practice exam 3 - missed questions

After the crisis of the Great Recession according to Conventional underwriting when can a borrower repurchase again after a Chapter 7 bankruptcy?

4 years from the discharge date -Borrowers must wait 4 years from a Chapter 7 bankruptcy to apply for conventional financing.

Which of the following situations is not a red flag that illegal flipping may be taking place?

Purchasing and remodeling a house and selling it for a quick profit -Illegal property flipping occurs when the property is purchased and resold quickly at an artificially inflated price by utilizing fraudulently inflated appraisals. Illegal property flips typically have not been improved or renovated since the purchase and are quickly resold at a much higher price. Sometimes the property is only owned for twenty-four (24) hours before it is resold.

If two people are married, how do they likely hold title?

Tenancy by the Entirety -Tenancy by the Entirety is a form of co-ownership that involves only owners who are husband and wife, with each having an equal and undivided share of the property. This form of ownership includes the right to survivorship with the property automatically going to the surviving spouse.

The NMLS will not charge fees for which of the following?

A processing fee for ACH payments -The primary fees charged by the NMLS are a processing fee, the state required renewal or application fee, and a fee for criminal background checks and credit reports.

Discount points would only be used if the interest rate offered to the borrower were which of the following?

Par or anything above par -Discount points are used to buydown the rate. If the borrower is receiving par rate the lender might offer discount points as an option to lower the borrower's interest rate.

How can one calculate monthly income for an applicant who is paid an hourly wage?

((hourly wage x 40) x 52) / 12 -You have to first determine the weekly income by multiplying the hourly wage by the hours worked (40 hours if full time). Then multiple the weekly income by 52 weeks in the year and divide it by 12 to get the monthly total.

What is the appraiser most interested in when determining the value of an income property?

-This approach is going to use the earning potential of the property to determine the value of the property. The appraiser will determine the value of a property from the potential income that the property could bring the borrower over time. The appraiser is not concerned with the cash flow that the investment properties provide to the owner

The borrowers are purchasing a house with a sales price of $300,000 they put 30% as a down payment. If they paid $3,150 in points, how many points does that represent?

1.5 -To determine discount points we first need to discover the loan amount, 30% of $300,000 is $90,000. $300,000 - $90,000 gives us a loan amount of $210,000. Discount points are generally 1% of the loan amount. 1% of $210,000 is $2,100 would get us 1 point. If the borrower paid $3,150, they paid for 1.5 points.

After the crisis of the Great Recession according to VA underwriting when can a borrower repurchase again after a Chapter 7 bankruptcy?

2 years -Borrowers who wish to obtain VA financing have to wait 2 years from any Chapter 7 bankruptcy.

What are the terms of the "cooling off" period if a loan falls under HOEPA?

3 business days prior to closing -HOEPA includes a three-day "cooling off" period between the time the borrowers are furnished with disclosures and the time that they are obligated under the terms of the loan.

After the crisis of the Great Recession according to FHA underwriting when can a borrower repurchase again after a foreclosure?

3 years -FHA allows for a borrower to obtain an FHA mortgage 3 years after a foreclosure. Conventional underwriting is 7 years.

After the crisis of the Great Recession according to FHA underwriting when can a borrower repurchase again after a short sale?

3 years from the credit report date -FHA's three-year waiting period starts from: The date of the short sale, OR. If the prior mortgage was also an FHA-insured loan, from the date that FHA paid the claim on the short sale.

The FACTA allows a consumer to dispute inaccurate credit information. How many days are allowed for an incorrect item to be investigated?

30 -The dispute must be resolved within thirty (30) days after the dispute was received.

When a trust deed (or deed of trust) is recorded, which of the following is true?

A lien is created -Voluntary liens are placed against property with the consent of the owner. A mortgage or deed of trust is a written instrument that uses a specific real property to secure payment of a debt. When the trust deed or mortgage is recorded it creates the lien.

A yield spread premium occurs when:

An interest rate is charged above the par rate and is a credit to the borrower. -YSPs are paid to the broker for giving a borrower a higher interest rate on a loan in exchange for lower up-front costs generally paid in origination fees, broker fees or discount points.

Which of the following is NOT a finance charge in a residential mortgage loan?

Appraisal Fee -A finance charge is a cost of credit. A good way to think about it is, would the borrower potentially pay this fee if they were paying cash for this home? If the answer is yes, then it's likely not a finance charge. In this situation - if the borrower is paying cash for the home, they will likely still have to pay for an appraisal, so an appraisal fee is not a finance charge. The other fees are all costs of obtaining a loan.

Under which federal legislation does the consumer have the right to receive a copy of the appraisal report on a dwelling that is to be used as collateral for a loan?

ECOA -ECOA requires that lenders provide an applicant a copy of all appraisals and other written valuations that were developed in connection with the application, promptly upon completion or at least three (3) business days before the consummation of the transaction, whichever is earlier.

If borrower Jill has a loan with an LTV of 95% how would her PMI change if she put an extra 5% down to bring her LTV to 90%?

It would be lower -If Jill brings her LTV down 5%, then it is likely that her PMI would be lower than if she did not put that extra 5% down.

In qualifying the income of a sole proprietor borrower, the originator should consider which of the following to be most important?

Schedule C net income plus non-cash expenses and depreciation -Usually when determining sole proprietor income, you're going to use the net income to add things back in like depletion and depreciation and subtract meals and entertainment.

One of the acknowledgments in the signature section of the 1003 loan application, signifies that:

The borrower represents that all information contained in the form is the truth -The acknowledgement states: Each of the undersigned hereby acknowledges that any owner of the Loan, its servicers, successors and assigns, may verify or reverify any information contained in this application or obtain any information or data relating to the Loan, for any legitimate business purpose through any source, including a source named in this application or a consumer reporting agency.

Which of the following is not true about HOEPA?

The late fee on a high-cost home loan cannot exceed 3% -Under HOEPA, late fees cannot exceed 4% of the past due payment and it prohibits the pyramiding of late fees.

Which of the following statements best describes Form 1008?

Underwriter request for more information -The Uniform Underwriting and Transmittal Summary Form 1008 summarizes key data from the loan application package. Lenders use this information in reaching the underwriting decision. Form 1008 (or a similar document) must be retained in the mortgage file for manually underwritten mortgage loans. Lenders may, but are not required to, retain Form 1008 for loans underwritten with DU.

The borrower uses his home's equity for a mortgage loan for business purposes. The borrower will use $80,000 to buy restaurant equipment. This loan will be

covered by RESPA, as the collateral is a mortgage on the borrower. -Generally, RESPA does not cover commercial or business loans but because the collateral in this situation is a home then it would be covered by RESPA.

A loan officer creates a marketing plan to make between 2k and 4k per loan. His cousin calls, he agrees to do the 300k loan for .75% commission. This is:

legal and ethical because he is within his marketing plan. -This situation is legal and ethical. He is working within his normal marketing plan.

The purpose of a Market Conditions Addendum is to:

provide the lender/client with a clear and accurate understanding of the market trends and conditions prevalent in the subject neighborhood. -The Market Conditions Addendum (Form 1004MC) is designed to enhance the transparency of the market trends and conditions conclusions made by the appraiser.