Mortgage Broker License

A mortgage broker is establishing a new brokerage. Which of the following is typically the FIRST regulatory step required before conducting business?

• AHiring licensed MLOs
• BObtaining NMLS company registration
• CPurchasing errors and omissions insurance
• DSetting up a trust account

What document must a mortgage brokerage maintain that outlines its procedures for ensuring loan file accuracy and regulatory compliance?

• ABusiness continuity plan
• BQuality control plan
• CEmployee handbook
• DMarketing compliance manual

A mortgage brokerage owner wants to open a branch office in a neighboring state. What must the brokerage do FIRST?

• AHire a branch manager with an active MLO license in that state
• BObtain a branch license in the new state through NMLS
• CTransfer the existing state license to cover the new branch
• DFile a DBA (doing business as) in the new state

Under the SAFE Act, which entity is responsible for maintaining the Nationwide Multistate Licensing System (NMLS)?

• AConsumer Financial Protection Bureau (CFPB)
• BConference of State Bank Supervisors (CSBS)
• CFederal Housing Finance Agency (FHFA)
• DDepartment of Housing and Urban Development (HUD)

A mortgage broker receives a completed loan application from a borrower on Monday. Under TRID, when is the latest the broker must provide the Loan Estimate?

• AMonday (same day)
• BTuesday
• CThursday
• DThe following Monday

What is the primary purpose of a surety bond for a mortgage brokerage?

• ATo insure the brokerage against employee theft
• BTo protect consumers if the broker violates licensing laws
• CTo guarantee loan repayment to investors
• DTo cover errors and omissions in loan processing

Which federal law prohibits mortgage brokers from giving or receiving anything of value in exchange for referrals of settlement service business?

• ATruth in Lending Act (TILA)
• BReal Estate Settlement Procedures Act (RESPA)
• CEqual Credit Opportunity Act (ECOA)
• DHome Mortgage Disclosure Act (HMDA)

A mortgage brokerage is required to retain loan files for a minimum period. What is the typical federal retention requirement for mortgage loan records?

• A2 years
• B3 years
• C5 years
• D7 years

Which of the following is a prohibited practice under ECOA for a mortgage brokerage?

• ARequiring a co-signer when the primary applicant does not qualify alone
• BAsking about the number of dependents on a loan application
• CDenying a loan application based solely on the applicant's marital status
• DRequesting proof of income from a self-employed borrower

A mortgage brokerage must designate a specific individual to be responsible for the company's compliance with licensing requirements. What is this person commonly called?

• AChief compliance officer
• BDesignated broker
• CQualifying individual
• DManaging director

What is the minimum net worth requirement for a mortgage brokerage in most states?

• A$10,000
• B$25,000
• C$100,000
• D$500,000

Which of the following best describes the role of a mortgage broker versus a mortgage banker?

• AA broker funds loans with their own capital; a banker connects borrowers with lenders
• BA broker connects borrowers with wholesale lenders; a banker funds loans with their own c…
• CA broker services loans after closing; a banker does not
• DA broker only works with government loans; a banker works with conventional loans

How often must a mortgage broker typically renew their state license through NMLS?

• AEvery 6 months
• BAnnually
• CEvery 2 years
• DEvery 5 years

Under RESPA, which of the following is a permitted compensation arrangement for a mortgage broker?

• AReceiving a referral fee from a title company for each loan sent to them
• BCharging the borrower a loan origination fee disclosed on the Loan Estimate
• CAccepting a gift from a real estate agent for steering clients to their agency
• DReceiving an undisclosed yield spread premium from a lender

What is the primary purpose of the Home Mortgage Disclosure Act (HMDA) for mortgage brokerages?

• ATo set interest rate limits on mortgage loans
• BTo require collection and reporting of mortgage lending data
• CTo establish borrower qualification standards
• DTo regulate advertising of mortgage products

A new mortgage brokerage owner asks what type of insurance is specifically designed to protect the company against claims arising from professional errors in loan processing. What should the owner obtain?

• AGeneral liability insurance
• BWorkers' compensation insurance
• CErrors and omissions (E&O) insurance
• DFidelity bond coverage

Which of the following continuing education requirements applies to mortgage brokerage qualifying individuals under the SAFE Act?

• A4 hours annually
• B8 hours annually
• C12 hours annually
• D20 hours annually

A mortgage brokerage receives a consumer complaint about a recent loan transaction. What is the broker's FIRST obligation?

• AForward the complaint to the wholesale lender
• BAcknowledge receipt of the complaint in writing
• CContact the borrower's attorney to discuss the matter
• DFile a report with the state regulator

Under TILA, what is the Annual Percentage Rate (APR) designed to show borrowers?

• AThe monthly payment amount on the mortgage
• BThe total cost of credit expressed as a yearly rate
• CThe maximum interest rate over the life of the loan
• DThe broker's compensation as a percentage of the loan

What is the purpose of maintaining a written staffing and supervision plan at a mortgage brokerage?

• ATo qualify for lower E&O insurance premiums
• BTo document the chain of command and oversight of MLO activities
• CTo satisfy IRS requirements for independent contractor classification
• DTo market the company's team to potential wholesale lender partners

A mortgage brokerage operates in three states. The qualifying individual's MLO license in one state lapses. What is the MOST LIKELY consequence?

• AThe brokerage loses its license in all three states immediately
• BThe brokerage must cease operations in the state where the QI's license lapsed
• CThe brokerage has 90 days to designate a new qualifying individual in that state
• DAll loans in the pipeline for that state are automatically canceled

A mortgage broker discovers that one of their MLOs has been offering borrowers a $500 gift card for each referral they send to a specific real estate agent. What regulation has been violated?

• ATILA Regulation Z
• BRESPA Section 8
• CECOA Regulation B
• DHMDA Regulation C

Under the Dodd-Frank Act's loan originator compensation rules, which of the following compensation structures is PROHIBITED for mortgage brokers?

• APaying MLOs a fixed salary plus commission based on loan volume
• BPaying MLOs a commission that varies based on the interest rate of the loan
• CPaying MLOs a flat fee per closed loan regardless of loan amount
• DPaying MLOs a base salary with a bonus tied to customer satisfaction scores

A mortgage brokerage's quality control plan must include random file audits. What percentage of closed loan files should typically be audited according to industry standards?

• A5%
• B10%
• C25%
• D50%

A borrower provides a mortgage broker with their Social Security number, property address, income, estimated property value, loan amount sought, and name. Under TRID, what has the borrower provided?

• AA pre-qualification request
• BA completed loan application
• CAn intent to proceed
• DA preliminary application inquiry

A mortgage brokerage wants to offer borrower-paid compensation on some loans and lender-paid compensation on others. Under Regulation Z, what restriction applies?

• AThe broker cannot offer both models — they must choose one compensation structure for all…
• BThe broker can offer both but cannot charge the borrower AND receive lender compensation…
• CThe broker must disclose both options to every borrower regardless of which model they ch…
• DLender-paid compensation must always be lower than borrower-paid compensation

When a mortgage brokerage undergoes a state regulatory examination, which of the following would be the MOST significant finding?

• AIncomplete employee training records
• BPattern of TRID violations across multiple loan files
• COne loan file missing a copy of the appraisal
• DMinor discrepancy in the brokerage's financial statement

A mortgage broker is originating an FHA loan. Which agency insures this loan against default?

• AFannie Mae
• BFreddie Mac
• CFederal Housing Administration (FHA/HUD)
• DDepartment of Veterans Affairs (VA)

A mortgage brokerage operates with 12 MLOs and originated 150 closed-end mortgage loans in the prior calendar year. Is this brokerage likely subject to HMDA reporting requirements?

• ANo, because brokerages are exempt from HMDA
• BNo, because the volume threshold for HMDA reporting is 200 loans
• CYes, because HMDA applies to non-depository institutions that originated at least 25 clos…
• DYes, because any mortgage brokerage with more than 10 MLOs must report HMDA data

A mortgage broker is comparing a conventional loan versus an FHA loan for a borrower with a 640 credit score and 5% down payment. Which statement is MOST accurate?

• AThe borrower cannot qualify for either loan with a 640 credit score
• BThe FHA loan will likely have lower upfront costs because FHA does not charge mortgage in…
• CThe FHA loan will likely be more accessible because FHA allows credit scores as low as 58…
• DThe conventional loan will always have a lower interest rate than the FHA loan

A mortgage brokerage discovers that an MLO falsified income documentation on a loan application. What is the broker's MOST appropriate immediate action?

• ATerminate the MLO and report the incident to the state regulator and NMLS
• BAsk the MLO to correct the documentation and resubmit the loan
• CWait until the next quality control audit to address the issue
• DContact the borrower to discuss the discrepancy before taking action

Which of the following scenarios would MOST likely trigger a fair lending concern at a mortgage brokerage?

• ADenying a loan to a borrower who does not meet the minimum credit score requirement
• BOffering different interest rates to borrowers based on their credit scores and down paym…
• CConsistently routing minority applicants to FHA products while offering conventional opti…
• DRequiring additional documentation from self-employed borrowers

A mortgage brokerage is evaluating its risk controls. Which of the following represents the HIGHEST risk area for a brokerage?

• AStale marketing materials on the company website
• BOutdated employee phone directory
• CThird-party vendor management for loan processing services
• DSlightly delayed filing of annual report with the Secretary of State

Under TRID, a borrower receives a Loan Estimate on Tuesday. What is the earliest the borrower can close on the loan?

• AFriday of the same week
• BThe following Monday
• CThe following Tuesday
• DThe following Wednesday

A mortgage brokerage's surety bond is set to expire in 30 days. What happens if the bond is not renewed before expiration?

• AThe brokerage receives an automatic 60-day grace period
• BThe brokerage's state license is automatically suspended
• CThe brokerage can continue operating while the bond is being renewed
• DThe state regulator will renew the bond on the brokerage's behalf

Which of the following is a Non-QM (Non-Qualified Mortgage) loan product that a mortgage broker might offer?

• AA 30-year fixed-rate conventional loan meeting all CFPB requirements
• BAn FHA loan with standard documentation
• CA bank statement loan that uses 12-24 months of bank statements instead of tax returns fo…
• DA VA loan with full documentation for an eligible veteran

A mortgage brokerage wants to advertise specific interest rates in its marketing materials. Under TILA Regulation Z, what additional information must be included when a triggering term is used?

• AOnly the APR
• BThe APR, loan term, down payment amount, and repayment schedule
• CThe name of the wholesale lender funding the loan
• DThe brokerage's NMLS number only

Under the current CFPB General Qualified Mortgage (QM) definition, which factor primarily determines whether a conventional loan qualifies as a General QM?

• AA fixed maximum debt-to-income ratio of 43%
• BWhether the loan's APR does not exceed the average prime offer rate (APOR) by more than t…
• CWhether the borrower has a minimum credit score of 700
• DWhether the loan is guaranteed by a government agency

A mortgage brokerage is audited and the examiner finds that the brokerage did not provide adverse action notices to denied applicants within the required timeframe. Which regulation has been violated?

• ARESPA Section 6
• BECOA Regulation B
• CTRID timing rules
• DHMDA data collection requirements

A mortgage brokerage owner discovers that their net worth has fallen below the state-required minimum. What should the owner do?

• AContinue operations normally and address it at the next annual renewal
• BImmediately notify the state regulator and develop a plan to restore net worth
• CReduce the surety bond amount to offset the net worth shortfall
• DTransfer personal assets to the company to temporarily meet the requirement without discl…

Under RESPA, which of the following affiliated business arrangements (AfBA) is PERMITTED?

• AA broker referring business to their affiliated title company without any disclosure to t…
• BA broker referring business to their affiliated title company with proper written disclos…
• CA broker requiring borrowers to use only their affiliated title company for all settlemen…
• DA broker receiving a referral fee from their affiliated title company in addition to thei…

A mortgage brokerage is implementing a new loan origination system (LOS). What is the MOST important compliance consideration?

• AThe system's user interface design
• BThe system's ability to generate required disclosures within regulatory timeframes
• CThe system's integration with the brokerage's email platform
• DThe cost of the system relative to competitors

What is the maximum seller concession typically allowed on a conventional loan with a down payment of less than 10%?

• A2%
• B3%
• C6%
• D9%

A mortgage brokerage's branch manager leaves unexpectedly. What is the brokerage's compliance obligation?

• AThe branch can continue operating without a manager for up to 6 months
• BThe brokerage must notify the state regulator and designate a replacement within the time…
• CThe branch can operate under the supervision of the main office indefinitely
• DThe brokerage must close the branch permanently

Under the Fair Housing Act, which of the following actions by a mortgage broker would constitute illegal steering?

• ARecommending an FHA loan to a first-time buyer with a 600 credit score and 3.5% down paym…
• BSuggesting a borrower consider a larger down payment to avoid PMI
• CDiscouraging a minority borrower from applying for a mortgage in a predominantly white ne…
• DRecommending a 15-year term to a borrower who wants to pay off their mortgage faster

A mortgage brokerage is preparing its annual HMDA submission. Which of the following data points must be reported for each application?

• AThe borrower's Social Security number
• BThe loan officer's personal income
• CThe applicant's race, ethnicity, and sex
• DThe borrower's political party affiliation