Mortgage Lending practices Random Q's

Prior to recent regulatory changes, "yield spread premium" was traditionally defined as: A. An amount paid by a lender to a loan originator for closing a loan at a rate higher than the rate for which the borrower qualifies B. A free paid by borrowers to lenders for lowering the note rate on their loan transaction C.Income available to a settlement service provider who has entered into a legitimate affiliated business arrangement D. A fee split between service providers for sharing settlement responsibilities

A. An amount paid by a lender to a loan originator for closing a loan at a rate higher than the rate for which the borrower qualifies

Advertising an attractive interest rate that a mortgage professional is not at liberty to offer is a major ethical offense and a violation of: A. Regulation Z B. The Equal Credit Opportunity Act C. The Fair Credit Reporting Act D. Regulation X

A. Regulation Z

An advertisement that states, "Refinance and we can save you up to $300 per month!" is: A. not a violation of TILA if it provides information on APR's and payments with equal prominence, as long as statement is true B. A TILA violation only if the loans are not available C. A violation of TILA D. A TILA violation because it targets struggling homeowners

A. not a violation of TILA if it provides information on APR's and payments with equal prominence, as long as statement is true

Which of the following requires mortgage professionals to implement and maintain security protocols to ensure the confidentiality of consumer information? A. The Safeguards Rule B. The confidentiality Rule C. The ATR rule D. The MAP Rule

A. the Safeguards rule

If a mortgage broker were to take on the role of a borrowers agent, the mortgage professional is said to have: A. Power of attorney B. A fiduciary duty C. A financial partnership D. a Fidelity agreement

B. A fiduciary duty

According to fair lending laws, age may be considered as a factor in denying a loan application if: A. The applicant is too old to survive the term of a the loan B. The applicant is too young to enter a contract C. The applicant is too young or too old to understand the terms of the contract. D. The applicant is too young to have accumulated savings and requires a gift from his or her parents in order to make a down payment

B. The applicant is too young to enter a contract

For a fee, a real estate licensee offers a mortgage company the names and telephone numbers of all the people who attended an open house, ,but the mortgage company does not accept the offer. Who is in violation of RESPA? A.The mortgage Company B. The real Estate license C. Both the mortgage company and the real estate licensee D.Neither the mortgage company nor the real estate licensee

B. The real Estate license

Which of the following statements offers the most accurate description of the effect of using a "trigger term" in an advertisement for a loan? A. Use a trigger term in an advertisement violated Regulation Z B. use of a trigger term requires the clear and conspicuous disclosure of other relevant terms with equal prominence C. Use of a trigger term requires clear and conspicuous disclosure of HUD- approved housing counselors D. Use of a trigger term requires the disclosure of all the lending terms of the mortgage described in the advertisement

B. use of a trigger term requires the clear and conspicuous disclosure of other relevant terms with equal prominence

Which of the following statements would be permissible when communicating with an appraiser? A. "your last appraisal did not meet the minimum value we expected. We are going to have to wait on paying your invoice until we obtain a second opinion" B." Can you explain why this property is valued so low, compared to the current market?" C. " I need this property to value a minimum of $200,000" D. " your appraisals have been coming in lower than expected lately. We are going to start using another appraiser."

B." Can you explain why this property is valued so low, compared to the current market?"

A "straw Buyer" is: A. A buyer who uses another individuals identity in order to obtain a mortgage for which he or she is not eligible. B.A buyer who accepts a fee for the use of his or her SSN and other personal information on a mortgage application C. A buyer who intends to purchase property but does not intend to occupy it D. A buyer who is a victim of identity theft

B.A buyer who accepts a fee for the use of his or her SSN and other personal information on a mortgage application

When Michael wanted to purchase a home in 2006 , his mortgage broker told him that his income was insufficient to qualify for the mortgage broker suggested that he complete an application for a stated-income loan , and told him the minimum income level that he needed to include on the application in order to qualify for a mortgage. Michael completed the loan application in order to qualify for a mortgage. Michael completed the loan application, adding $20,000 to the minimum amount that his broker suggested . the broker reviewed the application and Michael signed it. Which of the following statements most accurately describes the liability that can arise from this scenario? A. The mortgage broker is solely liable, because he encouraged Michael to misrepresent his income B.Michael is solely responsible for misrepresentation, since he inflated his income more than was necessary to secure the loan. C. Michael and the mortgage broker are liable for submitting a loan application that contains false information.

C. Michael and the mortgage broker are liable for submitting a loan application that contains false information.

A Mortgage broker enters into a rental agreement with a real estate agent where the rent for the office space is at the prevailing market price. Who has violated RESPA? A. The real estate agent B. Both the mortgage consultant and the real estate agent C.Neither the mortgage broker nor the real estate agent D. The mortgage broker

C.Neither the mortgage broker nor the real estate agent

A mortgage broker has 49% ownership in a title company. The mortgage broker refers business to the title company and also proved written disclosures to the borrower detailing the business relationship. The written disclosure also makes it clear that the borrower is not required to use the services of the TItle company. Who is in violation of RESPA? A.Both the title company and the mortgage broker B. the Title company C.Neither the title company and the mortgage broker D. the mortgage broker

C.Neither the title company and the mortgage broker

Which of the following describes an air loan? A. A loan is obtained with inflated property values B. A loan that is repeatedly refinanced with no benefit to the borrower C. a loan that is presented to the borrower with hidden fees D. A fictitious borrower obtain and secures it with fictitious property

D. A fictitious borrower obtain and secures it with fictitious property

Property Flipping occurs when: A. Someone accepts a fee to falsely claim ownership to a property B. The Title of a property is passed to a family member C. Someone secures a loan with fictitious property D. A property is bought and resold within a very short period of time

D. A property is bought and resold within a very short period of time

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

D. An Open-end HELOC

Michael Purchased a luxury home in 2006 using funds secured through a stated-income loan. In 2008, the IRS audited him, and began to suspect mortgage fraud upon discovering that he never earned enough to qualify for a loan to buy his expensive home. using an undercover agent, the IRS recorded Michael admitting that he had used a "Liar Loan" to purchase his home. Having obtained this Information the IRS: A. May not refer Michaels file to law enforcement authorities, since so many consumers were exaggerating their income on loan application during the mortgage boom B. May only bring an action against the lender that funded Michaels loan C.May only bring an action against Michael if he has failed to make timely payments on his home loan D. May refer Michaels file to law enforcement authorities for an action for mortgage fraud

D. May refer Michaels file to law enforcement authorities for an action for mortgage fraud