Mortgage

The FHA insured loans- 1934

"To insure lenders from loss so the lenders aren't scared of lending to a wide variety of economic backgrounds" - more possible for people to buy homes

table funding or "wet founding"

"the borrower gets the funds whole the ink from the signatures is still wet". a type of mortgage lending where the funds are disbursed from escrow on the day that all the paperwork is signed; everyone walks away from the "table" with their portion of the transaction

What is the maximum fine an MLO may be charged for a violation of state rules

$30,058

a couple applies for an FHA loan in order to buy a $210,000 house. What is the minimum down payment that the couple must be prepared to pay in order to qualify for the loan

$7,350 FHA loans require at least a 3.5% down payment. When calculated, 3.5% of the property's value is 0.035 x $210,000 = $7,350

Assuming a 0.5 %PMI rate on a $225,000 loan, how much would the borrower be required to pay monthly?

$93.75 Assuming a 0.5% PMI rate on a $225,000 loan, the borrower would pay $104.16 per month in PMI ($225,000 X 0.5% = $1,125 / 12= $93.75)

State should do all of these through safe act

(1) Provide uniform license applications and reporting requirements for state licensed-loan originators. (2) Provide a comprehensive licensing and supervisory database. (3) Aggregate and improve the flow of information to and between regulators. (4) Provide increased accountability and tracking of loan originators. (5) Streamline the licensing process and reduce the regulatory burden. (6) Enhance consumer protections and supporting anti-fraud measures.

Which of her documents will be viewable for others to see

- Any enforcement actions brought against her - her license info - her employment history

Federal Housing Administration (FHA)

- created 30 yrs mortgages - introduces idea of amortization: paying back a large debt with a gradual payment that include interest and principal - more manageable down payment - introduced risk assessment

How many days must an applicant wait between failed attempts on the test to retake the test?

30 days

Within what timeframe must a creditor provide a notice to consumers if their loan is rejected

30 days

The longest repayment period for conventional loans is

40 years

The starting interest rate on an ARM is 3.2% and the loan has a cap structure of 2/3/10. What is the max possible interest rate for the loan after its initial adjustment?

5.2%

People back in the day had to pay up to

50% of the cost and complete the payment in 5 years (balloon payment)

Regulation B defines "elderly" consumers as those over the age of

62 years

Lenders generally require private mortgage insurance for conventional loans in which the loan-to-value ratio is excess of a certain percentage. What's this percentage?

80%

Which of these statements best describes a conventional mortgage loan?

A fixed-rate loan with a lower interest rate than most loans, usually for a 15 or 30 year term

CFPB Loan Originator Rule

A loan originator may not receive dual compensation from anyone associated with the loan (e.g., a consumer and a creditor).

Which of the following options provides the best description of a mortgage loan banker

A person or institution that originates, funds, and sometimes services mortgage loans

Which of the following provides the best definition of a mortgage servicer?

A person who disburses money from escrow and initiates foreclosure

Under RESPA, which of the following fees and compensations are permitted?

A salary paid to an MLO for loan originating activities is permitted

Which of the following loan types is exempt from the requirement to provide an LE?

An adjustable-rate hime mortgage equity plan

Exams

Applicants must first register with the NMLS, and then pay for their test and schedule their test time. Applicants are subject to a waiting period of 30 calendar days from the previous test date prior to retaking the test. After every third failed test, applicants are subject to a waiting period of 180 calendar days before retaking the test.

Which of the following net worth examples may a lender prefer to see for a borrower applying for a mortgage loan?

Assets exceed liabilities

What does a preliminary title report reveal?

Both the property's ownership and any liens, encumbrances, or circumstances that won't be covered under a title policy

Which of the following statements best describes the difference between the primary and secondary markets?

Consumers must originate their loans in the primary market; investors and government entities purchase those loans in the secondary market

Each state will issue a UI, which Trudy needs to register with NMLS

False

She'll obtain her license from NMLS no matter what state she lives in

False

The CSBS and AARMR enforce a MSL to assist and facilitate states with loan origination and mortgages

False - they created an MSL. They dont enforce it.

How many identity theft red-flag sources do the identity theft rules identity

Five

Which of the following is considered an MLO-provided service

Guide mortgage applicants through the process approval

Licensee Bob is being investigated by his state regulatory authority for potentially violating license law. What must Bob do?

He must comply and provide his documents if requested

A borrower was obtaining a conventional loan, and she puts $50,000 down as a own payment. Why might her lender also acquire her to obtain private mortgage insurance?

Her down payment of $50,000 isn't at least 20% of the purchase price

All of the following are recommended responses to FTC red flags except for which one?

Ignore the red flag

What information must a borrower provide on a loan application in order for it to be complete, according to RESPA?

Information about the borrower, the loan amount sought, and the property to be purchased

The New Deal affected the mortgage industry in which of these ways?

It introduced regulations to make mortgages more consumer friendly

Which of the following options describes a benefit of homeownership in the U.S?

It leads to higher education levels

What is the primary market?

Loan origination - Once a loan is originated on the primary market, then it may be sold on the secondary market

The history of the mortgage industry can teach us which of the following?

MLOs play a crucial role in responsible mortgage lending, which, in turn, has a profound effect on the health of the U.S economy.

Which one of the following professionals is concerned with researching applicants' financial information and maintaining mortgage-specific paperwork?

Mortgage loan processors

Working with appraisers, title companies, and others, these people generate much of the paperwork that's vital to the successful completion

Mortgage loan processors

These are federal and state agencies that are concerned with enforcing mortgage legislation

Mortgage regulators

They collect and apply the payments for mortgage loans

Mortgage services

Marcus is a loan originator whose com company is federal depository and manages the assets of others and is responsible for transferring assets to beneficiaries. Does he need to be licensed as an MLO?

No, he must be registered through the NMLS

A consumer received the LE fro his loan originator. As he approached closing, he received the CD with his final costs. The transfer tax amount went down on the CD and was now 10% less than the amount he was provided on the LE. Was this a violation?

No, the transfer tax amount was decreased A decrease in fees does not impact tolerance rules as long as it is disclosed in good faith. Tolerance provisions only apply to a fee increase.

When completing a residential loan application, borrowers must list their liabilities. What are liabilities?

Obligations a borrower owes

Which of the following is a task that an MLO performs?

Originates loans or negotiates the terms of a mortgage loan for compensation or gain

What type of title insurance policies are needed during a real estate transaction?

Owner's and lender's policies

In an interest-only loan, what does the lump sum payment include?

Principal only When the loan term is over, the borrower has to pay the remainder of the money owed, which is the entire principal

A homeowner contracted a lender after seeing an advertisement about refinancing mortgage loans. The ad used an official-looking logo that implied it was a special government program. The homeowner later learned that a private lender, not a government entity, refinanced his loan. What type of misrepresentation was this?

Product association

MLO applicants must meet certain requirements when they apply for licensure. Which of the following is NOT required?

Provide five personal references

How do RESPA rules impact mortgage loan originators in relation to settlement services?

RESPA prohibits MLOs from accepting kickbacks from any settlement service providers related to a mortgage loan transaction

The federal Fair Housing act includes the protected classes of

Race, color, religion, national origin, sex, familial status, and disability

What may a borrower use to secure a reverse mortgage loan?

Residential real property that has the borrower owns and currently occupies

Fannie Mae is a major player in this market

Secondary

A borrower isn't sure when she's supposed to receive a Closing Disclosure (CD). Which one of the following is a true statement regarding this deadline?

She will get the CD after she signs the loan contract

Comparing Dry and Table funding

Table funding is more common in most states. Some require it by law

Jerry lives in Maine, but his family is moving to North Carolina. He's been registered as an MLO for approx three years. What will he need to obtain to do business in North Carolina?

Temporary authority

Sam and Maria are new to the homebuying and mortgage loan process, and they call MLO Terri daily with questions and concerns. How should Terri handle them so that they don't make a complaint?

Terri should return each phone call promptly and handle each questions diligently.

What does it mean if your job title is "registered MLO?"

That you've been registered with NMLS and have a unique identifier

CSBS

The Conference of State Bank Supervisors - they provide a state law to assists states with overusing loan origination and mortgage services

SAFE act is

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008

An MLO applicant received notice that his applicant was denied. What was the most likely reason?

The applicant had a felony conviction within the last seven years

The upfront mortgage insurance premium (MIP) on an FHA loan is calculated based on

The base loan amount

Which one of the following statements about the origin of the concept of a mortgage is true?

The earliest written proof of mortgage arrangements come from an ancient Indian document

Wanda applied for a mortgage loan. While her husband Raoul isn't listed as a co-signer, Wanda listed her husband salary as a source of income on the loan application application. Under the ECOA, what may the lender do in this situation?

The lender may ask questions about Raoul to assess his creditworthiness

Federal National Mortgage Association (Fannie Mae)

The nation's largest, privately owned, investor in residential mortgages. - in 1938 the government created Fannie Mae- whose purpose was to buy FHA mortgages from the lenders - This created secondary market where loans could be resold to investors

What does a loan originator ask borrowers to provide in order to help assess their current future income?

Their current employment

Which of the following is a true statement about MLOs

They may work for banks, credit unions, and non-depository institutions

Why do lenders usually sell the loans they make?

To free up more funds so they can make more loans

Why would a lender have a title policy?

To protect its investment on a loan it has extended on a property

The CSBS and the AARMR established the NMLS for the mortgage industry

True

The MSL supports and complies with the SAFE Act, including the act's deadlines

True

Mortgage loan bankers often use their own funds for mortgages, but not always, Instead, many go to _____ for funding, because they specialize in providing lines of credit to companies

Warehouse lenders

Bart is exploring the best offerings to fund his mortgage when he's financing $200,000. He's trying to calculate the best loan origination fees. Which of the following is the best rate offering?

a flat fee of $1,300

A mortgage

a loan that's offered exclusively for purchasing a house, vacant property, improved land, or any other form of real estate.

The NMLS is

a nationwide system of record for all financial services and licensing covering all 50 states and U.S. territories. These jurisdictions are responsible for issuing and managing licenses on the NMLS, and are comprised of 64 state regulatory agencies

Unique Identifier

a number permanently assigned to them by the NMLS. The UI allows regulators to track mortgage providers, even across state lines, to ensure a provider has not committed a prohibited act in one state (and therefore does not escape regulatory action by moving to another state). - Once assigned a number, it cannot be changed.

dry founding

a type of mortgage funding where closing doesn't occur until after the buyers and seller sign all loan documentation and the mortgage lender has completed and reviewed documentation for accuracy

The SAFE Act requires

all MLOs licensing and registration information to be tracked in a national registry database- the Nationwide Multistate Licensing System and Registry (NMLS)

On which of the following are loan originators required to disclose their unique identifier?

all loan applications and marketing materials, including social media

Real Estate Company A forms a new business entity with the owners of Lender Company B to create a "one-stop- shop" for their consumers to make closing easier and more cost-effective. What must they provide when a consumer is referred to them?

an affiliated Business arrangement Disclosure form

Better educational outcomes and lower levels of crime are just two examples of the many _____ benefits that homeownership in America generates

civil

HPML lenders are required under the TILA HPML escrow rule to establish and maintain an escrow account for the payment of property taxes, and premiums for mortgage-related insurance required by the creditor for at least _____ years, regardless of the LTV ratio

five

The amount of the _____ a veteran must pay depends on various factors, such as military status

funding fee

Which of the following questions do mortgage regulators try to answer

is this lender following all applicable federal regulations?

What does RESPA prohibit to protect borrowers from overcharges in a mortgage loan closing?

kickbacks

These people perform audit-like reviews on completed mortgages and ensure that specific compliance standards have been met

mortgage examiners

They work alongside brokers, coordinating and transactional paperwork

mortgage loan office assistant

They assess the risks involved with a particular borrower taking out a mortgage

mortgage underwriters

MLOs must

obtain and annually renew their licenses through the NMLS

Mortgage bankers and credit unions are members of this market

primary mortgage market

Players in this market make their money by collecting finance charges at closing and receiving ongoing interest payments

primary mortgage market

Billie responded to an advertisement about refinancing her mortgage loan because she thought it was a special government program, as indicated by the ad. She learned that a private lender, not the government refinanced her loan. This misrepresentation was related to

product association

secondary market =

resale market

With an interest-only loan, what happens after the specific period of time that interest-only payments are made is over?

the full principal of the loan is due

What does a chain of title documents establish?

the path of life ownership over time

One of the primary purposes of the USA PATRIOT Act is require financial institutions to

turn in suspected terrorists

Per the E-sign Act, Mortgage loan disclosures and records that have been delivered and signed electronically are

valid and enforceable

Andy ran an advertisement that misrepresents the interest, payments, or other terms with inaccurate usage of "fixed" to describe them. This is misrepresentation of the ____ of the terms.

variability

What is secondary mortgage market?

where lenders buy and sell existing mortgages - this frees up money for additional mortgage lending (resale market place)