Practice mortgage test
Using a 36% back end ratio, an applicant for an 80% conventional loan, with a GMI of $3600 and monthly fixed debts of $400, would be eligible for a loan with monthly payments to PITI of
$896 3600 x 36% = 1296 1296 - 400 = 896
An ARM rate adjustment will take into account which of the following?
- Index rate - Margin and - cap
A prepaid finance charge DOES NOT consists of
- Loan origination fee - Escrow processing fee - Escrow waiver fee ALL OF THE ABOVE
What is the Fannie Mae hazard insurance coverage minimum?
100% of the replacement cost or loan balance.
What percentage variance on an fannie mae appraisal report is tolerable when dealing with comps without justification?
15
Borrower is buying a house with a sales price of $200,000 and an LTV of 75%. If he paid $3,000 in points, how many points does that represent?
2
How much of a cushion is a lender allowed for tax reserves?
2 months
What is the variance allowed on adjustments for appraisals according to FNM and Freddie?
20
What is the variance allowed on adjustments for appraisals according to FNM and Freddie?
20%
What percentage of variance on a Fannie Mae appraisal report is tolerable when dealing with comps?
20%
The Truth in Lending Act requires that a borrower be given how many copies of the notice of his right to rescind?
3
Which federal agency administers Regulation B implementing ECOA, Regulation C implementing HMDA and Regulation Z implementing TILA?
FRB
Which federal agency administers Regulation B implementing ECOA, Regulation C implementing HMDA and Regulation Z implementing TILA?
FRB Federal Reserve Board
The Gramm-Leach-Bliley Act requires that financial institutions give consumers what period of time to opt out of allowing the sharing of their nonpublic personal information?
No specified time, but a reasonable opportunity.
The Truth in Lending Act is most closely related to
RESPA
What is allowed per RESPA in terms of commission splitting?
Referring a service provider as long as the work done is proportionate to the fee earned
What is Red Lining?
Refusing to lend in a specific neighborhood.
The risk that an agent may not have his client's best interest at heart is called
Principal-agent risk
For an FHA loan, an acceptable source of down payment assistance is
a gift from a nonprofit organization.
A borrower in a mortgage transaction is called
a mortgagor
The rules relating to the Federal Trade Commissions "no call" registry allow calls to persons on a no call list
a&B for 18 months and 3 months
The charges shown in the GFE
are binding for 10 business days
Without a waiver, an applicant for a conforming loan must be given a copy of an appraisal report
at least three business days prior to closing.
A portion of each payment made on an uninsured amortized loan without an escrow account is applied to
interest and principal.
A conventional loan is a loan that
is not issued, insured or guaranteed by a government entity.
The Homeowners Protection Act (HPA) of 1998 provides that a borrower with a good payment history has the right to request in writing the cancellation of private mortgage insurance when he pays down his mortgage to the point that
it equals 80% of the original purchase price or the appraised value of his home at the time the loan was obtained, whichever is less.
Hal has an adjustable rate loan with a payment cap that allows him to pay less than the amount needed to pay all of the interest being charged on the loan. The term to describe this is
negative amortization.
In a construction mortgage the funds loaned are normally disbursed to the builder in
two equal sums, one at the outset of construction and the other at completion of the job.
Borrower right to receive appraisal within?
30 days
A home appraised at $100,000. The borrower currently has a loan of $50,000, an open end line of credit with a limit of $25,000 and a current balance of $17,500. What is his LTV?
50%
Fannie Mae requires occupancy within
60 days
A 3/1 ARM is?
A Fixed period ARM
Which of the following statements regarding title insurance is true?
A borrower is required by the lender to pay for the lender's title insurance.
Which type of loan processing would include only an appraisal and a credit score?
No documentation
Which type of limited documentation does not consider income in qualifying the borrower?
No ratio
When a telemarketer calls a person on the do not call list in violation of the do not call regulations, he is subject to a fine of
$16,000
Which is not part of total prepaid finance charge (PFC fees)?
Appraisal Fee
Which of the following does NOT appear on the HUD-1 settlement statement?
APR
The clause in a mortgage that allows the lender to foreclose if the borrower defaults is the
Acceleration clause
A copy of the appraisal is provided when?
At close of Escrow.
What is a convertible ARM? It allows the borrower to do what?
Change from a adjustable rate to a fixed rate mortgage.
What is a feature of an ARM?
Adjust at any time.
A 15 year fixed mortgage of $225,000 has a fixed rate of 4%. If the origination fee is 1%, what is the amount financed?
Answer $222,750. $225000 x 1% = 2250 2250 - 225,000 = 222,750
What is the best description for a 360/180 loan
Balloon Loan
The Truth In Lending form provides?
Borrowers with an idea of total closing costs and finance charges.
A GFE contains
Estimated closing costs.
RESPA does not require lender disclosures of closing costs and procedures for which of the following home loans?
Construction loans
A COFI indes is defined as?
Cost of Funds Index
If a refinance is closing on 10/15 and a borrower is not waiving their escrows, how many months of insurance can they collect?
Depends upon expirations of insurance policy
Which of the following is a COST of having an impound account?
Escrow waiver fee
SSPL should be prepared based on?
Final itemized costs - Settelment - Service - Provider - List
In the loan application process which of the following documents refers to a shopping CHART?
GFE
What is the Cost Approach method?
General the cost to build.
Which of the following charges have 10% tolerance?
Government recording charges
RESPA is administered by
HUD
A borrower comes to your office for a loan. The HMDA requires you to collect information about her race. The borrower does not wish to provide information for that section for the application, what do you do?
Have the borrower check the box indicating they do not want to furnish the information, then answer it according to visual observation when she leaves.
A mortgagor wishes to ensure his right to sell is valid?
He should ensure that mortgagor and mortgagee sign a agreement which is the instrument to enforce
If a loan is fraudulent, what actions are NOT typical?
Increasing the borrower interest rate.
How does rate change for PMI for a 90% loan compare to that for a 95% loan?
It depends solely on the loan amount.
loan officer creates a marketing plan to make between 2k to 4k per loan. His cousin calls, he agrees to do the 300k loan for .75% commission and $400 processing fee. this type of transaction is:
Legal and ethical because he is within his marketing plan
LLPA stands for
Loan Level Price Adjustment.
How can one calculate per diem interest?
Loan amount or balance x annual interest rate/number of days in a year.
When a loan balance is paid down to 80% of the purchase price of the home, PMI
May be cancelled upon written request of the borrower.
Under truth in lending requirements, a creditor's ad that contains the APR must also include which of the following?
Monthly payments? Amount financed? Interest Rate? Answer: None of these, as the APR may be advertised by itself.
Which of the following would be included in an escrow or impound account?
Mortgage insurance premiums
A basis point is?
One-one hundredth of 1%
RESPA regulates and sets limits on:
Origination fee
PUD stands for
Planned Unit Development
Something paid for on or before a transaction is consummated is called?
Prepaid finance charge or prepaid costs
Something paid for on or before a transaction is consumated is called?
Prepaid finance charge or prepaid costs?
What is non-traditional mortgage product in consumer handbook?
Reverse Mortgage
The cost of a loan is shown as an annual percentage rate in the
TIL Disclosure Statement.
Which of the following cannot be charged to a borrower in an FHA loan transactions?
Tax Service Fee
When a self-employed person is a 25% owner of his business, which of the following documents needs to be reviewed to determine his loan qualifications?
Tax returns
What will cause a change in the amount of the loan payments on a fixed-rate loan?
The annual escrow analysis
Approval of a reverse mortgage application will be based on which of the following?
The borrower's equity
Which of the following need not be given to a consumer who applies for an ARM loan?
The interest rate upon the first adjustment
Service release premium represents:
The profit a bank makes when selling the servicing rights to a loan
the HMDA provides that financial institutions supervised by the Federal Reserve or FDIC may, at their option report
The reason a loan application was denied.
In order to discover whether there are any liens or mortgages on a property, one would order a
Title search
How can one calculate the number of years it will take to recover the costs of refinancing a loan?
Total costs/monthly savings due to refinancing/12
Which of the following charges have no tolerance restriction?
Transfer taxes
The best tools for a borrower to shop and rate compare are?
Truth in lending form
How can one calculate monthly income for an applicant who is paid an hourly wage?
Weekly income x 52/12
When is the appraisal disclosure required to be delivered?
When a complete application is taken.
Truth in Lending Act is designed to protect consumers in
credit transactions.
A loan originator may not charge
discount points + yield spread premium
An applicant for a real estate loan cannot be asked about his
religion
Subordinate financing relates to
second mortgages.
An ALT A loan is a class of
subprime loan
Regulation Z was issued to implement the Truth in Lending Act by
the Board of Governors of the Federal Reserve System.
PMI and MI are intended to cover whose risk?
the Lender's
the interest rate of a home equity line of credit will be directly affected by changes in
the Lenders PRIME RATE
The advantage of a home equity loan over refinancing is
the ability to pay off part of the total debt separately.
If a rate is locked and interest rates drop during the lock-in period
the lender will not drop the rate to be charged the borrower
The interest rate of a home equity line of credit will be directly affected by changes in
the lender's prime rate
FHA requires a borrower to maintain hazard insurance of at least the lesser of
the loan balance or the replacement cost of the improvements.