MLO Exam Dumps - NMLS SAFE MLO Questions and Answers

The VA permits another person to sign closing documents for a borrower if the signer holds a designated power of attorney. This is common in situations where the borrower is deployed or otherwise unavailable.

“When the veteran is unable to sign documents in person, a designated attorney-in-fact (under a valid power of attorney) may sign on their behalf.”

— VA Lender’s Handbook, Chapter 9: Legal Instruments, Liens, Escrows, and Title

TRID regulations require that the consumer receive the Closing Disclosure at least three business days before loan consummation. This gives the borrower adequate time to review final terms and costs.

“The creditor must ensure that the consumer receives the Closing Disclosure no later than three business days before consummation.”

— 12 CFR § 1026.19(f)(1)(ii)

Under Regulation Z (TILA), when mortgage loan originators (MLOs) advertise mortgage services, including payment amounts, they must disclose the Annual Percentage Rate (APR). The APR reflects the total cost of the loan, including interest and certain fees, and provides a clear picture of the loan's true cost over time.

Failure to include the APR in an advertisement that mentions payment amounts, interest rates, or other specific loan terms is considered a violation of TILA’s advertising requirements.

Other details (B, C, D), such as the MLO's website or the number of days the rate is available, are not mandatory in all advertisements, but the APR is required.

A quit claim deed is a legal document used in real estate transactions to convey ownership or interest in a property from one party to another. It transfers the grantor’s interest in the property without any warranties or guarantees about the property’s title.

Promissory notes (B) represent a borrower’s promise to repay a loan.

Mortgage instruments (C) create a lien on the property but do not convey ownership.

Occupancy certificates (D) certify that a property complies with regulations for occupancy but are not involved in transferring ownership.

For rental properties, an appraiser will typically use the Income Approach to estimate the property's value. This method is based on the income-generating potential of the property, which is most relevant for investment properties, including rentals.

The Income Approach assesses the property's ability to generate future cash flow by evaluating the income that can be derived from renting it. The formula often involves determining the net operating income (NOI) and applying a capitalization rate (cap rate) to estimate value.

This method is most appropriate for rental properties because their value is inherently tied to their profitability.

Other methods:

Cost approach: More suited for unique properties or new construction.

Sales comparison approach: Often used for owner-occupied properties, comparing recent sales of similar properties.

Regulation Z (TILA) requires that a loan application and all related disclosures identify the mortgage loan originator’s name, NMLS unique identifier, and the employer's (company) NMLS unique identifier. There is no regulatory requirement for a return fax number to be included on the loan application.

“For any loan application, the creditor must ensure that the loan originator’s name and Nationwide Mortgage Licensing System and Registry (NMLS) unique identifier, and the name and NMLS unique identifier of the loan originator’s employer are included on the loan application, the note, and the security instrument.”

— 12 CFR § 1026.36(g)(1), Regulation Z, TILA

A return fax number is not required by federal mortgage regulations.

Under Regulation Z, when a consumer applies for an ARM, the required variable-rate program disclosures must be given when an application form is provided or before a nonrefundable fee is paid, whichever is earlier.

“The disclosures required… must be given at the time an application form is provided or before the consumer pays a nonrefundable fee, whichever is earlier.”

— 12 CFR § 1026.19(b)(1)

Under the Telemarketing Sales Rule, companies are required to access the National Do Not Call Registry at least once every 31 days and must maintain records documenting this process. Solicitors may not call any number on the registry that has been there for 31 days or more.

“You must update your call list every 31 days by accessing the National Do Not Call Registry.”

— FTC, National Do Not Call Registry FAQs

A second (subordinate) mortgage loan refers to a mortgage taken out after the primary mortgage and is subordinate to the first in priority of claims on the property in case of default or foreclosure. One of the most common types of subordinate mortgages is a home equity line of credit (HELOC).

HELOC allows homeowners to borrow against the equity in their home, typically after the first mortgage, making it a subordinate loan.

Other options:

Government home purchase loans (A) and conventional home purchase loans (B) are typically first mortgages.

A home equity conversion mortgage (C) is a type of reverse mortgage, which is also typically a primary loan, not a subordinate one.

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.