MARZO 12-- 76%

Marcia's application for a mortgage loan has been denied. To stay in compliance with ECOA and Regulation B, the Adverse Action notice sent by the lender must contain a statement that Marcia can request a specific reason for the denial if she does so within ____ days of receipt of the lender's notification.

60 Per ECOA, as implemented by Regulation B, the Statement of Adverse Action must either disclose a specific principal reason for the action taken or disclose the applicant's right to request the reason(s) for denial within 60 days of receipt of the lender's notification.

Under the Fair Credit Reporting Act, a consumer reporting agency may not report negative credit information that is more than ___ years old.

7 YEARS OLD Under the Fair Credit Reporting Act, consumer reporting agencies may not report outdated negative information. In most cases, a consumer reporting agency may not report negative credit information that is more than seven years old, a tax lien or judgment seven years after it has been paid, or bankruptcies that are more than ten years old.

If an advertisement states a rate of finance charge, it must state the rate as

AN APR If the advertisement states any interest rate or finance charge, the consumer must also be provided the annual percentage rate in the advertisement.

With a trust deed, who is considered the trustee?

AN INDEPENDENT THIRD PARTY With a trust deed, an independent third party, called the trustee, holds the trust deed. The lender is called the beneficiary, and the borrower is called the trustor.

The unique identifier licensees are required to include on credit applications, a note or loan contract, security instruments, the Loan Estimate, the Closing Disclosure, and advertisements is issued by the

Nationwide Mortgage Licensing System and Registry. The unique identifier is issued by the Nationwide Mortgage Licensing System and Registry (NMLS).

The federal ____ prohibits discrimination in housing based on race, color, religion, sex, national origin, disability, or familial status in the sale or lease of residential property.

THE FAIR HOUSING ACT The Fair Housing Act prohibits discrimination in housing based on race, color, religion, sex, national origin, disability, or familial status in the sale or lease of residential property.

Underwriters on loans guaranteed by the VA do NOT consider

THE HOUSING EXPENSE RATIO Underwriters on VA loans do not consider the housing expense ratio, also called the front-end ratio. Instead, underwriters start with the total debt-to-income (DTI) ratio and generally looking for a total DTI that does not exceed 41%. In addition to the debt-to-income ratio, an underwriter must ensure that an eligible borrower has the appropriate balance of cash flow remaining for family support. This is determined by looking at residual income, which is the amount of income remaining after subtracting taxes, housing expenses, and all recurring debts and obligations. Residual income uses net effective income in its calculation, not gross income. VA-guaranteed loans are for primary residences only.

What statement about an MLO sending out a mailer in an attempt to solicit mortgage business for his employing mortgage broker's business is FALSE?

The mailer does not need to include the license number of employing broker's principal place of business. Any outgoing communication is prohibited, including advertisements soliciting mortgage business, unless the communication includes the name and license number of the employing broker's principal place of business. The communication must also include the NMLS ID of the MLO and be approved by the employing broker.

Which of the following is NOT exempt from the restrictions set forth by Section 32 of Regulation Z for high-cost mortgage loans?

a two-unit dwelling where one unit is a residential investment property Section 32 applies to consumer credit transactions that are secured by the consumer's principal dwelling. Exemptions from Section 32 apply to a reverse mortgage transaction subject to § 1026.33; a transaction to finance the initial construction of a dwelling; a transaction originated by a Housing Finance Agency, where the Housing Finance Agency is the creditor for the transaction; or a transaction originated pursuant to the United States Department of Agriculture's Rural Development Section 502 Direct Loan Program. Note that if the borrower occupies even one of the units then the property is usually treated as a primary residence even if the other units are used for investment purposes.

According to TRID, a borrower must provide certain pieces of information as part of a loan application to be considered complete and trigger Loan Estimate disclosure requirements. Which of the following information is the complete list of borrower application information that triggers that a Loan Estimate must be provided?

borrower's name, Social Security number(s), gross monthly income, the subject property address, the loan amount, and an estimate of the value of the subject property A "complete application" is defined as the receipt of a borrower's name, Social Security number(s), gross monthly income, the subject property address, the loan amount, and an estimate of the value of the subject property. The obligation to provide the LE is not triggered until the consumer submits the six pieces of information that constitute an application under the TILA-RESPA Rule. Creditors may collect additional information, such as loan term or product, prior to producing the LE, provided the consumer has not submitted all six pieces of information.

The SAFE Act

establishes minimum standards for licensing and registering mortgage loan originators. The Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act is designed to enhance consumer protection and reduce fraud by requiring states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators.

Which is NOT a trigger used to define a high-cost mortgage loan under the Home Ownership and Equity Protection Act?

excessive prepayment penalty Although prepayment penalties with high-cost loans are generally prohibited by HOEPA, the prepayment penalty is not one of the triggers used to identify a high-cost loan.

Regulation Z applies to all residential loans

with more than four installments. Regulation Z, which implements TILA, does not apply to business, commercial, or agricultural loans, loans payable with four or less installments, loans without a finance charge, or to loans made to corporations, partnerships, associations, and agencies.

Mary finally is building that dream home in the country on the five acres she has owned for seven years. Can she use the equity in the land in lieu of cash for a down payment on a construction loan?

yes, regardless of whether the land is free and clear, as long as there is enough equity In almost all cases, equity in land from the building site that has been owned long enough may be applied to the cash requirements for a construction loan.

Jim's gross monthly income is $4,500 per month and his wife Jan's is $3,700. They have a car payment for $320 a month and $175 a month in credit card debt. They also have a 401K loan repayment of $475 with eight months remaining. What is the maximum monthly payment they qualify for, including PITI, with a conforming loan and acceptable ratios of 28%/36%?

$2,296 First, add their gross monthly incomes together: $4,500 + $3,700 = $8,200. Using the front-end housing expense ratio: $8,200 x 28% = $2,296 maximum mortgage PITI payment. Using the back-end DTI ratio: $8,200 x 36% = $2,952 maximum debt allowed; subtract the debt (do not include the 401K payment since 401k loans are not included in the debt ratio): $2,952 maximum debt allowed minus $495 debt = $2,457 maximum mortgage PITI payment. They must qualify under both ratios, so the lower figure ($2,296) is the maximum monthly PITI mortgage payment they qualify for.

A buyer of a house with a sales price of $100,000 is paying a $10,000 down payment as well as 2 discount points and 2 points for loan origination fees. What is the total cost of the points?

$3,600 The points are figured as 1% of the total loan amount ($90,000), not the sales price. Each point costs the borrower $900. Four points cost the borrower $900 x 4 for a total of $3,600.

A(n) ____clause is a clause in a contract that obligates a creditor to release property from a lien and conveys title to that part back to the debtor once certain provisions of the note or mortgage have been satisfied.

A RECONVEYANCE A reconveyance clause is a clause in a contract that obligates a creditor to release a property from a lien and conveys title to that part back to the debtor once certain provisions of the note or mortgage have been satisfied. A reconveyance clause may also be referred to as a partial release or satisfaction clause.

The Financial Privacy Rule does NOT require which of the following?

An entity that services a mortgage loan must provide a quarterly privacy notice to its customers. As set forth by Regulation P, which implements the Financial Privacy Rule of the GLB Act, a customer relationship with a consumer is established when an entity originates or acquires the servicing rights of a loan for personal, family, or household purposes. As set forth by Regulation P, when an entity and a consumer enter into a continuing relationship, the consumer becomes a customer and must receive the initial Privacy Policy notice and an annual (not quarterly) Privacy Policy notice. A customer must also receive notice of a revised Privacy Policy.

A _____ mortgage loan is made by an institutional lender or a private party with real estate as security for the loan that the government neither guarantees nor insures.

CONVENTIONAL A conventional mortgage loan is usually made by a bank or institutional lender and is not insured or guaranteed by a government entity or agency, such as FHA or VA. Conventional loans may be conforming loans or nonconforming loans; however, most conventional loans conform to guidelines set by government-sponsored entities (GSEs), such as Freddie Mac and Fannie Mae, so that they may be sold in the secondary market. When a loan meets the criteria necessary to be sold in the secondary market, it is considered a conforming loan.

For unique property, such as a geodesic home, being purchased as a primary residence, an appraiser is most likely to use what method of appraisal in the absence of comparables?

COST APPROACH The cost approach develops an opinion of value for a property by calculating the cost of the land, site improvements, the cost to build the structure on the land, and the cost of any depreciation to the property. The cost approach is best for relatively new construction or for unusual or special purpose properties that have few or no comparables or properties that do not produce income, such as hospitals, schools, or churches.

What entity has federal rulemaking authority for the SAFE Act?

Consumer Financial Protection Bureau On July 21, 2011, Title X of the Dodd-Frank Act transferred rulemaking authority for the SAFE Act to the Consumer Financial Protection Bureau (CFPB).

What term is BEST defined as a nonpossessory interest and an encumbrance on property that grants the right to use another person's real property for a particular purpose?

EASEMENT Easement is defined as a nonpossessory interest and an encumbrance on property that grants the right to use another person's real property for a particular purpose.

The Loan Estimate disclosure requirement does not apply to all real estate loans. All of the following loan types are exempt from the Loan Estimate disclosure requirement EXCEPT

HOME EQUITY LOANS A home equity loan, which is a closed-end fixed interest rate loan, usually in a subordinate lien position, is not exempt from the requirements of the Loan Estimate. Exemptions include home equity lines of credit, reverse mortgages, loans to secure a fractional interest in real estate (timeshares), loans for mobile homes or dwellings not affixed to real property, loans made by a person or entity that makes five or fewer mortgages in a calendar year, and loans made to a non-natural person (business entity).

Which statement is FALSE as it relates to TRID requirements for providing a Loan Estimate (LE) to an applicant?

If a consumer requests a pre-qualification only and provides 6 of 6 elements of a complete application, the MLO is not obligated to provide a LE. If a consumer requests a pre-approval or pre-qualification and provides five of the six pieces of information that constitute a complete application as defined by TRID, the creditor is not yet obligated to provide a LE. The creditor is not required to provide a Loan Estimate and may simply provide a pre-approval or pre-qualification in compliance with its current practice and other applicable law. However, if the consumer provides all six elements of the application, the TILA-RESPA Rule requires the creditor to provide a Loan Estimate. The fact that a consumer requests a pre-approval or pre-qualification will not change the creditor's obligation to provide a Loan Estimate.

____ is one of the key components of the BSA/AML Act.

KNOWING YOUR COSTUMER Useful methods for ensuring compliance with the BSA/AML Act by mortgage businesses include: Requiring identification of the consumer seeking a mortgage loan, being alert to any suspicious activity that occurs during the loan process, and verifying information provided by the consumer as part of the qualifying process for a loan.

Which of the following information is NOT required to submit a complete mortgage loan application that will trigger federal application disclosures?

MOST RECENT TWO MONTHS BANK STATEMTENTS A "complete application" is defined as the receipt of a borrower's name, Social Security number(s), gross monthly income, the subject property address, the loan amount, and an estimate of the value of the subject property. Once these six pieces of information are collected by an MLO, disclosures required by TILA and RESPA, such as the Loan Estimate and Home Loan Toolkit, must be provided to the applicant within three business days.

Which is an example of steering?

Property manager Amy suggests Jake would be happier in a more diverse building. Steering as prohibited by the Fair Housing Act is the discriminatory practice of channeling buyers to or away from certain neighborhoods based on their race, religion, or national origin. Amy is committing the illegal act of steering.

A lender who refuses to make loans secured by property in a certain neighborhood because of the racial or ethnic composition of the neighborhood is committing the prohibited act of

Redlining Redlining is a refusal to make loans on property located in a particular neighborhood for discriminatory reasons such as the racial or ethnic composition of the neighborhood; effectively, drawing a red line around an area. Redlining is prohibited under the Fair Housing Act and is discouraged in the Community Reinvestment Act.

____ is a security instrument placing into the hands of a disinterested third party a specific financial interest in the title to real property as security for the payment of a note.

TRUST DEEED Trust deed is a security instrument placing into the hands of a disinterested third party a specific financial interest in the title to real property as security for the payment of a note.