GM Knowledge (Sim Exam 5/9, 5/13 (#1), 5/17, 5/19, 5/21, 5/22, 5/28, 6/3, 6/10, 6/22, 6/28, 7/4)

Adam secures a loan to buy a small office building that he intends to rent. Under the Truth in Lending Act, how long will he have to change his mind after he signs the note?

0 days; there is no right of rescission

A higher-priced mortgage loan (HPML) is defined as a loan where the annual percentage rate, of a first lien mortgage loan exceeds the average prime offer rate by

1.5% for a first mortgage lien.

A lender has how many days to notify the borrower of the status of their loan?

30

Which situation would require a partial release?

A borrower wishes to sell a property that is part of a blanket mortgage.

Which organization helps to develop model legislation applicable to the administration and regulation of mortgage lending, servicing, and brokering?

AARMR

Which borrower may qualify for a reverse equity mortgage?

Bill, age 65, who does not currently have a mortgage on his home

Borrower A has a $100,000 30-year loan. Borrower B has a $100,000 15-year loan. At the end of their respective loan terms, who will have paid more principal?

Both borrowers would pay the same amount of principal.

Which of the following would not be part of an escrow account on a government-insured loan transaction?

Credit Insurance

The loan type which limits the LTV to 96.5% for credit scores of 580 or higher after all allowable financed items is

FHA-insured.

The only mortgage that Lucille's lender would give her is a high-cost loan that defers interest payments for the first two years, anticipating that her salary will increase enough to change the payment schedule. However, a high-cost loan that results in negative amortization is illegal under what law?

HOEPA

With a fixed-rate mortgage, what happens to a borrower's payments if interest rates increase?

Payments remain the same.

Which fee is a lender prohibited from charging?

TIL preparation

If a borrower is requesting a cash out refinance on his primary residence and signs all the closing documents on a Thursday, the lender does business on Saturday, and there is not a federal holiday during the month, when could the loan fund?

The following Tuesday

A UFMIP would not apply to which of the following loan programs?

VA-guaranteed loan

What form is used to confirm the balance and availability of liquid assets used in connection with a mortgage?

VOD

What form is used to verify the payment history for a current home loan?

VOM

A final payment at the end of a loan term to pay off the entire remaining principal and interest balance NOT covered by payments during the loan term is

a balloon.

The right a lender has to require payment in full immediately due to a broken covenant in the mortgage document is provided through a(n)

acceleration clause.

The total obligation debt-to-income ratio is computed by

adding the PITI payment and long-term debt and then dividing by the gross monthly income.

The term for gaining ownership rights to a piece of property through open and hostile occupancy for a prescribed number of years is

adverse possession

Which mortgage clause prevents someone from assuming a loan without lender permission?

alienation clause

An occupancy certificate means the

borrower has permission to move into the home from the zoning department.

Which financial arrangement is exempt from the Real Estate Settlement Procedures Act?

bridge loans

A limit on the amount the interest rate can increase for an adjustable rate mortgage is its

cap.

The need to establish a borrower's income through verification is a means to demonstrate the underwriting concept of

capacity.

What term describes the reason why, in some states, a married person cannot sell real property without the consent and signature of his or her spouse, even though the property and any financing is only in one spouse's name?

community property

The option to lock in a fixed rate on an ARM for the remaining term of the loan (after the closing) is known as a(n)

conversion option.

Mortgage insurance insures the __________ against the risk of ___________.

creditor, default

Lenders who are authorized to underwrite their own FHA-insured loan applications have what type of underwriters in their office?

direct endorsers

One percent of the mortgage loan used to buy down the rate is called a

discount point

Interest rates charged by the Federal Reserve for loans to member banks are called the

discount rate.

What is a provision in a mortgage enabling the lender to demand full repayment if the borrower sells the mortgaged property or partial interest in a mortgaged property?

due on sale clause

The annual percentage rate (APR) is also referred to as

effective rate of interest.

The Government National Mortgage Association (Ginnie Mae)

guarantees mortgages backed by federally insured or guaranteed loans.

The U.S. Department of Veteran's Affairs (VA)

guarantees residential loans for veterans.

Section 32 of Regulation Z addresses

high-cost loans.

The amount of the principal loan balance on the date of settlement is the

initial loan amount.

The Federal Housing Administration (FHA)

insures mortgage lenders against default.

Some lenders and investors are willing to make subprime loans because

lenders can charge higher rates for assuming the added risk.

The loan requested divided by the total cost of the project is referred to as the

loan to cost.

What risk is PMI intended to cover?

loss by foreclosure

Which cost would be included in the APR calculation?

mortgage insurance

What document is a promise to pay the mortgage?

note

What type of mortgage allows personal property to be included in the property sale and financed together with one loan?

package mortgage

Funding for a construction loan is usually made

periodically, as the building is constructed.

An easement is

permission to use or occupy another's property for specified time and purpose.

One of the purposes of the Qualified Mortgage definition is to

prohibit or limit certain high-risk mortgage products and features.

Which item is not included in the calculation that determines the annual percentage rate?

purchaser's title insurance premium

What document would be used for a person to relinquish all interest and rights to property without guaranteeing the quality of title?

quitclaim deed

When a debtor in default pays the court what is due, which may include principal and interest owed, lender costs, court costs, and attorneys' fees to stop a judicial foreclosure, this is known as

redemption

The term "par rate" is best described as

requires no discount points and pays no yield spread premium.

ATR/QM rules include

second homes.

In a typical loan for a real estate transaction, the mortgage is the ______ and the property is the ______.

security instrument / collateral

A borrower with bad credit or other risk factors such as high debt, low credit scores, and other creditworthiness issues may qualify most easily for what type of loan?

subprime

Market price is

the amount, in dollars, actually paid for the property.

What are the terms of the "cooling off" period if a loan falls under HOEPA?

three business days prior to closing

According to the Interagency Guidance on Nontraditional Mortgage Products, loans to borrowers who do not show a capacity to repay the loan from sources other than the collateral are

unsafe and should be avoided.

The buyer in a land contract is called the

vendee

Two days after borrower Jim received a Loan Estimate, he tells the lender he wants to change the loan terms from adjustable to fixed rate. When must the lender provide a revised Loan Estimate?

within 3 business days of knowing about Jim's request