2022 GREATEST NMLS MLO TEST - HAS MATH EQUATION & HARD QUESTIONS

WHICH LOAN IS THIS, SCENARIO #6: The Humphrey(s) have a loan with a fixed interest rate for seven years. At the end of seven years, they will be required to pay the remainder of their loan in full, although they have a conditional refinance provision.

#6 The Morrisons have a loan with a balloon payment. 7/23 is a typical loan with a balloon payment after seven years and a conditional refinance provision.. So is 180/360

Mr. Bob Brown earns $12.00 per hour and works 38 hours each week for his job at a retail store. His wife Matilda is paid $680 bi-weekly as a medical technician. What is their combined monthly qualifying income?

(DON'T FORGET TO USE 52 WEEKS OUT OF THE YEAR- if the questions states they get bi-weekly, use 26 weeks to multiply instead) The answer is $3,449.33. Mr. Brown's monthly income can be calculated by multiplying his hourly base pay rate wage ($12.00) by the average number of hours worked per week (38), yielding a weekly income of $456.00. To determine his monthly income, weekly income ($456.00) is multiplied by the average number of weeks worked per year (52) and then divided by 12. ($456.00 × 52)/12 = $1,976.00. Mrs. Brown's income can be determined by multiplying her biweekly salary ($680) by 26 and then dividing by 12. ($680 × 26) / 12 = $1,473.33. Adding the two incomes together ($1,976.00 + $1,473.33), yields a combined monthly income of $3,449.33.

Don is refinancing his home in order to save money. If the loan goes through, his payment will drop from $2,000/month (PITI) to $1,500/month (PITI). Don's gross income each month is $6,800, but he has a $300 car payment, a $150 credit card payment, and monthly alimony payments of $1,300. What is Don's housing ratio on the proposed loan?

(PAY ATTENTION TO THE QUESTION, ASKING FOR ONLY THE HOUSING RATIO and NOT the DTI!!!) The answer is 22%. "Housing ratio" refers to the cost of Don's housing expenses monthly divided by his gross monthly income. In this case, his proposed housing expense (PITI) will be $1,500/month. $1,500 / $6,800 = 22%.

What is the difference between FHLMC and FNMA?

. Federal Home Loan Mortgage Corporation. (FREDDIE MAC) The primary difference between Freddie Mac and Fannie Mae is where they source their mortgages from. Fannie Mae buys mortgages from larger, commercial banks, while Freddie Mac buys them from much smaller banks

DIFFERENCE BETWEEN FIXED-RATE MTG & ADJ-RATE MTG

A fixed-rate mortgage charges a set rate of interest that does not change throughout the life of the loan. The initial interest rate on an adjustable-rate mortgage (ARM) is set below the market rate on a comparable fixed-rate loan, and then the rate rises (or possibly lowers) as time goes on. ARMs are typically more complicated than fixed-rate mortgages.

VA LOANS INFORMATION

ALL VA LOANS ARE ASSSUMABLE. Allows 100% cash out capability VA guidelines suggest that the debt-to-income ratio generally should be no more than 41 percent. However, if the ratio is greater than 41 percent, if your DTI is above the maximum mark, it's not automatic grounds for rejection. (basically go to another lender) If you're eligible, VA loans are fairly easy to qualify for, since there's no down payment required, no minimum credit scores, and no maximum limit on how much you can borrow relative to income.

GREAT LINKS TO READ AND FOLLOW UP ON:

Advanced Math Questions Formula Help https://www.youtube.com/watch?v=mseixXgMHz0 https://www.bankrate.com/mortgages/how-to-compare-loan-estimates/ https://www.consumerfinance.gov/rules-policy/regulations/1024/14/ https://www.youtube.com/watch?v=FXLRrkpGiwA 20 hrs safe act https://www.youtube.com/watch?v=y3SLMVxwg_Q FCRA/CREDIT/LAW https://www.slideshare.net/Valerie1120/advertising-marketing-compliance-sept-09 https://www.quickenloans.com/learn/qm-vs-non-qm-loan QM & Non-QM https://sanctionssearch.ofac.treas.gov/ OFAC site for Patriot ACT https://blog.lendingclub.com/amortization-methods Amortization explained https://clarifacts.com/faqs/disparate-impact-vs-disparate-treatment/ Disparate Theory

What is 0% Tolerance for the FEE TOLERANCE BUCKETS?

Creditor Paid[This includes any fees paid to the creditor and any lender paid credits] Mortgage Broker paid [This includes any fees paid to the mortgage broker and any broker paid credits] Paid to Affiliate of Creditor or Broker Unaffiliated Third Party if Shopping not allowed Transfer Taxes

Which of the following transactions would be exempt from the ATR Rule? A. refinance transaction B. first lien on a home C. mortgage secured by a vacation home D. An open-end HELOC

D. The answer is an open-end HELOC. An open-end HELOC would be exempt from the ATR Rule. ** NOTE Before accepting a loan that is a high-cost mortgage, borrowers must complete counseling with a counselor approved by HUD.

Difference between a Hybrid ARM loan and a regular ARM loan?

An ARM can also be referred to as a 1-year ARM. A "hybrid" ARM however, is a loan that has an initial fixed-rate period, usually for 3, 5, 7, or 10 years, after which it adjusts annually. By offering borrowers several different fixed rate periods, hybrid ARMs are the most popular type of Adjustable Rate Mortgages.

Telemarketing Sales Rule - Do Not Call registry what is described as an established business relationship? https://www.consumer.ftc.gov/articles/national-do-not-call-registry-faqs

An established business relationship exists if a consumer secured a loan from a lender within the past 18 months or contacted it within the past three months to inquire about loan products. NOTE: Telemarketers cannot call consumers before 8 a.m. or after 9 p.m. Telemarketers who do call after these times have violated two federal laws that overlap somewhat — the Telephone Consumer Protection Act, and the Telemarketing and Consumer Fraud and Abuse Prevention Act Companies that illegally call numbers on the National Do Not Call Registry or place an illegal robocall can currently be fined up to $43,792 per call.

What does AVM stand for?..in an appraisal?

Automated Valuation Model Automated valuation models (AVMs) are software-based pricing models used in the real estate market to value properties. AVMs are more efficient and consistent than a human appraiser, but they are also only as accurate as the data behind them, meaning they may be outdated or incorrect.

Loans that do not meet the guidelines set by Fannie Mae and Freddie Mac are considered to be: A. Conventional B. Nonconforming C. Government D. Unconventional

B. NON-CONFORMING Loans that do not meet Fannie Mae and Freddie Mac guidelines are considered "nonconforming."

The Federal Home Loan Mortgage Corporation is also known as: A. Fannie Mae B. Ginnie Mae C.Freddie Mac D. Freddie Mae

C. The answer is Freddie Mac. The Federal Home Loan Mortgage Corporation is known more commonly as "Freddie Mac," and also as "FHLMC."

Statements regarding the calculation of finance charges that are TRUE:

Charges that result in compensation for creditors and affiliates are included in finance charges, but when required disclosures are provided, charges for optional insurance products are not. Premiums for optional insurance products are not included if the creditor discloses that coverage is optional and does not extend through the full loan term. Reasonable charges for title insurance that do not result in direct or indirect compensation for the creditor are not included. Charges paid to a title insurer that is not affiliated with the creditor are not included.

What is the CLTV and what is this is formula used for?

Combined mortgages & Liens or credit DIVIDED over the property's value [choose the lower]

Jimmy has been working with ABC Mortgage for 16 years and has built a strong relationship base with most of his settlement service providers. The Smith file has been a big headache for Jimmy, and it looks like the deal will be very tight. Jimmy shoots an email to his appraiser that reads, "The Smiths believe that their home is worth $250,000 and would like for you to feel the same. How much will the appraisal cost?" This communication may lead to: A. appraisal review B. inflated appraisal C. violation of TILA's rules pertaining to communication with appraisers D. All of the above - these are likely to result

D. all of these are likely to result. It is likely that in Jimmy's long-term relationship with his appraiser, the meaning in this kind of email is very clear to the appraiser. In order to please Jimmy and the borrower, the appraiser is likely to do everything he/she can to arrive at as high a value as possible. This may lead to an inflated appraisal, possibly an appraisal review, and a violation of TILA's rules regarding communication with appraisers

The intention of the Safeguards Rule is to: A. Require disclosures regarding the use of personal information by third parties B. Prohibit lenders from sharing account numbers if they share customers' information C. Restrict the sharing of nonpublic personal information between nonaffiliated financial institutions D.Ensure the protection of personal information through an effective security program

D. ensure the protection of personal information through an effective security program. The Safeguards Rule requires the creation, implementation, and maintenance of an effective security program that ensures the privacy of clients' personal financial information. The program must include four key elements, including a program coordinator, identification of risks, regular testing, and oversight of third-party service providers.

What is DO and DU?

Desktop Originator(Brokers) Desktop Originator (DO) is one of the leading underwriting systems designed to help establish a home loan's eligibility. and Desktop Underwriter(lenders) DU is an automated tool that can provide lenders with certainty early on through a comprehensive risk assessment, which determines a loan's eligibility for sale and delivery to Fannie Mae. DU is the powerhouse that connects Fannie Mae technologies and gives users innovation at their fingertips.

Which of the following is true regarding ATR standards for consideration of borrower repayment ability?

General ATR standards require a consideration of DTI ratio and residual income; there is no DTI threshold or minimum required residual income. General ATR standards require a consideration of DTI ratio and residual income. However, there is no DTI ratio threshold or minimum required residual income. What are the 8 ATR rules? At a minimum, creditors generally must consider eight underwriting factors: (1) current or reasonably expected income or assets; (2) current employment status; (3) the monthly payment on the covered transaction; (4) the monthly payment on any simultaneous loan; (5) the monthly payment for mortgage-related obligations; ...

Summarize the differences between conventional loans and government loans.

Government loans like FHA are insured by the government while Conventional loans are issued and funded by financial institutions without being backed by the US Government. Government loans like FHA are also made to give a better opportunity for individuals out there that thought they couldn't afford a home because of a low credit score or other reasons relating to finance. (500-580 credit score accepted with a 3.5%-10% down payment) . Conventional Loans are usually for people that can save up a good down payment or have decent credit rating like above 720. Because of this, there would be better quality homes for Conventional Loan borrowers and more choices than the typical Government loan can show for.

When is HMDA reporting required?

HMDA reporting is not required for loans for personal property; loans to purchase RVs are personal loans and therefore not subject to mortgage lending laws. HMDA requires lenders to report the ethnicity, race, gender, and gross income of mortgage applicants and borrowers. Lenders must also report information regarding the pricing of the loan and whether the loan is subject to the Home Ownership and Equity Protection Act, 15 U.S.C. 1639 The HMDA reports provide information regarding home mortgage lending activity, and the PMIC reports provide mortgage insurance activity data from private mortgage insurance companies. The reports can be used along with the FFIEC census data for data analysis purposes. What are the three purposes of HMDA? The data- related requirements in HMDA and Regulation C serve three primary purposes: (1) to help determine whether financial institutions are serving their communities' housing needs; (2) to assist public officials in distributing public investment to attract private investment; and (3) to assist in identifying

A loan with a fixed rate at the start that will adjust regularly after a certain period is commonly referred to as a:

HYBRID ARM (also known as a "fixed-period ARM" or 'delayed first-adjustment' ARMs) This type of mortgage will have an initial fixed interest rate period followed by an adjustable rate period (can add a balloon provision if borrower wants) These ARMs feature a fixed interest rate for a period of years -- commonly 3, 5, 7 or 10 years -- before they turn into a traditional one-year ARM for the remainder of a 30-year term. A hybrid mortgage lets you split your borrowing into two or more rates. The most common example is the 50/50 mortgage, in which you put half your mortgage in a fixed rate and half in a variable rate. Some hybrids let you mix the terms (contract lengths) as well.

When can a refinance be cancelled to receive a Notice of Right to Cancel?

If you are refinancing a mortgage, you have until midnight of the third business day after the transaction to rescind (cancel) the mortgage contract. The right of rescission refers to the right of a consumer to cancel certain types of loans. HOWEVER, TILA allows for a rescission period on the refinance of a borrower's principal dwelling. IF a relative has been living in a borrower's condo as his primary residence for two years, the refinance of his previous home would be considered non-owner-occupied, which is not subject to the right of rescission. PLUS IT IS AN INVESTMENT PROPERTY - have no right to rescind

What is an example of a HELOC?

If you have a $100,000 HELOC, for example, you can borrow up to that amount at an adjustable interest rate. If you never use more than $20,000 of the HELOC line, you will only pay interest on the $20,000 you used, not the $100,000 that is the maximum value of the line. Some people mix up HELOCs with mortgage loans.

WHICH LOAN IS THIS, SCENARIO #3: Sergeant Simpson just purchased a home. He was required to pay a funding fee and qualify based on a total debt ratio of 41%.

Sergeant Simpson has a VA loan. VA loans require payment of a funding fee and only consider the total debt ratio, which must be 41% or less.

Summarize the four types of caps that affect adjustable-rate mortgages.

Since indexes can change risking rate hike the risks are mitigated somehow with the adjustable rate caps (Initial rate cap + periodic rate cap +lifetime rate cap + payment cap) Initial rate cap shows how much the interest can increase the very first time in the loan once the fixed-rate expires and commonly has a limit up to 5% at most. Periodic rate caps would limit initial and future adjustments, and a lifetime cap would prevent the loan's rate from ever exceeding a certain percentage mark(can increase in total over the LIFE of the loan). A payment cap will limit the amount of interest change - prevents increased payments on mortgage(maximum periodic payment)

Jimmie is purchasing a home with a purchase price of $350,000. He has been approved for a loan with an 85% LTV. What is his down payment?

Solution The answer is $52,500. The relationship of the loan amount to the value or sales price of the property securing the loan is called the loan-to-value ratio. The loan-to-value ratio (LTV) relates the loan to the lesser of the appraised value or sales price. If Jimmie has been approved for a loan with an 85% LTV, his down payment must cover the remainder of the purchase price, or 15%: 15% × $350,000 = $52,500

What you can do with an ARM mortgage?

Like many types of loans, you can refinance an ARM. When you refinance an ARM, you replace your existing loan with a brand new one. You can also adjust a regular ARM loan. An ADJUSTABLE RATE MORTGAGE CONVERSION involves converting the ARM structure of your loan into that of a fixed-rate mortgage. To get a conversion, you simply pay a fee and your ARM officially converts over to a fixed-rate mortgage.

The conclusive presumption of compliance applies to:

PRIME LOANS that meet the qualified mortgage standards. The conclusive presumption of compliance applies to prime loans that meet the qualified mortgage standards.

Agatha was a licensed LO when the housing market slowdown left her with little work. She accepted a job outside the mortgage field over 3 years ago, and her license expired. Now she wants to apply for a license again. One of the requirements she must meet in order to be re-licensed is:

Provide proof she completed all continuing we for the year in which license was last held, if not - she has to redo the NMLS test.

The Phillips family has a joint gross monthly income of $11,300. The $499 lease payment for their car expires in four months. A student loan that has been deferred will kick in at the end of the year, and payments will be $210 monthly. Joe Phillips pays child support for his children with his first wife in the amount of $2,200 per month, but $600 of that will drop off in four months when his oldest son turns 18. They are buying a new home with a loan that carries a $2,700 a month payment. What is their housing ratio? (REMEMBER TO READ IN DETAIL!!!)

QUESTION ONLY ASKING FOR THE HOUSING RATIO!! The answer is 24%. Housing ratio is only concerning the ratio between housing expenses and gross monthly income. In this case, their housing expenses ($2,700), divided by gross monthly income ($11,300) equals 24%

An individual who is an employee of a depository institution or a subsidiary of a depository institution meets the definition of a loan originator, defined as a(n)

REGISTERED MORTGAGE LOAN ORIGINATOR A "registered mortgage loan originator" is an individual who is employed by an exempt depository institution and is therefore also exempt from licensure as a loan originator. The registered mortgage loan originator is merely required to be registered with the NMLS.

What is RTC and what does it stand for?

RTC is Right to Cancel or Rescind

A property is valued at $295,000. The property is subject to a first mortgage and a second mortgage, with a CLTV of 77%. The current balance on the second mortgage is $29,500. What is the approximate amount of the first mortgage?

The answer is $197,650. The approximate amount of the first mortgage is $197,650. This can be calculated using the information given here, according to the following formula: [first mortgage + second mortgage] / appraised value = CLTV. In this case, the question provides the amount of the second mortgage ($29,500), the appraised value of the property ($295,000), and the CLTV (77%); the amount of the first mortgage (x) must be determined. Using this formula would result in the following equation: [x + $29,500] / $295,000 = .77. First, multiply $295,000 by .77 ($227,150). This figure is equal to the first mortgage (x) plus the second mortgage ($29,500). Subtract $29,500 from $227,150 to find the amount of the first mortgage ($197,650).

The Smiths are buying a house for $200,000. After their 10% down payment, they have also decided to pay two discount points. What is the dollar amount of the discount points?

The answer is $3,600. The down payment of 10% ($20,000) is based on the purchase price of $200,000. The down payment must be deducted from the purchase price to find the loan amount. The discount points in this transaction are then based on the loan amount of $180,000. Each point is 1% of the loan amount, so a total of 2%. $180,000 × 0.02 = $3,600. (DON'T FORGET TO MINUS THE DOWN PAYMENT FROM THE PURCHASE PRICE IF THE QUESTION STATES THAT THEY MADE A DOWN PAYMENT!!)

Kelsey and Matt have just signed a contract to purchase a home for $360,000. Their mortgage loan is an HPML. Their creditor has discovered that the seller purchased the home four months earlier. The creditor will require a second appraisal if the seller's purchase price was:

The answer is $300,000 or less. For transactions involving an HPML (higher-priced mortgage loan), a second appraisal is required if the seller acquired the home 91 to 180 days prior to the consumer's agreement to purchase it, and the price at which the consumer agreed to purchase the home is 20% more than the price paid by the seller. 20% of $300,000 is $60,000. $300,000 + $60,000 = $360,000.

Richie Rich has been approved for a 90% loan. Richie is under contract to purchase a home for $400,000 and put $5,000 earnest money down with the contract. If Richie's lender is charging 1% origination, 1% discount, and the title company fees total $1,350, how much does Richie need to bring to closing?

The answer is $43,550. 90% LTV means Richie will need to bring 10% of the purchase price, or $40,000, to closing, minus the $5,000 he already paid as earnest money. To this he must add 1% of the $360,000 loan amount, or $3,600, for the 1% origination fee, and an additional 1% of the loan amount ($3,600) for the discount. Finally, he must add the $1,350 title charge: $40,000 − $5,000 + $3,600 + $3,600 + $1,350 = $43,550

Sam Cooper was found to be providing mortgage loan origination services without a state license. A temporary order to cease and desist engaging in such activities was issued against Sam. While under the order, Sam completed three transactions. What is the maximum fine a state licensing agency may impose on him?

The answer is $75,000. The maximum amount of penalty for each act or omission is $25,000. Each violation or failure to comply with any directive or order of the state licensing authority is a separate and distinct violation.

How much hazard insurance does FNMA require on a property?

The answer is 100% of the lesser of the loan amount or the cost to restore the improvements to the property. Fannie Mae requires hazard insurance in place of at least 100% of the lesser of the loan amount, or the cost to restore the improvements to the property.

If a purchase loan closes on January 20th, how many days of per diem interest must be collected to put the loan on schedule?

The answer is 12. 12 days of per diem interest would be collected to place this loan on schedule for a first payment date of March 1. Remember, per diem interest needs to count the day of closing. There are 31 days in January - so, per diem interest must be paid for 12 days (January 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31).

If a first-time homebuyer wishes to use his/her VA loan privilege for the first time and is not planning to make a down payment, what is the amount of his/her funding fee? VA FUNDING FEE = ?

The answer is 2.30%. The funding fee for a first-time user who is regular military, purchasing a home using a VA loan, is 2.30%.

A borrower obtains an ARM with a start rate of 2.5% and a periodic rate cap of 1%. The loan adjusts four times. After the fourth adjustment, the rate is expected to be 6.5%. However, due to the lifetime cap on the loan, the rate is not permitted to exceed 5%. What is the lifetime rate cap?

The answer is 2.50%. For this ARM, the lifetime cap is 2.5%. The lifetime cap limits the maximum amount by which the rate on an ARM may increase. Here, the rate is not permitted to exceed 5%. To determine the lifetime rate cap, subtract the start rate (2.5%) from the maximum rate (5%). This results in the lifetime rate cap of 2.5%. ( DON'T FORGET TO MINUS THE START RATE FROM THE MAXIMUM RATE!!)

The Walkers are purchasing a home for $300,000. Their down payment is $60,000. What is the percentage of the down payment the Walkers are making?

The answer is 20%. The Walkers are making a down payment equal to 20% of their loan amount. ($60,000 / $300,000 = .20 )

The Peterson family is buying a new home and their new P&I payment totals $1,800 per month. Their annual tax bill is $3,000, and their annual homeowner's insurance premium is $720. The family's annual income totals $98,520. What is their housing (i.e., front-end) ratio?

The answer is 26%. The Petersons' housing ratio - also known as the front-end ratio - is 26%. This is calculated by comparing monthly housing expenses, such as flood insurance, homeowners insurance, and other monthly housing costs, to gross monthly income. In this case, add together the $1,800 mortgage payment with the $250-per-month tax payment and $60-per-month homeowner's insurance payment. Divide that total ($2,110) by the total monthly income of $8,210 (annual income of $98,520, divided by 12), equaling 26%.

Conforming loan guidelines generally include DTI ratios of:

The answer is 28% / 36%. The standard conforming DTI ratios for Fannie Mae and Freddie Mac are 28% (housing) and 36% (total debt).

The general acceptable front-end housing ratio for a USDA loan is:

The answer is 29%. USDA loans use a front-end ratio of 29%.

Every month, a borrower has a car payment of $350, a credit card payment of $50, HOA dues of $35, a cable bill of $40, and a house payment (including taxes and insurance) of $1,250. The borrower's annual income is $50,000. What is the borrower's front-end debt-to-income ratio?

The answer is 30.8%. A housing or front-end ratio compares the applicant's monthly housing costs to his/her gross monthly income. Housing costs are referred to as PITI (principal, interest, taxes, insurance). In addition to PITI, any monthly homeowners' association (HOA) dues, if applicable, would also be included because they are a housing-related debt. Non-housing-related expenses (car payments, credit cards, etc.) are not included in the housing ratio. Housing ratio = housing debts divided by gross monthly income. In this case, $50,000÷12 = $4,166.66. ($1,250+$35)÷$4,166.66 = 0.308 = 30.8%.

A 7 / 1 ARM has a start rate of 4%, an initial cap of 3%, and a periodic cap of 1%. The lifetime cap is 8%. The margin is set at 4%, and the current index value has risen in the last month to 9.25%. The loan closed four years ago. What is the current rate?

The answer is 4%. This ARM has a start rate of 4.00%, and is locked for the first seven years. The question specifies that the loan is entering into its fifth year. The rate would still be 4.00% until at least the start of the eighth year.

Doug and Carrie bought their house using a three-year ARM with a start rate of 3.00%. They are making plans for the first rate adjustment on the loan after receiving a notice from their lender informing them of the impending change. The letter states the margin of 3.00% and the current value of the index as 3.75%. It also states that they are protected by a periodic adjustment cap of 2% and a lifetime cap of 6%. What will the adjusted rate be?

The answer is 5%. The ARM adjustment would be controlled by the periodic cap, because the "true rate" or "fully-indexed rate" is 6.75% (margin + index). Because the periodic cap prevents the start rate from moving any more than 2% at any given adjustment, the first move can only go as high as 5.00%.

A borrower obtains an ARM with a start rate of 2%. The ARM has an initial cap of 1%, a periodic cap of 2%, and a lifetime cap of 4%. Assume that the ARM will adjust three times, and that at each adjustment, the rate will increase by the maximum amount possible. What is the maximum amount that the interest rate can reach?

The answer is 6%. At the first adjustment, the ARM rate would increase from 2% to 3%. At the second adjustment, it would increase from 3% to 5%. At the third increase, it would increase from 5% to 7%. However, the lifetime rate cap is 4%, meaning that the rate may never be higher than 6% (2% + 4% = 6%). As a result, the interest rate may never be higher than 6%.

The max seller concession that a borrower may receive on a conventional loan when making a 20% down payment is:

The answer is 6%. On conventional loans, a borrower may receive a seller concession of as much as 6% for an LTV at 90% or less.

A borrower pays $200,000 for a home and gets a fixed-rate loan from his lender at 5.75%. He puts $40,000 down. What is the LTV on this loan, and does the buyer have to pay PMI?

The answer is 80% and no. This borrower put 20% down on the purchase. Therefore, with an 80% LTV, the borrower does not need PMI.

Helena receives a completed application for a 30-year fixed-rate mortgage loan. What must be provided at least seven business days prior to consummation?

The answer is A Loan Estimate. For most mortgage loan transactions (unless exempt), a Loan Estimate must be provided no later than three business days after receiving a completed loan application and at least seven business days prior to consummation.

Which of the following prefixes indicates the purchase of flood insurance is mandatory?

The answer is A and V. The "A" and the "V" prefixes indicate the zones in which flood insurance is mandatory. In zone "D," flood insurance is available if a homeowner chooses it, but no other zones require flood insurance.

Two brothers, Tom and Jim, purchase homes on the same block where they grew up. They knew the sellers, having grown up on the block, and both obtain $200,000 loans to purchase their new homes. Jim chose a "traditional" loan - 30-year fixed, while Tom would rather pay his loan off more quickly. He decided on a 15-year mortgage. Which of the two will pay more principal?

The answer is Both Jim and Tom will pay the same amount of principal. Both brothers will pay the same amount in principal, though Jim will pay much more in interest over the longer term.

On which section of the application would a borrower be asked to attest to legal issues that could impact repayment ability, such as outstanding judgments, tax liens or delinquencies on other debts?

The answer is Declarations. The Declarations Section (Section 5) asks the borrower for information regarding any judgments, citizenship, default status, occupancy status, and other questions that may affect underwriting.

An originator advertises via the Internet and direct mail a "3.5% fixed payment loan" that was not actually available to any loan applicant. Which federal agency would bring the lawsuit against this originator and his company?

The answer is FTC or the CFPB. The CFPB is the federal agency responsible for enforcing violations of TILA prohibitions against misleading advertisements, but shares some enforcement authority with the FTC.

Income derived from a rental property would be entered in which section of the URLA?

The answer is Financial Information - Real Estate. Income derived from a rental property would be entered into the "Financial Information - Real Estate" section of the URLA, under a heading called "Property You Own." If the applicant owns multiple properties from which they earn rental income, there are additional content boxes in this section to accommodate that information.

What was the first law that Congress enacted to combat predatory lending?

The answer is HOEPA. The Home Ownership and Equity Protection Act (HOEPA) was enacted in 1994 and was the first legislation specifically created to combat the practice of predatory lending.

Housing counselors must generally be approved by: A. The CFPB B. The Office of Financial Education C. HUD D. The NMLS

The answer is HUD. Housing counselors must generally be approved by HUD.

A VA loan referred to as an "IRRRL" is an:

The answer is Interest Rate Reduction Refinance Loan. In terms of VA loans, IRRRL stands for Interest Rate Reduction Refinance Loan, often referred to as "streamline" or a "VA to VA." Is an Irrrl a good idea? Benefit financially.Lenders will typically only approve a VA IRRRL if it will help you out financially. This could mean a lower rate or monthly payment. Or you could refinance from an adjustable rate to a fixed rate, which may help you budget more effectively and make payments on time. Today's starting rate for a 30-year VA refinance is 3% (3.179% APR), according to our lender network. Funding fee requirement is .0.5 percent of the loan's value, or 1 percent for an unaffixed manufactured home. Funding fees may be financed or paid in cash. Lenders can offer existing cus tomers a product to lower their payments, which may generate further business for the bank. IRRRL can not have veteran cash-out unless refinancing the loan.

Which of the following would not be required for an adjustable-rate home equity plan? A. What You Should Know about Home Equity Lines of Credit B. Disclosure of APR, fees, and transaction requirements C. Disclosure of frequency of APR changes and a description of how the APR will be determined D. Loan Estimate and Closing Disclosure

The answer is Loan Estimate and Closing Disclosure. A Loan Estimate and Closing Disclosure would not be required for an adjustable-rate home equity plan, because this type of loan is exempt from the requirements of the TRID Rule.

Attorney MC Hammer has an arrangement with Godfrey Lending to fund all loans that Hammer negotiates on behalf of his clients. In exchange, Godfrey pays Hammer a finder's fee. Under the S.A.F.E. Act:

The answer is MC must be licensed as a loan originator. A licensed attorney is exempt from the requirement to be licensed as a mortgage loan originator if he offers or negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to his/her representation of the client, UNLESS the attorney is compensated by a lender, mortgage broker, or other loan originator, or by any agent of the same.

Jenny has applied for a loan to purchase a home and learns that she is unable to qualify for any loan other than a high-cost mortgage. Her lender, MortgageMax, tells her that she must complete pre-loan counseling to obtain the loan. MortgageMax also tells her that it will pay for the counseling if she uses a counselor from its affiliate company, MortgageMax Counseling, and obtains her certification from this company. Which statement is the most accurate assessment of this arrangement?

The answer is MortgageMax may pay the counseling fees, but is prohibited from steering Jenny towards a particular counselor or allowing her to complete counseling from one of its affiliates. MortgageMax may pay the counseling fees, but it is prohibited from steering Jenny towards a particular counselor or allowing her to complete counseling from one of its affiliates.

Which of the following is offered on conventional mortgages? A. UFMIP B. Guarantee fee C. COE D. PMI

The answer is PMI. Private mortgage insurance (PMI) is required on conventional mortgages where the LTV is more than 80%. PMI is not used for government loans. MIP is used for FHA loans.

Enhancing protection and reducing fraud by directing states to adopt minimum uniform standards for the licensing and registration of residential mortgage loan originators was the purpose of the federal act known as the:

The answer is S.A.F.E. Act. The purpose of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (S.A.F.E. Act) was to enhance consumer protection and reduce fraud by directing states to adopt minimum uniform standards for the licensing and registration of residential mortgage loan originators and to participate in a Nationwide Multistate Licensing System and Registry database.

XYZ Mortgage is transferring servicing rights for all of its mortgages to a new servicer. RESPA requires what disclosure to be sent to the borrowers affected?

The answer is Servicing Transfer Statement. RESPA requires that a client be provided a Servicing Transfer Statement at least 15 days prior to the transfer of the loan to a new servicer.

Ella Ellerby's lender failed to provide her with the required rescission notice when she refinanced her home. Ella has not transferred or sold her interest in the property, but is beginning to have second thoughts about the refinance. Under these circumstances, Ella can rescind the loan: For three years after consummation For two years after consummation For five years after consummation At any time she sees fit

The answer is for three years after consummation. If a creditor/lender fails to provide the required disclosures and notice to effectively initiate the three-day period, the borrower's right to rescind shall automatically expire at the earliest of three years from consummation of the transaction; transfer of the borrower's interest in property; or sale of the borrower's interest in property.

Which unethical behavior involves conspiratorial involvement of individuals using the mortgage market to benefit financially from criminal behavior?

The answer is fraud for profit. Fraud for profit may involve a number of persons, such as sellers, mortgage loan originators (including mortgage brokers and lenders and their individual mortgage loan originators), real estate brokers, appraisers, builders and developers, who conspire to manipulate the mortgage market by inflating property values (and therefore loan amounts) for personal financial gain.

The first step in the closing process is:

The answer is funding. The first step in the closing process is funding. This occurs when the lender wires funds to the title company or closing attorney. Once the closing has occurred, the title company is authorized to release funds to the parties (disbursement). Depending on state law and the type of transaction, disbursement could occur at closing or several days later.

Which of the following is true regarding acceptable sources for down payment?

The answer is gifts from relatives are permitted. Acceptable sources for down payment include gifts from relatives and gifts from domestic partners (although Fannie Mae and Freddie Mac require a 12-month relationship history). Gifts from the seller are not an acceptable source of down payment.

If a borrower sells personal property in order to raise money for down payment, and the underwriter questions whether the value of the items sold is realistic, the underwriter may:

The answer is have an appraisal done on the item, or ask for further documentation. The underwriter will ask to see documentation if the value of personal property being sold is called into question. This may include an appraisal of the property, and/or some further documentation.

Qualifying ratios consist of which two separate calculations?

The answer is housing expense ratio and total debt ratio. Qualifying ratios consist of the housing expense ratio and the total debt ratio.

A piggyback loan is most often used: A. As a bridge from one property to the next B.In the event a borrower is upside down on his/her loan C. To finance home improvement projects D. In order to avoid paying PMI TERM

The answer is in order to avoid paying PMI. Borrowers with more than 80% LTV are required by conforming lenders to obtain private mortgage insurance. In a piggyback scenario, a borrower takes out a simultaneous second mortgage in order to avoid paying PMI. However, the lender must, based on provisions of the Ability to Repay Rule, determine that the borrower has the ability to repay both the first and second mortgage according to their loan terms.

Annual insurance for USDA/RHS guaranteed loans is:

The answer is less expensive than that charged for FHA loans and for private mortgage insurance. USDA/RHS guaranteed loans require payment of upfront and annual mortgage insurance, but the premiums are less than those for other types of mortgage insurance. For USDA/RHS loans, the insurance charge is referred to as the "guarantee fee."

The Qualified Mortgage Rule applies to which of the following? A. Bridge loans of 12 months or less B.Open-end home equity loans C. Reverse mortgages D. Loans secured by non-owner-occupied homes

The answer is loans secured by non-owner-occupied homes. The Qualified Mortgage Rule applies to a broad range of loans including those secured by second homes or investment properties, but does not apply to open-end home equity loans, bridge loans of 12 months or less, reverse mortgages, or mortgages for timeshares.

In order to comply with the advertising rules found in Regulation Z, creditors that advertise rates and payments for mortgages must:

The answer is make the required disclosures with equal prominence and in close proximity to the advertised rates or payments. In order to comply with the advertising rules found in Regulation Z, creditors that advertise rates and payments for mortgages must make the required disclosures with equal prominence and in close proximity to the advertised rates or payments.

Unilateral increases in the cost of settlement services made by another provider with the intention of retaining the additional fees are referred to as what?

The answer is markups. The earning of additional revenue through the practice of one settlement service provider increasing the fees of another settlement provider with the intention of retaining the additional fees is a practice known as markup.

After an escrow account is established for an HPML, it:

The answer is may be cancelled at the borrower's request five years after consummation if the borrower is not currently delinquent or in default and the loan balance is less than 80% of the original value of the home securing the loan. After an escrow account is established for an HPML, it may be cancelled at the borrower's request five years after consummation if the borrower is not currently delinquent or in default and the loan balance is less than 80% of the original value of the home securing the loan.

"MBS" stands for:

The answer is mortgage-backed securities. In the secondary mortgage market, mortgage-backed securities are an investment vehicle in which expected payment streams from mortgage loans make up the profit paid out to investors. MBSs are a product of the secondary market.

Which of the following documents connects the promissory note to the collateral?

The answer is mortgage. A mortgage connects the promissory note (the borrower's promise to pay) with the collateral

When a creditor revises a Loan Estimate, the revised version must be received by the consumer - WHEN?

The answer is no later than four business days prior to consummation. When a creditor revises a Loan Estimate, the revised version must be received by the consumer no later than four business days prior to consummation.

Frank Stein is a loan originator for a county housing finance agency whose function is to help meet the affordable housing needs of the residents of the state. Is Frank required to be licensed under the S.A.F.E. Act?

The answer is no, he is exempt from the requirement to be licensed. A state is not required to license an individual who is an employee of a federal, state, or local government agency or housing finance agency who acts as a loan originator in the course of his/her employment.

A borrower is considered to be self-employed if he or she:

The answer is owns more than 25% of a business. A borrower is considered self-employed if he or she owns more than 25% of a business. 4606-C needs to be filled out to get past two years of tax forms of the self-employed individual

Which of the following is a limit on the amount that the payment can change on any adjustment date from the current or previous payment amount on an ARM?

The answer is payment cap. The payment cap is a limit on the amount by which the payment can change on any adjustment date from the current or previous payment amount on an ARM.

Standard income qualification for a salaried borrower applying for a conforming loan typically includes:

The answer is paystubs for the most recent 30-day period and W-2s for the most recent two years. Conforming loan programs meet the guidelines set by Fannie Mae and Freddie Mac. The general guidelines set for salaried income include W-2s from the past two years and paystubs from the past 30 days.

Once a state licensing agency has provided private or confidential information to the NMLS, what is the status of the information?

The answer is privacy and confidentiality requirements continue to apply. The requirements under any federal or state law regarding the privacy or confidentiality of any information or material provided to the NMLS continue to apply after such information has been disclosed to the NMLS.

Tom has negotiated a contract for the sale of the Flynns' home to the Ryderss. However, the contract does not involve any financing for the transaction to be completed. Tom has engaged in: A. Real estate brokerage activities B. Loan origination activities C. Loan processing activities D. Loan closing activities

The answer is real estate brokerage activities. Real estate brokerage activity is any activity that relates to the offering of or providing real estate brokerage services to the public, including negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental or exchange of real property, other than in connection with providing financing for the transaction.

The FTC Disposal Rule requires a loan originator to use _____ to ensure that unauthorized access to or use of consumer information cannot occur as a result of its disposal. A. Extraordinary measures B. Third-party certified disposal C. Locked cabinets D. Reasonable methods

The answer is reasonable methods. FACTA requires the use of "reasonable methods" to make sure a borrower's personal information cannot be accessed as a result of its disposal

The process of releasing a lien on a property is called

The answer is reconveyance. Reconveyance is the process of releasing a lien on a property.

A balloon mortgage that includes a conditional refinance provision allows the borrower to:

The answer is request modification of the terms of the loan when it reaches maturity. A balloon mortgage that includes a conditional refinance provision allows the borrower to request modification of the terms of the loan when it reaches maturity

The practice of intentionally TARGETING borrowers in poor or underserved areas with expensive high-cost loans is known as:

The answer is reverse redlining. HOEPA prohibits the intentional TARGETING of poor or underserved areas with expensive high-cost loans, which is a practice known as reverse redlining.

The Loan Estimate must be provided at least how many days prior to consummation?

The answer is seven business days. The Loan Estimate must be provided at least seven business days prior to consummation.

"SIVA" stands for: Stated income validation amortization Simple interest validation account Stated income verified assets Stated interest verification account

The answer is stated income verified assets. "SIVA" stands for stated income verified assets.

A _____ is an individual who, in exchange for a fee, allows his or her qualifying information to be used on an application for a loan he or she has no intention of repaying.

The answer is straw buyer. A straw buyer is an individual who, in exchange for a fee, allows his or her qualifying information to be used on an application for a loan he or she has no intention of repaying.

An escrow account analysis has been completed on Mary Thompson's loan. It is discovered that there is a $40 overage in her account. How many days does the servicer have to return the money?

The answer is there is no refund. RESPA requires a refund if an escrow analysis uncovers an overage of greater than $50. Smaller overages are applied to the next year's escrow payments; anything above $50 is then required to be refunded within 30 days.

Which of the following describes a state where the lender holds legal title until the debt is paid? Lien theory Conveyance theory Due-on-sale clause Title theory

The answer is title theory. In a title theory state, the lender holds legal title until the debt is paid, which, in theory, means the lender actually owns the home until the borrower has paid the mortgage.

The back-end ratio compares:

The answer is total monthly debts (including housing expenses plus other debts) to monthly gross income. Unlike the front-end ratio, which focuses only on housing-related expenses, the back-end ratio focuses on housing expenses plus other debts.

An underwriter would expect to see _____ in order to document the income of a commissioned borrower.

The answer is two years' tax returns and all schedules if the commission income is more than 25% of income. Commissioned borrowers must show two years' tax returns if their commission income is more than 25% of their total income

APPRAISER FACTS :

The use of appraisal management companies (AMC) is required by Fannie Mae and Freddy Mac - They are a neutral 3rd party USPAP - has to conformed with - and be licensed in their state in order to do appraisals. Sales comparison - used most common - comparable properties to determine the value of the subject property(has to not be sold within 6 months and 1 mile distance from each other) Gross adj can not exceed 25% of the comparable value or 15% net the comparable. Cost approach - how much to reproduce the improvement of the home. Used multi-unit or investment property or CONSTRUCTION homes

Protected Classes of the FHA includes?

To briefly review, the federal Fair Housing Act (FHA) has seven protected classes, which include: race, color, religion, national origin, sex, disability, and familial status

WHAT LOANS APPLY TO TRID AND TRID COVERS?

TRID is a series of guidelines that dictate what information mortgage lenders need to provide to borrowers and when they must provide it. TRID rules also regulate what fees lenders can charge and how these fees can change as the mortgage matures. TRID rules apply to MOST consumer credit transactions ONES THAT ARE SECURED BY REAL PROPERTY. These include mortgages, refinancing, construction-only loans closed-end home-equity loans, and loans secured by vacant land or by 25 or more acres. The three-day period is measured by days, not hours. Thus, disclosures must be delivered three days before closing, and not 72 hours prior to closing. Disclosures may also be deliv- ered electronically on the disclosures due date in compliance with E-Sign requirements. WHAT LOANS ARE NOT COVERED BY TILA-RESPA? The TILA-RESPA rule applies to most closed-end consumer credit transactions secured by real property, but does not apply to: HELOCs; • Reverse mortgages; or • Chattel-dwelling loans, such as loans secured by a mobile home or by a dwelling that is not attached to real property (i.e., land).

BALLOON MORTGAGE

180/360 it is known by Benefits

The Derringers have rescinded their loan transaction, informing their lender of their decision by mail. They are entitled to a full refund within:

20 DAYS - TWENTY DAYS. If a borrower rescinds a transaction, within 20 days of the rescission, he is entitled to a refund of all money or property given to the creditor.

Sara the LO receives a complete app for a mortgage. Within how many days must she provide applicant with Loan Estimate?

3 business days after receiving complete app & 7 business days prior to consummation

A loans final termination date refers to : 1) 78% LTV 2) 80% LTV 3) Amortization midpoint 4) Loan payoff

3) Amortization midpoint Because under HPA , PMI must be removed from any standard conventional mortgage, regardless of whether the loan is current, once the loan's amortization midpoint has been reached. On a standard conventional mortgage with PMI, the PMI Cancellation date is the day on which the LTV amortizes down to 80% The termination date is the date on which the LTV reaches 78%. The **FINAL** termination date is the date on which the loan reaches its amortization midpoint.

When is the Initial escrow statement disclosure due? What is the timeframe to retaining disclosures for TILA/MAP/RESPA/LAR/LE-LOC-LAR/ECOA ?

45 days after consummation & annually after that RETAINING DISCLOSURES TIMEFRAME: (REXPA/RESPA) TILA disclosure = 2 years DoNotCall = 2 years MAP = 2 years ANY THAT STARTS WITH L (LoanEstimate, LOC, and LAR) = 3 years Closing Disclosure = 5 years SAR = 5 years ECOA = 25 months Creditors must continue to use the Good Faith Estimate, Truth-In-Lending Disclosure and the HUD-1 form for reverse mortgages, HELOCs, mobile home or other non-attached dwelling loans and others NOT covered by TRID.To qualify for the Partial Exemption from the TRID disclosure requirements under the BUILD Act, the loan must be a residential mortgage loan, offered at a 0 percent interest rate, have only bona fide and reasonable fees, and be primarily for charitable purposes and be made by an organization described in Investment property transactions are covered by the TRID rule if the transaction is primarily for a consumer purpose. ... If a loan secured by an investment property is primarily for a consumer purpose however (eg. cash-out to pay college tuition), then the transaction is subject to Reg.

Conventional Conforming Loans

A conforming loan is a mortgage with terms and conditions that meet the funding criteria of Fannie Mae and Freddie Mac.(which usually has a 30 year fixed.) Conforming loans cannot exceed a certain dollar limit, which changes from year to year. ... Conforming loans typically offer lower interest rates than other types of mortgages. ** NOTE** Usually all conforming loans are conventional, not all conventional loans qualify as conforming. A jumbo mortgage of $800,000, for example, is a conventional mortgage but not a conforming mortgage—because it surpasses the amount that would allow it to be backed by Fannie Mae or Freddie Mac

What is a CONVERTIBLE ARM loan?

A convertible ARM loan is a hybrid mortgage that combines adjustable rate mortgages and fixed-rate mortgages. Borrowers begin their loan term with an adjustable interest rate, but after a set period of time, they have the option to convert to a fixed rate.

The FCRA places all of the following limitations on the inclusion of negative information in credit reports

A limit on civil lawsuits that are more than seven years old A limit on accounts placed for collection that are more than seven years old Bankruptcies that are more than 10 years old.

TRUTH ABOUT THE LOAN ORIGINATION FEE?

A loan origination fee is a charge by a mortgage broker or lender to cover the administrative costs of making the mortgage. It is paid at closing and varies by lender. The origination fee may NOT be based on loan terms as per the Loan Originator Compensation Rule. - May be charged by a mortgage broker or a lender - May be paid at closing - Covers the administrative costs of making the mortgage

Does the margin EVER change in an adjustable-rate mortgage?

A margin value will NEVER change once set on ANY loan.

NON-CONFORMING MEANS Not following government guidelines like Jumbo loans

A non-conforming loan is a loan that fails to meet bank criteria for funding. Reasons include the loan amount is higher than the conforming loan limit, lack of sufficient credit, the unorthodox nature of the use of funds, or the collateral backing it. VA/FHA/or USDA loans are examples of non-conforming loans .The most common types of non-conforming loans are government-backed mortgages - like FHA, USDA and VA loans - and jumbo loans that are above Fannie Mae and Freddie Mac limits. ... High loan limits (for jumbo loans)N ***FHA loans you have to have at least a 580 credit score to qualify for a 3.5% down payment If you can make a 10% down payment, your credit score can be in the 500 - 579 range. ***VA LOANS = 41% DTI with residual income recommended. Qualifications are You've served 181 days of active service during peacetime. You've served 90 consecutive days of active service during wartime. You've served more than 6 years of service with the National Guard or Reserves or 90 days under Title 32 with at least 30 of those days being consecutive. Once a VA loan borrower puts down at least 5 percent down, the VA Funding Fee shrinks. For a first-time VA loan borrower, the funding fee is typically 2.3 percent with no money down. The U.S. Department of Veterans Affairs, which guarantees all VA home loans, doesn't require a certain credit score. But the private lenders that issue VA loans may have their own minimum credit score requirements, typically ranging from 580 to 660 ***USDA LOANS 29%FE/41%BE Min.credit score of 640 USDA sets no loan limits. However, the amount you can borrow is limited by your income and your household's debt-to-income ratio. The USDA typically caps debt-to-income ratios to 41%. The current standard USDA loan income limit for 1-4 member households is $91,900, up from $90,300 in 2020. The 2022 limit for 5-8 member households is $121,300, up from $119,200. USDA loan limits by county may be higher to account for cost of living

(INCOME DISCRIMINATION)The answer is potentially unlawful under the disparate impact theory. Even when there is no intent to discriminate, lending policies are potentially unlawful if they could adversely impact creditworthy consumers who belong to a protected class. For example, the lending standards described in this question could adversely impact younger applicants, thereby violating ECOA's prohibition against age-based discrimination.

ACME Home Loans is a private lender with a strict policy of limiting originations to conventional qualified mortgages with minimum loan amounts of $300,000. To ensure compliance with this policy, loan originators are instructed to refuse to accept applications from consumers who want loan amounts of less than $300,000, or who have debt-to-income ratios of 44% or more. This policy is

Which of the following are required to credit an applicant with child support? A) Evidence of receipt for the previous 12 months B) A court order C) a 36 month continuence D) A six month seasoning

A) Evidence of receipt for the previous 12 months In order to use non-traditional income in the form of child support for qualification purposes, the applicant would have to demonstrate sourcing (a legal entitlement to income), seasoning (a consistent receipt of the income over the most recent six months), and a likelihood of continuance(being able to demonstrate entitlement to receive the income for no less than 36 months)

Which of the following is NOT a CONSIDERATION surrounding non-traditional income? a. Proof of receipt b. seasoning c. likelihood of continuance d. sourcing

A. Proof of Receipt When utilizing non-traditional , qualifying income ,the three primary considerations are sourcing, seasoning, and the likelihood of continuance

A balloon loan is defined as: A. A loan that has a specific amortization period but matures prior to the time it fully amortizes B. A loan that has a specific amortization period but is due at a specific time prior to maturity C. A loan whose final payment is smaller than the previous periodic payments D. A loan which matures on a date after amortization

A. The answer is a loan that has a specific amortization period but matures prior to the time it fully amortizes. A balloon loan is a loan that has a specific amortization period but matures prior to the time at which it fully amortizes.

All of the following methods can be used by an originator to detect fraudulent documents, except: A.Verifying that the purchase price is not greater than the average for the area B. Check paystubs for watermarks or fraud prevention patterns C. Track chain of custody of all verifications D. Compare earnings claims to public databases for industry and region

A. verifying that the purchase price is not greater than the average for the area. A purchase price that is slightly higher than the average area is not, in and of itself, an indicator of a fraudulent transaction. There are a number of reasons for a higher purchase price, such as property features, age, improvements, and more. The Gramm-Leach-Bliley Act requires that a consumer be given an Initial Privacy Notice: only if nonpublic personal information is intended to be shared with nonaffiliated third parties. Financial institutions are only required to provide an Initial Privacy Notice to consumers if they intend to share their information. NOTE:, the only reason someone would get a privacy notice is for the sharing of NPI (Non-Public Information) with non affliates so is there isnt going to be sharing then they would not recieve its is for everyone if there is gonna be NPI shared

Which of the following is not involved in the bundling of mortgages for sale in the secondary market? A. FHA B. FNMA C. Private-label investors D. FHLMC

A: FHA - The secondary market includes GSEs, such as Fannie Mae and Freddie Mac (FNMA and FHLMC), as well as private financial institutions, also known as private-label investors.

All of the following are responsibilities of the underwriter

Applicant + Collateral The underwriter is responsible for confirming that a potential borrower has sufficient cash assets to close, ensuring that the property is eligible and meets lender guidelines for collateral, and examining the overall pattern of credit behavior and isolated occurrences of derogatory credit. - Confirming that a potential borrower has sufficient cash assets to close -Ensuring the property is eligible and meets lender guidelines for collateral' - Examining the overall pattern of credit behavior and isolated occurrences of derogatory credit

What is AUS ? or LPA? or

Automated Underwriting System (AUS) is the technology-driven underwriting process that generates an underwriting response regarding eligibility of the mortgage purchase in the secondary markets. Fannie Mae's Desktop Underwriter and Freddie Mac's Loan Prospector are the commonly used automated underwriting systems Freddie Mac's Loan Product Advisor (LPA)

BARNEY Mortgage Company wants to take advantage of the safe harbor that it will enjoy from liability when it originates mortgages that amortize fully by the end of the loan's 30-year term, have points and fees that do not exceed 3% of the total loan amount, and include no negative amortization features or balloon payments. WHAT TYPE OF LOAN IS THIS?

BARNEY Mortgage plans to focus on making qualified mortgages. Qualified mortgages must meet certain product feature prerequisites, including a loan term that does not exceed 30 years, points and fees that do not exceed 3% of the total loan amount, no balloon payments, no payment schedules that lead to negative amortization, and originations limited only to borrowers whose DTI ratios or APRs fall below specified thresholds.

Oscar is being licensed in a state that requires each LO to be covered by a surety bond. Upon approval of his license app, he will be employed by Nelson Brokerage. Who is required to provide Oscar's surety bond?

BOTH OSCAR AND THE BROKER - both responsible

If a borrower selects a mortgage loan covered by HOEPA, he or she:

Can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan after submitting a written request that is signed by the parties entitled to the waiting period and which describes the emergency and consent to the waiver. If a borrower selects a mortgage loan covered by HOEPA, he/she can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan after submitting a written request that is signed by the parties entitled to the waiting period and which describes the emergency and consent to the waiver.

Common underwriting pitfalls:

Cash-out refinances listed as no cash-out Income calculated incorrectly Secondary financing not disclosed

WHAT ARE FHA LOAN PRODUCTS?

Cash-out refinances, home equity conversion mortgages, and streamline refinances are all examples of FHA loan products. FHA is NON-COMFORMING LOAN which are NOT backed by Fannie/Freddy

All of the following are common indices used for adjustable rates

Common indices include the Treasury Bill Index, the 11th District Cost of Funds Indexes (COFI), or the London Interbank Offered Rate (LIBOR).

All of the following are common indices used for adjustable rates

Common indices include the Treasury Bill Index, the 11th District Cost of Funds Indexes (COFI), or the London Interbank Offered Rate (LIBOR)., CMT , MTA, SOFR, COSI

What types of loans are Fannie Mae?

Conforming & Conventional loans.

WHICH LOAN IS THIS SCENARIO #1 : Dewey is a 67-year-old retired reverend living on a lakeside in upstate New York. He keeps busy through woodworking, building custom furniture and other items for customers. Dewey decides that he would like to construct a small workshop on his property to house all of the equipment and accessories needed for his hobby. He visits Nash Financial Services in town, where he meets with a mortgage loan originator named Selene. Selene recommends a home equity conversion mortgage. Dewey obtains a HECM with an interest rate that is subject to adjustment on a monthly basis. Selene tells Dewey that he will be required to meet with a housing counselor, and she gives him a list of approved counselors in the area. He has $2,500 in closing costs, which include an appraisal fee, credit report fee, property survey, and other charges.

Dewey's transaction is an example of a standard HECM loan. HECMs are available with either fixed or adjustable rates, though adjustable rates are more common. His loan originator is correct in stating that Dewey will need to complete financial counseling in order to obtain the loan; this helps consumers to fully understand the obligation they are taking on, and the unique functions of reverse mortgage loan products.

Select two different loan programs/types and summarize the important points you would need to communicate to a potential borrower. (some examples: interest-only loans, home equity loans, loans with a balloon feature, reverse mortgages)

EXAMPLE: A typical snowbird here in Arizona doesn't stay in their home for that many months out of the year so I would recommend them to have a loan with a balloon feature. The advantage of this compared to other loans is that there would be a lower monthly payment and overall lower cost. They can pay off the loan within a few years instead of the typica 20-30 years like a conventional loan. However I would also tell them that Balloon mortgages gives them a risk of financing again if they can not afford to pay it off on those set years. If the snowbirds believe they can not afford paying the house off within a few years then I would offer a home equity loan which I can help to describe it as similar to a conventional loan with a fixed-rate but will be using their house like collateral. The interest rates will be higher and if they decided to pay off the home early, a prepayment clause fee can apply.

An underwriter examines title documents for issues that may cloud the title or affect marketability. WHAT WOULD AFFECT THE TITLE?

Easements, land locks, and leaseholds are all examples of title issues that may affect marketability or cloud title.

NOTES ON REGULATIONS LETTERS AND INFORMATION:

Equal Credit Opportunity Act and Regulation B (BE EQUAL) HMDA REGULATION C - to see Credit unions disclosing loan information - see race for monitoring purposes only on application Regulation F is Fair Debt Collection Practices Act (FDCPA) Regulation G, which controls the requirements for registered loan originators [12 CFR §§1007 et seq. ]; and. Regulation H, which controls the requirements for state-licensed loan originators. Regulation K According to the Board of Governors of the Federal Reserve System, Regulation K governs "the international banking operations of U.S. banking organizations and operations of foreign banks in the United States." Regulation V is to protect confidential information for consumer credit reports FACTA deals with identity theft FACRA deals with credit reporting The Real Estate Settlement Procedures Act and Regulation X (REXPA) with TILA THE GODZILLA Regulation Z (HOEPA IS IN HERE Section 32 of Regulation Z implements the Home Ownership and Equity Protection Act of 1994 (HOEPA). HOEPA protects consumers from deceptive and unfair practices in home equity lending by establishing specific disclosure requirements for certain mortgages that have high rates of interest or assess high fees and points.) TILA also carries the ATR/QM RULE. Gramm-Leach-Bliley Act and Regulation P for PRIVACY OPT-OUT NOTICES, PRIVACY The Truth in Lending Act and Regulation Z to not be Zoobled in marketing cons MAP RULE is Regulation N (No you can't advertise like that you greedy lender!) Regulation N is also known as the Mortgage Acts and Practices Advertising Rule, or MAPs rule because it regulates how mortgage lenders, servicers, brokers, advertising agencies, and others can advertise mortgage services. Under the GLB Act, a customer relationship is established UPON APPLICATION. Under the Gramm-Leach-Bliley Act, a customer relationship begins as soon as a borrower provides non-public personal information. For the purposes of mortgage lending, this happens at application. Federal Trade Commission - FTC's work is performed by the Bureaus of Consumer Protection, Competition and Economics. That work is aided by the Office of General Counsel and seven regional offices. The FTC enforces laws that protect consumers from deceptive mortgage practices by certain kinds of lenders. The FTC also takes action when companies use illegal tactics directed to people facing foreclosure. The Dodd-Frank Wall Street Reform and Consumer Protection Act is a United States federal law that was enacted on July 21, 2010.

DETAILS OF FHA LOANS 2022

FHA LOANS WERE CREATED IN 1934 In 2022, you can borrow up to $647,200 with a conforming loan in most parts of the US. In areas with a higher cost of living, you may be able to borrow up to $970,800. (To borrow more than the FHFA allows for conforming loans in 2022, consider applying for a jumbo loan) FICO® score at least 580 = 3.5% down payment. FICO® score between 500 and 579 = 10% down payment. MIP (Mortgage Insurance Premium ) is required. Debt-to-Income Ratio < 43%. The home must be the borrower's primary residence. Borrower must have steady income and proof of employment. 31/43 - FHA DTI Requirement PLEASE VISIT : https://www.fha.com/fha_loan_requirements FHA Loan applicants must have a minimum FICO® score of 580 to qualify for the low down payment advantage which is currently at 3.5%. If your credit score is below 580, the down payment requirement is 10%. You can see why it's important that your credit history is in good standing. Keep in mind that FHA credit requirements cover more than just your FICO® score; they also determine eligibility based on a borrower's payment history, bankruptcies, foreclosures, and extenuating circumstances that keep applicants from making timely payments.

ACRONYMS THAT MAY BE USED ON THE TEST

FHLMC - Federal Home Loan Mortgage Corporation(FREDDIE MAC) FNMA - Federal National Mortgage Association - FANNIE MAE GFE - Good Faith Estimate HELOC - Home Equity Line of Credit PITIA - Principal , Interest, Taxes, Insurance (HOA may Apply) PMI - Private Mortgage Insurance MIP - Mortgage Insurance Premium RTC - Right To Cancel (Rescind or Rescission) RESPA - Real Estate Settlement Procedures VOE - Verification of Employment VOD - Verification of Deposit VOM - Verification of Mortgage LIBOR - London Interbank Offered Rate SOFR - Secured Overnight Financing Rate COFI - Cost of Funds Index COSI - Cost of Savings Index CMT - Constant Maturity Treasury Rate SFR - Single Family Residence

What does 5 represent in an 5/1 ARM loan?

FIXED OR TEASER RATE The first number specifies how long the rate stays fixed at the beginning of the term - in this case, 5 years. Adjustment intervals: The next number tells you how often the rate adjusts once the fixed-rate portion of the loan is over. For this example, the 5/1 ARM adjusts once per year. A 5-year adjustable-rate mortgage (5/1 ARM) can be paid off early, however, there may be a pre-payment penalty. A pre-payment penalty requires additional interest owing on the mortgage.

What best describes the fiduciary duty that a loan originator owes to a consumer?

Fiduciary Duty is imposed by state law and means that the agent (the loan originator) must act in the best interests of the principal (the borrower). Fiduciary duty is imposed by state law in some jurisdictions and means that the agent (the loan originator) must act in the best interests of the principal (the borrower).

CALCULATING MORTGAGE RATIOS & EXAMPLES

FRONT END = To calculate the front-end ratio, follow the steps below. Add your total expected housing expenses. This includes the principle and interest mortgage payment, taxes, insurance and any HOA dues. Divide your housing expenses by your gross monthly income. Multiply that number by 100. The total is your front-end DTI ratio. BACK END = The back-end ratio can be calculated by summing the borrower's total monthly debt expenses and dividing it by their monthly gross income. DEBT TO INCOME (DTI) RATIO: To calculate your debt-to-income ratio, add up all of your monthly debts - rent or mortgage payments, student loans, personal loans, auto loans, credit card payments, child support, alimony, etc. ... For example, if your monthly debt equals $2,500 and your gross monthly income is $7,000, your DTI ratio is about 36 percent. **********Debt to Income (DTI) Front end Monthly gross income is $5,200 PITIA $1,780 1,780/5,200 = 34.2% Back end Monthly gross income is $5,200 PITIA $1,780 All other debt $850 $1780+$850=$2,630 2,630/5,200 = 50.58% Result:34.2% / 45.38% *********Loan to Value (LTV) 1st mortgage Loan amount is $150,000 Appraised value is $ 320,000 Results: 150,000/ 320,000 = 47% *******Combined Loan to Value (CLTV) 1st mortgage loan amount is $150,000 2nd mortgage loan amount is $50,000 Appraised value is $320,000 Results: 150,000+50,000= 200,000 / 320,000 = 63% ********High Combined Loan to Value (HCLTV) 1st mortgage loan amount is $150,000 2nd mortgage HELOC Balance $25,000 2nd mortgage HELOC Credit Limit $75,000 Appraised value is $320,000 Results: 150,000 + 75,000 = 225,000/320000 =70% ******Discount Points 1% of loan amount New 1st mortgage loan amount is $200,000 Borrower is paying 1 discount point · A quarter discount point 200,000 x .0025 = 500 **Half a discount point 200,000 x .005 - 1,000 · 1 discount point 200,000 x .01 = 2,000 · 2 discount points 200,000 x .02= 4,000 ******Down Payment - Purchase 3.5% down / 96.5% LTV 550,000x .035= $19,250 Loan amount $530,750 10% down / 90% LTV 550,000 x .10=$55,000 Loan amount $495,000 20% down / 80% LTV 550,000x.20=110,000 Loan amount $440,000 *******Per Diem Interest 365 days annually / 31 days monthly Rate x Loan Amount = Annual Interest Rate Annual Interest Rate / 365 = Daily Interest Rate Daily Interest Rate x Number of Days = Per Diem ****Interest Rate I-O Monthly Payment Loan Amount x Interest Rate = Yearly Interest Yearly Interest / 12 = Monthly Payment ******Monthly Income Bi-Weekly Income x 26 = Annual Income Annual Income / 12 = Monthly Income Bi-Monthly Income x 24 = Annual Income Annual Income / 12 = Monthly Income Annual Income / 12 = Monthly Income

Fair Housing Act covers which two classes?

Familial Status & Disability and sometimes Rentals

What are the 5 Cs in Lending?

Familiarizing yourself with the five C's—capacity, capital, collateral, conditions and character—can help you get a head start on presenting yourself to lenders as a potential borrower. Let's take a closer look at what each one means and how you can prep your business. PLEASE SEE MORE DETAILS: https://www.navyfederal.org/resources/articles/small-business/the-5-cs-of-credit.html

A borrower is unsure whether to go with a fixed rate or adjustable rate loan. What kind of questions would you ask to help them decide?

I would tell them to agree on a fixed-rate loan since the rate never changes during the life of the loan. There would be more of a risk because the rates on the adjustable rate loan fluctuates depending on the housing market structure-however if they did not agree on a fixed rate, they can also choose the initial rate cap on an adjustable rate loan afterwards just to make sure they would be aware how much the interest can change after the fixed-rate period expires.

Types of CAPS [This refers to the limit on the amount the interest rate can increase each adjustment period] for ANY LOAN.

INITIAL ADJUSTMENT CAPS: This is the most your interest rate can increase the first time it adjusts. SUBSEQUENT ADJUSTMENT CAP - .These caps limit the amount your interest rate can increase in one adjustment period after the initial adjustment LIFETIME CAPS - the maximum interest rate a borrower could ever pay during the life of a loan. If interest rates exceed the lifetime cap, the borrower will still be limited to paying this maximum rate. PAYMENT CAPS - a consumer safeguard that limits the amount that your monthly payment on an adjustable rate mortgage can change. ... However, since payment caps don't limit the amount of interest you can accrue, it's possible that your interest due could be larger than your payment amount. ***********EXAMPLE BELOW ****** A 5/1 ARM with 5/2/5 caps, for example, means that the first five years of the loan, the rate can't increase or decrease by more than 5 percent above or below the introductory rate. For each year thereafter, the rate can't fluctuate more than 2 percent.

On the Loan Estimate (LE) where is the Servicing located at?

In the OTHER CONSIDERATIONS section [you can also find "Appraisal, Assumption, Homeowners Insurance, Late Payment & Refinance" terms in this area.]

DETAILS OF USDA LOANS 2022

Income eligibility: Steady job and monthly income, proven by tax returns Credit requirements: FICO credit score of at least 640 (though this can vary by lender) Existing debt ratio: Debt-to-income ratio of 41% or less in most cases USDA GUARANTEE FEE .35% Income eligibility: Steady job and monthly income, proven by tax returns Credit requirements: FICO credit score of at least 640 (though this can vary by lender) Existing debt ratio: Debt-to-income ratio of 41% or less in most cases No prepayment penalty / Finance Closing Costs are into the loan Flexible Credit guidelines Lower Interest Rate and 0 Down payment needed ONLY FIXED-RATE - no ARMS allowed. Homeowners counseling is NOT required. USDA guarantees its mortgage loans, meaning it offers protection to mortgage lenders in case USDA borrowers default. But the program is partially self-funded. READ MORE @ https://themortgagereports.com/14969/usda-loans-home-mortgage

TRADITION MORTGAGE QUALIFICATIONS

Income: You must have verifiable income, including pay stubs, W-2s, and tax returns. Debt: Your debt-to-income ratio (DTI) must be 43% or less. This is the amount of your monthly income that goes toward your existing debts. Limits on fees: Points and fees on your loan cannot exceed 3% of the loan amount. No risky loan features: Risky features include interest-only loans (where you only pay interest without reducing the principal), negative amortization (where your principal can increase, even while you are making payments), or balloon payments (where a larger payment can be tacked on to the end of the loan). Loan term: The loan term must be 30 years or less. If you can't tick all of the above boxes, you'll need to look into non-qualifying mortgages.

According to the federal guidances on nontraditional lending, all of the following loan programs are considered to be nontraditional :

Interest-only loans Payment-option ARM loans Stated income loans The term "nontraditional" primarily refers to payment structure or qualification documentation. In other words, traditional loans will include a payment structure that regularly decreases the principal balance and will require a borrower to prove that he/she can pay off the loan to qualify.

Jack Jackson just found a ranch-style home in a nice neighborhood on a shady, tree-lined street. He is excited to move his young family into the neighborhood. He is able to purchase the property for $325,000, and he has $25,000 available as a down payment. Jack is a hardcore traditionalist. Because he has young kids, he and his family are on a budget, and he wants the security of consistent payments that are as low as possible. He does not mind a slightly higher interest rate in exchange for that security. BEST LOAN FOR JACK?

Jack Jackson wants a 30-year, fixed-rate mortgage loan. These loans provide the least amount of risk and are generally solid products for someone who will be living in a property for a long period of time.

JUMBO LOAN DETAILS - can you name them all?

Jumbo mortgages are large loans that fall above the federal loan limit. These loans are typically harder to qualify for than conforming loans, but they can offer competitive interest rates. They're also a convenient way for borrowers to secure the money they need to purchase expensive homes.A loan is considered jumbo if the amount of the mortgage exceeds loan-servicing limits set by Fannie Mae and Freddie Mac — currently $647,200 for a single-family home in all states (except Hawaii and Alaska and a few federally designated high-cost markets, where the limit is $970,800). Jumbo loans typically have much higher down payment requirements compared to conforming loans. It's common to see lenders require 20% down on jumbo loans for single-family units. You may also need a higher down payment for second homes and multifamily units. 43% DTI or under required Credit limit preferences are above 720 to get a jumbo loan UPDATE YOURSELF : https://www.investopedia.com/best-jumbo-mortgage-rates-5101581

Following statements that accurately describe a legal obligation that FCRA requires mortgage lenders to meet when using information contained in a credit report :

Lenders do not have a legal obligation to notify CRAs of disputes that loan applicants have with information presented in a credit report. Lenders must certify that they are using the information in a credit report for a permissible purpose When providing a notification of adverse action, lenders must include a statement that the CRA did not make the decision to deny a loan application When denial is based on information from a lender's affiliate, the lender must notify the loan applicant of the right to know the nature of this information

HOEPA DEFINITION AND RESTRICTIONS: How many can you get right?

Loans covered by HOEPA include both open-ended home-secured credit transactions (for e.g. home equity lines of credit) and home-purchase loans, which were previously exempted A new threshold was added for high-cost mortgages based on the prepayment penalties Existing thresholds based on a loan's rate, points, and fees were lowered so more loans were considered as high-cost mortgages Additional restrictions were imposed on high-cost mortgages, including the prohibition of ballooning payments regardless of loan term What are examples of HOEPA violations? Practices Prohibited Under HOEPA Mortgage brokers and lenders are prohibited from recommending a default on an existing loan to be once again financed by a high-cost mortgage. Neither creditors, lenders, servicers, or brokers should charge a fee to modify, renew, defer, amend, or extend a high-cost mortgage. Mortgage brokers and lenders are prohibited from recommending a default on an existing loan to be once again financed by a high-cost mortgage Neither creditors, lenders, servicers, or brokers should charge a fee to modify, renew, defer, amend, or extend a high-cost mortgage Late fees cannot go beyond 4% of the past due payments, however large Pyramiding/ballooning of late fees is prohibited Fees cannot be charged for generating payoff statements, a practice which is banned by law Points and fees cannot be financed A loan structure which is purposefully structured to circumvent HOEPA is also banned by law Disclosure Requirements for HOEPA According to the HOEPA act, if a loan meets all the above-mentioned criteria, the lender has to provide several disclosures to the borrowers at least 3 days before the loan is closed. The disclosures required for HOEPA include - Written/Typewritten notice stating that the loan is not finalized, even though the application is signed. In this way, borrowers get three days to decide whether to finalize the loan agreement or not A written/typewritten notice warning the borrower that since the lender has a mortgage on his/her home, they are liable to losing their home unless the payments are made in due time The lender must disclose the following properly -The APR documentation Regular payable amount (including balloon payments)Total loan amountIf a variable loan, then lender must disclose the exact rate and monthly payments Maximum monthly payments How to Determine Whether a Loan Belongs to the "High-cost Mortgage" Bracket? As we have seen previously, only high-cost mortgages belong to HOEPA. At the same time, there is often confusion about which loans are considered high-cost mortgages. In simple terms, a loan is considered high-cost if the transaction's APR (Annual Percentage Rate) exceeds the APOR (Average Prime Offer Rate) on a particular date for comparable transactions which is more than - 6.5% points for any first-lien transaction 8.5% points for first-lien transactions (<$50,000) and secured by personal items and property such as RVs, houseboats, etc. 8.5% points for all junior-lien transactions In certain cases, a loan can also be considered to be high-cost by calculating the total amount of points and fees paid during the transaction tenure, or also with the help of prepayment penalties.

Four Different Registration Forms Required?

MU1(Company (MU1)) , MU2 (Business Ownership) , MU3(Branch) , MU4 (Originators/US) Please see MU1: https://mld.nv.gov/uploadedFiles/mldnvgov/content/Industry/Mortgage_Brokers_and_Mortgage_Agents_-_NRS_645B/MU-1Form.pdf

Specific prohibitions in advertising for mortgages :

Misleading advertisement of a "fixed" rate Claims of debt "elimination" Misrepresentation of government endorsement What must be included in a mortgage advertisement? Advertising of Loan - License Disclosure. Disclosure of License Number in Advertisement; License. Number and DRE License Information Telephone Number. in Disclosure Statements. Commissioner's Regulations. What are 3 laws that regulate advertising mortgage? There are also numerous regulations and agency requirements for mortgage lending advertising activities based on RESPA(REG X), S.A.F.E. Act(REG H), MARS (Regulation O), MAP rules (reg N ), Fair Housing Act, HUD-issued guidance, state laws, and other fair-lending regulations

CALCULATION ON MONTHLY INTEREST PAYMENT IS?

Monthly interest payment (Interest only) I/O= Loan amount x Rate / 12 EXAMPLE: 1. L= 200,000 Rate= 6% ($200,000x6% divided by 12) I/O= 1000

If a loan originator has not renewed his/her license by December 31st, he/she may:

NOT continue to conduct any loan originator activities until the license has been renewed. While some state regulators will allow for a "late renewal," after December 31st the license is expired. Therefore, the originator is technically unlicensed and may not continue to engage in any activities that require a license to conduct business.

HYBRID ARM LOANS BENEFITS AND INFO

No prepayment premium required for any prepayment during the adjustable rate period. However, Flexible prepayment options available during the fixed rate term, including yield maintenance and declining prepayment premium. **BENEFITS** Competitive interest rates Low cost of execution Delegated Model provides Lenders and Borrowers speed and certainty of execution No Underwriting Floor or Fixed Rate test in Strong Markets and Los Angeles Flexible prepayment terms **ELIGIBILITY** Loan amount of $6 million or less Existing, stabilized multifamily properties, including Conventional properties, and Manufactured Housing Communities Available for acquisition or refinance **TERM** 7-year fixed rate term, followed by a 23-year adjustable rate term; or 10-year fixed rate term, followed by a 20-year adjustable rate term. **AMORTIZATION** 30 years. **MAXIMUM LTV** Up to 80%.

WHAT IS A NON-QUALIFIED MORTGAGES & LIST

Non-qualified mortgages are not backed by government agencies like FHA(MIP), VA, Fannie Mae, and Freddie Mac. A non-qualified mortgage (non-QM) is a home loan designed to help home buyers who can't meet the strict criteria of a qualifying mortgage. For example, if you are self-employed or don't have all the necessary documentation to qualify for a traditional mortgage, you might need to look at non-qualified mortgages. **NON QM LOANS ** Bank Statement Loans. Only a bank statement is required for this type of Non-QM loan. ... Jumbo Loans with 10% Down. ... No Income Investment Loans. ... Asset-Based Loans. ... Foreign National Loans (ITIN) ... Interest-Only Home Loans. ... Recent Credit Event Loans. ... Commercial Rental Property Loans.

How many HELOCS are there?

Open End HELOCS & Closed End HELOCS home equity lines of credit (HELOCs). The interest paid on home equity loans is tax-deductible, but only if the loan is used to buy, build, or substantially improve the home that secured the loan.

The administrative authority of the Commissioner included

Order restitution/monetary penalties, enter cease & desist order, subpoena witnesses/documents

Nontraditional credit includes WHAT?

Payments to a landlord Electric bills Telephone bills The types of credit that can be used to develop a nontraditional credit history are those that require the borrower to make periodic payments on a regular basis with intervals that are no longer than every three months. ... This includes payments made to a landlord or management company

What is prohibited for qualified mortgages? (a 30 term mortgage is allowed)

Points and fees that exceed 9% of the total loan amount A negative amortization feature Ability to defer payment of the principal 4 TYPES OF QUALIFIED MORTGAGES ARE: General, Temporary, Small Creditor, and Balloon-Payment

Redling(avoiding a certain area) + Reverse redlining (targeting a certain area)

Predatory Lending - literally the opposite reverse redlining targeting an area based on income/race, etc.

FEE TOLERANCE BUCKETS.. WHAT IS ALLOWED? VARIATIONS PERMITTED. (LO / us don't really have control over. )

Prepaid Interest, Property Insurance Premiums(depending on insurance provider you choose) ., Amounts placed in Escrow, Charges paid to 3rd party service providers NOT included on written list, Charges paid to 3rd party service providers not required by the creditor(Home warranty for example. Additional Insurances), Change Circumstances applies, Property Taxes Paid at Closing

The Jetsons have brought LO Stanley a check to pay for LO fees, the private MIP, and commitment fee. These charges are:

Prepaid finance charges

What does the acronym RESPA stand for? What is RESPA?

Real Estate Settlement Procedures Act. Real Estate Settlement Procedures Act. RESPA seeks to reduce unnecessarily high settlement costs by requiring disclosures to homebuyers and sellers, and by prohibiting abusive practices in the real estate settlement process. RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit. What are RESPA violations? RESPA violations include bribes between real estate representatives, inflating costs, the use of shell entities and referrals in exchange for settlement services RESPA Violation Examples and Penalties Giving (non-monetary) gifts in exchange for referrals. ... Inflating the cost of services. ... Overcharging for common fees. ... Paying referral fees to an insurance company. ... Setting up shell entities to cover up kickbacks. In a criminal case, a person who violates Section 8 may be fined up to $10,000 and imprisoned up to one year. PLEASE READ FOR EXAMPLES: https://www.nar.realtor/real-estate-settlement-procedures-act-respa/respa-faq

Which types of transactions do not require a creditor to provide consumer with a Loan Estimate?

Reverse Mortgages, mortgages secured by mobile home/dwelling not attached to real property, creditors who do not make more than 5 mortgages a year & HELOC's

Assessment of borrower repayment ability is required for ALL mortgage loans except for what? (law under TILA)

TILA expressly requires an assessment of repayment ability for virtually all transactions other than those for reverse mortgages.

Truth in Lending Act of 1968 does what?

TILA regulates language and terms used in advertising for credit. TILA and Regulation Z prohibit the advertisement of lending terms that a lender or creditor is not actually prepared to offer. The law and regulations also seek to prevent publication of advertisements that are deceptive and misleading. TILA also intended in providing the consumer with information on the cost of credit. The main purpose of TILA is to provide the consumer protection by requiring disclosure of the cost of credit. Dividing the PITI by the amount of a borrower's monthly gross income determines the: The answer is housing expense ratio. PITI divided by gross monthly income calculates the housing expense ratio. https://www.slideshare.net/Valerie1120/advertising-marketing-compliance-sept-09

What are considered settlement services under RESPA X and what is NOT Covered under RESPA??

TITLE INSURANCE AND TITLE SEARCHES are covered under the provisions of RESPA and are considered settlement services. The provisions of RESPA cover settlement services including title searches, title examinations, and title insurance. Land tracts of 25 or more acres, whether there is a residence or not, are not covered When a loan is assumed, and the lender has no rights to approve future persons for the assumption, then the loan is not covered. Temporary Financing is not covered. There aren't many residential assumable loans anymore, but VA loans are a notable exception. When a loan is made to purchase vacant land, and none of the proceeds of the loan will be used to construct a covered residential structure, the loan is exempt from RESPA CONSTRUCTION-ONLY Unless a loan is made as a construction-to-permanent loan, it is not covered. GOVERNMENT LOANS ARE NOT COVERED UNDER RESPA Neither is Vacant land 25 acres or more bridge loans and swing loans are also not covered

A HECM is what type of loan: WHAT MAKES THEM UNIQUE?

TYPES OF HECM LOANS -Reverse mortgage -Bridge loan -Graduated payment mortgage -Line of credit The home equity conversion mortgage (HECM) does not require repayment as long as the borrower continues to live in the home. Who is eligible for Home Equity Conversion Mortgages (HECM)? -Be 62 years of age or older. -Own the property outright or have a small mortgage balance. -Occupy the property as your principal residence. -Not be delinquent on any federal debt. -Participate in a consumer information session given by an approved HECM counselor. ***requires at least a 29% down payment Is a HECM the same as a reverse mortgage? A home equity conversion mortgage (HECM) is a type of reverse mortgage that is insured by the Federal Housing Administration (FHA). Home equity conversion mortgages allow seniors to convert the equity in their home into cash. What can a HECM be used for? A HECM is a loan that allows seniors to use the equity in their home while paying off their existing mortgage. Insured by the government, a HECM can be used to supplement your retirement income, but the mortgage can be complex and isn't always the right option for everyone How does a HECM Purchase work? A HECM for Purchase loan combines a reverse mortgage with the equity from the sale of your previous home - or from other savings and assets - to buy your next primary home in a single transaction. Is HECM for Purchase a good idea? Using an HECM for Purchase Loan to buy a new house may not be a good idea unless you plan to live there for at least five years. If you take out an HECM for Purchase Loan but you can't keep up taxes and insurance payments, your lender can foreclose on your home.

The types of high-cost mortgages that may be subject to HOEPA (Dodd-Frank Act) include all of the following

The Dodd-Frank Act broadened the scope of HOEPA to cover almost all mortgage types, EXCEPT for reverse mortgages. Refinances, Home equity lines of credit, and Loans to purchase a home are all included The risk of a balloon mortgage may be minimized by including a: conditional refinance provision. The risk of a balloon mortgage may be minimized by including a conditional refinance provision.

How are FHA loan limits established?

The FHFA establishes loan limits for FHA loans The FHA uses loan limits based on CFPB loan limit guidance Loan limits are set by Ginnie Mae HUD establishes loan limits for FHA loans based on county-by-county conforming limits The answer is HUD establishes loan limits for FHA loans based on county-by-county conforming limits. HUD establishes loan limits for FHA loans based on county-by-county conforming loan limits. FHA loan limits are divided into lower-cost and higher-cost areas.

What does FHLMC (Freddie Mac) stand for? When was it created? Why did Congress feel Freddie Mac was necessary?

The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, is a publicly traded, government-sponsored enterprise, headquartered in Tysons Corner, Virginia. The FHLMC was created in 1970 to expand the secondary market for mortgages in the US.

WHICH LOAN IS THIS, SCENARIO #7: Henry Henson and his wife, Henrietta, have decided to make a few upgrades around their home. Their kids are gone, they are ready to retire, and they feel like it is time to add a few improvements they never had the money for previously. They want to remodel their kitchen and add a whirlpool tub to their master bath. To pay the contractors, they take out a loan based on their equity. The loan is similar to a credit card - they only make payments based on funds they withdraw from the loan.

The Hensons have a home equity line of credit (HELOC). A HELOC acts like a credit card - the borrower is approved for a line of credit and only makes payments based on withdrawals they make from the credit line.

Which of the following is a trigger term for advertisements for both open-end and closed-end mortgage loans? A. Finance charge B. Amount of down payment C. Period of repayment D. Number of payments

The answer is finance charge. The finance charge is a trigger term in advertising for both open- and closed-end loans.

Jeff and Jenn Jefferson just moved to a new city and are excited to purchase their first home. Jeff struggled with credit card debt out of college, but has worked hard to improve his credit. Jenn's new job presents great earning potential. Jenn's parents also offer to make the generous gift of a down payment for the loan. While the Jeffersons love the small house they have found, they know they want to start having children soon, and will want to move to a larger house in a good school district in about five years or so. They figure if they can take advantage of a particularly low interest rate to start out, that is a worthy investment. -- WHAT IS BEST LOAN FOR THE JEFFERSONS?

The Jeffersons are aiming for an adjustable-rate mortgage. This will allow them to make mortgage loan payments for their first few years at an interest rate that is likely lower than the standard available for fixed-rate mortgages. This will help Jeff continue to improve his credit as they build equity. Then, when they are ready to move, they may be able to avoid any interest rate increases by purchasing their new home with a fixed-rate loan.

WHICH LOAN IS THIS, SCENARIO #4: The KINGS just purchased 15 acres with a loan from a farm credit institution with no down payment. They will build a farmhouse on the land.

The KINGS likely have an RHS loan. These loans do not require a down payment and can be used to purchase a lot/home site in rural areas

WHICH LOAN IS THIS SCENARIO #2 : Retired veteran Sam Samuels and his wife, Sarah, have reached their golden years. They are both 70, and they were disappointed when their investments fell short and did not adequately supplement Sam's Navy pension. They obtained a loan to help with their living expenses.

The Samuels have a reverse mortgage. The key indicators are the fact that they are both over 62 and need the loan to pay for living expenses. They will not have to repay the loan as long as they live in the home.

WHICH LOAN IS THIS, SCENARIO #5: The Smiths had some credit problems for a few years, but just qualified for a loan program with a higher interest rate. The lender offered the higher rate in order to offset the increased credit risk.

The Smiths have a subprime loan. Subprime loans were obtained by borrowers who had impaired credit or other qualification problems. A higher interest rate was intended to protect the lender in the event that the borrower defaulted.

In a title theory state, title to residential real estate is granted with a _____, naming the lender as the beneficiary of the trust, the borrower as the trustor, and the third party that holds the deed until the loan is fully paid as the _____.

The answer is deed of trust / trustee. In a title theory state, title to residential real estate is granted with a deed of trust, naming the lender as the beneficiary of the trust, the borrower as the trustor, and the third party that holds the deed until the loan is fully paid as the trustee.

The Onyewus are purchasing a home with an agreed-upon sales price of $320,000. They are putting down 20%, and have agreed to pay two points in discount to lower their rate, and two points in origination fees to their lender. What is the total cost of their points?

The answer is $10,240. Points are paid based on the loan amount. After a 20% down payment, the total loan amount is $256,000. They have agreed to pay two points in discount and two points in origination, for a total of four points. Each point is 1% of the loan amount, so 4% of $256,000 equals $10,240.

The primary reason for adopting special appraisal requirements for HPMLs was to:

The answer is discourage the use of inflated appraisals to flip properties. The primary reason for adopting special appraisal requirements for HPMLs was to discourage the use of inflated appraisals to flip properties.

Marketing campaigns for the solicitation of credit are covered by the provisions of:

The answer is TILA. General marketing and advertising for credit is covered by TILA. (Marketing is a way for lenders to try to get money from potential borrowers so that would be reason for it to fall under this regulation - TILA Z under RESPA X ) ECOA , REGULATION B Under RESPA ' ECOA protects against discrimination in credit transactions. Asking how many years someone has been at their job is not considered discriminatory. It is a gauge of income stability. -- APPLIES TO ALL CREDITORS + CREDIT UNIONS --- Regulation B prohibits creditors from requesting and collecting specific personal information about an applicant that has no bearing on the applicant's ability or willingness to repay the credit requested and could be used to discriminate against the applicant. Regulation B covers the actions of a creditor before, during, and after a credit transaction. ... This list also includes refinancing, credit applications, information requirements, standards of creditworthiness, investigation procedures, and revocation or termination of credit. What is not covered under ECOA? What loans are not covered by the ECOA Valuations Rule? The ECOA Valuations Rule does not cover second liens and other subordinate loans and loans that are not secured by a dwelling (such as loans secured solely by land). Regulation B covers the actions of a creditor before, during, and after a credit transaction. The CFPB lists credit transactions and aspects of credit transactions to include consumer credit, business credit, mortgage, and open-end credit.

The CHARM Booklet is an educational disclosure required by which piece of federal legislation?

The answer is TILA. The Consumer Handbook on Adjustable Rate Mortgages (CHARM) is one of a number of disclosures required by the Truth in Lending Act (TILA) to be provided to any consumer interested in an ARM product.

Which of the following is responsible for determining whether to issue a license approval? The NMLS The Governor The Legislature The Commissioner

The answer is The Commissioner. The Commissioner or state regulator for financial institutions determines licensing eligibility.

This federal law was enacted with the intent to make it easier to prosecute mortgage fraud. The Fraud Enforcement and Recovery Act The Dodd-Frank Act The Consumer Financial Protection Act The Mortgage Acts and Practices Act

The answer is The Fraud Enforcement and Recovery Act. The Fraud Enforcement and Recovery Act was enacted with the intent to increase enforcement against those who commit mortgage fraud.

WHAT IS A STRAW BUYER? (EXAMPLE)

The answer is Tom's sister has bad credit and cannot qualify for a loan, so he agrees to let her get the loan using his name and allows his sister to live in the house and cover the mortgage payments. A straw buyer is someone who agrees to let someone use his/her name, Social Security Number, and other financial information to qualify for a loan he/she has no intention of paying back or occupying the home.

The term "maximum guaranty amount" applies to _____ loans, and it refers to _____.

The answer is VA; the maximum amount that the VA will pay to a lender if the borrower defaults on a loan. The VA limits the amount that it can guarantee to repay a lender in the event of a default on the loan. This amount is referred to as the "maximum guaranty amount."

In a transaction for a fixed-rate mortgage to finance a home purchase, the loan applicant should receive: A. The CHARM Booklet B. Your Home Loan Toolkit: Step-by-Step Guide C. What You Should Know about Home Equity Lines of Credit D. The Consumer Handbook on Fixed-Rate Mortgages

The answer is Your Home Loan Toolkit: A Step-by-Step Guide. In a transaction for a fixed-rate mortgage to finance a home purchase, the loan applicant should receive Your Home Loan Toolkit: A Step-by-Step Guide.

All of the following are examples of nontraditional mortgage products, as defined by the S.A.F.E. Act, except: A fixed-rate loan with a term of 30 years An interest-only loan with a term of 40 years An adjustable-rate mortgage with a term of 30 years A fixed-rate loan with a term of 15 years

The answer is a fixed-rate loan with a term of 30 years. The S.A.F.E. Act defines a "nontraditional mortgage product" as any loan other than a 30-year, fixed-rate loan.

Which of the following statements most accurately describes HOEPA's prepayment penalty threshold for high-cost mortgages?

The answer is a loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid. A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid.

What type of lien takes priority over a mortgage & mechanics lien?

The answer is a tax lien. A tax lien takes priority over ALL other liens, regardless of chronological order.

An originator uses a contracted processor who charges $500 per file. The fee disclosed to the borrower for processing is $800, a difference of $300 which the originator keeps for himself. This is an example of WHAT?

The answer is a unilateral markup, which is legal, but may be a violation of RESPA's prohibition against unearned fees. RESPA requires compensation for settlement services to be earned. Any compensation not in direct correlation with an actual service is likely a violation. However, according to a 2012 case, the act of unilaterally marking up a fee and retaining the additional earnings is not illegal, as long as fee-splitting is not involved.

All of the following are responsibilities of the closing agent, except: Verify identity and notarize documents Explain the risks and benefits of the ARM product on which the client is closing Coordinate the closing process Verify that all parties have copies of forms and disclosures required for settlement

The answer is explain the risks and benefits of the ARM product on which the client is closing. In broad terms, it is the closer's job to "review" the terms of the loan with the borrower; it is not their job to "re-sell" the loan to the borrower. Full disclosure and discussion of all fees are the obligations of the borrower and should take place prior to closing.

Virtually every residential transaction involves an estate that is held in _____, the desired form of holding ownership to property because it has the fewest restrictions. A. Foreclosure B. Fee simple C. Short sale D. Deed-in-lieu

The answer is fee simple. Virtually every residential transaction involves an estate that is held in fee simple, the desired form of holding ownership to property because it has the fewest restrictions.

When a fixed-rate qualified mortgage includes a prepayment penalty, that penalty may not be charged AFTER THE FIRST... WHAT? (# of years of loan term)

The answer is after the first three years of the loan term. When a fixed-rate qualified mortgage includes a prepayment penalty, the penalty may not be charged after the first three years of the loan term NOTE: "Prepayments are associated with non-conforming mortgages — loans not sold or insured by government-sponsored enterprises such as Fannie Mae or Freddie Mac — and they don't apply to conventional, FHA, VA or USDA home loans," says Anna DeSimone, New York City-based personal finance expert and author of "Housing Finance 2020." The Dodd-Frank Act established limitations for prepayment penalties. Today, a mortgage prepayment penalty can only be assessed during the first three years of the loan term. Also, the penalties are capped at 2 percent of the loan balance for the first two years and 1 percent of the loan balance for the third year. EXAMPLE: of a prepayment penalty Here's another prepayment penalty scenario. Say you bought a house 19 months ago and borrowed $200,000 via a non-conforming mortgage loan to finance it. Now, interest rates have dropped much lower, and you want to refinance to lower your monthly payments. "In this case, because you are refinancing within the first two years of the loan, you would be charged a $4,000 penalty — equating to 2 percent of your balance," Bulger says. Another example: Imagine you inherit a windfall and decide to use $30,000 of it to help pay off your $200,000 mortgage more quickly. "In this scenario, you would not be charged a prepayment penalty," Bulger says. "That's because your $30,000 accelerated payment is less than the 20 percent maximum your lender will allow annually as a prepayment amount."

An advertisement placed by Buster Posey contains a trigger term. As required, Buster has also provided the required additional disclosures. These include all of the following, except the: A. Amount or percentage of the down payment B. Terms of repayment C. Annual percentage rate D. Amount of the finance charge

The answer is amount of the finance charge. Additional disclosures required in an ad containing a trigger term include the amount or percentage of the down payment, the terms of repayment, and the annual percentage rate. The amount of the finance charge is a trigger term, not a required additional disclosure.

It is a violation of TILA for a loan originator to collect _____ before providing a loan applicant with _____.

The answer is an origination fee/a Loan Estimate. The collection of an origination fee prior to providing a Loan Estimate is illegal.

For the purposes of providing a Loan Estimate, a "business day" is:

The answer is any day on which the creditor's offices are open to the public for carrying out substantially all business functions. For the purposes of providing a Loan Estimate, a "business day" is any day on which the creditor's offices are open to the public for carrying out substantially all business functions.

Desperate to increase her business, Sandy has advertised a loan product that has very attractive terms but which does not actually exist in the marketplace. She plans on telling consumers who inquire about the product that it was pulled from the market and then steer them to other loan products that are actually available. By doing this, Sandy has engaged in what?

The answer is bait-and-switch advertising. Bait-and-switch advertising is advertising a loan at very attractive terms and then informing the potential customer that that loan is not available but that a different loan with different terms is.

A conditional refinance provision might be a feature of what type of loan?

The answer is balloon. A balloon loan may be eligible for refinance if it carries a conditional refinance provision. This means the loan may qualify for refinance if certain conditions are met, including: borrower must live in the house; no second liens in place; must be current and not have been late in 12 months; new rate cannot exceed 5% over the note; docs must be signed and fees paid.

Lisa and Ryan are moving out of state and have sold their home. Unfortunately, the closing on their old home is not for another two months, and they need funds to begin making payments on their new home, which they have closed on and plan to move into immediately. Their lender is likely to suggest that they secure:

The answer is bridge financing. Bridge financing is used to help homeowners who are selling one home and buying another to make payments on their new home loan while waiting for the closing date on their old home to arrive.

In the practice of table funding, what is used to protect the lender against fraudulent activity? (Table funding means a settlement at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds)

The answer is buy-back provisions. A warehouse lender often uses buy-back provisions in the agreements with brokers to assure themselves some protection against fraudulent activity during the loan process.

What best describes the types of conventional mortgages that are available?

The answer is conforming loans and nonconforming loans. There are two types of conventional mortgage loans: conforming loans, which meet GSE loan limits and standards, and nonconforming loans, which do not meet GSE loan limits and standards (for example, "jumbo" loans). NOTE: The housing GSEs are the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal Home Loan Bank System (FHLBank System), which currently consists of 12 Federal Home Loan Banks (FHLBanks).

If an appraiser considers the value of the land and the cost of improvements as a means to arrive at an estimate of value for a property, he/she is using the _____ approach.

The answer is cost. The cost approach uses the value of the land and the reproduction cost of any improvements. Cost approach is used in Construction Loans. In which situation can the sales comparison approach be used? The term sales comparison approach refers to a real estate appraisal method that compares one property to comparables or other recently sold properties in the area with similar characteristics. Real estate agents and appraisers may use the sales comparison approach when evaluating properties to sell. principle of substitution Like the cost approach, the sales comparison approach is based on the principle of substitution. This principle presumes that a prudent buyer will pay no more for a property than the purchase price of a similar and equally desirable property. When would an appraiser use the income approach? When a property's intended use is to generate income from rents or leases, the income method of appraisal or valuation is most commonly used. The net income generated by the property is measured in conjunction with certain other factors to calculate its value on the current market if it were to be sold.

After a cursory examination by the state, it is determined that Quick Dollar Mortgage Co., in all probability, is engaging in prohibited activities. To ensure that Quick Dollar's files and records are not tampered with during the investigation, state examiners may do which of the following? A. Place all records in a separate location undisclosed to the licensee until the investigation is over B. Require that all records be transferred to the NMLS for review and safekeeping C. Take complete physical control of all records and prohibit the licensee from any access during the investigation Take possession of records or designate a specific person to control access

The answer is take possession of records or designate a specific person to control access. During the course of an examination or investigation, the state licensing agency may take possession of the documents and records of the person being examined or place a person in exclusive charge of the documents and records in the place where they are usually kept. Licensees generally must still be given access to records for the purposes of conducting normal business, but licensees and their employees are prohibited from any attempt to destroy, conceal, secrete, remove, or otherwise tamper with records and files during investigation or at any time.

In what area of the Loan Estimate would a borrower be able to see if their loan has a balloon payment?

The answer is the "Loan Terms" section. The Loan Terms section on page 1 of the Loan Estimate includes, among other things, an indication of whether the loan includes a prepayment penalty or a balloon payment.

Government monitoring information regarding applicant demographics is found where?

The answer is the 1003. Demographic information collected for government monitoring purposes (HMDA info) is found on the application, or 1003. The other form 1004 is the URLA stands for "Uniform Residential Loan Application." - basically the application - can remember it by thinking of up to 4 dwelling residential limits

The provisions of the GLB Act specifically require compliance with the:

The answer is the Safeguards Rule. The provisions of the GLB Act specifically require compliance with the Safeguards Rule. The GLBA's purpose was to remove legal barriers preventing financial institutions from providing banking, investment and insurance services together. Established in 2003, the Safeguards Rule sets forth the foundational requirements of an information security program that covered financial institutions must implement to protect the non-public personal information of their customers What is required under the safeguard rule? The existing Safeguards Rule requires security training for personnel. A financial institution must provide an annual notice at least once in any period of 12 consecutive months during the continuation of the customer relationship. Generally, new privacy notices are not required for each new product or service. When must a bank provide a GLBA privacy notice to customers? A financial institution must provide an annual notice at least once in any period of 12 consecutive months during the continuation of the customer relationship. Generally, new privacy notices are not required for each new product or service. Which are three key rules of the GLBA? The Act consists of three sections: The Financial Privacy Rule, which regulates the collection and disclosure of private financial information; the Safeguards Rule, which stipulates that financial institutions must implement security programs to protect such information; and the Pretexting provisions.

Lifetime rate caps are used in transactions for adjustable-rate mortgages to limit:

The answer is the amount by which an interest rate can change over the loan term. Lifetime rate caps limit the amount by which a rate can change during a loan term.

Payments for non-qualified mortgages must be based on:

The answer is the fully-indexed rate. Payments for non-qualified mortgages must be based on the fully-indexed rate.

A loss payee clause protects whom?

The answer is the lender in the event the property is damaged by fire or other risks. The loss payee clause in a hazard insurance policy protects the lender's investment in the event that the collateral is damaged by fire or other risks. This means that if there is a fire or other loss, the lender is paid first to cover its investment.

Annual PMI is determined by multiplying:

The answer is the loan amount and the mortgage insurance rate. Annual PMI is determined by multiplying the loan amount and the mortgage insurance rate.

For ARMS characterized by figures like "3/1," "5/1," "7/1," or "10/1," the first number represents _____, and the second number represents _____.

The answer is the locked term; the adjustment frequency. ARMS are often named for their features. In other words, a 3/1 ARM is locked for three years, and then adjusts annually each year thereafter. The first number represents the locked term and the second number represents the adjustment frequency.

In calculating an adjustment for an ARM, the fully-indexed rate is determined by adding:

The answer is the margin to the index. The fully-indexed rate determines the movement of an ARM (absent the caps). In order to arrive at the fully-indexed rate, you simply add the margin and index together.

Payments for qualified mortgages must be based on: A. The maximum interest rate that will apply over the life of the loan B. The fully-indexed rate C. The introductory rate D. The maximum interest rate that will apply during the first five years after the date of the first payment

The answer is the maximum interest rate that will apply during the first five years after the date of the first payment. Payments for qualified mortgages must be based on the maximum interest rate that will apply during the first five years after the date of the first payment.

The priority of liens is based on:

The answer is the order of recordation, unless a tax lien or subordination agreement changes the order. Liens are paid in order based on the recording date, oldest first. However, tax liens take priority, and a subordination agreement can change the order between creditors.

If a changed circumstance in a mortgage loan transaction occurs fewer than four business days prior to consummation:

The answer is the revised charges may be provided to the consumer on a revised Closing Disclosure. If a changed circumstance occurs fewer than four business days prior to consummation, the revised charges may be provided to the consumer on a revised Closing Disclosure.

All of the following may be reasons why a lender may call a reverse mortgage due and payable:

The homeowner dies An act of fraud or misrepresentation occurs The homeowner declares bankruptcy Reverse mortgage interest is charged on the outstanding balance and added to the debt, which means the debt increases with each payment or draw. This is how a reverse mortgage is designed to be implemented. All Borrowers Died. ... The Property Is Sold or Title to the Property Is Transferred. ... The Borrower No Longer Uses the Home as a Principal Residence. ... The Borrower Fails to Occupy the Home for Longer Than 12 Consecutive Months Because of a Physical or Mental Illness. No more DELINQUENCIES OR DEBT LEFT

A mortgage lender regularly shares loan applicants' nonpublic personal information with an underwriter who works as an independent contractor. What must the lender do to comply with the GLB Act?

The lender must require the underwriter to contractually agree that it will only share the nonpublic personal information with affiliated companies The lender must provide an opt-out notice to its loan applicants, because the underwriter is a nonaffiliated service provider The lender must offer its loan applicants a choice of providers for underwriting services The lender must require the underwriter to contractually agree that it will only use the nonpublic personal information to perform the services requested

An originator's unique identifier must be shown on ?

The unique identifier of any person originating a residential mortgage loan must be clearly shown on all residential mortgage loan application forms; solicitations or advertisements, including business cards or websites; and any other documents as established by rule, regulation, or order of the state licensing agency (MSL.210).

There are 3 types of discrimination in fair lending:

There are 3 types of discrimination in fair lending: Overt Discrimination. Overt discrimination is the act of openly and/or intentionally discriminating on a prohibited basis, i.e. "we don't lend to single women." Disparate Treatment. Disparate treatment refers to intentional discrimination, where people in a protected class are deliberately treated differently. This is the most common type of discrimination. An example would be an employer giving a certain test to all of the women who apply for a job but to none of the men Disparate Impact. Disparate impact refers to discrimination that is unintentional. The procedures are the same for everyone, but people in a protected class are negatively affected. For example, say that job applicants for a certain job are tested on their reaction times, and only people with a high score are hired. Disparate impact is a way to prove employment discrimination based on the effect of an employment policy or practice rather than the intent behind it. When a real estate professional or entity discriminates against a group of people (and didn't mean to do it)

ANOTHER TERM FOR Adjusted Rate Mortgages (ARM) Loans

These loans, also known as NEGATIVE AMORTIZATION loans, keep payments low; however, these payments may cover only a portion of the interest due. Unpaid interest becomes part of the principal. After years of paying the mortgage, your principal owed may be greater than the amount you initially borrowed ADVANTAGE: The biggest advantage of an ARM is that it is considerably cheaper than a fixed-rate mortgage, at least for the first three, five, or seven years. ARMs are also attractive because their low initial payments often enable the borrower to qualify for a larger loan and, in a falling-interest-rate environment, allow the borrower to enjoy lower interest rates (and lower payments) without the need to refinance the mortgage.

What is 10% Aggregate Increase List ?

Unaffiliated Third Party IF Shopping allowed, recording fees, Services for which Consumer may but does not shop.

Do lenders/loan/creditor originators EVER charge for the second appraisal?

When two appraisals are required, the creditor may not charge the consumer for the second appraisal. Yet second appraisals are required for high cost mortgage or house flipping . Second Appraisals were originally required to stop the extreme increased value of homes from house flipping.

WHAT IS A MARGIN?

When you sign your loan, you agree to pay a rate that is a certain percentage higher than the adjustment index. For example, your adjustable rate may be the rate of the one-year T-bill plus 2%. That extra 2% is called the margin

Under TILA guidelines, what are the following disclosures required to be provided for an adjustable-rate loan?

Under TILA guidelines, required disclosures for an adjustable-rate loan include the frequency of changes in the annual percentage rate, the index used to determine rate adjustments, and the fact that the payment amount may change over time.

Difference in Open and Closed mortgage

Understanding the difference between an open and closed mortgage, as well as a convertible mortgage means a difference in interest rates (which translates into more or less money in your pocket) and flexibility (how much you can pay toward the mortgage and when you can pay it off) An open mortgage provides flexibility until you are ready to lock into a closed term. A closed mortgage limits your prepayment options but usually offers a lower interest rate than an open mortgage. An open-end mortgage is a type of mortgage that allows the borrower to increase the amount of the mortgage principal outstanding at a later time. Open-end mortgages permit the borrower to go back to the lender and borrow more money. There is usually a set dollar limit on the additional amount that can be borrowed.

Non-Conventional Loans ,.

Usually required a 20% down payment A conventional mortgage loan is one that's not guaranteed or insured by the federal government High-cost mortgages are permitted to have a variable interest rate, however, negative amortization, advanced payments, and prepayment penalties are not allowed.

What is VOM and VOD acronyms stand for?

Verification Of Mortgage (typically used by creditors to overall get a 12 month history & mortgage information from a servicer OR refinancing - making payments still. Paper or verbally is allowed) - Verification of Deposit

What is a payment -Option ARMS?

You could choose to make traditional principal and interest payments; or interest-only payments; or a limited payment that may be less than the interest due that month, thus the unpaid interest and principal will be added to the amount you owe on the loan, not subtracted.

When may a homeowner request that PMI be cancelled?

as soon as his/her equity position is 20% or greater. The Homeowners Protection Act states that a homeowner may request a lender/servicer cancel PMI as soon as the equity position is at 20% or greater (80% LTV or less). The PMI is automatically terminated by the lender/servicer at 78% LTV or when the loan reaches the midpoint in its amortization.

Two types of loans used to finance the construction of a property are:

construction-to-permanent and stand-alone construction. Construction-to-permanent and stand-alone construction loans are two options used to finance the construction of a home being built. Both have advantages and disadvantages based on the borrower's needs and the timeline of the construction.