MLO
Which of the following is an acceptable condition on which to base a mortgage loan originator's compensation?
A fixed percentage of the loan amount
What is a feature of an ARM? -A loan amount that never increases -A monthly payment is regular -A loan which can adjust at any time -A loan that has an adjustable feature
A loan that has an adjustable feature
What is an Intermediate Term Mortgage?
A loan with Contractual maturity from the time of purchase equal to or less than 20 years.
Which of the following would have no Annual MIP (2012)? -A loan with a 79% LTV -A loan with a 78% LTV and a term of 15 years or less -A loan with an 80% LTV -Annual MI is always required
A loan with a 78% LTV and a term of 15 years or less
When was the SAR rule released that included lenders and brokers in the SAR Requirements
February 10th, 2012
On an appraisal what are the maximum allowed adjustment percentages? -Net 5% and Gross 15% -Net 10% and Gross 20% -Net 15% and Gross 25% -Net 20% and Gross 30%
Net 15% and Gross 25%
According to the Truth in Lending Act which loan type includes the right to rescind? -Construction -Non-owner occupied refinance -Owner occupied refinance -Purchase
Owner occupied refinance
If the amounts paid by the consumer at closing exceed the prescribed tolerance thresholds, a credit must refund the excess to the consumer no later than
within 60 calendar days after consummation
According to the deed, how soon must the borrower occupy within closing?
within 60 days of closing
Good faith estimate
within the loan estimate
The Borrower is entitled to the disclosure of the costs of a mortgage loan in writing in a form he may keep: -within three business days of the loan application. -prior to making application for a loan. -within 7 business days of the loan application. -Within 3 business days prior to loan closing.
within three business days of the loan application.
According to Dodd-Frank, a mortgage loan originator is defined as a natural person, who for compensation or expectation of compensation, does any of the following EXCEPT
works for a mortgage lender
Rental income can be verified by any of the following methods EXCEPT: -copies of all rental agreements. -written statement in the form of a notarized affidavit from the borrower certifying that the rent was actually received. -IRS Schedule E. -two years of tax returns.
written statement in the form of a notarized affidavit from the borrower certifying that the rent was actually received.
Where can consumers receive a free credit report?
www.annualcreditreport.com
A loan originator may keep both the: -yield spread premium and the origination fee. -credit report fee and yield spread premium. -discount points and appraisal fee. -yield spread premium and discount points.
yield spread premium and the origination fee.
It is okay to advertise for specific interest rates, points, or terms if: -you have offered those terms in the past. -your competitors offer similar rates, points, or terms. -you currently offer the terms advertised. -you have considered TILA.
you currently offer the terms advertised.
Under RESPA, the aggregate impound limits at closing are: -zero dollars or 1 months taxes and insurance. -1% of the entire principal balance. -zero dollars / up to 2 months taxes and insurance. -$100 and three months taxes and insurance.
zero dollars / up to 2 months taxes and insurance.
The 1003 is which of the following? -The Underwriting Transmittal -The Uniform Residential Loan Application -The Uniform Residential Appraisal Report -The APR disclosure
The Uniform Residential Loan Application
What is the 1003?
The Uniform Residential Loan Application
due on sale clauses are prohibited which means they are
assumable
TILA was intended to:
assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available and avoid the uninformed use of credit.
The estimate of the charges and terms for all settlement services must be available for
at least 10 business days from when the Loan Estimate is provided
the FHA --- loans
insures loans
the FHA does not loan money, it
insures loans made by primary lenders against losses due to default
the FHA promotes home ownership by--loans
insuring
The Home Mortgage Disclosure Act requires MLOs to ask borrowers certain personal information when they apply for a loan. What may NEVER be asked about during the loan application process?
religion
The amount of homeowners insurance required by the lender is the lesser of the loan amount or: -the value of the home. -the sales price. -replacement cost. -50% of the loan value.
replacement cost.
The initial TIL on an ARM loan indicates an APR of 6%. The APR changes 6.125% prior to close. This
requires redisclosure but no additional waiting period.
Which advertising practice is prohibited by TILA?
using the term "counselor" in reference to a for-profit lender
How can one calculate monthly income for an applicant who is paid an hourly wage? -Weekly income x 52/12 -Weekly income x 12/52 -Hourly wage x 40 x 52/12 -Weekly income x 4
Hourly wage x 40 x 52/12
The SAFE Act is part of the: -Community Reinvestment Act. -Dodd-Frank Act. -Housing and Economic Recovery Act. -Real Estate Settlement and Procedures Act.
Housing and Economic Recovery Act.
Provide the term for the following definition: "an individual who performs clerical or support duties at the direction of and subject to the supervision and instruction of a state-licensed loan originator or a registered loan originator." -Loan Processor -Real Estate Broker -Mortgage Loan Originator -Independent Contractor
Loan Processor
What law prohibits loan originators compensation from being based on terms of a loan? -Qualified Mortgage -Ability to Repay -Loan Originator Compensation -Regulation X
Loan Originator Compensation
NMLS stands for: -National Mortgage Licensing Standards -National Mortgage License System -Nationwide Multistate Licensing System -Nationwide Mortgage Licensing Service
Nationwide Multistate Licensing System
NMLS is the acronym for: -National Mortgage Licensing System. -Nations Management License System. -Nationwide Mortgage Loan System of Licensure and Registration. -Nationwide Multistate Licensing System and Registry
Nationwide Multistate Licensing System and Registry
A reverse mortgage has which of the following features? -A prepayment penalty -Negative amortization -Graduated payments -Two closings
Negative amortization
When do VA loans carry a mortgage insurance premium?
NEVER
If specific loan terms are shown in an ad, those terms must be
actually available
If specific loan terms are shown in an ad, those terms must be ______________________.
actually available
After loan is made, 2nd mortgages may be
added by the owner or by a later buyer who assumes the loan
Which participant in the loan process would be most likely to overvalue a property?
appraiser
How long prior to closing does RESPA require that the HUD-1 Settlement Statement be provided to the borrower, if requested?
1 business day
Under Regulation Z which of the following advertisements would require full disclosure of the rate term payment and balance? -"Interest rates are at an all-time low" -"Monthly payments could be under $950 per month" -"No money down" -"Stop paying rent"
"Monthly payments could be under $950 per month"
Under Regulation Z, which advertisement would trigger the requirement to disclose all finance charges and the true APR?
"Monthly payments under $700" - Regulation Z requires that once you state any type of credit terms in advertising, such as an exact interest rate or monthly payment, you must disclose all finance charges and total annual percentage rate (APR).
What would be the minimum down payment on a VA loan of $150,000? -$4,500 -$5,250 -$7,500 -$0
$0
Aggregate escrow requires that the borrower have which of the following? -$0 in the account or no more than 2 months impounds in reserves -$0 in account, or no more than 1 month impound in reserves -No more than 1% of the principal balance of the loan maximum in the impound account -$100 and no impound reserves
$0 in the account or no more than 2 months impounds in reserves
Penalties for violations are assessed per day. A "Knowing" violation is how much? -$10,000 -$25,000 -$50,000 -$1,000,000
$1,000,000
Calculate the borrower's maximum housing payment if the qualifying ratios are 28/36, the husband's income is $48,000 per year, and the wife makes $2,500 per month? -$2,044 -$1,820 -$2,628 -$2,340
$1,820
Under RESPA what is the dollar fine that can be imposed for each instance of a referral fee kickback or unearned fee? -$5,000 -$7,000 -$10,000 -$15,000
$10,000
What are the penalties for giving a referral fee to a realtor?-There are no penalties. -$10,000 per incident and up to one year in jail -$100,000 plus up to 30 years in jail -$1,000,000 plus up to one year in jail
$10,000 per incident and up to one year in jail
What are the penalties for violating Section 8 of RESPA? -$5,000 per incident and up to one year in jail -$10,000 per incident plus one year jail time -$100,000 plus up to 30 years in jail -$1,000,000 plus up to one year in jail
$10,000 per incident plus one year jail time
Penalty for a Kickback is...?
$10,000, one year in prison, or both, (Per occurance)
What is the penalty for a loan officer violating RESPA by paying a referral fee to a real estate agent? -$10,000/three years prison -$10,000/one year prison -$1,000/one year suspension -$5,000/one year prison
$10,000/one year prison
On an interest-only loan of $216,000, 30 years, at 7.25% interest, how much interest would be paid in nine months? -$11,745.00 -$12,933.75 -$11,236.96 -$12,997.63
$11,745.00
When a telemarketer calls a person on the do-not-call list the telemarketer is subject to a fine of: -$16,000.00 -$12,000.00 -$7,500.00 -$5,000.00
$16,000.00
The sales contract in the borrower's file states the agreed purchase price is $162,000. The closing costs are $3,700. The seller is paying $1,200 in closing costs on a $153,900 loan amount. What is the acquisition cost?
$164,500 = 162,000+3700-1200
Andrew has been paying interest-only payments on his mortgage of $500 a month for the past 10 years, the interest rate on the loan was 4%. At year 15, he will be required to pay a balloon payment. The principal balance at the time the loan closed was $172,000. What will be the balloon payment? -$103,200 -$68,800 -$172,000 -$170,000
$172,000
If an applicant works 40 hours a week and is paid $ 14.26 per hour, what is the applicant's average monthly income? -$2,487.68 -$2,281.60 -$2,471.73 -$2,444.57
$2,471.73
You are wondering what the total amount of interest your borrowers will pay on their 30 year fixed rate loan--if they kept that loan for its full 30 years. On the TIL you calculate the Amount Financed to be $145,000. Your customers P&I payment is $975.00 per month. Based on this information, what will be the amount of interest your customer will pay over the 30 year period? -$206,000 -$351,000 -$145,000 -$148,717
$206,000
A buyer had made an earnest money payment of $5,000. Later the buyer pays an additional $2,000 to be credited at closing on a property with a sale price of $160,000. If the required down payment is 20%, how much additional money will the buyer need to provide toward the down payment at closing? -$32,000 -$27,000 -$30,000 -$25,000
$25,000
If a loan originator violates or fails to comply with requirements in a temporary cease and desist order, the Regulator may impose a civil penalty of up to how much? -$10,000 -$15,000 -$25,000 -$30,000
$25,000
The states can impose a fine of up to what amount per violation
$25,000
The Regulatory Authority may impose penalties for each violation up to, and not exceeding: -$25,000.00 -$10,000.00 -$5,000 -The Regulatory Authority is not permitted to impose penalties.
$25,000.00
Paula has been at her job for 10 years and typically works overtime 5 hours per week at time and a half. Her hourly rate is $15.75. What is the gross monthly income you can use to qualify Paula?
$3,241.88 - To find the monthly income for an hourly worker, multiply the hourly rate by 40 to find the weekly rate; multiply that by 52 weeks per year then divide by 12 months ($2,730). Then add the monthly amount of the overtime: $15.75 / 2 + $15.75 = $23.63 x 5 hours per week x 52 weeks / 12 months = $511.88; $2,730 + $511.88 = $3,241.88
An applicant for a mortgage loan is a salaried employee who is paid $1,350 every two weeks. In addition, she indicates that she receives $500 a month in alimony. What is the gross monthly income you can use to qualify her?
$3,425
68.What is the penalty for Red Flag non-compliance? -$5,000 per incident -$2,500 per incident -$10,000 per incident -$3,500 per incident
$3,500 per incident
Gregory's loan is $125,000. For it to be considered a qualified mortgage, the points and fees cannot exceed what amount? -$3,750 -$6,250 -$5,000 -$10,000
$3,750
The borrowers want a conventional loan for a $150,000.00 new home purchase. They do not want to pay for mortgage insurance. They have enough money to put down, but want to put the minimum down required that would allow for no mortgage insurance. What amount would be needed for the down payment? -$40,000.00 -$20,000.00 -$33,000.00 -$30,000.00
$30,000.00
A mortgage company telemarketer has been accused of inappropriately calling two consumers on the National Do Not Call Registry. What is the maximum fine the company could face for this violation? -$11,000 -$16,000 -$20,000 -$32,000
$32,000
A person was purchasing an income property which was scheduled to close and fund on June 25th. Rent of $1800 was paid for the month of June on the 1st. What was the buyer's proration amount? -$300 -$210 -$296 -$360
$360
A borrower is buying a house for $180,000. He provides a down payment of $40,000. If he pays three discount points, what is the total cost of the points?
$4,200
What are the Fannie Mae / Freddie Mac loan limits as of 01-01-2012? -$417,000 -$225,500 -$322,700 -$359,650
$417,000
For loans purchased by FNMA or FHLMC, the conforming limit for 2012 is: -$322,700.00 -$333,700.00 -$417,000.00 -$300,700.00
$417,000.00
Hannah is purchasing a new property. The taxes on her new home are $1200 a year and the hazard insurance on her new home are $1400 a year. How much can the lender collect at closing to start Hannah's escrow account? -$217 -$432 -$200 -$316
$432
Liza is purchasing a new home. The purchase price of the home is $200,000. She has put down $2,000 in earnest money. If she is receiving FHA financing, how much more will she need for her down payment? -$7,000 -$5,000 -$4,000 -$18,000
$5,000
For an interest only loan of $180,000 with a 5% interest rate, how much is the dollar amount of interest for 7 months? -$5,500 -$6,500 -$9,000 -$5,250
$5,250
Agatha wants to purchase two discount points, and there are two origination points on her loan. The sales price of the property is $150,000, and she is putting 10% down on the property. How much are the discount points and origination points going to cost her? -$5,400 -$6,000 -$1,500 -$1,350
$5,400
The buyers purchased a home for $175,900. They put 10% down, and were charged an origination fee of 1% and discount points of 2.5%. How much money did the buyers have to bring to cover the origination fee and discount points? -$5,540.85 -$6,156.50 -$18,350.00 -$24,130.25
$5,540.85
The borrower is putting 10% down on a $180,000 sales price. She is paying 2.5 discount points and a 1% origination fee. What is the total of the origination fee and discount points she is paying? -$5,670 -$6,300 -$1,800 -$6,120
$5,670
When filling out the loan application, amounts entered should be rounded to the nearest: -$100.00 -$50 -$1,000.00 -$1.00
$50
In the event of an overage in an escrow account, what is the limit the account can be over before it needs to be refunded?
$50 dollars
For an interest-only loan of $210,000 with an interest rate of 3%, what would the monthly interest payment be? -$525 -$630 -$360 -$750
$525
What would be the minimum down payment on a FHA loan of $200,00? -$7,000 -$6,000 -$20,000 -$40,000
$7,000
Reginald works a full-time job as a schoolteacher and makes $43,000 a year. He also has been working a part-time job for the last two years working 10 hours a week at $10.50 an hour. His wife, Julia, works as a medical assistant and makes $22.50 an hour and works 45 hours a week. What is their gross monthly income? -$3,762 -$4,631 -$7,207 -$8,426
$8,426
A borrower gets a 15-year interest only loan for $85,000 at 6%. At the end of the loan term, how much will the borrower owe the lender?
$85,000
A borrower wants a Cash Out refinance for 80% LTV on a house that appraises for $250,000. The borrower has a first mortgage of $87,000 and a second for $25,000. Closing costs will equal $3,000. How much cash is available for the borrower to receive? -$30,000 -$85,000 -$115,000 -$200,000
$85,000
A borrower purchases a home for $120,500 and is putting 10% down. If he has already paid $2,500 in earnest money, what is the rest of the down payment at closing? -$8,345 -$8,550 -$9,550 -$10,500
$9,550
Jamie is looking to refinance his property. He currently owes $55,000 on a first mortgage and pays a 4% interest rate on it. He also owes $5,000 on a HELOC paying 6% interest on it. He wants to obtain some cash-out and is expecting to get at least $30,000. The appraisal came in at $200,000. He also has a tax lien of $1,200 on the property and $4,000 in credit card debt he'd also like to eliminate. He qualifies for an 80% LTV and the closing costs are going to be $3,000 on the new loan. How much cash will Jamie have available? -$93,000 -$97,000 -$91,800 -$95,800
$91,800
Allie is looking to purchase a new property. She currently makes $3,200 a month gross. What would be the maximum payment she could have on her new property? -$1,376 -$992 -$2,208 -$2,308
$992
The annual percentage rate is generally considered accurate if it does not vary above or below the APR initially disclosed by more than:
- 1/8% for a regular transaction - 1/4% for an irregular transaction
What is considered a Qualified Mortgage?
- A loan with a max term of 30 years - Fees do not exceed 3% of the loan amount - Income, assets, and obligations were verified - fully amortizing - DTI no more than 43%
Regulation X
- Addresses RESPA and applies to any federally-related mortgage loan secured by a first or subordinate lien on a residential real property designated for one-to-four families - Prohibits giving or accepting a fee, kickback, or any thing of value in exchange for referrals of settlement service business involving a federally related mortgage loan
Required disclosures before settlement:
- Affiliated Business Arrangement Disclosure (if settlement service provider is other than the lender & if borrower requests) - Closing Disclosures: 3 days prior to consummation
Valid changed circumstance
- An event that is beyond the control of the creditor or the borrower that occurs - Information that was known or provided at the tie of the application changed subsequent to the application and caused a change in the initial loan terms, interest rates, or settlement serve provider charges - New information regarding the borrower or the loan that the creditor did not rely on when suppling the Loan Estimate - Borrower-requested change to the interest rate or loan term - Borrower does not initially lock an interest rate, but does so after the Loan Estimate is initially delivered
Required disclosures after settlement:
- Annual escrow statement - Servicing transfer statement
Charges that MAY NOT change on the Closing Disclosure by any amount:
- Any charge paid to the creditor, mortgage broker, or affiliate of the creditor or mortgage broker for the orientation, processing, and closing of a mortgage loan - Any charge paid to a non-affiliate for a settlement service that the borrower is not permitted to shop for - Fees paid to an unaffiliated third party if the borrower is not allowed to shop for the third party service - Transfer taxes
Post-settlement service providers:
- Building/remodeling contractors - Service and repair contractors - Moving companies - Landscaper - Home improvement or design companies
The three business day waiting period requirement applies to a corrected Closing Disclosure that is provided when they are
- Changes to the loan's APR - Changes to the loan product - The addition of a prepayment penalty
Rules and Regulations of RESPA apply to:
- Conventional loans - FHA, VA, and other government sponsored loans - Purchase loans - Reverse mortgages - Assumptions - Refinances - Property improvement loans - Equity lines of credit
A creditor must generally consider eight types of information when establishing the borrower's ability to repay a mortgage loan:
- Current income or assets - Current employment status - Borrower's credit history - Monthly payment for the mortgage - Borrower's monthly payments on other simultaneous mortgage loans - Monthly payments for other mortgage-related expenses - Other debts of the borrower - Monthly debt payments
Today's regulations mandate the following:
- Disclosure of settlement costs expressed as a dollar figure - Disclosure of financial interests in a transaction - Disclosure of final settlement costs - Disclosure of closing costs and interest rates in a uniform manner - Disclosure of loan terms in advertising - Improved document review times for consumers - Elimination of PMI insurance at certain thresholds
Required disclosures at settlement:
- Finalized Closing Disclosure - Initial Escrow Statement (within 45 days of closing)
If the closing costs on the Closing Disclosures are:
- Greater than what was disclosed initially on the Loan Estimate, the Loan Estimate is considered to not be made in good faith - Less than the Loan Estimate, then the originator is considered to have acted in good faith when making the initial Loan Estimate
Required disclosures at or within 3 business days of application:
- Home Loan Toolkit - Loan Estimate - List of HUD approved Home Counselors - Affiliated Business Arrangement Disclosure (if required by the lender)
Loan Estimate DOES NOT apply to all real estate loans; exemptions include:
- Home equity lines of credit - Reverse mortgages - Loans to secure a fractional interest in real estate - 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 - Loans made to a non-natural person - Vacant land or land consisting of more than 25 acres - Construction-only homes
If an advertisement states a simple annual rate of interest and more than one rate applies over the term of the loan, the advertisement must also disclose with equal prominence and in close proximity to the advertised rate:
- each simple annual rate of interest that will apply; if a variable-rate, a reasonably current index and margin must be used - the period of time during which each simple annal rate of interest applies - APR
The Mortgage Disclosure Improvement Act (AKA 3/7/3 rule) mandates:
- Initial disclosures must be given to mortgage borrowers (or placed in the mail) within three business days of receipt of a completed application - The earliest a loan may be consummated is on the seventh business day after disclosures are delivered/mailed - Any correct Annual Percentage Rate redisclosures must be received by the consumer at least three business days before the loan is consummated
Features of Qualified Mortgages
- No excess upfront points and fees - No toxic loan features - Cap on how much income can go toward debt - No-doc loans not eligible - Prepayment penalties prohibited
Loan Estimate shows the borrower which charges are:
- Origination charges and services a borrower is not permitted to shop for, which cannot change at loan consummation - Services they can shop for, which could vary by up to 10% of the total - Services that can vary by any amount at loan consummation
Changes that occur to the annual percentage rate before consummation that require a new three business day waiting period include the disclosed APR on a closed-end transaction accurate for either
- Regular transactions if it is within 1/8th of 1 percentage point of the APR calculated under - Irregular transactions if it is within 1/4th of 1 percentage point of the APR calculated under
Transactions NOT covered by RESPA:
- all-cash sale - sale where the individual home seller takes back the mortgage - rental property transactions - temporary construction loans - other business purpose transaction - property of 25 acres or more - vacant or unimproved property, unless a dwelling will be constructed or moved onto the property within two years
Triggering terms requiring disclosure:
- amount of the down payment - amount of any payment - number of payments - period of repayment - amount of any finance charge
If any triggering terms are used in an ad, all of these disclosures must be made
- amount or percentage of down payment - terms of repayment - APR
If any of the triggering terms are used or the payment terms of the plan are set forth, affirmatively or negatively, in an advertisement for open-end credit, the ad must also clearly and conspicuously state the following:
- any loan fee that is a percentage of the credit limit under the plan and an estimate of any other fees imposed for opening the plan, expressed as a single dollar amount or a reasonable range - any periodic rate used to compute the finance charge, expressed as an APR - the maximum annual percentage rate that may be imposed in a variable-rate plan
Terms that do NOT trigger disclosure:
- available here - easy - financing available - terms to fit your budget
Prohibitions to closed-end mortgage loan that is subject to TILA and secured by the consumer's principal dwelling:
- coercing, influencing, or encouraging an appraiser to misstate the value of the dwelling - extend credit, if the creditor knows at or before closing, that improper coercion has occurred by anyone unless the creditor can document that has acted with reasonable diligence to determine that the appraisal does not materially misstate or misrepresent the dwelling's value
The HPA does not cover loans that
- do not have private mortgage insurance - are secured by second or multi-family homes - are VA or FHA loans - have lender paid PMI
Items on the Closing Disclosure:
- final statement of closing costs the borrower will incur - final truth in lending statement that discloses the APR - items paid at/before closing - transaction details (assumption of the loan, demand features, late payment information, negative amortization features, partial payments, description of the security for the loan, escrow account information) - appraisal - note and security instrument - liability - probability of a potential refinance - contact information for the lender, mortgage broker, real estate agents, and settlement agent
Information on the Loan Estimate:
- interest rate lock - difference in payments before and after mortgage insurance is in place - comparisons of payments made and the principal reduction of the loan in the first 5 years - Estimated Closing Costs - Estimated Cash to Close - Earnest money deposit - Total Interest Percentage (TIP) - Info on servicing the loan - Info on the delivery of the appraisal to the borrower - Likelihood of future refinance transactions - Place for borrowers to sign and confirm they have received the Loan Estimate
Misrepresentation: Regulation Z prohibits:
- misrepresentation about a loan product being government endorsed - misleading use of the current lender's name in the advertisement or claim of debt elimination - using the term "counselor" in any advertisement to refer to a for-profit mortgage broker or lender - in a foreign language advertisement, providing information about some trigger terms or required disclosure in a foreign language, while providing information about other trigger terms or required disclosures only in English
If the advertisement states the amount of any payment, it must also disclose - with equal prominence and in close proximity to the payment:
- the amount of each payment that applies over the term of the loan, including any balloon payments; if a variable-rate, a reasonably current index and margin must be used - the period of time during which each payment applies
The HPA requires that lenders provide these disclosures to residential mortgage borrowers:
- the borrower's right to request cancellation of PMI when a mortgage has been paid down to 80% or its original appraised value or purchase price, whichever is less, assuming that the borrower has had a good history of payment, not taken out ay other loans on the property, and not experienced a decline in the value of the home - the automatic cancellation of PMI by the lender when a mortgage has been paid down to 78% of the property's original value, assuming the borrower is current with payments - the borrower's right to accelerate the cancellation date by making additional payments that bring the loan-to-value ratio to 80%
Consumers may have a right to an extended rescission period of up to three years under these circumstances:
- the creditor fails to property notify consumers of the right to rescind - the creditor does not provide the consumer with the required material disclosures
Consumers may waive or modify the 3 business day waiting period when
- the extension of credit is needed for a bona fide personal financial emergency - the consumer has received the Closing Disclosure - The consumer gives the creditor a dated written statement that describes the emergency, specifically modifies or waives the waiting period, and bears the signature of all consumers who are primarily liable for to mortgage
Section 8 of the Real Estate Settlement Procedures Act does NOT prohibit:
- the payment of fees to attorneys, title companies, or agents for service actually performed - the payment of a bona fide salary or compensation to a person or goods or products actually furnished or services actually performed in the making of a loan - payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and brokers
If a catalog or other multiple-page advertisement or an electronic advertisement gives information in a table or schedule in sufficient detail that includes triggering terms requiring additional disclosure, it would be considered a single advertisement under the following circumstances:
- the table or schedule is clearly and conspicuously set forth - any statement of the triggering credit terms appearing anywhere else in the catalog or advertisement clearly refers to the page or location where the table or schedule begins
Homeowners Protection Act requires lenders or servicers:
- to provide certain disclosures and notifications concerning private mortgage insurance - that refinance or service home mortgages to comply with its terms
Disclosures are required in two general areas:
- when creditors offer credit but before the transaction is consummated - when credit terms are advertised to potential customers
Current FHA loan limits (floors and ceilings) are
--One-Family Properties: $271,050 floor and $729,750 ceiling --Two-Family Properties: $347,000 floor and $934,200 ceiling --Three-Family Properties: $419,400 floor and $1,129,250 ceiling --Four-Family Properties: $521,250 floor and $1,403,400 ceiling --Alaska, Hawaii, Guam, and the Virgin Islands: 150% of the loan limit ceiling
What are the specific limits on the maximum LTV for cash-out refinance transactions
--owned a property as their principal residence for at least 12 months or more, they are eligible for a maximum of 85% of the appraised property value for a cash-out refinance transaction --owned a property for less than 12 months, they are limited to 85% of the lesser of the appraised value or the initial sales price for a cash-out refinance transaction
Sub-prime borrowers have what characterists?
-2 or more 30 day lates in last 12 months -DTI over 50% -High default probability -Bankruptcy in the last 5 years -Judgement, foreclosure, reposession or charge-off in the last 24 months - one or more 60 day delinquencies in the last 24 months
Who is exempt from licensing requirements?
-A processor or underwriter, -A registered loan originator who is an employee of a national bank, member banks of Federal Reserve System and their subsidiaries, insured by non member banks, savings associations and their subsidiaries, any federally insured credit union, The Farm Credit System lending institutions -individual that only performs real estate brokerage activities, -individual who offers or negotiates terms to immediate family -employees of a bona fide non profit organization
According to Fannie/Freddie guidelines, how long is a credit report good for? -90 days -30 days -60 days -120 days
90 days
RESPA exempt transaction include:
-Business or commercial loans -loans on properties 25 acres or more -construction loans if: (A) not exempt if the lender issues a committment for permanent financing (B) not exempt if it is used to purchase the property
What information must be reported for HMDA?
-Loan number -Date of application -Type and purpose of loan -Owner occupancy status -Loan amount -Type of action taken -Location by MSA, state, county, and census track -race or national origin -sex of applicant -Type of entity purchasing the loan if it was sold
The consumer may receive a corrected Closing Disclosure after consummation that:
-Corrects a numerical error - May include proceeds for a lender tolerance cure - Corrects a non-numerical clerical error that corrects the inaccuracy
What are factors to consider what determining the Ability To Repay
-Current or expected income/assets -current employment status -Monthly mortgage payment for this loan -Monthly payment on any simultaneous loans on -the property -ESCROW -Debts, alimonly, child support -DTI ratios (Monthly) -Credit history
Prohibited Conduct and practices include what?
-Directly or indirectly employ any scheme or way to defraud or mislead borrowers or lenders. -obtain property by fraud -engage in unfair or deceptive practices -entering a contract that the person may earn a fee or commission through "Best efforts" to obtain a loan even though its not obtained. -failing to disclose required disclosures -failing to comply with SAFE Act or any regulations -engage in bate-and-switch advertising
What Is an example of loan fraud?
-Double Consent- Fraud because the true sales price is kept from the lender. -Trust Deed Refinance- Fraud if the lender doesn't know about all steps involved. -Flipping- buying and reselling with inflated appraisals
The notice of servicing transfer must include:
-Effective date of the transfer -Toll free or collect number for both the transferring servicer and the new servicer -Name or department of both companies for contact to answer inquires -the date on which the old servicer will cease accepting payments -Any info regarding mortgage life or disability insurance - A statement advising the borrower that the terms of their loan will not change
What does the Dodd-Frank Wall Street Reform Act establish and require?
-Established the CFPB -Requires the QM and QRM rule -Restricts LO compensation -requires Assessment of Ability to Repay -requires new borrower disclosures to replace GFE and TILA disclosures -Limits loan terms such as pre-payment penalties, negative amortization, balloons etc...
Zero tolerance for the LE/CD needing to be redisclosed if:
-Fees paid to the creditor, broker or affiliate of either -Fees paid for services the customer cannot shop for. -Transfer taxes.
What are the 3 required disclosures within 3 business days of a completed loan application (assuming the lender does not turn down the loan - Not Required)
-HUD Settlement Costs Booklet—contains consumer information regarding various real estate settlement services (required for purchase transactions only) -Good Faith Estimate (GFE) of Settlement Costs—provides an estimate of each charge the buyer is likely to pay at settlement; must also disclose any settlement service providers the lender requires -Mortgage Servicing Disclosure Statement—discloses to the borrower whether the lender intends to service the loan or transfer the servicing to another lender, and provides information about complaint resolution
What constitutes a non-profit organizations?
-Has the status of a tax-exempt organization under section 501(c)(3) of the Internal Revenue code of 1986 -promotes affordable housing or provides homeownership education -conducts its activities in a manner that serves the public -Receives funding and revenue and charges fees in a manner that does not incentivize it or its employees to act other than in the interests of its clients -Provides for the borrower, residential mortgage loans with terms favorable to the borrower and comparable to mortgage loans and housing assistance from government housing programs
According to the Homeowner's Protection Act or PMI Act, lenders are required to drop mortgage insurance when?
-If the LTV reaches less than 80% of the lower of the original purchase price or appraised value and the borrower requests, -when the borrower pays the loan about down to 78% of the lower of the original purchase price or appraised value AUTOMATICALLYY.
The Anti-Money laundering rule sets forth requirements to the AML plan, which include?
-Incorporating policies, procedures and internal controls based upon the loan or finance companies AML and terrorist financing risks. -A compliance officer must be designated and is responsible for, effectively implementing the AML rule and updating it and making sure training occurs -The training must be done by a competent 3rd party and must be able to be verified that training happened -Testing is required to monitor compliance
What are some examples of fraud red flags?
-Long or unrealistic commute from work to home -downgrading homes, unless empty nester's -down payment other than cash -new home too small to accommodate all intended occupants -price and date of original purchase not shown on refinance -same phone number for home and business -loan payments too high with respect to salary -Invalid social -years of schooling isnt consistent with job or profession
What is predatory lending?
-Making loans based on the value of the property -Inducing a borrower to repeatedly refinance -Engaging in fraud or deception to conceal characteristics of a loan from a borrower
What are some prohibited acts or practices in advertising?
-Misleading consumers in any way -Making false statements that the product offered is a "government loan program" or "Government supported" unless it is a FHA or VA loan that is in fact a government loan -You cannot use the term counselor in an ad to refer to a for-profit mortgage broker or creditor -you cannot use the name of a current lendor in a misleading way.
What are Safeguard Rules Security Plan requirements that each institution must do?
-Must designate one or more employees to coordinate safeguards. -Must identify and assess risks -Must design and implement a safeguards program, and regularly monitor/test it -Must select appropriate service providers and contract with them to implement safeguards -Must evaluate and adjust the program in light of relevant circumstances
What is the loan-to-value if the loan amount is $139,500, the appraised value is $164,117 and the sales price is $155,000?
90% - 139,500/155,000
No tolerance for the LE/CD needing to be redisclosed if:
-Prepaid interest -Property insurance premiums escrow -services the consumer shopped and chose a provider not on the list -Changes for services NOT required by the creditor
What is the max LTV financed for an FHA loan?
96.5% financing,.
What are the objectives of the SAFE Act?
-Provide uniform license applications and reporting requirements for state licensed-loan originators -Provide comprehensive licensing and supervisory database -Aggregate and improve flow of information to and between regulators -Provide increased accountability and tracking of loan originators -Streamline the licensing process and reduce regulatory burden -Enhance consumer protections and support anti-fraud measures -Provide consumers with free information about a loan originator's employment history and public disciplinary and enforcement actions -Establish a means by which residential mortgage loan originators would be required to act in the best interests of the consumer -Facilitate responsible behavior in subprime mortgage market place -Provide comprehensive training related to nontraditional mortgage products -Facilitate the collection and disbursement of consumer complaints
The identity theft prevention plan must include what?`
-Reasonable policies to identify red flags -Policies and procedures to detect them -Actions to be taken once identified -Procedures for updating the plan
the FHA has several different loan programs that are designed for different types of properties and different categories of borrowers
-section 203 (b)standard loan program -section 245-graduated paymen mortgage
10% Tolerance for the LE/CD needing to be redisclosed if:
-Recording fees -3rd party fees paid to non affiliates that the consumer was allowed to shop and the consumer chose from a provider on the provided list NOTE: redisclosure should only occur once the cumulative increase exceeds 10%
maximum purchase money loan amount for FHA insured loan is
96.5% of sales price or appraised value, whichever is less
State agencies have regulatory power. What are a few examples of them?
-Setting education standards for pre-licensing -Setting education standards for continued-education -Conducting background checks -investigating potential rule violations by licensees -Fining licensees for violations or stripping licenses -Setting fees -coordinating iwth other state agencies and the NMLS to share information
If a lender denies an application based on credit, an adverse action notice must include what?
-Stating Adverse action was taken based on information received from the credit reporting agency -name, address and telephone number of the agency -statement that the agency doesnt know information regarding the adverse action -The consumer can receive a free copy of the credit report.
What must mortgage relief services disclose to protect consumers from being misled?
-That they aren't associated with the government and their servicers have not been approved by the government or the lender -The lender may not agree to change the consumers loan -If companies tell consumers to stop paying their mortgage, they must tell them they could lose their home and damage their credit
What does the Consumer Financial Protection Bueau enforce?
-Truth in Lending Act (TILA) -Real Estate Settlement Procedures Act (RESPA) -Homeowners Protection Act (HPA) -Fair Credit Reporting Act (FCRA) -Fair and Accurate Credit Transactions Act (FACTA) -Portions of the Gramm-Leach Bliley Act related to information privacy -Equal Credit Opportunity Act (ECOA) -Home Mortgage Disclosure Act (HMDA) -Home Ownership and Equity Protection Act (HOEPA) -Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act
What are unacceptable sources for down payments?
-Unsecured loans -Credit Cards -undocumented cash -gifts from seller
What are permitted or eligible reasons to request a credit report?
-Upon borrower request -for extension of credit as result of an application from a consumer -For use by a potential investor or servicer, or current insurer, in a valuation or assessment of the credit or prepayment risks associated with an existing credit obligation.
What are acceptable sources for down payments?
-savings and checking account, -gifts from relatives -gifts from domestic partners (with 12 month history) -bonuses -grants from non profit organizations -secured loans -sale of personal property -Trade equity
Lenders must notify applicants of action taken on an application when?
-Within 30 days after receiving the completed application concerning approval, denial or a counter offer -30 days after taking adverse action. -within 90 days after notifying the applicant of a counteroffer and if the borrower does not accept.
What must an adverse action notice contain?
-a statement of the action taken -contact information for the lender -name and address of the federal agency with jurisdiction -and reasons for the decision or a statement advising the borrower their right to receive reasons.
Who is exempt from the DNC rules?
-banks -federal credit unions -federal loans and savings -airlines -long distance telephone numbers -non-profit organizations -business to business calls -survey calls -political organizations
section 203(b)standard loan program
-basic FHA loan insurance program for residential property of 1-4 families -most FHA loans are limited to owner occupied properties
how FHA loan insurance works (4)
-borrower holding an FHA insured loan defaults on the loan -lender forecloses -property is sold -
What are the 3 requirements in order to renew your license?
-continue to meet the minimum standards for license issuance (Surety bonds, financial, background) -Satisfy all CE requirements -pay all required renewal fees
when an appraisal is made for an FHA, it serves 2 purposes-
-establishes value of property for loan purposes -serves as a conditional commitment to borrower
2nd type of restrictions is in clauses allowed in loans(2) (federal law prohibits)
-prepayment penalties -due on sale clauses
3 main purposes of FHA
-promote improved housing standards -assist in stabilization of mortgage market -provide mortgage loan insurance
Define an associate:
-spouse, parent or child -corporation or entity that controls, is controlled, or is under common control with such person -an employer, officer, director, partner, or franchiser of such person -anyone with an agreement, arrangement, or understanding with such person, the purpose or substantial effect of which is to enable to person in a position to refer settlement business to benefit financially from referrals.
If the APR on a fixed rate loan increases from the initially disclosed rate by more than which of the following, an additional waiting period is triggered before the loan can close? -.125 percent -.250 percent -.375 percent -.500 percent
.125 percent
Which of the following are powers/duties of the Regulatory Authority? -Arrest and imprison -Conduct examinations of licensee's books and records -Participate in Background Investigations done by the FBI -Prevent a licensee from taking Continuing Education classes
.Conduct examinations of licensee's books and records
Lisa is applying for a loan to purchase a home. Under the terms of Reg Z, how long will Lisa have to rescind the loan after she signs off on it?
0 days; there is no right of rescission - Regulation Z does not require a rescission period for a typical purchase loan.
The term "20 basis points" expressed as a percentage is: -0.02% -0.20% -2.00% -20.00%
0.20%
How long prior to closing does RESPA require that the HUD-1 Settlement Statement be provided to the borrower, if requested?
1 business day - RESPA requires that the borrower have the right to inspect the HUD-1 one business day prior to closing, if requested.
Which of the following are NOT specifically listed as courses required for continuing education? -3 hours of federal laws training -2 hours of ethics -2 hours of nontraditional mortgage product training -1 hours of NMLSR history training
1 hours of NMLSR history training
one discount point is equal to
1% of loan amount
How much is 1 discount point? -A 1% reduction in the note rate -$1,000 -1% of the loan amount -1% of the sales price
1% of the loan amount
What is a buy down/discount point
1% of the loan amount, used to lower the interest rate permanently
An affiliated business arrangement must be given if there is what percent of an ownership interest? -1% ownership -over 10% ownership -a 25% ownership -If more than 5% is owned the affiliated company cannot be used
1% ownership
According to TRID what are the 6 pieces of an application
1) Borrower name 2) Borrower income 3) Borrower social security for the credit report 4) Property address 5) Estimated property value 6) Loan amount
The three circumstances a new 3 business day waiting period with a newly issued CD is started again is as follows:
1) Changes in the APR outside of 1/8% 2) Changes in the loan product 3) addition of prepayment penalties
If an escrow account is short, the servicer has 4 options, what are they?
1) Do nothing 2) require a lump sum payment only if the shortage/deficiency is less than one months worth of deposits 3)require the borrower to repay SHORTAGES over 12 months 4) require the borrower to repay DEFICIENCIES (Negative balances) over a two month period
What are 4 criterias of suspicious activity to report a SAR?
1) It involves funds derived from illegal activity or hiding funds for illegal activity 2)Transactions are designed to evade Bank Secrecy Act requirements or SAR rules 3)transactions with no purpose 4)Transactions that use a loan or finance company to facilitate criminal activity
A transaction that requires reporting of a SAR has 3 requirements to report a SAR, what are they
1) It is conducted or attempted by or at a finance company 2) It involves funds or assets of atleast $5,000 3) the finance company knows, suspects or has reason to suspect suspicion
There are 4 purposes of RESPA, what are they?
1) Require effective advance disclosure of costs 2) Eliminate kickbacks and referral fees 3) Limit amount held in escrow or reserve accounts 4) Reform record keeping of land title information
If a trigger term is used and triggered, what must be disclosed?
1) The amount or % of down payment 2) The terms of repayment 3) The APR including any variable rate features
What are the 4 trigger terms in an advertisement
1) The amount or percent of any down payment 2) The number of payments or period of repayment 3)The amount of any payment 4) the amount of any finance charge
What must be disclosed if asking for race, color, religion, sex, or origin for monitoring purposes?
1) The applicant isnt required to provide the information 2) Lenders do not monitor religious information 3)the info is being requested for monitoring purposes 4) if not provided, the info will be collected by surname and visual observation
the six valid reasons to redisclose LE/CD are:
1) Valid Change in Circumstance 2) Changes that affect consumer eligibility for the terms 3)any changes requested by the consumer 4) Rate locks 5) consumer does not communicate intent to proceed within 10 days of issuance 6) construction loan closing is delayed by atleast 60 days from issuance of LE.
According to the deed, what is the order which payments are applied?
1) interest 2)principal 3)escrow 4) late charges
Income used to qualify must have been received for 2 years and be likely to continue for at least: -3 years. -5 years. -1 year. -Indefinitely.
3 years.
A Chapter 7 bankruptcy could show on a credit report for a maximum of
10 Years
The estimate closing costs on the mortgage loan disclosed either on the Good Faith Estimate or Loan Estimate are good for: -3 days -7 days -10 days -21 days
10 days
LE is good for how long?
10 days from receipt to give a chance to give intent to proceed
Long term debts are those that have payments remaining for more than: -10 months. -6 months. -12 months. -28 months
10 months.
According to the Fair Credit Reporting Act, a bankruptcy could remain on a credit report for how long? -3 years -5 years -7 years -10 years
10 years
How long before a discharged bankruptcy will be removed from a credit report? -Never 2 -5 years -7 years -10 years
10 years
How long can bankruptcies be reported on a credit report?
10 years
Jordan has a bankruptcy on her credit report. How long can that bankruptcy continue to stay on her credit report? -10 years -7 years -5 years -2 years
10 years
What is the statute of limitation for loan fraud?
10 years
A loan originator who supplies a revised Good Faith Estimate to a borrower must maintain the related documentation for at least
3 years.
The borrowers are purchasing a house with a sales price of $300,000 they put 30% as a down payment. If they paid $3,150 in points, how many points does that represent? -1.05 -2 -2.25 -1.5
1.5
How much is charged for the up front mortgage insurance on an FHA loan (2012)? -1.25% -1.50% -1.75% -2.25%
1.75%
The UFMIP on a 30-year FHA loan (as of June 2012-2013) is? -1.00% -1.75% -2.00% -2.25%
1.75%
What is the amount of FHA's UMIP (2012)? -1.50% -2% -2.25% -1.75%
1.75%
The Verification of Mortgage (VOM) must be provided for all existing mortgages and be sent to the underwriter by the: -processor. -title company. -borrower. -real estate agent.
1.processor.
Each month, the lender may require a borrower to pay into the escrow account no more than
1/12th of the total of all disbursements payable during the year plus an amount necessary to pay for any shortage in the account (one month)
Each month, the lender may require a borrower to pay into a cushion in an escrow account not to exceed an amount equal to
1/6th of the total disbursements for the year (two months)
If the APR in the initial Truth in Lending Statement for a fixed rate loan deviates by more than ________, an additional waiting period is imposed.
1/8%
The estimate of settlement charges on a GFE must be made available for at least _____ business days.
10
When qualifying a borrower, an installment debt does not need to be included in the debt ratio when the balance of the term of repayment is less than how many months?
10
Charges for third-party services and recording fees paid by or imposed on the consumer are grouped together and subject to a
10% cumulative tolerance (the total sum of the charges added together does not exceed the sum of all such charges disclosed on the Loan Estimate)
one point is referred to as
100 basis points
If two borrowers own property in joint tenancy, each borrower has what percent of ownership? -0%, the lender owns the property until the lien is paid in full -The percentage is determined by how much is written on note or deed -100% -50%
100%
VA loans allow for a maximum LTV of what percent?
100%
The amount of hazard insurance coverage is determined by the lower of what?
100% of the insurable value of the improvements established by the insurer OR unpaid principal balance as long as it equals the minimum 80% of the insurable value of the improvements required to compensate for damages.
The Uniform Residential Loan Application is also known as the: -1002 -4506T -MU-4 -1003
1003
What is the form number of the Fannie Mae Residential Loan Application?
1003 - The loan application is the 1003. Form 4506T is a request for copy of tax transcripts; Form 1008 is the transmittal summary; Form 1099 is a non-employee wage statement.
The written Verification of Employment (VOE), is also known as FNMA form: -1005 -1099 -1006 -1031
1005
The Verification of Deposit (VOD) is also known as FNMA form: -W-2. -1099 -1031 -1006
1006
The loan amount (principal) is $50,000 and the annual interest paid is $5,500. What is the annual interest rate?
11%
How many of the 125 National Test with UST questions are scored? -125 -120 -115 -110
115
COFI is an Index used in which district? -11th District -The Federal District -Cost of Funds Index District -Cost of Funds Index
11th District
Dan wants to refinance his mortgage. His current monthly payment is $1,250, and the monthly payment on his new loan will be $985. Closing costs are $3,180. How long will it take Dan to recover the cost of refinancing?
12 Months - Dan will save $265 each month. When you divide the cost of getting the loan by the amount of savings, you see that it will take 12 months to break even. This is probably a very beneficial loan for Dan.
for proposed construction-appraisal is valid for
12 months
A consumer has an ARM with an initial rate of 6% and a rate cap 2/6. What's the highest her interest rate could be over the life of the loan?
12%
How many questions are on the National Test with the UST? -100 Questions -125 Questions -150 Questions -175 Questions
125 Questions
FHA Maximum Mortgage Amounts
125% of the median house price in an area, or 175% of the national conforming loan limit of $417,000
What percentage of the national test relates to Uniform State Content? -25% -23% -16% -13%
13%
According to RESPA, a lender making a purchase loan may collect how many months of hazard insurance at settlement? -12 months -14 months -Two months -Only what is required to pay the insurance premium
14 months
How many days in advance of transferring a loan to another lender must the current mortgage servicer inform that customer of the transfer to another lender who will subsequently be servicing the loan? -15 -20 -35 -45
15
If a lender transfers the servicing of a mortgage, it must inform the borrower at least how many days in advance of the effective date of transfer? -15 -30 -60 -90
15
Regarding Mortgage Servicing Transfers, what are the number of days that the current mortgage servicer must inform that customer prior to transferring the loan to another lender - who will subsequently service that loan. How many days prior to this loan transfer does the current mortgage servicer have to inform the customer? -15 -20 -3 -45
15
ABC Mortgage transferred servicing rights of some of its mortgage loans to XYZ Mortgage. ABC must send a Servicing Transfer Statement to the affected borrowers ______ days before the effective date of transfer.
15 - RESPA requires a Servicing Transfer Statement to be sent to the consumer if the loan servicer sells or assigns the servicing rights of the loan to another service provider. The consumer must be notified 15 days before the effective date of transfer.
How much notice is the lender required to give the borrower before transferring the "servicing" of the loan? -10 Days -45 Days -30 Days -15 Days
15 Days
What is the minimum amount of time that a lender has to inform the borrower that they are transferring servicing? -15 days -45 days -10 days -60 days
15 days
while typical FHA loans are for 30 years, loan terms from
15 to 40 years are available
A borrower's name is on the National Do Not Call list. At what point after the loan closes and is sold to another company must the MLO stop contacting the borrower to solicit new business? -Immediately -After three months -One year -18 months
18 months
If the borrower's monthly gross income was $6,000 and the monthly housing expense was: first mortgage payment, $900; monthly property tax $110; monthly hazard insurance $28; and monthly mortgage insurance $60, what is the housing ratio or front end ratio? -15.00% -16.00% -18.30% -17.30%
18.30%
FHA Loans
1934 It insures loans. In the event of foreclosure, the lender is protected by mortgage insurance issued
After the crisis of the Great Recession according to FHA Standard underwriting when can a borrower repurchase again after a Chapter 13 bankruptcy? -7yrs from the credit discharge date -5yrs from the credit discharge date -1yr from the credit discharge date -3yrs from the credit discharge date
1yr from the credit discharge date
After the crisis of the Great Recession according to VA underwriting when can a borrower repurchase again after a Chapter 13 bankruptcy? -7yrs into the payout on a case by case basis. -4yrs into the payout on a case by case basis 3.1yr into the payout on a case by case basis 4.3yrs into the payout on a case by case basis
1yr into the payout on a case by case basis
The Truth In Lending Act requires that a borrower be given how many copies of the notice of his right to rescind? -4 -3 -2 -1
2
X 31. A mortgage loan originator must retain evidence of compliance with the Truth in Lending Act for at least ____ years after disclosures were required to be made.
2
If you're an approved continuing education insructor, you may receive credit towards your own continued education at what rate?
2 hours of credit for every one hour taught.
In order to meet the pre-licensing education requirement, a person shall complete at least 20 hours of approved education. Which of the following is NOT included in the minimum educational requirements? -2 hours of training related to predatory lending laws -3 hours of Federal law and regulations -3 hours of ethics training -2 hours of training related to nontraditional mortgage products
2 hours of training related to predatory lending laws
What is the cushion of escrow payments a servicer may hold
2 months worth of any escrowed items.
RESPA prohibits lenders from requiring an escrow cushion of more than
2 months.
889.A mortgage loan originator is required to keep a record of compliance with TILA for how many years? 1.2 years 2.3 years 3.5 years 4.7 years
2 years
How long must a creditor or servicer retain the Escrow Closing Notice and the Post-Partial Payment Policy disclosure? -5 years -2 years -3 years -10 years
2 years
How many years of employment is required to be disclosed on the 1003? -2 years -3 years -10 years -7 years
2 years
What is the guideline regarding length of history for a second job to be included as qualifying income? -6 months -1 year -2 years -3 years
2 years
How many years of employment should you document on the 1003 for each borrower? -1 year only -1 year if they are W-2 employees -2 years for both -2 years for at least one of the two borrowers
2 years for both
How many years of residency history do you need to document on the 1003 for each borrower? -Only 1 year if they lived with parents -1 year if they rented prior to the purchase -2 years for both borrowers -2 years for at least one of the two borrowers
2 years for both borrowers
Maximum allowed seller contributions, lender contributions, etc for conventional loans are:
2% of the lesser of the appraised value or sales price for investment properties 3% of the lesser of the appraised value or sales price for principle or second homes if the LTV is greater than 90% 6% of the lesser of the appraised value or sales price for principle or second homes if the LTV is between 76% and 90% 9% of the lesser of the appraised value or sales price for principle or second homes if the LTV is 75% or lower
An active duty service person, or a veteran obtaining his/her first VA loan would pay what amount for the VA funding fee (2012)? -2% -2.15% -2.40% -2.25%
2.15%
What is the funding fee for an active duty veteran or a veteran who has not previously used his/her entitlement and who is not putting down a down-payment (2012)? -1.40% -2.00% -2.15% -1.50%
2.15%
Which of the following is an example of a subprime loan? -2/28 -3/1 -5/1 -360/180
2/28
What is a 2/28 balloon payment, what is a 180/360 balloon payment?
2/28 -balloons in 2 years, fixed rate, amortized over 30 years 180/360 - balloons in 15 years, fixed rate, amortized over 30 years
Explain what a 2/6 ARM cap means, a 1/5 cap and a 5/2/5
2/6 = 2% periodic adjustments, 6% lifetime cap 1/5 = 1% periodic adjustments, 5% lifetime cap 5/2/5 = 5% first adjustment, 2% periodic cap after the first one 5% lifetime cap
The borrower's gross monthly income is $5,000. The new mortgage loan will reduce his monthly payment to only $1,000 per month. The borrower will still owe a car payment of $350 and a student loan payment of $250. The borrower also has a cell phone bill of $90 per month. What is the borrower's new Housing Ratio? -20% -27% -32% -33.80%
20%
When was the Housing and Economic Recovery Act signed into law? -2007 -2008 -2009 -2010
2008
When was the SAFE Act passed?
2008
What gross percentage of variance on an appraisal report is tolerable when evaluating comparables? -25 -15 -20 -10
25
Which property is exempt under RESPA? -Owner occupied dwellings -25 acres or more -Condominiums -PUDs and condominiums
25 acres or more
How much can Social security be grossed up to?
25%
If a borrower has rental properties, how much of the gross monthly rent may be used as income?
25%
A borrower must provide copies of their business tax returns if they own what percent of the business? -5-10% -10-15% -15-25% -25% or more
25% or more
What % must a borrower own of a company before business tax returns are required?
25% ownership
What is the housing ratio for a borrower who makes $24,000 a year with a payment amount of $560? -25% -28% -23% -31%
28%
When a file is being manually underwritten, the Fannie/Freddie maximum qualifying ratios are: -28/36. -28/43 -29/41. -25/39.
28/36.
What are FHA's automated underwriting qualifying ratios? -29/41 -24/36 -36/43 -28/36
29/41
After the crisis of the Great Recession according to VA underwriting when can a borrower repurchase again after a foreclosure? -7yrs from the credit report date -5yrs from the credit report date -2yrs from the credit report date -3yrs from the credit report date
2yrs from the credit report date
After the crisis of the Great Recession according to VA underwriting when can a borrower repurchase again after a short sale? -7yrs from the credit report date -5yrs from the credit report date -2yrs from the credit report date -3yrs from the credit report date
2yrs from the credit report date
After the crisis of the Great Recession according to Conforming and High Balance when can a borrower repurchase again after a Chapter 13 bankruptcy? -7yrs from the discharge date -5yrs from the discharge date -2yrs from the discharge date -4yrs from the discharge date
2yrs from the discharge date
After the crisis of the Great Recession according to VA underwriting when can a borrower repurchase again after a Chapter 7 bankruptcy? -7yrs from the discharge date -5yrs from the discharge date -2yrs from the discharge date -3yrs from the discharge date
2yrs from the discharge date
A borrower completes a loan application/disclosures, but instead of locking the interest rate at the time of application, he locks the rate at a later date. The lender has ________ business days to redisclose the terms of the locked loan.
3
A creditor is generally required to ensure that the consumer receives the Closing Disclosure no later than ______ business day(s) before loan consummation.
3
A creditor must deliver to the consumer or place in the mail, the revised Loan Estimate no later than ________ business day(s) after receiving information regarding a fee that qualifies as a changed circumstance.
3
A loan greater than $100,000 is not considered a qualified mortgage (QM) if the points and fees paid by the consumer exceed what percent (%) of the total loan amount? -2 -3 -5 -6.5
3
How many business days after closing does the consumer have the right to rescind a refinance of his personal residence?
3
How many business days from the day of application does the MLO have to deliver the Truth in Lending Statement?
3
What is the minimum number of comps required by most secondary lenders to ensure an accurate estimate of value when performing the sales comparison approach?
3
If an interest rate is locked after the Loan Estimated has been delivered, how long does the lender have to deliver the revised Loan Estimate to the applicant?
3 Business days
How long does a borrower have to the right of rescission?
3 business days (any day except sunday)
When is the consumer deemed to have received the LE after its mailed?
3 business days after mailing or if there is actual documentation of an earlier delivery
How long does an LE have to be redisclosed after a change was made.
3 business days of receiving the information
A creditor must provide the Closing Disclosure and the consumer must receive the disclosure
3 business days prior to loan consummation
According to MDIA, when must you provide a copy of the appraisal to your borrower? -3 business days prior to settlement -At settlement -1 business day prior to settlement -Within 90 days after a borrower request for the appraisal
3 business days prior to settlement
When must the Home Loan Toolkit be provided to the borrower? -3 days after application -3 days before closing -At the time of application -7 days after application
3 days after application
MDIA requires the appraisal be given to borrowers: -1 day before settlement. -3 days before settlement. -30 days after settlement. -Immediately after settlement.
3 days before settlement.
As part of a mortgage loan originator applicants pre-licensing education, how many hours must be focused on federal law? -2 hours -3 hours -4 hours -10 hours
3 hours
In order to renew your license, you must annually complete which of the minimum requirements pertaining to Continuing Education: -3 hours of Federal Law, 2 hours of Ethics, 2 hours of non-traditional and 1 Elective -2 hours of Federal Law, 2 hours of Ethics, 2 hours of non-traditional and 2 Electives -3 hours of Federal Law, 2 hours of Ethics, 1 hours of non-traditional and 2 Electives -2 hours of Federal Law, 3 hours of Ethics, 2 hours of non-traditional and 1 Elective
3 hours of Federal Law, 2 hours of Ethics, 2 hours of non-traditional and 1 Elective
What is the break down of continued education required?
3 hours of Federal Laws 2 hours of Ethics 2 hours of Non-traditional Mortgage products 8 hours total
What is the break down of the pre-licensing Education required?
3 hours of Federal Laws 3 hours of Ethics 2 hours of non-traditional mortgage products 20 hours total
For license renewal, an MLO is required annually to complete a minimum of how many hours of continuing education on the topic of federal law? -2 hrs. -3 hrs. -7 hrs. -8 hrs.
3 hrs.
A potential borrower calls you for rates and programs. Assume that they are on the DNC Registry. You are allowed to call them back for what period of time? -30 days -3 months -1 year -18 months
3 months
How many pages does the Loan Estimate have?
3 pages
If an applicant does not initially pass a test, they may retake the test after waiting at least 30 days. How many times may an individual retake a test before having to wait longer than 30 days? -Once -6 times -3 times -4 times per year
3 times
A refinance loan closes and funds. The lender forgot to tell the borrowers about the right of rescission. How long do the borrowers have to rescind the loan? -3 days -3 months -3 years -Only until the first payment is due
3 years
An extended period of rescission of __________ is given to consumers who did not receive a Truth in Lending Statement prior to close.
3 years
How long must a brokerage owner keep records? -3 years -4 years -5 years -7 years
3 years
If a loan is a refinance, and the loan is improperly closed and funded in one day with no three day rescission period, how long do the borrowers have to rescind the transaction? -1 day -3 days -1 week -3 years
3 years
How long must LO compensation be kept record for?
3 years following the date it is paid
If a lender is not compliant with the right of rescission, how long does a borrower have to rescind?
3 years, or in the event of a sale or transfer of the property. Whichever comes the earliest.
Seller concessions FHA
3-6% the seller is paying a percentage of the buyers closing costs out of pocket. the seller is agreeing to give back a certain percentage of the purchase price to the buyer to cover the buyer's closing costs.
as of january 1, 2008, the minimum required down payment on an FHA insured loan is
3.5%
Down Payment Min
3.5% - 10% --580 credit score to qualify for a 3.5% down payment program --below 580 credit score must make a down payment of at least 10%. --less than 500 are not eligible for FHA loans. Downpayment can be from the borrower's own funds, gift funds or housing authority grants.
what is the minimum down payment that may be required of a buyer using an FHA insured loan to buy a property
3.5% of sales price, or appraised value, whichever is less
In order for a junior mortgage on a primary residence to be considered a higher-priced loan, the APR must exceed the applicable average prime offer rate by at least
3.5%.
Carlisle currently has an ARM and his ARM is going to adjust for the first time. The margin on his ARM is 2.25 and his ARM is tied to the LIBOR, and it's currently sitting at 1.25. What would be his interest rate if it adjusted today? -2.25% -1.25% -4.50% -3.50%
3.50%
A lender has how many business days to notify the borrower of an underwriting decision? -3 -10 -30 -60
30
A lender has how many days to notify the borrower of an underwriting decision?
30
The Equal Credit Opportunity Act is a law that requires the lender to provide the borrower a reason for denial within how many days of loan application? -3 -10 -30 -45
30
The FCRA allows a consumer to dispute inaccurate credit information. How many days are allowed for an incorrect item to be investigated? -30 -60 -90 -120
30
What is the testing waiting period?
30 day waiting period if you fail After 3 fails its 6 months.
How long does a company have to comply with DNC in the event of a DNC request
30 days
If an applicant has been denied credit, how long does the lender have to get a letter of adverse action to him/her? -10 days -15 days -30 days -It is not necessary to send a letter as long as the borrower knew before they applied they had bad credit.
30 days
If the file is inactive for borrower non-performance a declination letter must be sent within? -10 days -15 days -30 days -It is not necessary to send a letter if the file is merely inactive.
30 days
Lucy has taken the National Test Component with the Uniform State Test two consecutive times and failed, how long must she wait before she can take it again? -30 days -6 months -60 days -90 days
30 days
Under ECOA, the lender is required to provide the borrower a reason for denial. How long does the lender have to provide that reason? -60 days -90 days -30 days -120 days
30 days
When is a Notice of Adverse action required when the borrower applies for a loan? -10 days -30 days -60 days -90 days
30 days
How long does the servicer have to refund escrow overages over $50?
30 days.
graduated payment loan program maximum loan term is
30 years
Each of these loans would be considered nontraditional EXCEPT a
30-year fixed rate loan.
Fill in the Blank. In the event that a Cease and Desist hearing is called, the notice instituting proceedings shall fix a date not earlier than ______ days nor later than ______ days after service of the notice. -15; 30 -15; 60 -30; 45 -30; 60
30; 60
What are the qualifying ratios on an FHA loan when manually underwritten? -28/36 -31/43 -29/41 -33/38
31/43
FHA Ratio
31/43%
Daniel is looking to qualify his borrower for a conventional loan. He is attempting to determine the borrower's back-end debt-to-income ratio. What is the maximum back-end DTI ratio that Daniel can use on a conventional loan? -41% -36% -28% -32%
36%
What is the conventional mortgage back end DTI ratio? -28% -29% -36% -41%
36%
When an underwriter is manually underwriting a Freddie Mac/Fannie Mae loan without compensating factors, what is the maximum debt ratio allowed? -34% -41% -36% -38%
36%
How many days do you have to correct a non-numeric clerical error on the Closing Disclosure? -10 day after consummation -20 days after consummation -30 days after consummation -60 days after consummation6
60 days after consummation
How long can a borrower make payments to the new and old servicers in the event of a servicing transfer?
60 days following the effective date of transfer
A loan that meets the TILA definition of a "higher-priced" loan is required to have a lender-imposed escrow account for at least
60 months
After the crisis of the Great Recession according to FHA underwriting when can a borrower repurchase again after a foreclosure? -7yrs from the credit report date -5yrs from the credit report date -2yrs from the credit report date -3yrs from the credit report date
3yrs from the credit report date
After the crisis of the Great Recession according to FHA underwriting when can a borrower repurchase again after a short sale? -7yrs from the credit report date -5yrs from the credit report date -2yrs from the credit report date -3yrs from the credit report date, or immediately if there was no late mortgage payments.
3yrs from the credit report date, or immediately if there was no late mortgage payments.
If a changed circumstance exists prior to loan consummation, a creditor may NOT provide a revised Loan Estimate to a consumer within ______ business day(s) of loan consummation.
4
How many days before consummation must the last revised Loan Estimate be delivered?
4 business days
How many days prior to consummation or closing is the final Loan Estimate required to be provided to the borrower? -21 days before consummation or closing -10 days before consummation or closing -7 days consummation or closing -4 days consummation or closing
4 days consummation or closing
Greg's initial Truth in Lending Statement indicated that the APR on his adjustable rate mortgage would be 5.02%. Prior to loan consummation, it was discovered that the APR was incorrect. Greg would have to wait an additional three business days to consummate the loan if the true APR was actually
4.75% - If the final APR deviates up or down from the initial APR by more than .25 of 1% on an irregular loan, such as an ARM, the lender would have to redisclose and the borrower would have to wait an additional three business days.
There are two ratios commonly used to qualify the buyer. What are they? -Debt ratio and net income ratio -Investment ratio and mortgage ratio -Income ratio and expense ratio -Housing ratio and total debt ratio
4.Housing ratio and total debt ratio
maximum loan term for FHA loan is
40 years
A Qualified Mortgage may contain all of the following terms EXCEPT
40-year term loan
According to the Qualified Mortgage Rule, what is the maximum percentage limit on the total obligation debt to income ratio for a qualified mortgage? -41% -36% -28% -43%
43%
Qualified mortgages generally will be provided to people who have debt-to-income ratios less than or equal to
43%
Which form allows the lender to verify your client's tax returns? -W-2 -4506-T -1099 -DD-214
4506-T
After the crisis of the Great Recession according to Conventional underwriting when can a borrower repurchase again after a Chapter 7 bankruptcy? -7yrs from the credit discharge date -5yrs from the credit discharge date -3yrs from the credit discharge date -4yrs from the credit discharge date
4yrs from the credit discharge date
After the crisis of the Great Recession according to Conventional underwriting when can a borrower repurchase again after a short sale? -7yrs from the credit report date -5yrs from the credit report date -3yrs from the credit report date -4yrs from the credit report date
4yrs from the credit report date
After the crisis of the Great Recession according to Conforming and High Balance underwriting when can a borrower repurchase again after a Chapter 7 bankruptcy? -7yrs from the discharge date -5yrs from the discharge date -2yrs from the discharge date -4yrs from the discharge date
4yrs from the discharge date
How many pages does the Closing Disclosure have?
5 pages
Fill in the Blank. A State-licensed loan originator who fails to maintain a valid license for a period of___________ or longer shall retake the test. -5 years -3 years -2 years -1 year
5 years
How long must your license be inactive for to be required to retake the test again?
5 years
Most lenders see that a credit score may raise serious questions about a borrower's willingness to repay debts if the score were lower than: -680 -699. -640-659. -700-719. -620-639.
620-639.
A Truth in Lending Statement must be given to a consumer no later than ________ business days prior to closing a home loan.
7
By taking and passing the UST , as of 3/1/16, you will meet the exam requirements of how many state mortgage agencies? -10 agencies -21 agencies -35 agencies -51 agencies
51 agencies
Hugo is looking to refinance his current property. He currently pays $1200 a month on his home. He also pays $500 a month in child support, $200 for his cell phone, $300 for his student loans, $150 for his credit cards and $200 for his car insurance. Hugo makes $4000 a month gross. What is Hugo's total debt ratio? -50% -43% -53% -51%
53%
FHA Min. Credit Score
580
A borrower purchasing an investment property must have how many months of payments in reserve? -6 months -3 months -2 months -No months are required
6 months
How long is the waiting period to take the test again after failing 3 consecutive times? -1 year -6 months -4 months -3 months
6 months
When purchasing a 2-4-unit property according to FHLMC/FNMA guidelines, how many months of reserves are required? -6 months -1 month -3 months -1 year
6 months
existing properties- appraisal is valid for
6 months
FHA allows seller concessions. What is the maximum amount of seller concessions allowed on an FHA loan? -10% -4% -6% -8%
6%
What is the note rate for a $150,000 loan with a 2/1 buy down when the borrowers start with a payment rate of 4% for 12 months; then 5% for another 12 months; then 6% for the rest of the payment term? -The note includes all three interest rates. -4% -5% -6%
6%
293.On an FHA annually adjusting ARM, assume that the starting rate was 5%; the margin is 2.5%; the index in 6 months is 3%; the index in 12 months is 3.5%; the index in 18 months is 3.25%. What is the borrower's interest rate in 18 months? -5.00% -6.00% -5.50% -5.75%
6.00%
If the amounts paid by the consumer at closing exceed the amounts disclosed on the Loan Estimate beyond the applicable tolerance threshold, the creditor must refund the excess to the consumer no later than
60 calendar days after consummation
If a home is purchased with an FHA owner-occupied loan, the borrower must move in within? -10 days -20 days -30 days -60 days
60 days
On an FHA residence loan, the borrower must occupy the premises within how many days after closing? -45 days -15 days -60 days -30 days
60 days
In order to meet the annual continuing education requirements, at least how many hours of approved education are required? -4 hours -6 hours -8 hours -20 hours
8 hours
Generally speaking, a credit agency may not report negative credit information in a credit report that is more than how many years old?
7 - Under the Fair Credit Reporting Act, consumer reporting agencies may not report negative information that is more than seven years old, in most cases.
According to MDIA, what is the waiting period once initial disclosures are provided to the borrower before the loan can close? -10 business days -7 business days -5 business days -3 business days
7 business days
How soon after placing the Loan Estimate in the mail can the loan close?
7 business days
If the revised loan estimate is mailed, how many days before consummation must it be placed in the mail?
7 business days
The fastest permissible closing time under MDIA is: -3 business days -5 business days -7 business days -10 business days
7 business days
The loan may close how long after the LE disclosures are mailed?
7 days
Under the FCRA, when must credit reporting agencies delete obsolete information? -5 years from the date placed for collection or charged off -10 years from the date opened, except for bankruptcies -7 years from the date of last activity, except for bankruptcies -7 years from the date of last activity including bankruptcies
7 years from the date of last activity, except for bankruptcies
After the crisis of the Great Recession according to Conventional underwriting when can a borrower repurchase again after a foreclosure? -7yrs from the credit report date -5yrs from the credit report date -2yrs from the credit report date -3yrs from the credit report date
7 yrs from the credit report date
What is the HCLTV (HTLTV) assuming a $200,000 value, a $100,000 first mortgage loan, and a $50,000 Home Equity Line of Credit second mortgage with a drawn amount of $30,000? -50% -65% -75% -100%
75%
What is the loan-to-value ratio if the loan amount is $93,750, the appraised value is $125,000 and the sales price is $130,000? -75% -78% -80% -100%
75%
What percentage of correct answers to questions must be achieved in order to have passed a qualified written test? -65% -75% -80% -90%
75%
How is rental income calculated when the borrower owns rental properties other than the subject property? -100% of the income less the PITI. If the net is positive, include as income; if the net is negative, include as a monthly debt -Only when the borrower has a two year history of managing rental properties -75% of the income less the PITI. If the net is positive, include as income; if the net is negative, include as a monthly debt -Only when the borrower has a two year history of managing rental properties and the borrower has rent loss insurance
75% of the income less the PITI. If the net is positive, include as income; if the net is negative, include as a monthly debt
According to the Homeowners Protection Act, borrowers may request cancellation of their mortgage insurance premiums when the equity reaches
78%
If a loan with private mortgage insurance was originated after July 1999, then the mortgage insurance must be dropped when the loan reaches the following percentage of the original sales price or appraised value: -88% -80% -75% -78%
78%
The requirement for private mortgage insurance is generally discontinued when the loan-to- value ratio falls below: -20% -50% -78% -90%
78%
Mortgage insurance is required by the lender, based on risk, credit score, length of the loan, fixed or variable and the LTV. The cost for PMI will vary, depending upon these factors. Which of the LTVs below would not be used for determining the cost of mortgage insurance? -85.01-90% -78-80.00% -80.01-85% -90.01-95%
78-80.00%
After the crisis of the Great Recession according to FHA High Balance when can a borrower repurchase again after a Chapters 7 and 11 bankruptcy? -7yrs seasoning -5yrs seasoning -2yrs seasoning -4yrs seasoning
7yrs seasoning
What percentage is the fee threshold that triggers HOEPA disclosures?
8
How many hours of annual continuing education are required by the SAFE Act for state-licensed mortgage loan originators? -3 hours -8 hours -11 hours -20 hours
8 hours
How many hours of continuing education are required for mortgage loan originators? -8 hours -10 hours -12 hours -20 hours
8 hours
What is not likely to happen if the lender/investor finds fraud? -A 1% interest rate increase on the loan -The lender and/or broker will be required to repurchase the loan -The entire loan can be called due and payable -The loan officer must pay back any premium made on the loan
A 1% interest rate increase on the loan
What type of loan never requires monthly mortgage insurance? -A 100% VA loan -An 80% FHA loan -A 90% LTV conventional loan -An 85% LTV jumbo loan
A 100% VA loan
Which of the following would NOT be considered a non-traditional mortgage product? -An FHA 15 year mortgage -A VA 25 year mortgage -A Conventional 5/1 ARM -A Conventional 30-year mortgage
A Conventional 30-year mortgage
What is Fannie Mae and Freddie Mac?
A Private GSE whos stocks are traded publicly.
Which of the following would NOT be a red flag of the possibility of loan fraud? -Sales price is substantially below market value. -Name and address on the deposit check is different from the buyer. -A REALTOR® is involved in the transaction. -Deposit check was not cashed.
A REALTOR® is involved in the transaction.
Anna is looking to purchase a new home. She lives in a small town of under 20,000 people. What loan program would be a good option for her? -A VA loan -A USDA loan -An FHA loan -A conventional loan
A USDA loan
An IRRRL is what type of loan? -A VA streamline loan -An FHA streamline loan -A USDA purchase loan -A VA cash-out loan
A VA streamline loan
A loan paid in a lump sum after a fixed amount of time is called? -A conventional loan -An ARM -A balloon loan -A jumbo loan
A balloon loan
George has a loan that is amortizing over 30 years, but he will be required to pay the remaining principal in 15 years. What is this called? -A balloon payment mortgage -An adjustable rate mortgage -An interest-only mortgage -A reverse mortgage
A balloon payment mortgage
Which of the following is NOT true of an organization that would be considered a bona fide nonprofit organization? -A bona fide nonprofit organization promotes affordable housing or provides homeownership education, or similar services. -A bona fide nonprofit organization conducts its activities in a manner that serves public or charitable purposes, rather than commercial purposes. -A bona fide nonprofit organization does not compensate its employees. -A bona fide nonprofit organization provides or identifies for the borrower residential mortgage loans with terms favorable to the borrower and comparable to mortgage loans and housing assistance provided under government housing assistance programs.
A bona fide nonprofit organization does not compensate its employees.
Which of the following fraud situations does not involve a straw buyer? -A borrower using a relative -A borrower manipulating a paystub to qualify for a loan -A borrower agreeing to a loan under his name even though he never intends to live in the house or to make the payments. -Two friends scheme to save a home from foreclosure, one friend taking out a loan as owner occupied and the other living in the home
A borrower manipulating a paystub to qualify for a loan
Which of the following situations would NOT require full tax returns to support a loan application? -When a borrower owns other real estate with an income or loss reported -A borrower on Social Security -An employee with bonus income exceeding 25% of total income -When a borrower is employed by a family member
A borrower on Social Security
Trevor just received a promotion at work that is going to require him to move across the country. What type of loan might Trevor use to help him between selling his previous home and buying his new home? -A bridge mortgage -A graduated payment mortgage -A reverse mortgage -An adjustable rate mortgage
A bridge mortgage
Appraisal Management Company
A business entity that - for a management fee - administers a network of certified and licensed appraisers to fulfill real estate appraisal assignments on behalf of mortgage lending institutions
Which of the following is not an acceptable source for the borrower's down payment on a Fannie Mae loan? -Funds the borrowers have saved in their checking account -Funds from an inheritance -A secured loan from a car that the borrowers own -A cash advance from a credit card if it doesn't show on the credit report
A cash advance from a credit card if it doesn't show on the credit report
What is a lien?
A claim on the title of the property that usually must be paid off by closing
At closing, which would not be a standard trust deed rider? -An ARM rider -A compliance agreement rider -A planned unit development rider -A graduated payment mortgage rider
A compliance agreement rider
Title is transferred from one party to another through which of the following? -A conveyance -Entitlement -A gift -An encumbrance
A conveyance
What is a Quitclaim Deed?
A deed transferring ownership of a property but does not make any guarantee of clear title.
If one affiliate is referring business to another affiliate, what must happen?
A disclosure from the referring affiliate regarding the affiliate relationship. This must be done at the time of the referral
What is used to buy down a person's interest rate and costs 1% of the loan amount? -An origination point -A discount point -Par rate -Prime rate
A discount point
What is a discount point? -A fee paid to lower the borrower's first loan payment -A fee paid to help pay for part of the borrower's closing costs -A fee to the lender for originating the loan -A fee to permanently reduce the interest rate on a loan
A fee to permanently reduce the interest rate on a loan
What is the penalty for violating the DNC rules?
A fine up to $16,000 per occurance
When would a subordination agreement be appropriate? -A first mortgage is being refinanced and doesn't want to lose priority to an existing 2nd mortgage. -A first mortgage is being paid off, and the holder of the second mortgage wants to ensure they will have first priority. -A second mortgage is obtained, and the lender wants to ensure that it will be second in priority. -Subordination clauses are never used in the creation of loans, since they create confusion as relates to priority.
A first mortgage is being refinanced and doesn't want to lose priority to an existing 2nd mortgage.
Which of the following best describes Fannie Mae? -A government agency that buys FHA and VA loans -A government corporation that sets the interest rates for federally related institutions -A government-sponsored enterprise that purchases loans -A government agency that provides special funds for multi-family properties
A government-sponsored enterprise that purchases loans
Which of the following best describes Freddie Mac? -A government-sponsored enterprise that purchases loans from the primary market -A government agency that provides special funds to multi-family properties -A government agency that deals specifically with VA loans -A government corporation that sets the interest rates for federally related institutions
A government-sponsored enterprise that purchases loans from the primary market
Rebecca just recently passed the bar exam and became a licensed attorney. She is looking to purchase a new home, and her mortgage loan originator suggested that they look into a loan that has lower payments at the beginning and the payments then increase during the life of the loan. What type of loan is this? -A bridge mortgage -A graduated payment mortgage -A reverse mortgage -An adjustable rate mortgage
A graduated payment mortgage
Joanna is looking to purchase a property for $750,000. What type of loan would Joanna need to receive? -A Reverse Mortgage -A bridge loan -A jumbo loan -A line of credit
A jumbo loan
Which is considered an illegal referral fee? -A lead generating company getting a higher fee if the lead closes -MLOs buying leads from a legitimate lead generating company -MLOs pursuing lead from past borrowers -An employee of a lead generating company referring a potential borrower to an MLO
A lead generating company getting a higher fee if the lead closes
What is forbearance?
A lender may decide not to take legal action when a borrower is late on payments. This usually occurs when a borrower sets up a plan that both sides agree will get the borrower caught up to date.
A borrower applies for a loan. After pulling the borrower's credit, the loan is denied. Which of the following must occur? -A loan denial letter must be sent to the borrower within 30 days of the date of the application. -The borrower may not get a loan at another Mortgage Company. -A loan denial letter must be sent to the real estate agent. -The borrower must wait one (1) year before applying for an FHA loan.
A loan denial letter must be sent to the borrower within 30 days of the date of the application.
Which of the following is NOT true of a loan originator? -A loan originator takes a residential mortgage loan application. -A loan originator performs purely administrative tasks. -A loan originator offers or negotiates terms of a residential mortgage loan for compensation or gain. -A loan originator assists in the financing of real property
A loan originator performs purely administrative tasks.
What is a Higher Priced Mortgage Loan (HPML)
A loan that carries an APR that is 1.5% above the Average Prime Offer Rate (APOR)
What is a high cost loan
A loan that exceeds comparable treasury yields by more than 6.5% for the first lien and 8.5% for any subordinate liens OR The fees payable that exceed 8% of the total loan amount or $400(adjusted for inflation) whichever is greater`
Which of the following would not be a prohibited under the Loan Originator Compensation Rule? -A mortgage loan originator receives 10% additional for each ARM that they close -A mortgage loan originator receives $1,000 for selling a loan with an interest rate of over 4% -A mortgage loan originator receives a flat fee for each loan that they close -A mortgage loan originator receives a $5,000 bonus for loans over $250,000 that they close
A mortgage loan originator receives a flat fee for each loan that they close
Residential Mortgage
A mortgage, loan, or other evidence of a security interest created with respect to a single-family dwelling that is the primary residence of the borrower
The underwriter will require verification of employment. Which of the following will NOT serve this purpose? -A notarized affidavit from the borrower -Telephone call to the employer by the loan processor -Paycheck stubs -A written letter or completed form directly from the employer
A notarized affidavit from the borrower
Borrowers who qualify for conforming loans would be referred to as: -D paper borrowers. -B paper borrowers. -C paper borrowers. -A paper borrowers.
A paper borrowers.
Which of the following was added as a protected class under the Fair Housing Act? -A paraplegic -A person 62 years of age or older -An African-American -An American Indian
A paraplegic
What does Vested mean?
A point in time when you may withdraw funds from an investment account, such as retirement account, with no penalty
Which one of the following statements about the UFMIP on FHA loans is correct? -It cannot be financed into the loan -It must be paid only by the buyer at closing -A portion of the MIP could be prorated if the loan is refinanced within three years into another FHA loan -There is never an annual premium if it is all paid up-front
A portion of the MIP could be prorated if the loan is refinanced within three years into another FHA loan
How much can a servicer collect in an escrow payment?
A servicer may only collect one months worth of escrowed item, unless there is a shortage.
What an affidavit?
A signed, sworn statement made by the buyer or seller regarding the truth of the information provided
What is an amortized loan that has a final payment due earlier than the term to fully pay off the loan called? -Balloon loan -Construction loan -Reverse mortgage -Adjustable Rate Mortgage
Balloon loan
Which of the following is the best comparable to use for a loan? -An almost identical home, recently sold in foreclosure -Three similar homes currently listed on the same street -A similar home that is currently under contract -A recently sold home, in the neighborhood, similar to the subject property
A recently sold home, in the neighborhood, similar to the subject property
Single-Family Dwelling
A residence consisting of a one-family dwelling unit
Which of the following transactions is not governed by the new TRID Rules? -A reverse mortgage -A closed-end second mortgage -A refinance transaction -A purchase money transaction
A reverse mortgage
Michael does not have enough money to put 20% down on his conventional loan to avoid PMI but really can't afford the payment with the additional cost. Instead of looking for the additional money to put down in cash, Michael contacts a second lender who lends him the additional money he needs to put the 20% down. That second lender and the loan Michael receives is never disclosed to the 1st lender. What would that second loan be considered? -A silent second -A second lien loan -A payday loan -home equity line of credit
A silent second
Affiliated Business Arrangement
A situation where a person in a position to refer settlement services - or an associate of that person - has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1% in a provider of settlement services and who then refers business to that provider or in some way influences the selection of that provider
Genevieve wants to buy a home, but her credit score took a tank after her divorce. Her brother, Donald has a great credit profile, though, and she asks him to apply for a loan for her. Genevieve promises Donald that she will pay the mortgage. What would Donald be considered? -A good brother -A straw buyer -An investor -A mortgage relief service provider
A straw buyer
For the Bureau to determine that a state is providing effective supervision and enforcement, a supervisory authority must meet all BUT the following performance standards: -The supervisory authority must examine or investigate loan originator licensees in a systematic manner based on identified risk factors or on a periodic schedule. -A supervisory authority must be accredited under the CSBS-AARMR-NMLS Mortgage Accreditation Program. -The supervisory authority must approve or deny loan originator license applications and must renew or refuse to renew existing loan originator licenses for violations of state or Federal law. -The supervisory authority must discipline loan originator licensees with appropriate enforcement actions, such as license suspensions or revocations, cease-and-desist orders, civil money penalties, and consumer refunds for violations of state or Federal l
A supervisory authority must be accredited under the CSBS-AARMR-NMLS Mortgage Accreditation Program.
Which of the following is NOT true of a unique identifier? -A unique identifier is a number -A unique identifier is assigned by protocols established by the NMLSR. -A unique identifier allows for the electronic tracking of loan originators for the sole use of Federal banking agencies. -A unique identifier can be used to access employment history of and the publicly adjudicated disciplinary and enforcement actions against loan originators.
A unique identifier allows for the electronic tracking of loan originators for the sole use of Federal banking agencies.
Which of the following statements about a VA loan is true? -A veteran can have two or more VA loans in place simultaneously. -A veteran must pay off a previous VA loan before he/she can obtain a second VA loan. -Once a veteran uses his/her loan benefit, the benefit goes away. -Veterans can use their benefit to get a loan to purchase a personal residence a maximum of two times.
A veteran can have two or more VA loans in place simultaneously.
What is a warrantee deed do? What does a Deed of Trust do?
A warantee deed is what conveys a property, A deed of Trust encumbers a property
MDIA and Mailbox Rule
Borrower will receive mail on saturdays
What is a privacy notice?
A written notice describing a financial institutions privacy policies and practices.
RESPA Defines an affiliated business relationship as?
A) a person or associate of that person who is in position to refer business, has either an affiliate relationship with or direct or beneficial ownership interest of more than 1% in a provider of settlement services B) either of such persons directly or indirectly refers such business to that provider or influences the selection of that provider
An applicant for a mortgage has recurring monthly debt of $425 and a gross monthly income of $3,850. For a conforming loan, what is the maximum house payment—including principal, interest, taxes, and insurance—for which she qualifies?
A. $961.00 = 3850-425*.28
Steering consumers to loan products that would result in greater compensation for a MLO is prohibited by what legislation?
A. Dodd -Frank Act
Which is NOT a requirement of the Safeguards Rule of the Gramm-Leach-Bliley Act?
A. allow consumers to add their phone numbers to a list that prohibits unauthorized calls
ABC Mortgages makes a loan with consumer even though he is unlikely to repay it, anticipating that they'll eventually foreclose and get the borrower's equity in the property. This is an example of
A. predatory lending.
Who must receive the required rescission notice on a transaction?
ANY and ALL owners
When a potential borrower inquires about the cost of credit orally, only the ______________ is required to be stated
APR
According to TRID, what is the tolerance for APR and finance charges?
APR = 1/8% Finance charge = $100
Changes before consummation that require new 3 day period
APR becomes inaccurate Loan Product Changes PPP is added
Which of the following is not one of the three rules outlined within the Gramm-Leach-Bliley Act? -Safeguards Rule -Pretexting Rule -Ability to Repay Rule -Opt-Out Rule
Ability to Repay Rule
Which of the following could be classified as real estate brokerage activity? -Providing privacy and anonymity between parties interested in purchasing, selling or leasing property. -Working with an un-licensed person when the law requires that person to be registered or licensed. -Negotiating financing terms on behalf of any party relating to the sale of property. -Acting as a real estate agent or real estate broker for a buyer of a real property.
Acting as a real estate agent or real estate broker for a buyer of a real property.
Lola is working on a loan for her sister, Joan. She knows Joan is currently receiving child support, and Joan has authorized Lola to use that income to qualify her. Lola also knows that her nephew is 17 years old, and once he turns 18, Joan's child support payment will drop dramatically. Lola decides to indicate on the 1003 that Joan's oldest child 14 instead of 17 to help Joan qualify for the loan. This would be considered: -Negligence -Actual Fraud -Misrepresentation -A good deed
Actual Fraud
What form do you give to the borrower(s) to sign that authorizes the MLO to order a credit report? -Borrowers Signature Authorization -Affiliated Business Agreement -The Privacy Act Disclosure -Loan Credit Act Form
Borrowers Signature Authorization
What must the consumers be given for ARM?
Additional disclosures and the CHARM Booklet (Consumer Handbook on Adjustable Rate Mortgages)
What are riders or addendums a Deed of Trust can carry?
Adjustable Rate rider, Balloon rider, VA rider, Condominium rider, PUD rider biweekly payment rider second home rider, 1-4 family rider prepayment penalty rider
Which of the following is true about an adjustable rate mortgage? -Adjustable rate mortgages payments never change -Adjustable rate mortgages interest rates are fixed -Adjustable rate mortgages interest rates are not fixed -Adjustable rate mortgage always includes interest-only periods
Adjustable rate mortgages interest rates are not fixed
Section 251
Adjustable-Rate Mortgages: The 251 program is based on 203 (b), with the added feature of an adjustable rate. FHA offers a number of different types of ARMs, including one-, three-,five-, seven- and ten-year versions.
If a creditor denies a loan, what document must be sent to the client to inform him of the denial? -Adverse Action Notice -GFE -TIL Statement -Nothing is required to be sent if the information is verbally relayed to the client
Adverse Action Notice
What does AfBA stand for?
Affiliate Business Arrangements
When will the mortgage inurance be dropped on an FHA loan with 90% LTV or less and a 15 year term?
After 11 years
When are Delinquent or Adverse items removed from a credit report?
After 7 years
When are the funds disbursed for an owner-occupied residential refinance? -After the loan documents are recorded -At the time of the loan closing -Within seven days after the application -After the three business-day right of rescission period has expired
After the three business-day right of rescission period has expired
Under the 1968 Fair Housing Act, which of the following is NOT one of the protected classes: -Race -Color -Age -Sex
Age
What type of scheme is usually occurring when there is a nonexistent property? -Air Loan -Chunking -Churning -Illegal Property Flipping
Air Loan
Standard endorsements on title insurance don't cover which of the following? -Environmental issues -Restrictions and CC&R's -The property address -Air hazards
Air hazards
Which of the following would be considered a mortgage loan originator? -Alexia is discussing a rate lock with a borrower -Henry is determining whether a borrower can repay the proposed loan -Jane is requesting a verification of employment from a borrowers employer -Jackson is discussing with a borrower the need for additional documentation for their loan
Alexia is discussing a rate lock with a borrower
The ATR/QM rule applies to what?
All closed-end mortgages secured by residential properties except: Helocs, Time-shares, reverse mortgages, temporary loans(less than 12 months), Construction loans
When must customers receive a privacy notice?
All customers must receive one regardless if the information is shared or not. They also must receive annual notices
What is the objective of FCRA? -To assure fairness, relevancy, confidentiality, and accuracy -To assure all borrowers have access to credit -To delete obsolete information -All of the above
All of the above
Which of the following are functions of FACTA? (Select all that apply) -To improve consumer access to credit information -To improve resolution of consumer disputes with credit agencies -To prevent identity theft and restore credit history to victims of identity theft -All of the above
All of the above
How can a lender use E-sign to issue the LE/CD
All requirements of the Federal E-sign act must be met.
Non-traditional mortgage products and the interagency guidance on non-traditional mortgage products applies to which loans?
All residential mortgage loans that allow borrowers to defer repayment of principal or interest
What is tenancy in common?
Allows for disproportionate ownership and allows for an owners share in the property to pass the owners heir. If ownership is not specified in the deed, its assumed to be equal among the owners.
What is a property Tax Deduction?
Allows homeowners to deduct the amount they have paid in property taxes from there total income
How are fees listed on the new TRID disclosures?
Alphabetically
Which of the following is NOT a scoring system lenders use to evaluate credit? -Equifax BEACON -Trans Union EMPIRICA -Altera SCORE -Experian FICO
Altera SCORE
According to Regulation B, which of the following is not recommended? -Including income from alimony or child support if it is to be computed into the income -Asking about the number of children in the family -Always referring to the man as borrower and the woman as co-borrower -Asking if the applicant is married
Always referring to the man as borrower and the woman as co-borrower
AARMR is the national association of executives and employees of the various states who are charged with the responsibility for administration and regulation of residential mortgage lending, servicing, and brokering, and dedicated to the goals described at www.aarmr.org. What does AARMR stand for? -American Association of Residential Mortgage Regulators -American Association of Real Estate Mortgage Regulators -American Academy of Residential Mortgage Regulators -American Association of Registered Mortgage Regulators
American Association of Residential Mortgage Regulators
What does AARMR stand for?
American Association of Residential Mortgage Regulators
ALTA is the acronym for: -American Land Truth Act. -Afro-American Loan Truth Act. -All-Inclusive Loan and Title Association. -American Land Title Association.
American Land Title Association.
What are the payment options on an Option ARM? -Amortized over 30 years; amortized over 15 years; interest only; or negative amortization -Amortized over 30 years; amortized over 20 years; amortized over 15 years; or interest only -Amortized over 30 years; amortized over 15 years; interest only; or balloon payment -Amortized over 30 years; amortized over 20 years; amortized over 15 years; or amortized over 10 years
Amortized over 30 years; amortized over 15 years; interest only; or negative amortization
Section 10
Amounts that can be charged to maintain an escrow account
Fannie Mae would require mortgage insurance on which of the following loans? -An 83% LTV conventional loan -A 96.5% FHA loan -An 80% LTV first mortgage and 20% LTV second mortgage equaling a 100% LTV loan -A 100% VA loan
An 83% LTV conventional loan
What is a Title 1 loan?
An FHA-insured loan that allows a borrower to make non-luxury improvements (like renovations or repairs). They are generally less than $7,500 and dont require a lien
Who of the following is in violation of the Section 8 provisions of RESPA? -An attorney who also earns fees for performing multiple settlement services -An employer who pays her employees for referrals -A real estate broker who pays a cooperating real estate broker for a referral -An MLO who leases office space in a real estate office at an above market amount
An MLO who leases office space in a real estate office at an above market amount
A Mortgage Lender shall maintain capital of not less than $______ per licensed location: -$100,000 -$200,000 -$300,000 -An amount determined by the state Regulatory Authority that reflects the dollar amount of loans originated.
An amount determined by the state Regulatory Authority that reflects the dollar amount of loans originated.
Fill in the Blank. A Mortgage Lender shall maintain capital of not less than $______ per licensed location. -An amount determined by the state Regulatory Authority that reflects the dollar amount of loans originated. -100,000 -200,000 -300,000
An amount determined by the state Regulatory Authority that reflects the dollar amount of loans originated.
According to the Fair Credit Reporting Act, which of the following does not entitle a borrower to a free copy of his credit report? -An applicant was refused credit due to insufficient income -A consumer has placed an alert in the credit report while serving in the military -A consumer was a victim of identity theft and a fraud alert included in the credit report -The credit file contains inaccurate information as a result of fraud
An applicant was refused credit due to insufficient income
What does a loan originator use to determine the estimated value of a property based on analytical comparison of similar property sales? -An appraisal -A market survey -An area survey -A cost-benefit analysis
An appraisal
Which law gives a consumer who has had her credit card used by an identify thief has the ability to place a freeze on her credit report?
FACT Act
If a trust deed is recorded, which of the following is true? -It verifies both the lender and borrower signed the document. -Ownership is conveyed. -A lien is released. -An encumbrance is created.
An encumbrance is created.
Providing a referral fee to a realtor is? -An acceptable practice -An illegal practice -An acceptable practice as long as it is a fair price for services actually provided -Acceptable only if fully disclosed
An illegal practice
When a Preliminary Title Report shows a judgment, which of the following is true? -Borrowers will not get a loan. -Judgments have no bearing on mortgages. -An indemnification agreement may be required. -The judgment must always be paid off.
An indemnification agreement may be required.
Which one of the following is not required to be licensed? -Any Mortgage Lender making less than five mortgage loans within any 12 consecutive months -Any person who acts as a Mortgage Broker less than 5 times within any 2 consecutive months -Independent loan processor contractors who engage in loan origination activities -An individual negotiating a residential mortgage loan with or on behalf of an immediate family member
An individual negotiating a residential mortgage loan with or on behalf of an immediate family member
Which of the following is required to be licensed? -An individual who negotiates a loan that serves as the individual's residence -A staff loan processor or underwriter (Not Contracted) -Any person solely involved in timeshare plans. -An individual who negotiates a mortgage loan for another for compensation
An individual who negotiates a mortgage loan for another for compensation
A loan originator is: -A person who only performs real estate brokerage activities and is not compensated by a lender, a mortgage broker, or other loan originator. -A person or entity solely involved in extensions of credit relating to timeshare plans. -An individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain. -A person who only handles clerical or data entry functions.
An individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain.
How does the SAFE Act define a loan originator?
An individual who: -Takes a residential mortgage loan application. -Offers or negotiates terms of a residential mortgage loan for compensation or gain.
An interest rate at PAR would be? -The interest rate before any fees -An interest rate with no YSP or SRP -The rate charged by banks to their best customers -The rate quoted in radio advertising to induce clients to call, but which will require discount points
An interest rate with no YSP or SRP
When a trust deed (or deed of trust) is recorded, which of the following is true? -Ownership is conveyed -A lien is released -An lien is created -It verifies both the lender and borrower signed the document
An lien is created
APR is the acronym for: -Average Percentage Rate. -All-Inclusive Percentage Rate. -Annual Percentage Rate. -Amortized Percentage Rate.
Annual Percentage Rate.
Which is the only authorized site for obtaining your free credit report? -FreeCreditReport.com -AnnualCreditReport.com -FreeScore.com -CreditReport.gov
AnnualCreditReport.com
How often must a state require an individual licensed with an organization that has tax exempt status, to renew their loan originator license? -Annually -An organization that has tax exempt status, does not need to renew their loan originator license -Every 3 years -Every 5 years
Annually
RESPA regulations require that an annual escrow statement be provided to the borrower within what time frame? -10 days after the end of the calendar year -Annually -30 days BEFORE the end of the calendar year -Annually 15 days after the funding of the loan by the new servicer
Annually
What does RESPA apply to?
Any Federally regulated mortgage loan.
What activities does the Gramm-Leach-Bliley Act cover?
Any Lending, exchanging, transfering, brokering, servicing, or safeguarding money or securities, debt collecting, providing real estate settlement services, and career counseling.
What is the definition of a business day for the Loan Estimate disclosure? -Monday through Friday -Monday through Saturday -Any day on which the creditor's offices are open to the public for carrying out substantially all of its business functions -Monday through Saturday except Sundays and all Federal holidays
Any day on which the creditor's offices are open to the public for carrying out substantially all of its business functions
According to the LE a business day is what?
Any day the creditors are open to the public
By taking and passing the UST, you will meet the exam requirements of how many states? -All States -Any future states that adopt the UST -Just the original 21 states -The original 29 states
Any future states that adopt the UST
Which of the following is true concerning title insurance? -Borrowers must pay for a lender's policy. -Borrowers must pay for a lender's and an owner's policy. -Borrowers must pay for an owner's policy. -Borrowers do not pay for title insurance, sellers always pay for it.
Borrowers must pay for a lender's policy.
What is a Federally regulated mortgage loan?
Any loan secured by a first lien on a residential property designed for occupancy of one to four families made by a lender that meets the following: 1) Has deposits insured by the federal government 2) Regulated by the Federal Government 3) Insured by HUD 4) Intends to sell the loan to a Government sponsored entity (FNMA, GNMA or FHLM) 5) Makes more than $1,000,000 in loans per year
what is a Jumbo loan?
Any loan with a loan amount in excess of Freddie Mac or Fannie Mae loan limits.
What does the term "Nontraditional mortgage product" mean? -Any mortgage product other than a 30-year fixed rate mortgage -Any mortgage product other than a 30-year fixed rate or variable rate mortgage -Any mortgage product other than a 15-year fixed rate mortgage -Any mortgage product other than a 30-year variable rate mortgage
Any mortgage product other than a 30-year fixed rate mortgage
Referral
Any oral or written action directed to a person, which has the effect of affirmatively influencing the selection by that person of a settlement service or business provider
Debts
Any recurring monetary obligation that will not be cancelled
Thing of Value
Anything (e.g. item, object, payment, service) that is regarded as being worth something by another party
HMDA requires lenders to request what information from applicants in a face to face interview for home mortgage loans? -Applicant -Number of children the applicant has -Religion of the applicant -Source and seasoning of the down payment
Applicant
The APR does not include which of the following? -Mortgage Insurance -Appraisal -Interest rate -Origination charges
Appraisal
Which of the following is NOT a finance charge in a residential mortgage loan? -Loan origination fee -Appraisal fee -Mortgage insurance premium -Mortgage broker fee
Appraisal fee
Which of the following is not a prepaid finance charge? -Origination fee -Discount point -Upfront Mortgage Insurance Premium -Appraisal fee
Appraisal fee
Which of the following participants in a mortgage loan transaction would be most likely to overvalue a property? -Appraiser -Attorney -Surveyor -Title Company
Appraiser
How often must a borrower receive an annual privacy notice? -As long as they are customers -Every 6 months -Only at closing -With initial disclosures, then annually for the first 5 years
As long as they are customers
When must covered financial institutions be required to be compliant with the SAR rules?
August 12, 2012
Which of the following is true about asking a borrower questions about divorce? -Asking questions about divorce is permissible if there is any documentation in the loan file that suggests a divorce. -Questions about divorce are always allowed. -If you suspect a divorce based on visual evidence, questions may be asked. -Questions about divorce are never allowed.
Asking questions about divorce is permissible if there is any documentation in the loan file that suggests a divorce.
Which of the following questions is not prohibited while taking a loan application? -Asking about childbearing intentions -Asking the borrower to add a spouse to the application -Asking questions to discouraging a borrower from applying -Asking the borrower his/her marital status
Asking the borrower his/her marital status
When should the applicant receive the Closing Disclosure?
At least 3 business days before consummation
When must a borrower receive the most accurate closing disclosure?
At or before consummation (with most changes, a new waiting period of 3 business days is not required)
According to RESPA, when must an Affiliated Business Arrangement (AfBA) disclosure be provided? -At the time of application even if there are no AfBAs -At or prior to the time a referral is made if there is an AfBA -Within three business days of settlement even if there are no AfBAs -Never; TILA, not RESPA, requires this disclosure
At or prior to the time a referral is made if there is an AfBA
When does the 3 day rule begin tolling for a rescission?
At the later event of either: -Closing or consummation -Delivery of all material disclosures (TIL, itemization) -Delivery to the consumer of the rescission notice
With an FHA loan, which of the following is true concerning qualifying ratios? -Automated underwriting may approve a borrower with ratios higher than 29/41 -A borrower with a very high credit score may get a loan with 55% debt ratio -A borrower with a very low credit score can only borrow to a 31% debt ratio -The maximum ratios in any circumstance are 31/43
Automated underwriting may approve a borrower with ratios higher than 29/41
An MLO advertises a low interest rate for qualified applicants. A prospective borrower meeting the qualifications applies. The MLO moves the borrower into another loan which makes more profit to the lender. This is an example of: -Ponzi scheme -Bait and switch -Extortion -Loan flipping
Bait and switch
ECOA is also known as Reg.: -X -Z -B -C
B
A buyer makes an offer of $156,000 on a house that was appraised for $162,000. If the seller accepts his offer, how much will he have to pay down on an FHA loan (assuming a credit score of at least 580)?
B. $5,460
What law requires that a cash transaction of more than $5,000 be reported? -BSA/AML -Dodd-Frank -FTC Red Flags -RESPA
BSA/AML
What are some of the licensing requirements?
Background checks Financial reponsibility Pre-licensing 20 hours Annual continued education 8 hours testing
A 360/180 best describes what type of loan? -Subprime -FHA -Balloon -ARM
Balloon
How are VA loan max loan amounts determined?
Based on their entitlement found on the CoE
What is the Cost approach appraisal?
Based upon the cost to rebuild a property Used on properties which are difficult to appraise using other methods Starts with the cost to construct, then calculated depreciation for the age of the property
Discount points would only be used if the interest rate offered to the borrower were which of the following? -Above par -The prime rate -Below par -Par or anything above par
Below par
If a recording is used for telemarketers, what must it contain
Name and phone number of the company making the call as well as a notice of solicitation
Renee is a real estate broker working for a property developer. She has been going door-to- door discussing with homeowners in a certain area the possibility of them selling. She often tells these homeowners that there has been an increase of Latinos moving into the area and that they really should move now before their property values drop because of this influx of lower income individuals. This would be considered: -Redlining -Reverse Redlining -Blockbusting -Churning
Blockbusting
The practice of getting people to sell their homes at bargain prices by suggesting that certain ethnic groups are going to move into the area is nicknamed: -Price fixing -Redlining -Steering -Blockbusting
Blockbusting
Under a trust deed and note, what interests do the borrower and lender hold in the property which is used as collateral? -Borrower - legal title, Lender - equitable title -Borrower - legal title, Lender - a lien -Borrower - equitable title, Lender - legal title -Borrower - lien, Lender - legal title
Borrower - legal title, Lender - a lien
Which consumer would be most likely to be able to waive the waiting period and expedite the closing on a refinance?
Borrower D whose home is scheduled to go into foreclosure
What are the Fannie Mae and Freddie Mac guidelines regarding an investment property? -Rents must be greater than the mortgage payment -Borrower must put 20% down -Borrower must have 6 months reserves -Maximum Debt to income ratio is 45%.
Borrower must have 6 months reserves
What does the note typically contain?
Borrower name, loan amount, interest rate, loan terms and a provision requiring notices to be done in writing. It does not contain a legal description of the property
Under the Truth in Lending Act, which of the following is NOT a requirement? -Borrower review of HUD-1 -Three day right of rescission -Use of APR in advertising -Disclosure of loan costs
Borrower review of HUD-1
Which of the following is true when taking a loan application? -Borrowers must fill in the government monitoring (HMDA) section. -Borrowers must provide their birthdates, ages of children and marital status. -Borrowers must decide on their loan program at application. -Borrowers must sign initial loan disclosures within 3 business days.
Borrowers must provide their birthdates, ages of children and marital status.
For FHA what LTV do consumers qualify for based on credit ranges?
Borrowers with a credit score of 580+ are eligible for maximum financing. Borrowers with a credit score of 500 - 579 are limited to 90% LTV Borrowers with a credit score under 500 are not eligible for FHA
Clerical or support duties of a loan processor or underwriter would NOT include: -Counseling consumers about residential mortgage loan rates or terms. -Offering or negotiating loan rates or terms. -Both A & B -Data entry on a file.
Both A & B
Who contains servicing requirements
Both Regulation Z and Regulation X
If a borrower and a co-borrower are refinancing a home that they both occupy, at the closing - who must receive a copy of the rescission disclosure? -Both borrowers -Either borrower or co-borrower -Neither borrower because it is a refinance -Neither borrower because it is owner occupied and was already financed
Both borrowers
Which of the following would NOT be considered an administrative or clerical task? -Receiving borrower information -Processing loan applications -Distributing information for processing or underwriting a loan -Bringing together parties interested in the mortgage of a property
Bringing together parties interested in the mortgage of a property
Which of the following is NOT true concerning SRP? -The Lender that services the loan does not receive the SRP. -Brokers do not get the SRP. -Brokers may receive an SRP. -Lenders get the SRP when the loan is sold.
Brokers may receive an SRP.
TILA does not apply to which loans?
Business, commercial, agricultural, or organizational credit
When the borrowers pay a fee to get a lower interest rate, but the interest rate will not remain at that level for the life of the loan, but over time will raise to the quoted fixed rate. What is this called? -Origination fee -Buy down fee -Discount points -Adjustable rate
Buy down fee
What is a temporary buy down?
Buy downs used to temporarily lower the monthly payment for the first 1 - 3 years. The interest savings is usually paid into a holding account at the time of closing and the borrower must qualify for the note rate not the bought down rate
What part about short sale flipping has temporarily been suspended? -Immediately selling for a profit after disclosing the dollar amount of all repairs -The requirement of full disclosure to both seller and buyer regarding purchase price -Buying the property and re-selling within 90 days -The need for approval by an underwriter for financing
Buying the property and re-selling within 90 days
How is the market value of an appraisal determined? -By analyzing similar sold homes that are in the same geographical area -By analyzing homes that generate the same amount of income when rented -By analyzing similar homes that are for sale in the same geographical area -By analyzing homes that cost the same amount to build
By analyzing similar sold homes that are in the same geographical area
How does the cost approach determine value on a property? -By analyzing the income generated from the property -By calculating the dollar amount to rebuild the home -By averaging nearby property values -By analyzing similar homes in the same geographical area
By calculating the dollar amount to rebuild the home
How do the loan limits vary?
By county
What are the maximum loan amounts based on for FHA?
By county
FHA loans are insured by who?
By the federal government through the Federal Housing Administration.
HMDA is implemented as what Regulation? -B -C -X -Z
C
While it is unlawful to consider race when underwriting a loan, what federal legislation requires that this information be included on the loan application?
C. Home Mortgage Disclosure Act - The Home Mortgage Disclosure Act requires that this information be reported in order to determine whether discriminatory practices are being used.
-Which of the following entities oversees MDIA? -CFPB -HUD -State Attorney's General -Dept. of Veteran Affairs
CFPB
You and the borrower believe an Adjustable Rate Mortgage would be best for the borrower. What is the name of the booklet you are required to give? -CHARM Booklet -ARM Disclosure -Fair Lending Practices Booklet -RESPA Booklet
CHARM Booklet
Which disclosure do you need for an ARM loan? -Home Buyers Guide -CHARM booklet -Understanding ARMs -HECM disclosure
CHARM booklet
The document used by the VA to determine the maximum mortgage amount is a(n)
CRV.
Which organization helps develop model legislation applicable to the administration and regulation of mortgage lending? -MERS -USPAP -CSBS/AARMR -NAR
CSBS/AARMR
A lender learns that a real estate agent encouraged an appraiser to hit a specific value for a property. The lender
Can use the appraisal and close the loan if the lender can document that the appraisal does not materially misrepresent the value.
In the event of a consumer receiving insurance what must a servicer do?
Cancel the forced-placed insurance within 15 days and refund any overlapped insurance premiums
What is the appraiser most interested In when determining the value of an income property? -Future projections of expenses and rents -Location -Interest rates -Cash flow
Cash flow
With a conventional loan, what source of down payment is NOT acceptable? -Bonus from an employer -A secured loan -Cash on hand which is not verifiable -The documented sale of an asset
Cash on hand which is not verifiable
What needs to be included on a privacy notice?
Categories of information collected -Categories, not names, of affiliates and non affiliated third parties whom you disclose the information -categories of information disclosed and to whom under the joint marketing/service provider exeption -if you are disclosing NPI to non affiliated 3rd parties -Any disclosures required by the Fair Credit Reporting Act -policies and practices with respect to protect confidentiality and security
Which of the following would not be considered a prohibited act? -Make any payment, threat or promise, directly or indirectly, to any person for the purposes of influencing the independent judgment of the person in connection with a residential mortgage loan, or make any payment threat or promise, directly or indirectly -Collect, charge, attempt to collect or charge or use or propose any agreement purporting to collect or charge any fee prohibited by the S.A.F.E. Act -Cause or require a borrower to obtain property insurance coverage -Fail to truthfully account for monies belonging to a party to a residential mortgage loan transaction.
Cause or require a borrower to obtain property insurance coverage
What is the CRV for a VA loan?
Certificate of Reasonable Value
What are VA appraisals called?
Certificate of Reasonable Value (CRV)
CRV is the acronym for: -Community Redevelopment Value. -Certificate of Residential Value. -Certificate of Reasonable Value. -County Residential Valuation.
Certificate of Reasonable Value.
When an LE is revised
Changed circumstances Revisions are requested by consumer Interest rate is not locked Consumer indicates ITP after 10 days Once revised, must be placed in mail no later than 3 business days after receiving the info
Changes that do not require a new waiting period
Changes after consummation Document refunds or tolerance violations Correct non-numerical clerical errors
When performing the sales comparison approach, what does "adjusting properties" involve? -Changing the subject property to make it more like the comparables -Changing the comparables to make them more like the subject property -Always using comparables that are exactly like the subject property -Finding comparables that sold for the same price as the subject property
Changing the comparables to make them more like the subject property
The Regulatory Authority may do all of the following if an applicant fails to meet requirements for receiving a license except: -Deny a license or Decline to renew a license -Revoke a license -Charge higher fees for licensure -Suspend a license
Charge higher fees for licensure
what is an example of discrimination?
Charging different rates or costs based on race, color, religion, sex, handicap, familial status or natural origin.
Under RESPA, which of the following would be considered legal? -Charging a slight fee over the actual cost of the credit report. -Charging $50 over the actual cost of the appraisal. -A payment to a real estate agent bringing a client for a loan. -Charging for fees that are direct costs of the loan.
Charging for fees that are direct costs of the loan.
Which of the following sources of income would NOT be allowed on a conforming conventional loan? -Salary income when the borrower has worked for only 6 months -Social Security income -Income from a rental property that has been owned only 2 years -Child support received for a 16 year old child
Child support received for a 16 year old child
What type of fraud scheme usually includes a "get rich quick" real estate seminar? -Chunking -Churning -Redlining -Illegal Property Flipping
Chunking
Travis is a mortgage loan originator, and he primarily does refinances for borrowers. He has a borrower, Steve, who calls him once a year to refinance and every time Travis refinances his property even though Steve does not need to refinance. Travis does this to make sure that he receives the fees for the refinance. What would this be considered? -Steering -Churning -Chunking -Redlining
Churning
The penalties issued by the Regulatory Authority are ____ penalties on mortgage loan originators. -Civil -Criminal -Contractual -Continual
Civil
Which was the first major legislation to directly affect equal rights to ownership of real property? -Civil Rights Act -Emancipation Proclamation -Federal Fair Housing Act -Homeowners Protection Act
Civil Rights Act
A person operating without a license is subject to: -Imprisonment -Civil money penalties -Criminal court proceedings -NMLS disciplinary actions
Civil money penalties
A borrower wants to purchase a 2nd home and tells you that they intend to rent the property out when they are not living in it. You have reviewed their financial information and realize that the borrower would qualify for financing if the property is classified as a 2nd residence. However, if the property is classified as an investment property, the borrower is unlikely to qualify. What should you do? -Classify the property as a rental property even though the borrower intends to reside there part of the year. -Classify the property as a 2nd residence; since the borrower intends to use the property for part of the year, this is acceptable. -Classify the property as a 2nd residence because it is not legal for the borrower to personally reside in a property classified as a rental for any length of time. -Deny the borrower because it is neither legal to rent out a 2nd residence or reside in a rental property for any length of time.
Classify the property as a rental property even though the borrower intends to reside there part of the year.
Which of the following is responsible for the accurate disbursements of all funds due to and from all parties in a mortgage transaction? -MLO -Appraiser -Real estate agent -Closing Attorney, settlement or escrow agent
Closing Attorney, settlement or escrow agent
On which two documents would a Pre-Payment Penalty be disclosed? -Closing Disclosure and Truth In Lending Disclosure -Note and Truth In Lending Disclosure -Deed of Trust and Intent to Proceed -Closing Disclosure and Loan Estimate
Closing Disclosure and Loan Estimate
Up to 30 days after consummation, creditors are permitted to issue revised ____ only in certain situations such as when changed circumstances result in increased charges. -Closing Disclosures -Loan Estimates -GFEs -TILs
Closing Disclosures
Examples of Red Flags include all of the following except: -Fraud alert on credit reports -Documentation which appears altered or forged -Address discrepancies -Credit scores
Credit scores
What is CFR?
Code of Federal Regulations
When a borrower asks for an FHA loan, which of the following is false concerning the borrower's credit? -Collections will not affect the credit score -If the credit score is less than 640, the borrower may still get a loan -With excellent credit, the borrower will not get a better mortgage rate -If the borrower has credit issues, but can convince an underwriter of credit worthiness, s/he may still get a loan
Collections will not affect the credit score
Which of the following financial institutions originates the largest amount of residential mortgage loans without necessarily using its depositors' funds? -Commercial banks -Credit Unions -Savings & Loan -Thrifts and Loan
Commercial banks
If a borrower is a commissioned employee and required to provide tax returns, how does the lender calculate income from the tax returns? -Commissioned income less all of Schedule A -Commissioned income only -Commissioned income less schedule 2106 expenses -Adjusted Gross Income
Commissioned income less schedule 2106 expenses
CRA is the acronym for: -Congressional Reclamation Act. -Community Reinvestment Act. -Community Redevelopment Act. -Cost of Reinvestment Act.
Community Reinvestment Act.
What is the Market approach
Compares the subject house with sales data for comparable homes in the same area calculates adjustments for differences between the properties guidelines for adjustments are 25% gross and 15% net Preferred and most common for SFRH's Predominant value refers to the most common sales price in an area
What is the CSBC?
Conference of State Bank Supervisors
What is the name of the national organization composed of state bank supervisors dedicated to maintaining the state banking system and state regulation of financial services? -Committee of State Bank Supervisors (CSBS) -Committee of National Bank Supervisors (CNBS) -Conference of State Regulating Supervisors (CSRS) -Conference of State Bank Supervisors (CSBS)
Conference of State Bank Supervisors (CSBS)
How does NMLS get their laws written?
Congress writes the laws and gives the NMLS the authority to enforce. The NMLS then writes regulations that help's them fulfill their objectives.
TILA is apart of which act?
Consumer Credit Protection ACT
The Truth in Lending Act is also known as: -Consumer Credit Protection Act -Fair Credit Reporting Act -Home Mortgage Disclosure Act -Trust Fund Accounting Act
Consumer Credit Protection Act
The Truth in Lending Act is administered by the
Consumer Financial Protection Bureau
What federal agency has enforcement and rule making authority over TRID?
Consumer Financial Protection Bureau(CFPB)
CFPB is the acronym for: -Congressional Fair Public Business Act. -Consumer Financial Protection Bureau. -Consumers Federal Policy Bureau. -Congressional Federal Protection Board.
Consumer Financial Protection Bureau.
If a mortgage company is utilizing E-Sign, what requirements must be met?
Consumer must consent to Electronic delivery Consumer must be provided how to withdraw consent Consumer must be provided a statemement informing them of the right to have information in paper form and to what transactions the consent applies. Consumer must be provided info regarding the hardware and software requirements for access to electronic records PRIOR TO CONSENT
If a lender is processing an FHA loan and finds out that the borrower has a questionable social security number, what should be done? -Continue to process and close the loan, FHA will insure it as long as the required documentation is in the file. -Keep processing and proceed as if nothing has happened, the SS# will be checked later in underwriting. -Immediately turn the loan down it is probably fraud -Contact the Social Security Administration and resolve the question
Contact the Social Security Administration and resolve the question
The loan officer suspects the social security number in an FHA application is incorrect, what must he/she do? -Contact the Social Security administration to verify it. -Proceed with the loan, because FHA will verify the social security number. -Proceed with the loan and HUD will verify it. -Give the borrower five days to bring in the verification.
Contact the Social Security administration to verify it.
What affects the amount of the Mortgage insurance Premium?
Credit, LTV and the loan program.
What can lenders reject applications based on?
Credit, employment, income, etc...
What are the requirements of DTI for FHA and Conventional?
Conventional is 28/36 FHA is 31/43
PMI, or Private Mortgage Insurance, would be used for which of the following loans? -FHA loans -VA loans -Conventional loans -All Government loans
Conventional loans
What type of appraisal takes the cost of rebuilding the property, plus the cost of the land the property is on and subtracts any depreciation to determine a value of the property? -Income Approach -Sales Comparison Approach -Cost Approach -Investment Approach
Cost Approach
Land is given as a separate value in which of the following appraisal methods? -Cost approach -Income method -Market or sales approach -Land is never given a separate value
Cost approach
Who is responsible for LE issues?
Creditor is responsible for contents and accuracy
Seven years is usually the length of time information is kept on a credit report. Which of the following would be different? -Slow payments -Collection accounts -Criminal convictions -Mortgage ratings
Criminal convictions
COFI is the acronym for: -Calculation of Foreign Indexes. -Cost of Funds Index. -Coefficient of Funding Index -Confluence of Funds Index
Cost of Funds Index.
What is a Finance Charge?
Costs of obtaining credit paid by the consumer
What does CC&R stand for?
Covenants, Conditions and Restrictions
What federal law created the idea of a qualified mortgage? -Dodd-Frank -TILA -RESPA -ECOA
Dodd-Frank
Which of the following information will an MLO not gather on a loan application? -Employer, age of borrowers and monthly income -Current and Future income -Social Security number and ages of children -Schedule of property currently owned
Current and Future income
When becoming licensed, you must have Financial management. What is financial mis-management?
Current outstanding judgments, except from medical expenses Current outstanding tax liens or other government liens and filings Foreclosures or a pattern of seriously delinquent accounts within the past 3 years.
In the Real Estate Owned section of the 1003, you need to include all of the following: -Current residence, rentals, lots, and any other real estate owned -Current residence only -Current residence and other personal property owned -Current residence, farm lands and building lots
Current residence, rentals, lots, and any other real estate owned
A lien is released by which of the following documents? -Deed of Trust -Deed of Re-conveyance -Quit Claim Deed -Warrantee Deed
Deed of Re-conveyance
Which is NOT a triggering term according to TILA, requiring additional disclosing in advertising?
D. "Terms to fit your budget"
What risk is PMI intended to cover?
Default on loan repayment
The Consumer Financial Protection Bureau was created by what legislation?
Dodd-Frank Act
A lender who does not cancel PMI when the LTV reaches 78% is in violation of which federal law?
D. Homeowners Protection Act
What form is used in order to verify an honorable discharge? -26-1880 -DD 214 -1003 -NGB Form 22
DD 214
What two documents are required of the borrower when applying for a VA loan?
DD-214 and Certificate of Eligibility
MLO Andy is currently working on four loan applications. For which transaction must Andy follow the regulations of the Truth in Lending Act?
Dan's application to purchase a duplex where he will live in one unit and rent the other - TILA does not apply to business, commercial, or agricultural loans, loans payable with four or less installments and without a finance charge, or to loans made to corporations, partnerships, associations, and agencies. Andy does have to follow the rules of TILA when the loan is for a residential property such as the one Dan wishes to buy.
What is HMDA?
Data that must be reported by lenders regarding its home purchase and home improvement loans originated to be monitored to prevent discrimination
Which of the following does a standard Freddie/Fannie credit report contain? -A statement regarding future credit worthiness of a borrower -Credit inquiries from insurance companies -Payment amounts only for reported debts -Debts a person may owe
Debts a person may owe
When you order an Insurance binder on a borrower's loan file, the one-page sheet that summarizes all the insurance information is known as the: -binder summary page. -Declaration page. -1008 -binder reference page.
Declaration page.
The document that conveys ownership of real property from one person to another is known as the: -Mortgage -Deed -Title -Promissory Note
Deed
If you are violating restrictions what can the consequences be?
Deny/suspsend/revoke or decline to renew a license -deny your license if you lied or withheld info for ANY reason -Order restitution against persons subject to the SAFE Act -Order that fines be paid -impose restraining orders, injunctions, cease and desist orders, or any other measure that is necessary
What are the mortgage regulatory commissions?
Department of Financial Institutions, Department of Real Estate, Department of Consumer Protection
If the borrower is self-employed, generally speaking, what can be added to the income? -Notes due and payable in less than one year -Adjusted Gross Income -Depreciation -Nothing, only W-2 income
Depreciation
What is the name of Fannie Mae's automated underwriting system? -Encompass -POINT by Calyx -Loan Prospector -Desktop Underwriter
Desktop Underwriter
What is the name of the automatic underwriting system used by Fannie Mae? -Loan Prospector -Desktop Underwriter -Direct Endorser -Loan Underwriter
Desktop Underwriter
How is the cost of hazard insurance determined?
Determined by the replacement cost of the property
Which of the following is not considered a protected class under Reg. B? -Age -Disability -Sex -National Origin
Disability
Whenever the loan is an ARM, Federal regulations require which of the following? -A maximum loan limit of $417,000 -An increase of no more than 1/2 percent per year -The lender to charge set amounts for the origination fee -Disclosure of the index used
Disclosure of the index used
Which of the following would NOT appear on the Truth-in-Lending Disclosure? -Finance charge -Amount financed -Total of Payments -Discount points
Discount points
A lender has a policy that they never lend less than $70,000 because they can't make any money off of loans lower than $70,000. What would this be considered: -Disparate Treatment -Disparate Impact -Discrimination -Blockbusting
Disparate Impact
A lender has a policy that only individuals between the age of 25-45 can receive home loans of over $200,000. What would this be considered: -Disparate Treatment -Disparate Impact -Discrimination -Blockbusting
Disparate Treatment
According to the FACT Act which of these could be considered a failure to secure private information? -Burning old files in a steel drum behind the office once a month -Hiring a document destruction company to remove all old files -Shredding documents and throwing them in the trash -Disposing of documents into the trash bins for the janitorial service to empty nightly
Disposing of documents into the trash bins for the janitorial service to empty nightly
The way to compute loan to value would be? -Divide the loan amount by the value of the property. -Multiply the property value by the loan amount. -Divide the property value by the loan amount. -Multiply the loan amount by the property value.
Divide the loan amount by the value of the property.
When taking an application for a mortgage loan, what are mortgage loan originators NOT permitted to ask?
Do you receive child support?
What law required the disclosures under TRID be integrated?
Dodd Frank Act
When do and dont Service Release Premiums require disclosure?
Dont- If the funding and originating lenders are the same Do- if the funding and originating lenders are different. The SRP is treated like the YSP for disclosure purposes
Under which of the following circumstances would a repurchase, or buyback, NOT happen? -The borrowers never made any payments. -The borrowers are in default within the first few months. -During the term of the loan the borrowers were late on a few payments. -The secondary lender discovered fraud in the application.
During the term of the loan the borrowers were late on a few payments.
Relevant financial information about an applicant who applies for an FHA or conventional residential mortgage is entered on: -FNMA form 1008. -FNMA form 1003. -FNMA form 1003. -FHLMC form 95.
FNMA form 1003
Regulation B is affiliated with which act? -TILA -ECOA -HMDA -HOEPA
ECOA
Regulation B is also known as -ECOA -HMDA -RESPA -TILA
ECOA
Under which federal legislation does the consumer have the right to receive a copy of the appraisal report on a dwelling that is to be used as collateral for a loan?
ECOA
Under which federal legislation does the consumer have the right to receive a copy of the appraisal report on a dwelling that is to be used as collateral for a loan? -HMDA -RESPA -TILA -ECOA
ECOA
Which federal law prohibits someone from inquiring about childbearing? -HMDA -ECOA -Fair Housing Act -RESPA
ECOA
Under which federal legislation does the consumer have the right to receive a copy of the appraisal report on a dwelling that is to be used as collateral for a loan?
ECOA - Since the appraised value and the property condition are considered in the approval process, the consumer has the right to inspect the document being used to evaluate these facts, according to the Equal Credit Opportunity Act.
Which is not part of the original loan application? -Borrower's marital status -ECOA disclosure -Borrower provided ethnicity -Borrower provided birth date
ECOA disclosure
Each loan or finance company must do what in relation to Anti-Money Laundering rules?
Each institution must implement a written AML program that is reasonably designed to prevent the loan or finance company from being used in Anti-Money laundering or Terrorist activity Financing.
Two people obtain a loan and buy a home, taking ownership as joint tenants. Which of the following would NOT be true? -Both must sign on the loan -Each owns 50% -Neither could sell without the other's permission -Each owns 100%
Each owns 50%
Which of the following does not have an effect on mortgage interest rates? -Fraud -Foreclosure -Early Payoff -The Federal Reserve System
Early Payoff
Which of the following does NOT directly influence interest rates? -Early payoffs -Foreclosure -Fraud -Federal Reserve Bank
Early payoffs
Which of the following must an individual do before he or she is allowed to engage in the business of a loan originator? -Obtain and maintain annually a registration as a loan originator -Obtain and maintain annually a license as a state licensed loan originator -Both A & B -Either A or B
Either A or B
What is required for the applicant to receive electronic delivery of the disclosures?
Electronic consent to receive documents electronically
Which of the following is acceptable discrimination under ECOA? -Race -Sex -Religion -Employment
Employment
Which of the following would NOT be a good source to establish credit history when a borrower does not have a traditional credit score? -Employment history -Rent history -Utility ratings -Insurance payment history
Employment history
What prevents a party from having clear title? -Impounds -Escrow -Entitlement -Encumbrance
Encumbrance
Additional coverage to the title insurance is called?
Endorsements
What is EEM and what loan type is it under?
Energy Efficient Mortgage, FHA
X 19. Red Flag Rules are part of what federal law?
FACT Act - Section 114 of the FACT Act is known as the Red Flags Rules, which, among other things, requires financial institutions and creditors to implement a written identity theft prevention program.
What is the amount of money that VA guarantees called? -Escrow -Endorsement -Encroachment -Entitlement
Entitlement
Which is not an application disclosure? -Servicing disclosure -Environmental hazard disclosure -Appraisal disclosure -APR disclosure
Environmental hazard disclosure
Borrower(s) may decide to disclose income from child support or alimony. If disclosed, which federal law requires that it be considered in the loan approval process? -Real Estate Settlement Procedures Act -Equal Credit Opportunity Act -Fair and Accurate Credit Transactions Act -Truth in Lending Act
Equal Credit Opportunity Act
What does ECOA stand for?
Equal Credit Opportunity Act
What does the acronym ECOA stand for? -Economic Concern in Outlying Areas -Equal Credit Opportunity Act -Equality of Credit Obligations Act -Equal Credit Originations Act
Equal Credit Opportunity Act
What is ECOA? -Equal Credit Option Administration -Environmental Commission Oversight Act -Equal Consumer Opportunity Act -Equal Credit Opportunity Act
Equal Credit Opportunity Act
Which law prohibits discrimination based on sex, race, age, national origin, marital status, and source of income?
Equal Credit Opportunity Act
ECOA is the acronym for: -Equal Credit Opportunity Act. -Equal Community Opportunity Act. -Equity Conservation and Organization Act. -Equal Contribution and Options Act.
Equal Credit Opportunity Act.
The lender is requiring repairs on the home to be completed. Those repairs can be done after the loan closes by including them in a(n): -Escrow Holdback. -Earnest Money Deposit. -Lender Retainer. -Repairs Completion Account (RCA).
Escrow Holdback.
What do we call it when the loan will not be fully funded until further conditions are met? -Escrowed funding -Conditional funding -Loan reserve funding -Loan held in trust
Escrowed funding
When was the HUD established and what is its purpose?
Established in 1965, HUD works to create a decent home and suitable living environment for all Americans. It does this by enforcing laws, developing American Communities, etc...
What is the general accuracy requirement for any amounts listed on the LE? -Must be within 10 percent of actual cost. -No more than $100 per category. -There is no general requirement. -Estimates must be made in Good Faith.
Estimates must be made in Good Faith.
What does an appraisal do? -Secures the value -Guarantees the value -Estimates the value -Determines the value
Estimates the value
An applicant for licensure must pass a written test which shall include questions on Federal and State law and regulation. Which of the following would NOT necessarily be included in this subsection? -Instruction on fraud -Consumer protection -Fair lending issues -Ethics
Ethics
The SAFE Act mandates that specific topics be covered every year. Which of the following is a required topic? -Appraisal -Ethics Fair lending and Consumer protection -FHA loans -Secondary markets
Ethics Fair lending and Consumer protection
How often must companies update their list with the National Registry?
Every 31 days
How often must a lender perform an escrow account analysis to ensure that excess funds are not being kept? -Once a month -Twice a year -Every year on the loan -Once every two years
Every year on the loan
The Regulatory Authority may appoint an examiner to work on behalf of the Regulator in making examinations of loan originator operations. What responsibilities do these examiners typically have? -Examiners may administer oaths and affirmations, make examinations and examination reports. -Examiners have the responsibility of paying assessments to the Secretary in conjunction with carrying out examinations. -Examiners have legal authority to summon loan originators to be present for court appointments. -Examiners have the authority to instigate a cease and desist proceeding if the Secretary is found improperly usurping his or her authority.
Examiners may administer oaths and affirmations, make examinations and examination reports.
An MLO leaves a borrower's file open on his/her desk for just a moment. An Identity thief sees the borrower's credit report which contains a huge amount of information. Fortunately the MLO quickly returns. What potential Federal laws is the MLO violating? -ECOA and RESPA -FACT Act and GLBA -HMDA and TILA -RESPA and MDIA
FACT Act and GLBA
The Red Flags Rule is part of what law? -FACTA -FCRA -Gramm-Leach-Bliley Act -The MAP Rule
FACTA
Which federal law was put into place to improve consumer's access to credit information? -FCRA -FACTA -Gramm-Leach-Bliley -Red Flags Rule
FACTA
True or False? A mortgage loan originator may operate independent of employment by a licensed mortgage lender, mortgage broker, or mortgage servicer. The mortgage loan originator just needs to have a license. -TRUE -FALSE
FALSE
True or False? A reasonable fee may be charged to consumers in order to cover the costs of maintaining and providing access to information from the Nationwide Multistate Licensing System and Registry. -TRUE -FALSE
FALSE
True or False? A registered loan originator does not need to maintain a unique identifier through the NMLSR so long as he or she works for a subsidiary that is regulated by a federal banking agency. -TRUE -FALSE
FALSE
True or False? A state-licensed loan originator may take the same approved course in the same or successive years to meet the annual requirements for continuing education. -TRUE -FALSE
FALSE
True or False? An applicant who has had a loan originator license revoked previously is eligible for a license as long as they wait seven years before they apply for a new license. -TRUE -FALSE
FALSE
True or False? An independent contractor may engage in residential mortgage loan origination activities as a loan processor or underwriter without a state issued loan originator license. -TRUE -FALSE
FALSE
True or False? It is the NMLSR, not the Regulator, who possesses the sole authority to require a person to cease and desist loan originating practices when there is reasonable cause to suspect the commission of a past or future violation. -TRUE -FALSE
FALSE
True or False? Once information is entered into the NMLSR, any mortgage loan originator wishing to challenge that information must wait until the time of license renewal and pay a fee. -TRUE -FALSE
FALSE
True or False? Only some states require fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a state, national and international criminal history background check. -TRUE -FALSE
FALSE
True or False? The SAFE Act does not mention subprime mortgage lending. -TRUE -FALSE
FALSE
True or False? The term "mortgage loan originator" includes a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with State law. -TRUE -FALSE
FALSE
True or False? When considering acts that would make an individual ineligible for a loan originator license, expunged convictions still have an affect on the eligibility of the individual. -TRUE -FALSE
FALSE
Which federal law restricts the use of credit reports and requires accuracy on credit report? -FCRA -FACTA -Gramm-Leach-Bliley -Red Flags Rule
FCRA
Which federal legislation requires that the borrower have the right to receive a copy of his or her credit report, without charge, annually?
FCRA
What kind of loan has Upfront Mortgage Insurance? -FHA -Jumbo -Conventional -VA
FHA
What loan requires an upfront mortgage insurance fee? -Conventional -FHA -VA -Subprime
FHA
What type of mortgage requires upfront mortgage insurance and monthly mortgage insurance? -VA -USDA -Conventional -FHA
FHA
203 (b) Condominium Mortgages (Check)
FHA has a number of specific requirements regarding the condo project. For example, the condo must be part of a project with at least two units, and 50% of the units must be owner-occupied.
What is the main difference between FHA and Conventional loan programs? -FHA is for first time home buyers -FHA insures the lender against losses -FHA doesn't require a down payment -There is no difference
FHA insures the lender against losses
conditional commitment means
FHA is making a commitment to the borrower to insure a loan on the property, as long as borrower qualifies for the loan
MIP or Mortgage Insurance Premium would be used for which of the following loans? -Conventional loans -VA loans -Secondary financing -FHA loans
FHA loans
Mortgage Insurance Premium (MIP) would be used for which of the following loans? -VA loans -Secondary financing -FHA loans -Conventional loans
FHA loans
FHA loan limits change from time to time, and are based on the: -average selling price of homes in a county. -FNMA maximums minus 20%. -average income level of the county. -FHA median house prices.
FHA median house prices.
if proceeds of sale are less than outstanding balance on the loan, the
FHA pays lender the difference
2-1 Buy Downs
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 payments the first two years of the loan.
A Section 203K loan is a: -FHA program -A reverse mortgage -A VA program -A Fannie Mae program
FHA program
The most commonly used conventional underwriter guidelines are established by: -Federal Reserve. -VA/FHA. -GNMA and FNMA. -FNMA and FHLMC.
FNMA and FHLMC.
What does FCRA stand for ?
Fair Credit Reporting Act
What does FCRA stand for? -Factual Credit Reporting Act -Fair Credit Reporting Act -Fair Credit Release Act -Fair Credit Reporting Action
Fair Credit Reporting Act
FCRA is the acronym for: -Federal Credit Reporting Act. -Federal Certificate of Reimbursement Act. -Fair Credit Reporting Act. -Federal Community Redevelopment Act.
Fair Credit Reporting Act.
FHA is the acronym for: -Fair Habitation Act -Federal Housing Act -Fair Home Act -Fair Housing Act
Fair Housing Act
Which law prohibits discrimination based upon disability? -ECOA -Reg. C -Fair Housing Act -RESPA
Fair Housing Act
What federal legislation requires that all printed advertising include the Equal Housing Opportunity logo?
Fair Housing Act - The Fair Housing Act requires that the Equal Housing Opportunity logo be displayed in all printed material and the term "equal housing lender" must be used when broadcast over the airwaves.
What does FACTA stand for?
Fair and Accurate Credit Transactions Act
MARS rule prohibits mortgage relief companies form making any statements that do what?
Falsify or mislead claims about their services.
What is prohibited by The Fair Housing Act but not ECOA?
Familial status and Handicap
The Federal National Mortgage Association is also known as which of the following? -Fannie Mae -Freddie Mac -Ginnie Mae -Sallie Mae
Fannie Mae
Which of the following is a government sponsored entity? -Fannie Mae -Ginnie Mae -FHA -The USDA
Fannie Mae
Which automated underwriting system does Fannie Mae use, and what system does Freddie Mac use?
Fannie Mae - Desktop Underwriter Freddie Mac - Loan Prospector
Who are conventional or conforming loan limits set by?
Fannie Mae and Freddie Mac
The three major buyers in the secondary mortgage market are
Fannie Mae, Ginnie Mae, Freddie Mac. - The three major secondary mortgage market buyers are Fannie Mae, Ginnie Mae and Freddie Mac.
FmHA is the acronym for: -Farming Housing Act. -Farmers Home Administration. -Federal Mortgages for Homes Act. -Family Home Administration.
Farmers Home Administration.
Which of the following would NOT be considered a Federal Banking Agency? -Comptroller of the Currency -Board of Governors of the Federal Reserve System -Federal Bureau of Investigation -National Credit Union Administration
Federal Bureau of Investigation
FDIC is the acronym for: -Federal Deposit Insurance Corporation. -Fair Distribution of Insurance Commissions. -Federal Development of Institutional Corporations. -First Deposit and Insurance Corporation.
Federal Deposit Insurance Corporation.
What is FEMA?
Federal Emergency Management Agency
What is FFIEC
Federal Financial Institutions Examination Council
Where do the funds for FHA loans come from?
Federal Home Loan Mortgage Corporation
FHLMC is the acronym for: -Freedom from House and Loan Mismanagement Act. -Federal Housing and Loan Mortgage Commission. -Fair Home and Lending Management Commission. -Federal Home Loan Mortgage Corporation.
Federal Home Loan Mortgage Corporation. Correct Choice
What does FHA stand for? -Federal Housing Administration -Federal Housing Act -Federal Housing Agency -Federal Housing Academy
Federal Housing Administration
Which agency is the conservator of Fannie Mae and Freddie Mac?
Federal Housing Finance Agency - In 2008, Fannie Mae and Freddie Mac were moved back under government control when the Federal Housing Finance Agency was appointed as a conservator.
FNMA is the acronym for: -Federal Non-institutional Mortgage Administration -Federal National Mortgages Act -Federal National Mortgage Association -Federal National Monetary Association
Federal National Mortgage Association
Fannie Mae is the more common name of the
Federal National Mortgage Association.
Which entity is responsible for setting the country's monetary policy and thereby affecting interest rates on mortgage loans?
Federal Reserve
In the testing of loan originators, you must take a qualified test that measures knowledge and comprehension in which areas? -Ethics and Federal Laws -Federal law, mortgage origination, and ethics -Federal and State law and regulation pertaining to mortgage origination -Federal and State law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues, general mortgage industry knowledge and origination
Federal and State law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues, general mortgage industry knowledge and origination
Are State-specific disclosures replaced by the new Loan Estimate and Closing Disclosure? -These are new Federal Disclosures and do replace all state disclosures -Federal disclosures never replace state specific disclosures -Federal disclosures cannot be superseded by state disclosures -State disclosures are now consolidated by the new LE and CD disclosures
Federal disclosures never replace state specific disclosures
Zero Tolerance between LE & CD for
Fees paid to creditor, broker, or affiliate Fees to 3rd party if the creditor did not permit shopping Transfer taxes
A loan or finance company must make a copy of its AML program available to whom?
FinCEN
What is FinCEN?
Financial Crimes Enforcement Network
FIRREA is the acronym for: -Financial Institutions Reform, Recovery and Enforcement Act. -Fair Institutional Rules, Regulations and Equalization Act. -Federal Institution Recover, Reform, and Executive Act. -Falsification of Restoration, Recover and Extrication Act.
Financial Institutions Reform, Recovery and Enforcement Act.
Liabilities
Financial obligations owed by a borrower
What is the penalty for loan fraud
Fine of $1,000,000. Prison term up to 30 years
What information must an applicant furnish to the NMLSR in order to verify their identity? -Just Fingerprints -Only a personal history and experience -Simply an authorization for the System to obtain a credit report -Fingerprints, a personal history and experience and an authorization for the System to obtain a credit report
Fingerprints, a personal history and experience and an authorization for the System to obtain a credit report
A transaction where the buyers have signed a contract to purchase real property, but have the intention of immediately selling it to another buyer is called: -FICO -A kickback -Flipping -A service release premium
Flipping
The Loan Estimate after disclosure must be kept for how long? -Until Consummation -For 60 days after consummation -For 3 years after disclosure -For 5 years after disclosure
For 3 years after disclosure
The Closing Disclosure must be kept for how long? -For 60 days after consummation -For 3 years after disclosure -For 5 years after disclosure -For 1 year after consummation
For 5 years after disclosure
What federal legislation prohibits the exchange of information between consumer creditors under certain criteria? -Equal Credit Opportunity Act -Fair Credit Reporting Act -Gramm-Leach-Bliley Act -Truth in Lending Act
Gramm-Leach-Bliley Act
When can lenders request info about race, color, religion, natural origin or sex?
For monitoring purposes/HMDA
How long must Flood insurance last?
For the entire term of the loan
When must notices of ARM adjustments be provided?
For the first adjustment, a written notice must be given between 210 and 240 days prior to the adjustment. For ongoing adjustments, the notice must be given between 60 and 120 days prior to the first payment at the new rate.
How long is flood insurance required? -Until the next drought -For the first 5 years -For the life of the loan -Until the LTV is 78% or less
For the life of the loan
If required, the borrower must retain flood insurance for how long? -Until the loan is paid down to 50% LTV -Until the loan is paid down below 80% LTV -For 10 years -For the life of the loan
For the life of the loan
When a property is located in a flood plain, the lender will require flood insurance to be in effect for how long? -For 10 years, then requires the borrower to obtain a flood protection letter -Until the LTV reaches below 80% -Until the LTV reaches 50% -For the life of the loan
For the life of the loan
When hazard insurance on the property lapses, what will the lender do? -Force placed insurance -Errors and omissions insurance -Special mortgage insurance -An umbrella policy
Force placed insurance
If the borrower's homeowner's insurance lapses, the lender will obtain which of the following? -Federal insurance -Forced place insurance -Credit insurance -Special mortgage insurance
Forced place insurance
Kay is behind on her mortgage payments and is concerned that she will soon be going into the foreclosure process. Kay receives a phone call from a company stating that they can help her avoid foreclosure if she pays them $3,000 upfront to discuss options with her servicer. What type of scheme is likely occurring in this situation? -Loan Flipping -Foreclosure Rescue Scheme -Illegal Property Flipping -Equity Skimming
Foreclosure Rescue Scheme
What is an example of a Red Flag?
Fraud alert on credit -Active duty alert on credit -Altered or forged paperwork -Address discrepencies on credit report -photos that do not match the person presenting it -invalid address -incomplete application -returned mail
Javier is looking to purchase a home, but he does not make enough money to obtain the loan that he wants. Javier, instead of looking for a less expensive property, changes his W-2 to reflect that he is making an additional $1,000 a month. What type of fraud is this? -Fraud for property -Fraud for profit -Fraud for criminal enterprise -Negligent fraud
Fraud for property
If a loan officer were to take a loan application Tuesday at 1:00 p.m., what is the last day that the good faith estimate must be mailed or disclosed? -The same day, Tuesday before end of business -The next day, Wednesday before 5pm -Friday before midnight -Within 3 days before 5pm
Friday before midnight
What is an unacceptable source of gift funds on an FHA loan? -From seller to borrower -From uncle to niece -From grandparent to grandchild -From an employer
From seller to borrower
What event occurs when the 3-day right of rescission has passed? -Closing -Funding -Post-Closing -Underwriting
Funding
The following two disclosures are required by RESPA, if applicable: -1003 and AfBA -GFE and AfBA -1003 and 1008 -Borrower's Signature Authorization and GFE
GFE and AfBA
What is a Graduated Payment Mortgage
GPMs offer borrowers lower initial interest rates that increase over the first few years of the loan
What did the UST (Uniform State Test) do?
Gave each state the opportunity to either implement the new national test or keep their state-specific tests. If you take the national, you get licensed in all states that have adopted it.
Application
General industry definition: Submission of a borrower's financial information in anticipation of a credit decision. Different regulations can apply specific conditions to the term under their requirements. Although based on the same general definition, each regulation includes different descriptions with it. An MLO should become familiar with any variation in meaning that is being used with the regulation affecting their mortgage lending activities.
Who does the Fair Credit Reporting Act cover?
Generally all consumer credit reporting agencies
According to TILA what is a business day
Generally any day a company is open for business. Sometimes any day except sunday and legal public holidays
Why was Regulation Z enacted? -Require lenders to protect borrowers non-public information -Enable banks to sell mortgages more easily -Give borrowers disclosures regarding costs and fees and the ability to cancel certain transactions -Prevent discrimination based on race ethnicity or gender
Give borrowers disclosures regarding costs and fees and the ability to cancel certain transactions
The Homeowners Protection Act of 1998 does which of the following? -Gives buyers the right to cancel a contract based on property condition -Requires a buyer to sign a disclosure regarding home inspections -Gives borrowers the right to cancel PMI when certain conditions are met -Provides consumers a means of protection through PMI
Gives borrowers the right to cancel PMI when certain conditions are met
According to RESPA, where must the YSP be disclosed? -Truth in Lending Disclosure -Notice of Right to Cancel -Good Faith Estimate -APR Calculation
Good Faith Estimate
What does GFE stand for?
Good Faith Estimate
What forms were integrated to create the Loan Estimate?
Good Faith Estimate and the early TIL disclosure
The tradeoff table is a tool to assist consumers that appears on the
Good Faith Estimate.
A yield spread premium is disclosed on which document? -TIL disclosure -Good faith estimate -Servicing disclosure -Rescission disclosure
Good faith estimate
FHA is a Blank type of Loan
Government Loan
GNMA is the acronym for: -Government Non-institutional Mortgage Act -Government National Money Act -Government National Mortgage Association -Government National Monetary Association
Government National Mortgage Association
What is a GSE?
Government Sponsored Entity? (Fannie Mae, Freddie Mac, Ginnie Mae)
Which fee shown on a Good Faith Estimate allows a 10% tolerance when compared to the actual settlement charge?
Government recording charges
What are Fannie Mae and Freddie Mac also known as? -Congress owned enterprises -Government supervised but privately owned entities -Government sponsored enterprises -Privately owned entities
Government sponsored enterprises
What is GPM?
Graduated Payment Mortgages
A mortgage loan that features lower payments in the beginning and increases during the life of the loan is also known as which of the following? -Bridge mortgage -Graduated payment mortgage -Construction to permanent loan -Fixed interest rate mortgage
Graduated payment mortgage
Under what federal legislation, is a lender required to allow a borrower to opt-out of having their nonpublic personal information disclosed to a third party? -Gramm-Leach-Bliley -The USA Patriot Act -FACTA -FCRA
Gramm-Leach-Bliley
The form number for the Loan Estimate is:
H24
The form number for the closing disclosure is:
H25
What are reverse mortgages also known as?
HECM (Home Equity Conversion Mortgage)
Home Equity Conversion Mortgage (HECM)
HECM is the FHA's version of a reverse mortgage --Is available to borrowers who are 62 or older --Is secured by the borrower's principal dwelling --Allows borrowers to receive monthly payments or a lump sum drawn from the equity in the home --Borrowers seeking HECM mortgages must complete borrower counseling and pay upfront and annual MIPs.
Which of the following is not an index that is typically used for adjustable rate mortgages? -Margin -COFI -HELOC -LIBOR
HELOC
Lenders submit Loan/Application Registers in order to comply with what law? -CRA -FACT Act -FCRA -HMDA
HMDA
Section X on the 1003 is where information regarding what federal law goes? -HMDA -ECOA -QM -ATR
HMDA
What law requires the collection of race, ethnicity and sex for the purpose of preventing and detecting discriminatory practices? -HMDA -ECOA -Fair Housing Act -RESPA
HMDA
What law requires the lender to collect borrower information for first mortgages and home improvement loans? -HOEPA -TILA -ECOA -HMDA
HMDA
The federal act that requires lenders to disclose mortgage loan information, by geographic area is: -HMDA. -FCRA. -ECOA. -RESPA.
HMDA.
A high-cost loan that results in negative amortization is illegal under what law?
HOEPA
Which Act requires lenders to inform mortgage borrowers of their rights for borrower-initiated cancellation of PMI and requires its termination by the lender when the borrower has reached an LTV of 78%?
HPA - The federal Homeowners Protection Act of 1998 requires that lenders or servicers provide certain disclosures and notifications concerning private mortgage insurance (PMI) on residential mortgage transactions.
What federal agency oversees FHA
HUD
Who reimburses the loan amount on an FHA loan if its insured?
HUD
Which is a disclosure that RESPA requires creditors to give to customers at the time of the mortgage loan closing?
HUD-1
The Uniform Settlement Statement is commonly referred to as the: -HUD-1 Form. -Good Faith Estimate. -Truth in Lending Statement. -Escrow Disclosure.
HUD-1 Form.
RESPA requires that all mortgage loan compensation be disclosed in which of the following documents? -HUD Settlement Cost Booklet -HUD-1 Statement -CHARM booklet -Truth in Lending Disclosure Statement
HUD-1 Statement
-Which of the following documents itemizes all settlement costs including lender charges? -Agreement of sale -HUD-1/Settlement statement -Form 1003 -Forbearance agreement
HUD-1/Settlement statement
-The Real Estate Settlement Procedures Act falls under the control of which agency? -HUD/CFPB -Federal Reserve -SEC -State Regulators
HUD/CFPB
FHA (Federal Housing Administration) loans fall under the control and guidelines of: -HUD/CFPB. -FNMA/FHLMC. -RESPA/TILA. -PAR/BPS.
HUD/CFPB.
According to the Truth-in-Lending Act (TILA), which of the following fees is EXCLUDED from the calculation of the annual percentage rate? -Hazard insurance -Wire Transfer -Prepaid interest -Mortgage insurance premiums
Hazard insurance
What is Forced Placed Insurance
Hazard insurance the is forced upon by the servicer when a borrower fails to maintain coverage
What is not included in the APR calculations? -Mortgage insurance premium -Origination fee -Processing fee -Hazard/Fire insurance premium
Hazard/Fire insurance premium
The borrower wants to buy an investment property. Which of the following would NOT be calculated in the back-end ratio? -Health insurance -Car payment -Primary residence payment -Investment property HOA fees
Health insurance
In computing debt ratios, which of the following would NOT be considered? -Second mortgage -Car payment -Hazard Insurance -Health insurance premiums
Health insurance premiums
Purpose of the Home Loan Toolkit
Help persons borrowing money to finance the purchase of residential real estate better understand the nature and costs of real estate settlement services; CFPB requires lenders to distribute this information to borrowers at the tie of loan application or within three business days
Which types of loan are governed by HOEPA? -Higher priced loan -High cost loan -Subprime loans -Qualified mortgages
High cost loan
Section 35 of TILA governs what type of loan? -High Cost -Higher priced -Subprime loans -Open-ended loans
Higher priced
A credit history shows the borrower's
History of making payments on past debts and obligations. - The correct answer is B. A credit report will show the borrower's history of making payments on past debts and obligations.
HELOC is the acronym for: -Home Equity Line of Credit.. -Housing Equity Loan Corporation. -Housing Equity Loans Of Commission. -House and Environmental Landscaping of Compensation Act.
Home Equity Line of Credit..
On Form 1003 Section X: Information for Government Monitoring Purposes is used in order to comply with which federal law? -Community Reinvestment Act -Fair Credit Reporting Act -Home Mortgage Disclosure Act -Truth in Lending Act
Home Mortgage Disclosure Act
What does HMDA stand for?
Home Mortgage Disclosure Act
What does HMDA stand for? -Home Mortgage Disclosure Act -Home Mortgage Disabilities Act -Housing Mortgage Disclosure Act -Home Mortgage Development Association
Home Mortgage Disclosure Act
What does the acronym HMDA stand for? -Home Mortgage Disclosure Act -Home Mortgage Discovery Act -Home Mandated Disclosure Act -Household Mortgage Disclosure Act
Home Mortgage Disclosure Act
While it is unlawful to consider race when underwriting a loan, what federal legislation requires that this information be included on the loan application?
Home Mortgage Disclosure Act
-HMDA is the acronym for: -House and Mortgage Deposit Act. -Home Mortgage Discovery Act. -Home Mortgage and Development Act. -Home Mortgage Disclosure Act.
Home Mortgage Disclosure Act.
What does HOEPA stand for?
Home Ownership and Equity Protection Act
Which federal law requires a lender to verify that the customer is able to repay the loan?
Home Ownership and Equity Protection Act
Which Act amended the Truth in Lending Act, establishing disclosure requirements and prohibiting equity stripping and other abusive practices in connection with "high-cost" mortgages?
Home Ownership and Equity Protection Act (HOEPA)
HMDA Covers what loan types?
Home purchases Home improvement loans And refinances of loans used to purchase a property
What is HELP?
Homebuyer Education Learning Program A program from FHA that counsels people on the home buying process. Completion of the program may entitle the homebuyer to a reducted initial FHA MIP from 2.25% to 1.75% of the home purchase price.
What does HPA stand for?
Homeowners Protection Act
Which federal law allows borrowers to request PMI cancellation when their LTV reaches 80%? -Homeowners Protection Act -Reg. Z -RESPA -Home Ownership and Equity Protection Act
Homeowners Protection Act
One purpose of the Fair and Accurate Credit Transaction Act is to prevent -Predatory lending -Discrimination in lending -Loss of borrower -Identity theft
Identity theft
On a QM, When may the 43% DTI rule be waived?
If a loan can be sold to Fannie Mae, Freddie Mac or insured by VA, FHA, or USDA.
When is an Affiliated Business Agreement required? -Always when there is a co-borrower/affiliate -Only purchase loans -If an affiliated business is providing services -It is no longer required
If an affiliated business is providing services 4.It is no longer required
What determines lien priority? -If it's the lowest interest rate -If it's recorded first, second etc. -If it has the largest loan balance -If it was subordinated to the first
If it's recorded first, second etc.
On a conventional loan, when is Mortgage insurance (PMI) required?
If the LTV is 80% or higher
Under what circumstances would it be possible to consider capital gains as income for a Fannie Mae or Freddie Mac loan? -If the borrowers can get written verification from their mortgage loan servicer that the income will continue -If the borrowers can verify a minimum of two years income on their tax returns and still own the asset -If the borrowers can verify one year income on their tax returns and get a CPA letter -If the borrowers are using the asset/income as part of their down payment
If the borrowers can verify a minimum of two years income on their tax returns and still own the asset
Generally speaking, which loan does not require mortgage insurance? -If the combined loan to value is 90%, and the LTV is less than 80% -If the loan is greater than 80% LTV -If the combined loan to value is 95%, and the LTV is less than 81% -If the loan is less than 90% CLTV, and the LTV is 85%
If the combined loan to value is 90%, and the LTV is less than 80%
In which situation would it be most likely that a lender will reject a property? -If the effective age is unduly old -If the condition is marked "fair" by the appraiser -If the market value exceeds the costs to rebuild -If the net adjustments on the comparable were 5%
If the condition is marked "fair" by the appraiser
How can a company call somebody on the DNC list?
If the consumer completed a transaction or received services from the seller within 18 months of a telemarketing call. OR If the consumer made an inquiry into the business within 3 months of the telemarketing call
A borrower with an FHA loan sells the property on contract and transfers the title. Under which circumstance is this acceptable? -If the loan is assumable -If the new borrower occupies the property -If the original borrower indemnifies the lender against any losses -Under no circumstances
If the loan is assumable
When are lenders exempt from HMDA?
If their assets are less than $10,000,000 and they originated less than 100 home purchase loans. OR The institution did not have an office in an MSA
What can a lender consider/deny about a person?
Immigration status
Which of the following is not a penalty that the state regulatory authority can levy against a licensee? -Restitution -Imprisonment -License Suspension -License Revocation
Imprisonment
When and who issued a regulation that exempted lenders and brokers from the SAR rules?
In 2002, FinCEN
When was the Dodd-Frank Wall Street Reform Act passed?
In 2010
Which of the following is not required as part of the application process for a mortgage loan originator? -Fingerprints -Background Check -Interview of Professional References -Credit Check
Interview of Professional References
Hank just received an appraisal fee from his borrower. What type of account should Hank put this appraisal fee until it is paid to the appraiser? -In an investment account -In an interest bearing savings account -In an escrow account -In the lenders general operating account
In an escrow account
How much privacy notices must be delivered?
In writing or electronic delivery was given consent.
Identify which attribute is NOT considered illegal discrimination in granting credit under the Equal Credit Opportunity Act. -Color -Income -Race -Sex
Income
Which of the following is not included in a credit score? -Items from public records -Income information -A good rating of how someone has paid -A bad rating of how someone has paid
Income information
Which of the following is true concerning income with an FHA loan? -Borrowers may state income on any FHA loan -Income is not verified on FHA loans -Income must always be verified -Borrowers may only state income on an FHA ARM loan
Income must always be verified
Which of the following terms means, "an individual who performs his or her duties other than at the direction of and subject to the supervision and instruction of an individual who is licensed and registered as a loan originator"? -Loan Processor -Independent Contractor -Mortgage Loan Originator -Mortgage Loan Officer
Independent Contractor
An adjustable rate mortgage has two components to it, the index and the margin. After closing which of these can change? -Index only -Margin only -Both index and margin -Neither because the loan is "closed"
Index only
How does an ARM adjust? -Index only -Index plus the margin -Interest rate caps only -Federal Reserve Bond
Index plus the margin
Which of the following is true of an ARM? -Index rate + margin = ARM rate -Initial rate + margin = ARM rate -ARM rate + margin = index rate -Margin + cap = ARM rate
Index rate + margin = ARM rate
The portion of an adjustable rate mortgage used to compute the interest rate that can change and is based on the T-Bill, LIBOR, or any other factor outlined in the note is known as the
Index.
Complete application
Initial six items of information that an MLO receives and no more; includes: - Name(s) of the borrower - Social Security number for each borrower - Gross monthly income of borrower(s) - Loan amount sought - Address of subject property - Estimate of property value
Tripwires
LE is provided under RESPA, CD Under TILA
Borrowers indicate
Intent to proceed within 10 days of LE
If an advertisement contains TRIGGER TERMS, what must then be disclosed? -APR only -APR and payment amount -Interest rate, term, balance, and APR -Interest rate, closing costs, and APR
Interest rate, term, balance, and APR
In which order is the borrower's mortgage payment disbursed? -Interest, principal, escrow -Principal, interest, escrow -Escrow, interest, principal -Interest, escrow, principal
Interest, principal, escrow
Which of the following is not a type of appraisal? -Income Approach -Sales Comparison Approach -Investment Approach -Cost Approach
Investment Approach
Which of the following best describes a lien? -Stops all fees from incurring on the property -Is a claim on the property -Forfeits the property -Allows the lender to sell the property
Is a claim on the property
Which of the following are NOT powers/duties of the Regulatory Authority? -Conduct Investigations -Issue Warrants -Conduct examinations of licensee's books and records -Issue Fees and Penalties
Issue Warrants
All of the following are examples of prohibited conduct, except: -Issuing a Satisfaction of Mortgage -Failing to account for or disburse funds properly -Paying compensation to an unlicensed individual -Charging high rates or fees exceeding Predatory laws
Issuing a Satisfaction of Mortgage
What is joint tenancy ownership?
It allows for the property to automatically transfer to surviving owners upon death and provides for undivided ownership by two or more parties. All owners must be natural persons
Which of the following is NOT true about the VOE? -It must be provided for all employed applicants, and must be fully completed, signed, and dated . -It must be sent directly by the processor to the employer. -It must be signed by the personnel department or the borrower's superior. -It can be sent electronically to the borrower to be presented to the lender.
It can be sent electronically to the borrower to be presented to the lender.
How soon can a loan estimate be provided after issuing a Closing disclosure?
It cannot be delivered on the same day or the day after the CD was provided
Record Retention
LE- 3 years CD- 5 years
Which of the following is not true about the Dodd-Frank Act: -It created the CFPB -It prohibits unfair lending practices -It expanded consumer protection on high-cost mortgages -It created the NMLS
It created the NMLS
If a lender does not comply with E-sign and sends the LE what happens?
It doesnt count, its as if they didnt send them.
Which of the following is the most correct concerning a trust deed? -It must be signed by the borrower and the lender in order to make it legally enforceable. -It encumbers the borrower's title to the real estate. -It conveys title to the property. -It allows the lender to occupy the premises.
It encumbers the borrower's title to the real estate.
All of the following are true about the FTC Red Flags Rule except: -Protect sensitive personal data -Require the implementations of a written plan to detect and prevent industry theft -It is enforced by the CFPB -The penalty for noncompliance is $3,500
It is enforced by the CFPB
How does rate charged for PMI for a 90% loan compare to that for a 95% loan? -It depends solely on the loan amount -It is lower -It is higher -It is the same
It is lower
When is it acceptable to discourage a borrower from making a formal loan application due to the fact that the borrower receives income from public assistance? -When the credit score is below normal loan parameters -It is never correct to discourage a borrower from applying for a mortgage loan -When the income is below the government disclosed poverty line -When the loan size makes it a non-conforming loan
It is never correct to discourage a borrower from applying for a mortgage loan
What makes a mortgage loan a second mortgage? -It has a higher interest rate. -It is the smallest loan. -It is recorded in second position. -It is a HELOC.
It is recorded in second position.
When do you give an ARM disclosure? -When the rate may change at any time in the life of the loan. -Any time the rate changes in the first five years. -When the borrower asks for one. -Any time the rate changes in less than three years.
It is recorded in second position.
Which of the following is true concerning hazard insurance on a Freddie/Fannie loan? -It is not required when the LTV is less than 50%of the house value. -It is required on all loan transactions. -It is not required on loan transactions equal to or less than 78% of the house value. -It is not required when the LTV is less than 80% of the house value.
It is required on all loan transactions.
What is the purpose of the MAPS rule?
It prohibits basically every type of misrepresentation in advertising including: -The interest charged, -the APR or any rate, -existence or nature of fees or costs, -whether separate payment of Taxes and Insurance are required, -Regarding prepayment penalties -Regarding variability of loans and mis-using the term "Fixed" -regarding reverse mortgages -Regarding potential of default -regarding availability, nature of counseling services or any other expert advise -regarding the lenders affiliation with a government entity.
How does aggregate adjustment benefit the borrower? -It protects against escrow overages -It protects against escrow shortages -It protects against escrow elimination -It protects against escrow theft
It protects against escrow overages
What benefit does private mortgage insurance provide to the borrower? -It pays off the mortgage if either the borrower or co-borrower pass away. -It allows a longer grace period for payments. -It protects against property loss or damage. -It reduces the amount of down payment required.
It reduces the amount of down payment required.
What does PMI (Private Mortgage Insurance) cover?
It reimburses the lender for the amount of losses in the event the property is foreclosed or short sale
What is the Dodd-Frank Wall Street Reform Act?
It was created in response to the financial crisis. It contains reforms of many financial structures.
When was the Fair Credit Reporting Act enacted and revised?
It was enacted in 1971 and revised in October 1997
Assets
Items of value
What is a surety bond?
Its a requirement by each state for mortgage loan originators. MLO's must be covered by a net worth or surety bond requirement, or pay into a state fund, as required by the state loan originator supervisory authority. It varies by state. You must be covered by a surety bond for EVERY state in which you're licensed.
When did the ATR/QM rule take effect
January 10th, 2014
Which of the following is asking for the manner in which title will be held? -Periodic tenancy -Tenancy for years -Common Joint tenancy -Joint tenants with full rights of survivorship
Joint tenants with full rights of survivorship
Which of the following would be an appropriate entry on the 1003 if asked for the "manner" in which title will be held? -Joint tenants with full rights of survivorship -Tenancy for years -In a bank safety deposit box -Periodic tenancy
Joint tenants with full rights of survivorship
A couple wants to buy a house together and both will be using their credit and income to qualify for the loan. However they are not married. How are they applying? -Jointly but on two separate loan applications -Not Jointly -Individually -Married applying jointly
Jointly but on two separate loan applications
What do you call a loan that exceeds Fannie/Freddie loan limits? -Conventional -Government -Jumbo -Conforming
Jumbo
When FNMA or FHLMC loan limits are exceeded, the loan is considered to be ___________. -Subprime -Jumbo -Suspended -Conforming
Jumbo
Another way to refer to non-conforming loans would be: -investment. -FHA. -Jumbo. -VA.
Jumbo.
Seller's Closing Disclosures not prepared by the creditor must be: -Kept for five (5) years -Never be kept as sellers are not taking out a loan -Reviewed for accuracy but does not need kept as part of the transaction -Kept for three (3) years
Kept for five (5) years
3-7-3 Rule
LE given or mailed 3 business days after application From application to settlement 7 days must elapse Re-disclosures require another 3 day waiting period
For a property purchased for $225,000 with a first mortgage loan amount of $150,000, and a HELOC for 25,000 the LTV and CLTV are? -LTV 77% / CLTV 77% -LTV 66% / CLTV 77% -LTV 77% / CLTV 66% -LTV 150% / CLTV 128%
LTV 66% / CLTV 77%
What is LTV, CLTV, HLTV/HCLTV, and TLTV?
LTV- loan amount divided by the lesser of the appraised value or purchase price. CLTV- First/Second mortgage combined divided by the lesser of appraised value or purchase price HLTV- The max HELOC amount divided by the lesser of the purchase price or appraised value TLTV- Amount used on the Line of credit divided by the lesser of the purchase price or appraised value.
You have a customer who has been approved by the lender and is ready to close. The customer backs out at the last minute because of a recent interest rate drop and opts to go with a different loan officer. You paid for the appraisal and want to invoice the customer and be reimbursed. This course of action would be considered: -Legal and ethical -Illegal and unethical -Legal but unethical -Illegal but ethical
Legal and ethical
Which statement about loan origination fees on a Loan Estimate is FALSE?
Lender and mortgage broker fees for the same transaction must be itemized
If a borrower is self-employed and trying to get a government or conventional loan, which percentage of ownership in a business means that the borrower will not be required to provide tax returns? -Greater than 25% -Greater than 50% -Less than 25% -Greater than 50% but less than 75%
Less than 25%
According to HMDA what must be forwarded to the regulator by March 1 of each year? -Adverse Action Notices -Mortgage Call Report -Loan Application Register (LAR) -Red Flags Policy
Loan Application Register (LAR)
Which of the following terms means an individual who, with respect to the origination of a residential mortgage loan, performs clerical or support duties at the direction of and subject to the supervision and instruction of a state-licensed or registered loan originator"? -Loan Processor or Underwriter -Independent Contractor -Mortgage Loan Originator -Mortgage Loan Officer
Loan Processor or Underwriter
What is the name of Freddie Mac's automated underwriting software program? -Loan Processor -Loan Prospector -Loan Underwriter -Loan Originator
Loan Prospector
What is the name of Freddie Mac's automated underwriting system? -Loan Prospector -Desktop Underwriter -Desktop Originator -FHLMC Loan Underwriter
Loan Prospector
What is the name of the automatic underwriting system used by Freddie Mac? -Loan Prospector -Desktop Underwriter -Direct Endorser -Loan Underwriter
Loan Prospector
Annual MIP is determined by
Loan Term and LTV
A discount point is calculated as being 1% of what? -Interest rate -Down payment -Loan amount -Sales price
Loan amount
Who is required to comply with the Do Not Call list? -National Banks -Airlines -Political organizations -Loan officers
Loan officers
Which of the following is not common to split between buyer and seller? -Homeowner's Association Fees -Property taxes -Rents -Loan origination fees
Loan origination fees
What can Loan officer compensation not be based off of
Loan terms or conditions.
LTVR/LTV is the acronym for: -Lot to value ratio -Loan to value ratio -Less than value ratio -Land to value ratio
Loan to value ratio
Each licensee shall make or compile reports or prepare other information as directed. Of the following reports/pieces of information most frequently required, which would NOT be required? -Accounting compilations -Information lists and data concerning loan transactions in a format prescribed -Such other information deemed necessary -Loan types by each MLO
Loan types by each MLO
Which ratio is described as the loan amount divided by the property value? -Debt to Income ratio -Loan-to-value ratio -PITI -Housing expense ratio
Loan-to-value ratio
What is Zoning?
Local laws established to control the uses of land within a particular area. Zoning laws are used to separate residential land from areas of non-residential use.
Which of the following must have an MLO license? -June, who is working as an attorney and negotiating terms on a loan for her client as part of her job as an attorney -William, who extends credit solely on timeshare plans -Jackson who is negotiating the terms of a loan on his primary residence -Lola, who is working as an independent contractor underwriter and is underwriting loans
Lola, who is working as an independent contractor underwriter and is underwriting loans
LIBOR is the acronym for: -London Inter-bank Offered Rate. -Land Investment and Bank Offered Regulation. -London Institutions of Britain Organization Rule. -Loan and Interest Board Of Rates.
London Inter-bank Offered Rate.
Advantages of FHA loans
Low Down payment Loan discount points Loan origination fees Interest rate buy downs Closing cost assistance Payment of condo fees Builder incentives Down payment assistance Monetary gifts
Which of the following would be considered a trigger term except: -Low down payment for qualified borrowers -$500 a month mortgage payments -3% interest rate -$1,000 down
Low down payment for qualified borrowers
What are examples of NPI?
Name, social security, address or other info on a loan application, account numbers, payment history, loan balance, etc.... Unless its public info.
All other business days
M-Sat
Loan estimate business day
M-f
Which rule mandates disclosure to consumers that mortgage relief providers have no connection to any government program or agency? -Home Mortgage Disclosure Act -Fair and Accurate Credit Transactions Act -MARS Rule -Safeguards Rule
MARS Rule
Which is not a credit reporting agency? -Equifax -TransUnion -Experian -MGIC
MGIC
All of the following must be deposited into trust accounts EXCEPT: -Application Fees -Rate-lock Commitment Fees -MLO Commission Checks -Prepaid Attorney Charges
MLO Commission Checks
According to RESPA an MLO is considered to have taken an application when the: -customer calls to ask about rates and the MLO asks questions. -customer calls to inquire about loan programs and the MLO asks questions. -MLO has gathered enough information to make a credit decision. -MLO provides a possible interest rate.
MLO has gathered enough information to make a credit decision.
Each individual state has its own prohibited content information, however some prohibited acts are consistent in every state. Which of the following would not be considered a prohibited act? -Conduct any business covered by the S.A.F.E. Act without holding a valid license as required under this Act, or assist or aide and abet any person in the conduct of business under this Act without a valid license as required under this Act -Make disclosures as required by the S.A.F.E. Act and any other applicable state or federal law including regulations thereunder -Fail to comply with the S.A.F.E. Act or rules or regulations promulgated under this Act, or fail to comply with any other state or federal law, including the rules and regulations thereunder, applicable to any business authorized or conducted under this A -Make, in any manner, any false or deceptive statement or representation
Make disclosures as required by the S.A.F.E. Act and any other applicable state or federal law including regulations thereunder
Under Section X, Information For Government Monitoring Purposes, you ask the borrower race, ethnicity and gender questions. The borrower tells you that s/he does not wish to furnish that information. In a face to face loan application, what should you do? -Tell the borrower that the questions must be answered for a loan application to be considered complete. -Leave the answers blank but check the box "I do not wish to furnish this information". -Fill in the answers you are sure are correct. -Make your best guess and fill in all the information.
Make your best guess and fill in all the information.
Which of the following is not considered "prohibited conduct"? -Negligent behavior -Making a costly error -Not acting in good faith -An act of commission as well as omission
Making a costly error
What are the four payment methods of an Option ARM?
Minimum payment - amortizing the loan over 30 years, the start rate is extremely low. The payment cannot increase by 7.5% each year for the first 5 years. Interest only - after the first 30, 60 or 90 days the interest rate on this program changes 15 year fixed 30 year fixed
HMDA reports are due to the regulator by which of the following dates? -January 1st -March 1st -June 1st -December 31st
March 1st
Which of the following borrowers would be a good fit for a reverse mortgage? -Janet, who is 50 years old and owns her house, outright -Howard who is 66 years old and just purchased his home 3 years ago -Margaret who is 63 years old and owes only $10,000 on her current mortgage -Saul who is 62 years old and owes $100,000 on his home
Margaret who is 63 years old and owes only $10,000 on her current mortgage
What would the lender use to compute the adjustment on an ARM loan? -Periodic annual and lifetime caps -Margin and Index before the loan is locked, the index after the loan is locked and the rate caps -Margin, Index, and APR -Index and APR
Margin and Index before the loan is locked, the index after the loan is locked and the rate caps
ECOA prevents discrimination based on: -Income -Marital Status -Location -Employment
Marital Status
If appraising a 10 year old residential home, what is the best approach to determine value? -Market value -Property tax assessment -Income approach -Cost to rebuild
Market value
John intentionally tells the mortgage loan originator that he is working for that he only pays $1500 in child support when he pays $2000 in child support. This would be considered: -Material misstatement -Omission -Collusion -Inflation
Material misstatement
What is an MSA?
Metropolitan Statistical Area?
A lender may NOT use ______________ on the Loan Estimate
N/A
A lender may not use the term _________ on the Loan Estimate
N/A
Define "Business day" under the Truth in Lending Act for the three day right of rescission. -Monday through Friday, except federally related holidays -Monday through Saturday, except federally related holidays -Monday through Saturday except legal public holidays -Any day the mortgage company is open for "business"
Monday through Saturday except legal public holidays
What is MTA?
Monthly Treasury average
What does MARS rule stand for?
Morgage Assistance Relief Services
What does the MAPS rule stand for?
Mortgage Acts and Practices
All of the following are considered Federal Banking Agencies except: -The Board of Governors of the Federal Reserve System, The National Credit Union Administration and The Federal Deposit Insurance Corporation. -Mortgage Bankers. -The Director of the Office of Thrift Supervision. -The Comptroller of the Currency.
Mortgage Bankers.
Which law is an amendment to Regulation Z?
Mortgage Disclosure Improvement Act
MIP is the acronym for: -Mortgage Interest Prediction -Multi Interest Prevention Act -Mortgage Insurance Premium -Malpractice Investigation Penalty
Mortgage Insurance Premium
MIP
Mortgage Insurance Premium All FHA loans require MIP for the first five years of the loan. MIP is used to insure loans in the event of default.
Give the job title for the following definition: One who "assists a consumer in obtaining or applying to obtain a residential mortgage loan." -Loan Processor or Underwriter -Real Estate Broker -Mortgage Loan Originator -Independent Contractor
Mortgage Loan Originator
Which of the following requires the lender to disclose to borrowers the possibility that their loan will be sold, assigned or transferred to another? -Affiliated Business Arrangement Disclosure -GFE -Mortgage Servicing Disclosure -Service Providers List
Mortgage Servicing Disclosure
What is the best way to explain APR to borrowers? -Yield spread premium or service release premium plus all closing costs -Yield spread premium or service release premium plus the interest rate -Mortgage insurance plus the interest rate including loan costs -Interest rate plus all closing costs and prepaids
Mortgage insurance plus the interest rate including loan costs
Which of the following would NOT be an acceptable trust deed rider? -A condo rider -An ARM rider -A PUD rider -Mortgage insurance rider
Mortgage insurance rider
When obtaining hazard insurance, the lender will require a special clause to be inserted into the policy covering them from any loss. This is called? -Release from liability clause -Mortgagee clause -Hold harmless clause -Mortgagor clause
Mortgagee clause
Tolerance Violations
Must be cured within 60 days of settlement and must provide a revised CD
What is the amount of coverage for flood insurance?
Must equal the lower of 100% of the replacement cost or the principal balance.
When calculating the income for commissioned borrowers what income must you use and do what with it?
Must use W-2 income, and subtract non-reimbursed business expenses (IRS form 2106)
Which is not included in debt-to-income ratio? -Netflix monthly fee -MI on an FHA loan -HOA dues not included in the house payment -Credit card debt
Netflix monthly fee
According to FCRA, how often is a consumer entitled to a free copy of their credit score? -Never -Annually -Twice a year -Once every two years
Never
Is a referral fee ever allowed? -No, unless disclosed on the HUD and paid for by borrower -No -Only to a disclosed provider -Only to a lawyer that refers a loan
No
You are doing a refinance loan for your borrowers non-owner occupied property. You look at the property profile and see that the site address and your customers' address are different. What action should you take? -No action required -Call the FBI and report them for fraud -Call your customer to find out why the addresses are different -Mark the property type as owner occupied
No action required
What are the requirements of criminal history for license requirements?
No felonies in the last 7 years No felonies that are fraud, dishonesty, breach of trust or money laundering related EVER
when must the Closing disclosure be given before closing
No later than 3 business days prior to consummation
Borrowers must receive the new Closing Disclosure form: -On the day the borrower signs -No later than 48 hours after the borrower signs -No later than seven business days before the borrower signs -No later than three business days before consummation
No later than three business days before consummation
If the servicing is transfered when must the transfer notice be given?
No less that 15 days before the effective transfer date.
If the Closing Disclosure has been provided to the applicant, can a new revised Loan Estimate be provided if there is a change of circumstances?
No, the Loan Estimate may not be provided after the Closing Disclosure has been provided
TILA would not apply to which of the following: -Non Owner Occupied loans -Purchases -Refinance transactions -2-4 Unit Owner Occupied Rental units
Non Owner Occupied loans
Which of the following would describe a non-conforming loan? -Non-conforming loans do not follow FHA guidelines -Non-conforming loans do not follow Fannie Mae and Freddie Mac guidelines -Non-conforming loans follow Fannie Mae and Freddie Mac guidelines -Non-conforming loans are subprime loans
Non-conforming loans do not follow Fannie Mae and Freddie Mac guidelines
What is NPI?
Non-public Personal Information, any personal information collected by a financial institution in connection with providing a financial product or service. (Unless the info is otherwise publicly available)
What is an IRS Form 2106?
Non-reimbursed business expenses
Which of the following would keep you from getting an FHA loan? -Not having a down payment -No college education -Not having a spouse -Self-employment
Not having a down payment
What information/fees can creditors request from borrowers before delivery of the LE and intent to proceed?
Nothing besides a credit report
To transfer an FHA case number, FHA will allow the originating lender to charge how much? -For actual costs -.5% of the loan amount -no less than 1% of the loan amount -Nothing, unless it has been underwritten by the DE underwriter
Nothing, unless it has been underwritten by the DE underwriter
After initial disclosures and the borrower has given you their Intent to Proceed what other initial disclosure do you need to send the borrower? -Nothing, unless there is a Change of Circumstance -A new and final Loan Estimate -A Good Faith Estimate -A settlement Statement
Nothing, unless there is a Change of Circumstance
The borrower right to rescind the loan is disclosed in the: -72-hour Contingency Clause -Loan application -Notice of Right to Cancel -HUD-1 Settlement Statement
Notice of Right to Cancel
After meeting with the borrowers to complete a loan application, you return to your office and order a Tri-Merged credit report. Now that you have a credit report, what Loan Disclosure must you now prepare and mail (or give) to them? -Notice to Home Loan Applicant -Credit Authorization Consent -Denial Letter -Rapid Rescore
Notice to Home Applicant
Logan wants to buy an investment property but knows that he will get better terms on the loan if he tells the lender that this is his primary residence. What type of fraud would Logan be committing? -Occupancy Fraud -Identity Theft -Asset Fraud -Income Fraud
Occupancy Fraud
Which Date did the TRID go into effect
October 3, 2015
203 (g)
Officer and Teacher Next Door -o ffering homes for sale at a 50% discount off the HUD appraised value to teachers, law enforcement officers and fire fighters/EMTs.
When is Hazard insurance required?
On all mortgage transactions!
According to the Fair Credit Reporting Act, when are borrowers entitled to get a copy of their credit reports? -Once a year -When the borrower has been turned down for a loan -When the borrower is on public assistance -A borrower has no right to a free copy of his credit report
Once a year
When does the lender become obligated to issue a Loan estimate
Once an application is submitted and received
How long must an applicant wait to receive a new license if they have previously had their license revoked? -7 years -10 years -5 years -Once an individual's license has been revoked, that person is never eligible for a future license.
Once an individual's license has been revoked, that person is never eligible for a future license.
What is a loan originator?
One who takes an application, offers credit terms, negotiates credit terms on behalf of a consumer, obtaining an extension for a creditor.
Home Owner Association (HOA) dues are disclosed: -Always on the Loan Estimate -If known and only on the Closing Disclosure -Never, as these fees are never charged by the creditor -Only after the fee is known
Only after the fee is known
Credit report fee
Only allowable fee prior to delivery of the LE
What type of loans are FHA loans allowed on?
Only allowed on owner occupied, primary residences.
If part of the property is in a flood zone, how would flood insurance be required?
Only if the improvements are in a flood zone
When must a consumer receive a privacy notice
Only if the institution shares information with non-affiliated third parties.
The consumer can be charged an appraisal review fee? -Only after an appraisal and you know a review is needed -If the appraiser requests a review appraisal be completed -Never -Only if the review fee is disclosed on the Loan Estimate
Only if the review fee is disclosed on the Loan Estimate
The borrower may express intent to proceed how?
Orally, in person, upon receiving the disclosures or over the phone, or signing a form. But it must be documented
Who is Ginnie Mae apart of?
Owned by the government and apart of HUD
A "trigger term" is any number used in advertising, other than the APR. When a trigger term is used, the advertising must include all of the following EXCEPT the: -Origination fee -Payment -Rate -Term
Origination fee
Which of the following is NOT a penalty for violating the SAFE Act? -Deny, suspend, revoke, condition or decline to renew a license -Pay a fee to the CSBS and AARMR -Impose fines on persons subject to this Act pursuant -Order or direct persons subject to this Act to cease and desist from conducting business
Pay a fee to the CSBS and AARMR
Your customer calls you in the morning and tells you to lock the interest rate at the 5.5% you initially disclosed. You commit to lock the rate, but your day becomes busy and you aren't able to lock it until later in the day. When you go to lock the rate, you notice that the pricing has changed since this morning and the rate of 5.5% is now going to cost an additional $500.00. What is the most appropriate course of action? -Call the customer before locking the rate and tell them about the $500 cost -Pay the $500 cost and lock the rate -Float the rate until rates improve -Lock the rate and charge a $500 administration fee at closing
Pay the $500 cost and lock the rate
If a Mortgage Loan Originator (MLO) cannot close a loan, he/she can refers the loan to another MLO who can close the loan. Can the referring MLO receive a referral fee? -A referral fee is earned and should be paid to the first MLO. -A referral fee can be paid as long as it is disclosed on the Settlement Statement (HUD-1). -Paying a referral fee is against RESPA. -Paying a referral fee is allowed if the borrower approves it.
Paying a referral fee is against RESPA.
With an ARM, what happens to a borrower's payments if the index increases? -There will be a larger balance due and payable -Payments go down -Payments go up -Payments remain the same
Payments go up
When is the funding on a residential construction loan made? -At the time the loan documents are signed -Periodically, as the home is being built -When the home is complete and an occupancy permit issued -When the filing period for all mechanics liens has expired
Periodically, as the home is being built
Background checks performed by the Regulatory Authority cannot include: -fingerprints. -state, national, and international criminal history. -Personal history and experience. -Personal checking account information.
Personal checking account information.
When a lender learns that a property is in a flood zone, the lender must do which of the following? -Place flood insurance on the property at a cost to the borrower -Must immediately call the entire unpaid principle balance due and payable -Begin foreclosure in order to protect its financial interest -Notify the borrower of the flood insurance requirement and have the borrower purchase flood insurance
Place flood insurance on the property at a cost to the borrower
PUD is the acronym for: -Planned Unit Development. -Primary Utility Disclosure. -Preliminary Uniform Disclosure. -Planned Urban Development.
Planned Unit Development.
PR is the generally accepted acronym for: -Premium Title Report -Present Time Reclamation Association -Preliminary Title Report -Preliminary Tax Report
Preliminary Title Report
Unlimited Tolerance
Prepaid interest Homeowners insurance premiums Amount in escrow Charges for 3rd party services not required
Total Loan Costs includes all of the following except: -Origination Charges -Services you Can Shop For -Services You Cannot Shop For -Prepaids
Prepaids
What QM types are prepayment penalties allowed ?
Prepayment penalties are only allowed on fixed rate or step rate QMs that are not Higher priced.
Which of these property types can be owner occupied? -A second residence -Investment property -Primary residence -Condotels
Primary residence
Your borrower wants to buy an investment property. Which of the following would be used in calculating the housing ratio? -Primary residence utilities -Investment property utilities -Primary residence payment -Investment property reserves
Primary residence payment
PITI is the acronym for: -Principal, Interest, Taxes, Insurance. -Primary Integrated Taxes and Investment. -Price, Investment, Taxes, Insurance. -Property Interest and Tax Installment.
Principal, Interest, Taxes, Insurance.
The mortgage loan you submitted to the Lender has been approved. However, there are some conditions that the Lender requires before the loan docs will be sent to the closing office. These conditions are referred to as: -Prior to doc -Prior to funding -Doc order -Re-draw
Prior to doc
PMI is the acronym for: -Preliminary Mortgage Investigation -Private Mortgage Insurance -Premium Mortgage Insurance -Primary Mortgage Insurance
Private Mortgage Insurance
Which law promotes informed shopping by requiring the disclosure of settlement services to the borrower? -Reg. C -RESPA -Reg. B -TILA
RESPA
What laws were amended to create the new TRID rule?
RESPA sections 4 and 5 and TILA
When an individual is collecting documents for the purpose of completing the loan file, what are they considered to be doing to the loan? -Processing -Underwriting -Originating -Closing
Processing
ECOA prohibits discrimination based on:
Race Color Religion National origin Sex marital status Age (Unless they are too young to sign a contract or lack "legal capacity")
Section 8
Prohibits kickbacks, fee-splitting, and unearned fees
Which of the following documents would contain the details about the loan amount, payment, when payments are due, late penalty, interest rate, etc.? -Mortgage -Promissory note -Loan package -Trust Deed
Promissory note
TRID does apply to
Properties over 25 acres Vacant Land Construction loans
Deeds typically contain what?
Property descriptions, loan amounts, borrowers name and vesting
What is Homestead Credit?
Property tax credit program offered by some state governments that provides reductions in property taxes to eligible households
Which of the following circumstances would disqualify the use of income generated from a basement apartment in qualifying for a Freddie/Fannie loan? -Property was appraised as a single-family dwelling -The property is zoned for 2-4 units -LTV is calculated as a 2-unit property -The apartment was vacant for 4 months
Property was appraised as a single-family dwelling
Section 6
Protects homeowners against abuses in loan servicing
What does the MARS Rule do?
Protects homeowners from mortgage relief service scams such as foreclosure rescue or loan modification scams.
HMDA requires the lenders to obtain which of the following information for each borrower? -Age and Race -Race and Sex -Marital status and Sex -Marital status and Age
Race and Sex
The Fair Housing Act prohibits discrimination of what?
Race, color, religion, sex, handicap, familial status or Natural origin
Which of the following must be provided to the client on an ARM loan? -The "Consumer Handbook on Adjustable Rate Mortgages" -The "ARM Handbook" -"When Your Home is on the Line" -"Your Settlement Costs and You" booklet by HUD
The "Consumer Handbook on Adjustable Rate Mortgages"
Regulation B does which of the following? -Protects a borrower from fraudulent use of their information -Requires Upfront Mortgage Insurance on all FHA loans -Provides equality in the extension of credit -Regulates advertising of APR
Provides equality in the extension of credit
The Nationwide Multistate Licensing System and Registry accomplishes all of the following except...? -Provides uniform license applications and reporting requirements for State-licensed loan originators. -Provides a comprehensive licensing and supervisory database as well as provides increased accountability and tracking of loan originators. -Enhances consumer protections and supports anti-fraud measures including the collection and disbursement of consumer complaints on behalf of State and Federal mortgage regulators. -Provides tracking of the number of loans each mortgage loan originator writes, including loan amounts and types.
Provides tracking of the number of loans each mortgage loan originator writes, including loan amounts and types.
A licensed mortgage lender may not do which of the following in their advertising? -Publish an advertisement that does not include the lenders unique identifier on their advertisement -Publish an advertisement with their exact name as it appears on their license -Publish an advertisement that shows an insignia designating membership in a particular state association -Publish an advertisement that shows the lenders exact address as it appears on their license
Publish an advertisement that does not include the lenders unique identifier on their advertisement
What transactions do recissions not apply to?
Purchase loans
Which of the following situations is not a red flag that illegal flipping may be taking place? -A group of sellers and buyers changing ownership of one property among them -An inflated appraisal -Purchasing and remodeling a house and selling it for a quick profit -A series of sales within a short period of time such as multiple sales within the last 12 months
Purchasing and remodeling a house and selling it for a quick profit
Which of these actions would indicate that a mortgage loan originator is not committed to privacy and safeguard compliance? -Requiring all computers be password protected and passwords changed periodically -Shredding paper documents and erasing electronic records -Contracting a document disposal company for weekly pick up of locked shredding containers -Putting files in unlocked file cabinets
Putting files in unlocked file cabinets
Which of the following is not included in background checks for MLO candidates? -Submitting fingerprints for a criminal history check -Submitting personal history and experience -Authorizing the NMLS or regulator to obtain a credit report -Questioning of friends, coworkers, or family members regarding personal character
Questioning of friends, coworkers, or family members regarding personal character
A Mortgage Servicing Disclosure Statement is required by what law?
RESPA
A Mortgage Servicing Disclosure Statement is required by what law? -MDIA -RESPA -SAFE Act -TILA
RESPA
Regulation X is also known as what law? -FCRA -FHA -RESPA -TILA
RESPA
Which is the primary law that affects mortgage loan closings? -TILA -ECOA -RESPA -HMDA
RESPA
In an effort to become an informed borrower, each borrower should receive from the lender all of the following EXCEPT: -Real Estate Purchase Contract. -Good Faith Estimate. -Truth In Lending Disclosure Statement. -RESPA Settlement Costs booklet.
Real Estate Purchase Contract.
RESPA is the acronym for which of the following? -Realty Ethics Settlement Policy Act -Real Estate Sales Procedures Act -Real Estate Settlement Practices and Act -Real Estate Settlement Procedures Act
Real Estate Settlement Procedures Act
RESPA is the acronym for: -Real Estate Sales Procurement Act -Real Estate Sales Process Act -Real Estate Settlement Procedures Act -Rights, Equalization, Stabilization and Processing Act
Real Estate Settlement Procedures Act
What does RESPA stand for?
Real Estate Settlement Procedures Act
All of the following Acts are part of Reg Z except: -Consumer Credit Protection Act. -Truth In Lending Act. -Mortgage Disclosure Improvement Act. -Real Estate Settlement Procedures Act.
Real Estate Settlement Procedures Act.
What fee is not included in the Good Faith Estimate? -Appraisal fee -Credit reporting fee -Mortgage broker fee -Real estate broker fee
Real estate broker fee
"Any activity that involves offering or providing real estate brokerage services to the public," could be used to define what activity? -Loan originating -Real estate brokerage -Loan processing -Property appraisal
Real estate brokerage
Which of the following would a lender NOT consider to be paid in advance? -Real estate commission -Mortgage insurance -Prepaid interest -Hazard insurance
Real estate commission
Which of the following is NOT calculated into the APR? -Fixed interest rate -Lender's origination fee -Realtor's commission -Discount points
Realtor's commission
When an individual "offers or negotiates terms of a residential mortgage loan for compensation or gain" he/she also does all but which of the following? -Presents for consideration by a borrower or prospective borrower particular residential mortgage loan terms -Communicates directly or indirectly with a borrower, or prospective borrower for the purpose of reaching a mutual understanding about prospective residential mortgage loan terms -Receives a residential mortgage loan application for the purpose of facilitating a decision whether to extend an offer of residential mortgage loan terms to a borrower or prospective borrower -Receives or expects to receive payment of money or anything of value in connection with or as a result of any residential mortgage loan terms entered into as a result of such activities
Receives a residential mortgage loan application for the purpose of facilitating a decision whether to extend an offer of residential mortgage loan terms to a borrower or prospective borrower
Which federal law prohibits mortgage relief service providers from requiring an advance fee before the provider has obtained and the borrower has accepted a written offer from the borrower's lender or servicer? -Reg. N -Reg. O -Reg. X -Reg. Z
Reg. O
10% Tolerance
Recording fees Charges for 3rd party services where the charge is not paid to creditor or affiliate Fees that were permitted to shop but are on the creditor's recommended list Also a cumulative charge
ABC Bank receives a change of address request from a consumer. What requires the bank to follow up with him to verify the validity of the request?
Red Flag Rules
ABC Bank receives a change of address request from consumer Jane. What requires the bank to follow up with Jane to verify the validity of the request?
Red Flag Rules - Section 114 of the FACT Act is known as the Red Flags Rules, which, among other things, requires financial institutions and creditors to implement a written identity theft prevention program.
Which is NOT a part of the Gramm-Leach-Bliley Act?
Red Flags Rules
A lender services a large metropolitan area but refuses to lend in one specific area because the people in that area are low-income. This would be considered: -Reverse redlinig -Redlining -Blockbusting -Steering
Redlining
A minority borrower is refused a loan because the neighborhood that they have chosen has a high number of foreclosures. This is an example of what illegal practice? -Blockbusting -Rating -Redlining -Steering
Redlining
The practice of denying home financing in certain neighborhoods is called: -Redlining -Bait and switch -Dart boarding -Skimming
Redlining
The SAFE Act is designed to do all of the following except: -Reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators. -Establish and maintain a nationwide mortgage licensing system and registry -Reduce fraud by creating an enforcement agency that prosecutes unethical activity -Provide consumers with easily accessible information, offered at no charge, through electronic media, including the Internet
Reduce fraud by creating an enforcement agency that prosecutes unethical activity
Which of the following would NOT be a purpose of a "cash-out refinance"? -Increase the amount of the existing first mortgage and provide cash to the borrower -Refinance at a lower interest rate, reducing the monthly payments; and increase the balance to provide immediate cash -Refinance at a lower loan amount, by providing a significant amount of cash to make up the difference -Pay off a second mortgage with the cash
Refinance at a lower loan amount, by providing a significant amount of cash to make up the difference
The Truth in Lending Act does which of the following? -Requires all loan applications be made in person -Prevents advertising FHA financing to the exclusion of Conventional -Regulates advertising regarding interest rates -Requires a closing cost breakdown on residential loans
Regulates advertising regarding interest rates
What regulation is ECOA?
Regulation B
Which statement is correct?
Regulation B is also known as the Equal Credit Opportunity Act.
Home Mortgage Disclosure Act (HMDA) is what regulation?
Regulation C
What regulation is the MAPS rule?
Regulation N
Which federal law limits the length of time that adverse collection information may appear in a consumer's credit report?
Regulation V - The Fair Credit Reporting Act, or Regulation V, limits the number of years that negative credit information can appear in a credit report.
What is the federal regulation that implements the Real Estate Settlement Procedures Act? -Regulation C -Regulation X -Regulation Z -Regulation B
Regulation X
What regulation forbids the seller to require the use of a particular title company as a condition of sale?
Regulation X
RESPA is a.k.a what?
Regulation X - Designated by HUD
Which two regulations require timely disclosures be provided to the borrower within three business days of a 1003? -Regulation B and Regulation C -Regulation H and Regulation Z -Regulation G and Regulation X -Regulation X and Regulation Z
Regulation X and Regulation Z
Specific provisions of the Truth in Lending Act are implemented by
Regulation Z
The 3/7/3 Rule is associated with which law or regulation? -Regulation B -FACT Act -SAFE Act -Regulation Z
Regulation Z
The 3/7/3 Rule is associated with which law?
Regulation Z
Which law prohibits MLOs from influencing an appraiser to overstate the value of a home in order to get a closed-end loan on the borrower's primary residence approved? -Regulation B -Regulation C -Regulation X -Regulation Z
Regulation Z
Which law prohibits MLOs from influencing an appraiser to overstate the value of a home in order to get the loan approved?
Regulation Z
Which regulation mandates the use of the Closing Disclosure?
Regulation Z
HOEPA is an addendum of: -Regulation B. -Regulation C. -Regulation X. -Regulation Z.
Regulation Z.
Who released and when was the MARS rule released?
Released by FTC in 2010
Front end ratios do NOT include which of the following? -Principal and interest -Hazard insurance -Rent Payment -Property taxes
Rent Payment
Which of the following is not included in the debt-to-income qualifying ratio? -Installment loans -Rent on current housing -Housing payment -Monthly revolving payments
Rent on current housing
Which of the following would not be a prohibited practice regarding an appraisal? -Threatening non-payment to manipulate the appraiser into raising the value of the property -Bribing the appraiser for a higher appraised value -Requesting that the appraiser reviews additional comparables -Refusing to use an appraiser again if they do not change the value on an appraisal
Requesting that the appraiser reviews additional comparables
If a loan goes into early default, what can a lender do?
Require the originating broker/lender to repurchase the loan
if a loan goes into default and the lender finds fraud in the file what can a lender do?
Require the originating broker/lender to repurchase the loan
What is the HUD-1 Settlement Statement?
Required by RESPA, its an itemized statement of services and charges relating to the closing of a property transfer. This is known as the HUD-1 Settlement Statement.
Federal Truth in Lending Act
Requires disclosures to provide a uniform method of finance charge disclosure; express the true cost of credit over the term of the loan as a percentage, not a dollar amount
Under the MARS Rule the What does the Advance fee ban do?
Requires mortgage relief service companies to provide borrowers with a written offer from their lender and a written document describing the key changes that will result if the consumer accepts the offer.
If a lender is not compliant with the rescission rights, and a borrower is going to foreclose before the 3 year deadline they can:
Rescind the transaction and are entitled to a refund of all fees paid to the lender.
Which of the following is not a HOEPA trigger test? -APR Test -Points and Fees Test -Prepayment penalty Test -Rescission Test
Rescission Test
The following definition describes which of the following? Any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or residential real estate upon which is constructed, or intended to be constructed, as a dwelling. -Residential Mortgage Loan -Residential Real Estate -Nontraditional Mortgage -Sub-Prime loan
Residential Mortgage Loan
The following definition describes which of the following?Any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or residential real estate upon which is constructed, or intended to be constructed, a dwelling. -Residential Mortgage Loan -Residential Real Estate -Nontraditional Home -Construction Loan
Residential Mortgage Loan
Fill in the blank. Any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or residential real estate upon which is constructed or intended to be constructed a dwelling, is called a _____________________. -Short term mortgage loan -Nontraditional mortgage loan -Commercial mortgage loan -Residential mortgage loan
Residential mortgage loan
When considering a VA loan, what additional type of income must be considered? -Residual Income -Social Security Income -Child Support Income -Investment Income
Residual Income
What type of income is used on VA loans?
Residual income that must be greater than or equal to the guidelines set forth by the VA underwriting guidelines
Which of the following would require a person to be licensed as a loan originator? -Assisting a borrower or prospective borrower who is filling out an application by explaining the contents of the application and where particular borrower information is to be provided on the application -Generally describing for a borrower or prospective borrower the loan application process without a discussion of particular loan products. -Responding to a borrower's inquiry resulting from a prequalified offer, collecting detailed identifying information and/or loan application information from the borrower or prospective borrower on behalf of a lender. -Receiving a loan application through the mail and forwarding it, without review, to loan approval personnel.
Responding to a borrower's inquiry resulting from a prequalified offer, collecting detailed identifying information and/or loan application information from the borrower or prospective borrower on behalf of a lender.
TRID does not apply to
Reverse Mortgages HELOCS Mobile homes not attached to a foundation Anyone making 5 or fewer loans
There is a lender working in a large metropolitan area, but currently, they are targeting a low- income neighborhood and charging more for their loans because the individuals in the area are mostly African American. This would be considered: -Chunking -Churning -Reverse Redlining -Redlining
Reverse Redlining
A HECM is what type of loan: -Reverse mortgage -Bridge loan -Graduated payment mortgage -Line of credit
Reverse mortgage
Which of these transactions would not be covered under TRID? Construction loan, reverse mortgage, vacant land, closed end transaction
Reverse mortgage
Which of the following situations would be considered a prohibited act or practice? -Tyler discusses with a borrower particular rates and terms that they qualify for -Laurie, an independent contract processor, renews her mortgage loan originator license -Riley, working as a processor for a mortgage lender, discusses specific options for locking a borrowers loan -Eileen, a mortgage loan originator, provides an additional appraiser comparables with the hopes that the appraiser might change the value on her borrower's appraisal
Riley, working as a processor for a mortgage lender, discusses specific options for locking a borrowers loan
Which of the following will not affect a borrower's fixed rate mortgage payment? -An increase in property taxes -An increase in hazard insurance -The 10 year treasury bond -A decrease in property taxes
The 10 year treasury bond
814.A _____ is an interpretation of a Statute. -Statute -Rule -Bill -Legislator
Rule
What federal law details the licensing requirements for mortgage loan originators? -Dodd-Frank -SAFE Act -TILA -Loan Originator Compensation
SAFE Act
If an advertisment contains an interest rate, what must it also contain?
The APR (Annual Percent Rate)
When purchasing a home with an FHA loan, which of the following is true concerning employment? -Self-employment is not allowed -Salaried employment is always verified -The employer must have been in business for 2 years -Employment is not verified for an FHA loan
Salaried employment is always verified
What type of appraisal uses compares multiple similar recently sold properties to a borrower's property to determine the value? -Income Approach -Sales Comparison Approach -Cost Approach -Investment Approach
Sales Comparison Approach
When disclosing rates on advertisements you must disclose what and how?
The APR and in a clear and conspicuous manner
Business income is derived from a sole proprietorship and is calculated on which of the following tax forms? -Schedule C -Schedule E -Form 1099 -W-2
Schedule C
If the borrower is self-employed, what does the lender look for on the tax returns for income? -Adjusted Gross Income -Schedule C and non-cash expenditures including depreciation -Net Schedule C income -FICA income
Schedule C and non-cash expenditures including depreciation
In qualifying the income of a sole proprietor borrower, the originator should consider which of the following to be most important? -Form 1040 adjusted gross income -Schedule C net income -Expenses reported on Form 2106 -Schedule C net income plus non-cash expenses and depreciation
Schedule C net income plus non-cash expenses and depreciation
If at any time it is determined that the Nationwide Multistate Licensing System and Registry is failing to meet the S.A.F.E. Act's requirements, who is charged with establishing and maintaining a licensing and registry database of loan originators? -The Secretary of State -The Federal Bureau of Investigation -Secretary of Housing and Urban Development -The Bureau of Consumer Financial Protection
Secretary of Housing and Urban Development
What entity works with the NMLSR to establish a backup licensing system, licensing and registration requirements, unique identifiers, and state licensing law requirements? -State Secretary -Secretary of Housing and Urban Development -Secretary of State -Mortgage Licensing State Secretary
Secretary of Housing and Urban Development
What is HOEPA also known as? -Section 30 -Section 32 -Section 33 -Section 34
Section 32
Where, in the TILA is the explanation for higher-priced loans located? -Section 32 -Section 35 -Section 23 -Section 42
Section 35
What does the APR consist of?
The APR includes costs associated with the laon including: Origination fees, discount points, tax service fees, underwriting fees, processing fees, prepaid/pay per diem interest, MIP, MI impounds/reserves, VA Funding fees, FHA UFMIP, buydown, flood certification fees, closing fees, and courier fees (lender)
Four sections of RESPA that impact and guide the mortgage industry in protecting borrowers from abuses
Section 6 Section 8 Section 9 Section 10
The Lender Credit section of the LE and CD can be found where? -Section A -Section D -Section I -Section J
Section J
What does S.A.F.E stand for?
Secure And Fair Enforcement Act
S.A.F.E. is the short title for what Mortgage Licensing act of 2008? -Secure and Fair Enforcement -Secure and Fair Environment -Safe and Fair Enforcement -Systematic and Fair Enforcement
Secure and Fair Enforcement
What does SAFE stand for?
Secure and Fair Enforcement Act
Which act provides a specific definition of a nontraditional loan?
Secure and Fair Enforcement Mortgage Licensing Act
S.A.F.E. Act is the acronym for: -Safe And Federal Enforcement Act. -Secondary Amortizing Federal Efficiency Act. -Safe And Sound Financial Emergency Act. -Secure and Fair Enforcement Mortgage Licensing Act.
Secure and Fair Enforcement Mortgage Licensing Act.
What is Idemnification?
Security against any loss or damage, compensate or give security for reimbursement for loss or damage incurred.
In a typical mortgage loan, what are the mortgage note and the property called? -Financing instrument/deed -Hypothecation/security -Lien/appraised value -Security instrument/collateral
Security instrument/collateral
Which of these four items would not trigger a new three day waiting period after delivering the Closing Disclosure to the applicant? The APR on a fixed rate loan increases by 1/8th , The Loan Product changes, The Seller contribution increases by $150 and a prepayment penalty is added.
Seller contribution increases by $150
If a borrower is denied financing based on credit, which of the following must be done? -Send a written adverse action notice 30 days after the date of the credit report. -Notify borrower by telephone within the next couple of days. -Send a written adverse action notice within 30 days of the date of the application. -Notify borrower in person within the next 15 days.
Send a written adverse action notice within 30 days of the date of the application.
Which of the following is not one of the new disclosures required under TRID? -The Loan Estimate -The Closing Disclosure -The Home Loan Toolkit -The Adverse Action Notice
The Adverse Action Notice
The Loan Estimate must be: -Received within 3 days of the application -Disclosed within 3 days of the application -Sent within 3 business days of the application -Received within 3 business days of the application
Sent within 3 business days of the application
SRP stands for: -Standard Rate Product. -Servicing Release Pricing. -Service Release Premium. -Standard Rate Premium.
Service Release Premium.
What is SRP
Service Release premium
No person shall give or receive anything of value as part of a federally regulated mortgage settlement, other than for:
Services actually performed
Which disclosure is due within 3 business days of application? -Fair Housing Disclosure -HUD-1 -ECOA Notice -Servicing Disclosure
Servicing Disclosure
Which of the following does RESPA require to be given to the borrower? -Settlement Cost Booklet -Right of Rescission -Lead Based Paint Disclosure -APR Disclosure
Settlement Cost Booklet
who is responsible for proividing the seller on a transaction the seller information?
Settlement agents
Which of the following does RESPA require on a purchase? -Lead paint notice -A 1008 -APR disclosure -Settlement cost booklet
Settlement cost booklet
Who is responsible for the accurate accounting of all monies due to and from the parties in a real estate sale?
Settlement or escrow agent
The Privacy Act allows a lender to do which of the following? -Share a borrower's information with those necessary to complete the loan request -Share a borrower's information with anyone if no fee is received -Sell a borrower's information to anyone as long as it is private -Sell a borrower's information with the parent company, affiliates and non-affiliates
Share a borrower's information with those necessary to complete the loan request
What is a chain of title?
Shows the history of whos been on the title.
What is Ginnie Mae?
Similar to FNMA and FHLM, except GNMA is a GSE that is government owned and part of HUD.
How do borrowers rescind?
Simply mail in the disclosure before the deadline
Non-conforming or jumbo loans are generally restricted to certain types of property. Which of the following typically IS allowed to receive these loans? -Condominiums -PUD's -Second homes -Single family residences over $417,000
Single family residences over $417,000
After failing three (3) exams, an applicant must wait how long before taking the exam again? -Ninety (90) Days -180 Days -One (1) Month -Six (6) Months
Six (6) Months
Rural Development loans are available in
Small towns up to 20,000 people.
Which of the following would qualify as the best comparables for a residential dwelling? -A comparable from a home that has been sold, but has not been closed -Sold homes that are similar to the subject property -Three comparables from homes that have been listed on exactly the same street -A comparable that indicated the highest value of the home, as provided by the real estate agent
Sold homes that are similar to the subject property
How can a consumer avoid the 20% down payment and mortgage insurance on a conventional loan?
Some programs include a first mortgage at 80% combined with a second mortgage to so that MIP is not required.
What type of terms cannot be used in High Cost (Section 32 or HOEPA) loans
Some versions of balloon payments, negative amortization and some prepayment penalties
Which of the following, under RESPA, could NOT provide settlement services for the loan and purchase of an owner occupied property? -Someone who holds a power of attorney -The lender originating the loan -A licensed escrow officer -A licensed attorney
Someone who holds a power of attorney 2.The lender originating the loan
Included with the application is a "Continuation Sheet." What is the purpose of this form? -To note the financial obligations of the buyer and seller -Space for information or explanations for which there isn't sufficient room on the application -List the verifications associated with income -Provide a summary of the entire transaction
Space for information or explanations for which there isn't sufficient room on the application
The borrower applies for a loan and asks about tax impacts. Which of the following should be told to the borrower by the MLO? -Origination fees are tax deductible. -Get tax advice from a trusted friend. -Speak with a tax advisor for tax deductibility. -Mortgage interest is tax deductible.
Speak with a tax advisor for tax deductibility
Mortgage Servicing Disclosure Statement
Standard form used to disclose to the borrower whether the lender intends to retain the mortgage servicing for the loan
How should you evaluate Self-employed borrowers income?
Start with the income from the 1040's (Tax returns). If the adjusted gross income is used, voluntary contributions must be added back to the total income. Non-cash flow items such as depreciation should also be added back to total income Analyze for history and sustainability.
Reporting of suspected loan fraud should be done at this level of government: -County -State -City -National
State
Section 9
States a seller cannot require the use of particular title company
Andrew's borrower wants to refinance his home and Andrew has put together some great options. Of those options, Andrew wants his borrower to chose the ARM option because his company is giving bonuses to everyone who sells an ARM. Andrew pressures his borrower into choosing that options. Andrew is guilty of what? -Steering -Churning -Chunking -Flipping
Steering
If an MLO or real estate agent suggests to a client that he move to a particular area to reside in a community that he will fit into, what would that mortgage loan originator or real estate agent be guilty of? -Blockbusting -Flipping -Redlining -Steering
Steering
What can the mortgage relief companies not tell consumers to do
Stop paying their mortgage payment
The best answer for which of the following debts that are considered as part of a borrower's monthly obligation when qualifying for a mortgage loan would be: -Student loan payments and car payments -Life insurance premiums and credit card payments -Gym Membership dues and monthly cell phone bill -Utility payments and monthly health insurance payments
Student loan payments and car payments
An Alt-A or Alt Doc loan would be considered a type of: -Adjustable rate mortgage -Subprime mortgage -Jumbo loan mortgage -Nontraditional mortgage
Subprime mortgage
You have a borrower/salesperson that incurs expenses that are not reimbursed and are claimed on the tax returns. How is the income calculated? -Make no adjustment for the expenses, these are write-offs for tax purposes. -Subtract the expenses on Form 2106 from the gross income. -The borrower does not need to provide a copy of the tax returns to calculate income if s/he is a W-2 employee. -Use the gross monthly income figure your borrower discloses.
Subtract the expenses on Form 2106 from the gross income.
Who implemented the The Ability to Repay/QM rule?
The CFPB
A loan's APR must be disclosed to the consumer on the: -GFE. -Servicing Disclosure Statement. -Loan Application Register (LAR). -TIL Statement.
TIL Statement.
What must be disclosed with the prepayment penalty?
TIL form.
"Higher-priced loans" are defined by which law.
TILA
MDIA is an amendment to what law?
TILA
Regulation Z is also known as which of the following? -ECOA -FHA -RESPA -TILA
TILA
Section 32 which covers high cost loans is part of which federal law? -ECOA -HMDA -RESPA -TILA
TILA
Under what law does the Ability to Repay Rule fall under? -TILA -RESPA -Dodd-Frank -ECOA
TILA
Which law ensures lenders use an annual percentage rate (APR) so that the borrowers have the information they need to make informed comparisons?
TILA
Which law promotes informed use of credit by requiring the disclosure of the APR to the borrower? -Reg. C -RESPA -Reg. B -TILA
TILA
Which loan requires MLOs to provide borrowers with a loan estimate of closing costs?
TILA
TRID is an acronym for:
TILA RESPA Integrated Disclosures
What is Truth-in-Lending Act?
TILA, a federal law obligating a lender to give full written disclosure of all fees, terms, and conditions associated with the loan initial period and then adjusts to another rate that lasts for the term of the loan.
What does TRID stand for? -TILA-RESPA Interspersed Documents -TILA-RESPA Integrative Discovery -TILA-RESPA Integrated Disclosures -TILA-RESPA Integrated Documents
TILA-RESPA Integrated Disclosures
What 2 types of mortgage insurance does FHA carry?
The UFMIP which is 1.75% of the loan, Charges monthly mortgage insurance that must be carried for 11 years on 15 year term loans. Or for the life of the loan on 30 year terms
True of False? A depository institution includes any credit union. -TRUE -FALSE
TRUE
True or False. There is more than one definition of business day for TRID. -TRUE -FALSE
TRUE
True or False? A State-licensed loan originator who is approved as an instructor of an NMLS approved continuing education course may receive credit for the originator's own annual continuing education requirement. -TRUE -FALSE
TRUE
True or False? A loan originator who applies to be licensed again after expiration shall complete the Continuing Education requirements for the last year in which the license was held prior to issuance of a renewed license. -TRUE -FALSE
TRUE
True or False? A loan processor or underwriter who does not represent to the public, through advertising or other means of communicating or providing information, that such individual can or will perform any of the activities of a loan originator shall not be required to be a State- licensed loan originator. -TRUE -FALSE
TRUE
True or False? A state-licensed loan originator may not apply credits for education courses taken in one year to meet the continuing education requirements of subsequent years. -TRUE -FALSE
TRUE
True or False? A state-licensed loan originator may only receive credit for a continuing education course in the year in which the course is taken. -TRUE -FALSE
TRUE
True or False? An applicant for licensure will not be issued a mortgage loan originator license if at any time preceding such date of application, the applicant had a felony involving an act of fraud, dishonesty, or a breach of trust, or money laundering. -TRUE -FALSE
TRUE
True or False? An applicant is ineligible for a license if they have been convicted of, or pled guilty or no contest to, a felony in a domestic, foreign, or military court in the seven years prior to their application for a license. -TRUE -FALSE
TRUE
True or False? An individual does not need to be licensed if that person performs only purely administrative or clerical tasks on behalf of a loan originator. -TRUE -FALSE
TRUE
True or False? An individual engaging solely in loan processor or underwriter activities, shall not represent to the public, through advertising or other means of communicating. -TRUE -FALSE
TRUE
True or False? Every state requires those applying for a loan originator license to agree to a background check. -TRUE -FALSE
TRUE
True or False? If an applicant has been involved in an act of fraud, dishonesty, or a breach of trust, or money laundering at any time preceding the date of application, they will not be eligible for a license. -TRUE -FALSE
TRUE
True or False? It is the Secretary's responsibility to conduct an extensive study of the root causes of default and foreclosure of home loans, using as much empirical data as is available. -TRUE -FALSE
TRUE
True or False? No license may be revoked or suspended until after issuing a Notice and a Hearing. -TRUE -FALSE
TRUE
True or False? Non-federally insured credit unions which employ loan originators, shall register such employees with the Nationwide Multistate Licensing System and Registry by furnishing the information concerning the employees' identity. -TRUE -FALSE
TRUE
True or False? Only some states require fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a state, national and international criminal history background check. -TRUE -FALSE
TRUE
True or False? Pre-licensing education may be offered either in a classroom, online or by any other means approved by the Nationwide Multistate Licensing System and Registry. -TRUE -FALSE
TRUE
True or False? Requiring a consumer to pay a referral fee is considered prohibited conduct. -TRUE -FALSE
TRUE
True or False? States are encouraged to use unique identifiers for their loan originators in lieu of social security numbers. -TRUE -FALSE
TRUE
True or False? The Regulator has both summons and examination authority over any loan originator as may be relevant or material to an investigation of such loan originator for compliance with the licensing requirements. -TRUE -FALSE
TRUE
True or False? The Regulatory Authority may conduct investigations and issue subpoenas. -TRUE -FALSE
TRUE
True or False? The SAFE Act encourages states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators. -TRUE -FALSE
TRUE
True or False? The SAFE Act is designed (in part) to establish and maintain a nationwide mortgage licensing system and registry. -TRUE -FALSE
TRUE
True or False? The definition of a Mortgage Loan Originator does not include an individual engaged solely as a loan processor. -TRUE -FALSE
TRUE
True or False? When referring to surety bonds, immediately upon recovery upon any action on the bond the licensee shall file a new bond. -TRUE -FALSE
TRUE
When the interest rate floats, it means which of the following? -That the interest rate cannot go up but can go down -That the interest rate can continue to go up or down until it is locked -That the interest rate cannot go down but can go up -That the interest rate cannot go down or up
That the interest rate can continue to go up or down until it is locked
What actions does one do that might qualify them as a Loan Originator?
Take a residential mortgage loan application OR Represent to the public through advertising or other communication or providing information that you can or will take or negotiate loan applications.
Rescind
Take back or withdraw an offer or contract
Change of circumstances do not include what?
Technical errors, miscalculations or underestimations
Which of the following methods of disclosure does NOT meet the requirements of the Equal Credit Opportunity Act (ECOA)? -E-Mail -Mailed Letter -Telephone -Faxed letter
Telephone
MLOs are prohibited from which of the following? -Asking an appraiser to consider other comparable properties -Obtaining multiple appraisals on a property -Telling an appraiser a minimum value needed to approve the loan -Withholding fees from appraisers for substandard performance
Telling an appraiser a minimum value needed to approve the loan
A mortgage loan originator hands the borrower a GFE and a TIL in his office the day after the application was completed. The MLO can charge the borrower for an appraisal
That day.
Who is granted broad administrative authority to administer, interpret and enforce this Act (S.A.F.E.), and promulgate rules or regulations implementing this Act, in order to carry out the intentions of the Legislature? -The Commissioner -The Secretary of State -The Lieutenant Governor -The State Financial Supervisorial Authority
The Commissioner
The Nationwide Multistate Licensing System and Registry is developed and maintained by which of the following: -The Conference of State Bank Supervisors and the NMLS -The American Association of Residential Mortgage Regulators and the NMLS -The Conference of State Bank Supervisors and The American Association of Residential Mortgage Regulators -The NMLSR
The Conference of State Bank Supervisors and The American Association of Residential Mortgage Regulators
Which of the following is not considered a Federal Banking Agency? -The Consumer Financial Protection Bureau -The Director of the Office of Thrift Supervision -The National Credit Union Administration -The Federal Deposit Insurance Corporation
The Consumer Financial Protection Bureau
What does COFI stand for? -Central Office of Financing Institute -Comptroller Of Financial Institutions -The commodity used to determine the borrower's interest rate -The Cost Of Funds Index
The Cost Of Funds Index
What is the Director?
The Director of the Bureau of Consumer Financial Protection
Which of the following would NOT be included in a list of Federal Banking Agencies? -The Board of Governors of the Federal Reserve System -The National Credit Union Administration -The Comptroller of the Currency -The Director of the Office of Credit Compliance
The Director of the Office of Credit Compliance
The Ability to Repay/QM rule is apart of which act?
The Dodd Frank Bill
What is the E-sign Act technically called?
The Electronic Records in Global and National Commerce Act
What law allows for e-signatures as long as the borrower gives permission? -The Electronic Signatures in Global and National Commerce Act -The Dodd-Frank Act -Gramm-Leach-Bliley -Homeowners Protection Act
The Electronic Signatures in Global and National Commerce Act
The CHARM booklet was prepared by: -the CFPB. -The Dept. of Housing and Urban Development. -The Federal Housing Administration. -The Federal Reserve Board.
The Federal Reserve Board.
The lender discloses the prepayment penalty on which of the following documents? -The 1003 and the TILA -The Good Faith Estimate and the TILA Disclosure -ECOA and TILA disclosure -The trust deed and the trust deed note
The Good Faith Estimate and the TILA Disclosure
What forms were integrated to create the Closing Disclosure?
The HUD1 and the final TIL disclosure
In which situation is there no monthly mortgage insurance on an FHA loan (2012)? -The LTV is less than 89.99% and the loan is a 15 year term -The LTV is less than 78% and the loan 15 years or less -There is always monthly mortgage insurance on a 15 year loan -The LTV is 80% and the borrowers have paid for at least 3 years
The LTV is less than 78% and the loan 15 years or less
What are two of the most important documents that the borrower signs at settlement? -The Loan Note and the Deed of Trust -Error and Omissions and the Loan Note -The Loan Note and First Payment Letter -The Mortgage and Right of Rescission
The Loan Note and the Deed of Trust
At the top of page 3 of the Loan Estimate. Who is the primary contact on the loan? -The Lender -The Loan Officer -The Settlement Agent -The Broker
The Loan Officer
Which of these circumstances would NOT be an acceptable reason to provide a revised Loan Estimate to a borrower?
The MLO regretted overlooking certain liabilities in order to qualify the borrower for a better interest rate
What might the results be for a loan officer, if within two months of granting a refinance loan, the borrowers went to another lender who offered a lower rate and refinanced again? -The MLO's company may have to pay a premium recovery. -The wholesale broker agreement may automatically be cancelled. -The initial investor could sue for interest not earned. -The MLO could sue the borrowers for unethical behavior.
The MLO's company may have to pay a premium recovery.
All advertising of a Mortgage Loan Originator must include which of the following? -A photograph of the Mortgage Loan Originator -The Mortgage Loan Originator's unique identifier -Types of loans the Mortgage Loan Originator makes -A disclaimer from the NMLS
The Mortgage Loan Originator's unique identifier
Which disclosure, required to be sent three days after application, indicates to the borrower whether or not the servicing of their loan may be sold or transferred? -The Mortgage Servicing Disclosure -The Service Providers List -The Home Loan Toolkit -The Affiliated Business Arrangement Disclosure
The Mortgage Servicing Disclosure
What entity was created by CSBS and AARMR for the purpose of licensing and registering mortgage loan originators? -The NMLS -The CFPB -The CSBS/AARMR Database -The FTC
The NMLS
All of the following changes are because of The Dodd-Frank Wall Street Reform and Consumer Protection Act except? -The Consumer Financial Protection Bureau (CFPB) -The definition of a Qualified Mortgage (QM) -The Ability to Repay Rule (ATR) -The Red Flag Rule (RFR)
The Red Flag Rule (RFR)
Which of the following is not required by HOEPA? -The APR -The Loan amount -The Right of rescission on a refinance -The Right to receive a copy of seller information
The Right to receive a copy of seller information
Who provides the Annual Escrow Account Disclosure Statement? -The Mortgage Loan Originator -The Broker -The Title Company -The Servicing Lender
The Servicing Lender
What booklet is required to be provided to the applicant at application, or within 3 business days of application, for purchase transactions?
The Tool Kit
What is the 1008?
The Uniform Underwriting and Transmittal Summary that is submitted with the file for underwriting. It contains a summary of the loan including borrower information, ratios, LTV, credit score, etc...
What do VA loans require unless VA disability is involved?
The VA Funding Fee
What is redlining?
The act of denying loans in specific neighborhoods
Which of the following would not require a redisclosure of the CD and start the 3 day wait time over? -Addition of a pre-payment penalty -The adjustment of a fee to bring it into compliance -A change in APR above .125 on a fixed rate -A change in APR above .250 on an ARM
The adjustment of a fee to bring it into compliance
What is a Service Release premium?
The amount a servicer pays a lender for the servicing rights
The best description of LTV is a percentage of what? -The amount borrowed compared to the sales price or the appraised value -The down payment compared to the sales price or appraised value -The total of the borrower's monthly debts compared to his/her total monthly income -The loan amount compared to the borrower's total assets
The amount borrowed compared to the sales price or the appraised value
When disclosing payments on an advertisements for credit secured by a dwelling, the ad must also disclose...?
The amount of each payment that will apply over the term. -the period of time each payment will apply -The fact that the payments do not include amounts for taxes and insurance premiums, if applicable, the actual payment obligation may be greater
Which of the following best defines yield spread premium? -The amount of premium given by the lender when the interest rate closed is at par -The amount of premium given by the lender when the interest rate closed is floating -The amount of premium given by the lender when the interest rate closed is below par -The amount of premium given by the lender when the interest rate closed is above par
The amount of premium given by the lender when the interest rate closed is above par
In the case of a refinance with an escrow account, the amount required to be deposited will depend on what?
The anniversary date of the insurance policy.
In an advertisement along with an interest rate what must also be disclosed? -The annual percentage rate -The finance charge -The total of payments -The amount financed
The annual percentage rate
The application for a mortgage loan originator would be denied for all of the following reasons except: -The applicant had a mortgage loan originator license revoked -The applicant was convicted of a felony 5 years ago -The applicant has a foreclosure on their credit report from 4 years ago -The applicant has had seriously delinquent accounts in the past 3 years
The applicant has a foreclosure on their credit report from 4 years ago
Which of the following is NOT a minimum standard for licensing as a state-licensed loan originator? -The applicant has never had a loan originator license revoked. -The applicant has not been convicted/guilty of a felony in the 7-years preceding the date of application for licensing. -The applicant has demonstrated financial responsibility through maintaining a credit score above 600 points. -The applicant has completed pre-licensing education and has passed an approved test.
The applicant has demonstrated financial responsibility through maintaining a credit score above 600 points.
An applicant could still be eligible for a license under which of the following conditions? -The applicant was previously involved in an act of money laundering ten years prior to their application. -The applicant pled guilty to a felony in a domestic court eight years prior to their application. -The applicant has previously had a loan originator license revoked. -All of these conditions would be grounds for immediate rejection of an application.
The applicant pled guilty to a felony in a domestic court eight years prior to their application.
Which of the following is responsible for determining the need for flood insurance? -The appraiser -The title company -The loan officer -The borrower
The appraiser
The Legislature established the S.A.F.E. Act as an effective system of supervision and enforcement of the mortgage lending industry. Which of the following authorities are NOT included in this act? -The authority to issue licenses to conduct business under this Act -The authority to deny, suspend, condition or revoke licenses issued under this Act -The authority to examine, investigate and conduct enforcement actions as necessary to carry out the intended purposes of this Act -The authority to issue revised credit scores and personal financial information under this Act
The authority to issue revised credit scores and personal financial information under this Act
Regarding a balloon loan, which is the most correct? -The balloon is disclosed to the client on the HUD-1 settlement statement. -The balloon is disclosed to the client on the insurance documentation. -The balloon is disclosed to the client on the Trust Deed. -The balloon is disclosed on the Note and the Trust Deed Rider.
The balloon is disclosed on the Note and the Trust Deed Rider.
Who must approve the identity theft prevention plan for institutions?
The board of directs or senior-level management.
Which of the following applies to the right of rescission except: -It's only available on owner occupied refinance transactions -The lender is required to provide 2 copies of the notice of right to rescind at closing -The borrower has 4 days from choosing to rescind the loan -If the borrower does not receive the 2 copies of the notice of right to rescind the borrower has 3 years to rescind the loan
The borrower has 4 days from choosing to rescind the loan
Under Equal Credit Opportunity Act (ECOA), when looking to qualify a borrower, a lender may not consider which of the following? -The borrower is a senior citizen -The borrower has an average credit score -The borrower has had 10 jobs in the past 2 years -The borrower has a low monthly income
The borrower is a senior citizen
If the annual percentage rate (APR) of a loan changes more than .250 of 1% from the original disclosure on an irregular (ARM) transaction, which of the following would be applicable? -The lender is in violation of the law. -The borrower can "lock-in" the loan to avoid further interest increases. -The lender must pay for the borrower's credit report. -The borrower must be given a new disclosure at least 3 business days before the loan can be closed.
The borrower must be given a new disclosure at least 3 business days before the loan can be closed.
Using Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corp.) guidelines, what is true if a borrower is purchasing a non owner-occupied 2-4 unit property? -The borrower must have six months PITI in the bank -The loan payment must be sufficient to cover rents -The rent must be sufficient to cover the loan payment -The rent must be lower than the loan payment
The borrower must have six months PITI in the bank
If closing on a high cost loan what must happen?:
The borrower must receive additional disclosures
On a High Cost loan, what must happen once the GFE is received
The borrower must receive counseling
Which of the following is NOT required for bonuses and overtime to be counted as income? -The borrower must establish a positive trend for bonus and overtime income. -The employer must verify that the borrower has received the bonuses and overtime for the past two years and that it is expected to continue. -If the bonuses and overtime is more than 25% of the total income, the borrower must prove the income with two years of signed tax returns. -The borrower must show that the total of bonuses and overtime has been decreasing for the past two years, and that this trend will continue.
The borrower must show that the total of bonuses and overtime has been decreasing for the past two years, and that this trend will continue.
Which of the following would be considered a red flag in an owner occupied refinance loan? -The borrower owns a second home further than 50 miles away. -The borrower lives with his/her parents in the subject property. -The borrower owns another home in the same neighborhood. -The borrower resides in a home in the same neighborhood as subject property
The borrower resides in a home in the same neighborhood as subject property
If fraud is discovered by the servicer, what is LEAST likely to occur? -The borrower will experience a rate increase -A buyback by the originating lender -Calling the note due -The originating lender returns any premium fees
The borrower will experience a rate increase
Approval of a reverse mortgage application will be largely based on which of the following? -The borrower's income -The borrower's credit report -The borrower's equity -The current loan interest rate
The borrower's equity
Luke is a mortgage loan originator, and he is working with a new borrower. Luke needs to determine how much the home is worth versus the loan amount that the new borrower is requesting. What is Luke attempting to determine? -The borrower's debt-to-income ratio -The borrower's loan amount -The borrower's appraised value -The borrower's loan to value ratio
The borrower's loan to value ratio
For the purpose of complying with HMDA rules, a mortgage loan originator must ask all of the following questions except? -The borrower's race -The borrower's ethnicity -The borrower's marital status -The borrower's sex
The borrower's marital status
What information must be given to the seller in a transaction
The closing disclosure may be provided if it covers all seller information. The closing disclosure with only the seller information can be given.
Finance Charge
The cost of consumer credit as a dollar amount
Who is reponsible for preparing and delivering closing disclosures to borrowers?
The creditor
Consummation
The date when the consumer becomes contractually obligated to the creditor on the loan
Who are VA loans GUARANTEED by?
The department of Veteran Affairs (The VA)
What is a mortgage or trust deed? -The document that passes title from the borrower to the lender on the property being collateralized -The instrument that makes the lender a partial owner of the collateralized property -The document that creates a lien against the property -It is the contract that establishes the conditions for the loan and the repayment of money
The document that creates a lien against the property
If a borrower is quoted $200 for a termite report and no termite report is required or performed, what must be done?
The fee is deducted from the aggregate amount for the 10% tolerance calculation prior to analyzing the amount for a 10% variance
Closing
The final stage in a real estate transaction where ownership of real property is transferred from seller to buyer according to the terms and conditions set forth in a sales contract or escrow agreement
What is Priority of Liens?
The first lien recorded has priority. Mechanic liens are an exception but it depends on state laws
What the prepayment penalties not extend past in sub-prime lending?
The fixed period of the interest rate
Non-traditional mortgage products and the interagency guidance on non-traditional mortgage products addressed the analysis of a borrowers repayment capacity stating it should be determined by what rate?
The fully indexed rate
Which of the following is true about the index used in an ARM? -LIBOR is always the best index to use. -You can only change the index once during the life of the loan. -The index may only be a US Treasury Bill. -The index rate can change on the loan after settlement
The index rate can change on the loan after settlement
Which of the following would NOT be considered a change of circumstance and allow the lender to re-disclose the Loan Estimate? -An Act of God changes the condition of the property -The borrower decides to change from an ARM to a fixed rate product -The borrower's appraisal comes in low and to continue with the loan they need to change from a conventional to an FHA loan -The initial Loan Estimate indicates that the interest rate will be locked, and the mortgage loan originator forgets to lock the loan, and the interest rate goes up the next day, so the mortgage loan originator re-discloses the Loan Estimate with the new r
The initial Loan Estimate indicates that the interest rate will be locked, and the mortgage loan originator forgets to lock the loan, and the interest rate goes up the next day, so the mortgage loan originator re-discloses the Loan Estimate with the new r
Which of the following is true concerning Service Release Premium (SRP)? -Loan term is a factor of the SRP -Type of loan does not affect the SRP -The interest rate is a factor of the SRP -There is no such thing as SRP
The interest rate is a factor of the SRP
What can you tell a borrower about a 7/1 ARM? -The interest rate may go up only 1% each year for 7 years. -The interest rate is locked for the first year and may only go up 7% over the life of the loan. -The interest rate may only go up 7% over the life of the loan starting the 1st year. -The interest rate is fixed for the first 7 years then is a variable interest rate.
The interest rate is fixed for the first 7 years then is a variable interest rate.
Borrowers come to you for a mortgage loan. Which of the following would be appropriate to tell them about a fixed-rate mortgage? -Some have up-front fixed fees, but not all. -The rate is fixed for a time, and then may adjust. -The up-front fees are fixed. -The interest rate never changes.
The interest rate never changes.
What happens to the joint tenancy ownership if one owner transfers interest to the other?
The joint tenancy is severed and the ownership becomes tenancy in common
The borrower wants to get an FHA loan, but a judgment appears on the credit report. Which of the following represents how the judgment will be treated? -As long as the judgment was over one year ago, it has no bearing. -With a letter of explanation, the borrower may be approved for an FHA loan. -The judgment must be paid in full before the borrower can get an FHA loan. -If the judgment was over two years ago, it will have no bearing.
The judgment must be paid in full before the borrower can get an FHA loan.
A borrower wants to get an FHA loan, but a judgment appears on his credit report. Which of the following represents how the judgment will be treated? -As long as the judgment was over one year ago, it has no bearing. -With a letter of explanation, the borrower may be approved for an FHA loan. -The judgment usually must be paid. -If the judgment was over two years ago, it will have no bearing.
The judgment usually must be paid.
If a mortgage broker originates a loan and receives the application, who is responsible for the accuracy and the timing of the Loan Estimate?
The lender
The settlement agent must ensure who is provided with a copy of the Closing disclosure with the sellers information?
The lender
Who is responsible for the timing and accuracy of the Closing Disclosure?
The lender
Who sets the margin on an ARM? -FHA -The regulatory agency -Federal Reserve Board -The lender
The lender
If consumers have trouble repaying a loan a lender originates, they could claim what? How much could they recover as well?
The lender failed to make a reasonable, good-faith determination of their Ability to Repay the loan. They could recover up to three years of finance charges in addition to their legal fees
If a QM loan is a Higher priced mortgage loan, what does a lender qualify for?
The lender only has a rebuttal presumption regarding their assessment of the borrowers ability to repay.
A mortgage lender gave a final disclosure to a borrower which understated the APR by 50 basis points. What should be done? -The lender has to give the loan at the lower amount. -The lender should prepare new documents and redisclose in accordance with MDIA required waiting periods. -Re-close the transaction. -Nothing, as it was less than the required amount for redisclosure.
The lender should prepare new documents and redisclose in accordance with MDIA required waiting periods.
What does the lender's policy Title insurance protect against?
The lender's policy protects the lenders title position on the property and covers survey issues, CC&R issues, and mechanics liens
In the mortgage business, what does the word "term" refer to? -The various "terms" of the promissory note -The amount of time your mortgage license has left before expiration -The length of time of the loan -The time it takes from application to settlement
The length of time of the loan
What are FHA loan limits based on? -The sales price after the down payment and upfront mortgage insurance -The sale price of property -The lesser of the sales price or appraised value after the down payment and before upfront mortgage insurance -The appraised value less the down payment after the upfront mortgage premium
The lesser of the sales price or appraised value after the down payment and before upfront mortgage insurance
For a loan to be considered a QM loan, it must meet certain requirements. Which of the following is not one of those requirements? -The loan cannot have any negative amortization -The loan cannot have an interest only payment -The loan cannot have a balloon payment -The loan cannot have a prepayment penalty
The loan cannot have a prepayment penalty
FHA Minimum Mortgage Amounts
The loan limits for single family homes and for two-, three-, and four-unit properties cannot be less than: 65% of the GSE conforming loan limit of $417,000 (65% of $417,000 = $271,050)
Deeds contain a "Due on Sale" Clause which means?
The loan must be paid off if the property is sold, seller financing is not allowed. If the loan is assumed, the one assuming the loan must qualify for the loan
What is the Index determined by?
The loan program
Which loan has priority? -The loan with the lowest rate -The loan that is called the first mortgage -The loan that has the largest balance -The loan that was recorded first
The loan that was recorded first
What business day rule applies to determining when the Closing Disclosure should be delivered?
The mailbox rule. All calendar days except Sunday and legal public holidays
What two pieces of information is needed to determine what an adjusted interest rate will be on an adjustable rate mortgage? -The margin and the index -The margin and the current interest rate -The index and the current interest rate -The margin, the index, and the current interest rate
The margin and the index
A mortgage company is giving a borrower an FHA 1-year ARM. Which of the following is true? -There is no maximum for changes to the index. -The margin never changes. -The loan is funded by HUD. -The index can only change a max of 1% per year.
The margin never changes.
When fraud on the part of the borrower is found in a loan file, which of the following is likely to occur? -The borrower will not be affected until default -The mortgage broker may be forced to buy back the loan -The loan officer will go to jail -Nothing - it's built into the rates
The mortgage broker may be forced to buy back the loan
Which would LEAST LIKELY be a changed circumstance that would trigger the need to provide a new GFE to a borrower?
The mortgage loan originator learns that the alimony the borrower receives (which was not included in her income analysis) will cease after she is remarried next month.
Changes within 30 days after consummation, when must a new Closing disclosure be provided?
The new CD must be delivered or mailed within 30 days after the creditor receives information regarding the change
Where must prepayment penalties be disclosed on a conforming loan if applicable?
The note
The unique identifier of any person originating a residential mortgage loan shall be clearly shown on all of the following except? -Solicitations or advertisements. -Any other documents as established by rule, regulation or order. -All residential mortgage loan application forms. -The office front door or marquee.
The office front door or marquee.
What is the difference between the regular three business days and the mailbox rule definition of three business days?
The regular definition is any day the lender is open for business and the mailbox rule is all calendar days except Sundays and legal public holidays.
A borrower has an Interest Only mortgage loan and wishes to make the minimum monthly payments required. If the homeowner decides to payoff the loan at the end of the loan term, what will the homeowner be required to pay? -The original loan amount -A balance greater than the original loan amount -A balance less than the original loan amount -The entire purchase price of the property
The original loan amount
If original loan amounts, ending maturity dates and interest rates are the same for two loans. The first loan is an interest-only loan and the other loan is fully amortized. Knowing that, which of the following is true? -The first loan will have a lower interest cost. -The other loan will have a balloon payment. -The other loan will have higher monthly payments. -The first loan will be paid off quicker because it is interest only payments.
The other loan will have higher monthly payments.
What does Title insurance owners policy protect against?
The owners policy protects the owner of the property against ownership disputes, undetected liens, or claims on the property. The standard policy does not cover survey issues, CC&R issues, and mechanics liens.
When a self-employed borrower is a 25% owner of his business, which of the following documents is required? -The past two years balance sheets -The past two years tax returns -The past two years profit and loss statements -Articles of incorporation
The past two years tax returns
What is Subordination of a Lien?
The process of allowing a newer lien to take prority over an older lien. Example: refinancing a first mortgage that has a 2nd mortgage as well, you must subordinate the 2nd mortgage back to 2nd priority, thus making the new first mortgage the 1st priority again.
Servicing
The process of collecting payments, keeping records, and handling defaults for loans
What is Re-conveyance?
The process of releasing a lien from a property.
What is funding?
The process where the lender transfers the loan proceeds to the title or escrow company
What is an Administrative or Clerical Task?
The receipt, collections and distribution of information common for the processing or underwriting of a loan. This includes speaking with the borrower to obtain necessary information for processing or underwriting, NOT taking an application or negotiating terms.
What is the Acceleration clause?
The right of the lender to demand payment on the outstanding balance of a loan?
Which of the following buys closed mortgage loans? -The secondary market -The primary market -The buyer's market -The lender's market
The secondary market
On an FHA loan, which form of a gift is NOT allowed? -The seller gifts the down payment -Gift from a grandmother -Gift from an aunt and uncle -An employer gift which does not have to be repaid
The seller gifts the down payment
Which of the following would NOT cause a delay in funding the loan if closing has already taken place? -Some of the required repairs to the property were not done. -A problem was found in the chain of title for the property. -The address used in all the documents was not correct. -The seller wanted her maiden name included on the deed.
The seller wanted her maiden name included on the deed.
Who determines continuing education requirements and dates for license renewal? -The Governor of the state -The Nationwide Mortgage Licensing System -The state Regulatory Authority as established under the SAFE Act -The CSBS
The state Regulatory Authority as established under the SAFE Act
Who determines continuing education requirements and dates for licensing renewal? -The Governor of the state -The Nationwide Mortgage Licensing System -The state Regulatory Authority as established under the SAFE Act -The National Mortgage Association of Education
The state Regulatory Authority as established under the SAFE Act
"Application" defined by RESPA is?
The submission of a borrowers information in anticipation of a credit decision.
Which best describes the total debt ratio? -The total cost of all debt divided by the borrowers gross monthly income -The total cost of all housing expenses divided by the borrowers gross monthly income -The total cost of all debt divided by the borrowers net monthly income -The total cost of all the housing expenses divided by the borrower net monthly income
The total cost of all debt divided by the borrowers gross monthly income
Which best describes the housing ratio? -The total cost of all debt divided by the borrower's gross monthly income -The total cost of all housing expenses divided by the borrowers gross monthly income -The total cost of all debt divided by the borrowers net monthly income -The total cost of all the housing expenses divided by the borrower net monthly income
The total cost of all housing expenses divided by the borrowers gross monthly income
Which is true regarding FHA loans? -There is no prepayment penalty -The prepayment penalty is .5% of the note -The loan can be prepaid after 5 years with no penalty -The prepayment penalty is 6 months of interest
There is no prepayment penalty
Stated income should only be accepted when?
There are mitigating factors that clearly minimize the need for direct verification of repayment capacity
What is the maximum fee an MLO can charge for completing the Truth in Lending Disclosure Statement if properly disclosed? -.125% of the loan amount -250 of the closed loan amount borrowed. -$100.00 is the maximum fee allowed -There can be no fee charged for the TIL
There can be no fee charged for the TIL
What is the legal amount that an ARM can increase in one year? -6% -2% -1% -There is no legal amount
There is no legal amount
The borrower refinances a loan on a Pizza shop. Under the Truth in Lending Act how long will he have to change his mind after he signs the refinance loan papers? -There is no right of rescission it is an exempt transaction -1 business day -3 business days -30 days
There is no right of rescission it is an exempt transaction
-Travis is disclosing an origination fee of $1200 on the initial Loan Estimate. What is the maximum that origination fee can change between the Loan Estimate and the Closing Disclosure? -10% cumulatively -It can go up as much as Travis wants -There is zero tolerance, and it cannot change at all -It can go up $100 only
There is zero tolerance, and it cannot change at all
Energy Efficient Mortgages (EEM)
These loans are allowed for improvements to existing and new construction properties to increase their energy efficiency. Financing is the greater of 5% of the loan or $4,000, with the maximum capped at $8,000.
Although Fannie and Freddie are under government receivership, they are not apart of what?
They are not government owned or a Government agency
Which is true about nonconforming loans?
They generally cost a homeowner more in fees.
What does it mean when an applicant signs the Loan Estimate or the Closing Disclosure?
They have received the disclosures
The borrowers wanted to expedite the home-buying process so they got a pre-approval. Which statement best describes their situation? -They may or may not get the loan from the lender who gave the pre-approval. -they will get the loan, but the interest rate may be different than originally quoted. -They will definitely get the loan if they paid a non-refundable deposit to the lender. -They will not get the loan, but now know what they qualify for.
They may or may not get the loan from the lender who gave the pre-approval.
What must creditors document from redisclosing the LE/CD
They must document the changes and be able to defend every aspect of the change
If a lender originates an HPML what must happen
They must perform an appraisal including a physical interior and exterior inspection
In the event of error resolution or information requests, what must be done by servicers who receive these complaints? What are the timelines as well
They must: -Acknowledge receipt within 5 days -correct the error and provide notification of the correction or no error within 30 - 45 days -If the info is not available, inform the consumer within 30-45 days
Which statement concerning homeowners' association fees and the 1003 loan application is FALSE?
They never appear on the 1003. - The association fee must always be disclosed on the application as a monthly obligation for the debt ratios to be calculated properly.
How does the secondary market help lenders? -They sell loans. -They insure loans. -They guarantee loans. -They purchase loans.
They purchase loans.
Applicants may retake the exam a total of three (3) times with each retake attempt occurring at least how long after the preceding exam? -Thirty (30) days -Fifteen (15) days -One (1) week -One Month
Thirty (30) days
How many business days after a mortgage loan application does a mortgage loan originator have to mail disclosures to the borrower? -Four -Three -Two -One
Three
What are the terms of the "cooling off" period if a loan falls under HOEPA? -Three business days prior to closing -Three business days after closing -Seven business days prior to closing -30 business days after closing
Three business days prior to closing
According to TILA how long is the right of rescission for borrowers who have NOT been provided with full and correct disclosures of the APR (within stated limits)? -Three business days -Thirty days -One year -Three years
Three years
The legal link between a person who owns property and the property itself is the: -Title -Deed -Mortgage -Promissory Note
Title
Which of the following would usually not fall into the zero tolerance category? -Transfer Taxes -Credit Report -Title Insurance -Appraisal
Title Insurance
Which of the following would fall into the 10% cumulative tolerance category if the consumer were allowed to shop? -Origination Fee -Title Insurance Fee -Underwriting Fee -Processing fee
Title Insurance Fee
An applicant for licensure must pass a written test which shall include questions on laws and regulations. General mortgage industry knowledge, mortgage loan origination, and Ethics. Which of the following would NOT necessarily be included? -Title Insurance policies and endorsement codes -Consumer protection -Fair lending issues and concerns -Fraud prevention and awareness
Title Insurance policies and endorsement codes
The SAFE Mortgage Licensing Act is also known as what?
Title V - The Secure and Fair Enforcement for Mortgage Licensing Act.
What are the two titles of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010?
Title X, designated as the Consumer Financial Protection Act, and Title XIV, designated as the Mortgage Reform and Anti-Predatory Lending Act.
An agreement to indemnify against loss arising from a defect in title to real property, usually issued to a buyer of the property by the title company that conduct the search is: -Homeowners insurance -Title insurance -Title search -Hazard insurance
Title insurance
Which of the following would NOT be considered a prepaid item? -Prorated share of property taxes -Partial month's interest on a new loan -Title insurance -Hazard or flood insurance premium for one year
Title insurance
What is not included in to the APR?
Title insurance, Escrow, Notary fees, appraisal fees, termite inspection fees, credit report
RESPA also effects what settlement services?
Title searches Title examinations Title insurance Attorney services Preparation of documents Surveys Credit Reports Appraisals Pest inspections Real estate services Loan origination Processing mortgages Closing or settling mortgages
What is the purpose of HMDA? -To detect discriminatory lending -To prevent high cost loans -To regulate Home Mortgage Appraisals -To oversee the FHA
To detect discriminatory lending
The cost approach of an appraisal is used for all of the following EXCEPT: -To determine the cost of income, on a rental property -insurance. -new construction. -remodel. -to determine the cost of income, on a rental property.
To determine the cost of income, on a rental property
Which of the following is a purpose of RESPA? -To regulate interest rates -To monitor high cost loans -To eliminate kickback and referral fees -To track real estate settlement trends
To eliminate kickback and referral fees
What is a purpose of the Truth in Lending Act? -To enable consumers to compare the cost of credit from lender to lender -To keep loan officers honest -To prevent kickback and referral fees -To oversee commercial lending
To enable consumers to compare the cost of credit from lender to lender
Goal of RESPA
To help consumers become better informed borrowers and to be able to compare available options and shop for settlement services
Which of the following is a purpose for the Mortgage Servicing Disclosure Statement? -To disclose the percentages of loans this lender has serviced in the last 3 years -To inform the borrowers that they have certain rights under the law -To inform the borrower that the servicing of the mortgage may be or has been transferred -To inform the borrower the percentages of servicing that has been sold, assigned or transferred
To inform the borrower that the servicing of the mortgage may be or has been transferred
The Secretary is required to submit periodic reports to Congress of the effectiveness of the S.A.F.E. Mortgage Licensing Act. Which of the following is NOT a reason for why the Secretary is required to do so? -To strengthen consumer protections -To keep interest rates low to encourage home ownership -To streamline communication between all stakeholders involved in residential mortgage loan origination and processing -To establish performance based bonding requirements for mortgage originators or institutions.
To keep interest rates low to encourage home ownership
What is the purpose of the Aggregate Escrow Analysis
To limit and reduce the amount held in escrow or reserve accounts
What is the primary purpose of the primary market? -To pool loans and sell them to investors -To sell loans -To originate loans -To purchase loans
To originate loans
What is the purpose of title insurance? -To provide coverage for title to the property -To provide coverage in case of fire -To provide coverage for the chain of title -To provide coverage for the lender or owner
To provide coverage for the lender or owner Correct Choice:4
What is RESPA's intention
To reform the settlement process to ensure that consumers are provided with greater and more timely information on the nature and costs of the settlement process and are protected from unnecessarily high charges caused by abusive practices
In general there are two minimum standards for license renewal for State-licensed loan originators. The first is that the loan originator continued to meet the minimum standards for license issuance. What is the other minimum requirement? -To obtain recognition for outstanding practices -To satisfy annual continuing education requirements -To join a group, such as the NAMB or MBAA and maintain good standing -To reduce personal debt and increase personal assets
To satisfy annual continuing education requirements
A history showing the title changes regarding a property is required by an underwriter for what purpose? -To verify the absence of property flipping -To determine if there have been any forgeries -To establish that the boundaries are correct -To give a chronological record of all liens
To verify the absence of property flipping
What is the TIP on the new TRID disclosures?
Total interest paid over the life of the loan compared to the amount financed, disclosed as a percentage.
Which loan characteristic may be used to determine the fee that a mortgage loan originator is paid?
Total loan amount
What is back end DTI?
Total obligations on a credit report, including the housing expenses, divided by gross monthly income
Which of the following statements best describes Form 1008? -FHA loan application -FNMA/FHLMC loan application -Transmittal summary -Underwriter request for more information
Transmittal summary
What are examples of indexes?
Treasury index, COSI, COFI, LIBOR (London Inter Bank Offer Rate) and MTA (Monthly Treasury Average)
What does TILA stand for?
Truth In Lending Act
TILA is the acronym for which of the following? -Truthful Integrity in Lending Act -True Information in Lending Act -Trust in Lender -Truth in Lending Act
Truth in Lending Act
Regulation Z is another name for: -Equal Credit Opportunity Act. -Truth in Lending Act. -Americans With Disabilities Act. -Home Mortgage Disclosure Act.
Truth in Lending Act.
In the event of delinquent consumers and Loss mitigation, by when and what must a servicer do.
Try to reasonably contact the borrowers by the 36th day of delinquency. Notify borrowers of the loss of mitigation options by the 45th day of delinquency.
How long do telemarketers have to connect a consumer with a live sales representative?
Two seconds
In the case of a purchase transaction how much of the policy amount is collected at closing?
Typically the full annual policy amount
What does HUD stand for?
U.S. Department of Housing and Urban Development.
Which form is used most frequently for residential appraisals? -HVCC -URAR -USPAP -1025
URAR
What law requires identification be provided on a mortgage transaction? -Gramm-Leach-Bliley -Red Flags Rule -USA Patriot Act -BSA/AML
USA Patriot Act
Which government agency makes loans when no local lender is available?
USDA Rural Development
According to the ECOA an adverse action notice is NOT required to include the: -appraiser. -credit bureau information. -lender. -lender reason(s) for denial.
appraiser.
The Loan officer compensation is under what rule and granted authority by whom and issued by whom?
Under TILA Authority granted by the Dodd-Frank Bill. Issued by the CFPB
What act is the Red flags rule under/part of?
Under the Fair and Accurate Credit Transactions Act of 2003 (FACTA) Part of the Fair Credit Reporting Act
Which of the following is true concerning the YSP? -YSP is credit to the borrower. -YSP is the same for every lender. -YSP is what a broker will pay for originating a loan below par. -Banks are not allowed to receive a YSP.
YSP is credit to the borrower.
Who of the following would be an appropriate person to discuss the borrower's credit? -Seller -Selling agent -Underwriter -Listing Agent
Underwriter
Who reviews all the loan documents, verifications, and gives final approval or disapproval to a loan? -Director of Loans -Loan officer -Loan processor -Underwriter
Underwriter
When an individual is reviewing a loan file to determine that risk involved for the lender and to determine whether the borrower meets the requirements for the loan they are considered to be doing what to the loan? -Processing -Underwriting -Originating -Closing
Underwriting
URAR is the acronym for: -Uniform Residential Appraisal Report -Uniform Real Estate Appraisal Report -Uniform Real Estate Appraisal Report -Universal Residential Appraisal Report
Uniform Residential Appraisal Report
Conforming loans most often use a loan application known as the: -Uniform Residential Loan Application. -Short Form Residential Loan Application. -GNMA Residential Loan Application. -Freddie Mac form 92900A
Uniform Residential Loan Application.
URLA is the acronym for: -Uniform Residential Land Appraisal. -Uniform Residential Loan Application. -Uniform Residential Lot Appraisal. -Universal Residential Loan Application.
Uniform Residential Loan Application.
What responsibilities did the congress give the NMLS to provide?
Uniform license applications and reporting requirements for State-licensed loan originators -A comprehensive licensing and supervisory database -Improves the flow of info to LO's -Streamlines the licensing process and reduces the regulatory burden -Enhances consumer protections and supports anti-fraud -Provides the consumers with the ability to access information about their loan originator -Establishes a means that LO's must act with the best regards to the consumer.
What is does USDA stand for?
United States Department of Agriculture
What is a medium term?
Unsecured general obligations of Fannie Mae with maturities of one day or more with principal and interest payable in U.S. Dollars
What is an unacceptable source of funds for down payment on a Fannie/Freddie Loan? -The selling of an asset -Unverifiable cash on hand -A bonus from an employer that does not have to be repaid -A gift from the employer
Unverifiable cash on hand
UFMIP
Up Front Mortgage Insurance Premium The UFMIP is a lump-sum amount borrowers must pay to receive an FHA loan The UFMIP requirement applies to all FHA-approved mortgages. 1.75% of loan amount.
What is the maximum penalty for providing false information on a federally related loan? -$5,000 fine and one year jail time -$250,000 fine and 30 years jail time -Revoke license and $1,000 fine -Up to $1,000,000 fine and jail time
Up to $1,000,000 fine and jail time
When must a copy of the appraisal be shared?
Upon completion, or at the latest 3 days before closing. It may be waived by the borrower and be able to be given at closing
What would the best solution be if the borrower or co-borrower is not present to sign the closing documents? -Have the borrower or co-borrower sign for the absent individual -Use a specific power of attorney -Have a relative or spouse sign for him/her -Use a name affidavit
Use a specific power of attorney
In the event of a change within the 4th and 3rd business day of consummation what can a lendor do?
Use the initial Closing Disclosure in lieu of the final Loan Estimate to disclose the change.
In a face-to-face application, what do you do if the borrower refuses to fill out the race, ethnicity and gender section on Section X of the 1003? -Continue with the loan application, but be sure to get the information completed before submitting the loan to the underwriter. -Process and complete the loan entirely without the information. -Use your best guess and complete the information in Section X of the 1003. -End the application process.
Use your best guess and complete the information in Section X of the 1003.
What is the Deed of Trust?
Used to secure a note. A deed can carry a rider or an addendum
What is the Income approach
Uses capitalization rates and income in order to estimate value Look for words like, cap rates, income stream, cash flow, etc... Used for income or investment properties
Hypothecation occurs in a purchase transaction closing
Using property as collateral without surrendering use or possession of it.
Which of the following are not included in the housing qualifying ratio? -Hazard insurance -Property taxes -Home Owners Association Dues 4.Utilities -Utilities
Utilities
What kind of loan uses residual income as part of the qualifying process? -FHA -Conventional -Jumbo -VA
VA
What type of mortgage requires a funding fee? -VA -USDA -Conventional -FHA
VA
Which of the following would NOT be counted as income? -Income from a Trust -Payments from a note or mortgage that will continue for at least the next 36 months -VA fully authorized education benefits -Part-time income, if verified that it has not been interrupted for the past two years and is likely to continue
VA fully authorized education benefits
It is prohibited to advertise all of the following except: -"immediate approval" -"immediate closing" -"instant closing" -VA lender
VA lender
Which type of loan application requires a residual income analysis to be performed? -FHA loan -Jumbo -VA loan -Conventional
VA loan
VA is the acronym for: -Verification and Admissions. -Veterans Administration. -Veteran Affairs. -Variable Add-ons.
Veteran Affairs.
Which of the following would NEVER require mortgage insurance? -Federal Housing Administration Loans -Loans with secondary financing -Veterans' Affairs loans -Conventional Loans
Veterans' Affairs loans
How much money is required for fire insurance on a refinance at settlement? -14 months -1 year -2 months -Whatever is needed to renew coverage when the insurance expires
Whatever is needed to renew coverage when the insurance expires
Mortgage servicer
When a mortgage escrow account is established, the entity that collects monthly mortgage payments; pays taxes, insurance, and other items as they come due; and notifies the borrower of late payments
Streamline Refinancing
When an existing FHA loan is refinanced with another FHA insurance loan. The lending process is "streamlined" because it does not involve the complete underwriting process associated with a new FHA loan
When is it legal and/or acceptable for the loan originator to provide the consumer with a copy of his/her credit report? -Never -When the customer pays for it -When the customer requests it -When contracts with the credit reporting agency do not prohibit it
When contracts with the credit reporting agency do not prohibit it
When is redlining allowed?
When it is used based on economic variables.
When is redlining not allowed?
When it is used based on racial practices
At what LTV is the lender required to automatically remove private mortgage insurance? -When the LTV is 78% of the original purchase price or appraised value -When the LTV is 80% of the purchase price or appraisal -After paying on an FHA loan for five years -The lender is never required to "automatically" remove the mortgage insurance
When the LTV is 78% of the original purchase price or appraised value
According to the Fair and Accurate Credit Transactions Act, when is a borrower entitled to get a copy of their credit score? -Four times a year -When the borrower has applied for a loan and had his/her credit reviewed -When the borrower is on public assistance -A borrower has no right to a free copy of their credit score.
When the borrower has applied for a loan and had his/her credit reviewed
When is a loan officer authorized to refuse to accept a loan application? -When the borrowers' property is in a declining market -When the lender doesn't think the property will appraise high enough -When the applicant refuses to disclose their race and marital status -When the information supplied by the applicant appears fraudulent
When the information supplied by the applicant appears fraudulent
In selling a home which has an FHA loan, when can the FHA loan be assumed? -FHA loans cannot be assumed -When the seller indemnifies the lender against default -When the buyer signs a release document -When the loan documents say the FHA loan is assumable
When the loan documents say the FHA loan is assumable
When is a loan not subject to RESPA? -When it's a primary residence -When it's a second residence -When the property is 5 acres or less -When the property will be used for a commercial purpose
When the property will be used for a commercial purpose
When is an application considered to have been received?
When the six pieces of information have been received
Which of the following circumstances does NOT warrant a loan officer inquiring about a spouse? -When they are visually seen together by the MLO -Income from the spouse will be used to qualify for the loan -When the spouse will be obligated on the loan -When inquiring about liabilities
When they are visually seen together by the MLO
Loan officers can decrease their compensation when?
When unforeseen fees come up at the time of the initial disclosures were prepared
Which of the following situations always require full tax returns as documentation of income? -When proof of hourly wages are needed -When verifying self-employment income -Full tax returns are never required just the Adjusted Gross Income on the first page -When receiving W-2 only income
When verifying self-employment income
What must be disclosed to the borrower with servicing transfers?
Whether or not the servicing can be transferred on a loan, If the lender intends to transfer the servicing of the loan The lenders transfer history.
What is NOT considered a protected class under the Fair Housing Act?
While other federal legislation prohibits discrimination due to age, the Fair Housing Act does not address age.
You want to open a mortgage brokerage and have talked to several lenders. Before you started doing business with them, what would you need to have? -Wholesale broker agreements -An attorney on retainer -An in-house underwriter -A processor with experience
Wholesale broker agreements
A mortgage loan originator is NOT required to provide a GFE or a TIL if the borrower
Withdraws the application within 3 business days
When should the applicant receive the Loan Estimate?
Within 3 business days of receiving the application
When must the LE be delivered or mailed?
Within 3 business days of submission of an Application
By when must servicers mail the statements during billing cycles?
Within 4 days of the close of the courtesy period of the previous cycle
Alexandra is a licensed mortgage loan originator, and she works for a licensed mortgage lender. Alexandra also works part time as a mortgage loan originator at her friend's brokerage. Is Alexandra doing anything wrong? -Yes, Alexandra is working simultaneously for two companies, which is prohibited -No, Alexandra is properly licensed -Yes, Alexandra is not properly licensed -No, Alexandra can work for more than 1 company at a time
Yes, Alexandra is working simultaneously for two companies, which is prohibited
Can recordings be used for telemarketers
Yes, on a certain % of their calls.
What is YSP?
Yield Spread premium.
What is the soonest you can send a Closing Disclosure after the Loan Estimate? -You don't have to send it after, if you need to update the LE, you can do so after the CD was sent as long as you send another CD after it. -Same day. -You have to wait at least one day between sending. -You have to wait at least three days between sending.
You have to wait at least one day between sending.
The guide booklet for all purchase and refinance transactions using the LE and CD is called? -Settlement Cost booklet -Your Home Loan Toolkit -HUD Closing Cost guide -CHARM booklet
Your Home Loan Toolkit
New disclosure
Your Home Loan Toolkit given to all applicants for purchase transactions
Which of the following must be conspicuously disclosed on all advertisements? -Business name -Company Website Address -License number -Your Unique Identifier
Your Unique Identifier
All fees on the Loan Estimate fall into three (3) categories, these are? -Zero, 10% Cumulative and No Tolerance -Zero, 10% and Unlimited tolerance -Zero, 3% and 10% tolerance -10%, 10% and Zero tolerances
Zero, 10% Cumulative and No Tolerance
Flood insurance is determined by a flood certification. What are the zones in the certification?
Zone "A" requires flood insurance Zone "C" does not.
Which of the following flood zones require flood insurance? -Zone A -Zone B -Zone Y -Zone Z
Zone A
What is the MAPS rule?
a federal rule governing the advertising of mortgage products
According to the SAFE Act the only traditional loan in America today is: -a 30 year fixed rate. -any fixed rate loan. -a 30 or 15 yr. fixed rate loans. -Any loan that is not an ARM.
a 30 year fixed rate.
The term, "person" means a natural person. The definition would include all of the following EXCEPT: -corporation. -limited liability company. -association. -a city, county or state government.
a city, county or state government.
minimum payment required on FHA loans is typically less then that required for
a conventional loan
FNMA is best described as: -a government sponsored enterprise that buys closed loans. -a government owned and controlled organization that oversees FHA and VA loans. -a government owned organization that approves loans to be purchased from member banks. -a government owned corporation that participates in mortgage backed securities.
a government sponsored enterprise that buys closed loans.
FHLMC (Freddie Mac) is best characterized as: -a government owned organization that approves loans to be purchased from member banks. -a government sponsored enterprise, owned and controlled by the U.S. government. -a government corporation that deals in mortgage backed securities. -a government organization that purchases FHA, and VA loans.
a government sponsored enterprise, owned and controlled by the U.S. government.
A discount point is best described as a charge that the borrower pays to: -a lender to decrease the interest rate on a mortgage loan. -a mortgage broker at the time of application to obtain a favorable rate. -the seller as part of the closing costs of a loan. -a lender to protect against foreclosure.
a lender to decrease the interest rate on a mortgage loan.
Cash-Out Refinance
a loan that is appropriate for a borrower whose home has increased in value and who wants to use the home equity for improvements or to pay bills. This mortgage product allows borrowers to secure a new mortgage for more than is owed on an existing mortgage.
A balloon loan is best described as: -a loan that is paid in one lump sum. -a loan that has a floating rate. -a loan that exceeds the loan limit. -a loan that is paid annually.
a loan that is paid in one lump sum.
open-end credit
a loan where credit is extended to the borrower during the term and the creditor may impose a finance charge on the outstanding unpaid balance
An instrument that creates a voluntary lien on real property to secure repayment of a debt is known as
a mortgage.
Loan assumption refers to the circumstance when
a new buyer takes over the seller's existing mortgage loan.
Loan assumption refers to the circumstance when
a new buyer takes over the seller's existing mortgage loan. - Assumption of a loan occurs when a new buyer takes over the seller's existing mortgage loan.
The APR is the interest rate plus the finance charges computed and expressed as: -a percent. -an annual payment. -a dollar amount. -the amount financed.
a percent.
A Mortgage Banker is: -a person who engages in the mortgage loan business by directly or indirectly originating and closing mortgage loans with its own funds in the primary market for consideration. -a person who engages in the mortgage loan business by directly or indirectly negotiating or placing mortgage loans for others in the primary market for consideration. -a person who only performs real estate brokerage activities unless the person is compensated by a lender, a mortgage broker, or other loan originator -a contract MLO who works outside of the office and is not sponsored.
a person who engages in the mortgage loan business by directly or indirectly originating and closing mortgage loans with its own funds in the primary market for consideration.
Each of these loans would be excluded under the definition of a higher-priced loan EXCEPT
a purchase loan.
According to TILA what is a dwelling?
a residential structure which contains between one and four units. These units do not have to be attached to a real property. (This includes condo's and cooperative units)
Each loan originator is identified in the NMLS database by: -a license number. -a unique identifier. -his/her Social Security number. -employing the mortgage loan originator.
a unique identifier.
When PMI is required for high-risk residential mortgage transactions, the lender must provide to the borrower
a written notice stating that PMI will not be required beyond the date that is the midpoint of the loan's amortization schedule if, on that date, the borrower is current on the payments as required by the terms of the loan
Private Mortgage Insurance is required on conforming 1st mortgage loans when the Loan-To- Value is: -above 80%. -70% - 79.99%. -above 80% except if the loan has a 15-year term. -80% - 89.99%.
above 80%.
What clause gives a lender the right to declare the entire loan balance due immediately because of borrower default or for violation of other contract provisions?
acceleration clause
The right a lender has to require payment in full immediately due to a broken covenant in the mortgage document is known as
acceleration clause - If the mortgage document did not have an acceleration clause, the lender would have to sue as each payment came due.
An example of prohibited conduct is: -Having the license number and NMLS number on advertising -accepting fees from a consumer in the Loan Originator's own name. -accepting fees in the name of the Loan Originator's employer. -accepting fees payable to 3rd party providers. -having the license number and NMLS number on advertising.
accepting fees from a consumer in the Loan Originator's own name.
In order to carry out the purposes of examination and investigation authority, all of the following may be done EXCEPT: -retain attorneys, accountants, or other professionals and specialists as examiners, auditors, or investigators to conduct or assist in the conduct of examinations or investigations. -use, hire, contract or employ public or privately available analytical systems, methods or software to examine or investigate the licensee, individual or person. -access personal and confidential information and distribute said information to the public in the event that doing so would be in the best interest of the general public. -accept and rely on examination or investigation reports made by other government officials, within or without the state.
access personal and confidential information and distribute said information to the public in the event that doing so would be in the best interest of the general public.
The purpose of the Uniform Settlement Statement is to: -disclose the APR. -make sure the lender receives fair compensation. -account for all money involved in the transaction. -explain to the borrower the terms of the loan.
account for all money involved in the transaction.
When using the comparison approach, the appraiser is attempting to: -adjust the subject property to the comparable. -make neighborhood adjustments to determine the value of the property. -adjust the comparable to the subject property. -find a property that is identical to the subject property.
adjust the comparable to the subject property.
What is the period between rate changes in an ARM called? -change period -index period -term period -adjustment period
adjustment period
Anyone who places advertising that references consumer credit is required to follow the
advertising provisions of the Truth in Lending Act
the lender recieves payment from FHA insurance on a loan
after a foreclosure sale
A final disclosure must be sent to the borrower
after the PMI coverage has been terminated or cancelled to notify the borrower that the borrower is no longer covered by PMI and that the borrower is not required to pay PMI premiums any longer
second mortgages are allways allowed in conjunction with FHA loans
after the loan is made-
After a loan closing, funds are disbursed. When are the funds disbursed for an owner-occupied, residential refinance?
after the three business-day rescission period
The clause in the mortgage that makes the note due in full upon sale or transfer of a property is called a(n)
alienation clause.
When more than one consumer has the right to rescind, the exercise of the right by one consumer is effective for _______ consumers
all
With a mortgage loan that is rescindable under the Truth in Lending Act, the Closing Disclosure must be delivered to
all borrowers who have the right to rescind
When providing the revised Loan Estimate prior to the delivery of the Closing Disclosures, a business day is considered to be
all calendar days except Sundays and legal holidays
The four business day period for redisclosure of the Loan Estimate due to a valid changed circumstance is considered to be
all calendar days except Sundays and legal public holidays
Surety bonds must be maintained by: -licensees who will originate less than $7,500,000. -licensees who will originate $7,500,000 to $14,999,999.99. -licensees who will originate $15 Million to $29,999,999.99. -all licensees, unless excluded by the Regulatory Authority.
all licensees, unless excluded by the Regulatory Authority.
Under RESPA, who would be subject to fines and penalties if a kickback is paid?
all parties paying or receiving a kickback
credit
all real estate loans made to consumers - no matter what the amount - if the loan is for other than business or commercial purposes
Which transaction for a single family home is NOT covered by RESPA?
all-cash sale
discount points on FHA loans are
allowed and set by lender
Mortgage insurance benefits the borrower by: -allowing borrowers to obtain financing with lower down payments and higher LTVs. -making the payments if the borrowers lose their jobs. -paying off the home in the event of the death of any of the borrowers. -paying off the mortgage in the event of a fire.
allowing borrowers to obtain financing with lower down payments and higher LTVs.
A straw borrower is someone who
allows his name and information to be used to obtain a mortgage, but does not intend to live in the house.
By when and with what must any tolerance cures be mailed to the borrower
along with an updated Closing Disclosure, within 60 days of consummation
A state-licensed loan originator means any individual who is all of the following EXCEPT: -a loan originator. -an employee of a depository institution. -not an employee of a subsidiary that is regulated by the Farm Credit Administration. -licensed by a state as a loan originator with a unique identifier from the NMLSR.
an employee of a depository institution.
When money is not paid out and withheld from the funding at a loan closing, these monies are usually held as: -an impound. -an escrow. -an encumbrance. -a withholding.
an escrow.
All of the following are required to be licensed except: -any Mortgage Lender making less than five mortgage loans within any 12 consecutive months. -any person who acts as a Mortgage Broker less than 5 times within any 2 consecutive months. -an independent contractors who engage in loan origination activities as a loan processor or underwriter. -an individual negotiating a residential mortgage loan with or on behalf of an immediate family member.
an individual negotiating a residential mortgage loan with or on behalf of an immediate family member.
A bank, insurance company, savings and loan association, thrift or any lending institution whose loan is regulated by law, is usually known as: -the Federal National Mortgage Association. -a private mortgage repository. -the mortgage broker association. -an institutional lender.
an institutional lender.
A yield spread premium occurs when: -an interest rate is charged above the par rate and is a credit to the borrower. -an interest rate is charged below the par rate and is a credit to the borrower. -an interest rate that is equal to the lender's par rate is charged. -the mortgage rate is bought down.
an interest rate is charged above the par rate and is a credit to the borrower.
A fee charged to the borrower by lenders to cover such costs as preparation of documents and other services provided by the primary lender and computed as a percentage of the loan is known as: -P.O.C. (paid outside of closing). -an origination fee. -yield spread premium. -discount point(s).
an origination fee.
for payment of MIP, the FHA charges
an upfront payment and monthly premium payment
When a lender quotes an interest rate to a consumer, what must also be disclosed?
annual percentage rate
material
annual percentage rate, finance charge, amount financed, total payments, or payment schedule within the acceptable tolerance
In all forms of advertising credit, the only number that can be freely used is the: -total number of payments. -amount financed. -annual percentage rate. -finance charge.
annual percentage rate.
RESPA requires disclosure to the consumer of: -any affiliated business arrangement (AfBA). -the annual percentage rate (APR). -the number of business days before settlement. -use of race, ethnicity and gender for government reporting purposes.
any affiliated business arrangement (AfBA).
The right of rescission as discussed in Regulation Z applies to
any credit transaction involving the establishment of a security interest in the principal residence
Business day in providing a new disclosure of a Loan Estimate to the borrower is defined as
any day the creditor's offices are open to the public for the purpose of transacting substantially all of the creditor's business
consumer
any natural person in whose principal dwelling a security interest is or will be retained or acquired, of that person's ownership interest in the dwelling is or will be subject to the security interest
A Mortgage Loan Originator is: -any person who for compensation places a loan within this state for others. -an individual engaged solely as a loan processor. -a person involved in timeshares. -a person servicing mortgage loans.
any person who for compensation places a loan within this state for others.
Settlement services
any service provided in connection with a prospective or actual settlement (i.e. origination, taking of loan applications, loan processing, underwriting and funding of loans, services by a mortgage broker, counseling, obtaining verifications and appraisals, communicating with the borrower and the lender, title services)
You can pay off a FHLMC/FNMA loan without a penalty: -after 1 year. -after three years. -any time during the life of the loan. -when the LTV is 80% or below.
any time during the life of the loan.
FHA loans can be obtained by: -middle income wage earners as defined by law. -low income wage earners only. -only first time home buyers. -anyone.
anyone.
When purchasing a non-owner occupied property, the top ratio uses the: -applicant's current housing expense. -current housing expense and the expense of the new property. -expense of the property being purchased. -combined housing expenses of all properties owned.
applicant's current housing expense.
According to RESPA, an Affiliated Business Arrangement (AfBA) disclosure must be provided
at or prior to the time a referral is made, if there is an AfBA. - RESPA requires an Affiliated Business Arrangement (AfBA) disclosure whenever a settlement service provider involved in a RESPA covered transaction refers the consumer to a provider with whom the referring party has an ownership or other beneficial interest. The referring party must give the AfBA disclosure to the consumer at or prior to the time of referral.
an FHA appraisal fee must be paid
at the time requesting the appraisal
If the Regulatory Authority orders a cease and desist, the order becomes effective: -at time the Licensee is served papers. -at the time the Regulatory Authority signs the order. -after the Licensee responds to the order. -The Regulatory Authority cannot order a cease and desist.
at time the Licensee is served papers.
A partially amortized mortgage is also referred to as a
balloon payment mortgage. - A. A balloon payment mortgage, also known as a partially amortized loan, has periodic payments that do not fully amortize the loan by the end of the loan term. The larger final payment is known as a balloon payment.
A partially amortized mortgage requires
balloon payment. - A partially amortized loan has periodic payments that do not fully amortize the loan by the end of the loan term. The larger final payment is known as a balloon payment..
While taking a loan application, a mortgage loan originator will NOT gather
bankruptcy papers from 10 years ago - Bankruptcy papers from 10 years ago would not be relevant today, because a bankruptcy does not show on a credit bureau report after 10 years. In rare cases, the papers may be needed for verification.
borrower may also request that appraisal be reconsidered, if this is done, borrower must have a
basis for a claim that appraisal is too low, in the form of information on comparable properties in the same area
When verifying income for a loan, the borrower's pay-stubs should NOT: -clearly identify the borrower as an employee. -identify the pay period. -be handwritten by the employee. -show Year-To-Date earnings.
be handwritten by the employee.
In an ad that states a minimum payment, and it's possible that a balloon payment would result if only the minimum periodic payment is made, that fact must
be states with equal prominence and close proximity
The TILA-RESPA Integrated Disclosures are designed to help consumers
become better and more informed shoppers for consumer loans
Under state law, the state licensing agency has the authority to conduct investigations of any loan originator that is licensed or required to be licensed. No person who is being examined or investigated may knowingly withhold information. This includes all of the following except: -being "gone" during an examination. -removing information. -mutilating or destroying information. -secreting any books or records (including computer records).
being "gone" during an examination.
between what hours can solicitation calls be made?
between 8:00am and 9:00pm
The type of mortgage that covers more than one parcel or lot and is often used for financing subdivision developments is called a
blanket mortgage - A blanket mortgage covers more than one parcel or lot and is often used for subdivision developments.
The lender usually does not allow the source of a borrower's down payment to be
borrowed funds.
the FHA insurance premium is charged to the
borrower
Loan consummation is the day that the
borrower becomes contractually obligated on the credit transaction
The Home Ownership and Equity Protection Act does NOT require a lender to verify a borrower's ability to repay the loan if the
borrower plans to sell the current dwelling within a year.
Real estate agent Ike tells mortgage broker Tina that he will send her all of his clients if she'll give him $100 for each loan she closes. Although Tina turns him down, she does decide to send Ike tickets to a football game to thank him for referring his clients any way. According to Section 8 of RESPA,
both are in violation since any gratuity could be considered a kickback. - RESPA considers anyone who initiated, paid, or accepted a kickback to be in violation.
loans which require monthly taxes and insurance be escrowed are sometimes referred to as
budget mortgages
For purposes of initial disclosures, the day on which the effects of the business entity are open to the public for carrying on substantially all the entity's business function is known as a
business day
discount points on FHA loans may be paid by
buyer or seller or SPLIT between BOTH
for an FHA insured loan , the property must be appraised
by an FHA approved fee appraiser
PMI on a conforming high-risk loan must be terminated:
by the first day of the month following the date that is the midpoint of the loan's initial amortization schedule if, on that date, the borrower is current on the loan. If the borrower is not current on that date, PMI must be terminated when the borrower becomes current
time required for processing an FHA loan varies from
lender to lender and with market conditions
Adjustable rate disclosures that are required to be signed at closing need only be provided to the borrower who
expresses an interest in receiving a copy
Telemarketers must transmit what information in a call.
caller identification
The right of rescission provided under Regulation Z is the right to: -pay discount points. -cancel a refinance transaction. -receive a refund of unpaid mortgage insurance premiums. -receive a refund of unpaid mortgage insurance premiums.
cancel a refinance transaction.
A borrower closed a loan last week with ABC Mortgage Company. Her name is on the National Do Not Call Registry and on ABC's internal do not call list. ABC
cannot call her because she is on ABC's internal list.
Debts that are considered as part of a borrower's obligations when qualifying for a loan include
car payments - Car payments are a recurring monetary obligation that cannot be cancelled. The others may be monthly expenses but are not considered as debts because they can be cancelled.
The APR includes fees that are required to get the loan. Not included are costs which would occur with a: -first time homebuyer. -home refinance loan. -cash buyer. -construction loan.
cash buyer.
down payment on an FHA loan normally consists of
cash only
the FHA appraisal fee may be paid in the form of
cash only
When doing an appraisal, the appraiser, unless specifically instructed otherwise, will consider the financial part of the transaction to be: -cash or cash equivalent. -a loan with a reasonable down payment. -a high down payment of at least 20%. -The appraiser is not concerned with the financial part of the transaction.
cash or cash equivalent.
A borrower elects to buy down the interest rate on his mortgage loan. This appears on the GFE as a
charge to the borrower.
What is a pre-paid finance charge?
charges that are paid separately, before consummation or at the time of consummation which are withheld from the proceeds of a loan
a gift may come from a
charitable organization or a state or local government assistance program
The Patriot Act requires loan originators to: -check all gift donors against the known terrorist list. -report suspicious individuals. -keep records with customer identifying information for years. -verify citizenship/legal residency before submitting a file to underwriting.
check all gift donors against the known terrorist list.
The penalties issued by the Regulatory Authority are ______ penalties on mortgage loan originators. -civil -criminal
civil
Surrender of an MLO license does not affect the MLO's: -ability to originate loans as an employee for a licensed lender. -civil or criminal liability for acts committed prior to the surrender. -ability to process loans as a contract processor. -ability of taking loan applications as an independent contractor.
civil or criminal liability for acts committed prior to the surrender.
loan may contain a prepayment clause, but
clause must not contain penalty for prepayment
When advertising, the advertiser must tell the whole story __________________________.
clearly and conspicuously
The three business day waiting period requirement applies to a corrected Closing Disclosure when all of the following occur EXCEPT
clerical errors made to the Closing Disclosure
Which is NOT a way in which secondary mortgage markets make local real estate markets more stable?
collecting and processing county property tax payments - The effects of local real estate cycles can be moderated by the banks having stable investments from other areas, by providing additional funds for local banks to loan, and by having standards that allow loans to be sold throughout the country. Secondary markets do not generally service loans, which could include collecting and processing tax payments.
An example of a servicing activity for which a servicing fee may be charged is
collecting monthly mortgage payments. - Servicing activities include collecting and processing payments including taxes and insurance, accounting, recordkeeping and bookkeeping, and other follow-up services.
A loan originator who applies to be licensed again must: -receive a new unique identifier. -complete the Continuing Education requirements for the last year in which the license was held. -write a letter to the Regulatory Authority requesting a new license. -None of the above.
complete the Continuing Education requirements for the last year in which the license was held.
Regulation Z requires: -disclosure of the settlement costs to buyers and sellers. -disclosure of the impound accounts and the prepaids of the borrower(s). -computation and disclosure of the APR to the borrowers. -disclosure of servicing information on the loan.
computation and disclosure of the APR to the borrowers.
is usually takes longer to process an FHA loan than a
conventional loan
If a borrower exercises his right to change from an adjustable rate mortgage to a fixed rate mortgage one time during the loan term, provided certain conditions are met, he has what type of mortgage?
convertible arm
maximum loan amount differs for high cost and low cost areas and varies
county to county
Until the Loan Estimate disclosure, Home Loan Toolkit, and other required disclosures are delivered to the borrower, an MLO may charge the borrower a fee only for the actual cost of obtaining a
credit report
Which fee can be collected prior to delivery of the Loan Estimate?
credit report fee
Confidentiality and information sharing by the NMLS about MLOs applies to all of the following EXCEPT: -employment history. -disciplinary actions against mortgage loan originators. -enforcement actions against mortgage loan originators. -credit scores.
credit scores.
A borrower elects to lower his settlement costs by paying a slightly higher interest rate. This appears on the GFE as a
credit to the borrower.
Delivering the Closing Disclosure to the borrower is the responsibility of the
creditor
The _______________ is responsible for providing the Closing Disclosure to the borrower and ensuring that the content, delivery, and timing requirements set by the CFPB are met
creditor
In order to be issued a license, an individual must demonstrate financial responsibility, character and general fitness. For the purpose of showing financial responsibility, an individual should not have any of the following, EXCEPT: -current outstanding tax liens or other government liens and filings. -foreclosures within the past three years. -current outstanding judgments as a result of medical expenses. -a pattern of seriously delinquent accounts within the past three years.
current outstanding judgments as a result of medical expenses.
FHA loans
federal housing admininstration
appraisals on property on FHA loans are conducted by
fee appraisers
the FHA provides insurance to
lenders
Which fee is a mortgage loan originator forbidden from collecting?
fee for preparing a GFE
What fee can an MLO collect before providing a Good Faith Estimate?
fees for obtaining a credit report only
in 1991, the FHA began requiring borrowers to pay an
upfront payment at closing and monthly payments over a period of years to cover MIP
What fee can an MLO collect before disclosing a Good Faith Estimate?
fees for obtaining a credit report only - The only fee that may be collected prior to the mandated disclosures is a fee for obtaining a credit report.
Third party charges
fees that are paid to any party other than the creditor or their affiliates
The Truth in Lending Disclosure Statement must reveal all the following EXCEPT the: -date of the first payment. -annual percentage rate -finance charge. -amount financed.
date of the first payment.
the FHA insures against
default by borrowers
What risk is PMI intended to cover?
default on loan repayment - Private mortgage insurance (PMI) is offered by private companies to insure a lender against default on a loan by a borrower.
section 245 -graduated payment loan program
designed to assist 1st time buyers who might otherwise be unable to buy because of rising prices
An underwriter does all of the following EXCEPT: -determine that the seller has the legal right to sell the property. -determine if the loan is in compliance with investor criteria. -determine the credit worthiness of the borrower. -determine the acceptability of collateral.
determine that the seller has the legal right to sell the property.
as of october 1, 2008, seller funded down payment assistant programs have been
disallowed
Your borrower has a joint-asset account with another person. Most of the money in the account belongs to the non-borrower. The lender requires two months of bank statements. Under this circumstance, the documentation needed by the lender requires you to: -obtain a VOD with only the borrower's name on it. -remove the non-borrower's information since it is not applicable. -disclose and document deposits for the borrower and non-borrower. -temporarily transfer all the money into a separate account with only the borrower's name on it.
disclose and document deposits for the borrower and non-borrower.
loan discount charged by lenders on an FHA loan is assessed in the form of
discount points
Each of the following would be considered a "recurring cost" EXCEPT: -Property taxes -hazard insurance. -discount points. -mortgage insurance. -property taxes.
discount points.
How often must servicers provide statements?
during each billing cycle.
As the lender looks over the borrower's loan application and is deciding whether or not to make the loan, the lender may consider the: -economic health of the borrower. -psychological state of the borrower. -physical state of the borrower. -All of the Above.
economic health of the borrower.
A calculation of the return on investment that considers the price paid, the time held and the interest charged, which on a discounted loan could be greater than the interest charged is called the: -effective rate. -nominal rate. -effective yield. -premium rate.
effective yield.
On an FHA loan, the discount points can be paid: -only through having them added to the loan. -only by the borrower. -only by the seller. -either by the borrower and/or the seller.
either by the borrower and/or the seller.
FHA Cashouts 12months or more
eligible for a maximum of 85% of the appraised property value
New VA loans are available to: -family members of veterans. -eligible veterans. -any qualified buyer. -friends of veterans.
eligible veterans.
The Unique Identifier, issued by NMLS, of any person originating a residential mortgage loan shall be clearly shown on all of the following except: -emails. -advertisements. -business cards. -websites.
emails.
buyer generally must have cash for
entire down payment
The value remaining in property after all liens and debts are considered is
equity - Equity is the difference between market value of a property and the sum of the mortgages and liens against it.
What did the SAFE Act establish?
established standards for licensure which must be used as a minimum for licensing requirements for all state regulators.
The SAFE Act
establishes minimum standards for licensing and registering mortgage loan originators.
The SAFE Act: -prevents MLOs from practicing without a license. -establishes minimum standards for licensing and registering of mortgage loan originators . -prevents abuses in consumer mortgage transactions. -prevents kickbacks referral fees and unearned fees.
establishes minimum standards for licensing and registering of mortgage loan originators .
Assuming there has been no fraud or adverse action, a borrower is entitled to a free copy of his/her credit report: -every six months. -every year. -every 2 years. -every 3 years.
every year.
The borrower uses his home's equity for a mortgage loan for business purposes. The borrower will use $80,000 to buy restaurant equipment. This loan will be: -exempt from RESPA because it is a business purpose loan. -exempt from RESPA because it is a business purpose loan. -covered by RESPA, as the collateral is a mortgage on the borrower. -covered by RESPA because it is to an individual no matter the purpose of the loan. 5.exempt from RESPA because restaurant equipment loans are not federally related.
exempt from RESPA because it is a business purpose loan.
FHA insures loans not
guarantees them because money to pay for losses comes from premiums paid by borrowers
In a face-to-face loan application with the lender, if the applicant does not wish to answer the questions in the government monitoring section, the loan officer must: -research and obtain the information. -end the process. -check the box "I do not wish to furnish this information". -fill out the information based on visual observation.
fill out the information based on visual observation.
203 (b) Home Mortgages
fixed-rate program used to purchase or refinance one- to four-unit family dwelling
If a property were located in a flood zone, the borrower would be required by the lender to obtain: -flood insurance. -a flood waiver. -a flood protection letter. -nothing extra, but the property hazard policy would be looked at more carefully.
flood insurance.
A conforming loan is a loan that
follows the secondary market criteria set by Fannie Mae/Freddie Mac.
The settlement agent has the responsibility
for the delivery of the Closing Disclosure that accurately reflects the costs of the transaction
How long can prepayment penalties be imposed
for the first 3 years of the loan term. Prepayment penalties may not be greater than 2% of the loan in the first 2 years and 1% in the 3rd year
Under FHA loan rules, effective June 2013, loans beginning at 90% LTV or more will pay an annual mortgage insurance premium (MIP): -for at least 11 years. -for the life of the loan. -until the LTV reaches 78%. -until the LTV reaches 80%.
for the life of the loan.
If a new Loan Estimate is required because of a changed circumstance, it must be disclosed and received by the borrower
four days prior to consummation of the loan
A requirement in the Dodd-Frank Act requires qualified mortgages (QM) to have/to be: -a Balloon payment. -fully amortizing. -interest only payments. -negative amortization.
fully amortizing.
Which would LEAST LIKELY be a net tangible benefit for a borrower considering refinancing?
getting cash out for home repairs to get a higher listing price - If the borrower knows that he may or will be moving from the home in the next several years, the savings gained from lower monthly payments may not even cover the cost for the refinance.
some lenders permit the buyer to use--- for down payment
gift funds
An MLO referred his pre-approved borrower to a real estate company that both he and his partner own. According to RESPA the MLO must: -also provide a list of alternative real estate companies to the borrower. -disclose the relationship only if the borrower asks. -give full disclosure to the borrower at or prior to the time the referral is made. -not make the referral. Referrals are prohibited by RESPA.
give full disclosure to the borrower at or prior to the time the referral is made.
A mortgage loan originator refers her customer to XYZ Title Company, which is owned by her family. According to RESPA, she must
give full disclosure to the customer when, or before, she makes the referral.
The main difference between FHA and VA is that VA: -has lower discount points than FHA loans. -has no prepayment penalty. -guarantees the loan whereas FHA insures the loan. -allows assumptions.
guarantees the loan whereas FHA insures the loan.
The state regulatory authority may refuse to renew a license for an MLO if there is a finding that the licensee: -purchased more personal or business real estate than initially disclosed. -has been unethical in the transaction of mortgage lending. -purchased another company in the financial services industry. -has released an employee due to illegal activity by that employee.
has been unethical in the transaction of mortgage lending.
You interview a customer and collect all the information needed to fill out the 1003 and run credit. Before running credit, you specifically ask the client if it is okay to run their credit, and they consent. You should now: -have the customer sign a Borrower's Authorization form and then pull credit. -hang up the phone and run their credit. -ask the borrower to repeat their verbal consent, record it, and then pull credit. -feel confident a Borrower's Signature Authorization is not required as the consent has already been given.
have the customer sign a Borrower's Authorization form and then pull credit.
Which circumstance would disqualify an applicant for a loan originator license?
having a state-revoked state mortgage broker license - The SAFE Act disqualifies an applicant who has had a license revoked, but having another career would not be a disqualification.
An MLO is to be state-licensed if: -he/she called a borrower to gather missing information needed to complete an application. -he/she counseled a borrower about loan terms and interest rates. -he/she explained the GFE sent to a borrower. -he/she reviewed the borrower.
he/she counseled a borrower about loan terms and interest rates.
An individual takes "a residential mortgage loan application" if the individual does all of the following, EXCEPT: -he/she is involved in the approval of the loan. -When he/she has received the borrower's or prospective borrower's request or information indirectly. -he/she only input the information into an online application or other automated system. -he/she Is responsible for verifying information.
he/she is involved in the approval of the loan.
there is a maximum loan amount which is different for
high cost and low cost areas
A Loan Estimate that is made in good faith is determined by the closing costs quoted on the Loan Estimate and on the Closing Disclosure. For a Loan Estimate to be made in good faith, the costs on the Loan Estimate should be
higher than what is charged on the Closing Disclosure
A loan on a borrower's primary dwelling where the APR exceeds at least 1.5% of the applicable average prime offer rate for a first lien loan is known as a
higher-priced loan.
Escrow account
holds money (e.g. for purposes of paying taxes, hazard insurance, and other charges related to the property) that some mortgage lenders collect every month along with a mortgage payment
The new Loan Estimate does not apply to all real estate loans. All of the following loan types are exempt from the new disclosures EXCEPT
home equity loans
It is unethical for an MLO to provide the ______________________________in the loan documentation. -Social Security number of a client -identity of a prior borrower to obtain a loan for a borrower unable to qualify on their own -current occupancy of the property -employment history of a client
identity of a prior borrower to obtain a loan for a borrower unable to qualify on their own
When is flood insurance required?
if FEMA maps show any improvements on the property are in a flood zone
When must an Opt-out notice be given?
if the institution does share information with non-affiliates.
If you are a lender, it is acceptable to REQUIRE the services of a specific provider: -if you have no ownership interest in the provider. -if the other service provider is an affiliate. -as long as you provide the borrower with the appropriate disclosure within three business days of the loan application. -only if the service provider is licensed.
if you have no ownership interest in the provider.
You are working with a customer who has disclosed they have new payment obligations that do not appear on their credit report. You realize that your customer qualifies for a loan based on figures calculated using only payment obligations reported on their credit. In order to ensure your client qualifies, you decide to exclude the payment obligations that do not appear on the credit report. This action is: -Illegal but ethical -legal but unethical. -legal and ethical. -illegal and unethical. -illegal but ethical.
illegal and unethical.
You have completed the necessary Pre-licensure education, testing, and application requirements to obtain your mortgage license. You have been hired by a brokerage and expect your background check to clear shortly. You have a friend who is eager to proceed with a loan application and your manager at the brokerage has said that you can start the file under his/her name, then switch it back to your name once your license arrives. This action is: -legal and ethical. -illegal but ethical. -illegal and unethical. -legal but unethical.
illegal and unethical.
Upon the recovery of any claim on the bond, the licensee shall file a new bond: -within 3 months. -within 14 days. -within 5 days. -.immediately.
immediately.
In a reverse mortgage what are the ways borrowers can receive payments
in a lump sum a monthly payment or a combo of both
FHA charges on appraisal fee must be paid
in advance when appraisal is ordered
When an MLO accepts any third party fee from a borrower, the funds should be placed: -in an investment account. -in an escrow account. -mixed with the general funds of the company. -on the loan.
in an escrow account.
appraisal fee must be paid
in cash
A state law that requires payment of interest on an escrow account is: -consistent with RESPA and could therefore be enforced by the state. -in direct violation of RESPA and would therefore be overturned in court, - -inconsistent with RESPA and Federal law would take precedent. -a violation of RESPA interest is not paid on escrow accounts.
in direct violation of RESPA and would therefore be overturned in court
An acceleration clause in a mortgage instrument could NOT
increase payments at periodic intervals.
What is the adjustable number used to compute the interest rate on an ARM called?
index
Total Interest Percentage (TIP)
informs the borrower of the total amount of interest the borrower will pay over the loan term as a percentage of the loan amount
How do VA Funding fees vary?
initial loan, active duty = 2.15% initial loan, reserve = 2.4% subsequent loan, active and reserve = 3.3%
For a Mortgage Servicer, refusing to reinstate a delinquent loan after receiving a payment made to pay all past due amounts: -is permitted. Once the loan has become delinquent, the lender may do whatever they want with it. -is prohibited. Loans must be reinstated once all past due payments have been made. -may be either permitted or prohibited, depending on the length of time the loan has been delinquent. -is permitted if the loan was more than 180 days late
is prohibited. Loans must be reinstated once all past due payments have been made.
What is a yield spread premium?
is the money or rebate paid to a mortgage broker for giving a borrower a higher interest rate on a loan in exchange for lower up front costs, generally paid in origination fees, broker fees or discount points.
Charges for third-party services paid by or imposed on the consumer are grouped together and subject to a 10% cumulative tolerance. These fees can include all of the following EXCEPT the
lender processing fee
All of the following are powers/duties of the Regulatory Authority except: -conduct Investigations and Issue Fees and Penalties. -issue Warrants and Participate in Arrests. -conduct examinations of licensee's books and records. -collect and submit fingerprints and participate in background Investigation done by FBI.
issue Warrants and Participate in Arrests.
The Regulatory Authority may do any of the following if an applicant fails to meet requirements for receiving a license except: -deny a license. -issue a license. -suspend a license. -revoke a license.
issue a license.
The Regulatory Authority may do all of the following except: -establish licensing rules and regulations. -issue, revoke, deny, suspend, and condition licenses. -audit, investigate, and conduct enforcement actions necessary to carrying out the SAFE Act Audit, investigate, and conduct enforcement actions necessary to carry out the SAFE Act. -issue warrants and make arrests as a result of fraudulent activity by a Mortgage Loan Originator.
issue warrants and make arrests as a result of fraudulent activity by a Mortgage Loan Originator.
What is a proxy term?
it is not a transaction term, it varies consistently with the transaction terms and the originator can add, drop or change the factor.
The SAFE Mortgage Licensing Act is NOT designed to: -increase integrity in the residential mortgage loan market. -enhance consumer protections. -reduce fraud. -keep mortgage rates low with licensing standards.
keep mortgage rates low with licensing standards.
You pull credit on a husband and wife. It turns out their debt-to-income ratio is too high. You notice the majority of the debts belong to the husband. You also note that the wife has enough income to qualify on her own. You remove the husband from the loan, submit the file, and receive approval. This action is: -legal but unethical (except for communal property sales). -illegal but ethical (except for communal property sales). -illegal and unethical (except for communal property sales). -legal and ethical (except for communal property sales).
legal and ethical (except for communal property sales).
A loan officer creates a marketing plan to make between 2k and 4k per loan. His cousin calls, he agrees to do the 300k loan for .75% commission. This is: -legal and unethical but okay because he is family. -illegal and ethical. -illegal and unethical. -legal and ethical because he is within his marketing plan.
legal and ethical because he is within his marketing plan.
On a Federal Residential Loan Application: You initially disclose a rate of 5% to the customer but are floating the rate. Over the next few days, rates improve and you have the option to lock the customer in at a rate of 4.75% and earn the same compensation. This behavior would be considered: -illegal and unethical. -legal and ethical. -illegal but ethical. -legal but unethical.
legal and ethical.
A potential client is shopping around for a competitive rate and a 15-day lead time to close. The brokerage you work for offers highly competitive rates, has an average lead to close time of 30 days, and a fast lead to close time of 21 days. Understanding these figures, you tell the client you can meet their demands and secure their business. This action is: -legal but unethical. -illegal but ethical. -illegal and unethical. -legal and ethical.
legal but unethical.
You have been working with a client for the past six months who has finally been approved by the lender and is ready to close. Two days before closing, interest rates drop and you explain to your customer that you are unable to go with a different lender at the better rate because of the standing commitment to the current lender. You also inform your client that breaking a rate with a lender is very damaging to the broker-lender relationship. After explaining the situation, your client still chooses to back out of the loan and go with a different loan officer. Your client's action in this situation is: -illegal but ethical. -illegal and unethical. -legal but unethical. -legal and ethical.
legal but unethical.
For one person to sign a legal document for another person generally would be considered forgery, unless the person signing had: -a close relationship with the person, i.e., spouse, child, or parent. -There are no circumstances when this is legally allowable. -legal power of attorney. -a writ of being handicapped and unable to sign for themselves.
legal power of attorney.
discount points are set by
lender
Some lenders and investors were willing to make subprime loans because: -borrowers typically had greater income stability than with other real estate loans. -borrowers typically had greater net worth than with other real estate loans. -lenders could charge higher rates for the added risk. -lenders experience less risk with subprime loans than with other real estate loans.
lenders could charge higher rates for the added risk.
interest rate on an FHA loan is often less than that on a comparable conventional loan. to earn an equivilant yield on an FHA loan--
lenders may charge a loan discount
The SAFE Mortgage Licensing Act is designed to do all of the following EXCEPT? -increase integrity in the residential mortgage loan market. -enhance consumer protections. -reduce fraud. -license all Mortgage Loan Originators.
license all Mortgage Loan Originators.
Endorsements do not include: -true and correct address. -environmental. -encroachments. -liens.
liens.
What fact about a borrower may an underwriter take into consideration when approving a mortgage loan application?
likelihood of continued income
The purpose of an alienation clause is to
limit the debtor's right to transfer property without permission of the lender. - An alienation clause limits the debtor's right to transfer property without permission of the lender or creditor.
FHA Cashouts 12months or Less
limited to 85% of the appraised value or the initial sales price which ever is lesser
FHA MIP %
loan amounts of $625,500 or less = 1..25% loans in excess of $625,500 = 1.50%
Early default is usually an indicator of: -FICO score. -a prepayment penalty. -yield spread premium. -loan fraud.
loan fraud.
When a lender in the primary mortgage market sells loans to the secondary market in groups of loans that are similar in quality and size, it is referred to as a: -float agreement. -jumbo package. -loan pool. -conforming loan bundle.
loan pool.
According to Reg. Z, the borrower's automatic right to rescind the loan within 3 business days does not apply to: -loans used to refinance the borrower's home. -loans secured by second trust deeds. -equity lines of credit. -loans to purchase or build the borrower's residence.
loans to purchase or build the borrower's residence.
The Real Estate Settlement Procedures Act does not apply to: -higher loan amounts of $1 million or more on residential properties. -loans used to finance the purchase of 25 acres or more. -refinance transactions. -purchase loans that are secured by a first mortgage on the property.
loans used to finance the purchase of 25 acres or more.
Lenders must determine the consumer's ability to repay both the principal and the interest over the _________
long term
the FHA mortgage insurance protects lender against
losses resulting from default by borrower
graduated payment loan program-1st main feature is the monthly payments on the loan are
lower in the first year of the loan and increase over a period of years up to final payment level
FHA does not
make loans itself or provide housing
After obtaining the initial application, a loan officer's next step is usually to
obtain a credit report. - After a loan officer takes an application, a credit report needs to be reviewed to see if the customer is creditworthy.
Background checks performed by the Regulatory Authority includes all the following except: -fingerprints, personal history and experience. -state, national, and international criminal history. -marital History. -administrative, civil, or criminal findings by a governmental agency.
marital History.
Interest rates for an FHA loan are set by: -HUD. -Federal Reserve Bank. -market forces and/or negotiation between lender and borrower. -Federal Reserve Board.
market forces and/or negotiation between lender and borrower.
The best appraisal method to be used for a single family residence would be: -market, sales or comparison approach. . -income approach. -cost approach. -gross rent multiplier approach.
market, sales or comparison approach.
A borrower sends a check to his mortgage servicer that is less than the required payment stated in the terms of the contract. If the servicer accepts the payment, it
may credit the payment as of five business days after receiving it.
Revised loan estimate disclosures _______________ be delivered at the same time as the Closing Disclosure
may not
Background checks performed by the Regulatory Authority do not include: -a Credit Report. -administrative findings by a governmental agency. -civil, or criminal findings by a governmental agency. -medical findings by a governmental agency.
medical findings by a governmental agency.
Consumers may exercise the right to rescind the credit transaction until
midnight of the third business day following loan consummation
property which is financed with an FHA loan must meet certain standards which are specified in the FHA
minimum property requirements (MPR's)
Care must be taken to ensure that an advertisement that states any tax implications - such as whether interest is tax-deductible - is not
misleading
A disadvantage of a 15-year loan versus a 30-year loan is
monthly payments are usually higher.
ALL FHA loans require that escrow accounts be established and that
monthly payments for taxes and insurance be made in escrow accounts
With a fixed rate loan,
monthly payments must remain constant - Fixed rate loans have interest rates and monthly payments that remain constant for the duration of the loan. The monthly amount applied to interest and principal does change every month, but the total payment of these remains constant.
On the application, property tax is entered in the amount that will be paid: -annually. -Property tax is not entered any where on the application. -monthly. -quarterly.
monthly.
On the loan application, the term of the loan should be entered in number of: -years. -days. -months. -units.
months.
A person, who brings a borrower and lender together, is knows as a: -loan officer. -mortgage lender. -mortgage broker. -loan intermediary.
mortgage broker.
A person, who functions as an intermediary between a lender and a borrower, is known as a: -loan officer. -loan intermediary. -mortgage broker. -mortgage lender.
mortgage broker.
Which type of lender typically functions as the originators and servicers of mortgage loans on behalf of large investors?
mortgage companies - Mortgage companies are institutions that function as the originators and servicers of loans on behalf of large investors such as insurance companies, pension plans, or the Federal National Mortgage Association.
to pay for losses such as these, the FHA charges all borrowers a
mortgage insurance premium on all loans
What is Front end DTI?
mortgage obligations divided by your gross monthly income
A bridge mortgage is described as
mortgage that occurs between the termination of one mortgage and the beginning of the next. - A bridge mortgage (also referred to as a swing loan or gap loan) is a mortgage that occurs between the termination of one mortgage and the beginning of the next.
If a sheriff's sale is held, the document that dictated the foreclosure sale was a: -mortgage. -due-on-sale clause. -trust deed and note. -deed in lieu of foreclosure.
mortgage.
The entity that services a loan, basically takes on the duties of the: -mortgagee. -mortgagor. -trustor. -obligor.
mortgagee.
Market value can best be defined as a property's
most probable selling price.
The federal Truth in Lending Act
regulates advertising with references to mortgage interest rates.
Base employment income must be verified by: -current year-to-date pay stubs and three year's W-2 Forms. -two years of W-2 Forms. -most recent and current year-to-date pay stubs and the past two year's W-2 Forms. -The IRS does not encourage the use of W-2 Forms for employment verification since it may be ruled an invasion of privacy.
most recent and current year-to-date pay stubs and the past two year's W-2 Forms.
The definition of a "Complete Application" includes all of the following EXCEPT the
most recent two months of bank statements
A mortgage loan that includes mortgage insurance _____ have an escrow account
must
All government insured or guaranteed loans _____ have an escrow account
must
If an advertisement references both variable and non-variable rate loans, the terms "adjustable rate mortgage," "variable rate mortgage," or "ARM"
must appear with equal prominence as any use of the term "fixed" or "fixed rate mortgage"
A lender is offering an ARM loan that is fixed for the first three years. When advertising that loan, the word "fixed"
must be accompanied by the fixed time period.
According to the SAFE Act a mortgage loan originator employed by a federally insured depository institution: -is not required to be registered or licensed. -must be both registered and licensed. -must be registered. -must be licensed.
must be registered.
What results when a loan balance grows due to deferred interest?
negative amortization
Promissory notes that are freely transferable from one party to another are called
negotiable instruments - Most promissory notes used in real estate are negotiable instruments that are freely transferable from one party to another.
interest rate on all FHA loans is now determined by
negotiation between each individual borrower and lender
Fill in the Blank. In order to maintain a loan originator license, the applicant must be covered by either a surety bond or a(n) __________ , or pays into a state fund, as required by the state loan originator supervisory authority. -employer's letter of credit/recommendation -high credit score -national lender as an employer -net worth
net worth
If a new Closing Disclosure is delivered to the borrower, the borrower is given a
new 3 business day waiting period prior to loan consummation
Upon redisclosure of a corrected Loan Estimate, the borrower receives a
new three business day period to review the disclosures prior to consummation
If an advertisement discloses only the APR, what additional disclosures are required?
no additional disclosures are required
Prior to consummation when is the latest a borrower can receive a loan estimate
no later than 4 business days prior to consummation
MLOs must document the reason for the revised Loan Estimate, and retain that documentation for
no less than three years after settlement
FHA allows loans on all property types except: -non-owner occupied. -manufactured housing. -2-4 Units. -condominiums.
non-owner occupied.
A "jumbo" loan is also known as a(n)
nonconforming loan - A jumbo loan is also known as a nonconforming loan.
It is permissible to sign a borrower's application or related documents on behalf of or instead of another Mortgage Broker, Lender, or Loan Originator as long as: -that individual has given consent. -the document must be submitted in a timely manner and the individual who needs to sign cannot do so. -there is a note indicating your action. -none of the above, this action is not permitted.
none of the above, this action is not permitted.
All of the following are grounds for the Regulatory Authority to revoke a license except: -material misstatements in an application. -conviction of any crime of moral turpitude. -failure to account for funds received or disbursed. -not completing Continuing Education before Dec 31st.
not completing Continuing Education before Dec 31st.
TILA requires all of the following to be reflected on the TIL Statement EXCEPT the
note rate.
The rate that is used to amortize the mortgage loan and determine the monthly loan payments is known as the
note rate.
If a borrower wants to do a Rate/Term refinance loan and is still in the process of paying off a Chapter 13 bankruptcy, in order to do this loan you will need to: -make sure the bankruptcy was filed at least 7 years ago. -send a letter to the lender requesting permission to proceed. -obtain signed approval from the customer's bankruptcy court judge. -do nothing; special processes are only required for Chapter 7 and Chapter 11 bankruptcies.
obtain signed approval from the customer's bankruptcy court judge.
Each individual state has its own prohibited content information, however some prohibited acts are consistent in every state. All of the following would be considered a prohibited act except: -directly or indirectly employing any scheme, device, or artifice to defraud or mislead borrowers or lenders or to defraud any person. -engaging in any unfair or deceptive practice toward any person. -obtaining a loan on real property. -Soliciting or entering into a contract with a borrower that provides, in substance, that the person or individual subject to the S.A.F.E. Act may earn a fee or commission through "best efforts" to obtain a loan even though no loan is actually obtained for
obtaining a loan on real property.
"Concessions," as relates to the mortgage business are: -illegal forms of advertising by real estate agents and companies. -offers by sellers to pay the buyers' down payment. -offers by sellers to contribute to the closing costs of the buyer. -special add-ons built into the property to make it more sell able to induce buyers into purchasing.
offers by sellers to contribute to the closing costs of the buyer.
Licensee must disclose license and NMLS Number in each of the following circumstances EXCEPT: -at the time fee is paid by loan applicant. -on residential mortgage loan application forms. -on solicitations / advertisements, including, without limitation, business cards and websites. -on personal emails to family and friends.
on personal emails to family and friends.
How soon after a borrower is provided with all required disclosures may a loan close?
on the 7th business day after the disclosures were provided
The Unique Identifier, issued by NMLS, of any person originating a residential mortgage loan shall be clearly shown on all of the following except: -Residential Mortgage Loan Application Forms. -Residential Mortgage Loan Applications. -on the company's front door. -Residential Mortgage Loan Application Advertisements.
on the company's front door.
If a residential mortgage transaction is a lender-defined high-risk loan, PMI must be terminated:
on the date on which the principal balance of the mortgage - baed solely on the initial amortization schedule for that mortgage - is first scheduled to reach 77% of the original value of the property securing the loan, regardless of the outstanding balance for that mortgage on that date
When are lender credits guaranteed?
once a lock is disclosed
How often must escrow accounts be analyzed?
once every 12 months
RESPA requires the use of the HUD-1 for
one- to four-family residences.
borrowr may pay more for property than FHA appraisal but total amount of the price above the allowable loan amount must be
paid in cash
Negative amortization is when the: -borrower is not making payments on the loan. -mortgagee makes payments to the mortgagor. -payment is interest only, and the principal of the loan is not being reduced. -payment is less than the required interest amount and the loan balance increases.
payment is less than the required interest amount and the loan balance increases.
The Regulatory Authority shall have free and reasonable access to all of the following except: -books and Records. -records, hard copy and electronic files. -personal credit report. -personal checking account information.
personal checking account information.
To comply with the FACT Act, a mortgage loan originator should
place all loan applications and documentation in a secure place when not working on them.
With a trust deed, what clause allows a creditor to begin a non-judicial foreclosure action to sell the property without court supervision?
power of sale clause - Such non-judicial foreclosure is authorized by a power of sale clause.
At closing, the buyer realizes that the lender changed the terms of the loan, but since he was facing foreclosure, he felt he had no choice but to go ahead with the refinance or lose the house. This could be an example of
predatory lending
A lender who preys upon minority, elderly or recent immigrant borrowers in order to take their home's equity is engaging in: -home equity lending. -predatory lending. -negative amortization lending. -equity lending.
predatory lending.
the FHA insures loans, not guarantees them, because the money to pay for losses comes from
premiums by borrowers
Closing costs are those costs related to the loan EXCEPT: -discount points. -prepaid items. -processing fee. -loan origination fee.
prepaid items.
In a note, what gives the lender the right to charge the borrower a fee for retiring the loan early?
prepayment penalty
federal law prohibits FHA loans from including a due on sale clause or
prepayment penalty
When there is a clause in a mortgage that requires the borrower to pay an extra fee if the loan is paid off early, it is known as a: -post-payment penalty. -prepayment penalty. -early payoff charge. -prepayment privilege.
prepayment penalty.
When a loan is immediately being sold onto the secondary market, the responsibility of "funding" belongs to the: -borrower. -secondary lender. -primary lender. -seller.
primary lender.
The FHA insures loans made by
private lenders
Items on the Loan Estimate that have no tolerance restrictions for change include all of the following EXCEPT
private mortgage insurance
You just closed a loan with a customer and would like to take them out to dinner to celebrate their new home purchase. Midway through the meal, you realize paying for your clients' meals may be considered a violation of RESPA. You should: -ask your clients to pay for your meal. -proceed; it is ok to for you to pay for their meals. -ask your clients to pay for their meals. -pay only if their meal is under $25 which is allowed.
proceed; it is ok to for you to pay for their meals.
Lenders and servicers are ______________ from charging a fee for the preparation of the Loan Estimate or other disclosures required by the TILA or disclosures or statements required such as the Loan Estimate, Closing Disclosure, or annual escrow account statements
prohibited
The Fair Credit Reporting Act covers all of the following EXCEPT: -disclosing obligations on users of consumer reports. -prohibiting discrimination regarding the handicapped. -regulating the consumer reporting industry. -ensuring fair, timely and accurate reporting of credit information.
prohibiting discrimination regarding the handicapped.
TILA requires all of the following on the initial disclosure except the: -amount financed. -finance charge. -promissory note. -total of payments.
promissory note.
A written promise to repay a debt is called a
promissory note.- A promissory note is a written promise to repay a debt.
The annual percentage rate (APR) as required to be disclosed in a Truth in Lending statement is the
relationship between the total cost of borrowing and the actual amount borrowed.
The purpose of Fannie Mae and Freddie Mac is to: -make all loans. -insure all loans. -reinsure or guarantee just FHA and VA loans. -provide a source of funds to the primary market mortgage lenders.
provide a source of funds to the primary market mortgage lenders.
most familiar function of FHA is to
provide loan insurance programs
According to the Fair Credit Reporting Act if adverse action is taken against a prospective borrower because of information on a credit report, the lender who used that report is required to: -dispute the decision in writing for the customer. -provide the agency contact information required for the consumer to obtain a free copy of the credit report used. -recommend credit counseling to the borrower. -review the credit report with the borrower for inaccuracies.
provide the agency contact information required for the consumer to obtain a free copy of the credit report used.
The purpose of a Market Conditions Addendum is to: -replace the need for a full appraisal. -reveal prior marketing efforts by any realtor. -provide the lender with an understanding of the market trends and conditions in the subject property. -provide the lender/client with a clear and accurate understanding of the market trends and conditions prevalent in the subject neighborhood.
provide the lender/client with a clear and accurate understanding of the market trends and conditions prevalent in the subject neighborhood.
According to the Fair Credit Reporting Act, if adverse action is taken against a credit applicant because of information on a credit report, the lender who used that report is required to
provide to the consumer the name, address, and telephone number of the consumer reporting agency that furnished the report.
Homeowners Protection Act of 1998
provides certain disclosures and notification concerning private mortgage insurance (PMI) on residential mortgage transactions
203(b) standard loan program- promotes home ownership by
providing insurance for loans on residential real estate
A subordination clause in a mortgage
puts the mortgage in first lien position over an earlier recorded mortgage.
The Real Estate Settlement Procedures Act requires all of the following except: -a Good Faith Estimate. -a Settlement Statement. -a Special Information Booklet. -race, ethnicity and gender information.
race, ethnicity and gender information.
2nd mortgages are
rarely approved by the FHA
The Closing Disclosure discloses the settlement service provider charges the borrower will pay and all of the following EXCEPT
rate lock in information
What are the timeline requirements for FHA house flipping? (the rule has been temporarily repealed)
re-sales occuring in 90 days or less, are not eligible for FHA financing. Re-sales occurring in 91-180 days will be eligible with an additional independent appraisal Any re-sale occurring between 90 days and 1 year are subject to additional review to establish value
1st purpose of the appraisal is to determine
reasonable value for the property
What information is a loan originator NOT allowed to ask a borrower who is applying for a home mortgage?
receipt of public assistance
According to the Gramm-Leach-Bliley Act, which would NOT be considered nonpublic personal information and, therefore, is NOT protected?
recorded mortgages - A mortgage that has been recorded is public information and is, therefore, not covered by the privacy provisions of the Gramm-Leach-Bliley Act.
A Latina applies to a mortgage company for a home loan. She is refused based on the reputation of the neighborhood for a high number of foreclosures. This is an example of what illegal practice?
redlining
You are working on a file referred to you by a realtor. The realtor calls you to see if there is going to be any problem getting the customer qualified. The realtor wants to know what the borrower's credit scores are before presenting the offer. The most appropriate course of action is to: -refer the realtor to the borrower. -never disclose a borrower's information to a realtor. -obtain permission from the borrower to disclose the information. -tell the realtor the credit score.
refer the realtor to the borrower.
The APR
reflects certain finance charges associated with the loan spread out over the life of the loan. It is generally higher than the note rate
The Truth in Lending Act protects the borrower by: -putting caps or limits on rate adjustments. -making low interest rate guarantees. -requiring disclosure of loan costs -establishing usury laws.
requiring disclosure of loan costs
RESPA applies to all: -business real estate loans. -commercial real estate loans. -residential real estate loan. -real estate purchase transactions.
residential real estate loan.
Regulation Z applies to all: -business loans with collateral. -commercial real estate loans. -residential real estate mortgage transactions. -agricultural purchase transactions.
residential real estate mortgage transactions.
What is the most common appraisal approach used in appraising single-family housing?
sales comparison approach
closing cost on FHA loans are paid by
seller, but may be paid by buyer
Which of the following is NOT included as a protected class by the Equal Credit Opportunity Act?
sexual orientation
A Good Faith Estimate: -must be within $500 of the final costs. -is an estimate only and is not required to reflect the actual settlement costs. -should exhibit a reasonable relationship to the actual final settlement costs. -be within $1,000 of the final costs.
should exhibit a reasonable relationship to the actual final settlement costs.
graduated payment loan program is limited to
single family, owner occupied houses
Which factor is given the LEAST consideration when evaluating a mortgage loan application?
source of income - Creditors may not deny a loan based on the source of income; they may deny a loan based on the likeliness that income will not continue.
All may be included in a borrower's income analysis EXCEPT
sporadic overtime and bonuses.
The primary purpose of the loan application is to determine the borrower's: -purpose for obtaining the loan. -collateral and the value of the collateral. -stability, ability, and willingness to repay the loan. -need for the loan.
stability, ability, and willingness to repay the loan.
Which is considered a significant stabilizing influence of the secondary mortgage market?
standardization of loan criteria - The secondary mortgage markets influences the standardization of loan criteria.
If an advertisement is for credit secured by a dwelling, the advertisement may not
state any other rate, except that a simple annual rate that is applied to an unpaid balance may be stated in conjunction with the annual percentage rate
The borrower knows that he has derogatory credit. He convinces his brother who has better credit and income to apply. The brother of the borrower is considered a(n): -identity thief. -investor. -mortgage rescuer. -straw buyer.
straw buyer.
How does RESPA define an "application"?
submitting the borrower's financial information in anticipation of a credit decision
A home developer has an existing mortgage for the purchase of land. If the new lender of a second construction mortgage wants to ensure that the second construction mortgage takes priority over the existing first mortgage, what type of clause must be contained in the construction mortgage?
subordination clause - A subordination clause in a contract gives a mortgage recorded at a later date the right to take priority over an earlier recorded mortgage.
A borrower with less than perfect credit or other risk factors may qualify most easily for what type of loan?
subprime - Subprime loans fill a need for those with less than perfect credit who want to own a home. Some lenders and investors are willing to make these riskier loans because they can get much higher interest rates and fees than they can with other real estate loans.
A borrower who qualifies for B, C or D paper or less favorable terms and interest rates is referred to as a: -subprime borrower. -conforming borrower. -non-conforming borrower. -secondary borrower.
subprime borrower.
An alternative documentation loan is a type of: -subprime loan. -reverse mortgage. -adjustable rate loan. -seller financing.
subprime loan.
Monthly payments must generally be calculated by assuming that the loan is repaid in ________ during its term. -substantially equal monthly payments -substantially equal annual payments -substantially equal bi-weekly payments -unequal annual payments
substantially equal monthly payments
The borrower is applying as self-employed. An underwriter would deal with the Schedule A and 2106 expenses by: -subtracting unreimbursed business expenses. -adding unreimbursed personal expenses to the income. -adding expenses to the income. -subtracting expenses from the income.
subtracting expenses from the income.
Underwriters calculate overtime income for a loan by: -using a year-to-date average of the overtime income. -taking a one year average of the overtime income. -taking a two year average of the overtime income. -never allowing overtime income.
taking a two year average of the overtime income.
If the borrower is self-employed, she should provide
tax returns for the previous two or three years.
The Regulatory Authority shall NOT have free and reasonable access to licensees': -books. -records. -offices. -tax returns.
tax returns.
MLOs are prohibited from
telling an appraiser a minimum value needed to approve the loan.
APR
tells the borrower the total cost of financing a loan in percentage terms, as a relationship of the total finance charges to the total amount financed
An MLO hands the borrower a GFE and a TIL in his office the day after the application was completed. The MLO can charge the borrower for an appraisal
that day - When required disclosures are hand-delivered to a borrower, the MLO can charge other loan fees that day.
The relationship between the loan amount and the total amount financed, represented as a percentage, is known as: -an ARM. -the APR. -a discount point. -.the note rate.
the APR.
The responsibility of financial institutions to meet both the deposit and credit needs of the community, including the needs of low-income families, is called? -the Home Mortgage Disclosure Act. -the Community Reinvestment Act. -the Fair Credit Reporting Act. -the Equal Credit Opportunity Act.
the Community Reinvestment Act.
The Nationwide Multistate Licensing System and Registry is developed and maintained by: -the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators. -the American Association of Residential Mortgage Regulators (AARMR) and the National Mortgage Licensing System (NMLS). -the National Credit Union Administration (NCUA) and the Comptroller of the Currency. -the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA).
the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators.
maximum loan amount on FHA loan is set by
the FHA
On a conforming purchase loan transaction, the maximum percent a seller can contribute under "Seller Contributions" is determined by: -the LTV on the purchase loan. -the loan amount. -the borrower's middle credit score. -both the LTV and DTI.
the LTV on the purchase loan.
The Regulatory Authority shall renew a mortgage loan originator's (MLO) license if all of the following are done EXCEPT: -the originator continues to meet the minimum requirements. -the originator paid the fee to renew. -the originator satisfied the Continuing Education. -the MLO retests.
the MLO retests.
All of the following are considered a Federal Banking Agency EXCEPT: -The Board of Governors of the Federal Reserve System. -The Comptroller of the Currency. -the FDIC. -the NMLS.
the NMLS.
To accurately predict when a refinanced owner occupied property mortgage loan will fund after settlement, you must consider: -the Three-Day Right of Rescission. -the day of the week the loan closes. -if the lender does "table funding". -if you are allowed to back date or not.
the Three-Day Right of Rescission
The 1003 is also known as: -the settlement closing document. -the transmittal summary. -the loan, disclosure document. -the URLA.
the URLA.
Advertisements may not compare actual or hypothetical payments or rates and a "teaser" payment or simple annual rate available for the advertised product unless
the ad includes a clear and conspicuous comparison to the terms required to be disclosed
What is a Yield Spread Premium?
the amount paid to a borrower for closing a loan at an interest rate above the par rate. Par rate is the rate the lender neither pays or charges for the rate.
When offering or negotiating the terms of a loan, all of the following may occur, except when: -further verification of information is necessary. -the offer is conditional. -other individuals must complete the loan process. -the appraised value must equal the purchase price.
the appraised value must equal the purchase price.
When an ARM loan is obtained, additional disclosures to the borrower include all the following EXCEPT: -a loan program disclosure. -the balance in the lender's trust account. -a $10,000 loan historical example. -a handbook explaining Adjustable Rate Mortgages.
the balance in the lender's trust account.
closed-end credit
the balance is expected to repaid - along with any interest and finance changes - by a specified future date
It is allowed to discriminate under ECOA if: -the borrower is too young to enter into legally binding documents. -the borrower is too old to understand. -the borrower doesn't speak the same language; you cannot communicate. -Never
the borrower is too young to enter into legally binding documents.
One of the acknowledgments in the signature section of the 1003 loan application, signifies that: -both the MLO and the borrower acknowledge that the borrower has received all appropriate disclosures. -the borrower commits to the repayment of the loan if granted. -the borrower represents that all information contained in the form is the truth. -the MLO has properly explained all blanks on the 1003 loan application.
the borrower represents that all information contained in the form is the truth.
As it relates to a loan, the right of redemption is the right of: -the borrower to renegotiate the terms of the loan. -the lender to foreclose on a property. -the lender to sell the property during the redemptive period. -the borrower to redeem their property during the redemption period.
the borrower to redeem their property during the redemption period.
finance charges
the cost of consumer credit as a dollar amount; includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident or to a condition of the extension of credit
When providing the initial Loan Estimate, a business day is considered to be
the day a business entity is open for business to the public for the purpose of transacting substantially of the entity's business
If the ratios needed to qualify the buyer were expressed as 28/36, it would mean: -the income ratio must fall between 28 and 36. -the debt ratio must fall between 28 and 36. -the debt to income ratio or housing ratio is 28% and the total debt to income ratio is 36%. -the debt or back end ratio is 28 and the front end is 36.
the debt to income ratio or housing ratio is 28% and the total debt to income ratio is 36%.
the FHA loan programs are administered through
the federal housing administration
bona fide financial emergency
the imminent sale of the consumer's home at foreclosure, where the foreclosure sale will proceed unless loan proceeds are made available to the consumer during the waiting period
money which provides the FHA insurance protection to lenders comes from
the insurance premiums which are paid on each loan insured by FHA
note rate
the interest rate that appears in the promissory note
in rare cases, FHA may allow a 2nd mortgage at time loan is made, but is possible only with
the knowledge and consent of the FHA
The partial payment disclosure, located in the Closing Disclosure contains all the following disclosures EXCEPT
the lender will only accept partial payments after foreclosure proceedings have been initiated
when an FHA appraisal is ordered, the results of the appraisal will be given to
the lender, not the borrower
appraisal for an FHA loan is ordered by
the lender, who will make the loan, not the borrower
Loan documentation fraud may include any of the following except: -the MLO. -the lender. -the borrower. -the realtor.
the lender.
Private mortgage insurance (PMI) is NOT required when
the loan has been paid down to less than 78% of the property's original value.
RESPA imposes requirements about or prohibits all of the following except: -legal kickbacks and referral fees. -the loan origination fee. -the amount of prepaids. -information that must be disclosed to the borrower at the loan application or within 3 business days of the application.
the loan origination fee.
RESPA pertains to: -appraisal companies. -title companies. -the loan process. -the mortgage insurance process.
the loan process.
A lender will not accept a double contract because: -it only benefits the buyer and the seller. -the broker and the realtor could get paid twice. -the loan would be closed and funded based on misrepresentations to the lender. -it creates excess paperwork.
the loan would be closed and funded based on misrepresentations to the lender.
During the term of a fully amortized loan which of the following is true? -the monthly amount going to principle increases -the monthly amount going to interest increases -the monthly payment amount going to principal decreases -the principal balance increases
the monthly amount going to principle increases
A changed circumstance for the purpose of the Loan Estimate can be any of the following EXCEPT
the mortgage loan originator neglected to inform the borrower of the additional cost and necessity of a review appraisal when requested
The Regulatory Authority may renew a mortgage loan originator's license if all of the following occurs except: -the originator continues to meet the minimum requirements. -the originator paid the fee to renew. -the originator has been involved in an act of fraud, dishonesty, or a breach of trust. -the originator satisfied the continuing education requirements.
the originator has been involved in an act of fraud, dishonesty, or a breach of trust.
When a lender originates a mortgage for a buyer by providing loan money, this is known as
the primary mortgage market. - When the lender loans money to a borrower and the borrower gives the lender a mortgage, this is called the primary mortgage market.
Your customer owns several rental properties, one-third of which have a Negative Net Lease. Therefore, you can conclude that: -two of the rentals are owned outright. -the rents are equal to or less than the mortgage amount due each month. -more rent is collected than your borrowers owe in payments each month. -one out of the three rental properties is vacant.
the rents are equal to or less than the mortgage amount due each month.
clear and conspicuous disclosure
the required disclosures are given at a speed and volume sufficient for a consumer to hear and comprehend them
According to the Truth-in-Lending Act (TILA), the term "refinance" applies to: -a change in payment schedule. -a reduction of the APR. -the renewal of a single payment obligation with no change in the original terms. -the satisfaction of an existing obligation and its replacement by a new obligation.
the satisfaction of an existing obligation and its replacement by a new obligation.
Which item is NOT included in the calculation that determines the annual percentage rate?
the title insurance premium
245 Growing Equity Mortgages and Graduated Payment Mortgages
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.
Applicants may retake the exam a total of three (3) times with each retake occurring at least how long after the preceding exam? -thirty (30) days -fifteen (15) days -five (5) days -180 days
thirty (30) days
How much can VA loans finance in LTV?
up to 100% of the lower of the purchase price or appraised value
At what point can an MLO charge a loan origination fee?
three business days after mailing the required disclosures
The APR on a Loan Estimate for a 30-year fixed rate loan is 6.25%, and the APR on the Closing Disclosure is 6.5%. After redisclosure, how long must the borrower wait to close the loan?
three business days after redisclosure
The length of the rescission period for a refinanced mortgage loan is: -three business days including Saturday and excluding Sunday and holidays. -three business days including Saturday and Sunday excluding holidays. -five business days including Saturday and excluding Sunday and holidays. -three business days excluding Sunday and legal public holidays.
three business days excluding Sunday and legal public holidays.
When it is necessary to provide a revised Loan Estimate, MLOs must do so within
three business days of receiving information sufficient to establish changed circumstances
For income from alimony and child support to be recognized as income, the remaining term of such income must exceed: -five years. -three years. -seven years. -one year.
three years.
The APR includes all fees that are required in order to get the loan. Not included is: -title Insurance. -daily Interest charge. -MIP or PMI. -origination fee.
title Insurance.
If the borrowers wanted to be sure that the interest rate available at the time of their application would be the same when they closed on their home purchase, they would want: -to "buy down" the interest rate. -to pay an YSP/SRP to ensure the rate. -to "lock" their interest rate. -discount points to obtain the rate.
to "lock" their interest rate.
Why was the Non-traditional mortgage products and the interagency guidance on non-traditional mortgage products created?
to address the growing use of mortgage products that allow borrowers to defer payment of principal and interest
What is a Deed in lieu?
to avoid foreclosure, a deed is given to the lender to fulfill the obligation to repay the debt; this process doesnt allow the borrower to remain in the house but helps avoid the costs, time and effort of foreclosure
The purpose of the Equal Credit Opportunity Act is: -to ensure that all low-income borrowers are given favorable treatment when applying for a loan. -to ensure that all creditors have an equal opportunity to make loans. -to ensure that every borrower will get a loan. -to ensure that all borrowers are given an equal opportunity to get a loan.
to ensure that all borrowers are given an equal opportunity to get a loan.
FHA Primary Function
to ensure that low-income families, first-time buyers, and other borrowers who could not qualify for conventional loans could obtain a mortgage.
What was Fannie Mae and Freddie Mac created for?
to facilitate home ownership and mortgage financing in the United States
What is the purpose of the SAFE Act
to further regulate the mortgage industry on a national level.
The main reason loans are sold and bought on the secondary mortgage market is
to maximize the return on investment dollars. - Loans are bought and sold on the secondary market because the primary and secondary market players are trying to maximize the returns on their investment dollars.
What is the purpose of the Dodd- Frank Wall Street Reform & Consumer Act?
to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end 'too big to fail', to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes."
A unique identifier assigned to each loan originator is used for all of the following reasons EXCEPT: -to facilitate electronic tracking and uniform identification of loan originators. -to allow public access to loan originator licensing information. -to provide personal loan originator information to the general public. -to access information related to the employment history of and the publicly adjudicated disciplinary and enforcement actions against loan originators..
to provide personal loan originator information to the general public.
The total amount of interest a consumer will pay over the loan term as a percentage of the loan amount is referred to as the
total interest percentage
Debt-to-income ratio
total monthly debt divided by their total monthly gross income
TILA requires creditors to maintain records that they complied with the disclosure requirements for how many years?
two - TILA law requires creditors to maintain records for two years after the disclosures were required to be made.
Creditors must inform consumers of their right to rescind by providing
two copies of a Notice of Right to Rescind document to each consumer entitled to rescind
Creditors must inform consumers of their right to rescind by providing ________________ of a Notice of Right to Rescind to ________________________________
two copies; each consumer entitled to rescind
A licensed loan originator who is an instructor of an approved Continuing Education course may receive credit for the licensed loan originator's own annual Continuing Education requirement at the rate of: -one hour of credit for every one hour taught. -two hours of credit for every one hour taught. -three hours of credit for every one hour taught. -instructors may not receive credit in this way.
two hours of credit for every one hour taught.
Self-employed borrowers must provide Federal Tax Returns, including all applicable schedules for the previous: -one year. -three years. -two years. -four years.
two years
If dividends and interest received are being used as income, the borrower must show documentation that they have been received for at least the past: -two years. -three years. -one year. -five years.
two years.
To satisfy a lender's requirement to verify a prospective borrower's income, a lender will typically want to see employment history for the past: -three years. -one year. -five years. -two years.
two years.
How is a construction loan given?
typically as a line of credit, that is drawn up as construction progresses and expenses are incurred. Once the property is complete, a long term, permanent loan is obtained to pay it off.
sin 1965, the FHA has been an egency within the
u.s department of housing and urban development
Under what circumstances does RESPA allow a sale to be conditioned on the use of a particular title company chosen by the seller?
under no circumstances
Who makes the final loan approval or denial decision for a conventional mortgage loan?
underwriter - The underwriter is usually the final decision maker on a borrower's loan application.
Which advertising practice is prohibited by TILA?
using the term "counselor" in reference to a for-profit lender - The Truth in Lending Act prohibits for-profit lenders from using the term "counselor" in an advertisement.
Regulation B allows all of the following except: -inquiries about the ages of dependents. -inquiries about citizenship and residency status. -inquiring about receiving child support and/or alimony. -using the terms husband or wife when inquiring about a potential co-borrower.
using the terms husband or wife when inquiring about a potential co-borrower.
If a mortgage loan originator (MLO) consummates a loan while his license is suspended or revoked, the loan is: -closed, nothing needs to be done. -fraudulent and will need to be immediately repaid. -valid but the MLO violated the law. -void and will need to be rewritten.
valid but the MLO violated the law.
The term "Housing Finance Agency" includes any authority that is/has all of the following EXCEPT: -when chartered by a state to help meet the affordable housing needs of the residents of the state. -when it has the status of a tax-exempt organization. -when it is supervised directly or indirectly by the state government. -when it is subject to audit and review by the state in which it operates.
when it has the status of a tax-exempt organization.
when must a buyer qualify to assume an FHA loan?
when loan was made after December 15, 1989
A HELOC is a type of mortgage
where the balance fluctuates as the borrower accesses funds.
When the mortgage loan amount is at 78% LTV or less of the purchase price of the home, private mortgage insurance: -will be cancelled upon written request of the borrower. -will be cancelled automatically by the title company. -will be cancelled automatically by the lender. -will be required for the life of the loan.
will be cancelled automatically by the lender.
When an FHA mortgage loan amount is at 95% LTV and has a term longer than 15 years the mortgage insurance premium: -will be required for the life of the loan. -can be cancelled upon written request of the borrower. -may be cancelled automatically by the title company. -may be cancelled automatically by the lender.
will be required for the life of the loan.
If a consumer chooses to exercise the right to rescind, the mortgage is void and the creditor must return any money collected related to the loan
within 20 calendar days
When a change in interest rates prior to closing will increase the borrower's settlement charges to the point of exceeding the tolerances, mortgage loan originators must provide the borrower with a new GFE
within 3 business days of recognizing the changed circumstances.
How long do lenders have to notify a borrower their right to receive a copy of any appraisal?
within 3 days of receiving the loan application
How long does a lender have to cure a tolerance violation?
within 30 calendar days after settlement
If a lender denies an application based on credit, an adverse action notice must be made by when?
within 30 days of the action
