Mortgage Exam 8
Under the S.A.F.E. Act, a state licensing agency must have the authority to conduct what?
investigations and examinations of licensed loan originators and individuals required to have a loan originator license.
Reconveyance is the process of
releasing a lien on a property.
The Dodd-Frank Act broadened the scope of HOEPA to cover almost all mortgage types, except for
reverse mortgages. The Dodd-Frank Act broadened the scope of HOEPA to cover almost all mortgage types, except for reverse mortgages.
A trigger term is any of the following specific credit terms:
the amount or percentage of any down payment (except when down payment is zero) the number of payments or period of repayment; the amount of any payment; the amount of any finance charge.
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.
A conveyance is
the transfer of ownership of real estate from one owner to another.
When a fixed-rate qualified mortgage includes a prepayment penalty, the penalty may not be charged after the first __ years?
three years of the loan term.
Regulation B provides that, when inquiries related to marital status are permitted, the 3 terms that may be used are?
"married," "unmarried," and "separated."
Regulation B provides that, when inquiries related to marital status are permitted, the terms that may be used are
"married," "unmarried," and "separated."
The Homeowners Protection Act states that a homeowner may request a lender/servicer cancel PMI as soon as the equity position is at ___ % or greater
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).
For most mortgage loan transactions (unless exempt), a Loan Estimate must be provided no later than ____ business days after receiving a completed loan application and at least ____ business days prior to consummation.
3 days and 7 days. 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 3 additional disclosures are required in an ad containing a trigger term?
Additional disclosures required in an ad containing a trigger term include the 1) amount or percentage of the down payment 2) the terms of repayment 3) the annual percentage rate. The amount of the finance charge is a trigger term, not a required additional disclosure.
The Homeowners Protection Act states that a homeowner may request a lender/servicer cancel PMI as soon as the equity position is at ___% LTV or less)
80% LTV or less 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).
A 30-year loan term [IS / IS NOT] prohibited for a qualified mortgage.
A 30-year loan term is not prohibited for a qualified mortgage.
A _____-year loan term is not prohibited for a qualified mortgage.
A 30-year loan term is not prohibited for a qualified mortgage.
A loan feature that is not prohibited for qualified mortgages is: A. Points and fees that exceed 9% of the total loan amount B. A negative amortization feature C. A 30-year loan term D. Ability to defer payment of the principal
A 30-year loan term is not prohibited for a qualified mortgage.
A VA loan [DOES OR DOES NOT] require mortgage insurance premium?
A VA loan does not require mortgage insurance premium. VA loans use a funding fee.
VA loans use a ____ fee?
A VA loan does not require mortgage insurance premium. VA loans use a funding fee.
A borrower may take on a piggyback loan to avoid ___ but not ___?
A borrower may take on a piggyback loan to avoid mortgage insurance, but not "MIP," because that is required for FHA loans. Of the answers given, the best is to limit the cash necessary to bring to the table.
A borrower with an FHA loan is required to pay both ____ and ____ MIP.
A borrower with an FHA loan is required to pay both upfront and annual MIP.
A borrower with an FHA loan is required to pay both upfront and annual _______.
A borrower with an FHA loan is required to pay both upfront and annual MIP.
A change which renders the initial application inaccurate must be made known to the NMLS and the Commissioner through ___ form?
A change which renders the initial application inaccurate must be made known to the NMLS and the Commissioner through an updated Individual Form as soon as is determined in accordance with state regulator notification requirements.
Advantages of VA loans include 1) 100% financing 2) more lenient underwriting requirements 3) no prepayment penalties 4) all of the above 5) none of the above
ALL OF THE ABOVE Advantages of VA loans include 100% financing, more lenient underwriting requirements, and no prepayment penalties.
After June 3, 2013, FHA loans with an LTV [PICK ONE: greater than or equal to OR less than or equal to] ______% will require MIP until the end of the loan term or the first 11 years, whichever comes first.
After June 3, 2013, FHA loans with an LTV less than or equal to 90% will require MIP until the end of the loan term or the first 11 years, whichever comes first.
After June 3, 2013, FHA loans with an LTV less than or equal to 90% will require MIP until the _____ or the _____ years, whichever comes first.
After June 3, 2013, FHA loans with an LTV less than or equal to 90% will require MIP until the end of the loan term or the first 11 years, whichever comes first.
An advertisement that states "Refinance with 30 year fixed rates as low as 4.25!" is not a violation of TILA if it provides information on _____ and________, as long as the statement is [TRUE / FALSE].
An advertisement that states "Refinance with 30 year fixed rates as low as 4.25!" is not a violation of TILA if it provides information on APRs and payments with equal prominence, as long as the statement is true.
For FHA loans with an LTV greater than ____%, MIP will be required until the end of the loan term or the first 30 years, whichever comes first.
For FHA loans with an LTV greater than 90%, MIP will be required until the end of the loan term or the first 30 years, whichever comes first.
Mr. Jones's loan application has been denied and he is provided with an Adverse Action Notice as required by ECOA. Which of the following pieces of information would not be included on the notice? A. Information on the credit reporting agency if the adverse action is based on his credit report B. Reasons for the denial of credit C. His credit score D. A referral to another potential creditor
D. A referral to another potential creditor
Conclusive Presumption of Compliance
Definition: The Dodd-Frank Act provides that "qualified mortgages" are entitled to a presumption that the creditor making the loan satisfied the ability-to- repay requirements. However, the Act did not specify whether the presumption of compliance is conclusive (i.e., creates a safe harbor) or is rebuttable.
During the _____ boom, products such as ___, ____, and _____ loans were offered at subprime rates, and they tempted consumers to secure loans with false information.
During the lending boom, products such as no-doc, low-doc, and stated-income loans were offered at subprime rates, and they tempted consumers to secure loans with false information. These types of misrepresentations were far less common when consumers were required to produce all of the full documentation that was required to secure a prime loan product.
What types of misrepresentations were far less common when consumers were required to produce all of the full documentation that was required to secure a prime loan product?
During the lending boom, products such as no-doc, low-doc, and stated-income loans were offered at subprime rates, and they tempted consumers to secure loans with false information. These types of misrepresentations were far less common when consumers were required to produce all of the full documentation that was required to secure a prime loan product.
TRUE / FALSE: Ethical issues are the basis of only federal laws, and violating these laws can have serious legal consequences.
Ethical issues are the basis of both state and federal laws, and violating these laws can have serious legal consequences.
Fannie Mae requires hazard insurance in place of at least ___% loan amount or cost of ___?
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.
For FHA loans with an LTV greater than 90%, MIP will be required until the ______ or the first ____ years, whichever comes first.
For FHA loans with an LTV greater than 90%, MIP will be required until the end of the loan term or the first 30 years, whichever comes first.
For an adjustable-rate mortgage, the interest rate that should be listed on the ______ table of the Loan Estimate is the _____ rate.
For an adjustable-rate mortgage, the interest rate that should be listed on the Loan Terms table of the Loan Estimate is the fully-indexed rate.
HMDA reporting [IS / IS NOT] required for loans for personal property
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.
Loans to purchase RVs [ARE / ARE NOT] personal loans and therefore [ARE / ARE NOT] subject to mortgage lending laws.
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 reporting is not required for loans for ____ property; loans to purchase RVs are ____ loans and therefore [SUBJECT/NOT SUBJECT TO] mortgage lending laws.
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.
HOEPA applies to _____ and _____ transactions that are secured by the borrower's principal residence.
HOEPA applies to first- and subordinate-lien transactions that are secured by the borrower's principal residence.
HOEPA applies to first- and subordinate-lien transactions that are secured by the borrower's _______
HOEPA applies to first- and subordinate-lien transactions that are secured by the borrower's principal residence.
HUD is still responsible for implementation of what Act?
HUD is still responsible for implementation of the Fair Housing Act.
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?
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%.
If a borrower rescinds a transaction, within 20 days of the rescission, he is entitled to a refund of ________ given to the creditor.
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.
If a borrower rescinds a transaction, within ___ days of the rescission, he is entitled to a refund of all money or property given to the creditor.
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.
If a changed circumstance occurs [GREATER / FEWER] than ____ business days prior to consummation, 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.
Wet settlement vs dry settlement
In wet settlement, parties to a loan transaction meet to execute documents, and afterwards, funds are disbursed. In contrast, at a dry settlement, parties meet to execute documents but funds are not disbursed until certain specified conditions are met.
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
NOT A: there are a number of reasons for a higher purchase price, such as property features, age, improvements, and more.
Is a purchase price that is slightly higher than the average area an indicator of a fraudulent transaction?
No. There are a number of reasons for a higher purchase price, such as property features, age, improvements, and more.
If a loan originator has not renewed his/her license by December 31st, he/she may: A. Only see through completion of those loans originated prior to license expiration B. Not continue to conduct any loan originator activities until the license has been renewed C. Continue to honor existing contracts and be compensated only for those loans already in the pipeline D. Continue to conduct business as normal as long as a renewal application is submitted prior to the "late renewal" deadline
Not continue to conduct any loan originator activities until the license has been renewed
Payments for _____ mortgages must be based on the fully-indexed rate.
Payments for non-qualified mortgages must be based on the fully-indexed rate.
Payments for non-qualified mortgages must be based on the ______ rate
Payments for non-qualified mortgages must be based on the fully-indexed rate.
RESPA requires a refund if an escrow analysis uncovers an overage of greater than $__ and is required to be refunded within ___ days?
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.
TILA allows for a rescission period on the refinance of a borrower's _______ dwelling.
TILA allows for a rescission period on the refinance of a borrower's principal dwelling. Since Slim has been living in a 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.
TRUE OR FALSE: Lenders do not have a legal obligation to notify CRAs of disputes that loan applicants have with information presented in a credit report.
TRUE Lenders do not have a legal obligation to notify CRAs of disputes that loan applicants have with information presented in a credit report.
What section of the Loan Estimate includes an indication of whether the loan includes a prepayment penalty or a balloon payment?
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.
The PMI is automatically terminated by the lender/servicer at ____% LTV or when the loan reaches the _______ in its amortization.
The PMI is automatically terminated by the lender/servicer at 78% LTV or when the loan reaches the midpoint in its amortization.
The conclusive presumption of compliance applies to _____ loans that meet the qualified mortgage standards.
The conclusive presumption of compliance applies to prime loans that meet the qualified mortgage standards.
The funding fee for a first-time user who is regular military, purchasing a home using a VA loan, is _______%.
The funding fee for a first-time user who is regular military, purchasing a home using a VA loan, is 2.30%.
The lifetime cap limits the maximum amount by which the rate on an ____ may increase
The lifetime cap limits the maximum amount by which the rate on an ARM may increase.
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 be a violation of what acts' rules?
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 right to rescind a loan applies to a transaction for a ____________
The right to rescind a loan applies to a transaction for a home equity line of credit secured by a principal residence.
The risk of a balloon mortgage may be minimized by including what provision?
The risk of a balloon mortgage may be minimized by including a conditional refinance provision.
Mortgage loan originator Edna is planning an advertisement that indicates the number of payments required to pay off a specific loan. This statement is a: A. Prohibited statement B. Trigger term C. Permissible representation if it is accurate D. Hypothetical only
Trigger term
When a creditor revises a Loan Estimate, it must deliver the revised disclosure to the applicant no later than _______ business days prior to consummation.
When a creditor revises a Loan Estimate, it must deliver the revised disclosure to the applicant no later than four business days prior to consummation.
While some state regulators will allow for a "late renewal," after __[DATE]__ the license is expired.
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.
Is the amount of any finance charge a trigger term?
Yes
Is the amount of any payment a trigger term?
Yes
Is the number of payments or period of repayment a trigger term?
Yes
Is the amount or percentage of any down payment a trigger term?
Yes, (except when down payment is zero)
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.
An adverse action notice contains
a statement of the action taken; a prescribed ECOA Notice regarding the prohibition of discrimination; the name and address of the federal agency that administers compliance with respect to the loan originator; a statement of the specific reasons for the adverse action or a disclosure of the applicant's right to be given such a statement and the identity of the persons or office from which the statement may be obtained; and, if a credit score is used, FCRA requires that it also include the actual numerical credit score, the range of credit scores possible under the model used, all key factors that adversely affected the credit score, the date of the credit score, and the name of the entity that created the score or the credit file upon which the score was based.