NMLS SAFE MLO — Mortgage Loan Originator — All Questions
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108 questions
An underwriter must calculate qualifying income for a borrower paid $22/hour working a standard 40-hour week. What is the correct gross monthly income (using 2,080 hours annually)?
- a.$2,933
- b.$5,280
- c.$3,813✓
- d.$1,760
Annual income is $22 times 2,080 hours, or $45,760, and gross monthly income is $45,760 divided by 12, which equals about $3,813. Multiplying hourly pay by 40 gives only a weekly figure, so the annual-then-divide method yields the correct monthly income.
A lender orders a 'desktop' or 'hybrid' appraisal instead of a full appraisal on an eligible loan. What distinguishes these from a traditional appraisal?
- a.They set the interest rate directly
- b.They are only used after closing
- c.They eliminate the need to determine value
- d.They rely on data and, for hybrids, third-party property inspections rather than a full appraiser interior visit✓
Desktop appraisals use property data and public records without an appraiser's on-site visit, while hybrid appraisals pair a third-party inspection with an appraiser's analysis. Both still produce a value opinion, but reduce the traditional full interior/exterior appraiser inspection.
A borrower's assets include stocks in a brokerage account they plan to use for closing. How does an underwriter typically treat these funds?
- a.They may be counted, often at a discounted value, once liquidation or accessibility is documented✓
- b.They must be sold to the lender directly
- c.They are never usable because they are not cash
- d.They count at triple their market value
Marketable securities such as stocks can be used for down payment and reserves, but underwriters may apply a discount to account for market volatility and require documentation of value and, if being used at closing, evidence of liquidation. They are not tripled or excluded outright.
Between the Loan Estimate and Closing Disclosure, the recording fee (a zero-tolerance/limited-tolerance item) increases beyond the allowed tolerance. What must the lender generally do?
- a.Cure the tolerance violation, typically by refunding the borrower the excess amount✓
- b.Nothing; all fees can change freely
- c.Re-order the appraisal
- d.Cancel the loan
Under TRID tolerance rules, certain fees may not increase from the Loan Estimate beyond set limits. If they do, the lender must cure the violation, generally by refunding the excess to the borrower, usually within 60 days of consummation. It does not require canceling the loan.TILA-RESPA Integrated Disclosure (TRID)
A borrower assumes their monthly payment on a loan with an escrow account is fixed forever. Why might the escrow portion change over time?
- a.Because the lender adds new discount points annually
- b.Because property taxes and insurance premiums can rise or fall, changing the required escrow amount✓
- c.Because the interest rate on a fixed loan changes yearly
- d.Because the loan principal is recalculated monthly
Even on a fixed-rate loan, the escrow portion of the payment can change because property taxes and insurance premiums vary over time. Lenders perform an annual escrow analysis and adjust the monthly escrow to cover the new amounts, which changes the total payment.
A borrower qualifies with a co-signer (non-occupant co-borrower). How does the co-borrower generally affect qualifying?
- a.The co-borrower cannot be held liable for the debt
- b.The co-borrower's income and debts are included, and they share legal liability for repayment✓
- c.The co-borrower's income is ignored entirely
- d.Only the co-borrower's assets count, not the primary borrower's
A non-occupant co-borrower's income and debts are considered in qualifying, which can help the primary borrower's ratios, and the co-borrower is legally liable for repaying the loan. Their contribution is not ignored, and they do share responsibility for the debt.
After the borrower reviews the initial Closing Disclosure, the seller agrees to pay an additional closing cost credit at the table. How should this be handled?
- a.Skip disclosing the credit since it helps the borrower
- b.Cancel the closing entirely
- c.Update the Closing Disclosure to reflect the seller credit before consummation✓
- d.Leave the disclosure unchanged and record it later informally
Changes to the terms or costs, such as an added seller credit, must be reflected accurately on the Closing Disclosure so the figures match the actual transaction at consummation. Some changes require a corrected CD, but the transaction must be documented accurately, not left unchanged or undisclosed.
A borrower is purchasing a home appraised at $300,000 with a sale price of $290,000 and wants a 90% loan. On what value is the maximum loan calculated, and what is it?
- a.On the lower of price or value ($290,000); $261,000✓
- b.On the appraised value; $270,000
- c.On the down payment; $29,000
- d.On the higher of price or value ($300,000); $270,000
Loan-to-value uses the lesser of the purchase price or appraised value, which is $290,000 here. At 90% LTV, the maximum loan is 0.90 times $290,000, or $261,000. Using the higher figure would overstate the allowable loan, so the lower value governs.