A first mortgage closes at an APR of 12.4% when the Treasury yield for a comparable maturity is 4.1%, a spread of 8.3 points. Assuming the loan meets the other scope requirements of California Financial Code section 4970, does this APR spread trigger covered-loan status?
Correct Answer
A) A covered loan: the APR exceeds the Treasury yield by more than the 8 points
The rate trigger is an annual percentage rate at consummation more than 8 percentage points above the yield on Treasury securities of comparable maturity, and 8.3 clears it. Other choices: 10 points is not the figure; the trigger is not confined to junior liens; and the two triggers are alternatives, so points and fees need not also be exceeded. Source: Cal. Fin. Code § 4970(b)
Why This Is the Correct Answer
The rate trigger is an annual percentage rate at consummation more than 8 percentage points above the yield on Treasury securities of comparable maturity, and 8.3 clears it. Other choices: 10 points is not the figure; the trigger is not confined to junior liens; and the two triggers are alternatives, so points and fees need not also be exceeded. Source: Cal. Fin. Code § 4970(b)
More UST Questions
A Washington broker provides the federal settlement service estimates and booklet in 2026 and no separate state itemization. Can disclosures compliant with RESPA and Regulation X satisfy the state third-party itemization subsection?
Priya is comparing pre-license education providers before applying for a Florida mortgage loan originator license. How many hours of approved pre-license education must she complete in total?
An applicant is budgeting for a Florida MLO license and asks what the state application fee comes to at filing. Which figure is correct?
A newly sponsored Florida MLO is told she must buy an individual surety bond in her own name before she can originate. Is that correct?
A Washington consumer loan act licensee also brokers loans in 2026 outside the authority of that act. Does the consumer-loan-act exemption extend to mortgage brokerage outside that act’s authority?
A $200,000 Texas home equity loan has $3,700 in fees subject to the constitutional cap and a separate $600 fee for an appraisal performed by a third-party appraiser. Do the capped fees exceed the limit?
An owner applies for a Texas home equity loan on 4 May 2026 and the lender delivers the required notice on 8 May. Which date starts the constitutional 12-day waiting period for closing?
An owner closed a Texas home equity loan on 3 February 2026 and wants a second one on the same homestead in November 2026. Assuming no declared-emergency exception applies and the earlier home equity lien will be paid off, may the new loan close in November?
A Texas home equity loan forecloses and the sale leaves the lender $62,000 short of the balance owed. Absent actual fraud in obtaining the credit, may the lender recover the shortfall personally from the owner or spouse?
A Washington real estate broker helps a 2026 buyer arrange financing and takes only the usual sales commission. Does financing assistance incidental to a bona fide sale for only the customary real-estate commission fall within the exemption?
People Also Study
Federal Mortgage-Related Laws
24% of exam
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Ethics, Fraud & Consumer Protection
18% of exam