Fraud for money Laundering -Criminal uses scheme known as value tampering
-Criminal offers to buy house at reduced rate
-Seller must sell at appraised value on paper, but after closing, seller give the criminal the
difference in cash.
Adverse Action An unfavorable credit decision rendered again...
NMLS EXAM 2021 QUESTIONS AND
ANSWERS 100% CORRECT
Fraud for money Laundering ✔✔-Criminal uses scheme known as value tampering
-Criminal offers to buy house at reduced rate
-Seller must sell at appraised value on paper, but after closing, seller give the criminal the
difference in cash.
Adverse Action ✔✔An unfavorable credit decision rendered against a consumer made on
the basis of information contained on the credit application. If a lender takes adverse
action against an applicant, the lender must notify the applicant in writing. If the adverse
action is taken as a result of information contained on the credit report, the notice must
also provide the name, address and toll-free phone number of the credit bureau that
supplied the information.
American Association of Residential Mortgage Regulators (AARMR): ✔✔A national association
of individuals who are charged with administering and regulating various aspects of residential
mortgage lending. It played a major role in the formation of the NMLS-R and in the drafting of
the model licensing law.
Annual percentage rate (APR): ✔✔Does NOT include...TEN ACT-
(Title,Escrow,Notary,Appraisal,Credit Report,Termite)A measurement of the total cost of the
credit, expressed as an annual rate. The APR includes those paid at the time of closing and those
paid over the term of the loan. It includes all items that are part of the finance charge, such as
interest, discount points, mortgage insurance premiums and administrative fees.
Application ✔✔A request for a residential mortgage loan and includes the borrower-related
information that lenders commonly use when considering the request. Someone who takes an
,application from a consumer is generally considered to be acting as a loan originator, even when
gathering application information over the phone or Internet
ARM Disclosure: ✔✔A disclosure required to be presented to the applicant within three days of
application on any ARM loan. This disclosure provides the applicant with information about the
specific ARM product for which they are applying, such as a historical index value
Balloon mortgage: ✔✔A type of fixed-rate mortgage loan with monthly payments based on a 30-
year amortization schedule, setting a maturity date for a shorter period of time - usually five, seven,
10 or 15 years. This allows the borrower to make lower monthly payments for that shorter period
of time, with a large payment of the full remaining principal balance and interest due at the maturity
date
Bank Secrecy Act (BSA): ✔✔A federal law requiring that financial institutions take steps to
prevent and report cases of money laundering.
Bridge loan: ✔✔A bridge loan is a loan for a short duration of time and can be used when one is
purchasing one property but is dependent on the equity from another property that has not yet been
sold. Once the property is sold then the bridge loan is repaid.
Business day: ✔✔Monday through Saturday except holidays.For the LE, when creditor is open to
the public for carrying on substantially all of the creditor's business functions
Certificate of Reasonable Value (CRV): ✔✔A form indicating the appraised value of a property
being financed with a VA loan.
Changed circumstance: ✔✔A material event or piece of information that is discovered after the
issuance of a Loan Estimate and has an impact on either the borrower's settlement costs or the
borrower's eligibility for a loan. A changed circumstance allows a loan originator to reissue the
Loan Estimate to reset applicable tolerances.
, Chapter 7 bankruptcy: ✔✔A common kind of bankruptcy in which a borrower might need
to liquidate assets in order to satisfy creditors
Chapter 13 bankruptcy: ✔✔a reorganization form of bankruptcy for individuals that allows the
debtors to keep their property and use their income to pay a portion of their debts over three to five
years
Character ✔✔In mortgage lending, the borrower's willingness to repay the debt.
Closing costs: ✔✔All of the costs related to closing except
the prepaid or escrow items. Examples of closing costs are the origination fee, discount
points, real estate sales commission, attorney fees, survey charges, title insurance
premiums, agency closing fees, appraisal fees, credit report fees, termite report fees,
recording fees, mortgage insurance premiums, loan transfer or assumption fees, etc.
Commercial bank: ✔✔A financial institution organized to accumulate funds primarily
through time and demand deposits and to make these funds available to finance the
nation's commerce and industry.
Conference of State Bank Supervisors (CSBS): ✔✔A national organization of state bank
supervisors who are charged with ensuring that state banking institutions adhere to certain
standards. The organization played a major role in the formation of the NMLS-R and in the drafting
of the model licensing law.
Conforming loans: ✔✔Loans that can be sold to Fannie Mae and Freddie Mac.
Consumer Financial Protection Bureau (CFPB): ✔✔A federal regulator created under authority of
the Dodd-Frank Act. This agency is housed under and funded directly by the Federal Reserve, and
has been tasked with rule-making for and enforcement of the majority of U.S. mortgage laws.
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