NMLS MLO Based on Real Exam Environment

According to Regulation Z (TILA-RESPA Integrated Disclosure Rule, or TRID), lenders and settlement agents are not allowed to charge a fee for the preparation or delivery of the Closing Disclosure. This applies regardless of when or how many times the Closing Disclosure is provided.

“A creditor or other person may not charge any fee for the preparation or delivery of the disclosures required under this section (Closing Disclosure).”

— 12 CFR § 1026.19(f)(5)(i)

Under TILA-RESPA Integrated Disclosure (TRID) rules, if a lender overcharges the borrower by more than the allowable 10% aggregate tolerance on certain closing costs, the lender must refund the excess amount to the borrower within 60 days of loan consummation. The 10% tolerance applies to certain fees like title insurance and government recording fees, ensuring that the lender provides accurate estimates on the Loan Estimate (LE) and does not exceed allowable variances at closing.

First, calculate the monthly interest-only payment:

Loan Amount: $239,500

Interest Rate: 7.25% annual

Monthly Interest: $239,500 × 0.0725 ÷ 12 = $1,447.29

Add escrow for taxes and insurance:

Annual Insurance: $551 ÷ 12 = $45.92

Annual Taxes: $1,773 ÷ 12 = $147.75

Total escrow per month: $45.92 + $147.75 = $193.67

Total monthly payment:

$1,447.29 (interest-only) + $193.67 (escrow) = $1,640.96

Closest answer: C. $1,640.65

The slight difference is likely due to rounding, but C is the best match.

A balloon mortgage is a type of loan where a large portion of the principal is repaid in a lump sum at the end of the loan term. This structure often features smaller, periodic payments during the life of the loan, with the remaining balance (the balloon payment) due at the end of the loan period. Balloon mortgages are typically shorter-term loans, such as 5 or 7 years.

This differs from other loan types:

FHA mortgages (A) are fully amortized loans backed by the government.

Qualified mortgages (C) meet specific ability-to-repay standards and are fully amortized.

Deferred-payment mortgages (D) often refer to reverse mortgages or loans with delayed payment schedules, which are not the same as balloon loans.