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The Onyewus are purchasing a home with an agreed-upon sales price of $320,000. They are putting down 20%, and have agreed to pay two points in discount to lower their rate, and two points in origination fees to their lender. What is the total cost of their points? $10,240 $12,800 $5,120 $6,400
The answer is $10,240. Points are paid based on the loan amount. After a 20% down payment, the total loan amount is $256,000. They have agreed to pay two points in discount and two points in origination, for a total of four points. Each point is 1% of the loan amount, so 4% of $256,000 equals $10,240.
Debt ratios for an FHA loan are: 31% / 41% 28% / 36% 28% / 41% 31% / 43%
The answer is 31% / 43%. The general debt ratios for an FHA loan are 31% housing, and 43% total debt.
How are FHA loan limits established? The FHFA establishes loan limits for FHA loans The FHA uses loan limits based on CFPB loan limit guidance Loan limits are set by Ginnie Mae HUD establishes loan limits for FHA loans based on county-by-county conforming limits
The answer is HUD establishes loan limits for FHA loans based on county-by-county conforming limits. HUD establishes loan limits for FHA loans based on county-by-county conforming loan limits. FHA loan limits are divided into lower-cost and higher-cost areas.
Which of the following would not be required for an adjustable-rate home equity plan? What You Should Know about Home Equity Lines of Credit Disclosure of APR, fees, and transaction requirements Disclosure of frequency of APR changes and a description of how the APR will be determined Loan Estimate and Closing Disclosure
The answer is Loan Estimate and Closing Disclosure. A Loan Estimate and Closing Disclosure would not be required for an adjustable-rate home equity plan, because this type of loan is exempt from the requirements of the TRID Rule.
The Home Ownership and Equity Protection Act, enacted in 1994, amended what legislation? ECOA TILA FACTA CIP
The answer is TILA. In 1994, TILA was amended to provide greater protection to borrowers who chose or were coerced into loans with high costs or high rates. This section of TILA is known as Section 32.
RESPA requires _____ to be provided within 45 days of closing. It provides information regarding an estimate of related payments (for expenses such as taxes and insurance) that will be required in the first 12 months of the loan. The HUD-1 The Initial Escrow Statement The Loan Estimate form The Initial Rate Change Disclosure
The answer is The Initial Escrow Statement. The Initial Escrow Statement is due within 45 days of closing, though it is often provided on the day of closing. It provides information to the borrower about estimates for escrow payments, such as those for taxes and insurance.
Which of the following statements most accurately describes HOEPA's prepayment penalty threshold for high-cost mortgages? A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, and requires the prepayment penalties to exceed 2% of the amount prepaid A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 24 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 24 months after consummation, and requires the prepayment penalties to exceed 3% of the amount prepaid
The answer is a loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid. A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid.
Under ECOA, a broker is defined as: A person who regularly refers applicants to creditors, or selects or offers to select creditors to whom requests for credit can be made Any person who sells mortgage loans in the secondary market Any person who regularly extends, renews, or continues credit A natural person or entity who regularly extends closed-end or open-end credit
The answer is a person who regularly refers applicants to creditors, or selects or offers to select creditors to whom requests for credit can be made. A broker does not technically extend credit. However, ECOA specifically addresses the broker by including persons who "regularly refer applicants to creditors, or selects or offers to select creditors to whom requests for credit can be made."
Which of the following loans are covered by RESPA? First liens Both first and subordinate liens Subordinate liens Neither first nor subordinate liens
The answer is both first and subordinate liens. RESPA covers first and second liens on residential property.
The Fair Housing Act prohibits discrimination based on: Handicap, familial status, sex, national origin, religion, color, race Race, color, religion, sex, age Race, sex, age, color, religion, handicap Race, sex, color, religion, age, familial status, handicap
The answer is handicap, familial status, sex, national origin, religion, color, race. The Fair Housing Act prohibits discrimination in a manner similar to that of the Equal Credit Opportunity Act; however, the Fair Housing Act is not limited to an application for credit. The Fair Housing Act prohibits discrimination based on race, color, religion, national origin, sex, familial status, and handicap.
Loans that do not meet guidelines established by Fannie Mae and Freddie Mac are known as: Unconventional Government Nonpermissible Nonconforming
The answer is nonconforming. A nonconforming loan is a conventional mortgage that exceeds the current lending guidelines established by Fannie Mae and Freddie Mac.
Which of the following is a limit on the amount that the payment can change on any adjustment date from the current or previous payment amount on an ARM? Initial rate cap Payment cap Periodic rate cap Lifetime rate cap
The answer is payment cap. The payment cap is a limit on the amount by which the payment can change on any adjustment date from the current or previous payment amount on an ARM.
The legal document that authorizes one person to act on behalf of another is called: Legal prerogative Power of attorney Fiduciary authorization Proxy agreement
The answer is power of attorney. Power of attorney is a legal document that authorizes one person to act on behalf of another. It can grant complete authority or be limited to certain acts and/or certain periods of time.
Foreclosure is the sale of a property after a borrower's default on payments. The exact procedure the lender follows in order to foreclose is dependent on the absence or presence of a: Power of attorney Power of sale clause Deed in lieu of foreclosure Mortgagee clause
The answer is power of sale clause. The foreclosure process is determined by the presence or absence of a power of sale clause in the mortgage or deed of trust. If there is no power of sale clause, the lender must go to court to foreclose (called a judicial foreclosure). If a power of sale clause is included in the mortgage or deed of trust, then the lender can begin foreclosure without court involvement (nonjudicial foreclosure).
In accordance with TILA, all of the following are eligible for a three-day right to rescind, except: Home equity line of credit Purchase money mortgage Home improvement loan Refinance of a property that is owner-occupied
The answer is purchase money mortgage. No right to rescind exists for a first mortgage to purchase a home.
Which of the following mortgage loan types creates a presumption that the loan complies with ability-to-repay standards? Reverse mortgage Qualified mortgage Balloon mortgage Fixed-rate mortgage
The answer is qualified mortgage. The Qualified Mortgage Rule creates four types of "qualified mortgages." A loan that falls under the definitions of one of these four QM types will be presumed to comply with ability-to-repay standards.
Under the S.A.F.E. Act, a mortgage loan originator must submit to the NMLS: Reports of condition Financial reports Business organization documentation Trust account information
The answer is reports of condition. Each mortgage licensee must submit to the NMLS reports of condition in the form and containing the information as may be required by the NMLS.
Which of the following transactions should be most concerned about the tangible net benefit to the borrower? The refinance of a mortgage loan that originated ten years ago The origination of a mortgage loan with a fixed interest rate for a borrower with a high salary and low debt The refinance of a high-cost mortgage loan that was originated six months ago The origination of an adjustable-rate mortgage loan
The answer is the refinance of a high-cost mortgage loan that was originated six months ago. The refinance of a high-cost mortgage loan that was originated six months ago should be most concerned about the tangible net benefit to the borrower.