800 key facts affinity

(294) Non public personal information (NPI)

" NPI is any personally identifiable financial information that a financial institution collects about an individual in connection with providing a financial product or service, unless that information is otherwise publicly available."

(403) the nationwide maximum loan amount for a reverse mortgage is

$726,525

(348) A conventional mortgage has a 5% late fee

(5% of the P&I amount only)

(405) FHA reverse mortgage is called a Home equity conversion mortgage

(HECM)

(385) a senior mortgage

(first mortgage) has the superior lien position

(408) most borrowers in a reverse mortgage receive their funds vie the tenure method

(getting a monthly check instead of paying a monthly check.

(386) a junior mortgage

(subsequent mortgages) has a lower or more subordinate lien position than the senior mortgage.

(664) each discount point AND each origination point cost

1% of the loan amount

(618 USDA Loans) Guaranteed loan applicants may have an income of up to

115% of Area medium income (AMI)

(679) Late fees are due after the

15th of the month

(655) the combined loan to value ratio (CLTV) =

1st Mortgage + 2nd Mortgage ÷ the sales price or appraised value (whichever is lower).

(633) At a minimum, a borrower should have ____ months of mortgage payments after closing as reserve in a bank or brokerage account

2

(628) Lenders would like to see at least enough to cover ____ months' PITI mortgage payments of principal, interest, taxes, and insurance (and 47 | P a g e assessments such as condominium association fees, if applicable) after the borrower makes the down payment and pays all closing costs;

2 months, however, in most cases, this is not required.

(331) Copies of commercial communications and supporting documents must be kept for

2 years

(641) To be considered durable, bonus, commission, and part-time earning types of income must be shown to have been a consistent part of the borrower's earnings for

2 years

(606 VA Loans) The typical funding fee for a VA laon is

2.3 % of the purchase price of the home

(346) a conventional mortgage requires Private Mortgage Insurance (PMI) on loans with less than

20% down payment. PMI policy that allows the lenders to recover part of the loss in event of borrower default or loss in collateral value

(619 USDA Loans) Debt ratios

29% for housing (front) and 41% for total debt (backO

(785) Continuing Education Must include:

3 hours of federal law, 2 hours of ethics, and 2 hours of training on non -traditional mortgage products

(783) pre licensing education must include

3 hours of federal law, 3 hours of ethics, and 2 hours of training on non-traditional mortgage products

(573 FHA Loans) The FHA requires ___ months ownership before resale

3 months

(809) Loan originators organizations must keep a record of payments from a creditor and payments to individual originators for:

3 years, and the files must contain a copy of the compensation agreements that govern the payments

(351) FHA Insured loans requires ______ % down payments

3.5%

(564 FHA Loans) FHA loans have a minimum down payment of ____ with a credit score of 580 or above.

3.5% , his can be a gift from a relative.

(413) a traditional mortgage is defined as a

30 year fixed

(601 VA loans) VA Loans have a ___ late fee (of the P&I only)

4%

(561 FHA loans) FHA loans have a ___ late fee

4% of the P & I

(349) Government loans (FHA, VA, USDA) have a 4% late fee

4% of the P&I amount only

(620 USDA Loans) the late fee =

4% of the monthly P and i

(355) Late fees are either

4% or 5% if the debt service not the PITI

(589 VA loans) On a VA loan Generally look for DTI that does not exceed

41 %

(730) the appraisal recertification form is called the

442 recertification of value or recert

(629) For investment properties, _______ months of PITI payments must be verified for loans on non-owner-occupied property.

6 months

(568 FHA loan) in an FHA loan Sellers may contribute up to (how much(?

6% of the lesser of the property's sales price or the appraised value toward closing costs.

(404) A re verse mortgage allows qualified borrowers

62 and older to convert equity in home without selling or making payments

(342) Fannie Mae requires ___ year history to be reviewed for all credit and public record information

7 year history

(832) FHA imposes restrictions requiring the borrower not to resale for the first..

90 days

(514) In evaluating flood insurance terms, the risk of flood potential are identified by Special Flood Hazard Area (SFHA)

A SFHA is defined as the area that will be inundated by the flood event having a 1-percent chance of being equaled or exceeded in any giving year. The 1-percent annual chance flood is also referred to as the base flood or 100-year flood.

(523) Fee simple is the highest type of personal property interest in the law

A buyer owns the land as well as the improvements on the land.

(795) Instructor Credit

A licensed MLO who is an approved instructor may receive credit for their annual CE requirements at the rate of 2 hours credit, for every 1 hour taught

(418) Variable balance mortgage

A loan with an adjustable interest rate, but with payments that never change; instead, as the rate increases or decreases, the balance decreases slower of faster as payments are made

(499) The proceeds from the sale of a currently owned home are a common and acceptable source for the down payment and closing costs for a new house

A photocopy of the Closing Disclosure should be submitted to the lender.

(841) Mortgage Asset Research Institute (MARI)

A private subscription service that gives members access to a database of all fraud and suspected fraud cases as reported by its members and state and federal regulatory agencies, as well as the action taken.

(824) Switch After Sale

Accepting a deposit for product, then switching product to a higher priced item. Failure to make delivery of the product within reasonable time or make refund. Delivery of the advertised product which is defective, unusable, or impractical for the purpose represented or implied in the advertisement.

(842) Transitional Authority

Amended by the in 2018 with the passage of the economic growth, regulatory relief, and consumer protection of 2018 to mandate that all states implement transitional authority to MLO's seeking to become licensed other states or who seek t move from a bank to a non-bank lender.

(554) Easements

An easement is a formal right granted to another party allowing them to traverse or access a given property. Utility companies are often granted easements to access a property to maintain their infrastructure, such as electrical wires or cell phone towers. When recorded on the title of a property, an easement will remain permanently and will survive any transfer of title of that property.

(555) Encroachments

An encroachment is a structure or portion of a structure that extends over the boundary line of a property onto another parcel. For example, fences that are built to separate properties without the aid of a surveyor often are not built on the property line and end up encroaching on a neighbor's property.

(644) Employment income must be verifiable for the past 2 tax years.

Any source of income which is not verifiable is not acceptable to the lender.

(822) Occupancy Fraud

Applicant lying about the home being owner occupied. An owner occupied home can get a lower interest rate than an investment property does.

(625) Underwriters want to confirm that the borrowers have sufficient ______ and personal money o make a down payment on the property and pay closing cost, without having to borrow.

Assets

(318) under HPA

Borrowers can request a cancellation when it reaches 80%, which will usually be granted if they have a good payment history.

(676) Daily interest rate is

Calculated as follows; (Loan amount x interest rate) / 365

(591 VA loans) VA loans require to produce a ____ showing the amount of entitlement

Certificate of eligibility (COE)

(694) the lender always makes the final decision to fund a loan, the lender issues a

Clear - to - close

(787) If the marketing materials reference the company only

Companies unique identifier must be used

(282) Role of FFIEC -

Compiles information as individual disclosure statements for each institution, and in the form of aggregate reports for all covered institutions.

(542) No ratio

Conforming loans require an underwriting analysis of a borrower's debt ratios - ratio of housing debt-to-income and ratio of total debt-to-income. In this type of nontraditional loan, the borrower's debt ratios were not considered.

(663) Discount points (Buydwon points) are paid _______; where origination points are paid__________

DP; paid upfront, to the lender for lowering the interest rate. OP; to the loan originator as a fee of service

(339) Fannie Mae's automated underwriting system is known as

Desktop Underwriter (DU).

(575 FHA Loans). Borrowers with FHA loans must

Establish occupancy of the property as their principal residence within 60 days of signing a security instrument and live in the house for at least one year.

(566 FHA Loans) FHA loans require the use of an ___ ______ Appraiser

FHA approved

(583 FHA loans) 2-1 buydown

FHA permits borrowers to buy down the rate on their fixed-rate loan. Lenders are required to qualify the borrower at the note rate and not the buy down rate. In this type of buy down, the borrower deposits funds in an escrow account in order to offset lower interest.

(577 FHA Loan) 203 (b) Home mortgages

FHA's primary program, 203(b) is a fixed-rate program used to purchase or refinance one-to-four-unit family dwellings.

(360) Fannie Mae is the largest institutional investor in the secondary mortgage market. It purchases

FHA, VA and conventional loans from commercial banks.

(439) FICO Credit scores were devloped by

Fair Isaac Corporation

(414) conforming loans meet

Fannie Mae / Freddie Mac standards - can be sold on the secondary market.

(415) Non-conforming Loans Do Not Meet

Fannie Mae / Freddie Mac standards and CANNOT be sold to secondary market (Fannie/Freddie). Non-confirming loans include, among other things: Jumbo loans, Alt-A loans, Sub-prime mortgages.

(735) in the Sales Comparison appraisal Approach

Fannie Mae acceptable comp - no more than 15% net adjustments or 25% gross adjustments

(613 USDA loans) USDA home loans are also know as ____ or ____ loans

Farm loans, or rural development loans

(765) Federal Banking agencies =

Federal Reserve system board of governors, national credit union administration, comptroller of the currency and the federal deposit insurance corporation

(840) Suspicous Activity Reports (SARs)

Filed with the FBI by financial Institutions suspecting or knowing of fraud

(817) An additional appraisal may be required if a prospective purchase is a "flipped" home with a higher-priced mortgage loan.

Flips are defined as resells within 90 days with a buyer paying a minimum 10 % price increase, or resells within 91-180 days with a buyer paying more than 20% price increase.

(340) Freddie Mac's automated underwriting system is known as

Freddie Mac's Loan Product Advisor (formerly Loan Prospector)®. Loan Prospector (LP).

(638) Gross monthly income calculation =

Gross Monthly Income = Annual Income ÷ 12. Gross Monthly Income = Weekly Income x 52 ÷ 12. Gross Monthly Income = Hourly rate x weekly hours worked x 52 ÷ 12. Gross Monthly Income = Bi-weekly rate x 26 weeks ÷ 12. Gross Monthly Income = Bi-monthly rate x 24 weeks ÷ 12.

(753) The SAFE Act is part of the

Housing and Economic Recovery Act (HERA) Of 2008

(459) conforming loans typically do not provide pre payment penalties

However, if the loan does contain a prepayment penalty, it must be disclosed in the note (or on an attachment to the note) and must be clearly disclosed on the Loan Estimate and Closing Disclosure.

(379) Credit score multiple applicants

If more than one individual is applying for the same mortgage, the lender should determine the single applicable credit score for each individual borrower and then select the lowest applicable score from the group as the "representative" credit score for the mortgage.

(543) No income No Assets

In a NINA loan program, no income or assets information was provided by the borrower, nor verified by the lender. Although income was not verified, the lender verified that the borrower was employed.

(544) Stated income, Stated assets (SISA)

In a SISA loan program, the borrower provided information about his/her income and assets. However, no documentation was provided, and the lender performed no verification of the information. Although income was not verified, the lender verified that the borrower was employed.

(762) Applicant Information is stored (?)

In a national registry

(547) No Doc

In a no doc loan, the only documentation used was the credit report and appraisal. These loan programs relied on the value of the home and the borrower's credit history.

(431) For example CAPS = 5/2/6

In this scenario: The loan could adjust 5% at the FIRST adjustment period and indicates the percentage that the rate increases from the "start/initial rate". 2% at every adjustment period thereafter - indicates the percentage that the rate increases (or decrease) from the current rate, but it could only adjust 6% (the cap) - indicates the maximum percentage that the rate increases over the life of the loan.

(426) rate adjustment period

Interval at which interest rate changes.

(595 VA Loans) an entitlement (definition)

Is the maximum amount that the VA will "guarantee" on behalf of a veteran. Veteran's entitlement is based on 25% of the County Limit ($510,100 in most counties) up to maximum of $127,600. If an entitlement is insufficient, a cash down payment may allowed for the balance

(485) Simultaneous issue

Issuing both the homeowner's and the lender's title policy at the same time

(806) entitiy level financial condition report

It is completed annually, within 90 days of the companys fiscal year end

(802) Property Insurance Coverage

LO's may not cause a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer.

(750) Title Insurance protects?

Lenders against loss due to disputes over the ownership of a property and defects in the title not found the search of public records

(788) If marketing material and business cards are issued in the name of the MLO

Marketing materials and business cards require MLO's Unique identifier #

(610 VA Loans) The maximum term for a VA loan is ____ and the late fee is ____

Max term; 30 years, late fee; 4% of the monthly P&I

(703) Seller Contributions

Maximum allowable contributions by sellers and or lenders is 9% of the lesser of the appraised value or sales price, for a principal residence, or second home, if the LTV is 75% or less.

(433) Payment shock

Most ARMs use CAPS to prevent payment shock. Payment shock is when a borrowers rate / payment increases in a large amount - all at once

(759) Everyones loan originator license expires annually

Most states have a december 31 renewal date

(786) The NMLS Unique Identifier # (and advertisements)

Must be present on all marketing material

(698) Flood Insurance

Must be purchased from the National Flood INsurance Program (NFIP). Minimum amount is 100,000 and max amount is 250,000

(791) fail the exam 3 times

Must wait 6 months (180 days)

(513) Flood insurance must be purchased from the

National Flood Insurance Program (NFIP).

(691) When a married applicant qualifies for a mortgage based on his or her own financial capacity, (without any assets or income of their spouse) , Does the spouse have to sign the note

No

(545) No income, Cerified assets (NIVA)

No income information was considered; however, assets were verified. Although income was not verified, the lender verified that the borrower was employed.

(596 VA Loans) If legally married, spouse's income may also be considered for qualification purposes.

Non-married co-borrower is not allowed on a VA loan unless he or she is an eligible veteran who will occupy the home.

(607 VA Loans) If legally married, spouse's income may also be considered for qualification purposes:

Non-married co-borrower is not allowed on a VA loan unless he or she is an eligible veteran who will occupy the home.

(760) The renewal period for the NMLS is

November 1st - December 31st

(323) The E-sign Act, a party to a contract cannot be forced to use electronic signature method, and may sign in ink, "wet signature"

One party can use electronic signature method, while the other party to the contract can retain the right to sign the document personally (wet signature).

(756) The Conference of State Bank Supervisors (CSBS), the American Association of Residential Mortgage Regulators (AARMR), and the Consumer Financial Protection Bureau

Oversee compliance with the SAFE Act

(659) The total debt to income ratio =

PITI + other monthly debt / Gross monthly income

(658) The housing expense ration =

PITI / Gross monthly income Fannie Mae requires a maximum of 28% and FHA is 31%. The VA does not consider it.

(712) The one that will recieve the money promised is called the

Payee

(763) Consumer

People who keep their money in banks and credit unions, pay for goods and services with credit cards, rely on loans to buy homes and pay for college, among other services

(357) PITI is

Principal, Interest, Taxes and Hazard, Flood and Mortgage Insurance. It is also called the monthly housing expense.

(699) Flood Insurance

Property located in areas flood zone A or V (high flood areas) must have flood insurance, required by the lender, for the life of the loan

(521) real estate (defintion) and REal property (Definition)

Real estate is the land, structures on the land, air rights and mineral rights. Real property is the associated bundle of rights with real estate.

(541) Reduced documentation/No doc loans

Reduced documentation loans - also known as "low doc" or "no doc" loans - are one type that has become virtually unavailable in the marketplace. Low doc and no doc loans were initially used for self- employed individuals and other borrowers with income, debt and assets, which were difficult to verify through standard underwriting documentation.

(576 FHA Loans) FHA limits transactions as follows

Resales occurring 90 days or less following acquisition will not be eligible for an FHA mortgage. Resales occurring 91 to 180 days following acquisition will be eligible for an FHA loan provided an additional independent appraisal is obtained Resales occurring 90 days to one year following acquisition will be subject to additional review to establish value.

(816) short sale fraud

Schemes occur when the perpetrator uses a straw buyer to purchase and ultimately default on a home loan, creating a short sale situation so that the perpetrator can take advantage and purchase the home at a discount.

(579 FHA Loan) 203(k) Rehab Mortgage

Section 203(k) insurance enables homebuyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home.

(614 USDA Loans) also known as section _____ loans

Section 502 loans

(751) SAFE stands for?

Secure and Fair Enforcement

(582 FHA Loan) 245(a) Growing Equity Mortgages and 245 Graduated Payment Mortgages:

Similar in structure, these programs are intended to assist borrowers by lowering the initial costs of their mortgage. Payments increase each year, so the programs are best for borrowers expecting a steady increase in their income over time.

(425) Index

Statistical report used as reliable indicator of cost of money. Examples: COFI, COSI, LIBOR, PRIME

(706) Debtit

Sums of money owed

(584 FHA Loans) Officer and teacher next door

The 203(g) program is intended to revitalize communities by offering homes for sale at a 50% discount off the HUD appraised value to teachers, law enforcement officers and firefighters/EMTs. HUD requires a mortgage agreement to be signed for the discounted amount although no payments or interest is charged as long as the borrower fulfills a three-year owner occupancy requirement

(755) Consumer Financial Protection Bureau (CFPB) was created by

The Dodd Frank Act and the Consumer Finance Protection Act

(779) NMLS Uses a generic application (MU4)

The NMLS does not give a person their license, only a state can give someone a license. The mU4 is the application for any state, it includes information all states require on their license.

(546) Stated Income, Verified Assets (SIVA):

The borrower provided information on his/her income; however, no documentation was required, or verification on the actual income figures was performed. Assets, employment and other requirements were verified by the lender.

(656) HCLTV means Home equity line of credit (HELOC) combined laon to value ratio

The formula to calculate HLTV is as follows: HLTV = 1st Loan Amount + the maximum available balance of the HELOC ÷ Lesser of the Property Value or Purchase Price.

(609 VA Loans) Who sets the interest rate on a VA loan

The lender sets the interest rate, not the VA

(557 FHA LOans) The FHA provides 100% Insurance to its approved lenders

The lenders recover any losses experienced during a foreclosure or short sale because the FHA makes up the difference to the lenders.

(375) Fannie Mae will purchase first mortgages that are secured by residential properties for use by 1 to 4 families.

The occupancy may be that of a principal residence, a second home or investment property.

(429) CAPS

There are three types of rate CAPS on most ARM loans: The initial CAP applies to only the first rate adjustment, the periodic CAP applies to all subsequent adjustment periods, and the life CAP sets the maximum number of percentage points that the rate can increase for the life of the loan

(580 Adjustable Rate Mortgages)

These loans are allowed for improvements to existing and new construction properties to increase their energyefficiency. Financing is the greater of 5% of the loan or $4,000, with the maximum capped at $8,000.

(581 FHA loan) Energy efficient mortgages

These loans are allowed for improvements to existing and new construction properties to increase their energyefficiency. Financing is the greater of 5% of the loan or $4,000, with the maximum capped at $8,000.

(843) Individuals are allowed to originate loans while completing any state-specific requirements for licensure such as education or testing, for how long?

They can practice applying for state agency of their new license for up to 120 days.

(780) MLO Applicants are eligible for license if:

They have no felony convictions in the past 7 years, or no felony conviction ever if offense is related to fraud, dishonesty, money laundering, or breach of trust, THE ONLY EXCEPTION is if he/she has received a pardon

(617 USDA Loans) Insurance

USDA Mortgages do not have PMI, but instead have an upfront premium/funding fee that is meant to cover any losses incurred by borrowers who may default.

(558 FHA Loans) FHA Loans have a required

Up Front Mortgage Insurance Premium (UFMIP) and a Monthly Insurance Premium (MIP) regardless of the down payment amount.

(844) Someone who knowingly executes, or attempts, to execute a scheme, or artifice one has what consequences:

Up to $1,000,000 fine, and/or up to 30 years in prison.

(642) 25% of ownership in a businessis required for an individual to be considered self-employed.

Verification of income requires 2 years of personal and business income tax returns. A year-to-date Profit and Loss Statement and a Balance Sheet may also be required.

(515) high risk flood zones

Zones A and V (mandatory)

(516) Moderate flood zones

Zones B or X (optional)

(517) Low risk flood zones

Zones C or X (not required)

(599 VA Loans) A VA Appraisal is known as;

a Certificate of Reasonable Value (CRV). It can also be called a Notice of Value (NOV).

(471) Utilizing a Power of Attorney (POA)

a POA must be approved by the lender in advance and the lender may limit the person who can be a power of attorney to only immediate family member, such as a spouse or parent/child. Please note that a POA may never be a party to the transaction, such as the real estate agent or the MLO. If no POA is assigned - NO ONE can sign on behalf of the borrower.

(537) Bridge Financing

a bridge loan is sometimes used when the buyers wish to finalize the purchase of a new home before their current home is sold. It's a short-term cash- out loan made on the equity in the applicant's current property in order to allow them to close on the purchase of a new transaction.

(665) All origination points must be lumped together as the origination fee on the loan estimate while the discount points used to buy down the rate must be indicated as a charge the borrower incurrs for the interest rate selected.

a charge the borrower incurs for the interest rate selected.

(830) hacking

a form of identity theft involving accessing computer systems and networks to steal information

(827) Skimming

a form of identity theft involving compromising credit card readers to clone bank and credit cards.

(829) spamming

a form of identity theft involving sending unsolicited e-mails designed to trick recipients into providing personal info

(556 FHA Loans) The Federal Housing Administration is

a government agency within the department of Housing and Urban Development (HUD)

(796) Successive year rule

a licensed MLO may only receive credit for CE course in the year in which the course was taken

(792) Retest after lapse of license:

a licensed MLO who fails to maintain a license for a period of 5 years must retake the NMLS exam

(461) the mortgage reconveyance deed

a method used to transfer title for a property following full repayment of a loan

(768) A person in the mortgage industry is defined as

a natural person, a limited liability corporation, association, company, corporation, and partnership

(605 VA loans) for VA laons, No mortgage insurance. Instead of mortgage insurance, there is

a one-time variable VA funding fee that can be included in the loan.

(363) fannie mae requires a borrower to have

a social security # or an individuals tax payer identification #

(445) Construction mortgage

a temporary loan used to finance the construction of improvements and buildings on land.

(686) the borrower may rescind any lock in agreement, until:

a written confirmation of the agreement has been signed by the lender and mailed to the borrower

(493) The hazard insurance premium is paid

a year in advance, and must be effective the day of closing

(306) Do Not Fax -

advertisers may not send a message to anyone's fax number unless: they have an established business relationship, fax number is public information, recipient granted permission and advertisement has clear opt-out instructions on the first page of the transmission for recipients who no longer wish to receive faxes from the sender. The penalty for violations is $500 per unauthorized fax.

(309) MARS prohibits

advising consumers to discontinue communication with lenders.

(353) a jumbo loan exceeds fannie/freddie maximum loan amount

aka -a non conforming loan

(437) Balloon

aka partially amortized loan- has periodic payments that do not fully amortize the loan by the end of the loan term. the final payment is large than the others and is known as a balloon payment

(681) the loan originator collects

all information, and sends the package to an underwriter

(831) Identity theft

all types of crime in which someone wrongfully obtains and uses another persons personal data in some way that involves fraud or deception, typically for economic gain

(464) the mortgage pre payment privelage clause

allows the borrowerto pay all or part of the loan before it is due without a pre payment penalty

(454) The mortgage acceleration clause

allows the lender to call the entire loan balance due if the borrower is in default.

(453) A deficiency judgement

allows the lender to claim other assets from the borrower when the proceeds of the foreclosure sale are insufficient to satisfy the mortgage lien.

(456) The mortgage escalation clause

allows the lender to increase the interest rate of the loan under certain conditions.

(452) the equitable right of redemption

allows the mortgagor in default to pay the entire balance due and keep the property from being foreclosed.

(475) the assignor can sell the servicing rights

along with the mortgage and note to the assignee (selling a loan with servicing released).

(687) Generally the borrowers must use 5% of their own funds to make the required minimum cash down payment

although that downpayment may be supplemented with a gift from a relative, domestic partner, or fiance

(632) Lease payments must ____ be considered a recurring debt obligation, regardless of the # of months remaining on the lease

always

(653) The applicant will most likely be required to sign one or two IRS forms:

an IRS 4506-T (Request for Transcript of Tax Return) and/or an IRS 8821 (Tax Information Authorization) so that the lender can verify the income.

(821) Loan Flipping

an abusive practice in which a loan is refinanced without any tangible net benefit to the borrower. A form of equity stripping.

(823) Bait and Switch

an alluring but insincere offer to sell product or service. Purpose is to switch consumers from buying advertised product to something else. It's still bait and switch if consumer chooses other product/service.

(567 FHA Loans) An FHA Streamline Refinance doesn't require

an appraisal, or income and credit verification.

(578 FHA LOAN) 234 (c) Condominium mortgages

an fha condo loan also known as section 234 c, is a mortgage insured by the fha which is deisgned to assist people who are getting into a new condo

(772) Mortgage Loan Originator -

an individual who for compensation or gain, or in expectation of compensation or gain, takes a residential mortgage loan application, offers or negotiates terms of a residential mortgage loan.

(430) an ARM

an introductory rate that is lower than the fully indexed rate at the time of closing is called a teaser rate.

(738) income approach appraisal

analyzes revenue, income property does or could generate. most useful for income-producing commercial and investment properties

(724) trust deeds are non judicial

and do not require a court action to foreclose on a property

(387) there is an unlimted possible # of junior mortgages

and no restrictions on terms

(727) the appraiser must be paid a flat fee

and not a fee based on the appraisal value

(723) mortgages have Judicial fore closures

and require court action to foreclose on a property

(460) Under federal law, prepayment penalties are now restricted soley to fixed rate qualified mortgages

and they may not be charged for the first 3 years of the loan

(440) a first time home buyer is someone who is purchasing an owner occupied primary residence

and who has not had an ownership interest in an owner-occupied property for the past three years.

(773) Registered Mortgage Loan Originator

any individual who meets the definition of mortgage loan originator and DOES work for a depository institution/bank

(774) State Licensed Mortgage Loan Originator

any individual who meets the definition of mortgage loan originator, and is NOT an employee of a depository institution (bank)

(307) The Mortgage Assistance Relief Services (MARS) Rule - Regulation O

applies to negotiators assisting borrowers with mortgage loan modifications. The Mortgage Assistance Relief Services (MARS) Rule helps to protect distressed homeowners from foreclosure-prevention scams.

(627) Reserves (definition)

are cash on deposit or other highly liquid assets a borrower will have available after the loan funds

(624) Debts (definition)

are considered any reoccurring monetary obligations that cannot be canceled.

(776) Individuals who negotiate a mortgage loan for themselves or family members

are exempt from licensing

(771) Supervised loan processors and underwriters who do not represent to the public that they can perform any of the activities of a loan originator

are not required to be state licensed loan originators

(708) Pro-rations

are the division of expenses between the borrower and seller in pro-rations to the actual usage of the item as of the day the loan is funded

(381) subprime loans

are the riskiest, and are associated with poor credit scores

(393) U.S. Treasury Securities rate and the London Inter-Bank Offered Rate (LIBOR)

are two common indices.

(526) Joint tenants

are two or more parties buying at the same time, buying equal shares and the shares can't be willed. The right of survivorship dictates that the remaining co- owners receive the deceased's interest in the property.

(525) Tenants in common

are two or more parties buying the same or unequal percentage of the property, buying at the same or different times, and the individual's share, can be sold or willed.

(662) Points

are used to lower interest rates and each point will lower the rate by 0.25%

(356) escrow impounds

are usually collected by the lender as part of the monthly mortgage payment. They include the monthly amount for property taxes, hazard insurance and flood insurance, if required.

(447) after the loan is approved and funded, construction funds are placed in an account and released to the borrower / builder

as "draws" or obligatory advances.

(407) in a reverse mortgage the balance ______ as the equity ______

balance rises, equity shrinks (Rising debt, falling equity)

(667) A discount point or buy down can be paid by

borrower, seller, builder, etc.

(571 FHA Loans) Credit score requirement

borrowers with a minimum score of 500 to 579 will be eligible for a loan with up to 90% LTV

(570 FHA Loan) Credit score requirement

borrowers with a minimum score of 580 or above are eligible for maximum financing

(572 FHA Loans) Credit score requirement

borrowers with a minimum score under 500 are not eligible for FHA financing. The Upfront Mortgage Insurance Premium is charged on all FHA loans and paid to HUD after the loan closing.

(692) The underwriter is responsible for evaluating

both; the risk of the borrower, and the property

(406) a reverse mortgage still requres GFE and TIL

but not the loan estimate or closing disclosure

(337) Ginnie Mae does NOT

buy or sell loans or issue Mortgage Backed Securities (MBS)

(820) Unrecorded or silent scond

buyer gives a seller a second mortgage without informing the lender or makes the lender aware but never intends to file the lien or to make any payments to the seller, with the seller agreement.

(319) HPA Allows borrowers to accelerate the cancellation date

by making additional payments that bring the LTV to 80%.

(380) Alt-A loans are characterized

by reduced documentation, high ratios or limited assets.

(736) Cost approach

calculates cost of land, site improvement, and construction of structure. Most useful for unusual or non-income producing property.

(416) Package mortgage

can be either amortizing or non-amortizing, and the lien includes personal property as well as real property.

(640) A durable source of income

can be expected to continue for a sustained period. Permanent disability, retirement earnings, and interest on established investments clearly are durable types of income. Temporary unemployment benefits are unlikely to be counted.

(474) the assignor

can keep the servicing rights (selling a loan with servicing retained)

(815) builder - bailout scheme

can occur when a builder or developer experiences difficulty selling his inventory and resorts to using fraudulent means to unload properties

(468) partial release

clause in a blanket mortgage allows the developers lien to be released as the parcel is sold

(666) Discount points can be temporary, or they can be fixedand the cost of the point is considering a

closing cost, and it is usually paid the borrower, who pays the origination point

(308) MARS bans

collecting fees until homeowners have an acceptable written offer from the lender or servicer.

(436) Hybrid mortgage

combination of fixed and adjustable rates and / or interest only. for example 5/25 fixed for five years, and adjusts for 25 years until the loan is paid off

(597 VA Loans) 2 eligible veterans may

combine their VA Benefits to qualify for a larger loan.

(608 VA Loans) Two eligible veterans may

combine their VA Benefits to qualify for a larger loan.

(391) an adjustable rate mortgage

consists of 2 parts, an index which fluctuates and a margin which is fixed, index + margin = fully indexed rate

(448) permanent financing (take out loans)

construction is complete, loan is replaced by a permanent amortizing loan.

(362) fannie mae emphasizes the borrowers continuity of ____ _____ vs ____ __ _______

continuity of stable income vs. stability of employment.

(509) Insurance

contract that compensates for loss from designated hazard.

(510) Homeowners Hazard insurance

covers loss/damage from fire or other disaster. Policy sufficient to replace home or reimburse mortgage amount. Lenders can place insurance if borrower does not comply. Usually require first year premium prior to closing.

(466) blanket mortgage

covers multi tracts of land

(696) Hazard insurance does not cover

damages due to perils of flood

(775) States have the authority to

design application forms, collect transaction fees, conduct background checks, issue licenses, write regulations, deny, suspend, or revoke licenses, investigate complaints, subpoena witnesses and documents, assess penalties, and order the termanation of an indicual who are threats to public welfare

(329) MAP applies to any commercial communication

designed to produce a sale or to create interest in mortgage products or services. It is illegal to misrepresent any loan term or condition in an advertisement

(672) Lenders Return is the total amount a lender or broker makes on a loan's;

discount points, such as from loan fees

(630) Consumer debts (installments) that have less than 10 months of payments remaining

do not need to be included for the purpose of calculating debt ratios.

(801) MLOs, Processors, and Underwriters employed by credit unions and depository institutions

do not need to be licensed under the SAFE Act - employees of these institutions must be registered through the NMLS Registry and have an NMLS Unique Identifier #

(352) VA and USDA guaranteed loans

do not require a payment

(746) Title search

each of public records to determine ownership prior to the conveyance of property.

(484) who will pay for the title policies

either the seller or lender (or both)

(631) If the credit report does not show a required minimum payment amount, the lender should use an amount

equal to five percent of the outstanding balance.

(603 VA Loans) Sellers Concessions

exceeding 4% of the established reasonable value of the property are unacceptable, Max seller concessions on a VA loan is 4%

(777) Attorneys who negotiate terms as an ancillary service and who are not compensated by loan origniators or lenders are:

exempt from licensing

(685) each lock in agreement must be in writing and contain

expiration date of the lock, the interest rate, any discount points, any commitment fee, and lock in fee (if they exist)

(682) Applications can be taken in the following ways

face-to-face, over the phone, through the mail, or over the internet

(530) There are two types of freehold estates

fee simple and life estate.

(623) Liabilities are (Definition)

financial obligations or debts owed by a borrower.

(778) All applicants are required to provide:

fingerprints, credit report, and criminal background check

(343) A conventional mortgage requires a minimum of 3% down for

first time home buyers

(683) an applicants interest rates can :

float, or be lock in

(279) HMDA Data must be maintained and made available upon request

for 3 years

(569 FHA Loans) in an FHA loan initial premium - upfront mortgage insurance premium

for a 15- and 30-year purchase and refinance transactions for cases assigned on or after April 9, 2012 - 1.75% of the loan amount

(652) unemployment income

for applicants whose work is seasonal, unemployment income can be used as part of the qualifying income. Some trades such as fishing, construction, and teaching are seasonal work with regular down-time and during this down-time, they rely on unemployment income. If unemployment is a part of their natural annual work cycle, then it can be included in their qualifying income if it has shown for the past two years on the borrowers tax return (the average $$ amount is used).

(671) Buy down points (temporary points)

for example, shown as FHA 2-1, buy down allows a purchaser to reduce the interest rate on a mortgage by 2% for the first year, 1% for the next year, and 0% every year thereafter.

(819) Deed Scam

forced sellers signature on the deed. Property is fraudulently transferred and deed recorded. Thief mortgages property for cash out and walks away.

(725) uniform residential appraisal report (URAR)

form 1004 is the fannie mae appraisal form

(812) The FBI investigates mortgage fraud in 2 distinct areas

fraud for profit and fraud for housing

(500) Direct investor

funding occurs when the lender deals directly with the borrower without any middlemen.

(344) generally, the minimum is ___ % down payment

generally 5% down

(670) Fixed Discount Points

give the borrower a lower interest rate for the life of the loan

(434) convertible ARMs

gives borrower the right to convert from an ARM to a fixed rate loan

(293) GLBA Financial Privacy Rule

governs collection of non-public personal information (NPI), restricts when information may be disclosed to affiliates and non- affiliated third parties, prohibits disclosure of access codes and account numbers to non-affiliated third parties, requires Consumer Privacy Notice.

(338) Ginnie Mae

guarantees investors the timely payment of principal and interest on MBS backed by federally insured or guaranteed loans — mainly loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veteran Affairs (VA).

(444) A 5/1 arm (is structured how)

has a fixed interest rate for 5 years and adjusts annually after that

(443) A guarantor or co-signer is a credit applicant who does not have an ownership interest in the security property, but who signs the mortgage note and thus

has a joint liability for the note with the borrower who is the owner of the note.

(469) a valid contract

has four elements: competent parties, mutual agreement, legal object and consideration.

(420) seller wrap around mortgage

has the seller retain the existing mortgage (the buyer makes one larger payment; the seller pays the lender and keeps the difference).

(532) IRS Tax Liens

have a lower lein postion (recorded later) than property taxes, senior mortgages and junior mortgages because no lender would loan money to someone with an outstanding IRS lien

(522) REal estate tax liens

have priority over all other liens and must be paid off firstin the case of foreclosure.

(650) rental income

he underwriter will only consider 75% of rental income collected. The other 25% us considered vacancy factor.

(518) Force placed insurance

homeowner fails to keep home insured. Lender has right to buy and charge insurance to cover lender's interest in home. Typically expensive. Covers lender; not homeowner or contents of home.

(512) Flood Insurance

homeowner's hazard insurance doesn't cover flood damage. Homes in federally designated special flood hazard area require flood insurance for the life of loan.

(647) Alimony, child support and/or maintenance may not be used as income if the borrower does not want to use them

however, if these items are used as income, Regulation B (ECOA) states that the lender cannot refuse to consider them.

(350) The down payment amount on a conventional conforming loan could vary

however, on a conventional loan 5% of the down payment amount must come from the borrower's own funds.

(409) no income requirements in a reverse mortgage

however, the borrower must be able to pay continuing obligations related to property (property tax, insurance, upkeep).

(446) the three common disbursement plans

in a construction mortgage are the fixed disbursement plan, the voucher system and warrant system

(833) FHA requires the lender to investigate the transfer history of property for the past three years before resale

in attempt to identify any potential flipping schemes.

(695) Homeowners insurance policy is insurance that covers the loss or damage to the home or property

in the event of fire or other disaster such as tornado, snow, and hail damage

(334) the secondary market

includes private investors or government agencies that buy or sell real estate mortgages.

(283) The Gramm-Leach-Bliley Act (GLBA)

includes provisions to protect consumer's personal financial information held by financial institutions.

(742) Appreciation = ?

increase in property value

(529) Freehold estates can be held

indefinitely by the owner.

(808) Loan Originator organizations can receive compensation for selling additional products such as title insurance however

individual loan originators may not

(794) Once unlicensed for 5 years,

individuals must retake and pass the national exam. If the individual has worked as a registered MLO during this unlicensed period, he is credited that time

(769) Underwriters and loan processors are -

individuals who perform clerical or support tasks at the direction of a state licensed loan originator or registered loan originator. They do not negotiate loan terms

(719) trust deeds

instruments placing specific financial interest in title to real property into hands of disinterested third party as security for payment of note

(312) MOney laundering

involves bringing illegally obtained funds into and out of the financial system in a manner that evades law enforcement. Laundered funds are often linked to such serious crimes as terrorism, arms smuggling and drug trafficking.

(835) Predatory Lending

involves loans that take advantage of ill-informed consumers through excessive high fees, misrepresented loan terms, frequent refinancing, and prohibited acts

(651) public assistance income

is "grossed up" by 1.25% (increased by 25%) during underwriting.

(650.2) public assistance income

is "non-taxable" income and can be consider any of the following: child support, alimony, social security income, retirement income, pension, etc.

(359) The maximum term for a Fannie Mae loan

is 30 years.

(390) A 360/180 loan

is a balloon amortized over 30 years with a lump sum payment due after 15 years.

(747) Chain of title

is a clear unbroken chronological record of ownership of a specific piece of property.

(292) according to the GLBA a customer

is a consumer with a continuing relationship with a financial institution.

(424) A home equity line of credit

is a form of revolving credit in which the home serves as collateral. The amount of the available credit line usually depends on the borrower's equity in the home (appraised value — loan balance = borrower's equity).

(369) The Fannie Mae 1008 Transmittal Summary

is a form that summarizes the applicant's data and will usually be the top sheet in the loan package when it is sent to the underwriter.

(281) The Federal Financial Institutions Examination (FFIEC) Council

is a formal U.S. government interagency body composed of five banking regulators that is "empowered to prescribe uniform principles, standards, and report forms to promote uniformity in the supervision of financial institutions"

(428) A rate cap

is a limitation on the amount that an interest rate may increase or decrease at the adjustment date or over the life of the loan. These are referred to as "adjustment caps".

(417) Graduated payment mortgage

is a mortgage in which the payment starts low and increases over time. This is a specialized payment structure that allows the borrower to make a smaller payment in the early years of the mortgage, with payments increasing yearly, until they are sufficient to fully amortize the loan. The lower payments in the beginning usually cause negative amortization.

(767) an individual

is a natural person

(401) a reverse mortgage

is a negatively amortizing loan for homeowners of primary residences who are 62 years or older and have a large percentage of their current mortgage paid off. They are non-recourse loans, and the lenders cannot file a deficiency judgment against the heirs. The heirs are not personally liable for the note.

(399) a term mortgage

is a non-amortizing interest-only loan. The balance is due at the end of the term in a balloon payment.

(451) A list pendens

is a notice filed by the lender when it initiates a foreclosure lawsuit.

(501) table funding

is a process that allows a broker to originate and close a loan under his or her name. After closing, the mortgage and note are immediately assigned to that investor.

(455) the mortgage alienation clause

is a provision in a mortgage enabling a lender to demand full repayment if the borrower transfers the loan.

(280) The Community Reinvestment Act

is a regulation designed to help meet the credit needs of the communities in which it operates.

(534) HELOC

is a revolving mortgage loan that allows the borrower to take advances at his/her discretion up to an approved limit that represents a percentage of the borrower's equity in a property.

(487) An easement

is a right of way that gives someone other than the property owner the right to be on the land for a specific purpose.

(673) Yield Spread Premium (or lenders Credit)

is a tool that MLO's can use to reduce a borrowers settlement costs

(528) Subject to the mortgage

is a transfer of title in which there is no new note and the original buyer retains all the liability.

(336) the government national mortgage Association (Ginnie Mae)

is a wholly owned government corporation within the United States Department of Housing and Urban Development (HUD).

(478) a deed

is a written instrument used to convey title or transfer ownership

(527) Novation

is an assumption in which the original borrower is released from allliability.

(291) According to the GLBA - a consumer

is an individual who obtains or has obtained a financial product or service from a financial institution for personal, family or household reasons.

(470) An attorney in fact

is an individual with power of attorney who is able to sign the contract if one of the parties is not able or competent to sign.

(813) illegal property flipping

is best described as purchasing properties and artificially inflating their value through false appraisals

(743) Functional Obsolescence

is caused by a change in the taste

(744) Economic Obsolescence

is caused by a deteriorating neighborhood

(745) Physical Deterioration

is caused by aging or poor upkeep

(668) Origination Fee

is charged on loans that close. Covers administrative costs to close/service the loan. Usually based on percent of the loan amount (1% = 1 point = 100 basis points BPS).

(494) A flood certification fee

is charged to the borrowers at closing to cover the costs of determining whether or not the property is in a flood zone

(805) the state-level residential mortgage loan activity report

is completed quarterly within 45 days of the end of the calendar quarter

(206) Disparate treatment

is discrimination that is defined by differences in the way a member of a protected class (race, religion, sex, etc.) are served by an institution. Disparate Treatment is discrimination that is defined by differences in the way members of a protected class are served by the institution. For example, an individual may be engaging in disparate treatment by shaking the hand of members of one race or gender and not following the same procedure with members of another race or gender. Disparate treatment can also occur if members of a protected class are charged higher rates and/or fees than similarly situated members of a non-protected class.

(205) overt discrimination

is discrimination that is explicit or obvious. An example would be advertising that indicates members of a protected class are not welcome at the institution. Alternatively, overt discrimination might exist if there is a widespread understanding in the community that members of a protected class will not be served by an institution.

(550) Credit

is evaluated by looking at the credit report. While the borrower's FICO credit score is very important, there are other items that can affect the evaluation of the applicant's creditworthiness.

(422) purchase money mortgage or seller held mortgage

is given by the buyer to a seller to secure part or all of the money borrowed to purchase the property. A seller may take part of the purchase price as a mortgage to help the sale. Sometimes referred to as "seller-carry-back" loans.

(483) a title comittment binder

is issued after a search of the public records.

(498) Sweat equity is

is not an acceptable source of funds.

(333) The Federal National Mortgage Association (FNMA)

is now known as Fannie Mae. Fannie Mae is the largest institutional buyer of conventional mortgages in the secondary mortgage market.

(388) Fixed rate mortgage

is one example of a fully amortized loan. During the first few years of the loan, most of the monthly P&I is going toward paying the interest. Payments during the last few years are almost entirely principal repayment.

(398) A Bi-Weekly Mortgage

is one in which the borrower must make a mortgage payment every two weeks. This allows the borrower to build up equity faster and pay less interest over the life of the loan.

(639) A quality source of income

is one that is reasonably reliable, such as income from an established employer, government agency, interest-yielding investment account, etc.

(389) a balloon mortgage

is partially amortized. Monthly payments are usually calculated as if it was a 30-year term but the balance of the loan will come due before that time and has to be paid in one lump sum; 5, 7 and 10-year terms are popular.

(486) A property Survey

is required and is certified to lenders, title insurers and buyers.

(784) minimum of 8 hours continuing education

is required anually for all MLO's

(593 VA Loan) On a VA Loan NGB 22/23 for army or air national guard reservist with 6 or more years of reserve service

is required if currently "active".

(592 VA Loan) On A VA Loan a DD-214 (commonly called Discharge Papers or Report of Separation) is issued by the Department of Defense

is required if the Veteran has been discharged.

(604 VA Loans) Residual income (Definition)

is the amount that is left over to purchase necessities like food and gasoline after all other expenses are paid. The numbers are based on a report filed by the Department of Labor's Bureau of Labor Statics and is available on their website.

(748) Color of title

is the appearance of having title to personal or real property by some type of evidence, but in reality, there is either no title or it's a defective title. This person is usually not the true titled owner.

(450) forbearance

is the choice by the lender not to take action even though the borrower is in default of the loan.

(449) foreclosure

is the enforcement of a lien. A proceeding to extinguish all rights, title and interest of the owner of a property in order to sell the property and satisfy any liens against it.

(837) material misrepresentation

is the intentional hiding or altering of material fact such as income or tax documents

(839) Omission

is the intentional leaving out of information

(710) the note (promissory note)

is the legal evidence of the debt and it is not recorded

(432) the floor

is the lowest interest rate to which an ARM may adjust

(354) P&I (debt service)

is the monthly principal and interest payment

(473) the asignee

is the party receiving the contractual rights.

(472) the assignor

is the party transferring contractual rights to another.

(704) loan Consummation

is the point and time that the consumer becomes contractually obligated on a credit transaction. Often refered to as doc signing, or closing

(553) Risk Layering

is the practice of approving loans with multiple layers of risk, which may significantly increase the risks to both the lending institution and the borrower. Subprime borrowers are understood to be "at risk" borrowers because of past credit problems, layering on additional risk on the same loan would include such things as; reduced documentation, a simultaneous high LTV second mortgage, and not including escrows for taxes and insurance.

(382) amortization

is the process of fully paying off a loan in regular payments over a specified period of time. The portion of each monthly payment that goes to reduce the outstanding principal balance gradually increases with each payment throughout the life of the loan, and the portion used to pay interest gradually decreases each month. Payments applied to principal and interest.

(419) A Wraparound Mortgage

is usually a type of seller financing in which the seller finances enough money to cover the existing loan balance as well as any additional funds needed by the borrower.

(421) seller financing

is when the seller extends credit to the buyer to finance the purchase of property.

(598 VA Loans) The VA doesn't limit the price a veteran can pay for a house - however

it does limit the amount it will guarantee to 25% of the purchased price (or value - whichever is less). For example - if a home is selling for $350,000, the MAX amount the VA will guarantee is $87,500 ($350,000 x 25%).

(600 VA Loans) A VA Loan is assumable

it does not have a due-on-sale clause.

(810/811) creditors may not include mandatory arbitration clauses or waivers of the consumers right to file a lawsuit alleging federal violations in transactional agreements

it is a penalty of $28,474 and it violates the SAFE act

(392) the index is a known , fluctuating, published economic indicator

it is outside of the control of the lender

(729) an appraisal is valid for 6 months

it must be recertified if the appraisal will be 4 months old or more at closing

(310) The Bank Secrecy Act (BSA) and Anti-Money Laundering (AML)

laws require companies to file a Currency Transaction Report with the IRS for cash transactions exceeding $10,000 in one day. The act requires financial institutions to keep detailed records of cash transactions exceeding $10,000 (withdrawing, depositing or transporting).

(799) Loan Originators may not attempt to illegally influence individuals responsible for loan approval including;

lenders, appraisers, and underwriters

(397) rate caps

limit how much the interest rate can change at each adjustment and over the life of the mortgage. A 2/3/6 has a max first adjustment of 2%, subsequent max adjustments of 3% and a lifetime max adjustment of 6%.

(427) Interest rate caps

limitd the number of % points interest can rise or fall

(488) a deed restriction or restrictive convenant

limits the future use of property

(674) annual interest rate is calculated;

loan amount x interest rate

(675) monthly interest rate is calculated as follows

loan amount x interest rate / 12

(654) The Loan-to-Value Ratio (LTV) =

loan amount ÷ appraisal value or purchase price, whichever is less.

(807) Loan servicers or employees who assist in refinancing a loan or changing the terms on an existing loan are considered:

loan originators

(797) Loan Originators may not advertise or commit to:

loan terms that are not currently available

(741) Depreciation =?

loss in property value

(611 USDA Loans) USDA loans (Section 502 loans) (general description)

lower-income, owner-occupied, 30 year fixed-rate loans.

(612 USDA Loan) Qualifications of USDA loans

lower-income, owner-occupied, 30 year fixed-rate loans.

(495) FEMA

maintains flood maps

(758) CSBS/AARMR

maintains the registry Approves mortgage schools and courses, and oversees state compliance

(711) the one promising to pay the money is called the

maker

(693) Assesing an individuals risk (underwriting) may be done

manually, or by an automatic Underwriting system (AUS)

(700) Seller Contributions

maximum allowable contributions by sellers and/or lenders is 2% of the lesser of the appraised value or sales price for investment properties.

(701) Sellers Contributions

maximum allowable contributions by sellers and/or lenders is 3% of the lesser of the appraised value or sales price for a principal residence or second home if the LTV is greater than 90%.

(702 Seller Contributions

maximum allowable contributions by sellers and/or lenders is 6% of the lesser of the appraised value or sales price for a principal residence or second home if the LTV is between 76% and 90%

(535) A Fixed Home Equity Loan

may also allow the borrower to take advances at his/her discretion up the an approved limit, but is repaid based on a set amortization schedule. Unlike a HELOC, the borrower is NOT permitted to re-borrow any portion of the loan once it has been repaid to the lender.

(479) Deed restrictions

may be placed in the deed and control the use of the property.

(660) Per diem (or daily interest)

means the amount of daily interest payable under a loan. a borrowers first monthly payment is typically due on the first of the second month after closing. For example if a loan closes jan 15, then the first monthly payment would be due march 1

(714) the kender is the

mortgagee

(716) the lender is the

mortgagee

(715) the borrower is the

mortgagor

(491) The Metes and Bounds Method is the ____ ____ method

most accurate method

(490) The lot and block method is the ___ ___ method

most common

(793) Once an individual is unlicensed for 3 years as an MLO

most states require that the individual retake the 20 pre hour licensing education in order to have MLO license reinstated

(645) Commission, Overtime, Bonus, Part-time, Interest and Dividend income

must be averaged over 2 years.

(728) property appraisers

must be licensed and adhere to uniform standards of professional appraisal practice (USPAP)

(438) Credit documents

must be no more than 120 days old on the date the note is signed, this includes new construction

(770) Loan Processors and underwriters who practice as Independent contractors

must be state licsensed loan originators and register with the NMLSR

(689) A borrowers payment history on rent

must be verified for 12 months

(646) Retirement and pension income

must continue for 3 years beyond the application date in order to be included as income.

(705) Closing agent (settlement agent/title agent)

must simultaneously following the instructions of the borrower and the seller in a sales transaction, as per the sales contract, escrow instructions etc.

(790) Fail 1 or 2 times

must wait 30 days

(781) MLO Applicants must either meet :

net worth, or surety bond requirements, or pay into a state fund. These are 3 protection options that each state must have in place

(588 VA Loans) VA Loans require ___ monthly insurance premium

no monthly insurance premium

(764) Consumers can search a seperate database for

non - confidential licensee information

(818) air loan

non-existant loan and no-collateral loans

(716) The APR is NOT included in the

note

(384) negative amortization

occurs in a mortgage repayment plan in which the borrower makes payments that amount to less than the interest due. Unpaid interest is added to the outstanding loan balance, causing the outstanding loan balance to increase instead of decrease. Monthly payment is not sufficient to cover the accrued interest from previous month.

(435) A purchase money mortgage

occurs when a borrower obtains a mortgage fro the seller to purchase a home

(502) Ware house funding

occurs when a lender obtains funds for closing from a line of credit extended by a commercial bank.

(533) Steering

occurs when a loan originator directs a borrower to a given loan or loan product to increase compensation when the loan is "not in the consumer's interest".

(826) illegal flipping

occurs when a property is purchased at a low price, appraised at an inflated value without any valid reason for the increase, and then resold at a much higher price

(383) positive amortization

occurs when the monthly mortgage payment decreases the loan balance, by applying a portion of each payment to the principal.

(481) a deed in lieu of foreclosure

occurs when the mortgagor voluntarily conveys the deed to the lender in exchange for satisfaction of the debt. Debtors still lose property, but by conveying it voluntarily before final court action, they avoid foreclosure on credit record. Lender not obligated to accept.

(278) HMDA requires a lending institution to post a general notice about the availability of HMDA data in the lobby

of its home office and in the lobby of each branch office located in a metropolitan area.

(828) equity skimming

offering to assist homeowners facing foreclosure through buying their home and the selling it back to them, usually at rates and terms guaranteed to result in default and loss of all equity, or they refinance the home, take out all the equity, then try to sell it back to the borrower, who cannot afford the new home price.

(520) loss mitigation

options include refinancing, loan modification, short sale and deed-in- lieu.

(680) Prorated Mortgage Interest

paid by the borrower at closing (loan amount x interest rate/ 365 days) x the number of days left in month including closing day

(677) mortgage interest is

paid in arrears

(585 VA Loans) The department of veteran affairs

partially guarantees VA Loans

(477) grantee

party receiving the mortgage transfer

(648) Receipt of child support / alimony income

payments must continue for 3 years beyond the application date in order to be included as income.

(467) a mortgage subordination clause

permits a senior mortgage to assume a junior lein position

(465) the mortgage open - end clause

permits future additional advances from the same loan

(519) Hypothencation

pledge property as collateral for loan while maintaining possession. When you purchase a house or car, you hypothecate it. You use it as collateral but keep possession of it.

(782) minimum of 20 hours

pre licensing education is required for all loan originators

(616 USDA Loans) there is no _____ penalty on USDA loans

pre payment penalty

(726) the home valuation code of conduct (HVCC)

prevents a mortgage broker from choosing the appraiser for loans that are sold to fannie mae. the dodd - frank act extended the law to include all mortgages

(463) the mortgage exculpatory clause

prevents the lender from requesting a deficiency judgment against the borrower when the proceeds of the foreclosure are insufficient to pay off the mortgage lien.

(506) The lender who loans the money directly to the to a borrower is participating in a

primary mortgage market

(503) The payment usually consists of;

principal, interest and escrow funds for property tax and hazard insurance. The payment may also include the monthly private mortgage insurance, if applicable.

(326) The USA Patriot Act was created to

prohibit money laundering and the financing of terrorist activities.

(800) MLO's may not misrepresent

property

(295) GLBA Pretexting Rule

protects consumers from individuals and companies that obtain their personal financial information under false, fictitious, or fraudulent pretenses (pretenders).

(482) Title insurance

protects the homeowner (mortgagor) and the lender (mortgagee) against defects that occurred in the past: undisclosed liens, heirs, fraudulent documents, etc.

(296) GLBA

provides guidance to institutions regarding sharing of non-public information and requires at a minimum they disclose: what information is collected about its customers and to whom they share it with.

(586 VA LOans) VA loans are made to

qualified military service men and women

(549) Capital

refers to the borrower's ability to make a down payment, pay for closing costs and fund any escrows or reserves required at closing. In some cases, a lender will require that a borrower have enough reserves (liquid assets left over after closing) to pay a certain number of mortgage payments.

(548) Capacity

refers to the borrower's ability to repay the loan based upon sufficient income. The underwriter relies on the loan processor to verify the income information set forth by the borrower in the loan application. The borrower's capacity to repay a loan is determined, in part, by calculating and evaluating a debt- to-income ratio.

(552) Character

refers to the borrower's willingness to repay the debt, asdistinguished from the borrower's ability to repay the debt. Credit history canhelp to provide an indication of a borrower's willingness to repay, and evaluation of 42 | P a g e extenuating circumstances (as mentioned above) factors in as a measure of character, especially in loans that are manually underwritten.

(551) Collateral

refers to the property being mortgaged as security for the loan. The value of that property is established by a property appraisal performed by a licensed appraiser.

(400) net tangible benefit

refinance loans must "make sense" for the consumer. They must provide some "benefit'. The cost (or commission earned) for the loan cannot outweigh the "benefit" that the borrower will receive.

(358) Fannie Mae requires the non-qualifying spouse to sign the mortgage or any other documentation required to evidence that the spouse is

relinquishing all rights to the property.

(717) mortgages promise to

repay the loan, pay property tax, pay hazard insurance, and keep the property in good repair. They are in default if they fail to do any one of these.

(594 VA Loans) on a VA loan, a General Orders for members of the military currently on active duty with qualifying services remaining is required if

required if currently "active".

(317) The Homeowner's Protection Act (HPA)

requires lenders to cancel the PMI when the LTV reaches 78% of the original purchase price.

(324) The USA Patriot act

requires mortgage applicants to provide their name, address, social security number or employee identification number and a government- issued photo ID.

(462) the mortgage defessance clause

requires the lender to send a Satisfaction of Mortgage notice to the borrower within sixty days of paying off the loan.

(531) A life estate title

reverts to the original grantor or a remainder upon the death of the life estate holder.

(739) Closed sales are the most important type of comparison in the _____ ______ approach

sales comparison approach

(507) A mortgage and note may be sold to an investor in the

secondary market

(504) The _________ must analyze the escrow account each year and estimate the funds needed for the upcoming year (annual escrow analysis)

servicer

(505) the terms of the loan do not change when the ____ changes

servicer

(678) the first mortgage payment due date always

skips one calendar month

(669) A point is 1% of the loan amount

so 135000 x .01 = 1350 per point, 3 discount points would be 3 x 1,350

(562 FHA Loans) FHA borrowers must have a valid

social security #

(718) A mortgage is a voluntary lien

special assessments and mechanic's liens are involuntary liens.

(766) Imediate family members =

spouse, parents, step parents, child, stepchild, sibling, step-sibling, grandparent, grandchild, and adopted members.

(757) NMLSR

stands for Nationwide Mortgage Licensing System & Registry

(740) Principal of substitution

states that a knowledgeable consumer will pay no more for a property than the cost of acquiring an equally desirable alternative property.

(332) The HUD Equal Access Rule

states that a lender cannot inquire about an applicant's sexual orientation or gender identity.

(540) Statutory right of redemption

states that allow the redemption period to exist even after the judicial sale has occurred. This is called statutory right of redemption.

(539) Equitable right of redemption

states that have redemption periods that expire prior to or at the time of a judicial sale have the equitable right of redemption.

(825) straw buyer

straw buyer is a person who makes a purchase on behalf of another person. the borrower uses someons name (and credit card) to purchase the property

(722) trustee holds legal title to security property described in deed of trust

subject to terms of trust for lender benefit

(621) A borrowers net worth is determined by

subtracting liabilities from assets

(361) Fannie mae requires guaranteed funds

such a cashiers check from a bank or reputable institutions to pay closing costs, personal checks are not acceptable

(707) Credit

sums of money recieved

(761) The housing and economic recovery act allowed the federal housing finance agency to

take control of fannie mae and freddie mac in 2008

(524) There are three types of concurrent real estate ownership:

tenancy in common, joint tenancy, and tenancy by the entirety.

(394) The margin is a fixed percentage rate (typically 2% to 3%)

that is added to the specified index at each adjustment period to determine the fully indexed rate. It reflects the lender's profit and overhead. Added to the index to find the current interest rate charged; sometimes called spread.

(457) The mortgage due-on-sale clause requires

that the loan balance is paid off when the title is transferred.

(661) A par interest rate is;

the "break even" rate for the lender. If a borrower wants a rate lower than par, the lender may offer discount points

(615 USDA loans) USDA loans are funded by

the Department of Agriculture.

(789) All Disclosures require

the MLO's Unique Identifier #

(489) There are four types of legal descriptions for properties:

the Monument Method, the Government Land Survey Method, Lot and Block Method, and the Metes and Bounds Method.

(410) the amount the applicant may borrower on a reverse mortgage is based on ;

the age of the youngest borrower the value of the property and the expected interest on the loan.

(737) Cost approach

the appraiser estimates the cost to reproduce or replace the structures as if they were newm subtracts the value for depreciation because the structure is not new, and adds in the value of the land, and any improvements. Reproduction or depreciation + site Value = value of subject property replacement costs of improvements.

(734) Sales comparison approach

the appraiser researches a minimum of three closed sales that are similar in characteristics to the subject property.

(538) Redemption period

the borrower may pay off the loan in full in order to avoid a foreclosure sale of the property.

(458) The mortgage prepayment penalty clause requires

the borrower to pay a fee if the loan is paid off early.

(366) Fannie Mae will not accept a co-borrower's income for qualifying purposes, unless

the co-borrower also signs the mortgage note.

(305) if the consumer makes an inquiry or submits an application to a company

the company can call for 3 months

(643) A profit and loss statement sumarizes

the company's assets and liabilities over a range of time. A balance sheet depicts the company's book value at a single moment in time. It is a snapshot of value.

(713) What establishes lien position of the mortgage

the date, and time of recording

(688) A gift must be accompanied by a gift letter that specifies what:

the dollar amount of the gift, the date the funds were transferred, the letter must also contain the donors statement that no repayment is expected and include the donors name, address, phone #, and relationship to the borrower.

(754) The Dodd-Frank Act is charged with overseeing

the federal financial laws that specifically protect consumers who deposit their money in banks and credit unions, pay for goods and services with credit cards, and rely on loans to pay for services

(345) a conventional mortgage is not insured or guaranteed by

the government

(313) Under the BSA/AML

the government requires financial intuitions to file Suspicious Activity Reports (SARs) within 30 days of detecting suspicious activity if the perpetrator is an identifiable person, or within 60 days of initial detection if the perpetrator cannot be identified.

(396) the adjustment period specifies

the initial term before the first interest rate adjustment. After this first period, the loan typically adjusts every year.

(622) Asssets are (Definition)

the items of value owned by the borrower, such as cash on hand, checking and savings accounts, stocks, insurance, etc.

(412) If not in breach, a reverse mortgage becomes due when

the last surviving borrower: dies, sells the home, or ceases to live in home for 12 consecutive months.

(364) fannie mae holds the ______ responsible for the quality of the appraisal

the lender

(697) If the property is in a flood zone

the lender will require flood insurance (in addition to hazard insurance) for the life of the loan.

(559 FHA Loans) Who sets the interest rate for FHA loans

the lenders, NOT the FHA or HUD

(798) Loan originators may not collect commission if:

the loan doesn't close

(565 FHA Loan) on an fha loan, if the credit score is between 500-579

the minimum downpayment is 10%

(709) The 2 types of documents associated with a loan are

the mortgage and the promissory note

(731) market value

the most probable price a property will bring in a fair and open market

(476) Grantor

the owner of a property

(804) The MCR (mortgage call reports) is comprised of 2 parts:

the state level "residential mortgage loan activity report" and the entity level "Financial condition report"

(492) In the Metes and Bound Method;

the surveyor must start and end his measurements at the Point of Beginning (POB).

(657) the aquisition cost is defined as

the total amount needed to purchase property, including down payment, loan amount, and any allowable buyer paid closing costs.

(732) to determine the highest and best use of a property

the use must be legally permissible , physically possible, and financially feasible

(322) E sign act ensured

the validity and legality of contracts and documents that are entered by electronic method.

(402) on a reverse mortgage

there are no payments due for the borrower

(560 FHA Loans) FHA loans are assumable ;

there is no due on sale clause

(836) Predatory lending with Mortgage Fraud

these 2 words are not synonymous. Predatory lending refers to a wide range of unethical behaviors and abusive practices that can leave borrowers unable to pay the loan they have received and or unnecessarily take away the equity in their home.

(347) most conventional loans are not assumable

they have a Due on sale clause

(587 VA LOans) VA Loans require ____ downpayment

they require no down payment (100% financing)

(423) A Growing Equity Mortgage (GEM)

this is a fixed rate mortgage set up like a 30-year conventional mortgage loan with payments that increase regularly. It has a fixed interest rate and increasing payments so that the loan balance is paid off more quickly.

(590 VA Loans) VA loans require a a non - refundable one time variable funding fee at closing

this is waived for disabled vets, and surviving spouses

(411) reverse mortgages require that the homeowner meet with a counselor

to ensure that the he/she understands how the program works.

(733) Three Approaches

to estimating property value are: sales comparison approach (residential and vacant land) , Cost approach (new construction and special use properties) income capitalization approach (income producing properties).

(511) Homeowner's insurance requires buyers

to pay the first year's insurance in full prior to closing.

(752) the purpose of the safe act is

to promote financial stability through accountability and transparency

(325) The USA patriot act increased the ability of law enforcement agencies

to search telephone, email, medical, and financial records

(803) Mortgage companies and lenders must Mortgage call reports (MCR)

to the NMLSR quarterly, regarding the condition of the business. THe MCR is a quarterly report of the condition an entity submits thry the NMLS

(536) Fully Amortizing Loan

total payments over life of loan pay off entire balance of principal and interest due at the end of the term (self-liquidating).

(720) borrower is called the

trustor

(814) predatory lending

typically affects senior citizens, lower income borrowers and applicants with lower credit scores. predatory lending forces borrowers to pay exorbitant loan origination / settlement fees, subprime or higher interest rates, and in some cases, unreasonable service fees.

(838) Material misstatements

untrue statements related to financial status

(341) The 2020 maximum conforming loan limit was raised to 510,400

up from 2019's level to $484,350.

(690) a borrower may charge what to their credit card (lock in fees) ?

up to $500 for an appraisal, and up to 1% of the loan amount, to pay for lock in fees

(602 VA Loans) A lender may also charge a "flat fee"

up to 1% of the loan amount, to cover the lender's costs.

(749) a suit of quiet title (Quiet title action)

used to remove a cloud on a title

(684) a rate lock is a lender promise to hold a certain interest rate, and a certain # of points

usually for a specified period of time, while the loan application is processed.

(335) The Federal Home Loan Mortgage Corporation (Freddie Mac)

was chartered by the federal government to buy mortgages originated by Savings Associations.

(328) Mortgage Acts and Practices - Advertising (Regulation N) - Regulation N

was issued by the Consumer Financial Protection Bureau in order to prohibit false or misleading advertising of mortgage products.

(834) Elder Abuse

when elderly homeowners are required to apply for and obtain mortgage loans that they do not want. Often times a child, or caregiver forces this upon them. If an MLO is presented with this situation he should take the consumers application, but before actively proceeding with the loan request, try to conduct one on one conversation with the senior to determine if he is being forced to obtain the loan.

(496) Estoppel Letter

when the closing agent send an (estoppel letter) Letter to the sellers lender requesting the payoff amount

(508) Assignment mortgage

when the lender sells a mortgage loan to another lender

(395) the margin is expressed in basis points

where 100 points = 1%.

(574 FHA Loans) have a maximum loan ammount in each county

which does not include the upfront Mortgage Insurance Premium

(626) Underwriters want to confirm that the borrower will have adequate reserves, after making the down payment and closing cost.

which is usually two months of PITI

(365) Fannie Mae requires the lender to obtain a written credit report for each borrower on the loan application

who has an individual credit record.

(721) lender is the beneficiary

who retains who retains note and deed of trust

(497) Sweat equity (Definition)

work done by the borrower which has value. The work must be listed on the appraisal to be eligible.

(563 FHA Loans) FHA borrowers must be eligible to

work in the United state