1. Under the Mortgage Broker Practices Act (MBPA), when may the director of the
Department of Financial Institutions have access to all books and records of a mortgage
brokering firm?
A. Over the weekend
B. During normal business hours
C. When the mortgage broker is available
D. When the firm is closed to normal business
2. Which document is intended to translate the legalese of the Note and Deed of Trust
into understandable terms for comparison-shopping, to understand loan costs, type of
loan, length of loan, and payment schedule?
A. Title document
B. Good Faith Estimate (GFE)
C. Settlement Statement
D. Truth In Lending Disclosure
3. A mortgage broker has determined that those applicants who have a monthly ratio of
debt to gross income of 28% or below will be qualified for credit. Among the following,
which applicant will qualify for credit?
Description Applicant 1 Applicant 2 Applicant 3 Applicant 4
Monthly Payment $750 $1155 $1150 $3040
Gross Monthly Income $2500 $3300 $4600 $7600
A. Applicant 1
B. Applicant 2
C. Applicant 3
D. Applicant 4
4. According to the Mortgage Broker Practices Act (MBPA), a mortgage broker who
intends to sell his or her mortgage business is NOT required to notify the:
A. real estate broker
B. borrowers
C. third-party providers
D. Department of Financial Institutions
5. Under the Fair Credit Reporting Act, which of the following organizations have
assumed a vital role in assembling and evaluating consumer credit?
A. Federal Trade Commission
B. Consumer reporting agencies
C. Committee on Financial Services
D. Board of Governors of the Federal Reserve System
2
6. Under the Mortgage Broker Practices Act (MBPA), if a licensed mortgage broker
violates two provisions of the Act on three consecutive days, how many distinct
violations have occured?
A. 1
B. 2
C. 3
D. 6
7. Under the USA Patriot Act, what is the minimum number of years that a mortgage
broker is required to keep customer information after the account is closed?
A. 3
B. 4
C. 5
D. 6
8. A mortgage broker or loan originator may NOT tell an appraiser the:
A. listed price of a property
B. borrower's opinion of value
C. mortgage broker's opinion of value
D. value required to close a mortgage loan
9. According to the Truth In Lending Act (TILA), how should an applicant inform the
creditor about the decision to rescind?
A. Writing to the creditor
B. Writing to the loan originator
C. Phone call to the loan originator
D. By speaking in person to the creditor
10. A person has applied for a mortgage broker license. While the application is being
processed, under the Mortgage Broker Practices Act (MBPA), the person is allowed to:
A. finalize the location to conduct the business
B. advertise the business the applicant plans to start
C. originate one Washington residential mortgage loan
D. negotiate terms for a Washington residential mortgage loan
11. If the borrower is unable to obtain a loan, what MUST the mortgage broker provide
the borrower upon written request?
A. The documents paid for by the borrower
B. The yield spread premium paid to the mortgage broker by the lender
3
C. Another Good Faith Estimate (GFE) if there are no changes from the initial
GFE
D. Another Truth in Lending (TIL) statement if there are no changes from the
initial GFE
12. Under the Mortgage Broker Practices Act (MBPA), within how many days of
receiving money from a borrower for payment of third-party provided services is a
mortgage broker required to deposit it into a trust account?
A. Within 24 hours
B. Within 7 calendar days
C. Before the end of the third business day
D. Before the end of the fifth business day
13. Within how many days of receiving an application for a mortgage loan must the
mortgage broker provide a Good Faith Estimate (GFE) to the loan applicant?
A. 1
B. 3
C. 5
D. 9
14. A mortgage broker provided a 30-year fixed rate loan with an interest rate of 5.25%
for an amount of $150,000. The charges include a mortgage broker fee of $6,500 and 4
discount points. What is the APR of the loan program?
A. 5.25%
B. 5.78%
C. 6.04%
D. 6.25%
15. According to the Mortgage Broker Practices Act (MBPA), when must a loan
originator take an approved continuing education course on ethics?
A. First year of licensure
B. Second year of licensure
C. Third year of licensure
D. Fifth year of licensure
16. Under the Fair Housing Act (FHA), which of the following practices is illegal?
A. Relegating particular protected classes to predominantly minority
neighborhoods
B. Selling a home at a profit
C. Giving preference of lodging to club members by a club
D. Limiting the maximum number of occupants permitted to occupy a dwelling
4
17. According to the Mortgage Broker Practices Act (MBPA), the mortgage broker is
NOT responsible for paying fees for third-party services when:
A. the lender cancels the loan prior to closing
B. the mortgage broker did not collect funds from the borrower prior to closing
C. there is a written agreement between the third-party provider and the borrower
D. the loan closes and third-party providers are paid
18. Which of the following is regulated by the Truth In Lending Act (TILA), Regulation
Z?
A. Real Estate Listing Services
B. Disclosure of cost of credit
C. Equal housing opportunities
D. Credit for all sections of society
19. Which of the following building uses are residential?
A. Bank
B. Theater
C. Hospital
D. A co-op unit
20. Under the Mortgage Broker Practices Act (MBPA), when does a mortgage broker
receive a fee from a borrower?
A. At the time of signing a brokerage agreement
B. Once the borrower obtains the loan from the lender
C. Once the mortgage broker has negotiated and obtained a loan with a lender
D. When the mortgage broker has obtained a written commitment from a lender
for the loan
21. Which of the following statements regarding the Good Faith Estimate (GFE) is
CORRECT?
A. Discount points are shown on line 902.
B. Mortgage broker fees are shown on line 901.
C. Estimate can be given before a lender has been obtained.
D. Estimate must be given before a property has been identified.
22. An applicant receives the following offers for a $100,000 loan at a fixed interest rate.
Which of the following loans offers the highest APR for the applicant?
Loans Loan 1 Loan 2 Loan 3 Loan 4
5
Interest Rates 6.0% 6.25% 6.50% 6.75%
Loan Term 30 years 15 years 20 years 25 years
Discount Points 5% 4% 2% 1%
A. Loan 1
B. Loan 2
C. Loan 3
D. Loan 4
23. A loan originator works for more than one mortgage broker. According to the
Mortgage Broker Practices Act (MBPA), while taking a loan application, the loan
originator MUST clearly disclose on the application:
A. the names of all the mortgage brokers the loan originator represents
B. the name of mortgage broker for whom the application will be taken
C. the name of the designated mortgage broker of any of the mortgage brokers
D. the name of the lender the mortgage broker represents
24. Which statement regarding Private Mortgage Insurance (PMI) disclosure is
CORRECT?
A. It is required for every type of loan.
B. It is applicable for loans on every type of property.
C. It is the same for all loans closed by the same lender.
D. It is different for each type of mortgage loan product.
25. According to the Mortgage Broker Practices Act (MBPA), the Director of Financial
Institutions ensures that the applicant for a mortgage broker license has:
A. appointed a designated broker
B. provided a vehicle registration number
C. provided proof of five years residency in Washington
D. created an account to deposit the mortgage broker fees
26. Under the USA Patriot Act, which of the following actions is a mortgage broker NOT
required to take when a person applies for a loan?
A. Inform the government about the details of the loan
B. Verify the identity of any person seeking to open an loan
C. Maintain records of the information used to verify the person's identity
D. Determine whether the person appears on any lists of known terrorist
organizations
27. Under the Mortgage Broker Practices Act (MBPA), to receive a license from the
department of financial institutions, a designated broker appointee is NOT required to:
A. show evidence of professional experience
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B. provide a surety bond to the broker
C. undergo a good standing review
D. pass a written examination
28. A lender understated the finance charges for a home mortgage. According to the
Truth in Lending Act (TILA), what is the maximum allowable limit for the understated
amount for finance charges?
A. 5
B. 10
C. 50
D. 100
29. Under the Mortgage Broker Practices Act (MBPA), the funds a mortgage broker
accepts from a borrower in advance for third-party provider services MUST be deposited
in:
A. a trust account
B. the escrow account
C. department's account
D. designated broker's account
30. Although a lender and borrower have not entered into a rate-lock agreement, the
lender MUST provide the borrower with:
A. discount points
B. adjustable rate
C. fixed rate
D. disclosures
31. According to the Mortgage Broker Practices Act (MBPA), how many years of
applicable work experience are required to qualify for a Designated Broker license?
A. 1
B. 2
C. 3
D. 4
32. The Washington Usury statute applies to:
A. agricultural loans
B. commercial loans
C. personal loans
D. business loans
7
33. An applicant wants to compare 4 loans for $225,000 at a fixed rate for 30 years with
different interest rates and varying lender fees as given below.
Loans Loan 1 Loan 2 Loan 3 Loan 4
Interest Rates 6% 6.25% 5.75% 6.375%
Loan fees $1,200 $1,000 $2,000 $500
Loan points 1 2 4 1
Which loan offer provides the lowest APR for the applicant?
A. Loan 1
B. Loan 2
C. Loan 3
D. Loan 4
34. According to the Mortgage Broker Practices Act (MBPA), an applicant is NOT
eligible for a loan originator license if the applicant had had a license or similar state
statute previously suspended or revoked within how many years of filing the present
application?
A. 5
B. 7
C. 9
D. 10
35. Under the Consumer Credit Protection Act (Fair Credit Reporting Act), which of the
following systems are available to a consumer to notify lenders that the consumer does
not wish to receive written offers of credit?
A. Processes dictated by law
B. State-approved refusal forms
C. Recommendations for legislative action
D. Toll free numbers to register complaints
36. According to the Mortgage Broker Practices Act (MBPA), when may the Department
of Financial Institutions conduct an investigation on a mortgage broker licensee's
business?
A. As and when required
B. Only after issuing a directive
C. One time for each violation
D. Before each annual license renewal
37. According to the Truth In Lending Act (TILA), which of the following in an
advertisement triggers the need for additional disclosures?
A. 5% APR
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B. Easy payments
C. 5% down payment
D. Financing available
38. Under the Mortgage Broker Practices Act (MBPA), which of the following
documents is NOT required for the renewal of a designated broker license?
A. Endorsements from brokers and borrowers the designated broker has serviced
B. Report on the total number of closed loans originated by the designated broker
C. Certificate of satisfactory completion of an approved continuing education
course
D. Report on the total dollar volume of closed loans originated by the designated
broker
39. Under the Mortgage Broker Practices Act (MBPA), which of the following
statements is CORRECT?
A. A contract entered by loan originator is binding on the mortgage broker.
B. The contract must contain the entire agreement between the mortgage broker,
borrower, and lender.
C. A lender and mortgage broker must sign a loan broker agreement once the loan
documents are completed.
D. A contract must be signed by borrower, broker, and lender once the loan is
approved by the lender.
40. Under the Escrow Agent Registration Act (EARA), title insurance companies having
a valid certificate of authority and title insurance agents having a valid license are exempt
from:
A. serving as a member in the escrow commission
B. having a escrow agent license
C. paying the cost for investigation when being investigated for violations
D. making any disclosures to their clients when carrying out escrow transactions
41. The Annual Percentage Rate (APR) provides a way to compare only the:
A. interest rates of different loans
B. closing costs of different loans
C. lock-in periods of different loans
D. percentage costs of different loans
42. According to the Mortgage Broker Practices Act (MBPA), which of the following
best describes the role of a registered agent?
A. Market the company
B. Receive service of process
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C. Defend the company in a law suit
D. Represent the company before the Mortgage Broker Commission
43. What recourse does a borrower have if the loan balance has reached the threshold for
removal of private mortgage insurance (PMI)?
A. Stop making payments towards PMI
B. File a criminal case against the lender
C. Call the servicer and request removal of the PMI
D. Refinance with a lender who does not require PMI
44. According to the Mortgage Broker Practices Act (MBPA), which information is NOT
required to be included in a lock-in agreement?
A. Conditions of the agreement
B. Down payment amount
C. Cost of the agreement
D. Rate of interest
45. [This question has been removed from the study guide.]
46. According to the Mortgage Broker Practices Act (MBPA), any advance payments a
borrower makes in the form of a check to be deposited in a trust account MUST be made
payable to the:
A. loan originator
B. licensed mortgage broker
C. designated broker
D. Department of Financial Institutions
47. For a HELOC adjustable rate mortgage, which of the following disclosures is NOT
required under Truth in Lending Act (TILA)?
A. The statement that the annual percentage rate does not include cost other than
interest
B. The index used in rate adjustments and source of information about the index
C. The frequency of changes in the annual percentage rate
D. The projected interest rates for the next 12 months
48. Under the Mortgage Broker Practices Act (MBPA), the Department of Financial
Institutions may conduct a good standing review of an applicant who wants to become a:
A. consumer loan information provider
B. mortgage lender
C. registered real estate broker
D. exempt mortgage broker
10
49. Which statement is CORRECT regarding a loan application taken over the internet
by a loan originator?
A. The loan originator need not be licensed in Washington.
B. Disclosures are not required.
C. The loan originator must sign and date the application upon receipt.
D. Only mortgage brokers are permitted to take applications over the Internet.
50. A mortgage company offers a monthly contest for real estate brokers in which the
winner is given an all expense paid holiday trip. Which of the following is in violation of
the Real Estate Settlement Procedures Act (RESPA)?
A. Only the mortgage company violated the Real Estate Settlement Procedures
Act (RESPA)
B. Only the real estate broker that benefited from the paid holiday violated the
Real Estate Settlement Procedures Act (RESPA)
C. Both the mortgage company and the real estate broker violated the Real Estate
Settlement Procedures Act (RESPA)
D. Neither the mortgage company nor the real estate broker violated the Real
Estate Settlement Procedures Act (RESPA)
51. According to the Consumer Loan Act (CLA), under what circumstances may interest
be paid in advance when the simple interest method for interest calculation is used?
A. When a loan is secured by real estate
B. If the applicant has a poor credit history
C. If the property bought is for commercial purposes
D. When the debt to income ratio is not equal to 29/41
52. Which factor do lenders check to find out if the prospective borrower's earning power
exceeds the demands of the payment schedule?
A. Loan size
B. Size of debt burden
C. Social considerations
D. Length of commitment
53. According to the Mortgage Broker Practices Act (MBPA), a mortgage broker licensee
who is outside the state of Washington is NOT required to:
A. have a registered agent in the state of Washington
B. license all of their branch offices in Washington
C. maintain books and records in Washington
D. pay examination fees to the Department of Financial Institutions for
examinations outside of Washington
11
54. According to Regulation P implementing the Gramm-Leach-Bliley Act (GLBA),
which of the following individuals is entitled to receive privacy notices?
A. Consumer
B. The consumer's employer
C. A guarantor of a consumer loan
D. A person who browses the website of the financial institution
55. According to the Mortgage Broker Practices Act (MBPA), when should a mortgage
broker licensee make a request to consider an independent certified professional's report
instead of the department's examination?
A. On the day of the scheduled examination
B. Upon receiving the mortgage broker license
C. Upon filing the annual report with the department
D. Upon receiving the department's notice for the scheduled examination
56. According to the Truth In Lending Act (TILA), how many copies of the right to
rescind notice must be provided to a consumer?
A. 1
B. 2
C. 3
D. 4
57. Under the Mortgage Broker Practices Act (MBPA), what percent of the annual
assessment fee MUST a mortgage broker pay in addition to the annual assessment fee if
the broker applies for renewing the license after the expiration of the license?
A. 25%
B. 50%
C. 75%
D. 100%
58. Within how many days of receiving a loan application MUST an applicant be given
disclosures?
A. 1
B. 3
C. 5
D. 7
59. Which of the following is an acceptable practice for a mortgage broker?
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A. Receive mortgage broker fees from the borrower that exceeds the fees
disclosed without providing additional disclosures
B. Accept fees from a lender based on the interest rate and points on the loan and
provide disclosure to the borrower
C. Require an applicant to take insurance for an amount that exceeds the
replacement value of the real estate
D. Failure to provide applicants reasonable opportunity to review the loan
documents prior to closing
60. Under what circumstances may a lender offer credit exceeding the Washington usury
rate?
A. If the borrower accepts the interest rate
B. If the lender holds a mortgage broker license
C. If the lender holds a Consumer Loan license
D. If the borrower has a low credit score
61. Which of the following offers by various lenders for a 30-year fixed mortgage for
$100,000 have the lowest APR?
A. 7% interest, $0 prepaid finance charges, 4 points
B. 7% interest, $3,500 prepaid finance charges, 0 points
C. 7% interest, $2,000 prepaid finance charges, 1 point
D. 7% interest, $1,500 third-party fees, $1,000 prepaid finance charges, 3 points
62. According to the Mortgage Broker Practices Act (MBPA), which of the following
information is required on a loan originators web site?
A. Only the loan originator's name
B. The loan originator's name and business location
C. The loan originator's name and license number and the names of real estate
brokers with whom she or he works
D. The loan originator's name, license number, and the license number and name
of the mortgage broker represented by the loan originator
63. Under the Home Mortgage Disclosure Act, which of the following loans is secured by
a lien on a dwelling for the purpose of repairing that dwelling?
A. Home improvement loan
B. Manufactured home loan
C. Home-equity line of credit
D. Originated home purchase loan
64. If the Department of Financial Institutions hires a specialist to investigate a mortgage
broker, who pays the specialist's fees if a violation is found?
13
A. Mortgage broker licensee
B. Designated broker
C. Department of Financial Institutions
D. Registered agent of the mortgage broker
65. A creditor has a loan ceiling of $500,000 for an applicant. If a married applicant and
the spouse apply independently for credit with the same creditor, and both are
independently eligible for credit, what should be the maximum loan ceiling on each
applic
A. $250,000
B. $500,000
C. $750,000
D. $1,000,000
66. According to the Mortgage Broker Practices Act (MBPA), which of the following
fees paid by a borrower prior to loan closing are NOT deposited in a trust fund?
A. Appraisal fees
B. Credit report fees
C. Mortgage broker fees
D. Third-party provider fees
67. A mortgage broker refers clients to a title company. The mortgage broker owns 10%
of the title company. The title company performs services and pays the mortgage broker a
commission. The title company pays the mortgage broker annual dividends based on the
amount of business that was referred to the title company. Which of the following
statements is CORRECT?
A. Only the mortgage broker is in violation of the Real Estate Settlement
Procedures Act (RESPA).
B. Only the title company is in violation of the Real Estate Settlement Procedures
Act (RESPA).
C. Both the mortgage broker and the title company are in violation of the Real
Estate Settlement Procedures Act (RESPA).
D. Neither the mortgage broker nor the title company are in violation of the Real
Estate Settlement Procedures Act (RESPA).
68. Under the Mortgage Broker Practices Act (MBPA), which information in the credit
report submitted for a mortgage refinance application helps in delivery of initial
disclosures?
A. Date when credit information was gathered
B. Value of property for which refinance is sought
C. Name and address of the credit reporting agency
D. Name and address of the mortgage broker
14
69. When is a lender NOT required to provide Special Information Booklet to a loan
applicant?
A. When the lender is also the mortgage broker
B. When the application is received by internet
C. When the application is denied within three days
D. When the price of the property is below $100,000
70. A mortgage company makes a presentation to the staff of a real estate company.
Which company is in violation of the Real Estate Settlement Procedures Act (RESPA)?
A. Only the mortgage company
B. Only the real estate company
C. Both are in violation
D. Neither are in violation
71. A loan originator has obtained a loan for a borrower at the terms the borrower
requested, but the borrower is hesitant about completing the transaction. Which of the
following acts by the loan originator will NOT violate the Mortgage Broker Practices
Act?
A. Inform the borrower that he or she will have to pay the mortgage brokers
allowable fee if the loan does not close
B. Inform the borrower that the loan originator is going to send the files to another
mortgage broker if the loan does not close
C. Inform the borrower that he or she will be sued if the loan does not close on
time
D. Inform the borrower that he or she will be reported to the major credit bureaus
if the loan does not close
72. The purpose of obtaining a property appraisal is to:
A. decide how much the down payment needs to be
B. ensure that the mortgage installments are fair
C. determine the market value of the property
D. determine how much money can be borrowed
73. According to the Mortgage Broker Practices Act (MBPA), when the information
regarding a registered agent changes, within how many days MUST a mortgage broker
file a statement of change with the Department of Financial Institutions?
A. 5
B. 10
C. 15
D. 20
15
74. A customer of a mortgage broker would prefer not to have their nonpublic personal
information made available to a third-party. Under the Gramm-Leach-Bliley Act
(GLBA), which of the following choices can they make to ensure this?
A. Opt out
B. Require disclosure
C. Grant an exception
D. Inform a credit reporting agency
75. A mortgage broker offers a mortgage loan which includes taxes and insurance.
According to the Mortgage Broker Practices Act (MBPA), which of the following
components of the loan is the mortgage broker required to disclose to the borrower?
A. The principal only
B. The principal and interest only
C. The principal, interest, and taxes only
D. The principal, interest, taxes, and insurance
76. According to the Truth In Lending Act (TILA), which of the following fees is
excluded from the calculation of the annual percentage rate?
A. Notary Fees
B. Wire Transfer Fees
C. Prepaid Interest
D. Mortgage Insurance Premiums
77. Under the Mortgage Broker Practices Act (MBPA), applicants filing for licenses are
NOT required to provide information on the identity of:
A. owners
B. principals
C. designated brokers
D. independent contractors
78. If a borrower requests a rate-lock agreement, within how many days MUST the
mortgage broker deliver the terms of the rate-lock agreement?
A. 3 business days including Saturdays
B. 3 business days not including Saturdays
C. 5 business days including Saturdays
D. 5 business days not including Saturdays
16
79. A title company hosts a monthly dinner and reception for mortgage brokers in the
community. Which of the following violated the Real Estate Settlement Procedures Act
(RESPA)?
A. Only the title company violated the Real Estate Settlement Procedures Act
(RESPA)
B. Only the mortgage brokers violated the Real Estate Settlement Procedures Act
(RESPA)
C. Both the title company and the mortgage brokers violated the Real Estate
Settlement Procedures Act (RESPA)
D. Neither the title company nor the mortgage brokers violated the Real Estate
Settlement Procedures Act (RESPA)
80. Under the Consumer Loan Act (CLA), which of the following methods computes a
total of the interest payable on a loan, the principal balance and any other charges and is
stated to be the loan amount?
A. Add-on method
B. Simple Interest method
C. Credit calculation method
D. Payment and amortization method
81. How can homeowners protect themselves from claims by others against their new
home?
A. By buying an owner's insurance policy
B. By keeping the prior homeowner's insurance policy
C. By depositing money in an escrow account
D. By buying Private Mortgage Insurance (PMI)
82. According to the Mortgage Broker Practices Act (MBPA), a loan originator applicant
must provide which of the following documents when applying for a license?
A. Proof of surety bond
B. Continuing education certificate
C. Information to prove identity
D. Recommendation letter from a licensed mortgage broker
83. Under the Fair Housing Act (FHA), which of the following options constitutes a form
of discrimination?
A. Selling a house to the highest bidder
B. Refusing to sell a house to corporations
C. Refusing to sell a condo to a family with children under 18
D. Refusing to sell a condo to a convicted felon
17
84. When a mortgage broker is found to be violating the Mortgage Broker Practices Act
(MBPA) in a manner that is likely to cause substantial injury to the public, the
Department of Financial Institutions will:
A. issue an order to stop conducting business
B. order a change of designated broker
C. refer the licensee to the mortgage broker commission
D. cancel the licenses for the branch offices
85. Which of the following actions would NOT be a violation of the Equal Credit
Opportunity Act (ECOA) while considering the income of a borrower?
A. Discounting income based on marital status
B. Not accepting public assistance income in the same manner as other income
C. Refusing to consider income because it comes from part-time employment
D. Refusing to consider income without seeing documented proof of income
86. Under the Mortgage Broker Practices Act (MBPA), which of the following actions by
a mortgage broker licensee requires approval from the director of the Department of
Financial Institutions?
A. Changing the designated broker
B. Sharing an office with a licensed real estate broker
C. Hiring an accountant as an employee
D. Advertising for mortgage broker services on the Internet
87. A mortgage broker pays for title services on behalf of a developer. In return, the
developer agrees to refer prospective buyers to the mortgage broker. Which of the
following statements about this agreement is CORRECT?
A. Only the mortgage broker is in violation of the Real Estate Settlement
Procedures Act (RESPA).
B. Only the developer is in violation of the Real Estate Settlement Procedures Act
(RESPA).
C. Both the mortgage broker and the developer are in violation of the Real Estate
Settlement Procedures Act (RESPA).
D. Neither the mortgage broker nor the developer are in violation of the Real
Estate Settlement Procedures Act (RESPA).
88. Under the Mortgage Broker Practices Act (MBPA), any interest earned on the trust
account shall be credited to the:
A. lender
B. borrower
C. mortgage broker
D. third-party provider
18
89. In the HUD-1, which of the following IS included in section 800?
A. Hazard insurance premium
B. Appraisal fee
C. County property taxes
D. Title charges
90. A mortgage broker company shares advertisement space with a title company. The
mortgage broker company pays for the total advertisement space to offset a referral from
the title company. Which company is in violation of the Real Estate Settlement Procedur
A. The mortgage broker company
B. The title company
C. Both companies are in violation
D. Neither company is in violation
91. According to the Mortgage Broker Practices Act (MBPA), when the mortgage broker
has a single deposit account to hold trust funds, the mortgage broker MUST maintain a:
A. separate loan originator for each borrower
B. separate ledger for each loan application
C. report for each loan application
D. separate bank account for each borrower
92. The purpose of the Fair Credit Reporting Act (FCRA) is to:
A. reduce home insurance costs
B. ensure the accuracy of the information in consumer reports
C. help consumers receive lower interest rates
D. provide consumers with many finance options to choose from
93. According to the Mortgage Broker Practices Act (MBPA), within how many days
MUST a licensed mortgage broker inform the Department of Financial Institutions (DFI)
when the books and records are relocated?
A. 1 day
B. 5 days
C. 10 days
D. 30 days
94. Which of the following acts requires a financial institution to verify the identity of
any person who intends to open an account with the institution?
A. The USA Patriot Act
B. Bank Holding Company Act
C. The Fair Credit Protection Act
19
D. The Consumer Credit Protection Act
95. According to the Mortgage Broker Practices Act (MBPA), how many approved
courses must a designated mortgage broker complete annually to fulfill the continuing
education requirement?
A. 1
B. 2
C. 3
D. 5
96. According to the Truth in Lending Act (TILA), when must the disclosures be
generally provided to a credit applicant?
A. Before the consummation of the transactions
B. At the time of providing the application form
C. When a customer requests the information
D. Within one week of the consummation of the transactions
97. Under the Mortgage Broker Practices Act (MBPA), which of the following
disclosures is NOT required to be provided by a computer loan information (CLI)
provider who charges a separate fee for CLI services?
A. That use of the CLI system is not required to obtain a residential mortgage loan
B. That a fee will be charged by the CLI provider for accessing the CLI services
C. That the full range of loans available may not be listed on the CLI system
D. That lenders accessing the CLI system may charge for loan processing
98. A rate-lock agreement protects the applicant against an increase in:
A. rate of interest
B. price of property
C. mortgage broker fee
D. periodic payment amount
99. A title company advertises in a real estate companys publication by paying the
required fees. Which company is in violation of the Real Estate Settlement Procedures
Act (RESPA)?
A. The real estate company
B. The title company
C. Both are in violation
D. Neither are in violation
20
100. A licensed mortgage broker hires independent contractor loan originators. The
independent contractor loan originators MUST:
A. work from a location with a designated broker
B. work from a location with a branch manager
C. work from a licensed real estate office
D. work from a location with a branch office license
101. Which type of loan documentation ignores the rule that the borrower's debt ratio
cannot exceed some specified percent of income?
A. No ratio
B. Full document
C. Stated income stated assets
D. Stated income documented assets
102. A mortgage broker licensee ceases to do business in the state of Washington. Under
the Mortgage Broker Practices Act (MBPA), which of the following documents MUST a
mortgage broker file with the Department of Financial Institutions?
A. The annual report and the amendment application
B. The resignation letter and the amendment application
C. The mortgage broker closure form and the annual report
D. The resignation letter and the mortgage broker closure form
103. According to Regulation P implementing the Gramm-Leach-Bliley Act (GLBA),
nonpublic personal information can be disclosed by a financial institution to:
A. the spouse
B. another financial institution
C. a consumer reporting agency
D. a business partner of the individual taking a loan
104. According to the Mortgage Broker Practices Act (MBPA), which statement about
the Department of Financial Institutions regarding its examination of a licensee's business
is CORRECT?
A. It never will give advance notice to the mortgage broker about the
examination.
B. It is not required to send a report about the examination to the mortgage
broker.
C. It cannot expand the scope of the examination to the branches of the business.
D. It will not charge an examination fee when the mortgage broker business is in
the state of Washington.
21
105. Which of the following rates must be conspicuously disclosed in an advertisement
for a mortgage loan?
A. Period rate
B. Contract rate
C. Simple interest rate
D. Annual Percentage Rate
106. Which of the following properties is considered a multifamily property?
A. Hotel
B. Farmhouse
C. Duplex
D. Residential college
107. According to the Real Estate Settlement Procedures Act (RESPA), who bears the
final responsibility for providing a Good Faith Estimate (GFE) if an applicant is
obtaining a loan through a mortgage broker from a lender?
A. Lender
B. Real estate broker
C. Mortgage broker
D. Title company
108. According to the Mortgage Broker Practices Act (MBPA), what is the minimum
number of months that a mortgage broker must maintain the books and records from the
period to which the records relate?
A. 20
B. 22
C. 25
D. 28
109. Which statement regarding a HUD-1 settlement statement is CORRECT?
A. Separate statements may be prepared for each third-party provider
B. Separate statements may be prepared for the borrower and the seller
C. Copies of the statement must be provided to each third-party provider
D. Copies of the same statement must be issued to the borrower and the seller
110. A creditor has approved a 30-year mortgage for $300,000 at a fixed interest rate of
6%. The creditor also charges the following fees.
Fees Amount
Loan origination fees $2000
Loan processing fees $350
22
Underwriting fees $450
What is the amount financed for this mortgage?
A. $297,200
B. $298,000
C. $302,000
D. $302,800
111. According to the Mortgage Broker Practices Act (MBPA), a subaccount within a
trust account is identified by the name of the:
A. lenders loan product
B. borrowers loan application
C. third-party providers company name
D. branch offices location
112. The cost of PMI:
A. decreases as the down payment decreases
B. increases as the down payment decreases
C. is the same for any type of loan program
D. is determined using a pre-selected index
113. According to the Mortgage Broker Practices Act (MBPA), which of the following
actions by a mortgage broker does NOT constitute a violation?
A. Obtaining property by misrepresentation
B. Failing to reconvey title to collateral within 30 days of the loan pay off
C. Advertising a rate of interest disclosing the annual percentage rate implied
D. Entering into a contract with a borrower to earn commission when no loan is
obtained
114. Which of the following tests is the primary criterion for a Credit Scoring System in
order to comply with the Equal Credit Opportunity Act (ECOA)?
A. Credit test
B. Validity test
C. System performance test
D. System compliance test
115. A mortgage broker licensee fails to renew the license before the date of expiration.
Under the Mortgage Broker Practices Act (MBPA), within how many days must the
licensee meet the renewal requirements?
A. 15
B. 30
C. 45
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D. 60
116. What is the primary purpose of the Truth in Lending Act (TILA)?
A. To ensure that creditors do not charge high interest rates on credit
B. To ensure that the third-party service providers do not charge high fees
C. To ensure that applicants have equal opportunity to credit from lenders
D. To ensure that creditors provide consumers clear disclosure of the terms of
credit
117. A mortgage broker licensee makes a request to the Department of Financial
Institutions (DFI) for a new branch office license. Under the Mortgage Broker Practices
Act (MBPA), which of the following inquiries will the DFI conduct?
A. A good standing review of the licensee
B. A brief adjudicative proceeding for the request
C. An investigation of the request through a third-party
D. An interview with the clients of the mortgage broker licensee
118. Which of the following forms is known as form 1003?
A. Truth In Lending Disclosure
B. Operating Income Statement
C. HUD-1 Settlement Statement
D. Uniform Residential Loan Application
119. A home owner has taken a $100,000 loan with a 30-year mortgage at 8% fixed
interest rate. The annual taxes and insurance for the home is $3000 which will be paid in
equal monthly installment by the home owner. What is the total monthly payment
including taxes and insurance (PITI) for the home owner?
A. $733.76
B. $916.67
C. $983.76
D. $1233.76
120. According to the Mortgage Broker Practices Act (MBPA), how often MUST the
trust account ledger be reconciled?
A. Semi-monthly
B. Monthly
C. Quarterly
D. Annually
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121. Under the Fair Credit Reporting Act (FCRA), which of the following information is
contained in a consumer report?
A. An approval of a specific extension of credit by the issuer of a credit card
B. A list to be used by its client for direct marketing of goods not involving an
offer of credit
C. A report containing information only experiences between the consumer and
the person making the report
D. A written report by a consumer reporting agency containing information on a
consumer's mode of living
122. A mortgage broker licensee surrenders the license to the Department of Financial
Institutions informing of his or her intent to sell the broker business. Under the Mortgage
Broker Practices Act (MBPA), what should the licensee submit while surrendering the
license?
A. Completed annual report
B. Pending loan applications
C. Most recent credit report
D. License amendment application form
123. [This question has been removed from the study guide.]
124. A mortgage broker licensee charges a fee that exceeds the fee initially disclosed to
the borrower. According to the Mortgage Broker Practices Act (MBPA), what MUST the
mortgage broker provide the borrower three days prior to the signing of the closing
documents?
A. A copy of the borrower's rights under the Consumer Loan Act
B. A redisclosure of the fee including a clear written explanation for the increase
C. The details of the mortgage broker's trust account including subaccounts
D. The details of the mortgage broker's surety bond company and the amount of
the bond
125. The creditor has initiated foreclosure on the principal dwelling of a consumer that
was used as a guarantee for a credit. According to the Truth In Lending Act (TILA), what
is the maximum amount of understated finance charge that will be considered as accurate
disclosure by the creditor?
A. 35
B. 50
C. 75
D. 100
126. A licensed mortgage broker has an annual average of seven loan originators
representing the mortgage broker. Under the Mortgage Broker Practices Act (MBPA),
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what is the minimum dollar amount of the surety bond the mortgage broker must
maintain with the director of financial institutions?
A. $60,000
B. $50,000
C. $40,000
D. $30,000
127. Under which of the following conditions is a loan for a vacant property covered
under the Real Estate Settlement Procedures Act (RESPA)?
A. A structure will be built within 2 years using the loan proceeds.
B. The vacant property must be used for agricultural purposes.
C. The loan proceeds must be used to purchase only the vacant property.
D. The size of the vacant property must be less than 1 acre.
128. Under the Mortgage Broker Practices Act (MBPA), a licensed mortgage broker may
establish branch offices under names that are different from the main office provided the
names are approved by the director of the Department of Financial Institutions and:
A. each name is registered to a different mortgage broker
B. the designated broker's name is mentioned at each branch
C. the branches are located in the same state as the main office
D. each branch is clearly identified as a branch of the main office
129. The Truth in Lending Disclosure Statement (TIL) provides the applicant with the:
A. time period for repaying the loan amount
B. future rates of an adjustable mortgage loan
C. credit score in the applicant's consumer report
D. future price of the property intended for purchase
130. An applicant compares offers for $225,000 with different interest rates and fees as
given below.
Description Lender 1 Lender 2 Lender 3 Lender 4
Interest Rates 7% 6.5% 5.75% 6.25%
Appraisal Fees $500 $450 $400 $800
Discount Points 1% 2% 4% 3%
Term 30 years 30 years 15 years 15 years
Which lender offers the least APR for the mortgage?
A. Lender 1
B. Lender 2
C. Lender 3
D. Lender 4
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131. According to the Mortgage Practices Act (MBPA), a loan originator licensee is
required to display their license number in the:
A. loan applications taken by the loan originator
B. mortgage broker's office
C. loan originator's office
D. mortgage broker's license
132. According to the Private Mortgage Insurance (PMI) disclosure, PMI serves the
purpose of covering the risk of the:
A. lender
B. borrower
C. insurance agent
D. third-party provider
133. According to the Mortgage Broker Practices Act (MBPA), which of the following
actions by a mortgage broker is a violation of the act?
A. Instructing the title company to make correct disclosures
B. Providing only an estimate of the fee when actual costs are not available
C. Disclosing fees on lines other than 808 through 811 on the HUD-1/1A
D. Increasing and redisclosing the initial fees due to reasons unforeseen at the
time of initial disclosure
134. According to the Equal Credit Opportunity Act (ECOA), what reason must be given
to applicants when they ask why ethnicity information is requested in the loan
application?
A. To monitor compliance with federal statutes that prohibit creditors from
discrimination based on ethnicity
B. To ensure distribution of credit based on the proportion of each ethnic group in
the country
C. To track census data
D. To ensure that any one ethnic group does not obtain disproportionate credit
from the lenders
135. According to the Mortgage Broker Practices Act (MBPA), a licensed mortgage
broker must have a trust account when:
A. the loan is closed and funds are disbursed
B. an attorney represented the borrower at closing
C. escrow provides a final settlement statement to the borrower
D. escrow disburses funds to the licensee for the payment of third-party services
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136. Which of the following constitutes a thing of value that would violate the Real
Estate Settlement Procedures Act (RESPA)?
A. A mortgage broker pays a title company for title search service
B. A mortgage broker pays an insurance company for mortgage insurance
C. A mortgage broker gives a paid vacation to an attorney for title research
services
D. A mortgage broker gives an airline travel voucher to an attorney for
introducing a customer
137. Under the Mortgage Broker Practices Act (MBPA), a person running separate
business contracts to perform mortgage brokering services for a licensed mortgage broker
without being treated as an employee is called a(n):
A. lender
B. licensee
C. designated broker
D. independent contractor
138. In the HUD-1, which of the following deposits are included under the escrow
account deposits?
A. Assumption fee
B. Flood insurance cost
C. Loan origination fee
D. Recording cost
139. A lender has determined that those applicants who have a ratio of monthly debt to
income of 36% or below will be qualified for credit. Among the following, which
applicant will qualify for credit?
Description Applicant 1 Applicant 2 Applicant 3 Applicant 4
Monthly debt $1280 $2090 $1890 $1440
Gross Monthly Income $3200 $3800 $4200 $4500
A. Applicant 1
B. Applicant 2
C. Applicant 3
D. Applicant 4
140. According to the Mortgage Broker Practices Act (MBPA), who is NOT permitted to
deposit fees from the borrower to pay for third-party providers?
A. Lender
B. Mortgage broker
C. Loan originator
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D. Real estate broker
141. Under the Fair Credit Reporting Act, who is responsible for ensuring that the
reporting of consumers' credit standing and reputation protects the consumer's right to
privacy?
A. Mortgage broker
B. Consumer credit counseling agencies
C. Credit reporting agencies
D. Board of Governors of the Federal Reserve System
142. According to the Mortgage Broker Practices Act (MBPA), the Department of
Financial Institutions can deny an application for renewal of a mortgage broker's license
if the mortgage broker:
A. contracted with a third-party provider for property appraisals
B. changed the designated broker
C. did not make a residential mortgage loan under the Consumer Loan Act
D. did not provide the Department of Financial Institutions with an annual report
143. Which of the following actions constitutes an obligation on the part of the mortgage
broker to its customer under the Gramm-Leach-Bliley Act (GLBA)?
A. To ensure the customer's personal data is backed up
B. To permit customer employers access to the information
C. To keep customer's nonpublic personal information confidential
D. To protect customer's information from fire and other natural hazards
144. Which of the following actions by a mortgage broker licensee is a violation of the
Mortgage Broker Practices Act (MBPA)?
A. Using trust funds to pay third-party fees
B. Requesting an appraiser to reach a specified value
C. Charging discount points on behalf of the lender to reduce the interest rate of a
loan
D. Not withholding income tax from the independent contractor's fee
145. According to the Truth In Lending Act (TILA), which of the following notices by
the creditor informs the customers about their rights to cancel a loan?
A. Good Faith Estimate (GFE)
B. Notice of right to rescind
C. Servicing disclosure statement
D. Affiliated business arrangement disclosure
29
146. Under the Mortgage Broker Practices Act (MBPA), what MUST a mortgage broker
do in order to change the information on his or her mortgage broker license?
A. By filing an application for a new mortgage broker license
B. By filing a license amendment application with the department
C. By waiting for the next renewal date and file a request for changes
D. By obtaining an interim mortgage broker license till the next renewal date
147. A mortgage broker receives cash from a borrower for third-party provider services.
It is a violation of the Mortgage Broker Practices Act (MBPA) if the mortgage broker
does not have which type of account?
A. Trust
B. Escrow
C. Personal
D. Business
148. According to the Mortgage Broker Practices Act (MBPA), within how many days of
obtaining a written request from the borrower must a mortgage broker transmit the
appraisal, title report, etc.?
A. 2
B. 3
C. 5
D. 6
149. A mortgage broker obtains a loan from a lender for an applicant. According to the
Mortgage Brokers Practices Act (MBPA), who is responsible for providing the applicant
with the Good Faith Estimate (GFE)?
A. Lender
B. Mortgage broker
C. Real estate broker
D. Registered agent
150. A mortgage broker offers a 30-year fixed rate mortgage for a loan amount of
$200,000 at 6% fixed interest. The following fees apply. What is the APR on this loan?
Fees Amount
Mortgage Broker Fees 1%
Appraisal Fee $400
Pest Inspection $300
Recording Fee $50
Underwriting Fees $450
Discount Points 3%
Title Insurance $500
30
A. 6.30%
B. 6.37%
C. 6.41%
D. 6.66%
151. A mortgage broker terminates the services of a loan originator. According to the
Mortgage Broker Practices Act (MBPA), who must notify the Department of Financial
Institutions about the termination?
A. Loan originator
B. Mortgage broker
C. Designated mortgage broker
D. Registered agent
152. A borrower obtains a fixed rate mortgage that requires Private Mortgage Insurance
(PMI). Under the Private Mortgage Insurance Disclosure, how is the borrower required to
pay for the PMI?
A. The lender includes PMI in the loan payments.
B. The borrower makes the payments directly to the insurance company.
C. The insurance company insures the house and mortgage and charges this to the
borrower.
D. The borrower makes a one-time payment to the insurance company and the
remaining payments to the lender.
153. According to the Mortgage Broker Practices Act (MBPA), which of the following
documents is proof of the availability of an interest rate offered by a mortgage broker in
an advertisement?
A. Copy of the lender's rate sheet
B. Any lock-in agreement in which the rate was offered
C. Copy of any other advertisement that has published the same rate
D. Any closing documents which states a loan was closed at that rate
154. According to the Equal Credit Opportunity Act (ECOA), within how many days of
receiving a complete credit application MUST the applicant be informed about the
action taken on the credit application?
A. 3
B. 7
C. 14
D. 30
155. According to the Mortgage Broker Practices Act (MBPA), which task does a loan
processor perform?
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A. Obtain information from a borrower
B. Negotiate loan terms and rates with a borrower
C. Offer advice on various mortgage loans to the borrower
D. Take a residential mortgage loan application
156. Which of the following actions will satisfy a lenders obligations with regard to the
Good Faith Estimate (GFE) under the Real Estate Settlement Procedures Act (RESPA)?
A. Informing the applicant about the estimate during a meeting at the lenders
office
B. Instructing the applicant's real estate broker to inform the applicant about the
estimate details
C. Providing the Good Faith Estimate to the applicants address on the loan
application within three business days
D. Informing the applicant by phone about the charges in the Good Faith Estimate
157. Under the Mortgage Broker Practices Act (MBPA), from whom can an applicant
applying for a mortgage broker license obtain a surety bond to submit with the
application?
A. Legal attorney
B. Credit union bank
C. Insurance company
D. Department of Financial Services
158. Which document discloses all moneys paid into escrow?
A. Trust account statement
B. Good Faith Estimate (GFE)
C. Truth in Lending disclosure
D. HUD-1 Settlement Statement
159. An applicant receives the following offers for a $100,000 loan at a fixed interest
rate. Which of the following loans offers the highest APR for the applicant?
Loans Loan 1 Loan 2 Loan 3 Loan 4
Interest Rates 6.0% 6.25% 6.50% 6.75%
Loan Term 30 years 15 years 20 years 25 years
Discount Points 5% 4% 2% 1%
Mortgage Broker
Fees
$2,000 $3,000 $2,000 $3,000
A. Loan 1
B. Loan 2
C. Loan 3
D. Loan 4
32
160. According to the Mortgage Broker Practices Act (MBPA), while taking a loan
application, the loan originator must clearly disclose on the application all of the
following EXCEPT:
A. the location at which the application is taken
B. the real estate broker's license number
C. the loan originator license number
D. the date the application is taken
161. A lender provides a borrower with an initial amortization schedule for Private
Mortgage Insurance (PMI) disclosure at loan closing for a fixed-rate mortgage. The
lender must also provide a written notice stating the:
A. loan closing date
B. automatic termination date
C. loan application date
D. rate-lock agreement date
162. Under the Mortgage Broker Practices Act (MBPA), the Director of Financial
Institutions can deny an application for a mortgage broker license if the applicant:
A. has had only 4 years residency in Washington
B. has only 3 years experience in the loan originator business
C. was convicted of a felony 10 years prior to filing the present application
D. had a license issued in another state which was suspended within 5 years of
filing the present application
163. Under the USA Patriot Act, a mortgage broker is required to verify a customer's
identity in all of the following situations EXCEPT when the customer:
A. prepays for third-party services
B. makes a wire transfer
C. deposits earnest money with a money order
D. receives closing costs from the seller
164. Which statement regarding designated mortgage broker licensees is CORRECT
according to the Mortgage Broker Practices Act (MBPA)?
A. They cannot be a principal in the business of the mortgage broker licensee.
B. They can work as designated broker for more than one mortgage broker
licensee.
C. They cannot contract with third-party providers for real estate appraisal
purposes.
D. They can hire employees apart from the employees of the mortgage broker
licensee.
33
165. A lender has disclosed the annual interest rate for a residential mortgage to an
applicant. According to the Truth In Lending Act (TILA), at the time of consummation,
the lender has to redisclose to the applicant if the annual interest rate is changed by:
A. 1/16
B. 1/8
C. 1/4
D. 1/2
166. Under the Mortgage Broker Practices Act (MBPA), a Good Faith Estimate (GFE) is
generally signed by:
A. the lender
B. the borrower
C. the seller
D. the loan originator
167. A rate-lock agreement MUST contain which of the following?
A. The time period for which the interest rate is available
B. A statement that the lock-in fee paid by the borrower will be refunded if the
loan does not close
C. A notice that the interest rate offered is lower than rates offered by other
lenders
D. The escrow agent's signature
168. Under the Mortgage Broker Practices Act (MBPA), the earliest that a mortgage
broker can claim any compensation from the borrower is when the:
A. borrower obtains the loan from the lender on the terms and conditions agreed
upon
B. mortgage broker has negotiated the terms and conditions of the loan with the
lender
C. agreement of terms and conditions has been signed
D. mortgage broker prepares all the paperwork to be given to the lender
169. The loan fees increase from the initial Good Faith Estimate (GFE). The mortgage
broker MUST provide the borrower with:
A. redisclosures
B. a discount on the fee
C. refund of the GFE fee
D. additional discount points
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170. Which of the following is NOT a finance charge?
A. Title fee
B. Appraisal fee
C. Credit report costs
D. Origination fee
171. Under the Mortgage Broker Practices Act (MBPA), when must a mortgage broker
licensee provide the Director of Financial Institutions with a report of his or her mortgage
broker activity?
A. Every 6 months
B. Every year
C. Every 2 years
D. Every 5 years
172. Under the Fair Housing Act (FHA), a prospective lender CANNOT ask an applicant
which of the following?
A. The nature or severity of a handicap
B. The applicant's ability to meet the requirements of ownership
C. Whether an applicant is intending to reside in dwelling after it is purchased
D. Whether an applicant is intending to rent out the dwelling
173. When a violation of the Mortgage Broker Practices Act (MBPA) has occured, which
of the following factors is NOT considered when the Department of Financial Institutions
is assessing liability for the violation?
A. Policies and procedures in the business
B. Professional training provided to the staff
C. System of review for compliance with policies
D. Annual loan amount generated by the company
174. The primary purpose of the Equal Credit Opportunity Act (ECOA) is to ensure that:
A. every borrower obtains the required credit from lenders
B. all borrowers are given equal chance to obtain credit
C. low income borrowers are given opportunities to obtain credit
D. all lenders have equal opportunities to lend to those seeking credit
175. Under the Mortgage Broker Practices Act (MBPA), a licensed mortgage broker must
have one designated broker appointed for:
A. each borrower
B. the entire company
C. every ten loan originators
D. each branch of the company
35
176. Two applicants jointly apply for a loan with a mortgage broker. Which of the
following statements is CORRECT with respect to the Real Estate Settlement
Procedures Act (RESPA)?
A. The special information booklet must be sent to both applicants.
B. The special information booklet must be sent to any one of the two applicants.
C. The credit report must be sent to both applicants within one week.
D. The credit report must be sent to any one of the two applicants.
177. Under the Mortgage Broker Practices Act (MBPA), when can a person who does not
have a license independently contract with a licensed mortgage broker to provide
mortgage broker services?
A. When the independent contractor has signed a contract with the licensed
mortgage broker
B. When the licensed mortgage broker and the independent contractor have proof
of five years of stay in the state
C. When the independent contractor has provided proof of obtaining a surety
bond to the licensed mortgage broker
D. Under no circumstances
178. When are additional disclosures required to supplement the Truth in Lending
Disclosure (TIL) statement?
A. When the mortgage broker must pay third-party providers
B. When the applicant requests an adjustable mortgage rate loan program
C. When the lender charges pre-payment penalties on the loan
D. When the loan term is not disclosed
179. A borrower accepted a loan offer of a 20-year fixed mortgage for $250,000 at 5.75
percent interest with 239 payments of $1755.21 and a final payment of $1746.84. A fee
of $500 and 4 points was also charged on the loan. What is the APR for this loan?
A. 6.15%
B. 6.28%
C. 6.52%
D. 6.54%
180. According to the Mortgage Broker Practices Act (MBPA), who can be called a
third-party provider?
A. Seller
B. Borrower
C. Escrow agent
D. Mortgage broker
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181. Which of the following actions is the first that a borrower needs to take when a
mortgage loan servicer is cooperative when the borrower asks for a Private Mortgage
Insurance (PMI) cancellation?
A. Stop paying the PMI premiums
B. Appraise the home's current value
C. Ask for a reduction in the PMI premiums
D. Ask for a reduction in the interest rate on the mortgage
182. According to the Mortgage Broker Practices Act (MBPA), when a lock-in
agreement has NOT been entered into, the mortgage broker must provide the borrower
with a:
A. disclosure that the rate and terms are subject to change
B. disclosure of the rates offered by other mortgage brokers
C. copy of the contract between the mortgage broker and the loan originator
D. copy of the written commitment from the lender on the agreed terms and
conditions
183. Following a violation of the Equal Credit Opportunity Act (ECOA), what is the
maximum number of years within which civil action can be taken against a creditor by an
applicant?
A. 1
B. 2
C. 5
D. 10
184. A third-party receives payment from a mortgage broker for services. Under the
Mortgage Broker Practices Act (MBPA), the payment MUST be from:
A. financial services regulation funds
B. mutual funds
C. real estate trust funds
D. trust funds
185. In compliance with the Truth in Lending Act (TILA), which of the following
changes can a creditor make to the Annual Percentage Rate in the contract of a residential
mortgage loan?
A. Changes based on a publicly available index that is not in creditors control
B. Changes made only after a written notification to the borrower
C. Changes can be made only after obtaining permission from the borrower
D. Changes can be made if the borrower defaults any of the payments
37
186. According to the Mortgage Broker Practices Act (MBPA), who is required to have a
license to engage in residential mortgage broker activities in the state of Washington?
A. A mortgage broker whose business is subject to audit by Fannie Mae
B. An employee of a mortgage broker whose business is subject to audit by
Freddie Mac
C. A mortgage broker who makes a residential mortgage loan available to a
borrower using funds acquired from a lender
D. An employee of a mortgage broker conducting business under the Consumer
Loan Act
187. When a person submits an application for mortgage loan to a mortgage broker, it is a
violation if the mortgage broker:
A. obtains a credit report on the applicant
B. receives an appraisal report on the property
C. verifies the employment details in the form
D. receives trust funds without identifying their use
188. Under the Mortgage Broker Practices Act (MBPA), within how many days of
receiving a loan application must a mortgage broker provide to the applicant a full written
disclosure of all costs involved in obtaining a residential mortgage loan?
A. 3 business days
B. 5 business days
C. 5 calendar days
D. 7 calendar days
189. Which of the following is exempt from the Washington Usury statute?
A. Retail installment contract
B. Loan between two individuals
C. Secured personal loan
D. Unsecured personal loan
190. An applicant wants to compare 4 loans for $225,000 at a fixed rate for 30 years with
different interest rates and varying lender fees as given below.
Loans Loan 1 Loan 2 Loan 3 Loan 4
Interest Rates 6% 6.25% 5.75% 6.375%
Loan fees $1,200 $1,000 $2,000 $500
Loan points 1 2 4 1
Which loan offers the lowest monthly payment?
A. Loan 1
38
B. Loan 2
C. Loan 3
D. Loan 4
191. According to the Mortgage Broker Practices Act (MBPA), an applicant is NOT
eligible for a loan originator license if he or she has been convicted of any felony within
how many years of the filing of the present application?
A. 5
B. 7
C. 9
D. 10
192. One of the purposes of the Consumer Credit Protection Act (CCPA) is to ensure
that:
A. consumers do not take unnecessary loans
B. disclosures are provided to consumers
C. lenders charge the same interest rate to all consumers
D. it prevents consumers from taking multiple loans at the same time
193. According to the Mortgage Broker Practices Act (MBPA), the charges for an
investigation payable by a mortgage broker licensee whose business is being investigated
is determined as a:
A. flat fee plus a percent of the annual profit
B. percent of the annual profit of the business
C. the number of hours multiplied by an hourly rate
D. flat fee and the number of hours multiplied by the hourly rate
194. If a down payment is stated in an advertisement for mortgage, which of the
following disclosures must be made in order to comply with the Truth In Lending Act
(TILA)?
A. Terms of repayment of credit
B. Mortgage rates of competitors
C. All credit options offered by the creditor
D. Projected interest rates for the next 12 months
195. According to the Mortgage Broker Practices Act (MBPA), a loan originator's license
can be:
A. surrendered to the department
B. assigned to the loan processor
C. franchised by contract to a third-party
D. transferred to a licensed mortgage broker
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196. Which of the following entities would be classified as a third-party service provider
to a mortgage broker?
A. Lender
B. Title company
C. Loan originator
D. Realtor
197. Under the Mortgage Broker Practices Act (MBPA), the director of the Department
of Financial Institutions may review loan files to determine the mortgage broker's
compliance with:
A. payment of business and operating taxes
B. employee hiring and licensing rules
C. federal regulations covering the business of mortgage brokering
D. the purpose of understanding business and solicitation practices
198. The Truth in Lending Act (TILA) states the following requirements, EXCEPT:
A. decide the interest rate the banks may charge
B. provide consumers with rescission rights
C. impose limits on home equity lines of credit
D. protect consumers against unfair credit billing
199. An applicant accepts an offer of a 25-year fixed rate loan from a lender at an interest
rate of 6.5% for an amount of $150,000. The lender charges include a loan origination fee
of $4500 and 2 discount points. What is the APR of the offer?
A. 6.55%
B. 6.98%
C. 7.06%
D. 7.30%
200. According to the Mortgage Broker Practices Act (MBPA), what is a loan originator's
annual continuing education requirement?
A. 2 approved courses
B. 3 approved courses
C. 6 clock hours
D. attend 2 mortgage broker commission meetings
201. Which of the following residences is NOT a "dwelling" for the purposes of Home
Mortgage Disclosure Act?
A. A duplex
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B. Travel trailer
C. Apartment building
D. A vacation home
202. According to the Mortgage Broker Practices Act (MBPA), continuing education
courses may be offered on which of the following topics?
A. Banks and trust companies
B. Commerical lending practices
C. Regulation of money services providers
D. Internal audit standards
203. A creditor can retain files that are prohibited by the Equal Credit Opportunity Act
(ECOA) when the information:
A. about an applicant was obtained from a legal firm
B. about an applicant was obtained from another creditor
C. was requested and obtained from a source after 1997
D. was obtained from a consumer reporting agency without creditor requesting it
204. According to the Mortgage Broker Practices Act (MBPA), the fee paid as cash by a
borrower for the lock-in agreement is deposited in the:
A. Trust account
B. Escrow account
C. Financial Services Regulation Fund
D. Mortgage broker general account
205. A real estate broker has 50% ownership of a mortgage broker. The real estate broker
refers business to the mortgage broker who provides written disclosures to the borrower
of the business relationship. The written disclosure also makes it clear that the borrower
is not required to use the services of the mortgage broker. Which of the following
statements is CORRECT?
A. Only the real estate broker is in violation of the Real Estate Settlement
Procedures Act (RESPA).
B. Only the mortgage broker is in violation of the Real Estate Settlement
Procedures Act (RESPA).
C. Both the real estate broker and the mortgage broker are in violation of the Real
Estate Settlement Procedures Act (RESPA).
D. Neither the real estate broker nor the mortgage broker are in violation of the
Real Estate Settlement Procedures Act (RESPA).
206. Under the Mortgage Broker Practices Act (MBPA), a mortgage broker may ask an
appriaser to provide any of the following EXCEPT:
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A. Range of value
B. Certified Market Analysis (CMA)
C. Guaranteed minimum value
D. Automated valuation models (AVM)
207. Which of the following statements regarding the Special Information Booklet is
CORRECT?
A. It can be reproduced in any form.
B. It can be part of other larger documents.
C. It cannot be translated to other languages.
D. It cannot be stamped with the mortgage broker company name.
208. A real estate company accepted flyers from a mortgage company and distributed
them to prospective buyers during an open house. Which of the following companies are
in violation of the Real Estate Settlement Procedures Act (RESPA)?
A. Only the real estate company is in violation
B. Only the mortgage company is in violation
C. Both the real estate company and the mortgage company are in violation
D. Neither the real estate company nor the mortgage company are in violation
209. According to the Consumer Loan Act (CLA), using the simple interest method for
interest calculation, what is the maximum amount of days of prepaid interest that a
licensee may collect at the time of the loan closing?
A. 30
B. 45
C. 60
D. 90
210. How do lenders ensure borrowers are capable of repaying loans?
A. By giving small, short-term loans
B. By ensuring a safe ratio of debt to income
C. By giving loans only to first time borrowers
D. By charging a higher rate of interest than the market rate
211. According to the Mortgage Broker Practices Act (MBPA), a licensed mortgage
broker must transmit a borrowers information to another mortgage broker licensee
within how many business days after receiving the borrower's written request?
A. 5
B. 10
C. 15
D. 20
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212. According to Regulation P implementing the Gramm-Leach-Bliley Act (GLBA), the
treatment of which of the following information collected by a financial institution is
governed by the privacy rule?
A. Business information about companies
B. Information that is not nonpublic personal data
C. Nonpublic personal information about consumers
D. Public information about individuals who conduct business transactions
213. According to the Mortgage Broker Practices Act (MBPA), when an independent
certified professional examines a mortgage broker business instead of a department
examination, the report must be sent to the:
A. mortgage broker's bonding company
B. Mortgage Broker Commission
C. Department of Financial Institutions
D. registered real estate agent of the mortgage broker
214. The consumers right to rescission applies to all of the following EXCEPT:
A. residential mortgage transactions
B. a transaction involving refinancing of the principal mortgage balance
C. a transaction in which an agency of the state is the creditor
D. credit that uses the primary dwelling as a guarantee for repayment
215. Under the Mortgage Broker Practices Act (MBPA), when a mortgage broker notifies
the department that the broker wants to close the mortgage broker business, the mortgage
broker:
A. can assign the mortgage broker license to the owner of the business
B. can transfer the mortgage broker license to the designated broker
C. can be held liable for any violations of the MBPA
D. can claim the unused funds in the trust account
216. The Adjustable Rate Mortgage (ARM) disclosure MUST be provided to a mortgage
loan applicant for compliance with:
A. Real Estate Settlement Procedures Act (RESPA)
B. Truth In Lending Act (TILA)
C. Consumer Protection Act (CPA)
D. Equal Credit Opportunity Act (ECOA)
217. Under the Mortgage Broker Practices Act (MBPA), which of the following options
is CORRECT regarding third-party services?
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A. Fees may not be charged in advance
B. Fees not used must be returned to the borrower
C. A fee of $300 may be charged if the loan is not sanctioned
D. An administrative fee of 10% over the third-party fees may be charged
218. Which of the following actions by a mortgage broker is a violation of Real Estate
Settlement Procedures Act (RESPA)?
A. Providing more than one Good Faith Estimate (GFE)
B. Not providing a copy of the GFE to a loan originator
C. Disclosing charges in a GFE
D. Not disclosing the yield spread premium in a GFE
219. Which of the following amounts found on a settlement statement, paid by a
borrower, represents monies to be applied against the purchase price of the property?
A. Existing loans
B. Earnest money
C. Principal amount of the new loan
D. Adjustments for items unpaid by seller
220. According to the Mortgage Broker Practices Act (MBPA), who may bring a lawsuit
against a borrower for the collection of compensation?
A. Loan originator
B. Branch manager
C. Registered agent
D. Mortgage broker
221. Which of the following options constitutes a purpose of the Fair Housing Act
(FHA)?
A. To normalize rents payable by tenants
B. To provide housing for all senior citizens
C. To prevent discrimination based on disability
D. To provide housing for all families with children under 18
222. A mortgage broker licensee is dissatisfied with the quality of service provided by a
third-party provider. If the mortgage broker wants to dispute the service, within how
many days of the loan closing must he or she provide the third-party service provider
with a written report describing the dispute?
A. 10
B. 15
C. 30
D. 45
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223. Which of the following inquiries will NOT violate the Equal Credit Opportunity Act
(ECOA) during the application process for a residential loan?
A. The race of the applicant
B. The color of the applicant
C. The age of the applicant
D. The national origin of the applicant
224. The primary purpose of Mortgage Broker Practices Act (MBPA) is to:
A. ensure fair practices in the residential rental business
B. preserve public confidence in the lending and real estate community
C. establish rules of practice and conduct for real estate appraisers
D. promote honesty and fair dealing in the sale of commercial real estate
225. A real estate agent receives a $50 restaurant gift certificate from a mortgage broker
as a token of appreciation for referring a home buyer to the mortgage broker. Which of
the following laws was violated as a result of this transaction?
A. Equal Credit Opportunity Act (ECOA)
B. Real Estate Settlement Procedures Act (RESPA)
C. Fair Credit Reporting Act
D. Fair Housing Act
226. Under the Mortgage Broker Practices Act (MBPA), when the lender provides lockin
arrangement to a mortgage broker, the lender is considered:
A. the third-party
B. an escrow agent
C. the mortgage broker
D. an independent contractor
227. How many days prior to closing MUST the settlement services provider make the
HUD-1 available to the borrower?
A. 1
B. 5
C. 7
D. 10
228. When an escrow company and a mortgage broker have common ownership and
there is a referral from one to the other, what information about the affiliated business
arrangement (AfBA) disclosure is required under Real Estate Settlement Procedures Act
(RESPA)?
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A. The cost of similar services offered by competitors
B. A statement that the use of the affiliated service is required
C. Names of all escrow providers in the same locality
D. A statement that the use of the affiliated service is not required
229. A mortgage broker receives a Directive from the Director of the Department of
Financial Institutions to provide a specific loan file. Under the Mortgage Broker Practices
Act (MBPA), which of the following responses is permitted?
A. Provide only the documents that do not contain confidential information
B. Provide only the loan documents signed by the borrowers
C. Provide all documents in the loan file
D. Provide no documents from the loan file
230. Which loan documentation type generally allows borrowers to receive the best
possible rates and programs?
A. Full document
B. No documentation
C. Stated income stated assets
D. Stated income documented assets
231. Under the Mortgage Broker Practices Act (MBPA), when there is a change in a
mortgage broker licensees standing with the Washington Secretary of State, within how
many business days should the broker notify the Department of Financial Institutions?
A. 5
B. 10
C. 15
D. 20
232. Under the Gramm-Leach-Bliley Act (GLBA), with which of the following
organizations may a mortgage broker share a consumer's account information?
A. A bank
B. A credit card company
C. A telemarketing company
D. A consumer reporting agency
233. According to the Mortgage Broker Practices Act (MBPA), which of the following
actions by a mortgage broker licensee is NOT a violation of the act?
A. Adding undisclosed terms to the loan payment
B. Refusing to reduce the interest rate after the loan has closed
C. Increasing the mortgage broker fee on the day of closing
D. Paying the real estate broker a referral fee at loan closing
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234. According to the Truth In Lending Act (TILA), which of the following fees is
included in the calculation of the annual percentage rate?
A. Title insurance
B. Recording fees
C. Closing agent charges
D. Appraisal fee
235. Under the Mortgage Broker Practices Act (MBPA), the amount for the surety bond
an applicant must provide while applying for a mortgage broker license depends on the
average number of:
A. loan originators representing the applicant
B. years of experience the applicant has as a loan originator
C. principals of the mortgage broker business of the applicant
D. employees the applicant will appoint for the mortgage broker business
236. If the final closing costs do not exceed the closing costs in the most recent good faith
estimate, which of the following is NOT required?
A. Prepaid escrowed cost of ownership
B. Third-party providers
C. Private Mortgage Insurance (PMI)
D. Other disclosures
237. According to the Mortgage Broker Practices Act (MBPA), which information in the
annual report is exempt from disclosure requirements of the Public Records Act?
A. A trade secret as defined in the Uniform Trade Secrets Act
B. The total number of closed loans originated in Washington by the mortgage
broker
C. The total dollar volume of closed loans in Washington originated by the
mortgage broker
D. A trade secret aggregated with other information to make it not identifiable
238. The Good Faith Estimate (GFE) provides the estimate of the:
A. charges likely to be paid at closing
B. amount of mortgage broker fees to be paid
C. charges likely to be paid for servicing
D. amount of credit provided to the borrower
239. Which loan program includes only an appraisal and the borrower's credit score?
A. No ratio
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B. No documentation
C. Stated income stated assets
D. Stated income documented assets
240. A mortgage broker licensee changes his or her registered agent. According to the
Mortgage Broker Practices Act (MBPA), who sends a request to the new agent to obtain
the written consent to the appointment?
A. Mortgage broker
B. Loan originator
C. Mortgage Broker Commission
D. Director of Financial Institutions
241. Under the Gramm-Leach-Bliley Act (GLBA), a person is considered a consumer of
a financial institution when:
A. the person has designated the financial institution as a trustee for a trust
B. the person obtains credit from the financial institution for household purposes
C. the person is a beneficiary of an employee benefit plan for which the financial
institution acts as a fiduciary
D. the financial institution provides services to another financial institution of
which the person is a consumer
242. According to the Mortgage Broker Practices Act (MBPA), the Department of
Financial Institutions does NOT charge an investigation fee when:
A. the investigation exceeds a period of 45 days
B. the investigation finds that no violation has occurred
C. a loan originator works for a mortgage broker licensee
D. a mortgage broker works in an office location within the state
243. A mortgage broker offers an adjustable rate mortgage loan. Which of the following
information MUST be disclosed in the same advertisement?
A. The expected interest rate for the next 12 months
B. The annual percentage rate is subject to change
C. The fixed rate interest rate for various time periods
D. The actual interest rate for the last 12 months
244. Which of the following properties is considered as a single family property?
A. Hotel
B. Mobile home park
C. Apartment building
D. Residential dwelling of four units
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245. According to the Real Estate Settlement Procedures Act (RESPA), a Good Faith
Estimate (GFE) MUST contain:
A. Annual Percentage Rate
B. estimated closing costs
C. estimated closing date
D. date of application
246. According to the Mortgage Broker Practices Act (MBPA), when a licensed
mortgage broker is located out of state, where MUST the business records be kept?
A. At any readily available location
B. At the Department of Financial Institutions
C. At the office where the loan was originated
D. At a bonded storage facility
247. When is a HUD-1A settlement statement provided to a borrower?
A. When there is no seller involved
B. When the property is outside the state
C. When the mortgage broker is not a real estate broker
D. When there are no independent contractors involved
248. Which of the following payments is a violation of the Real Estate Settlement
Procedures Act (RESPA)?
A. A mortgage broker pays a fee to determine if a property is located in flood
zone
B. Two mortgage brokers decide to split the mortgage broker fee from a
residential loan transaction
C. A title company charges a market fee for examination and evaluation of title
evidence
D. A mortgage broker accepts a fee for sending its customers to a title company
249. According to the Mortgage Broker Practices Act (MBPA), who MUST authorize the
transfer of funds between a borrower's subaccounts?
A. Lender
B. Borrower
C. Third-party provider
D. Designated broker
250. Under the Fair Credit Reporting Act (FCRA), what course of action CANNOT be
taken by a victim of identity theft who has submitted a valid police report to a consumer
reporting agency?
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A. Apply for a security freeze
B. Request a change of information on the credit report
C. Make a written request to delete the challenged items on the record
D. Require the consumer reporting agency to attempt to find the offender