. higher interest rates.
b. more down payment.
c. higher closing costs.
d. All of the above.

95. The draw down period for home equity loans:
a. is usually 30 years.
b. is when the loan must be paid back.
c. is usually five to ten years.
d. expires when the line of credit is fully funded.

96. According to F.S. 494, which of the following should be used when categorizing the disposition of a loan application in the mortgage brokerage and lending transactional journal?
a. Funded.
b. Denied.
c. Application withdrawn.
d. All of the above.

97. The borrower would have a 3-day right of rescission on all of the following types of loans except?
a. Owner-occupied refinance.
b. A first mortgage loan.
c. Owner-occupied second mortgage.
d. Owner-occupied home equity loan.

98. Which of the following is correct with respect to Good Faith Estimates?
a. Must be in writing and given to the borrower within three days of application.
b. Must identify the recipient of all payments charged to the borrower.
c. Must clearly disclose the licensees name for each fee the recipient is to receive.
d. All of the above.

99. Where should a loan production manager look to uncover fraud?
a. At the servicing manager.
b. In the foreclosure department.
c. In the appraisal department.
d. In the company treasury.

100. A mortgage business advertising a loan at an expressed rate. According to F.S. 494, the brokerage CAN NOT advertise this unless:
a. the ad states the rate could change or not be available at commitment, or closing.
b. the ad lists the APR.
c. the ad conforms to UCC-1.
d. the ad lists the phone number of the advertising broker.