Shared Flashcard Set

Details

CA SAFE Test Questions
NMLS
134
Real Estate & Planning
Not Applicable
08/04/2012

Additional Real Estate & Planning Flashcards

 


 

Cards

Term
When was the Housing Economic Recovery Act enacted?
Definition
July 30, 2008
Term
What was the purpose of the Housing Economic Recovery Act?
Definition
To facilitate the recover and revitilzation of the United States' failing residential loan housing market.
Term
What does HERA stand for?
Definition
Housing Economic Recovery Act
Term
What does the SAFE act stand for?
Definition
The Secure and Fair Enforcement of Mortgage Licensing Act.
Term
When was the SAFE act enacted?
Definition
2008
Term
What is the SAFE act a component of?
Definition
HERA
Term
What are the two primary focuses of the SAFE act?
Definition
1) Reducing fraud
2) Enhancing consumer protections within the mortgage lending industry.
Term
What was the system of the SAFE act designed to do?
Definition
Streamline the process of licensing mortgage professionals who do business in multiple jurisdictions.
Term
When did the SAFE Act require all states to have loan originator licensing and registration systems placed by?
Definition
August 1, 2009. (August 1, 2010 for legislatures meeting biennially).
Term
What is the NMLS operated by?
Definition
The Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.
Term
Who will intervene if states do not meet the SAFE Act's requirements for licensing and registration?
Definition
The Department of Housing and Urban Development... the will implement a loan originator licensing system for the state.
Term
Who is considered a loan originator? (3)
Definition
Those who take residential mortgage loan applications, assist borrowers to obtain or apply for mortgage loans, and those who negotiate residential mortgage loan terms.
Term
Who is not considered a mortgage loan originator?
Definition
People who perform only clerical or administrative tasks in connection with loan origination. (i.e. underwriters)
Term
When did the CA Dept. of Corporations begin using the NMLS?
Definition
January 4, 2010
Term
What Title dictated that each state adopt mortgage licensing legislation?
Definition
Title V of HERA
Term
In California, responsibility for MLO licensure is divided between what two entities?
Definition
Dept. of Real Estate, and the Department of Corporations/Financial Services Division.
Term
What five sections make up the California State Law Study Guide, and how much is each section worth on the exam?
Definition
1. California Dept. of Corps and CA Dept. of Real Estate (5%)
2. California Law and Regulation Definitions (10%)
3. California License Law and Regulation (25%)
4. Compliance (50%)
5. Disciplinary Action (10%)
Term
What does CRMLA stand for?
Definition
The California Residential Mortgage Lending Act
Term
When was the CRMLA enacted? When did it become effective?
Definition
1994 and 1996
Term
What was the CRMLA designed to do?
Definition
Regulate the originating and servicing of loans and mortgage banking activities.
Term
What does the CRMLA authorize licensees to do? (6)
Definition
1. Make federally related mortgage loans
2. Make loans to finance the construction of a home.
3. Provide contract underwriting services for institutional lenders.
4. Sell the loans to institutional investors.
5. Service loans
6. Provide brokerage services to borrowers.
Term
What was passed to comply with the SAFE Act and participate in the NMLS?
Definition
Senate Bill 36 and Assembly Bill 34
Term
What were the purposes of Senate Bill 36 and Assembly Bill 34?
Definition
They changed state licensing, education, examination, and qualification requirements to meet those now mandated by HERA and its Secure and Fair Enforcement of Mortgage Licensing Act of 2008.
Term
What government agencies share the responsibility for most real estate and financial services? (4)
Definition
Dept of Real Estate, Office of Real Estate Appraisers, Dept of Corporations, Dept of Financial Institutions.
Term
Who do the Department of Corporations/Financial Services Division license and regulate?
Definition
Mortgage brokers, lenders and servicers, and MLOs.
Term
What does CFLC stand for?
Definition
California Finance Lenders Law.
Term
What is the DRE responsible for?
Definition
The administration and enforcement of Real Estate Law and Subdivided Lands Law.
Term
Who are licensees considered to be under the DRE?
Definition
Real estate brokers and sales persons, prepaid rental listing services, and mineral, oil, and gas brokers.
Term
What is the DOC/Financial Services Division responsible for?
Definition
The license and regulate mortgage brokers, lenders and servicers, and MLOs.
Term
What does "Commissioner" refer to?
Definition
Real Estate Commissioner
Term
Section II: California Law and Regulation Definitions (for the previous card as well)
Definition
n/a
Term
What does "Department" mean?
Definition
Department of Real Estate in the Business and Transportation Agency.
Term
What other terms can be used for the Department of Real Estate?
Definition
"division," "State Real Estate Division," or "Real Estate Division"
Term
What does "Person" include?
Definition
corporation, company, and firm.
Term
What does "Licensee" refer to?
Definition
A person, whether broker or salesman, licensed under any provisions of this part.
Term
What does the term "advance fee" refer to?
Definition
a fee, regardless of form, claimed, demanded, charged, received, or collected by a licensee from a principal before fully completing each and every service the licensee contracted to perform. (basically an upfront fee)
Term
What can a mortgage also be called?
Definition
a "Trust deed" or "deed of trust"
Term
What is a "Real property sales contract"
Definition
An agreement where one party agrees to convey title to real property upon the satisfaction of specified conditions set forth in the contract...
Term
How is "advertising" defined?
Definition
Any written or printed communication or oral communication made in accordance with a text or outline that has been reduced to written form, which is published for the purpose of inducing persons to purchase or use a product or service.
Term
What must advertising include?
Definition
The NMLS #
Term
What is an "annual audit"?
Definition
It is a certified audit of the licensee's books, records, and systems of internal control performed by an independent certified public accountant in accordance with generally accepted accounting principles and generally accepted auditing standards.
Term
What percentage is considered "control"
Definition
10 percent.
Term
What are considered "Federal Banking Agencies" (5)
Definition
1) the Board of Governors of the Fed
2) The Comptroller of the Currency
3) the Director of the Office of Thrift Supervision
4) the National Credit Union Administration
5) the FDIC
Term
What does "institutional investor" mean?
Definition
1. U.S. and its territories and its agencies. (for example Fannie and Freddie).
2. Any bank, credit union, etc.
3. Many other things including corporations, people, etc.
Term
What is an "institutional lender"
Definition
1) U.S. its cities and territories and agencies (Fannie and Freddie)
2) Any bank, credit union, etc.
Term
What defines a "lender"
Definition
a person that
1) is an approved lender of Federal Housing Administration, VA, Farmers Home Administration (USDA), Ginnie, Fannie, and Freddie
2) directly makes mortgage loans
3) makes the credit decision in the loan transactions.
Term
What does "makes or making residential mortgage loans" or "mortgage lending" mean?
Definition
Processing, underwriting, or as a lender using or advancing ones own funds, or making a commitment to advance one's own funds, to a loan applicant for a residential mortgage loan.
Term
What is a mortgage loan, residential mortgage loan, or home mortgage loan limited to?
Definition
a one to four family dwelling.
Term
What does "mortgage servicer" or "residential mortgage loan servicer" mean?
Definition
1) Approved by FHA, VA, USDA, Ginnie, Fannie, Freddie
2) Directly services or offers to service mortgage loans (basically someone who collects payments)
Term
What does "own funds" mean?
Definition
1) cash, corporate capital, or warehouse credit lines at commercial banks, savings banks and loan associations, industrial loan companies, or other sources that are liability items on a lender's financial statements, whether secured or unsecured
2) a lender's affiliate's cash, corporate capital, or warehouse credit lines at commercial banks or other sources that are liability items on the affiliates financial statements.
Term
What does "own funds" not include?
Definition
funds provided by a third party to fund a loan on condition that the third party will subsequently purchase.
Term
What does "person" include?
Definition
A natural person
a sole prop
a corp
a partnership
an LLC,
an association
a trust
a joint venture
an unincorporated org.
a joint stock company
a govt or political subdivision of a govt.
any other entity.
Term
What does "service" or "servicing" mean?
Definition
Receiving more than three installment payments of principal, interest, or other amounts.
Term
What does "sell" include?
Definition
Actual exchange, offer to sell, or solicitation to sell.
Term
What can an NMLS# also be called?
Definition
A unique identifier.
Term
What does "nontraditional mortgage product" mean?
Definition
Anything other than a 30-year fixed rate mortgage.
Term
What does "mortgage loan originator" mean?
Definition
an individual who, for compensation of gain, or in expectation of compensation or gain, takes a residential mortgage loan app or offers or negotiates terms of a residential mortgage loan.
Term
What does MLO not include? (4)
Definition
1) An individual who performs admin or clerical tasks.
2) A loan modification specialist.
3) People who extend credit relating to timeshare plans
4) An individual licensed as a MLO pursuant to Article 2.1 of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code and the SAFE Act.
Term
"Registered mortgage loan originator" means any individual who is all of the following: (3)
Definition
1. Meets the definition of MLO
2. is an employee of a depository institution, a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency
3. is registered with, and maintains a unique identifier through the NMLS
Term
What is the difference between a lender and a broker?
Definition
Lender makes and funds loans.
Broker negotiates terms with the bank.
Term
What does "finance lender" include?
Definition
Any person who is engaged in the business of making consumer loans or making commercial loans. (they lend their own money)
Term
What do "finance lender" and "broker" not include?
Definition
basically, employees.
Term
what does "branch office license" mean?
Definition
A license to engage in business at a location other than the location identified in an application.
Term
What do "charges" include?
Definition
aggregate interest, fees, bonuses, commissions, brokerage, discounts, expenses, and other forms of costs charged, contracted for, or received by a licensee or any other person in connection with the investigating, arranging, negotiating, procuring, gauranteeing, making, servicing, collecting, and enforcing of a loan or forbearance of money, credit, goods, or things in action or any other service rendered.
Term
What do charges not include?
Definition
1) Commissions received as a licensed insurance agent.
2) Court costs, excluding attorney's fees
3) Fees paid to a licensee for the privilege of participating in an open-end credit program.
4) other stuff.
Term
Consumer loan means?
Definition
A loan primarily for personal, family, or household purposes with a principal amount of less than five thousand dollars.
Term
What does "commercial loan" mean?
Definition
$5,000 or more. Use is primarily for other than personal, family, or household purposes.
Term
What does "Fair Market Value" mean?
Definition
the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale.
Term
What does "housing accommodation" include?
Definition
Any improved or unimproved real property that
1) is used or is intended to be used as a residence.
2) is or will be occupied by the owner,
3) contains not more than four dwelling units.
Term
Section III: California License Law and Regulation
Definition
25% of the test
Term
Mortgage loan originators in CA may be licensed in three different ways. What are they?
Definition
1) Companies holding a CA Finance Lenders Law license that make or broker loans secured by residential real estate.
2) Mortgage bankers licensed under the CRMLA
3) Real Estate Licensees acting as mortgage loan originators with a MLO endorsement from the DRE.
Term
When applying through the NMLS, who is referred to as a company?
Definition
Corps and real estate brokers working as sole proprietors.
Term
When applying through NMLS who is referred to as individuals?
Definition
brokers, broker-associates, broker/officers, and salespersons.
Term
What is required to obtain an individual license?
Definition
1) Satisfaction of all education and exam requirements.
2) Background check.
3) Credit history
Term
What is the initial application fee for mortgage loan originators applying for their licenses after 3/21/2010?
Definition
$100 plus a $30 NLMS system fee.
Term
If you are no longer employed by a licensed real estate broker, what happens with your license?
Definition
You are no longer officially licensed until you find a new employer.
Term
What entities are exempt from CRMLA licensing requirements? (12)
Definition
1) Banks, trust companies, insurance comps, and industrial loan comps.
2) Federally chartered savings and loan associations, savings banks, and federal credit unions.
3) Savings and loan associations, savings banks, and credit unions authorized to do business in CA.
4)Persons engaged solely in business, commercial, or agricultural mortgage lending.
5) Wholly owned service corps of savings and loan associations or savings banks.
6) People using their own money to make loans.
7) Federal, state, and municipal gots.
8) Pension plans making loans to their participants.
9) Persons acting in a fiduciary capacity conferred by the authority of a court.
10) Licensed CA real estate brokers
11) CA finance lenders
12) Trustees in a foreclosure proceeding.
Term
When does a licensee applying for renewal need to submit an application?
Definition
Not more than 90 days before the expiration of the license to be renewed.
Term
How many days do you have to notify the Department of any changes in license information or status?
Definition
5
Term
What broker addresses need to be on file with the commissioner?
Definition
Address of principal place of business,
address of each branch business office,
current mailing address if different than business address.
Term
When does the commissioner need to be noticed of an address change?
Definition
The next business day.
Term
How much is a license fee for the real estate broker license under Section 10210 of the Code?
Definition
$300.
Term
What is the minimum age for a real estate license?
Definition
18
Term
Upon the termination of employment of the salesperson, how many business days does the employer have to return the license?
Definition
3
Term
What must an applicant do to apply for a MLO license ENDORSEMENT?
Definition
Submit his or her fingerprints to the NMLS.
Term
The applicant may be precluded from obtaining a mortgage loan originator license endorsement where his or her personal history includes what two things?
Definition
1) any liens or judgments for fraud, misrepresentation, dishonest dealing, and/or mishandling of trust funds
2) other liens, judgments, or financial professional conditions that indicate a pattern of dishonesty on the part of the applicant.
Term
The designated officer of a corporation is responsible for maintaining and updating background information for which following individuals associated with a corporation? (4)
Definition
1) Directors 2) officers 3) subordinate officers with the responsibility of forming policy of the corp, and 4) all natural persons owning and controlling more than 10% of the corps shares.
Term
When must endorsement renewal requirements be filed?
Definition
Between November 1 and December 31.
Term
If a person fails to file necessary requirements to renew an endorsement, when may hey request reinstatement by?
Definition
March 1 of the following year.
Term
Prior to businesses obtaining a license, each applicant must demonstrate the following: (3)
Definition
Approval from FHA, VA, USDA, Ginnie, Fannie, or Freddie as a lender and/or servicer
A tangible net worth of at least 250K
A surety bond in the amount of 50K
Term
A MLO endorsement may be added to the following licenses: (4)
Definition
Real Estate Broker (Broker-Associate)
Real Estate Corp
Real Estate Salesperson
Real Estate Branch
Term
What is the minimum net worth for entities operating as a finance lender or broker who do not employ mortgage loan originators?
Definition
$25,000
Term
The SAFE Act requires that mortgage loan originator applicants demonstrate _________ _________, ________, and _______ ________ such as to command the confidence of the community to warrant a determination that applicants will operate honestly, fairly, and effectively.
Definition
financial responsibility, character, general fitness.
Term
How much is the criminal background check charge?
Definition
$39
Term
How many hours of NMLS approved, pre-licensing education must be completed by all MLO applicants?
Definition
20
Term
The 20 hours of education must include at least: (3)
Definition
3 hours of instruction on relevant federal law and regulations
3 hours of ethics
2 hours of training on lending standards for non-traditional mortgages.
Term
To pass, applicants: (3)
Definition
must achieve a score of 75% or greater on both components.
may take the test 3 consecutive times 30 days apart
must wait at least six months if they do not pass on the third attempt.
Term
How much are the tests?
Definition
National is $92. Each state is $69.
Term
How many questions must be answered correctly on each test?
Definition
68 for national, 30 for state.
Term
What are the 3 basic criteria for denying an application for a mortgage loan originator?
Definition
1) Prior revocation of a mortgage loan originator's license.
2) Criminal convictions
3) Unsatisfactory character or financial fitness.
Term
What are the major crimes that warrant consideration of denial for a license? (11)
Definition
1. Fraud
2. Counterfeiting, forging
3. Willing nonpayment of taxes
4. Bribery
5. Sexually related conduct
6. Willfully violating a provision of Division 4 of the Business Professions Code of CA.
7. Willfully violating a requirement that a license be obtained from a duly constituted public authority.
8. Blackmail
9. Contempt of court
10. Repeated willful disregard of the law.
11. Two or more alcohol or drug convictions.
Term
If any felony is committed within __ years, an applicant will be denied.
Definition
7... except for fraud.
Term
What are the continuing education requirements for MLOs?
Definition
8 hours a year.

3 hours on relevant federal law and regulations
2 hours of ethics
2 hours of lending standards in non-traditional mortgage markets.
1 hour of electives
Term
When do initial MLO endorsements which are approved for issuance in 2010 expire?
Definition
12/31/2011
Term
What form do licensees use to notice the DOC/FSD of changes in their business situation? How long do they have?
Definition
MU4, 5 business days.
Term
Section IV: Compliance
Definition
HALF of the CA test.
Term
When in doubt, remember _______ & ________ in all mortgage lending transactions is critical.
Definition
integrity, transparency
Term
The compliance section can be summarized in what five simple rules for the licensee?
Definition
1) Never intentionally misrepresent or conceal a material fact, term, or condition of the transaction.
2) Always use due diligence and make reasonable efforts to procure a mortgage loan on behalf of the borrower.
3) Always disburse funds in accordance with a written commitment to make a mortgage loan.
4) Never delay the closing of a mortgage loan for the purpose of increasing the interest rate or any other cost or fee.
5) Do not collect any mortgage broker fees before a conditional commitment is obtained from the lender by the mortgage broker.
Term
What must MLO's know when it comes to non-traditional mortgage products? (4)
Definition
1) management practices
2) underwriting standards
3) control systems
4) consumer protection practices.
Term
What do risk management practices include?
Definition
Giving primary consideration to the borrower's ability to repay the mortgage loan.
Term
What does Section 10241(a) state about costs and expenses of making the loan.
Definition
No costs which have not been paid, incurred, or reasonably earned by the loan broker shall be charged to the borrower.
Term
What is the NACCA
Definition
National Association of Consumer Credit Administrators
Term
What Risk Management Practices must a real estate broker adhere to? (3)
Definition
Consider a borrowers ability to repay the mortgage loan.
Ensure that a loan results in an identifiable benefit to the borrower.
Fully disclose the true nature of the mortgage loan obligation.
Term
Give an example of non-compliance.
Definition
A couple wants a $30,000 fixed rate loan for a home they say they will live in permanently. The MLO steers the couple to a variable rate loan with a balloon payment because he will get higher commission.
Term
How long a brokers required to obtain an approval on record?
Definition
3 years.
Term
What does the term "negotiation" as used in section 10133.1(c) of the Code NOT include? (4)
Definition
Any activities described as follows:
1. Preparing and designing advertising relating to loan transactions.
2. Distributing, circulating, using, or publishing preprinted brochures, flyers, etc.
3. Providing written factual info about loan terms. A non-licensed person may not provide counseling advice.
4. Notifying a borrower of the info needed in order to complete a loan app without providing advice.
5. 11 more non-significant options.
Term
Under CRMLA, what is the application fee for a company?
Definition
$1,000
Term
What is the purpose of the Approved Borrower Disclosure Statement?
Definition
aiding real estate licensees in providing the disclosure of material information to prospective borrowers in a uniform and effective manner.
Term
What are the Approved Borrower Disclosure Statement forms?
Definition
RE 882 and RE 883
Term
What is the purpose of the Approved Borrower Disclosure Statement for Nontraditional and Subprime Mortgage products?
Definition
Aid real estate licensees in providing the disclosure of material information in a uniform manner to prospective borrowers.
Term
What does a "nontraditional mortgage product" not include? (aside from fixed rate loans)
Definition
reverse mortgages and helocs.
Term
California real estate and mortgage brokers may _________ submit advertising materials for the DRE approval.
Definition
voluntarily
Term
The use of the words ________, ________, ________, ________, ________, ________, or other similar words or phrases that describe or characterize the security of lenders' or purchasers' funds will not be approved for publication by the commish.
Definition
guaranteed, insured, bonded, sure, safe, sound
Term
The use of terms in the _______ or ________ degree are not allowed for advertising. (i.e. saying "we have the best rates in town)
Definition
comparative, superlative
Term
If a specific installment in repayment of a loan (i.e. 30 years) is mentioned in an advertisement, what else needs to be disclosed?
Definition
1. Principal amount
2. Simple annual interest rate
3. APR
4. Number, amount, and period of payments scheduled to date of maturity.
5. Balance due at maturity if not fully amortized.
Term
All advertising materials that describe services requiring licensure must also include one of what two things?
Definition
NMLS ID# or eight digit real estate license ID#
Term
What materials are considered to be first point of contact with consumers?
Definition
Business cards, stationary, websites, promotional or advertising fliers, brochures, email and regular mail, leaflets, and any marketing material designed to solicit the creation of a professional relationship.
Term
What sections of the Code are administered when the commissioner takes such action as is appropriate to prevent or halt the publication of advertising that is false.
Definition
Section 10232.1 and 10235 of the Code
Term
What happens when sections 10232.1 and 10235 of the Code are administered?
Definition
What sections of the Code are administered when the commissioner takes such action as is appropriate to prevent or halt the publication of advertising that is false.
Term
If an adjustable rate, interest only or payment-option loan is advertised, what other information needs to be given?
Definition
1. Principal amount 2. Term of loan 3. Initial interest rate 4. Number of months the initial rate will be in affect. 5. Fully-indexed interest rate. 6. Maximum interest rate. 7. An explanation of the difference between the payment rate, initial interest rate and fully indexed rate. 8. APR 9. How often the interest rate and payments can change. 10. Maximum periodic change in the interest rate and payments. 11. Number of months and percentage of original loan amount after which minimum payments will not be accepted. 12. Monthly payment based on the maximum interest rate. 13. Statement of prepayment penalty, if necessary. 14. Statement of balloon payment, if necessary.
Term
What solicitation materials that are intended to be the first point of contact with consumer must disclose a license ID#?
Definition
1. Business cards.
2. Stationery
3. Websites owned, controlled, and/or maintained by the soliciting real estate licensee.
Term
How long do brokers who are responsible for trust funk bank accounts have to place funds into a neutral escrow depository?
Definition
3 days.
Term
What must go into the trust account?
Definition
Appraisal deposits among other things.
Term
What must the annual report for a trust fund bank account include?
Definition
1) A balance sheet of trust funds held by the broker as of the last day of the fiscal year.
2) Statements of receipts and disbursements of trust funds and changes in cash for the fiscal year.
3) A schedule of trust fund liability balances showing each open beneficiary account in connection with trust funds received in carrying on the activities described.
Supporting users have an ad free experience!