Emulation 5

John has just returned from being stationed in Afghanistan where he was injured. The military has determined that he is now 20% disabled. He intends to be discharged and wants to use his VA benefits to purchase a home.Which of the following statements is not true:

He will not have to pay a funding fee if he is no longer on active duty

All of the following must be included in early ARM disclosures, except:

How much the fixed rate will be

The Commissioner, Supervisor or Director, in the course of an examination or investigation, has the authority to request the books and records of an entity's operations and:

interview officers, MLOs, agents and customers

Regarding the Real Estate Settlement Procedures Act, Section 8, in a case where XYZ Mortgage Company originates and closes loans with their own funds, then sells the loans for a fee to ABC Mortgage, which of the following is true:

it is legal and ethical

A construction loan contains all of the following characteristics, except:

made by the builder, sold to the realtor, and then used by the borrower to build their home

The Contract Sales Price is $385,000. The applicant is requesting an 80% - 10 - 10. How much will the borrower bring to closing for the down payment?

38,500

Late fees of more than ___ % are prohibited on high cost loans.

4 percent

Your borrower receives child support of $1,500 per month and alimony of $1,000 per month and earns a $50,000 annual salary. What is the gross monthly income used for qualifying purposes?

7041.67

What would you say is the best use for Yield Spread Premium?

A borrower credit, used to reduce closing costs

If a mortgage company and a title company create a shell company for the purpose of collecting extra money at closing, what is this known as?

A sham Affiliated Business Arrangement

The formal written document that conveys interest and transfers ownership of real property to another

Deed

What is a clause that restricts the use of certain parts of land?

Deed restriction

The loan limit set for FHA loans is

Dependent on the county and its median income

Who enforces the Telemarketing Sales Rule (TSR) for local calls?

FCC

LP is whose AUS?

FHLMC

How long should a borrower with flood coverage keep the policy?

Forever

On loans not covered by the TRID Rule, fees paid to attorneys, appraisers, pest inspectors, etc. are disclosed at closing on the:

HUD-1 or HUD-1A settlement statement

A borrower is buying a home for $300k and the appraisal comes in at $290k. If they finance 95% LTV, what would their new loan amount be?

275500

You have a T-Bill indexed ARM that starts at 3%. The LIBOR index is at 4%, the COFI is at 4.5%, the T-Bill is at 6%, and the margin is 2.5% with caps of 2/1/6. What would be the fully index rate at the end of the fixed-rate term?

0.085

What would be the front-end ratio for a borrower with $50k in income, P&I of $700, annual taxes of $1,000, annual insurance of $400, and a monthly HOA fee of $100?

0.2199

After providing notice and opportunity for a hearing, the Commissioner, Supervisor or Director may impose a civil penalty for failure to comply with state law of up to _________ per act or omission.

25000

All of the following are protections under the Home Ownership and Equity Protection Act except:

ARMs must be 3/1 with caps of 2/6 and a start rate of 3.5%

Based on the inforamtion provided, which of the following statements is not a violation of the MAP Rule:

Apply with ABC Mortgage Bankers and obtain a low introductor rate mortgage! Rates offered ranging from 3% to 6% based on loan qualifications!

Mortgae Loan Originator, Melinda, had a purchase money client who wanted owner's title insurance, even though it was not required by the lender. Melinda spoke to the title company and estimated the charge at $375. At closing, Melinda found that the owner's title insurance actually cost $675. What must Melinda do to correct this situation?

As long as the fee was disclosed as optional, Melinda only needs to disclose the higher fee at closing

All the following are banned by HOEPA, except:

Balloon feature

Freda is a licensed MLO for Granite Mortgage, Corp. Freda's next-door neighbor, Ben came to Freda with a purchase money loan. He explained to Freda that he had a part interest in the house, but that his name would not show on title. He told her that if she could influence her company to use him for the appraisal, he would ensure the property appraised for the amount needed for the sale and would cut her in on the profit. Which of the following best describes Freda's situation?

Ben has a conflict of interest. It would be morally, ethically, and legally wrong for him to do the appraisal.

If a borrower is short funds to close, which of the following is not allowed

Borrow funds from a family member as long as the payback of the debt doesn't start for one year

All of the following types of calls are prohibited by the TSR, except:

Calls made directly to consumers on the "Do-Not-Call" registry by a local bank or Savings and Loan to solicit new business

What do you call an appraisal that uses a builder's plans to arrive at a value?

Cost Approach

MLO Jose is collecting his borrower's documents and notices that the signatures are remarkably different from document to document. The loan has been approved by the wholesale lender. How should Jose proceed?

Jose should speak to the customers and if they confirm those are their signatures, he should send the loan to underwriting noting the discrepancy and his conversation

A charge to pay for services in the handling of the application, processing, and orchestration of the loan closing.

Loan Origination Fee

Jennifer and Louis are looking to buy their dream home. They know their qualifications will be tight, so they alter their W2s to show their income as being higher than it actually is. Once they are satisfied with the documentation, they drop them in the mail to their MLO. Their MLO receives them and then scans them into the company's Loan Operating System (LOS) to review and organize before sending the package to processing. What type(s) of fraud have been committed?

Mail Fraud

On a refinance loan of $200,000 with closing costs of $8,000, which of the following would be considered to "unethical":

Saving the borrower $20 a month

If the borrower is legally separated, the loan officer should check the box marked:

Seperated

Which regulation prohibits you from collecting any fee before an LE is provided, and an agreement (ITP) is obtained from the borrower?

TRID

Lenders conduct an aggregate escrow analysis annually to ensure

That the lender is not overcharging the borrower for their escrow account

Which of the following is not one of the Federal Banking Agencies listed in the CSBS Model Legislation?

The Director of the Department of Housing and Urban Development

Which appraisal rule expressly permits borrowers to sign a waiver delaying delivery of appraisal copies?

The ECOA Valuation Rule

immie Conley works for a servicing company which purchases servicing rights on loans originated by Veteran's Home Loan Company and other mortgage originators. Jimmie's company never contacts these borrowers except to collect the payments. What law requires Jimmie to send a notice annually to the borrower?

The Financial Privacy Rule

Marsha came home from out of town to find that her mother had obtained a second mortgage from XYZ Mortgage on her home. Marsha was angry and called the state banking commissioner because her mother had dementia. After investigation, the Banking Commissioner determined the lender was notified of a power of attorney and told Marsha that he would make the mortgage company remove the mortgage and restore any monies which her mother had spent. Which of the following best describes the situation?

The actions of the originator were both illegal and unethical

As per Reg B, which of the following is not on the Adverse Action Notice:

The borrower's credit score

The E-Sign Act, which provides validity for electronic signatures, requires which of the following:

The consumer must affirmatively consent to using an electronic method for signing and cannot have withdrawn their consent

he Safe Harbor on the Qualified Mortgage loan has three attributes. Which of the following is not one of those attibutes?

The loan is a Higher Priced loan

Jason applies for a refinance loan with MLO Stephen at ABC Mortgage Bankers. Stephen assists him in completing a loan application and assesses his qualifications. Jason reviews his credit and sees that he has a lower score due to a few late payments on his accounts in the last 12 months, in addition to his high DTI. There are limited options, but Stephen determines he can offer him two loan options. Jason proceeds with selecting a fixed rate loan at 7%. This is a fixed rate loan with a 40 year term and a balloon feature after 15 years. Which of the following statements is true?

This is a Non-QM loan.

Which of the following is true of Title Insurance?

Title insurance protects against events that may have occurred in the past and is paid one time at closing

Prohibited acts enumerated in the CSBS State Model SAFE Act include all of the following, except?

To keep records on an encrypted hard drive

In order to carry out the requirements of the SAFE Act, the Commissioner, Supervisor or Director is authorized to participate in the NMLS and establish all the following background checks, except:

any information deemed necessary by the CSBS

An "Employee" is an individual who has an employment relationship with a mortgage broker, lender, or servicer and who is treated as a:

common law employee in compliance with the Federal Income Tax laws, with income reported on IRS Form W-2

To release claim or interest in a property with no warranties.

quit claim deed

A state Commissioner, Supervisor or Director may enter into information sharing arrangements with all of the following, except:

the MBA

Jack and Jill are looking to buy their first home together. They call into EZ Mortgage Company to inquire about the home loan process. They speak with Michael, a mortgage loan officer. During their conversation, Jack and Jill reveal many key pieces of information including: their homebuying area of choice, an address of a property they are looking to put a contract in on, and what the asking price is, how much money they make on an annual basis, and their identifying information like full name and social security number. Michael informs Jack and Jill that they do qualify for the home they are interested in. Per TRID, what has Michael just collected?

the application

If an MLO allows their license to lapse, for a period of no more than 5 years, prior to issuance of a new license, they must complete:

the continuing education requirements for the last year in which the license was held

An MLO is required to provide an updated Loan Estimate when:

the rate is locked

Bill Zimmerman decides to use a title company recommended to him by your company. You will be held to the 10% tolerance rule on all of the following service fees, except:

the transfer taxes

If the borrower had been previously divorced and is now single, what marital status should you check on the Uniform Residential Loan Application?

unmarried