Week 3 Quizes
When the borrower replaces an existing loan or debt obligation with a new obligation under different terms. Refinance Forbearance Purchase Loan Modification
Refinance
Sam has a home valued at $275,000 with a 1st mortgage of $150,000, a second mortgage of $25,000, a HELOC with a limit of $50,000 and a balance of $12,000, and a car loan of $15,000. What is Sam's TLTV? 73% 92% 87% 68%
$150,000 + $25,000 + $12,000 = $187,000 then $187,000 / $275,000 = .68 x 100 = 68%
A borrower is approved for a mortgage with a 15% down payment. The borrower has a purchase contract for $150,000 how much is their down payment? $10,000 $19,750 $22,500 $15,000
$22,500
You are qualifying your client, Tyler, for a refinance, and he makes $3,450 semi-monthly. What is Tyler's gross monthly income? $7,475 $6,500 $6,900 $7,250
$6,900
You provided a fixed-rate loan to a borrower. The LE must be re-disclosed during processing if the APR fluctuates by more than what percent? 1/4th of 1% 3/8 of 2% 1/8th of 1% 1/2th of 1%
1/8th of 1%
Betty is looking for a mortgage to purchase a new home, but she doesn't know what she can afford. She makes $4,000 bi-weekly as a TV personality. She has a Visa credit card with a payment of $220/month, a car loan with a payment of $350/month, her Hulu subscription for $25/month, a personal loan with a payment of $250/month, her mortgage with a payment of $1,000 and her cell phone bill of $100/month. What is Betty's total expense ratio? 19% 21% 28% 24%
21%
Sarah is looking to get a mortgage for a home she is looking to purchase. The home she is looking to buy has a value of $245,000, and her down payment will be $12,250. What is Sarah's LTV? 85% 95% 80% 90%
95%
Which would NOT be a violation of ECOA? A borrower that pays child support is approved for a loan even though they can't afford the new PITI payment. A 62-year old borrower that is disabled is denied a reverse mortgage because they receive child support. Farquad the MLO always checks the box that says his phone client doesn't wish to answer the gov't monitoring questions, then fills them out himself based on what he perceives even though he didn't ask any government monitoring questions. A mortgage is denied because the property is in an area that has seen a dramatic increase in short sale fraud cases recently.
A borrower that pays child support is approved for a loan even though they can't afford the new PITI payment.
All of the following are true regarding a construction loan, EXCEPT? A borrower will typically pay higher interest rates. The typical length of a construction loan is 1 year or less. A borrower will pay interim financing costs during the construction phase. A borrower will be required to make principal and interest payments during the construction phase.
A borrower will be required to make principal and interest payments during the construction phase.
The Department of Justice would have regulatory authority over which of the following situations? A consumer complained about an MLO who denied their application and claims they were discriminated against based on the location of the property. A lender failed to submit a loan application register by the required date. A current renter who applied for a mortgage was denied because they didn't have enough assets to meet reserve requirements. A rental application was denied to the applicant being disabled and the apartment complex was not wheelchair accessible
A rental application was denied to the applicant being disabled and the apartment complex was not wheelchair accessible
Which of the following are NOT standards established by ATR? DTI Credit History Income and Assets APR
APR
Jack and Jill are MLOs who share 25% ownership in their cousin's pest inspection company. That being said, they never refer clients to this company because they don't like their cousin Jim Joe. What disclosure will they not be giving to clients? AfBA NTS BAfA MSDS
AfBA
According to The Statement, what should underwriting and qualification NOT focus on? The effects to the borrowers repayment ability and the impact of payment shock to that ability to repay. All mortgages meeting a specific underwriting standard. Criteria that identify certain risk factors of a borrower's repayment ability. Loan features with rates that increase rapidly.
All mortgages meeting a specific underwriting standard.
Marzipan accepted an application from a client yesterday and sent the loan into process today. What steps would Marzipan need to make sure she took before putting that application into process? Wait for 3 business days to pass, issue a Loan Estimate, gain intent to proceed, lock the interest rate and send out relevant disclosures. Answer all of her client's questions about the LE, get intent to proceed, and send out all the other relevant disclosures. The processor must collect verifying documents, the underwriter must issue a conditional approval, an appraisal and title work must be done, and the underwriter must give a final approval. Nothing. Simply filling out the application implies consent to close the transaction, so the loan can be fully underwritten at this time.
Answer all of her client's questions about the LE, get intent to proceed, and send out all the other relevant disclosures.
Derrick is 15 years into his 30 year mortgage and receives a notice that according to the terms of his agreement, his principal balance will be due with his next payment. What type of mortgage does Derek have? Fixed-Rate Mortgage Adjustable Rate Mortgage Graduated Payment Mortgage Balloon Mortgage
Balloon Mortgage
Prudence is interested in refinancing. The mortgage you've chosen that suits her best has a feature that would allow the interest rate to fluctuate as the market changes, and Prudence is hoping it will drop. What disclosures must she receive before you can charge any nonrefundable fees? Notice of Right to Receive an Appraisal Closing Disclosure CHARM and Early ARM Graduated Payment Disclosure
CHARM and Early ARM
Debt-to-income relates to which of the following 4 C's? Capital Credit Collateral Capacity
Capacity
What is another name for Reset Option? Conditional Lump Sum Conditional Financing Required Rate Change Conditional Refinance Provision
Conditional Refinance Provision
Before you obtain a borrower's Intent to Proceed, as an MLO what fee can you charge? Processing Fee Origination Fee Appraisal Fee Credit Report Fee
Credit Report Fee
Which of the following is not a section of The Guidance on Nontraditional Mortgage Products ? Risk Management Practices Loan Terms and Underwriting Standards Delivery of Relevant Disclosures Consumer Protection Issues
Delivery of Relevant Disclosures
According to RESPA, what is the best reason for providing the MSDS? This is not a disclosure from RESPA. The MSDS comes from TILA. Explains to the borrower the likelihood of their loan being serviced or transferred by the MLO. Breaks down the finals costs of their loan. Advises borrowers on how to shop for different loans.
Explains to the borrower the likelihood of their loan being serviced or transferred by the MLO.
How is the purpose of FCRA different from the purpose of GLBA? There is no difference in the purpose of FCRA and GLBA. FCRA is regulated by the FTC and GLBA is regulated by the CFPB. GLBA focuses on ensuring accuracy of credit reports while FCRA protects the information from identity theft. GLBA focuses on protecting non-public information while FCRA focuses on protecting consumer credit information.
GLBA focuses on protecting non-public information while FCRA focuses on protecting consumer credit information.
What BEST describes the purpose of GLBA? GLBA protects consumers non-public personal information while it's in an institutions hands. GLBA only focuses on a consumers right to opt-out. GLBA protects consumers from mortgage-related misrepresentations in commercial advertising. GLBA ensures consumers must have an opportunity to prevent a financial institution from disclosing their information.
GLBA protects consumers non-public personal information while it's in an institutions hands.
Which of the following is the most accurate statement about the purpose of HMDA? HMDA prohibits discrimination. The Home Mortgage Disclosure Act improves the timing requirements for necessary disclosures to ensure the borrower has time to shop around. HMDA provides accountability for the requirements of fair lending laws. HMDA requires inquiry into ethnicity, race, and gender of potential borrowers.
HMDA provides accountability for the requirements of fair lending laws.
Why is the APR not the same as the TIP? It represents the interest rate over the life of the loan compared to the margin. It cannot be used to help borrowers compare costs between lenders. It factors in the interest and other finance charges. It annualizes all closing costs.
It factors in the interest and other finance charges.
What is a two close construction loan? It is an interim loan that helps finance the gap between purchasing and selling a home. It is a loan that doesn't need a certificate of occupancy or appraisal done once the construction is complete. It is a loan where the construction loan gets paid off by another lender, and the client gets more traditional financing from that lender paying off the construction loan. It is a loan where the client pays off the construction loan and does not get or need any other financing to do this.
It is a loan where the construction loan gets paid off by another lender, and the client gets more traditional financing from that lender paying off the construction loan.
What is a benefit for a borrower to buy discount points? It will lower their interest rate It gives them more money for closing It will lower the loan amount It helps them qualify for the loan
It will lower their interest rate
Johnny C. is purchasing a property in Jackson, TN that he plans to let his mother occupy as her primary residence. Johnny decided to pay in cash that he'd generated from his long time music career. Which of the following statements is most correct, according to RESPA? RESPA doesn't apply to this transaction because he is paying in cash. Johnny will need to receive and LE and a HUD-1 to understand the cost of the transaction. Johnny will be able to pick his Title agency. RESPA does not apply to this transaction due to the property being an investment property.
Johnny will be able to pick his Title agency.
What information do we need to pull a client's credit? Name, MLO name, Address, Social Security Number, Date of Birth Permissible Purpose, Estimated Property Value, Social Security Number, Name Name, Address, Loan Amount, Income, Permissible Purpose Name, Address, Social Security Number, Date of Birth, Permissible Purpose
Name, Address, Social Security Number, Date of Birth, Permissible Purpose
What is a loan with an interest rate that can adjust monthly and that offers a borrower a number of payment choices, such as Interest-Only, or a specified minimum payment at a reduced interest rate which usually results in negative amortization? Reverse mortgage Hybrid variable-rate mortgage Interest-only loan with a reset option Option ARM
Option ARM
Which of the following BEST describes the purpose of Section 19 of TILA. Section 19 combined different disclosures from TILA and RESPA to improve the process. Section 19 of TILA describes what a Qualified Mortgage is. Section 19 gives borrowers the right to cancel refinance transactions even after closing. Section 19 improves the way we give borrowers disclosures to ensure they have enough time to read the disclosures.
Section 19 improves the way we give borrowers disclosures to ensure they have enough time to read the disclosure
On the Loan Estimate there are services a borrower cannot shop for. Which of the following is NOT a reason why a borrower cannot shop for a certain service related to their loan? It could lead to collusion. It could lead to fraud. Some settlement services are more expensive than others. Some fees can only go to a specific government entity.
Some settlement services are more expensive than others.
Which of the following is the BEST description of TILA's overall purpose? TILA provides much needed clarity on credit terms. TILA provides much needed clarity on Settlement services. TILA provides much needed clarity on transaction costs. TILA provides much needed clarity on High Cost Loans.
TILA provides much needed clarity on credit terms.
Under which federal regulation must the mortgage broker provide to the borrower a disclosure statement showing the total cost of the loan, including finance charges, and the APR? TRID Gramm-Leach-Bliley Act FCRA ECOA
TRID
Which of the following loan products requires the consumer to receive counseling prior to closing? Construction Loan The Home Equity Conversion Mortgage All Reverse Mortgages The Home Equity Line of Credit
The Home Equity Conversion Mortgage
Generally, no repayment is required on a Reverse Mortgage unless the home is sold or the last surviving homeowner dies. All of the following are typical circumstances that might require repayment, EXCEPT? The homeowner rents out the basement. The homeowner fails to send in renewal documentation to the lender. The homeowner forgets to pay property taxes or fails to keep the home insured. A new lien is taken out against the home.
The homeowner fails to send in renewal documentation to the lender.
Which of the following is a standard NOT set under QM? Income and assets are verified. The loan can include balloon payments for all creditors. Loans cannot result in negative amortization or be interest-only. ARMs must be qualified based on the maximum rate in the first 5 years.
The loan can include balloon payments for all creditors.
A client is receiving revised loan estimate, what is one possible reason we are to redisclose the LE? There is a change in origination costs due to the appraisal value differing from the initial estimate. The services a borrower shopped for and didn't use any referred services increased by more than 10% aggregate. The services they did not shop for increased by more than 10% for one line item. The cost of the title work selected by the borrower increased the cost of services you can shop for by 5%.
There is a change in origination costs due to the appraisal value differing from the initial estimate.
A client receives their closing disclosure at 5 pm for a purchase loan on Monday. What is the earliest that they can consummate their loan? Saturday The following Monday Friday after 5 pm. Thursday
Thursday
All of the following are not benefits of ARMs, EXCEPT: A PITI payment that doesn't change Typically have a lower initial interest rate compared to a fixed rate mortgage ARMs do not contain prepayment penalties ARMs are easier to qualify for
Typically have a lower initial interest rate compared to a fixed rate mortgage