SAFEMLO Test 7

A conditional right to modify might be a feature of what type of loan?

Some balloon loans contain a conditional right to modify

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

the loan balance increases

Regulations in Section 32 of TILA deal strictly with:

consumer protections triggered by high-cost loan scenarios

An interest-only loan is a loan product sometimes used by borrowers who do not have a sufficient understanding of the product to truly use it appropriately. Which of the following terms is often used to describe the process an originator should use to determine if their borrower's circumstances are appropriate for an interest-only product?

"Loan suitability"

Businesses that conduct telemarketing are required to access the Do-Not-Call Registry every _______ in order to maintain an updated database of people on the Do Not Call list.

31

If a borrower has a representative credit score of 604 and wants to purchase a home using an FHA loan, he or she must make a down payment of at least _______.

A borrower is required to bring a minimum down payment of 3.5% to an FHA closing. If his or her credit score is below 580, however, the minimum down payment increases to 10%.

A bi-weekly mortgage payment plan:

A bi-weekly mortgage payment plan is a prepayment strategy used to essentially make one "extra" payment per year, by applying one-half of a monthly payment every two weeks thus making it possible to pay off a typical 30-year loan in as few as 23 - 24 1/2 years.

A float agreement allows:

An applicant to lock a loan at a later time when rates and/or points may be more attractive

A title insurance company provides a computer to a mortgage broker. The computer is used to transmit electronic documents from the mortgage broker's office to the title insurance company. Who is in violation of RESPA?

Both, Even though the computer may be intended for business purposes, it is still a thing of value.

Nontraditional credit includes all of the following except:

Car loans

The term encumbrance means:

Encumbrance is a term that totals all claims (mortgages or liens) against a property that may affect the ability to transfer ownership of the property.

As a result of the Housing and Economic Recovery Act of 2008, the regulation of the conventional GSEs was turned over to a new agency that was given broader controls to ensure responsible day-to-day oversight. Which agency was created and now oversees the activities of the conventional GSEs?

HERA created and installed the FHFA (Federal Housing Finance Agency)

When a credit report shows only a balance on a revolving debt, rather than a payment, an originator should:

If reported revolving debt does not show a payment amount, an originator should verify the minimum payment amount through the creditor.

A borrower is paying 5.875% on her 7/1 ARM that's about to adjust at the conclusion of the loan's seventh year. Her margin was initially 2.25%, her loan's CAP structure was 2/2/5, and, the applicable index on the date that her servicer is determining her new interest rate is 5.875%. Rounded to the nearest 1/8th of 1%, what will this borrower's new rate become?

If there were no CAPs, the borrower's interest rate would increase from 5.875% to 8.125% (5.875 + 2.25). Since the initial adjustment CAP, however, is 2, the most that this borrower's interest rate could increase would be by 2% from 5.875% to 7.875%.

Which required RESPA disclosures must be provided within three days of receipt of a loan application for a purchase?

LE, the HUD Home Loan Toolkit, and the Mortgage Servicing Disclosure Statement within three days

All of the following are true concerning mortgage fraud except:

Mortgage fraud is investigated by the FBI (not the FTC), HUD, and the IRS.

Which of the following fees is not included on the Loan Estimate?

Real estate broker fees

The regulation issued for the implementation of ECOA is known as:

Reg B

A conversion option is most closely associated with:

Standard ARMs typically contain a conversion option

A lender accepts an application from a borrower and begins working on the file after being given the go ahead. The lender refers the borrower to an affiliated title company and must inform the applicant of all of the following except:

That he or she is required to use this company for settlement because the transaction is a refinance

An ARM has a 6% start rate and is locked for three years. Its adjustment caps are set at 2/1/5. Assuming worst-case scenario, in what year would this loan reach its rate ceiling?

The ARM starts at 6% and is locked for three years. In the 4th year, the initial rate cap (of 2%) allows it to move to 8%. In the 5th year, the periodic rate cap (of 1%) allows it to move to 9%. In the 6th year, again the periodic rate cap limits movement to no more than 10%. Finally, in the 7th year, the loan would reach its rate ceiling of 11%.

When a state agency is conducting a background check, which state department is required to provide access to an applicant's criminal history information?

The Attorney General

The Federal Housing Finance Agency was formed in 2008 through the enactment of the Housing and Economic Recovery Act and is now:

The FHFA is now the government entity responsible for overseeing the daily operations of both Fannie Mae and Freddie Mac. Additionally, the FHFA sets the current conforming loan limits annually and determines areas across the country that are designated as "high-cost areas."

What agency ensures that the GSEs are using sound financial practices and have adequate capital to operate in the mortgage business?

The Federal Housing Finance Agency (FHFA)

Unethical practices in the mortgage industry have been blamed for all but which of the following?

The housing bubble bursting had nothing to do with unethical practices.

Non-judicial foreclosure is the process through which a lender takes ownership of a property after default in:

Title theory states operate by the lender retaining title through the Deed-of-Trust

In what scenario would a sales comparison approach to appraising be appropriate?

a condo comples for people ages 55 and over

The functions of participating in the NMLS, conducting background checks, and writing rules and regulations are required under the SAFE Act by:

a state licensing agency must participate in the NMLS

The term table-funding refers to:

a type of wholesale lending arrangement were brokers are permitted to originate, close, and fund a loan using a warehouse like of credit.

Mishandling borrowers' funds or improperly managing their funds is a practice prohibited by:

misappropriation and is prohibited by RESPA.

A lender is held to a 10% variance on fees disclosed through the LE in all of the following cases except for when:

only held to the 10% tolerance if the borrower chooses one identified by the lender.

circumstances permit a loan originator may refuse to take a mortgage application:

when the applicant is committing fraud, when the applicant is under the age of 18, or when the applicant is mentally incompetent