Uniform State Content practice

All 15 free uniform state content questions

1. The Secure and Fair Enforcement for Mortgage Licensing Act encouraged the states to set up the national registry through which of these bodies?

   • A The Conference of State Bank Supervisors Correct
   • B The Department of Housing and Urban Development This department is a federal agency and is not one of the two state regulator associations the section names.
   • C The Consumer Financial Protection Bureau The Bureau is not named in this section among the bodies the states were encouraged to work through.
   • D The Federal Housing Finance Agency This federal agency is not one of the two associations of state regulators the section names.

   Two associations of state regulators, the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, are the bodies the states were encouraged to work through in setting up the registry. Neither one is a federal agency.

   SAFE Act, 12 USC s. 5101

2. Under the Secure and Fair Enforcement for Mortgage Licensing Act, which work is an administrative or clerical task?

   • A Gathering file information from the consumer Correct
   • B Advising the consumer which rate option suits her Counseling a consumer about which loan rate to take is outside the clerical definition and is originator work.
   • C Negotiating the loan terms with the consumer Negotiating terms is the activity the licensing requirement exists for, and the clerical definition does not reach it.
   • D Deciding whether the file meets underwriting guidelines The definition covers moving information around, not making the credit decision the information supports.

   Receiving, collecting and distributing the information a file needs for processing or underwriting, and contacting the consumer to get it, is the clerical work the definition covers. Advising on a rate, negotiating terms and deciding whether the file qualifies are not.

   SAFE Act, 12 USC s. 5102(4)(C)

3. What must an applicant for a state loan originator license furnish through the national registry for a background check?

   • A Fingerprints for a state and national check Correct
   • B Fingerprints for a state criminal history check only The check is both state and national, so limiting it to one state understates what the statute asks for.
   • C A notarized affidavit of no criminal record The statute asks for fingerprints, not the applicant's own sworn statement about his record.
   • D A clearance letter from his county sheriff A local clearance letter is not what the section requires, and it would not reach a national record.

   Fingerprints must go to the Federal Bureau of Investigation for a state and national criminal history background check. A check confined to one state, a sworn statement or a sheriff's letter falls short of that.

   SAFE Act, 12 USC s. 5104(a)(1)

4. How many hours of approved pre-licensing education must an applicant for a state loan originator license complete?

   • A At least 20 hours Correct
   • B At least 8 hours Eight hours is the annual continuing education floor, not the pre-licensing requirement.
   • C At least 12 hours The statute names no twelve-hour requirement anywhere in the education provisions.
   • D At least 24 hours Twenty-four hours overstates the floor, which the section sets at 20.

   At least 20 hours of approved pre-licensing education is the floor the statute sets, including 3 hours on federal law and regulations, 3 hours on ethics, and 2 hours on lending standards for the nontraditional mortgage product marketplace. Eight hours is the annual continuing education figure.

   SAFE Act, 12 USC s. 5104(c)(1)

5. How many hours of approved continuing education must a state-licensed loan originator complete each year?

   • A At least 8 hours Correct
   • B At least 20 hours Twenty hours is the one-off pre-licensing requirement, not the annual one.
   • C At least 12 hours No twelve-hour annual requirement appears in the section.
   • D At least 6 hours Six hours is below the federal floor and would not meet the annual requirement.

   At least 8 hours of approved continuing education are required each year, made up of at least 3 hours of federal law and regulations, 2 hours of ethics, and 2 hours on nontraditional mortgage product lending standards. Twenty hours is the one-off pre-licensing figure.

   SAFE Act, 12 USC s. 5105(b)(1)

6. When a state agency examines a mortgage licensee, whom may it interview about the business?

   • A Staff, contractors, agents and customers Correct
   • B Staff, but not customers Customers of the licensee are on the list of people the agency may interview.
   • C Staff, but not contractors Independent contractors are named alongside officers, employees and agents.
   • D Only those the licensee agrees to produce The authority does not depend on the company agreeing. The same section also bars anyone from withholding or destroying records.

   Officers, principals, loan originators, employees, independent contractors, agents and customers can all be interviewed about the business, and the agency may see the licensee's books and records as well. The list goes past the payroll and does not depend on the licensee's consent.

   SAFE Act, 12 USC s. 5114(2)

7. Under Regulation H, when is an individual not acting for compensation or gain?

   • A When acting as a volunteer expecting nothing of value Correct
   • B When paid only after the loan closes Payment does not have to depend on the loan closing for it to be compensation.
   • C When paid a salary rather than a commission A salary is a thing of value, so being on salary does not put the individual outside compensation or gain.
   • D When the payment comes from the employer, not the borrower Who pays does not matter. Anything of value received for the activity is compensation.

   An individual acting as a volunteer, who receives and expects nothing of value for the activity, does not act for compensation or gain. Anything of value received for the activity makes it compensation: a salary, a bonus or a commission, whoever pays and whether or not the loan closes.

   Regulation H, 12 CFR Part 1008, Appendix A

8. When must a registered mortgage loan originator give a consumer his unique identifier?

   • A On request, before acting, in first written contact Correct
   • B Only on the consumer's written request A request is only one of the three triggers, and the rule does not require it to be in writing.
   • C At closing, on the final loan documents The identifier is owed before the originator acts, which is long before the closing papers.
   • D Within 30 days after the loan application is taken No thirty-day period appears here. The duty attaches at the earliest of the three triggers.

   Three triggers require the identifier: a consumer's request, the point before he acts as a mortgage loan originator, and his first written communication with the consumer. Whichever comes first governs. Waiting for the closing documents is far too late.

   Regulation G, 12 CFR s. 1007.105(b)

9. A residential mortgage loan advertisement must show whose unique identifier?

   • A The person originating the loan Correct
   • B The supervising branch manager The identifier belongs to the person who originates the loan, so a supervisor's number is the wrong one to print.
   • C The company alone A company number does not replace the identifier of the individual originating the loan.
   • D The state regulator issuing the license The regulator issues the license and holds no identifier that goes on an advertisement.

   The originator's own unique identifier must appear on application forms, solicitations and advertisements, business cards and websites among them. A supervisor's number or a company number does not stand in for it.

10. A state supervisory authority must be able to suspend, terminate and refuse renewal of a loan originator license for violations of which law?

    • A State or federal law Correct
    • B State law only Confining the power to state law would strip out the words that put federal violations inside the same authority.
    • C The employer's own policies An employer's policies are not the measure; the standard names violations of state or Federal law.
    • D State law and the registry's own rules The registry's own rules are not the measure here, and the standard names state and federal law.

    Violations of state law and of federal law both support suspending, terminating or refusing to renew a license, and the state authority must hold that power for each. Limiting it to one kind of law, or to the registry's rules, drops part of what the standard names.

    Regulation H, 12 CFR s. 1008.111(b)(5)

11. Which objective of the Secure and Fair Enforcement for Mortgage Licensing Act concerns the consumer?

    • A Originators act in the consumer's best interests Correct
    • B Originators owe borrowers a fiduciary duty The list states an objective for the licensing system and stops short of imposing a fiduciary duty on an originator.
    • C Originators offer the lowest available rate Nothing in the objectives ties the system to the rate an originator offers.
    • D Originators shop each file to three lenders Shopping a file to a set number of lenders appears nowhere in the objectives.

    Acting in the consumer's best interests, as far as possible, is one of the objectives the act sets for the licensing system the states were encouraged to build. It is a goal for the system and stops short of a fiduciary duty, a rate promise or a rule about shopping a file.

    SAFE Act, 12 USC s. 5101(8)

12. The Model State Law for the SAFE Act is best described as:

    • A Model legislation for states to adopt Correct
    • B A federal regulation binding all lenders It is model language for state legislatures, not a federal rule, and it binds no lender until a state adopts it.
    • C A compliance manual for bank staff It is written for states to enact as law, not as an internal policy manual for any bank's staff.
    • D The registry's own operating rules It governs state licensing of originators; it is not a set of operating rules the registry issues for its users.

    Each state legislature is meant to enact this model language so that its own law carries out the licensing requirements of the SAFE Act (Secure and Fair Enforcement for Mortgage Licensing Act). Until a state adopts it, it binds nobody, which rules out a federal regulation, a bank manual or registry rules.

13. How many times must a loan originator seeking licenses in three states pass the SAFE MLO test?

    • A Once per state The pass is not tied to one state; every state agency accepts the same result toward its own test requirement.
    • B Once Correct
    • C Twice, national then state No separate state pass is added, because passing the one test meets each state's test requirement.
    • D Once, then at each renewal Renewal does not call for a new test; a passed result lapses only after five years without a license or federal registration.

    One passing result on the SAFE Mortgage Loan Originator Test satisfies the testing requirement of every state agency, which means an originator seeking three licenses sits it only once. The MLO Testing Handbook gives this answer in its FAQ. The test is not repeated at renewal either, since renewal turns on continuing education and fees.

14. How many of a state-licensed loan originator's 8 annual continuing education hours must cover federal law and regulations?

    • A 1 hour One hour falls short of the minimum for federal law, which is 3 hours.
    • B 2 hours Two hours is the minimum for ethics and for nontraditional lending standards, not for federal law.
    • C 3 hours Correct
    • D 4 hours Four hours overstates the minimum; the federal law share is at least 3 hours.

    At least 3 of the 8 annual hours must cover federal law and regulations, alongside 2 hours of ethics and 2 hours on lending standards for nontraditional mortgage products. Regulation H (12 CFR Part 1008) sets the split in 12 CFR 1008.107(a)(2). Two hours is the figure for ethics, not for federal law.

    Regulation H, 12 CFR s. 1008.107(a)(2)(i)

15. The unique identifier the SAFE Act requires for each loan originator:

    • A Stays with the originator permanently Correct
    • B Belongs to the originator's employer The identifier belongs to the individual originator, not to whoever employs her, and it identifies her permanently.
    • C Changes in each state that licenses the originator One identifier serves in every state; states are told to use it in place of Social Security numbers.
    • D Lapses after five years without a license The five-year rule applies to passed test results, not to the identifier, which is permanent.

    A unique identifier is a number that permanently identifies a loan originator, which means it stays the same through license changes, moves between employers and work in more than one state. The Secure and Fair Enforcement for Mortgage Licensing Act defines it this way in 12 USC 5102(13)(A)(i). Five years without a license can cost an originator a passed test result, but never the identifier.

    SAFE Act, 12 USC s. 5102(13)(A)(i)