Chapter 36 — Self-Check Quiz

Technology: LOS Systems, CRM, Pricing Engines, AI, and the Digital Mortgage

Twenty-six questions. Multiple choice and short answer, written in the style of the SAFE MLO test where the material is exam-relevant. Answer key at the bottom in a collapsed block — write your answers down before you open it.

1. Which system is the authoritative record of a mortgage loan file?

  • A. the point-of-sale portal
  • B. the loan origination system
  • C. the customer relationship management database
  • D. the product and pricing engine

2. Under the federal E-SIGN Act, where a law requires that information be provided to a consumer in writing, electronic delivery is permitted if the consumer:

  • A. has an email address on file
  • B. is offered a paper copy at closing
  • C. affirmatively consents in a manner that reasonably demonstrates the ability to access the electronic records
  • D. signs the application electronically

3. Rights in an eNote held as a transferable record are transferred by:

  • A. physical delivery of the electronic file
  • B. endorsement in blank
  • C. a change in the controller of the authoritative copy
  • D. recording in the county land records

4. E-SIGN and UETA differ principally in that:

  • A. E-SIGN is federal and UETA is a uniform state act adopted state by state
  • B. E-SIGN applies to mortgages and UETA does not
  • C. UETA is federal and E-SIGN applies only to notes
  • D. they are the same statute under two names

5. A creditor denies an application. Under ECOA and Regulation B, the applicant must generally receive:

  • A. the creditor's underwriting guidelines
  • B. a statement of the specific principal reasons for the denial, or notice of the right to obtain them
  • C. a copy of any model used
  • D. nothing, if no consumer report was obtained

6. When a credit decision is based on a complex algorithm the creditor cannot readily interpret, the requirement to state specific principal reasons:

  • A. is waived
  • B. shifts to the model vendor
  • C. may be satisfied by a general statement of creditworthiness
  • D. still applies — complexity is not an exception

7. Nonpublic personal information collected from a mortgage applicant is protected under:

  • A. the Home Mortgage Disclosure Act
  • B. the Gramm-Leach-Bliley Act
  • C. the Real Estate Settlement Procedures Act
  • D. the Fair Housing Act

8. Remote online notarization is governed principally by:

  • A. federal law, uniformly across the states
  • B. investor guidelines only
  • C. state law, which varies as to authorization, identity proofing, and recording retention
  • D. county recording practice only

9. Which of the following is the LEAST accurate statement about a pricing engine?

  • A. it returns eligible products and a rate/price grid for each
  • B. it needs the representative score, LTV, occupancy and property type, and lock period
  • C. displaying a price on the engine constitutes a rate lock
  • D. its eligibility rules can lag a guideline change

10. A borrower uploads a document to the portal and the portal shows a green check. The corresponding LOS condition remains open. The most accurate description is that:

  • A. the portal is malfunctioning
  • B. document arrival and condition clearance are different events in different modules
  • C. the borrower uploaded the wrong document
  • D. the condition was written incorrectly

11. Which of these is a prior-to-funding condition on the Linden Street file?

  • A. the gift letter for the \$10,000 gift
  • B. the letter of explanation for the \$4,900 deposit
  • C. the pre-closing credit refresh and undisclosed-debt report
  • D. the mortgage insurance certificate

12. The Linden Street pipeline screen on day 37 showed a green status because:

  • A. the file was on track
  • B. all conditions had been cleared
  • C. no rule was being violated at that moment
  • D. the lock had been extended

13. Digital asset verification is best described as proving:

  • A. the source of every deposit
  • B. current balances and a transaction history over a defined lookback window
  • C. that a balance is not borrowed
  • D. that income will continue for three years

14. The \$4,900 deposit on the Linden Street file was flagged as a large deposit largely because:

  • A. it exceeded the down payment
  • B. it was an unusual dollar amount
  • C. a quarterly event appears exactly once in a 90-day lookback window
  • D. it came from an unverified source

15. Under §36.9, "explainability" is best characterized as:

  • A. a desirable feature of well-designed software
  • B. a precondition for a lawful adverse action notice
  • C. a Fannie Mae Selling Guide requirement
  • D. a state licensing requirement

16. A model that never receives a borrower's race can still produce racially disparate outcomes because:

  • A. models are inherently biased
  • B. other variables can serve as proxies for a prohibited basis
  • C. the model was trained by biased people
  • D. race is always inferable from a name

17. Supervisory guidance on model risk management generally requires that a model be validated by:

  • A. the team that developed it
  • B. the model vendor
  • C. parties independent of the model's development
  • D. the loan officers who use its output

18. Which of the following is NOT among the parties that must independently permit a fully remote, fully electronic closing?

  • A. the county recorder
  • B. the title underwriter
  • C. the borrower's real estate agent
  • D. the investor purchasing the loan

19. A hybrid eClosing typically means:

  • A. everything is signed electronically, including the note
  • B. most documents are e-signed in advance while the note and security instrument are wet-signed
  • C. the closing occurs in two sessions
  • D. the borrower signs remotely and the seller signs in person

20. The most defensible position on CRM portability when changing employers is that:

  • A. anything you personally entered is yours
  • B. the entire database is the employer's
  • C. contact information for relationships you sourced may be portable, subject to your employment agreement and privacy law; borrower financial data is not
  • D. portability is governed solely by state law

21. Marketing emails sent from a CRM that promote credit terms are subject to:

  • A. no particular rules, because they are not disclosures
  • B. Regulation Z's advertising rules and the Mortgage Acts and Practices rule, among others
  • C. RESPA Section 8 only
  • D. HMDA reporting

22. Short answer. Wire instructions arrive by email from the address you have used with this title company for nine years, signed by your usual contact, two days before closing, changing the receiving bank. State what you do and give the one-sentence reason the length of the relationship is irrelevant.

23. Short answer. Explain, in three sentences, why the Linden Street file's eleven-day stall produced no alert from any system.

24. Short answer. The asset verification report was generated on day 7. The condition arising from it cleared on day 33. Name what a machine did in that interval and what only a person could do.

25. Short answer. Give two uses of artificial intelligence in origination that are genuinely in production, and one decision that is constrained — and name the specific obligation that constrains it.

26. Short answer. A loan officer tells a declined applicant, "the system turned you down." Give two separate reasons this is wrong: one about accuracy and one about the applicant's rights.

Answer key — open after you have written your answers **1. B.** The LOS is the system of record. When any other system disagrees, the LOS is what the underwriter, the closer, the investor, and an examiner read. (§36.1, §36.2) **2. C.** E-SIGN's consumer consent provision requires affirmative consent given or confirmed in a manner that reasonably demonstrates the consumer can access the records in the form they will be provided. A paper copy on request (B) does not substitute; an email address (A) proves nothing about access. (§36.7) **3. C.** Control of the authoritative copy, not possession or delivery. This is the whole reason the transferable record concept exists. (§36.7) **4. A.** E-SIGN is federal; UETA is a uniform state act adopted state by state, with a few states enacting their own analogous statutes. (§36.7) **5. B.** ECOA and Regulation B require the specific principal reasons or notice of the right to obtain them. Note that FCRA imposes a *separate* obligation where a consumer report is used, and residential mortgage applicants have their own credit-score disclosure requirement — different notices, different triggers. Chapter 25 works the notices. (§36.9) **6. D.** There is no complexity exception. This is the point of the published guidance on adverse action notification where decisions rest on complex algorithms. (§36.9) **7. B.** GLBA — the privacy half governs sharing and notices; the safeguards half requires an information security program. (§36.10) **8. C.** State law, and it varies on nearly every operational question. Federal legislation establishing a national minimum standard has been introduced repeatedly; verify its current status. (§36.7) **9. C.** A displayed price is not a lock. A lock is a commitment recorded by the lock desk with a term and an expiration, evidenced by a confirmation that posts back into the LOS. (§36.5) **10. B.** Arrival is a document event; clearance is a review action taken by a person in a different module. Both displays can be accurate simultaneously — which is exactly what makes this failure so durable. (§36.2) **11. C.** The pre-closing credit refresh and undisclosed-debt report is one of the two prior-to- funding conditions; the verbal verification of employment is the other. A, B, and D were all prior-to-doc and cleared between day 29 and day 33. (Chapter 19; §36.6) **12. C.** Green means no rule is currently being violated. It is not a judgment about trajectory. (§36.2) **13. B.** Balances and transactions over a window. It cannot establish the *source* of a deposit or whether funds are borrowed — which is precisely why the \$4,900 still required a letter and documentation. (§36.6) **14. C.** With a 90-day lookback, a quarterly commission appears once, so within the data given it genuinely was an outlier. A longer window would have shown four and no threshold would have fired. (§36.6) **15. B.** A decision that cannot be explained cannot be disclosed, and a decision that cannot be disclosed cannot lawfully be made. (§36.9) **16. B.** Proxies — geography, employer, banking institution, device, school district. The model does not know what race is; it knows which columns predicted. Chapter 25 owns the doctrine. (§36.9) **17. C.** Independent validation is a core element of model risk management guidance, alongside sound development and use, and governance with documentation and an inventory. (§36.9) **18. C.** The lender, the title underwriter, the investor, and the county recorder each hold an independent veto. The buyer's agent does not. (§36.7) **19. B.** Hybrid: most documents e-signed in advance, the note and security instrument wet-signed with a notary present. (§36.7; Chapter 23 owns closing mechanics.) **20. C.** Three layers: your employment agreement, privacy law, and the practical line between contact information you sourced and the employer's customer database. Borrower financial data is protected regardless of who collected it. (§36.4) **21. B.** Regulation Z's advertising rules and Regulation N (the Mortgage Acts and Practices rule), plus contact rules such as the TCPA, the Do Not Call Registry, and CAN-SPAM depending on channel, and your employer's pre-approval requirement. (§36.4) **22.** You do not act on the emailed instructions. You call the title company at a number you obtain independently — from the executed contract or the company's published main line, never the number in the email — and confirm every digit by voice, and you tell the borrower to do nothing until you call back. The relationship is irrelevant because the third and most dangerous variant of this attack is a genuinely compromised mailbox: the email really does come from the right address, because the criminal is inside the account. (§36.10) **23.** Nothing was late — the nine prior-to-doc conditions had cleared and the two remaining conditions were prior-to-funding, written without a due date because funding had no date. Milestone systems record state changes and cannot record the absence of one. The single event that did occur in the window, the lock expiring on day 42, lived in the pricing and lock system, which had no reason to compare its expiration date to the LOS's estimated closing date. (§36.2, §36.11) **24.** The machine found the \$4,900 deposit, measured it against the account's typical activity, and flagged it as an outlier — on day 7, within days of application. Only a person could establish what it *was*: the net of a \$6,900 gross quarterly commission after \$2,000 of withholding, on income that is paid quarterly and is lumpy. Verification moved the evidence upstream by weeks and moved the interpretation not at all. (§36.6) **25.** Any two of: document recognition and classification; data extraction from paystubs, W-2s, and statements; document-integrity and fraud flagging; workflow triage and prioritization; collateral analytics; language assistance under human review. The constrained decision is a fully automated credit decision — constrained by ECOA and Regulation B's requirement to state the specific principal reasons for adverse action, and separately by the ability-to-repay requirement that the creditor make a reasonable good-faith determination based on verified information. (§36.8, §36.9) **26.** Accuracy: the *creditor* took the adverse action; a system produced an output, and the creditor remains responsible for the decision. Rights: the applicant is entitled to the specific principal reasons, and "the system turned you down" converts a legally required explanation into a shrug — if you do not know the reasons, find out. (§36.9)