Chapter 3 — Quiz

Twenty-six questions, written in SAFE MLO test style. Answer key at the bottom.

1. The S.A.F.E. Act was enacted as part of:

A. The Dodd-Frank Act of 2010 B. The Housing and Economic Recovery Act of 2008 C. FIRREA of 1989 D. RESPA of 1974

2. "S.A.F.E." stands for:

A. Standards and Fair Examination B. Secure and Fair Enforcement C. State Association of Financial Examiners D. Safe and Fair Endorsement

3. Pre-licensing education requires how many total hours?

A. 8 B. 12 C. 20 D. 24

4. The 20 hours of pre-licensing education include how many hours of ethics?

A. 2 B. 3 C. 4 D. 5

5. The 20 hours include how many hours on non-traditional mortgage lending?

A. 1 B. 2 C. 3 D. 12

6. Annual continuing education requires:

A. 8 hours B. 12 hours C. 20 hours D. 4 hours

7. The annual CE requirement includes how many hours of federal law?

A. 1 B. 2 C. 3 D. 4

8. The passing score on the SAFE MLO test is:

A. 70% B. 72% C. 75% D. 80%

9. The national test component with uniform state content contains:

A. 100 questions, all scored B. 120 questions, 115 scored C. 125 questions, 120 scored D. 115 questions, all scored

10. After failing the SAFE MLO test, a candidate must generally wait how long before retesting?

A. 7 days B. 14 days C. 30 days D. 90 days

11. After three consecutive failures, the waiting period becomes:

A. 60 days B. 90 days C. 180 days D. 1 year

12. A felony conviction disqualifies an applicant if it occurred within how many years preceding the application?

A. 3 B. 5 C. 7 D. 10

13. A felony involving fraud, dishonesty, breach of trust, or money laundering disqualifies an applicant:

A. For 7 years B. For 10 years C. Permanently, with no lookback limit D. Only if it was a federal conviction

14. An MLO license revoked in any governmental jurisdiction:

A. Bars licensure permanently, unless the revocation is formally vacated B. Bars licensure for 7 years C. Has no effect in other states D. Bars licensure only in the revoking state

15. A mortgage loan originator employed by a federally insured depository institution is generally:

A. Licensed by the state B. Registered, with an NMLS unique identifier C. Exempt from NMLS entirely D. Licensed only if they originate more than 5 loans a year

16. Which of the following applies to a registered MLO but not a licensed one?

A. An NMLS unique identifier B. A fingerprint background check C. Exemption from the SAFE MLO test D. Annual continuing education

17. Which of these does a licensed MLO have that a registered MLO does not?

A. An NMLS unique identifier B. A background check C. A surety bond or recovery fund coverage D. An employer

18. The minimum credit score required for an MLO license is:

A. 620 B. 640 C. 680 D. There is no minimum credit score

19. A mortgage loan originator is defined as a person who, for compensation or gain, takes a residential mortgage loan application or:

A. Processes loan documents B. Offers or negotiates terms of a residential mortgage loan C. Orders an appraisal D. Underwrites a loan file

20. An MLO license that has been issued but not sponsored:

A. Authorizes origination in the issuing state B. Authorizes origination nationwide C. Authorizes no origination activity D. Expires within 30 days

21. The annual license renewal window runs:

A. January 1 – March 31 B. July 1 – August 31 C. November 1 – December 31 D. October 1 – November 30

22. The "successive years" rule provides that an MLO generally may not:

A. Renew a license two years in a row without retesting B. Take the same approved continuing education course in consecutive years C. Work for two employers in consecutive years D. Be sponsored in more than one state in consecutive years

23. Which body currently holds rulemaking authority for the S.A.F.E. Act?

A. HUD B. The FHFA C. The CFPB D. The FDIC

24. Determining which state's license is required for a transaction generally follows:

A. The borrower's state of residence B. The location of the subject property C. The loan officer's office location D. The lender's state of incorporation

Short answer

25. A candidate has been federally registered at a bank for five years and is offered a position at an independent mortgage bank. Describe, in three sentences, what they must complete before originating a single loan there.

26. A processor asks a borrower for a bank statement, and then answers the borrower's question about what their payment would be at a different rate. Which of those two acts is a problem, and why?

Answer key **1.** B — HERA (2008). The most common date error among candidates. **2.** B — Secure and Fair Enforcement for Mortgage Licensing. **3.** C — 20. **4.** B — 3 hours of ethics. **5.** B — 2 hours. **6.** A — 8 hours annually. **7.** C — 3 hours of federal law. Note that federal law is 3 hours in *both* PE and CE — the only category that does not shrink. **8.** C — 75%. **9.** B — 120 questions, 115 scored, 5 unscored pretest items, 190 minutes. **10.** C — 30 days. **11.** C — 180 days. **12.** C — 7 years. **13.** C — permanently, with no lookback limit. Contrast with Q12; the test likes this pair. **14.** A — a permanent bar, with a narrow exception for a revocation that has been **formally vacated**. Expired, surrendered, or settled is not vacated. **15.** B — registered, with an identifier. **16.** C — exemption from the test. A and B apply to both; D applies to licensed MLOs only. **17.** C — a surety bond or recovery fund. A and B apply to both. **18.** D — there is no minimum score. The standard is *financial responsibility*, a judgment about pattern. **19.** B — offers or negotiates terms. It is a functional definition; job title is irrelevant. **20.** C — no origination activity. A license must be sponsored to be active. **21.** C — November 1 through December 31. **22.** B — the same approved course in successive years. **23.** C — the CFPB, which assumed the authority when it was created in 2010, even though the statute dates from 2008. A frequent trap. **24.** B — the location of the subject property is the general rule. Some states also regulate based on where the borrower is located when solicited, which can require licenses in both; confirm before taking the application. **25.** They must complete 20 hours of NMLS-approved pre-licensing education, pass the SAFE MLO test with a score of at least 75%, and obtain a state license including a background check, credit review, and bond — none of which their federal registration provided. Their sponsorship at the new employer cannot be activated until the license is issued. Realistically this is four to ten weeks during which they cannot originate. **26.** The second act is the problem. Requesting a bank statement is administrative and clerical activity, expressly outside the MLO definition. **Quoting a payment at a stated rate is offering terms**, which is MLO activity requiring a license. The correct response is "let me get the loan officer for that." Note that the processor's intent and job title are irrelevant — the definition is functional.