Practice Exam 3
A first-lien loan secured by the borrower's principal dwelling is a high cost loan under HOEPA if the APR exceeds the APOR by more than _____ percent or more than _____ percent if the dwelling is personal property (e.g. a manufactured home) and the loan amount is less than $50,000
6.5 ; 8.5
Under REPSA, when a loan servicer sells or assigns loan servicing rights to another loan servicer, the borrower cannot be penalized for making a timely payment to the prior servicer within ____ days of the loan transfer
60
A person has how many years from the time of the occurrence of an alleged ECOA violation to file a civil suit against the creditor?
5
A loan originator applicant must pass the NMLS required examination with a score of at least _____ percent
75
In order to meet the annual continuing education requirement, a state-licensed loan originator must complete at least ____ hours of NMLS- reviewed an approved coursework
8
Settlement services include all of the following EXCEPT
home decorator
A clause in the note the prohibits the borrower from prepaying the loan is the
lock-in clause
The purpose of TILA is to
promote the informed use of credit
With regard to adjustable loans with interest rate caps, it is true that
the loan payments may increase even if the index rate decreases
A lender can be protected from loss by encumbrances of a detective title through
title insurance
A mortgage typically does NOT
transfer title to the lender
RESPA requires that when an escrow account is required to manage tax and insurance payments, an initial escrow account statement showing all payments to be deposited and all disbursements to be made from the escrow account during the following year must be given to the borrower at or within ____ days after settlement
45
Evidence of compliance with the TILA RESPA Rule must be kept from the latest of consummation of the loan, the date disclosures are required to be made, or the date action is required to be taken, for ____ years for the Closing Disclosure and any associated documents, and for _____ years for the Loan Estimate
5 ; 3
As a general rule, it costs about ____ discount points to reduce the interest rate by one percent
6
For one to four family investment property in which the owner will not live. FNMA and FHLMC require a reserve of how many months PITI
6
Which law requires a loan originator to provide special information booklet to a borrower
RESPA
Arabella Ash works for an is supervised by loan originator Jerry Jenkins, collecting and analyzing data related to residential mortgage loans. She communicates with borrowers, but does not offer or negotiate loan rates or terms or advise consumers about residential mortgage loan rates or terms. Under SAFE Act definitions, Arabella is
a loan processor
In regulation x, the term "loan originator" applies to
a mortgage broker or mortgage lender
Which of the following would be included as an expense in calculating the debt to income ratio, assuming any debt has at least 10 months of payments remaining
a personal loan
HECM is also
a reverse mortgage
A low introductory rate on an ARM is called
a teaser rate
For purposes of mortgage licensing, all of the following are considered immediate family members, and therefore an individual may negotiate a mortgage loan on their behalf with being require to be licensed, EXCEPT
an aunt
An appraisal is
an opinion of value
In regard to reduced-documentation loans, the Guidance specifies that consumers should be alerted to
any pricing premium related to such loans
HMDA requires that for each transaction the lender must report all of the following data EXCEPT the
applicant's credit history, debt to income ratio and expense to income ratio
In regard to the communication with consumers regarding subprime loans, including both ads and oral communication, the Statement on Subprime Mortgage Lending recommends
avoid steering borrowers to these products to the exclusion of others
Loss in value due to any cause is called
depreciation
When a mortgage broker accepts a legitimate application and documents from a buyer and submits them to two lenders it is called
double selling
Under the TILA-RESPA Rule, a consumer may choose to waive the mandatory 7-day waiting period between the time the Loan Estimate is delivered or sent in the mail and loan consummation
due to personal financial emergency
PITI includes all of the following EXCEPT
existing debuts
The Fair and Accurate Credit Transactions Act (FACTA) states that upon request consumers must be given a copy of their credit report
for free once every 12 months
A loan applicant received a $20,000 gift from a relative to assist in the purchase of a home within the 60 days prior the purchase agreement or loan application. This will be treated by the lender as a
gift
The BSA's customer identification program involves cross checking customer identities with
government lists to uncover membership in terrorist organization
A VA borrower who has obtained a VA loan once can
have full eligibility restored to obtain a new VA loan if his prior loan is still outstanding and has been assumed by a financially qualified buyer
A purpose of the Home Mortgage Disclosure Act (HMDA) is to
identify possible discriminatory lending patterns
The penal sum of a loan originator's required surety bond must be maintained
in an amount that reflects the dollar amount of loans originated
Disclosures on the Closing Disclosure must be made
in writing
An estimate made by a mortgage loan originator of the amount of the loan for which the buyer can qualify based on his statements regarding his financial condition is called
prequalification
Gramm Leach Bliley's Safequards Rules requires financial institutions to maintain safeguards in order to
protect customer information from unauthorized access
If a rate is locked an interest rates drop during the lock in period
the lender will not drop the rate to be charge the borrower
Fannie Mae requires that a borrower maintain property insurance equal to
the lesser of the insurable value of the improvements or the loan balance
The maximum amount the charge for a category of settlement costs may exceed the estimated amount is the
tolerance
What law is in charge of the CHARM booklet
TILA
The limit of a loan origination fee for a HECM is
$6,000
Estimated taxes, insurance premiums and additional charges for a certain property are estimated at $3,600 for the following year. What is the "cushion" amount which the lender may require the borrower to keep in the account?
$600
The Loan Estimate must be delivered to the loan applicant _____ days after the creditor's receipt of the loan application and _____ days prior to the date of the loan's consummation
3 ; 7
In the Loan Estimate, fees related to third party service providers and recording fees are grouped together and subject to
10% tolerance
Section IV of Form 1003 records the details of the applicant's employment over the past ____ years
2
The Truth in Lending Act requires that a borrower be given how many copies of the notice of his right to rescind?
2
Under the SAFE ACT, mortgage loan originator applicants must have how many hours of pre licensing education?
20
In order to avoid having private mortgage insurance, a buyer's down payment must be at least
20%
A creditor must provide the Closing Disclosure no later than how many business days prior to consummation
3
A mortgage may not be consummated less than ___ days after the borrower has received the Closing Disclosure
3
Which of the following is NOT a finance charge in a residential mortgage loan
Appraisal Fee
Which of the following are types of bankruptcy that involves a payment plan to pay off one's debts
Chapter 13
Which of the following is true regarding the qualification of an applicant who receives child support and alimony?
Child support can be grossed up
The finance charge, the cost of credit to the borrower expressed in dollars and calculated based on the provisions of Regulation Z, can be found in the
Closing Disclosure
A person wanting a loan to build a house would apply for what type of loan?
Construction
Payment of which of the following would reduce a borrower's interest rate?
Discount Points
Relevant financial information about an applicant who applies for an FHA or conventional residential mortgage is entered
FNMA 1003
The number one ethical problem cited in surveys of professionals and managers is
False or misleading representation of products or services in marketing, advertising or sales
Which of the following is NOT required by the BSA?
Generating requests from information from FinCEN
When secondary financing for a mortgage loan is a HELOC, the loan balance plus the total line limit is used to calculate the
HCLTV
A homeowner has a home worth $220,000. He has an outstanding loan of $165,000, and a HELOC with a limit of $30,000 on which he has drawn $12,000. Which of the following is NOT true?
His TLTV is 94%
Which of the following is true of the COFI
It is the slow-moving Cost of Funds Index
Which type of loan processing would include only an appraisal and a credit score?
No documentation
A real estate agent receives a $50 restaurant gift certificate from a mortgage broker as a token of appreciation for referring a home buyer to the mortgage broker. Which of the following laws was violated as a result of this transaction?
Real Estate Settlement Procedures Act (RESPA)
In the sales comparison appraisal approach, the appraiser uses which of the following as comparable sales
Recent sales in the area
RESPA applies to which of the following mortgage transactions
Residential
RESPA is administered by
The Consumer Financial Protection Bureau
A loan which has an initial period during which the rate is fixed, after which, for the remainder of the loan term, the rate is adjustable, is called
a hybrid ARM
Under ECOA, which of the following could be a deciding factor in denying a loan application
The applicant is under 18 years old
Which of the following is true regarding rate sheets?
The more points paid by the borrower up front, the lower the interest rate charged over the duration of the loan
What is money laundering
The practice of cleaning "dirty" money using financial transactions to make the money look like it came from legal sources
The loan Estimate may be conveyed to a consumer
by mail
What is used to permanently identify a loan originator
Unique Identifier
Prorating may be performed using
a 365 day year or a 360 day year
According to Regulation P, implementing the Gramm Leach Bliley Act (GLBA), non public personal information can be disclosed by a financial institution to
a consumer reporting agency
Under the Dodd-Frank Act, offering to provide a product or service that is not in fact available is considered
a deceptive act or practice
For an FHA loan, an acceptable source of down payment assistance is
a gift from a nonprofit organization
When a broker falsifies information on loan applications by overstating income and/or assets or by understating liabilities of the applicant, this is termed
broker facilitated fraud
In general, the TILA RESPA RULE applies to
closed-end credit transactions secured by real property
Under HOEPA, verifying the consumer's repayment stability in an open-end, high cost mortgage
is based on verifying income, assets and current obligations
When the term "jumbo loan" is used to describe a loan, the loan
is nonconforming
Information held by the NMLS relating to the employment history or disciplinary actions taken against a mortgage loan originator
is not protected by confidentiality and is available for public access
The information previously included in the final TIL disclosure
is now included in the closing disclosure
All of the following can be expressed as points EXCEPT (Answer: expressed as a percentage)
late fee
If the loan amounts, maturity dates and interest rates are the same for loans A and B, but loan A is a straight (interest-only) loan and loan B is fully amortized
loan B will have higher periodic payments
Due to the principal agent problem, compared to borrowers who obtained loans through retail sources, borrowers or loans originated by brokers are
more likely to prepay faster
In regard to obtaining property, the SAFE Act states that loan originators
must not do so by fraud or misrepresentation
A basis point is
one-hundreth of 1%
The Uniform Residential Loan Application includes a section requesting information for government monitoring. Applicants must complete this section
only if they wish
Charging a borrower broker fees when the borrower never met or knew of the broker, charing borrowers for a detailed appraisal when only a drive by appraisal was done and itemizing charges are all aspects of a predatory lending practice called
padding
Warning signs of loan problems, or possible fraud, are commonly called
red flags
The practice of lenders refusing to provide financing to qualified applicants on reasonable terms and conditions due to the geographic area in which the property is located is
redlining
If a consumer pays more at consummation than what was disclosed in the Loan Estimate and the amounts exceed the tolerances allowed by law, the creditor must
refund the excess within 60 calendar days of consummation
An applicant for a real estate loan cannot be asked about his
religion
Subordinate financing relates to
second mortgages
The Equal Credit Opportunity Act protects those who
seek loans from a financial institution
In the calculation of an applicant's income, a capital gain can be considered if
the borrower owns additional capital assets