NMLS SAFE MLO — Mortgage Loan Originator — All Questions
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108 questions
Under TRID, a mortgage 'application' is legally triggered when the consumer submits which set of information?
- a.Name, Social Security number, and proof of homeowners insurance
- b.Name, income, SSN, property address, estimated property value, and loan amount sought✓
- c.A completed Form 1003 signed by the borrower and co-borrower
- d.Name, income, and a signed purchase contract only
Under TRID an application consists of six specific pieces of information: name, income, Social Security number, property address, an estimate of the property's value, and the loan amount sought. A signed Form 1003 is not required; once the creditor has all six pieces, the Loan Estimate clock starts.TRID
A loan officer receives the borrower's name, income, SSN, subject property address, an estimate of the property's value, and the requested loan amount on Monday. When does the three-business-day Loan Estimate clock begin?
- a.After the appraisal is completed
- b.After the borrower pays the application fee
- c.Immediately on Monday, because all six pieces of an application have now been received✓
- d.Only after the borrower signs Form 1003
The six pieces of information are complete, so an 'application' exists and the LE clock starts the day they are received. The creditor must deliver or mail the Loan Estimate within three business days. No signature or fee payment is needed to start the clock.TRID
Which of the following is NOT one of the six pieces of information that constitute an application under TRID?
- a.The consumer's employer's address✓
- b.The loan amount sought
- c.An estimate of the value of the property
- d.The consumer's Social Security number
The six pieces are name, income, SSN, property address, estimated property value, and loan amount sought. The employer's address is not among them. Collecting it may be part of processing, but it does not affect whether an application exists.TRID
The creditor must deliver or place in the mail the Loan Estimate no later than how many business days after receiving the application?
- a.1 business day
- b.7 business days
- c.3 business days✓
- d.2 business days
The Loan Estimate must be delivered or placed in the mail no later than three business days after the creditor receives the consumer's application. This is a core TRID timing rule.TRID
In addition to being provided within three business days of application, the Loan Estimate must be received by the consumer no later than how many business days before consummation?
- a.1 business day
- b.7 business days✓
- c.5 business days
- d.3 business days
The consumer must receive the Loan Estimate no later than seven business days before consummation. This ensures the borrower has time to review the estimated terms before becoming obligated on the loan.TRID
The consumer must receive the Closing Disclosure at least how long before consummation?
- a.1 business day
- b.7 business days
- c.3 calendar days
- d.3 business days✓
The Closing Disclosure must be received by the consumer at least three business days before consummation. This waiting period gives the borrower time to review the final terms and costs.TRID
For the Closing Disclosure's three-business-day waiting period, 'business day' is defined as:
- a.Monday through Friday only
- b.Any day the creditor's offices are open to the public
- c.All calendar days except weekends
- d.All calendar days except Sundays and legal public holidays✓
For the CD waiting period and other precise timing rules, 'business day' uses the more specific definition: all calendar days except Sundays and legal public holidays. That means Saturdays generally count as business days.TRID
For counting the three days to deliver the Loan Estimate, 'business day' means:
- a.All calendar days except Sundays and federal holidays
- b.Any day the Federal Reserve is open
- c.A day the creditor is open to the public for carrying out substantially all of its business functions✓
- d.Monday through Saturday, always
The three-day LE delivery period uses the general definition of 'business day': a day on which the creditor's offices are open to the public for carrying out substantially all of its business functions. This differs from the more precise definition used for the CD waiting period.TRID
Before the consumer has received the Loan Estimate and communicated intent to proceed, the creditor may collect which fee?
- a.An appraisal fee
- b.A processing fee
- c.A loan application fee
- d.A bona fide and reasonable fee for obtaining the consumer's credit report✓
The only fee a creditor may collect before the consumer receives the LE and indicates intent to proceed is a bona fide and reasonable charge for obtaining the consumer's credit report. All other fees must wait until intent to proceed is communicated.TRID
Which of the following qualifies as the consumer's 'intent to proceed' with the transaction?
- a.The consumer simply providing the six pieces of information
- b.Any affirmative oral or written communication from the consumer that they wish to move forward, after receiving the LE✓
- c.The consumer's silence for seven business days
- d.Signing the initial Form 1003
Intent to proceed is any affirmative act, oral or written, by which the consumer communicates a desire to move forward after receiving the Loan Estimate. Silence does not constitute intent to proceed, and it cannot occur before the LE is received.TRID
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When a valid changed circumstance justifies a revised Loan Estimate, the creditor must deliver or mail it within how many business days of receiving information sufficient to establish the change?
- a.1 business day
- b.7 business days
- c.3 business days✓
- d.4 business days
After a valid changed circumstance, the creditor must provide a revised Loan Estimate within three business days of receiving information sufficient to establish that the changed circumstance occurred. This resets the applicable tolerance baseline for the affected charges.TRID
A revised Loan Estimate must be received by the consumer no later than how many business days before consummation?
- a.3 business days
- b.1 business day
- c.7 business days
- d.4 business days✓
A revised Loan Estimate must be received by the consumer no later than four business days before consummation. Because the consumer must also receive the Closing Disclosure three business days before consummation, a revised LE cannot be issued on or after the CD is provided.TRID
Which charge is subject to a zero percent tolerance (cannot increase from the LE to the CD)?
- a.Homeowners insurance premium
- b.The loan origination fee charged by the creditor✓
- c.Prepaid interest
- d.A recording fee
Fees paid to the creditor, mortgage broker, or an affiliate, and charges for services the consumer cannot shop for provided by an affiliate, are subject to zero tolerance. The creditor's own origination fee cannot increase from the LE to the CD.TRID
Which fee falls under the 10 percent cumulative tolerance category?
- a.The creditor's underwriting fee
- b.Recording fees✓
- c.Transfer taxes
- d.Prepaid interest
Recording fees, along with charges for third-party services the consumer can shop for when the consumer selects a provider from the creditor's written list, fall under the 10 percent cumulative tolerance. These charges may rise, but only up to 10 percent in the aggregate.TRID
Which of the following is generally subject to NO tolerance limitation (may change without violating good faith)?
- a.Recording fees
- b.The lender's origination charge
- c.Transfer taxes
- d.Prepaid interest (per-diem interest)✓
Prepaid (per-diem) interest is in the 'no tolerance' category, meaning it may change from the LE to the CD without violating good faith. Also in this category are property insurance premiums, escrow amounts, and services the consumer shops for using a provider not on the creditor's list.TRID
A borrower chooses a title company that is NOT on the creditor's written list of providers. Into which tolerance category does that title service fee fall?
- a.A separate transfer-tax tolerance
- b.10 percent cumulative tolerance
- c.Zero tolerance
- d.No tolerance✓
When the consumer shops for a service and selects a provider that is not on the creditor's written list, that charge is in the 'no tolerance' category. Because the consumer went off-list, the creditor's estimate is not held to a strict tolerance for that charge.TRID
A borrower selects a pest-inspection provider FROM the creditor's written list of service providers. That charge is subject to which tolerance?
- a.10 percent cumulative tolerance✓
- b.No tolerance
- c.A separate 25 percent tolerance
- d.Zero tolerance
When the consumer can shop for a service and selects a provider from the creditor's written list, the charge falls in the 10 percent cumulative tolerance category. Staying on the list keeps the charge within the aggregate 10 percent limit.TRID
Transfer taxes disclosed on the Loan Estimate are subject to which tolerance?
- a.10 percent tolerance
- b.15 percent tolerance
- c.Zero tolerance✓
- d.No tolerance
Transfer taxes are in the zero tolerance category, meaning the amount charged at closing generally cannot exceed the amount disclosed on the Loan Estimate. Transfer tax rates are set by law, so the creditor is expected to disclose them accurately.TRID
After the Closing Disclosure is issued, which change requires a new three-business-day waiting period before consummation?
- a.A change from a fixed-rate to an adjustable-rate loan✓
- b.A $50 decrease in the recording fee
- c.A $30 increase in a third-party fee
- d.A typo in the loan officer's phone number
Only three changes after the CD trigger a new three-business-day waiting period: the APR becomes inaccurate (increases beyond tolerance), the loan product changes, or a prepayment penalty is added. Switching from a fixed to an adjustable rate is a loan-product change, so a new waiting period is required.TRID
Which post-CD change does NOT trigger a new three-business-day waiting period?
- a.The loan product changes from fixed to adjustable
- b.A minor decrease in the seller's closing costs✓
- c.The APR increases above the applicable tolerance
- d.Adding a prepayment penalty
A minor decrease in the seller's closing costs does not affect the three triggers for a new waiting period. Only an inaccurate APR, a changed loan product, or the addition of a prepayment penalty requires the consumer to receive a corrected CD and wait three more business days.TRID
A new three-business-day waiting period after the Closing Disclosure is required in all of the following EXCEPT:
- a.A prepayment penalty is added
- b.The consumer's homeowners insurance premium decreases by $20✓
- c.The APR becomes inaccurate (increases beyond tolerance)
- d.The loan product changes
The three events that trigger a new three-business-day waiting period are an inaccurate APR, the addition of a prepayment penalty, and a change in the loan product. A small decrease in the homeowners insurance premium is not one of them, so no new waiting period is required.TRID
If the Closing Disclosure is placed in the mail, when is the consumer presumed to have received it (absent evidence of earlier receipt)?
- a.The day it is mailed
- b.Three business days after it is mailed✓
- c.Seven business days after mailing
- d.One business day after mailing
Under the mailbox rule, if the CD is mailed, the consumer is presumed to receive it three business days after it is placed in the mail, unless the creditor has evidence of earlier receipt. The three-business-day waiting period then runs from the presumed receipt date.TRID
Which of the following is disclosed on the Loan Estimate?
- a.The final, exact amount of cash to close guaranteed at closing
- b.The real estate agent's commission split
- c.The estimated interest rate, monthly payment, and total closing costs✓
- d.The seller's net proceeds
The Loan Estimate discloses key estimated loan terms, including the interest rate, monthly principal and interest payment, and total estimated closing costs. It is an estimate designed to help the consumer understand and compare offers, not a final, guaranteed figure.TRID
The primary purpose of the Loan Estimate is to:
- a.Help the consumer understand the key loan terms and costs and shop among lenders✓
- b.Guarantee the interest rate for 30 days
- c.Serve as a binding loan contract
- d.Replace the promissory note
The Loan Estimate is designed to give consumers clear, comparable information about the key terms and costs of a mortgage so they can shop among lenders. It is not a contract, a rate guarantee, or a substitute for the note.TRID
Under TRID, who is responsible for ensuring the Loan Estimate is provided to the consumer?
- a.The creditor (though a mortgage broker may provide it)✓
- b.The title company
- c.The real estate agent
- d.Only the mortgage broker
The creditor is ultimately responsible for ensuring the Loan Estimate is provided and is accurate. A mortgage broker may deliver the LE on the creditor's behalf, but that does not shift the creditor's compliance responsibility.TRID
A mortgage broker receives a consumer's application. Which statement is correct about the Loan Estimate?
- a.The broker may provide the LE, but the creditor remains responsible for its accuracy and compliance✓
- b.No LE is required when a broker is involved
- c.The broker must provide the LE and the creditor bears no responsibility
- d.Only the creditor may ever provide the LE
When a broker receives the application, the broker may provide the Loan Estimate, but the creditor remains responsible for ensuring the LE complies with TRID. Only one LE should be provided for the transaction.TRID
Before intent to proceed, the fee a creditor charges to obtain the credit report must be:
- a.Any amount the creditor chooses
- b.Bona fide and reasonable in amount✓
- c.Waived entirely
- d.At least $500
The credit-report fee is the only fee that may be collected before intent to proceed, and it must be bona fide and reasonable in amount. It cannot be inflated as a way to collect other costs early.TRID
A loan officer collects a $600 appraisal fee from the borrower one hour after issuing the LE but before the borrower says they want to move forward. This is:
- a.A TRID violation, because fees (other than the credit-report fee) may not be collected before intent to proceed✓
- b.Permitted for any third-party fee
- c.Permitted if the borrower is buying a second home
- d.Permitted, because the LE was already issued
Issuing the LE is not enough; the consumer must also communicate intent to proceed before any fee other than the credit-report fee may be collected. Collecting the appraisal fee before intent to proceed violates TRID.TRID
When a creditor permits the consumer to shop for a settlement service, the creditor must provide:
- a.A guarantee of the lowest price
- b.A written list identifying at least one available provider for each such service✓
- c.An appraisal waiver
- d.A signed intent to proceed
For services the consumer can shop for, the creditor must give the consumer a written list identifying at least one provider for each such service. This helps the consumer shop while keeping listed providers within the 10 percent tolerance.TRID
If the creditor allows the consumer to shop for a service but fails to provide the required written list of providers, the charge for that service is generally treated under which tolerance?
- a.It is exempt from tolerance rules
- b.10 percent cumulative tolerance✓
- c.Zero tolerance always
- d.No tolerance
If the creditor permits shopping but fails to provide the required written list, the charge is generally subject to the 10 percent cumulative tolerance, as if the consumer had not been given the opportunity to shop freely. This protects the consumer from the omission.TRID
Which of the following qualifies as a 'changed circumstance' that permits a revised Loan Estimate?
- a.The loan officer forgot to include a fee on the original LE
- b.The creditor wants to increase its origination fee for more profit
- c.The consumer decides they want a slightly lower rate
- d.An extraordinary event beyond anyone's control, such as a natural disaster, affecting the transaction✓
A changed circumstance includes an extraordinary event beyond the control of any interested party, such as a natural disaster. A creditor's own error or a desire for more profit is not a valid changed circumstance and does not justify resetting tolerances.TRID
A revised Loan Estimate is also permitted when:
- a.The consumer's credit score stays the same
- b.More than 10 business days have passed for any reason
- c.Information specific to the consumer relied on at application later turns out to be inaccurate, such as income differing from what was stated✓
- d.The creditor simply wants to reset tolerances
A changed circumstance also covers information specific to the consumer that was relied upon at application and later proves inaccurate or changes, such as stated income not matching verified income. This can justify a revised Loan Estimate and reset the tolerance for affected charges.TRID
When a consumer locks an interest rate after the initial Loan Estimate, the creditor must provide a revised Loan Estimate by when?
- a.At consummation
- b.Within 7 business days
- c.It is never required
- d.No later than three business days after the rate is locked✓
A rate lock is a specific event that permits a revised Loan Estimate. When the rate is locked, the creditor must provide the revised LE no later than three business days after the lock so the disclosed rate-dependent charges reflect the locked rate.TRID
The Loan Estimate states that the consumer must indicate intent to proceed within how many business days for the closing cost estimates to remain available (the standard minimum period)?
- a.3 business days
- b.10 business days✓
- c.7 business days
- d.30 business days
The Loan Estimate must state that the estimated closing costs are available through a specified date, and that date must be at least 10 business days after the LE is provided. If the consumer does not indicate intent to proceed within that period, the creditor may revise the estimates.TRID
Under TRID, 'consummation' refers to:
- a.The day the appraisal is ordered
- b.The day the loan funds are disbursed
- c.The time the consumer becomes contractually obligated on the loan✓
- d.The day the consumer receives the keys
Consummation is the time at which the consumer becomes contractually obligated on the loan, as determined by state law. It is a distinct concept from closing or funding, and the CD waiting period is measured against consummation.TILA / Regulation Z
The Closing Disclosure primarily shows:
- a.The consumer's credit score
- b.Only the interest rate
- c.The actual, final terms and closing costs of the mortgage transaction✓
- d.An estimate that may still change substantially
The Closing Disclosure sets out the actual, final terms and costs of the mortgage transaction. It uses a format similar to the Loan Estimate so consumers can compare the final figures against the earlier estimates.TRID
A key reason the CD mirrors the LE's format is to:
- a.Let the consumer easily compare final costs against the original estimates✓
- b.Confuse comparison shopping
- c.Speed up underwriting
- d.Eliminate the need for a promissory note
The Closing Disclosure uses a layout similar to the Loan Estimate so consumers can readily compare the final terms and costs to the estimates they received earlier. This comparability is central to the purpose of TRID disclosures.TRID
A consumer receives the Closing Disclosure in person on Monday. Assuming no intervening federal holidays, the earliest day consummation may occur is:
- a.Wednesday
- b.Tuesday
- c.Thursday✓
- d.The following Monday
The three-business-day waiting period counts Tuesday, Wednesday, and Thursday, but not the Monday of receipt. Because Saturdays generally count as business days under the precise definition (only Sundays and legal public holidays are excluded), and no holiday intervenes here, consummation may occur on Thursday.TRID
A creditor places the Closing Disclosure in the mail. For the three-business-day receipt requirement, the consumer is presumed to receive it:
- a.Only when the consumer physically signs for it
- b.Three business days after mailing, unless the creditor has evidence of earlier receipt✓
- c.On the day of mailing
- d.Seven business days after mailing
When the CD is mailed, the consumer is presumed to receive it three business days after mailing, unless there is evidence of earlier receipt. The three-business-day waiting period before consummation then runs from that presumed receipt date. Delivering the CD in person or electronically with proof of receipt can shorten this timeline.TRID
The consumer may waive the CD three-business-day waiting period only when:
- a.There is a bona fide personal financial emergency, such as imminent foreclosure, documented in a dated written statement✓
- b.The creditor approves a shorter timeline
- c.The consumer simply requests it in writing for convenience
- d.The loan is for an investment property
The three-business-day waiting period may be waived only for a bona fide personal financial emergency, such as the imminent sale of the consumer's home in foreclosure. The consumer must give a dated written statement describing the emergency; convenience alone is not enough.TRID
If a charge exceeds the applicable tolerance at closing, the creditor generally must:
- a.Charge the consumer more
- b.Refund the excess to the consumer, a 'cure', typically within 60 days of consummation✓
- c.Cancel the loan
- d.Ignore it if under $100
When a charge exceeds its tolerance, the creditor must cure the violation by refunding the excess to the consumer, generally within 60 calendar days after consummation. A corrected Closing Disclosure reflecting the refund is also provided.TRID
Charges on the Loan Estimate are deemed made in 'good faith' if:
- a.The loan officer intended to be accurate
- b.The amount actually charged does not exceed the amount disclosed, subject to the applicable tolerances✓
- c.The consumer agrees in writing
- d.The charge is under $1,000
Good faith is generally measured by comparing the amount charged at closing to the amount disclosed on the Loan Estimate. A charge is in good faith if the amount charged does not exceed the disclosed amount, subject to the zero, 10 percent, or no-tolerance categories.TRID
'Services the consumer can shop for' are those for which:
- a.No provider is needed
- b.The creditor permits the consumer to select the provider✓
- c.The fee is always zero
- d.The creditor picks the provider
Services the consumer can shop for are those for which the creditor permits the consumer to choose the provider. The creditor must give the consumer a written list of providers; whether a charge stays in the 10 percent tolerance or moves to no tolerance depends on whether the consumer picks from that list.TRID
For purposes of triggering an application, the 'estimated value of the property' may be based on:
- a.The consumer's own estimate or the purchase price stated in a sales contract✓
- b.Only a completed formal appraisal
- c.Only the tax-assessed value
- d.The creditor's automated valuation only, never the consumer's
The 'estimate of the value of the property' among the six pieces can be based on the consumer's own estimate or the purchase price in the sales contract; a formal appraisal is not required to trigger an application. This is one of the six items that starts the LE clock.TRID
Before the consumer receives the Loan Estimate, if the creditor provides a written estimate of terms or costs, it must:
- a.Clearly state, in a prominent statement, that the terms are not an offer✓
- b.Be provided only orally
- c.Be identical to the final CD
- d.Guarantee those costs
If a creditor provides a written estimate of terms or costs before the consumer receives the LE, it must include a prominent statement that the terms and costs may change and are not an offer. This prevents such worksheets from being mistaken for the official Loan Estimate.TRID
A borrower gives the loan officer their name, monthly income, SSN, the loan amount they want, and an estimate of the home's value, but has not yet identified a specific property address. Under TRID:
- a.An application has NOT yet been triggered, because the property address is still missing✓
- b.The six-piece rule does not apply to purchase loans
- c.An application is triggered because five pieces are enough
- d.The LE must be sent within three days anyway
All six pieces are required for an application, and the property address is one of them. With only five pieces provided, no application has been triggered and the three-business-day LE clock has not yet started.TRID
A creditor may use a revised Loan Estimate to reset a tolerance baseline only when:
- a.A valid reason applies, such as a changed circumstance, a borrower-requested change, or a rate lock✓
- b.The consumer's income is verified as originally stated
- c.The creditor discovers it underpriced its own origination fee
- d.At any time before closing for any reason
A revised LE may reset tolerances only when a specific valid reason applies, such as a changed circumstance affecting settlement charges or eligibility, a borrower-requested change, a rate lock, or expiration of the LE. A creditor's own pricing mistake is not a valid reason to reset tolerances.TRID
The borrower asks to switch from a 30-year to a 15-year loan after the initial LE, changing several costs. The creditor may:
- a.Issue a revised Loan Estimate reflecting the borrower-requested change within three business days✓
- b.Charge whatever fees it wants with no re-disclosure
- c.Only issue a revised CD
- d.Not issue any revised LE
A borrower-requested change to the loan terms is a valid reason to issue a revised Loan Estimate. The creditor must provide the revised LE within three business days of receiving the request, and it may reset tolerances for the affected charges.TRID
A revised Loan Estimate may NOT be provided:
- a.After a rate lock
- b.On or after the date the consumer has received the Closing Disclosure✓
- c.After a changed circumstance
- d.Within three business days of application
A revised Loan Estimate cannot be provided on or after the date the consumer receives the Closing Disclosure. Because the revised LE must be received at least four business days before consummation and the CD at least three, once the CD is out, any further changes are reflected on a revised CD, not a new LE.TRID
Amounts placed into an escrow, impound, or reserve account are subject to which tolerance?
- a.10 percent tolerance
- b.25 percent tolerance
- c.No tolerance✓
- d.Zero tolerance
Amounts placed into an escrow, impound, or reserve account are in the 'no tolerance' category, meaning they may change from the LE to the CD as long as the estimate was made in good faith and based on the best information reasonably available.TRID