1700+ MCQs 2of4 Flashcards

Question

The Red Flag Rule is: a. Identity theft b. kickbacks c. Disclosure of the APR d. Regulation of interest rates

Answer 1

a. Identity theft

Answer 2

``` d. Fair and Accurate Credit Transaction Act (FACTA) ```

Answer 3

a. Mortgage Broker

Answer 4

d. Managed by the HR | department

Answer 5

c. 60 days

Answer 6

a. Seller credits buyer money | for landscaping

Answer 7

a. 0 (Closing day)

Answer 8

d. 30 days

Answer 9

b. 3 years

Answer 10

d. 5 years

Answer 11

a. 2 years

Answer 12

a. 2 years

Answer 13

b. Loan Estimate

Answer 14

b. Elderly

Answer 15

c. 25 months

Answer 16

c. Select the box with their best | guess

Answer 17

b. Enter one or more zip codes | of likely locations

Answer 18

b. Federal Housing | Administration

Answer 19

a. 12 months

Answer 20

b. 10 days

Answer 21

c. Home Owner Protection Act | (HPA)

Answer 22

b. 20 hours

Answer 23

c. 8 hours

Answer 24

d. Federally Chartered bank | employees

Answer 25

c. References

Answer 26

b. Every Year

Answer 27

b, 3 times

Answer 28

c. 30 days

Answer 29

c. 6 months

Answer 30

b. An Aunt

Answer 31

c. They are bank employees

Answer 32

b. Independent contractor who | is an underwriter.

Answer 33

c. Annually

Answer 34

d. $25,000.00

Answer 35

d. 5 years

Answer 36

b. Borrower

Answer 37

b. Voluntary lien

Answer 38

c. Date and time of recording

Answer 39

d. Voluntary lien

Answer 40

b. Obey all state and county | laws

Answer 41

c. Foreclosure

Answer 42

a. Forbearance

Answer 43

b. Escalation

Answer 44

c, Development clause

Answer 45

a. $2,000 in reserve

Answer 46

d. Right of survivorship

Answer 47

d. 60 days

Answer 48

d. Subject to the mortgage

Answer 49

a. Transfers contract rights

Answer 50

b. Mortgage lien

Answer 51

b. Hypothecation

Answer 52

a. Grantor

Answer 53

a. Grantee

Answer 54

a. The Note

Answer 55

b. The Note

Answer 56

a. Subordination clause

Answer 57

c. Joint Tenancy

Answer 58

b. Warranty Deed

Answer 59

c. Blanket mortgage

Answer 60

a. Junior liens

Answer 61

b. Do not include the Up Font Mortgage Insurance Premium. (UFMIP)

Answer 62

b. Mortgage insurance | premium

Answer 63

b. Certificate of reasonable | value.

Answer 64

100% financing

Answer 65

d. Borrower income limit

Answer 66

b. Lenders

Answer 67

b. Negative amortization

Answer 68

c. Index + Margin = fully | indexed rate

Answer 69

c. Lifetime cap of 7%

Answer 70

d. Fully amortized

Answer 71

b. Has payments that start low | and increase over time

Answer 72

a. Appraisal value - loan | balance

Answer 73

d. Conventional loans when there is less than a 20% down payment

Answer 74

c. Growing equity mortgage

Answer 75

b. HUD Department

Answer 76

d. Principle, interest, taxes, and | insurance

Answer 77

b. London Inter-Bank Offered | Rate and the Treasury rate

Answer 78

a. Is paid every 2 weeks

Answer 79

a. Senior Mortgage

Answer 80

d. IRS tax lien

Answer 81

c. Terms of repayment

Answer 82

a. Balloon mortgage

Answer 83

a Bi-weekly mortgage

Answer 84

c. Certificate of Reasonable | Value

Answer 85

b. the Index

Answer 86

a. Buy-down mortgage

Answer 87

b. Real estate agent

Answer 88

c. 6% + standard closing costs ( answer may be simply 4% for national exam)

Answer 89

c. $12,375.00 Discount points x loan amount

Answer 90

a. $517.81 loan amount x | interest rate/365x10 =

Answer 91

b. $232,000. Loan amount or appraised value whichever is lower x the LTV

Answer 92

b. 20%, PITI x monthly income =

Answer 93

b. $2,166.67, Hourly rate x hours per week x 52 weeks in a year/12 months=

Answer 94

c. $51.20, P&I x VA allowable percentage rate 4% =

Answer 95

c. 6 Number of months current annual policy has been in effect = 2 months cushion=

Answer 96

b. 2 years

Answer 97

b. 2 years

Answer 98

b. Personnel references

Answer 99

b. 2 years

Answer 100

c. 3 years

Answer 101

c. 3 years

Answer 102

d. Automobile lease payments | are always included

Answer 103

d. 10 months

Answer 104

b. 10 months

Answer 105

d. 7 years

Answer 106

d. 10 years

Answer 107

c. 120 days

Answer 108

b. Fair Isaac Corporation

Answer 109

b. The lower score

Answer 110

c. The middle score

Answer 111

There is no maximum age limit

Answer 112

b. Fannie Mae

Answer 113

a. Title insurance

Answer 114

b. 2 months

Answer 115

c. Mortgage and the Note

Answer 116

a. Mortgage

Answer 117

a. No limit

Answer 118

c. Fannie Mae 1008 - | Transmittal Summary

Answer 119

b, Fannie Mae 1005 - | Verification of Employment

Answer 120

a. Fannie Mae 1006 - | Verification of Deposit

Answer 121

d. Consumer signature

Answer 122

b. Desktop Underwriter (DU)

Answer 123

a. Loan Prospector

Answer 124

b. The Lender

Answer 125

d. Jumbo loans

Answer 126

c. The lender

Answer 127

b. 4 months

Answer 128

b. Market value

Answer 129

d. Based on possible future | zoning changes

Answer 130

a. Sales Comparison Approach

Answer 131

a. Sales Comparison Approach

Answer 132

b. Cost Approach

Answer 133

a. A commitment letter

Answer 134

b. It is based on loan amount

Answer 135

d. Real Estate Broker

Answer 136

b. Easement

Answer 137

a. Deed restriction

Answer 138

b. Lot and Block

Answer 139

b. Flood certification fee

Answer 140

a. HUD-1/Closing Disclosure

Answer 141

b. July 01

Answer 142

c. Metes and bounds

Answer 143

d. Wire transfer

Answer 144

c. Warehouse funding

Answer 145

a. Assignment of mortgage

Answer 146

c. Selling a loan with servicing | retained

Answer 147

d. Guarantee loans

Answer 148

b. Orchard

Answer 149

b. Mortgagee

Answer 150

b. Encumbrance

Answer 151

c. Principle of Highest and Best Use

Answer 152

c. Metes and Bounds

Answer 153

a. Encroachment

Answer 154

a. Title defect

Answer 155

b. Race, color, religion, sex, handicap, familial status, national origin

Answer 156

c. Thank you

Answer 157

d. Another real estate | brokerage firm

Answer 158

a. Real estate agent

Answer 159

a. Rehabilitation

Answer 160

b. Air loan

Answer 161

a. Fraud for profit and fraud for | housing

Answer 162

d. Redlining

Answer 163

a. Interest

Answer 164

a. Chattel mortgage

Answer 165

c. Loan amount

Answer 166

c. Assets minus liabilities

Answer 167

a. Amortization

Answer 168

b. Disintermediation

Answer 169

a. Eminent Domain

Answer 170

b. Actual notice

Answer 171

a. Constructive notice

Answer 172

a. Leverage

Answer 173

a. Note endorsed with recourse

Answer 174

c. Average Prime Offer Rate

Answer 175

1% of loan amount

Answer 176

b. 62 years old

Answer 177

a. Easement

Answer 178

b. Subordination

Answer 179

a. Subprime

Answer 180

The answer is $0. VA loans do not require a down payment. However, all veterans – other than those who are disabled – must make a cash contribution to a lending transaction in the form of a funding fee.

Answer 181

The answer is $10,240. Points are paid based on the loan amount. After a 20% down payment, the total loan amount is $256,000. They have agreed to pay two points in discount and two points in origination, for a total of four points. Each point is 1% of the loan amount, so 4% of $256,000 equals $10,240.

Answer 182

The answer is $189,000; 90%. The LTV is always based off of the lower of the purchase price or the appraised value. In cases where the appraisal comes back lower than the purchase price, lenders will typically adjust the figures based on the appraisal value. So, in this case, the purchase price would be adjusted to $210,000 (the appraisal price). From here, after the borrower’s 10% down payment, the loan amount would be $189,000, and the LTV would be 90%.

Answer 183

The answer is $2,500. To determine a monthly income based on salary that is not paid on a monthly basis, multiply a biweekly salary by 26 (number of paychecks in a year), and divide by 12 (number of months in a year). In this case ($1,153.85 × 26)/12=$2,500.00.

Answer 184

The answer is $3,449.33. Mr. Brown’s monthly income can be calculated by multiplying his hourly base pay rate wage ($12.00) by the average number of hours worked per week (38), yielding a weekly income of $456.00. To determine his monthly income, weekly income ($456.00) is multiplied by the average number of weeks worked per year (52) and then divided by 12. ($456.00 × 52)/12 = $1,976.00. Mrs. Brown’s income can be determined by multiplying her biweekly salary ($680) by 26 and then dividing by 12. ($680 × 26) / 12 = $1,473.33. Adding the two incomes together ($1,976.00 + $1,473.33), yields a combined monthly income of $3,449.33.

Answer 185

The answer is $3,600. Discount points are calculated based on the loan amount, which is determined by subtracting any down payment (in this case, $20,000) from the purchase price ($200,000). Each discount point is 1% of the loan amount. In this transaction, the Smiths are obtaining a $180,000 loan and buying two discount points, equal to 2% of the loan amount. $180,000 × 0.02 = $3,600.

Answer 186

The answer is $3,600. The down payment of 10% ($20,000) is based on the purchase price of $200,000. The down payment must be deducted from the purchase price to find the loan amount. The discount points in this transaction are then based on the loan amount of $180,000. Each point is 1% of the loan amount, so a total of 2%. $180,000 × 0.02 = $3,600.

Answer 187

The answer is $300,000. For transactions involving an HPML (higher-priced mortgage loan), a second appraisal is required if the seller acquired the home 91 to 180 days prior to the consumer’s agreement to purchase it, and the price at which the consumer agreed to purchase the home is 20% more than the price paid by the seller. 20% of $300,000 is $60,000. $300,000 + $60,000 = $360,000.

Answer 188

The answer is $390,000 and no. The CLTV is 90%, and the second mortgage has an LTV of 12%. This leaves the first mortgage with an LTV of 78%. $500,000 × .78 = $390,000. The value is under the conforming loan limit, so it is not considered jumbo.

Answer 189

The answer is $43,792. Violations of the federal Do-Not-Call rules can lead to fines of $43,792 per violation, as of 2021.

Answer 190

The answer is $5,625. The seller would pay 3% of the sales price, not 3% of the borrower’s loan amount. 187,500 × 3% = $5,625.

Answer 191

The answer is **"5% down payment."** Under TILA, an ad must disclose a number of additional credit terms if it contains a trigger term. A trigger term includes certain credit terms specifically cited in an ad, including the amount or percentage of any down payment (e.g., "5% down," "95% financing," "$6,200 down"), except when the amount of the down payment is zero; the number of payments or period of repayment (e.g., "360 monthly payments," "a 30-year loan"); the amount of any payment (e.g., “payments of less than $1,400 per month”); and the amount of any finance charge (e.g., “total financing costs of less than $3,000”).

Answer 192

The answer is **$1,250**. One discount point is equal to 1% (.01) of the loan amount. Therefore, a charge of 0.005 (one half of one point) on a $250,000 loan is 0.5% (.005) × $250,000 = $1,250.

Answer 193

The answer is **$1,875**. Generally, 75% of rental income may be used to qualify the borrower for a loan. This formula is based on an industry standard that taxes, insurance, and maintenance costs will equal about 25% of the income that a property generates. In this case, 75% × $2,500 = $1,875.

Answer 194

The answer is **$11,880**. For a conforming loan, the max seller contribution in this scenario is 6% (the down payment is more than 10%). The 6% is taken from the purchase price of $198,000, which is $11,880.

Answer 195

The answer is **$11,880**. The max seller contribution in this scenario is 6% (the down payment is more than 10%). The 6% is taken from the purchase price of $198,000, which is $11,880.

Answer 196

The answer is **$12,000**. To calculate the annual interest: 6% × $200,000 = $12,000.

Answer 197

The answer is **$13,800**. The seller concession allowed on a conforming loan with a 90% (or less) LTV is 6%. This number is taken from the sales price, not the loan amount. $230,000 × 6% = $13,800.

Answer 198

The answer is **$175,000**. The purchase price of the home is $175,000. This can be determined by adding together the amount of the mortgage loan ($140,000) and the amount of the Foxes’ down payment ($35,000).

Answer 199

The answer is **$197,650**. The approximate amount of the first mortgage is $197,650. This can be calculated using the information given here, according to the following formula: [first mortgage + second mortgage] / appraised value = CLTV. In this case, the question provides the amount of the second mortgage ($29,500), the appraised value of the property ($295,000), and the CLTV (77%); the amount of the first mortgage (x) must be determined. Using this formula would result in the following equation: [x + $29,500] / $295,000 = .77. First, multiply $295,000 by .77 ($227,150). This figure is equal to the first mortgage (x) plus the second mortgage ($29,500). Subtract $29,500 from $227,150 to find the amount of the first mortgage ($197,650).

Answer 200

The answer is **$2,025**. One discount point is equal to 1% of the loan amount. In this case, 90% × $225,000 = $202,500. 1% × $202,500 = $2,025.

Answer 201

The answer is **$35,900**. The down payment in this scenario will be $35,900. This is just enough to keep them at the $548,250 conforming loan limit which was adjusted January 1, 2021. 584,150-548,250 = 35,900.

Answer 202

The answer is **$36,000**. The LTV for the Talleys must be 80% or less. A down payment of 20% exactly would be $36,000.

Answer 203

The answer is **$4,750**. To calculate qualifying income, first, annual salary is calculated, including the bonus (in effect for three years), and then divided by 12 months. $1,700 × 26 = $44,200. Then the bonus: $3,200 × 4 = $12,800. Add the two, $44,200 + $12,800 = $57,000. Divide $57,000 by 12 = $4,750.

Answer 204

The answer is **$43,550**. 90% LTV means Richie will need to bring 10% of the purchase price, or $40,000, to closing, minus the $5,000 he already paid as earnest money. To this he must add 1% of the $360,000 loan amount, or $3,600, for the 1% origination fee, and an additional 1% of the loan amount ($3,600) for the discount. Finally, he must add the $1,350 title charge: $40,000 − $5,000 + $3,600 + $3,600 + $1,350 = $43,550.

Answer 205

The answer is **$52,500**. The relationship of the loan amount to the value or sales price of the property securing the loan is called the loan-to-value ratio. The loan-to-value ratio (LTV) relates the loan to the lesser of the appraised value or sales price. If Jimmie has been approved for a loan with an 85% LTV, his down payment must cover the remainder of the purchase price, or 15%: 15% × $350,000 = $52,500

Answer 206

The answer is **$7,525**. FHA loans require a minimum borrower investment of 3.5% That amount is calculated by the lesser of the purchase price or the appraised value.

Answer 207

The answer is **$75,000**. The maximum amount of penalty for each act or omission is $25,000. Each violation or failure to comply with any directive or order of the state licensing authority is a separate and distinct violation.

Answer 208

The answer is **$750**. Generally, 75% of rental income may be used to qualify a borrower for a loan. This formula is based on an industry standard that taxes, insurance, and maintenance costs will equal about 25% of the income that a property generates. In this case, 75% × $1,000 = $750.

Answer 209

The answer is **$9,983.33**. This question uses both bi-weekly and semi-monthly income, so you must be careful with calculations. The borrower receives bi-weekly pay of $2,300, which must be multiplied by 26, giving an annual salary of $59,800. The co-borrower receives semi-monthly income of $2,500, which must be multiplied by 24, giving an annual salary of $60,000. Combine both, and you have a household salary of $119,800. Divide this by 12, and you arrive at a qualifying income of $9,983.33.

Answer 210

The answer is **$940.33**. To calculate the borrower’s monthly income, earnings per hour ($20) are multiplied by hours per week (35) and weeks per year worked (52). This is divided by 12, totaling $3,033.33. To calculate the maximum housing payment (PITI), multiply monthly income by the allowable front-end ratio: $3,033.33 × 31%.(.31) = $940.33.

Answer 211

The answer is **0.125%**. Under TILA and Regulation Z , the APR is considered accurate generally if it is not more than one eighth of one percentage point (0.125%) above or below the APR determined in accordance with legal requirements (i.e., in accordance with the actuarial method or the United States Rule method), or in an irregular transaction, if it is not more than one quarter of one percentage point (0.25%) above or below the annual percentage rate determined in accordance with legal requirements.

Answer 212

The answer is **1.5 percentage points**. For first lien loans with a principal amount that does not exceed the conforming loan limit, Sandra’s creditor must determine if the APR for the loan exceeds the average prime offer rate by 1.5 percentage points.

Answer 213

The answer is **1.5**. Points are a percentage of the loan amount: 1 point = 1% of the loan. The loan amount here is $240,000 (80% of $300,000). On a $240,000 loan, one point would cost $2,400 (1% x $240,000). The Lewises are paying $3,600 in points; to determine how many points this represents, divide $3,600 by $2,400. This comes out to 1.5, meaning that Tom and Cindy paid for 1.5 points.

Answer 214

The answer is **10% tolerance**. In regard to tolerances related to settlement costs, fees related to third-party service providers and recording fees are grouped together and subject to a 10% tolerance. The creditor may charge more for a particular service or recording fee than initially disclosed as long as the total for all such charges, when added together, does not exceed 10% of the amount disclosed.

Answer 215

The answer is **10%**. For the purposes of issuing a revised Loan Estimate, “changed circumstances” that affect estimated settlement charges must result in a change to those charges of more than 10%.

Answer 216

The answer is **1004**. For FHA, VA, and conforming loans, appraisers will use the Uniform Residential Appraisal Report (URAR), also known as Fannie Mae Form 1004 and Freddie Mac Form 70.

Answer 217

The answer is **1007**. The 1004 is the Uniform Residential Appraisal Report, or URAR. There are variations for certain properties; the 1007 is used for single-family properties that are investment properties.

Answer 218

The answer is **15- and 30-year**. The FHA offers 15- and 30-year fixed-rate mortgages to qualifying borrowers.

Answer 219

The answer is **15 days prior to the effective date of the transfer**. Under RESPA, when a loan servicer sells or assigns loan servicing rights to another loan servicer, the borrower must be sent a servicing transfer statement (showing the new servicer’s name, address, and toll-free telephone numbers and showing the date the new servicer will begin accepting payments) at least 15 days before the effective date of the servicing transfer.

Answer 220

The answer is **15 years**. For FHA loans, the annual mortgage insurance premium (MIP) will differ based on whether the term of the loan is greater than 15 years or is 15 years or less.

Answer 221

The answer is **15**. If a consumer submits a complaint about a mortgage lender to the CFPB, the lender has 15 days to respond before the CFPB publishes the complaint in its public complaint database and pursues a potential investigation.

Answer 222

The answer is **180/360**. A partially amortized or balloon mortgage provides for some, but not total, amortization during the mortgage term. It has payments that are equal and regular in nature. However, the loan term is shorter than the time needed to repay the full loan balance by making those payments. Therefore, at the end of the loan term, a large balloon payment is needed to pay off the remaining balance. The loan would be labeled by indicating the loan term in months (in this case, 180) and the amortization period in months (in this case, 360).

Answer 223

The answer is **20**. An applicant for a mortgage loan originator license must satisfactorily complete a pre-licensing course of study that includes at least 20 hours of NMLS-reviewed and -approved education.

Answer 224

The answer is **20**. In order to obtain a mortgage loan originator license, an individual must complete required pre-licensing education consisting of at least 20 hours of NMLS-approved education. The S.A.F.E. Act specifies that the education must include at least three hours of federal laws and regulations, three hours of ethics, and two hours of training related to lending standards for nontraditional mortgage products.

Answer 225

The answer is **22%**. “Housing ratio” refers to the cost of Don’s housing expenses monthly, divided by his gross monthly income. In this case, his proposed housing expense (PITI) will be $1,500/month. $1,500 / $6,800 = 22%.

Answer 226

The answer is **24%**. Housing ratio is only concerning the ratio between housing expenses and gross monthly income. In this case, their housing expenses ($2,700), divided by gross monthly income ($11,300) equals 24%

Answer 227

The answer is **25%**. A borrower who owns more than 25% of a business must submit up to two years’ tax returns in providing income documentation.

Answer 228

The answer is **26%**. The Petersons’ housing ratio - also known as the front-end ratio - is 26%. This is calculated by comparing monthly housing expenses, such as flood insurance, homeowners insurance, and other monthly housing costs, to gross monthly income. In this case, add together the $1,800 mortgage payment with the $250-per-month tax payment and $60-per-month homeowner's insurance payment. Divide that total ($2,110) by the total monthly income of $8,210 (annual income of $98,520, divided by 12), equaling 26%.

Answer 229

The answer is **28% / 36%**. The standard conforming DTI ratios for Fannie Mae and Freddie Mac are 28% (housing) and 36% (total debt).

Answer 230

The answer is **29.38%**. Monthly Housing Costs + Monthly Liabilities / Gross Monthly Income = Debt-to-Income Ratio. Borrower 1's annual income is $60,000, divided by 12 = $5,000. The spouse's gross monthly income of $3,000 is added to $5,000, for a total monthly income of $8,000. The monthly housing expense ($1,500) is added to the car payment ($500) and the boat payment ($350), totaling $2,350. This figure, divided by $8,000, equals 29.38%. Typical living expenses, such as a phone bill or car insurance, are not included when calculating DTI.

Answer 231

The answer is **3%; 6%**. Seller concessions for conforming loans are limited to 3% and 6% for LTVs of over 90% and 90% or less, respectively.

Answer 232

The answer is **3**. The NMLS requires, as a federal minimum, at least three hours of ethics training within the total 20 hours of education required for pre-licensing education.

Answer 233

The answer is **3.50%**. On an FHA loan, a borrower is required to bring a minimum down payment of 3.5%.

Answer 234

The answer is **30 days**. Notice of action taken on a mortgage loan application is due within 30 days.

Answer 235

The answer is **30.8%**. A housing or front-end ratio compares the applicant’s monthly housing costs to his/her gross monthly income. Housing costs are referred to as PITI (principal, interest, taxes, insurance). In addition to PITI, any monthly homeowners’ association (HOA) dues, if applicable, would also be included because they are a housing-related debt. Non-housing-related expenses (car payments, credit cards, etc.) are not included in the housing ratio. Housing ratio = housing debts divided by gross monthly income. In this case, $50,000÷12 = $4,166.66. ($1,250+$35)÷$4,166.66 = 0.308 = 30.8%.

Answer 236

The answer is **30-year amortization period, but a requirement to pay the loan balance within a much shorter period of time**. A balloon mortgage requires the borrower to make one large payment at the end of a loan term. This payment may also be referred to as a “call,” a “demand,” or a “bullet.” It often has a 30-year amortization, but is typically due in 5, 7, 10, or 15 years.

Answer 237

The answer is **31 days**. A business must update its Do-Not-Call data every 31 days to remain compliant.

Answer 238

The answer is **33 or 38**. Direct RHS loans may have terms of 33 and 38 years.

Answer 239

The answer is **40 years**. VA fixed-rate loans may be made for terms of 20, 25, and 30 years.

Answer 240

The answer is **41% back**. A VA loan does not require any specific front-end ratio, but does use a general back-end ratio requirement of 41%.

Answer 241

The answer is **41%**. The preferred DTI ratio for VA loans is 41%. However, if a veteran cannot meet this limit, creditors may use a residual income analysis.

Answer 242

The answer is **43%**. In general, applicants for FHA loans must meet a back end ratio limitation of 43%.

Answer 243

The answer is **43%**. In order for a home loan to be a qualified mortgage, the debt-to-income ratio may not exceed 43%.

Answer 244

The answer is **4506-C**. The IRS form 4506-C is used to allow a lender to pull a transcript of the borrower’s tax returns.

Answer 245

The answer is **47%**. The CLTV accounts for the total encumbrance on the property, which in this case is $78,000. To calculate CLTV, divide the $78,000 total encumbrance by the value of $165,000. This equals 47%.

Answer 246

The answer is **5%**. An ARM with a start rate of 4.00% and a periodic cap of 1% (no initial cap) could move no higher than 5% on its first movement.

Answer 247

The answer is **5%**. The ARM adjustment would be controlled by the periodic cap, because the “true rate” or “fully-indexed rate” is 6.75% (margin + index). Because the periodic cap prevents the start rate from moving any more than 2% at any given adjustment, the first move can only go as high as 5.00%.

Answer 248

The answer is **50%**. When secondary financing is a line of credit, the loan balance plus any draw amount is used to calculate the combined loan-to-value ratio (CLTV). In this case, the CLTV would be $200,000 + $50,000 / $500,000 = 50%.

Answer 249

The answer is **6% of the sales price**. The FHA allows the seller to contribute up to 6% of the purchase price toward the buyer's actual closing costs, prepaid taxes and insurance, discount points, buydown fees, mortgage insurance premiums, and other financing concessions, but nothing toward the down payment.

Answer 250

The answer is **6%**. On conventional loans, a borrower may receive a seller concession of as much as 6% for an LTV at 90% or less.

Answer 251

The answer is **6**. When the interest rate adjusts, the new rate is the lower of index + margin (in this case, 5 + 3 = 8) and the current rate + cap (in this case, 4 + 2 = 6). Therefore, after the first adjustment, the interest rate would be 6%.

Answer 252

The answer is **6.5 percentage points above the average prime offer rate for a comparable transaction**. First-lien mortgage loan will exceed HOEPA’s APR threshold and qualify as a high-cost mortgage if its APR is 6.5 or more percentage points above the average prime offer rate for a comparable transaction.

Answer 253

The answer is **60 days**. Under most deeds of trust, including most FHA and VA loans, a borrower who intends to occupy the property as his or her primary residence must move in within 60 days after closing.

Answer 254

The answer is **75**. Mortgage loan originator license applicants must pass an exam developed by NMLS and administered by an approved test provider with a score of at least 75%.

Answer 255

The answer is **8%**. When the rate adjusts, the new fully-indexed rate is equal to the index plus margin. In this case: 5 + 3 = 8.

Answer 256

The answer is **80%**. Private mortgage insurance is required when a borrower’s loan-to-value is above 80%.

Answer 257

The answer is **80%**. The LTV is calculated using the lesser of the purchase price and the appraised value. In this case, the loan amount of $160,000 is divided by the appraised value of $200,000 to get 80% LTV.

Answer 258

The answer is **83.3%**. To get the loan-to-value (LTV) ratio, divide the loan amount by the property value: $375,000 / $450,000 = 0.833 = 83.3%

Answer 259

The answer is **95%**. CLTV stands for combined loan-to-value, which is a ratio used when there are multiple loans secured by the same property. This is calculated by combining the amounts of the loans secured by the property, then dividing by the property value or sales price (whichever is less). In this case, $80,000 + ($20,000 - $5,000)/$100,000 = 95%.

Answer 260

The answer is **a 20-year adjustable-rate mortgage granted to a borrower based on the maximum interest rate that may apply during the first five years of the loan**. A qualified mortgage is a covered transaction that provides for substantially-equal, regular periodic payments that do not provide for negative amortization, payment deferral, or (generally) a balloon payment. To be a qualified mortgage, the lender must determine the borrower’s repayment ability based on the monthly payment for mortgage-related obligations, the consumer’s reasonably-expected income and assets, and existing debt obligations. A qualified mortgage may not have a term that exceeds 30 years, provide for points and fees that exceed 3% of the total loan amount, or be granted to a borrower who has a monthly debt-to-income ratio exceeding 43%.

Answer 261

The answer is **a 65-year-old borrower without a mortgage who would like to supplement his income**. Home equity conversion mortgages allow elderly borrowers who have significant equity in their homes the opportunity to draw on that equity, without repayment, as long as they continue to live in the home.

Answer 262

The answer is **A and V**. The “A” and the “V” prefixes indicate the zones in which flood insurance is mandatory. In zone “D,” flood insurance is available if a homeowner chooses it, but no other zones require flood insurance.

Answer 263

The answer is **a balloon payment may result from minimum periodic payments**. The advertisement must include a statement that a balloon payment may result from minimum periodic payments.

Answer 264

The answer is **a balloon payment**. "5/25" and "7/23" are commonly used to designate loans that include a balloon payment.

Answer 265

The answer is **a bankruptcy from 15 years ago**. A bankruptcy from over ten years ago would not be considered in a borrower’s credit qualification.

Answer 266

The answer is **a bankruptcy from 15 years ago**. A bankruptcy from over ten years ago would not be considered in a borrower’s credit qualification.

Answer 267

The answer is **a borrower may not be charged a fee for the preparation of a settlement statement**. Section 12 of RESPA provides that no fee can be charged by a lender for the preparation and distribution of documents required in connection with the making of a federally-related mortgage loan.

Answer 268

The answer is **a bridge loan**. Temporary financing related to the construction or purchase of a home is typically referred to as a bridge loan, although these types of loan may have a balloon feature.

Answer 269

The answer is **a buyer who accepts a fee for the use of his or her Social Security Number and other personal information on a mortgage application**. A straw buyer is a person who purchases the property or applies for the loan in his or her own name for the actual borrower and is typically paid for the use of his or her personally identifying information.

Answer 270

The answer is **a claim against a property that can affect the ability to transfer title**. An encumbrance is a claim against a property that can affect the ability to transfer title.

Answer 271

The answer is **a condo complex for residents aged 55 and over**. The sales comparison approach to appraisals is most commonly used for residential properties within an area that has recent sales data to analyze for comparison.

Answer 272

The answer is **a creditor cannot legally discriminate against an applicant in any aspect of a credit transaction on the basis of age, provided that the applicant is of age to enter into a contract**. The Equal Credit Opportunity Act (ECOA) prohibits discrimination on the basis of age against a loan applicant who is of age to enter into contracts.

Answer 273

The answer is **a deed with conflicting ownership information**. Creditors protect their investment in a mortgage by placing a lien on the home used as security. A title search shows whether other liens are in place that will have priority over the creditor’s lien. When a refinance pays off an existing first mortgage, the second mortgage will have priority, but creditors can use subordination agreements to ensure that the new mortgage has priority over the existing second mortgage. The title search might also uncover problems in the chain of title which could stop a transaction - for instance, a deed with conflicting ownership information (sometimes these are "wild deeds" with names that appear nowhere else on record) will require additional research and might demand legal action or could fully stop the refinance.

Answer 274

The answer is **a fee paid by a title company to an originator for referral of settlement services**. RESPA requires any fees to be “earned.” Referral fees are considered a violation.

Answer 275

The answer is **a float**. If a borrower chooses to float the interest rate, the rate will not be set until closing unless the borrower obtains a lock-in (also called a rate lock or rate commitment).

Answer 276

The answer is **a government-sponsored, private, publicly-held corporation, formed to facilitate home ownership**. The Federal National Mortgage Association (FNMA), or Fannie Mae, was established in 1938 by amendments to the National Housing Act, in order to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing. It is a government-sponsored enterprise (GSE) and, since 1968, a publicly-traded company.

Answer 277

The answer is **a HECM**. The FHA's home equity conversion mortgage (HECM) is a reverse mortgage that enables individuals aged 62 or older to convert some of the equity in their primary residence to cash to pay living expenses, or to purchase a primary residence if they have the cash to pay the down payment and closing costs. It requires no repayment until either the property is sold or the owner dies, permanently moves, fails to live in the house for 12 consecutive months, or fails to pay property taxes, maintain hazard and/or flood insurance coverage, or maintain the property (i.e., perform necessary repairs).

Answer 278

The answer is **a high-cost bridge loan may include provision for a balloon payment**. Equal and regular payments still may not fully amortize a loan, thus resulting in a balloon payment. A high-cost home loan may not provide for a payment schedule that results in a balloon payment, unless the schedule is adjusted for the irregular or seasonal income of the borrower; the loan is a bridge loan with a term of 12 months or less, taken for the acquisition or construction of the borrower’s principal residence; or the loan satisfies the requirements of a balloon payment qualified mortgage (among other requirements, the loan must be originated in a predominantly rural or underserved community, have a fixed rate, and be for a term of five to 30 years).

Answer 279

The answer is **a hybrid ARM**. A hybrid ARM is a mix (hybrid) of a fixed-rate loan and an adjustable-rate loan. It has an initial period during which the rate is fixed; after this expires, the rate is adjustable for the rest of the term.

Answer 280

The answer is **a licensing system utilized by all U.S. states and territories**. The NMLS is a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for licensing and registering loan originators. It is utilized by all U.S. states and territories.

Answer 281

The answer is **a limit on bankruptcies that are more than seven years old**. Most negative information that is more than seven years old is not included in a credit report; however, bankruptcies may be reported for up to ten years.

Answer 282

The answer is **a loan applicant’s current loan balances**. Under the Gramm-Leach-Bliley Act, a loan applicant’s current loan balances would be considered nonpublic information.

Answer 283

The answer is **a loan assumption made without lender approval**. RESPA covers loans secured by first or subordinate liens on residential property but does not extend to an assumable loan which can be assumed without lender approval.

Answer 284

The answer is **a loan originator receives compensation for closing over $1 million in volume per month**. A loan originator is prohibited from receiving compensation based on the terms of a loan, such as prepayment penalties or interest rates, and is prohibited from receiving dual compensation (i.e., from both the consumer and the creditor).

Answer 285

The answer is **a loan processor**. A loan processor or underwriter is an individual who performs clerical or support duties at the direction of and subject to the supervision and instruction of a state-licensed loan originator or a registered loan originator. Clerical or support duties include the receipt, collection, distribution, and analysis of information common for the processing and underwriting of a residential mortgage loan. These duties also include communicating with a consumer to obtain the information necessary for processing and underwriting a loan as long as such communication does not include offering or negotiating loan rates or terms or counseling consumers about residential mortgage loan rates or terms. A person working solely as a loan processor or underwriter is not required to be licensed under the S.A.F.E. Act.

Answer 286

The answer is **a loan that is obtained by a fictitious borrower using a fictitious property**. Air loans are loans secured by non-existent property (“air”), which leave the lender without collateral. The schemer invents borrowers and properties, establishes fake accounts for payments, and maintains custodial accounts for escrows. He or she may even set up an office with a bank of telephones for verification purposes, with each phone representing the employer, appraiser, credit agency, etc.

Answer 287

The answer is **a mobile home to be used as a residence, even if it is not attached to the land**. The S.A.F.E. Act defines a mortgage loan originator as an individual who takes residential mortgage loan applications, or offers or negotiates terms of residential mortgage loans for compensation or gain. The S.A.F.E. Act’s definition of "residential mortgage loan" includes a loan secured by a consensual security interest on a dwelling and cross-references the definition of the term "dwelling" in the Truth-in-Lending Act (TILA). Regulation Z, which implements TILA, defines a dwelling as a residential structure that contains one to four units, whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence.

Answer 288

The answer is **a mortgage loan originator must always have his or her own surety bond in an amount that reflects the dollar value of loans originated in the previous year**. Each mortgage loan originator must be covered by a surety bond. If he or she is an employee or exclusive agent of a mortgage licensee, the surety bond of the employing licensee may be used to satisfy the loan originator surety bond requirement. The penal sum of the surety bond must reflect the dollar amount of loans originated. If the loan originator’s licensing state has developed and administers a fund specifically to provide protection to consumers by making funds available for claims resulting from violations of state or federal laws and regulations, in lieu of a surety bond or net worth requirement, the state may instead require the loan originator to pay a certain amount into the state fund.

Answer 289

The answer is **a mortgage loan originator refers all borrowers to use the title company which is located in the same building as the mortgage loan originator, but with which the mortgage loan originator or the mortgage loan originator's company has no other relationship**. An affiliate relationship exists when one company controls, is controlled by, or is under common control of another company. Under RESPA, when a settlement service provider refers a borrower to one or more affiliates with whom it has an ownership or other beneficial interest, an Affiliated Business Arrangement (AfBA) Disclosure Statement must be given on a separate piece of paper to the borrower. Among other things, the AfBA Disclosure informs the borrower that he/she is generally not required to use the affiliate and is free to shop for other providers. Kickbacks and referral fees are also prohibited under RESPA.

Answer 290

The answer is **a natural person, business, or financial organization that regularly extends credit to consumers**. A creditor is defined by TILA as “a natural person, business, or financial organization that regularly extends credit to consumers”.

Answer 291

The answer is **a number, expressed as a percentage, that represents a lender’s operating costs and profit margin**. Concerning ARMs, “margin” is best defined as a number, expressed as a percentage, that represents a lender’s operating costs and profit margin.

Answer 292

The answer is **a part-time hourly worker who may get overtime in the summer and plans to pay principal at that time**. An interest-only loan is suitable when a borrower is savvy enough to manage it properly. A part-time, hourly worker who “may” get overtime in the summer likely would not be the best candidate for an interest-only loan.

Answer 293

The answer is **a portion of it may be applied to the UFMIP of another FHA-insured mortgage**. The FHA funds the insurance from a mortgage insurance premium (MIP) charged to the borrower. Most FHA mortgages require payment of an upfront mortgage insurance premium (UFMIP). The UFMIP is nonrefundable, except to the extent that a portion may be applied to the UFMIP of another FHA-insured mortgage within three years. In addition, most FHA loans require payment of an annual mortgage insurance premium, payable monthly as part of the mortgage payment. This premium is based on the loan program, the loan term, and the LTV

Answer 294

The answer is **a possible ARM index**. The LIBOR, which stands for London Interbank Offered Rate, is a standard financial index used in U.S. capital markets.

Answer 295

The answer is **a prohibited act**. It is prohibited for any person engaging in mortgage origination activity to make any payment, threat or promise, directly or indirectly, to any appraiser of property for the purpose of influencing the independent judgment of the appraiser with respect to the value of the property.

Answer 296

The answer is **a property is bought and resold within a very short period of time**. "Flipping" refers to buying and reselling property within a short period of time. In the context of mortgage fraud, flipping, also called churning, is repeated refinancing of a loan within a short period of time without any real benefit to the borrower. The primary objective of the mortgage broker and/or lender is to generate additional loan points, loan fees, prepayment penalties, and fees from financing the sale of credit-related products. When a borrower has to return to a lender to refinance the loan, possibly to avoid foreclosure, he or she is charged additional points and fees. Typically, the new loan is just as unaffordable as the first, and the result may still be foreclosure.

Answer 297

The answer is **a statement of the estimated taxes, insurance premiums, and other charges the borrower will pay from the escrow fund during the first 12 months of the loan**. The Initial Escrow Statement is a statement of the estimated taxes, insurance premiums, and other charges the borrower will pay from the escrow fund during the first 12 months of the loan. Borrowers typically receive this notification at the time of closing; however, the lender has 45 days from the date of closing to deliver the Initial Escrow Statement to the borrower.

Answer 298

The answer is **a title company sends a mortgage loan originator a $25 gift certificate, because of the business the loan originator sends the title company**. Under Section 8 of RESPA, it is illegal to give or accept any fee, kickback, or other thing of value under any agreement or understanding, oral or otherwise, that business relating to or part of a settlement service involving a federally-related mortgage loan will be referred to any person. A business entity may not pay any other business entity, or the employees of any other business entity, for the referral of real estate settlement service business. Therefore, a title company that sends a mortgage loan originator a gift certificate because of the business the loan originator sends the title company would be guilty of a kickback in violation of RESPA.

Answer 299

The answer is **a type of lending arrangement where brokers are permitted to originate, close, and fund loans using the lender's warehouse line of credit.** Mortgage brokers sometimes engage in table funding which allows them to, in theory, be a lender on a loan and close in their own name. Once the loan closes, it is quickly assigned to another entity.

Answer 300

The answer is **a unilateral markup, which is legal, but may be a violation of RESPA’s prohibition against unearned fees**. RESPA requires compensation for settlement services to be earned. Any compensation not in direct correlation with an actual service is likely a violation. However, according to a 2012 case, the act of unilaterally marking up a fee and retaining the additional earnings is not illegal, as long as fee-splitting is not involved.

Answer 301

The answer is **a verification of employment**. Generally, a verification of employment is signed by the borrower with blank spaces remaining, with the understanding the borrower has signed to give permission for the employer to complete it.

Answer 302

The answer is **“Can this amount increase after closing?”** The first table on page 1 of the Closing Disclosure is the Loan Terms table, which lists the same information given in the Loan Estimate’s Loan Terms table (i.e., loan amount, interest rate, the monthly principal and interest, and space to indicate whether the product has a prepayment penalty or balloon payment). This information is updated to reflect the terms that will be in place at consummation, and the loan originator must answer the question “Can this amount increase after closing?” for each item.

Answer 303

The answer is **“Can you explain why this property is valued so low, compared to the current market?”**. When communicating with an appraiser, it would be permissible to ask the appraiser to provide more information about appraisal results.

Answer 304

The answer is **accepting payments, disbursing escrow funds, maintaining records, and managing delinquent accounts**. Loan servicers handle many tasks, including accepting payments, disbursing escrow funds, maintaining records, and managing delinquent accounts.

Answer 305

The answer is **actual amounts for taxes and insurance**. In the typical real estate sales transaction, the seller gives the buyer a deed at closing and the buyer gives the lender a promissory note and a security instrument (i.e., a mortgage or trust deed) that creates a lien on the property. The promissory note is both a promise to repay the money borrowed with interest and evidence of the debt. It shows the payor and payee, the amount owed, the rate of interest and whether it is fixed or adjustable, the due date(s) for payment, and the terms of the loan. The mortgage or trust deed secures repayment of the note. Its covenants address topics that include occupancy, insurance, and hazardous materials, but it does not typically specify actual amounts for taxes and insurance.

Answer 306

The answer is **adjustment**. Adjustments are made when comparable properties are compared to the subject property in a mortgage loan transaction. Adjustments assign positive or negative values to certain property features to help gauge value.

Answer 307

The answer is **advises loan applicants on current rates and loan terms**. The S.A.F.E. Act defines a mortgage loan originator as an individual who takes a residential mortgage loan application, or offers or negotiates terms of a residential mortgage loan for compensation or gain. The S.A.F.E. Act provides that an individual assists a consumer in obtaining or applying to obtain a residential mortgage loan by, among other things, advising on loan terms, including rates, fees, and other costs; preparing loan packages; or collecting information on behalf of the consumer with regard to a residential mortgage loan.

Answer 308

The answer is **Affiliated Business Arrangement Disclosure**. An Affiliated Business Arrangement Disclosure is required anytime a business refers another business with whom it has some common ownership or some other affiliation.

Answer 309

The answer is **air loans**. Air loans are loans secured by nonexistent property which leave the lender without collateral. The schemer invents borrowers and properties, establishes fake accounts for payments, and maintains custodial accounts for escrows. He may even set up an office with a bank of telephones for verification purposes, with each phone representing the employer, appraiser, credit agency, etc.

Answer 310

The answer is **all closed-end federally related mortgage loans**. The Loan Estimate is required for all closed-end federally related mortgage loans.

Answer 311

The answer is **All FHA loans**. Mortgage insurance premiums are required for all FHA loans.

Answer 312

The answer is **all options would have monthly mortgage insurance**. Most FHA mortgages require payment of an upfront mortgage insurance premium (UFMIP). In addition, most FHA loans require payment of an annual mortgage insurance premium, payable monthly as part of the mortgage payment. This premium is based on the loan program, the loan term, and the LTV. For all mortgages involving an original principal obligation (excluding financed UFMIP) less than or equal to 90% LTV, the annual MIP will be assessed until the end of the mortgage term or for the first 11 years of the mortgage term, whichever occurs first. For any mortgage involving an original principal obligation (excluding financed UFMIP) with an LTV greater than 90%, the FHA will assess the annual MIP until the end of the mortgage term or for the first 30 years of the term, whichever occurs first.

Answer 313

The answer is **allowing the FBI access to a borrower’s file for an investigation**. Exceptions to the FCRA allow for FBI access to a consumer report for the purposes of investigations.

Answer 314

The answer is **allows a buyer to assume the seller’s mortgage**. An assumption clause is a provision in the terms of a loan that allows a buyer to assume the seller’s mortgage.

Answer 315

The answer is **allows consumers a full refund if the originator is found to have engaged in unethical acts**. The S.A.F.E. Act includes provisions to enhance professional standards within the mortgage industry by imposing licensing requirements, providing consumers access to information about licensees at no charge through its online registry, and facilitating the collection and disbursement of consumer complaints on behalf of state and federal mortgage regulators. While the S.A.F.E. Act does have provisions ensuring compensation to victims of mortgage law violations, it does not guarantee such consumers a full refund in all cases of unethical conduct.

Answer 316

The answer is **an ad that refers a consumer to a consumer protection website which is not operated by the lender in order to compare average mortgage loan rates**. Under the Mortgage Acts and Practices Rule (MAP Rule or Regulation N), it is a violation of the advertising regulations for any person to make a material misrepresentation, expressly or by implication, in any commercial communication, regarding any term of any mortgage credit product, including misrepresenting loan terms (claiming a loan product is preapproved when it is not) and misrepresenting the source of a loan offer (claiming it originates from the consumer’s current mortgage lender or from a government agency when this is not the case). Referring a consumer to a consumer protection website which is not operated by the lender is not misleading nor is it a violation of the law.

Answer 317

The answer is **an applicant be given notification of the status of his/her loan application within 30 days**. An applicant has the right to receive, within 30 days of the creditor’s receipt of an incomplete application, notice of incompleteness with a reasonable time to respond, and within 30 days after receipt of a completed credit application, notice of action taken (i.e., acceptance or adverse action).

Answer 318

The answer is **an employee of a non-depository institution**. A state-licensed loan originator is an employee of a non-depository institution and is licensed by the state. An originator employed by a depository or the Farm Credit Administration would be registered.

Answer 319

The answer is **an estimate of market value derived by comparing the subject property to similar properties which have sold**. The market or market data approach, also called the sales comparison approach, bases the value of a property on the prices paid for similar, or comparable, properties in the area that have sold recently. It is the most reliable method for appraising single-family homes and land.

Answer 320

The answer is **an increase in the APR by more than .125%**. A new three-business-day waiting period applies to a corrected disclosure if there are changes or corrections that relate to the annual percentage rate, the loan product, or the addition of a prepayment penalty. For other types of changes, the corrected disclosure may be provided at or before consummation. The APR is generally considered to be accurate if it is not more than one eighth of one percentage point (0.125%) above or below the APR determined in accordance with legal requirements (i.e., in accordance with the actuarial method or the United States Rule method); or in an irregular transaction, if it is not more than one quarter of one percentage point above or below the annual percentage rate determined in accordance with legal requirements.

Answer 321

The answer is **an individual who performs clerical duties subject to the supervision of a licensed and/or registered loan originator**. Under the S.A.F.E. Act’s definition, a loan processor or underwriter is an individual who, with respect to the origination of a residential mortgage loan, performs clerical or support duties at the direction of and subject to the supervision and instruction of a state-licensed loan originator or a registered loan originator.

Answer 322

The answer is **an interest-only option**. An interest-only option is permitted for a non-qualified mortgage, but not for a qualified mortgage.

Answer 323

The answer is **an origination fee/a Loan Estimate**. The collection of an origination fee prior to providing a Loan Estimate is illegal.

Answer 324

The answer is **analysis of borrower repayment ability is not required**. Non-qualified mortgages may include features such as balloon payments, negative amortization, interest-only payments, or payment-option provisions. Borrowers are not held to a debt-to-income ratio limitation. Analysis of borrower repayment ability is still required.

Answer 325

The answer is **annual percentage rate**. A prepaid finance charge is any finance charge paid separately, in cash or by check, before or at the consummation of a transaction or withheld from the proceeds of the loan at any time. They are direct loan charges paid by the borrower that must be included in computing the annual percentage rate.

Answer 326

The answer is **annually**. The purpose of the aggregate escrow analysis is to ensure that the proper amount is being held in escrow or reserve accounts (i.e., accounts to hold funds on behalf of borrowers for the payment of taxes and insurance). Under Regulation X, a servicer may hold funds to cover two months of taxes, insurance, and mortgage insurance, as applicable, and may only collect one month’s worth of escrowed items in each payment, unless there is a shortage in the account. All accounts must be analyzed once every 12 months and any overage over $50 refunded to the borrower within 30 days or credited towards the borrower’s next year’s escrow payments.

Answer 327

The answer is **anti-money laundering**. Under the Bank Secrecy Act, financial institutions are required to develop a written anti-money laundering compliance program, which must be approved by the institution’s board of directors. Minimum requirements for the program include internal controls and metrics to ensure compliance; independent auditing of compliance; the designation of individuals responsible for managing compliance; and staff training for compliance.

Answer 328

The answer is **any day on which the creditor’s offices are open to the public for carrying out substantially all business functions**. For the purposes of providing a Loan Estimate, a “business day” is any day on which the creditor’s offices are open to the public for carrying out substantially all business functions.

Answer 329

The answer is **any mortgage product other than a 30-year fixed-rate mortgage**. The SAFE Act defines a “nontraditional mortgage product” as any product other than a 30-year fixed-rate mortgage.

Answer 330

The answer is **any of these**. An unlicensed loan processor or underwriter may obtain and analyze information (such as verifications of income, employment, and deposits) needed in processing and underwriting a residential mortgage loan, and communicate with consumers in order to obtain that information. However, loan processors or underwriters may not take applications or offer, negotiate, or counsel the consumer about residential loan rates or terms; only licensed loan originators are permitted to do so.

Answer 331

The answer is **any one of the five**. Any one of the five siblings would be able to rescind the loan on their own, as each has an ownership interest in the property and therefore has the right to rescind.

Answer 332

The answer is **applicant and collateral**. An underwriter must make a determination as to whether both the applicant and the subject property meet the guidelines of the investor.

Answer 333

The answer is **applicant and collateral**. Underwriting is the process of deciding whether to make a loan based on credit, employment, assets, and other factors. To ensure that loans are marketable in the secondary market, the underwriter assesses the borrower’s ability and willingness to repay and the property’s ability to serve as collateral for the debt.

Answer 334

The answer is **appraiser; underwriter**. The appraiser is responsible for determining whether a property is located in a flood zone, and the underwriter verifies that proper flood insurance is in place.

Answer 335

The answer is **are covered under the provisions of RESPA and are considered settlement services**. The provisions of RESPA cover settlement services including title searches, title examinations, and title insurance.

Answer 336

The answer is **as long as they are accompanied by a letter including the name of the donor and an indication that the funds are not expected to be repaid**. The donor must provide a gift letter clearly indicating that he/she does not expect repayment.

Answer 337

The answer is **assess jail time for fraudulent activities**. Under the SAFE Act, the authority of state agencies allows them to impose sanctions including suspending, revoking, or refusing to renew a license in response to violations; ordering restitution and imposing fines; and issuing orders or directives, including ordering or directing licensees to cease and desist from conducting business, including immediate temporary orders to cease and desist. The agencies are not authorized to assess jail time to licensees for any reason.

Answer 338

The answer is **assumable**. VA loans are assumable, which means that a purchaser of a home that secures a VA loan may assume the mortgage payments of that loan. Except for direct VA loans, most VA loans are funded by private lenders and are subject to underwriting requirements that include DTI ratios.

Answer 339

The answer is **assumption**.Transferring property to a new owner who takes responsibility for the existing mortgage debt without incurring any change in terms is called an assumption.

Answer 340

The answer is **at or before the time of the referral**. When a settlement service provider refers a borrower to one or more affiliates with whom it has an ownership or other beneficial interest, an Affiliated Business Arrangement (AfBA) Disclosure Statement must be given on a separate piece of paper to the borrower at or before the time the referral is made (if in person, writing, or electronically), within three business days after a referral made by telephone (provided an abbreviated verbal disclosure of the existence of the arrangement and the fact that a written disclosure will be provided within three business days is made during the telephone referral), or at the time the Loan Estimate is provided, in the case of a referral by a lender (including one to an affiliated lender).

Answer 341

The answer is **at the Office of the County Recorder**. Recording is when the deed, deed of trust, or other recordable documents are submitted to the County Recorder (or County Clerk) for filing.

Answer 342

The answer is **at the time of the referral**. The borrower must be provided with the Affiliated Business Arrangement Disclosure at the time of referral. Only if the referral is made over the phone would MZ Mortgage have three business days to provide disclosure. Considering the information provided, “at the time of the referral” is the best answer.

Answer 343

The answer is **ATR/QM Rule**. The ATR/QM Rule expanded requirements for the consideration of a borrower’s ability to repay when originating closed-end loans.

Answer 344

The answer is **aunt**. Despite the broad definition of a mortgage loan originator in the SAFE Act, there are some limited circumstances in which offering or negotiating residential mortgage loan terms would not make an individual a mortgage loan originator. These include an individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member, including a spouse, child, sibling, parent, grandparent, or grandchild. This includes stepparents, stepchildren, stepsiblings, and adoptive relationships.

Answer 345

The answer is **AUS**. Much of the underwriter’s decision-making has now been taken over by an automated underwriting system. These are known by many names, but all do the same thing: they make automated underwriting decisions based on lender guidelines and information entered into the AUS.

Answer 346

The answer is **average the income shown on the 1040s for the past two years**. When analyzing a borrower’s income for loan qualification, self-employed or commissioned income is averaged over a two-year period, using tax forms such as Form 1040, U.S. Individual Income Tax Return. When commission income is at least 25% of the borrower’s income, the most recent two years’ personal tax returns may be required.

Answer 347

The answer is **bait and switch**. Bait and switch advertising involves advertising a loan at very attractive terms and then informing potential customers that, while the advertised loan is not available, a substitute, usually more expensive or involving less appealing terms, is.

Answer 348

The answer is **balloon mortgage**. A partially amortized or balloon mortgage provides for some, but not total, amortization during the mortgage term. It has payments that are equal and regular in nature. However, the loan term is shorter than the time needed to repay the full loan balance by making those payments. Therefore, at the end of the loan term, a large balloon payment is needed to pay off the remaining balance.

Answer 349

The answer is **balloon payment**. If a loan agreement includes terms requiring the borrower to pay the remaining loan balance in one larger payment at the end of the loan term, this is known as a balloon payment.

Answer 350

The answer is **balloon** **mortgage**. A partially-amortized or balloon mortgage provides for some, but not total, amortization during the mortgage term. It has payments that are equal and regular in nature. However, the loan term is shorter than the time needed to repay the full loan balance by making those payments. Therefore, at the end of the loan term, a large balloon payment is needed to pay off the remaining balance. The loan would be labeled by indicating the loan term in months (in this case, 180) and the amortization period in months (in this case, 360).

Answer 351

The answer is **balloon** **mortgage**. In a balloon mortgage, a large portion of the borrowed principal is repaid in a single payment at the end of the loan period.

Answer 352

The answer is **balloon**. A balloon loan may be eligible for refinance if it carries a conditional refinance provision. This means the loan may qualify for refinance if certain conditions are met, including: borrower must live in the house; no second liens in place; must be current and not have been late in 12 months; new rate cannot exceed 5% over the note; docs must be signed and fees paid.

Answer 353

The answer is **bank statements**. Bank statement review is part of an underwriter’s assessment of the borrower, not the collateral.

Answer 354

The answer is **become state-licensed as a loan originator**. An independent contractor is required to become state-licensed in order to increase accountability within the NMLS system.

Answer 355

The answer is **Betty can rescind for three years from recording**. If the creditor has failed to provide the required disclosures and notice of the right of rescission, the rescission period may be extended up to the date of the first of the following: three years after the consummation of the transaction, transfer of all of the consumer’s interest in the property, or sale of the property.

Answer 356

The answer is **borrower who is a salesperson for a company, of which she is a 30% owner**. A self-employed borrower is one who owns 25% or more of a business.

Answer 357

The answer is **borrower's payment amount**. When a loan servicer sells or assigns loan servicing rights to another loan servicer, the borrower must be sent a servicing transfer statement at least 15 days before the effective date of the servicing transfer. This statement must show the name, address, and toll-free telephone numbers of both the old servicer and the new servicer, as well as the date the new servicer will begin accepting payments.

Answer 358

The answer is **borrower's Social Security Number**. In the typical real estate sales transaction, the seller gives the buyer a deed at closing and the buyer gives the lender a promissory note and a security instrument (i.e., a mortgage or trust deed) that creates a lien on the property. The promissory note is both a promise to repay the money borrowed with interest and evidence of the debt. It shows the payor and payee, amount owed, rate of interest and whether the loan is fixed or adjustable, due dates for payment, and the loan terms.

Answer 359

The answer is **both Andy and Larry could be fined up to $10,000, imprisoned for up to 1 year, or both for each incidence, because they are both violating RESPA**. Under Section 8 of RESPA, it is illegal to give or accept any fee, kickback, or other thing of value under any agreement or understanding, oral or otherwise, that business relating to or part of a settlement service involving a federally-related mortgage loan will be referred to any person. Since a gift certificate is a thing of value, both Larry and Andy are guilty of violating RESPA and may suffer the legal consequences of this violation.

Answer 360

The answer is **Both Connie and Callie**. Both Connie and Callie would be guilty of engaging in a prohibited act. Callie would be conducting loan origination business without holding a valid license, while Connie is assisting Callie, an unlicensed individual, in conducting loan origination business.

Answer 361

The answer is **both the hazard insurance company and the mortgage broker**. Under Section 8 of RESPA, it is illegal to give or accept any fee, kickback, or other thing of value under any agreement or understanding, verbal or otherwise, that business relating to or part of a settlement service involving a federally-related mortgage loan will be referred to any person. Since a free dinner is a thing of value, both the hazard insurance company and the mortgage broker are guilty of violating RESPA and may suffer the legal consequences of this violation.

Answer 362

The answer is **bridge financing**. Bridge financing is used to help homeowners who are selling one home and buying another to make payments on their new home loan while waiting for the closing date on their old home to arrive.

Answer 363

The answer is **business signage**. The unique identifier of any person originating a residential mortgage loan must be clearly shown on all residential mortgage loan application forms; solicitations or advertisements, including business cards or websites; and any other documents as established by rule, regulation, or order of the state licensing agency (MSL.210).

Answer 364

The answer is **by rounding them to the next whole number, except for estimated principal and interest payments**. Except for estimated principal and interest payments, costs on the Loan Estimate are rounded to the next whole number.

Answer 365

The answer is **Can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan after submitting a written request that is signed by the parties entitled to the waiting period and which describes the emergency and consent to the waiver**. If a borrower selects a mortgage loan covered by HOEPA, he/she can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan after submitting a written request that is signed by the parties entitled to the waiting period and which describes the emergency and consent to the waiver.

Answer 366

The answer is **cap**. Consumer protections that limit the amount that an interest rate or payment on an ARM may change are known as caps.

Answer 367

The answer is **car loans**. Nontraditional credit includes payments for things not traditionally tracked by or reported to the credit bureaus. This includes things like rent and utility bills.

Answer 368

The answer is **car payment, boat payment, child support obligations**. A debt-to-income ratio compares an applicant’s total monthly debt to his or her total monthly income. Total monthly debt would include simultaneous loans, debt obligations, alimony, and child support. Typical living expenses (e.g., utilities, health and disability insurance, food, phone or cable bills, etc.) are not included when calculating DTI.

Answer 369

The answer is **certificate of eligibility**. A VA loan is available only to veterans of the armed services, certain active and discharged military personnel, and their spouses; however, the loan is assumable by nonveterans. In order to obtain the loan, the applicant must obtain a certificate of eligibility from the VA (directly online, through the lender online, or by mail). This will determine whether an individual is eligible for a VA loan and whether he/she is eligible for a loan with the full guarantee.

Answer 370

The answer is **Certificate of Eligibility**. A VA loan requires the borrower to obtain a Certificate of Eligibility.

Answer 371

The answer is **CFPB**. The CFPB has primary oversight and enforcement authority for the Fair Credit Reporting Act. However, it shares some of its enforcement authority with the FTC.

Answer 372

The answer is **CFPB**. The CFPB now has primary enforcement responsibility over TILA. The FTC does still retain some authority.

Answer 373

The answer is **CFPB**. The Dodd-Frank Act listed the creation of financial education programs as one of the primary functions of the CFPB.

Answer 374

The answer is **charging a minority borrower a higher interest rate than a similarly situated non-minority borrower**. Regulation B prohibits discrimination in credit transactions based on criteria such as race, color, religion, national origin, sex, marital status, and age. An example of such discrimination would be charging a minority borrower a higher interest rate than a similarly situated non-minority borrower. Decisions based on creditworthiness, rather than discriminatory criteria, are not prohibited under Regulation B.

Answer 375

The answer is **charging different fees based on race is prohibited**. The Fair Housing Act prohibits discrimination in the sale, rental, and financing of any residential housing based on race, color, religion, national origin, sex, familial status, or mental or physical handicap, and therefore, prohibits charging different fees based on race. Residency status is not a protected category under the Fair Housing Act. Disclosure requirements are not imposed by the Fair Housing Act. Government reporting requirements are covered under the Home Mortgage Disclosure Act (HMDA).

Answer 376

The answer is **Close the business for the period of the examination**. In conducting an examination or investigation, a state licensing agency may, among other things, administer oaths and affirmations; subpoena witnesses, as well as books and records; require the production of relevant documents; and control access to any documents and records of the person under investigation. The state licensing agency is not authorized to close the business for any period of time.

Answer 377

The answer is **collect interest that accrues between the closing date and the end of the month**. Per diem interest is used by a lender in order to collect interest that accrues between the closing date and the end of the month.

Answer 378

The answer is **complete the section based on a visual observation of the borrower during a face-to-face application**. The section titled “Demographic Information” is required by the Home Mortgage Disclosure Act to aid the federal government in monitoring compliance with ECOA. Because supplying this information is strictly voluntary, an applicant who does not wish to do so should check the box provided to indicate his/her decision. When an applicant does not provide this information, an originator taking the application on a face-to-face basis must note the applicant’s sex, race, and ethnicity on the form, based on his/her visual observation and/or the applicant’s surname.

Answer 379

The answer is **complete the section based on a visual observation of the borrower during a face-to-face application**. When an applicant chooses not provide this information, an originator taking the application on a face-to-face basis must note the applicant’s sex, race and ethnicity on the form, based on his/her visual observation and/or the applicant’s surname.

Answer 380

The answer is **completion notice**. A completion notice is required of an appraiser, typically to document the completion of new construction prior to closing a loan on the property. Easements, land locks, and leaseholds are all examples of title issues that may affect marketability or cloud title.

Answer 381

The answer is **conduct an adequate review of the loans that they purchase to ensure that the underlying transactions are stable and safe**. As an industry partner in mortgage lending transactions, investors in the secondary mortgage market have an obligation to conduct an adequate review of the loans that they purchase to ensure that the underlying transactions are stable and safe.

Answer 382

The answer is **conforming loans and nonconforming loans**. There are two types of conventional mortgage loans: conforming loans, which meet GSE loan limits and standards, and nonconforming loans, which do not meet GSE loan limits and standards (for example, “jumbo” loans).

Answer 383

The answer is **considered unsafe and unsound**. The Interagency Guidance on Nontraditional Mortgage Product Risks emphasizes the importance of establishing a borrower’s ability to repay a loan based on the borrower’s existing resources, primarily monthly income, rather than the value of the collateral pledged. Loans to borrowers who do not demonstrate the capacity to repay the loan from sources other than the collateral pledged are generally considered unsafe and unsound.

Answer 384

The answer is **construction**. A construction loan or construction financing is high-interest interim (or temporary) financing that serves to finance the cost of labor and materials used during construction. It extends from the start to the completion of the work, when it is paid off, often with the proceeds of a more permanent form of financing (a take-out loan).

Answer 385

The answer is **construction-to-permanent and stand-alone construction**. Construction-to-permanent and stand-alone construction loans are two options used to finance the construction of a home being built. Both have advantages and disadvantages based on the borrower’s needs and the timeline of the construction.

Answer 386

The answer is **consult a tax adviser regarding deductibility of interest**. Advertising rules under Regulation Z provide that advertisements for loans exceeding the home’s fair market value must clearly and conspicuously state “The interest on the portion of credit that exceeds market value is NOT deductible.” The advertisement must also state that the borrower should consult a tax advisor regarding the deductibility of interest and charges.

Answer 387

The answer is **consumer debt is “disappearing” as a result of the new loan**. “Debt elimination” is a regular claim of some mortgage professionals that specialize in consolidation loans, and it is often very misleading. Some borrowers will not understand that by “rolling in” the debt to a new mortgage, they are just extending the term and often paying more in interest.

Answer 388

The answer is **Consumer Financial Protection Bureau**. The mission of the CFPB is to make markets for consumer financial products and services work for Americans. It is focused on one goal: watching out for American consumers in the market for consumer financial products and services. This includes ensuring that consumers get the information they need to make the financial decisions they believe are best for themselves and their families by making sure prices are clear upfront, risks are visible, and nothing is concealed in fine print. A working market allows consumers to make direct comparisons among products and prohibits providers from using unfair, deceptive, or abusive practices.

Answer 389

The answer is **consumer inquiry into the purchase of an item six months ago**. Under the Telemarketing Sales Rule, a company engaging in telemarketing is prohibited from making interstate or intrastate calls to anyone whose number is listed on the Registry, unless an “established business relationship” exists. An established business relationship means a relationship between the company and a consumer based on the consumer’s purchase, rental, or lease of the seller’s goods or services, or a financial transaction between the consumer and seller, within the 18 months immediately preceding the date of a telemarketing call, or the consumer's inquiry or application regarding an offered product or service within the three months immediately preceding the date of a telemarketing call. However, if such a consumer asks not to be contacted, the company must enter him or her on their own do-not-call list of such consumers.

Answer 390

The answer is **consumer reporting agencies**. Consumer reporting agencies (or CRAs) gather and sell information regarding an applicant’s credit in the form of credit reports.

Answer 391

The answer is **consummation**. Consummation is the time at which a consumer becomes contractually obligated on a credit transaction.

Answer 392

The answer is **contract with a federally-insured company to destroy documents**. Under the GLB Act, a financial institution must have a written information security program that is appropriate to its size and complexity, to the nature and scope of its activities, and to the sensitivity of the customer information it handles. As part of its program, the financial institution must assign one or more employees to oversee the program; conduct a risk assessment; put safeguards in place to control the risks identified in the assessment and regularly test and monitor them; require service providers, by written contract, to protect customers’ personal information; and periodically update its security program. There is no requirement to contract with any external company to handle information security issues of any kind.

Answer 393

The answer is **control access to Basil’s office**. In conducting an examination or investigation, the state licensing agency is authorized to administer oaths or affirmations; subpoena witnesses; require the production of relevant documents; and control access to any documents and records of any person under examination or investigation.

Answer 394

The answer is **conversion option**. The option on an ARM that gives a borrower the opportunity to convert his/her loan to a fixed rate is called a conversion option.

Answer 395

The answer is **cost**. The cost approach can be used for any property, but because of the knowledge of construction costs that is required, it is most often used to appraise value for new buildings, where costs are easy to obtain, and for properties such as churches and public service buildings, which cannot be compared to others that have sold or to those that produce income. The appraiser estimates the value of the land and the depreciated value of the improvements on the land separately, and then adds the two values to arrive at an estimate of the property’s total value. The depreciated value is equal to the cost to replace or reproduce the improvements less depreciation.

Answer 396

The answer is **CRAs, furnishers of information to CRAs, and users of consumer reports**. The FCRA creates a number of obligations for users and furnishers of credit information as well as the credit reporting agencies (CRAs) which receive and report credit information.

Answer 397

The answer is **creating a zero-cost borrower credit**. A licensee’s fiduciary duties toward a client include loyalty and good faith, disclosure of material facts, and holding the client's interests above those of the licensee.

Answer 398

The answer is **credit history is missing entirely**. Missing credit history is a credit report red flag, not an employment red flag.

Answer 399

The answer is **credit report, net worth, surety bond, payment into a state fund**. The S.A.F.E. Act mandates that states include a minimum net worth requirement or surety bond requirement for applicants, or require the applicant to pay into a state recovery fund. Licensing requirements also include criminal history and credit background checks, including a credit report. These are all factors used to establish a licensee’s financial responsibility and general fitness.

Answer 400

The answer is **credit reporting fee**. A credit report fee is the only fee that a creditor may charge before offering disclosures to a loan applicant.

Answer 401

The answer is **creditor**. The Truth-in-Lending Act identifies a creditor as a person, including a lender and a table funding mortgage broker, that regularly extends credit that is subject to a finance charge or is payable by written agreement in more than four installments. A creditor may also be a credit card issuer.

Answer 402

The answer is **dated prior to the sales contract**. An appraisal dated prior to the sales contract is a red flag.

Answer 403

The answer is **declarations**. The “Declarations” section of the URLA contains questions which, depending on the applicant’s answer, could result in immediate rejection of the application.

Answer 404

The answer is **declining a loan due to the borrower's race**. The Equal Credit Opportunity Act (ECOA) ensures that all persons, consumers, and businesses are given an equal chance to obtain credit by prohibiting discrimination based on criteria including race, color, religion, national origin, sex, marital status, and age (provided the individual is of age to enter into a contract). Declining a loan due to the borrower's race is a violation of ECOA.

Answer 405

The answer is **deed of trust / trustee**. In a title theory state, title to residential real estate is granted with a deed of trust, naming the lender as the beneficiary of the trust, the borrower as the trustor, and the third party that holds the deed until the loan is fully paid as the trustee.

Answer 406

The answer is **deed**. The deed is a written instrument properly signed and delivered that conveys title to real property.

Answer 407

The answer is **Department of Housing and Urban Development (HUD)**. The Department of Housing and Urban Development implements and enforces rules related to FHA lending.

Answer 408

The answer is **depreciation**. For a sole proprietorship (a self-employed borrower), the income, expenses, and taxable profits are reported on the Profit or Loss from Business (Schedule C) on the owner’s individual tax return (IRS Form 1040). The individual’s actual income would be the net income shown on the Schedule C, plus any recurring capital gains or non-cash expenses, such as depletion and depreciation, that was deducted in arriving at the adjusted income, since the borrower did not actually have to spend the amount claimed for non-cash expenses.

Answer 409

The answer is **determine criminal sentences for non-licensed entities under the Act**. A state regulator has the responsibility to carry out the administration of the SAFE Act, but is not involved in criminal prosecution or penalty decision making.

Answer 410

The answer is **discourage the use of inflated appraisals to flip properties**. The primary reason for adopting special appraisal requirements for HPMLs was to discourage the use of inflated appraisals to flip properties.

Answer 411

The answer is **discouragement**. Discouragement is a form of discrimination in which borrowers belonging to certain protected classes are discouraged from applying for a loan on the basis of their personal characteristics. Here, Sue Ellen has no idea as to the couple's financial qualifications to purchase a property in their desired neighborhood. She bases her discouragement solely on perceived racial characteristics, which is a discriminatory act that is prohibited under federal law.

Answer 412

The answer is **do not take periodic rate caps into consideration**. Underwriting of non-qualified mortgages must compute periodic payments that do not take periodic rate caps into consideration.

Answer 413

The answer is **dual compensation**. Dual compensation is an instance in which a loan originator receives direct compensation from a borrower and additional indirect compensation from a creditor in the same mortgage loan transaction.

Answer 414

The answer is **due-on-sale clause**. A due-on-sale clause provides that the loan must be immediately paid off if the subject property is sold. These apply to most mortgages/deeds of trust, unless the loan is assumable.

Answer 415

The answer is **earnest money**. Money paid by a buyer to a seller at the time of entering into a contract to indicate intent and ability to carry out the contract is called earnest money.

Answer 416

The answer is **ECOA**. Refusing to originate loans in a particular neighborhood or ZIP code because of perceived creditworthiness is a practice known as “redlining” and is a violation of ECOA.

Answer 417

The answer is **ECOA**. The Equal Credit Opportunity Act (ECOA) prohibits discrimination in extension of credit based on race, color, religion, national origin, sex, marital status, age, potential to have or raise children, the fact that the applicant receives income from a public assistance program, or the fact that the applicant has exercised his or her rights under the Consumer Credit Protection Act. This includes the discriminatory lending pattern of redlining, in which a lender refuses to provide lending products and services on an equal basis to residents of minority neighborhoods (the term is derived from the practice of drawing red lines around minority areas on a map.)

Answer 418

The answer is **ECOA**. The Equal Credit Opportunity Act is a fair lending law passed primarily because of anecdotal evidence that women were not treated on an equal basis with men in credit markets.

Answer 419

The answer is **eight**. A state-licensed mortgage loan originator must renew his/her license annually and must satisfy the continuing education requirement of at least eight hours of courses that have been reviewed and approved by the NMLS.

Answer 420

The answer is **either at the time of application or within three business days of application**. A mortgage servicing disclosure statement discloses whether the servicing of the loan (i.e., collection of payments) may be assigned, sold, or transferred to any other person at any time while the loan is outstanding. It must be delivered to the borrower at application or within three business days.

Answer 421

The answer is **Either Oskar or Half Nelson**. Each mortgage loan originator must be covered by a surety bond. If he/she is an employee or exclusive agent of a person subject to the state’s SAFE Act, the surety bond of the employing licensee or exempt person may be used to satisfy the loan originator surety bond requirement.

Answer 422

The answer is **employee**. An employee is an individual whose manner and means of performance of work are subject to the right of control of, or are controlled by, a person, and whose compensation, for federal income tax purposes, is reported on a W-2 form issued by the controlling person.

Answer 423

The answer is **employer's phone number**. Nonpublic personal information (NPI) is any personally identifiable financial information that a financial institution collects about an individual in connection with providing a financial product or service. NPI does not include information where there is reasonable basis to believe it is lawfully made publicly available, such as an employer’s phone number.

Answer 424

The answer is **encumbrance**. An encumbrance would prevent the conveyance of title, meaning there is a debt or lien against the property and title may not change hands until the debt or lien is satisfied.

Answer 425

The answer is **encumbrances**. An encumbrance is a claim or liability on the title to a property, such as a lien or a mortgage.

Answer 426

The answer is **ensure meaningful disclosure of credit terms to consumers**. The purposes of TILA include assuring a meaningful disclosure of credit terms so that the consumer will be able to more readily compare the various credit terms available to him or her and avoid uninformed use of credit.

Answer 427

The answer is **entitlement**. The VA limits the amount that it can guarantee to repay a lender in the event of a default on the loan. The amount that the government will guarantee to a lender is known as a veteran’s entitlement.

Answer 428

The answer is **equity**. Equity is defined as the difference between the fair market value of a property and the current balances of any liens against the property.

Answer 429

The answer is **escrow accounts are required for all first-lien HPMLs secured by the borrower’s principal dwelling**. Escrow accounts are required for all first-lien HPMLs secured by the borrower’s principal dwelling.

Answer 430

The answer is **establishing compensation programs that withhold payment for services until the service provider can demonstrate compliance with the law**. Establishing compensation programs to withhold payment for services is not a required element of a risk management program.

Answer 431

The answer is **ethnicity, race, sex, and religion of the applicant**. HMDA monitoring requires the collection of extensive data about each mortgage loan application and origination. This includes any action taken on the loan, indication of whether the loan is subject to HOEPA, and the ethnicity, race, sex, and income of the applicant. HMDA does not require the collection of information about an applicant’s religion.

Answer 432

The answer is **exchange active loans to another entity to generate new funds to make more loans**. The securitization process allows lenders to transfer active loans to another entity in exchange for funds to make more loans.

Answer 433

The answer is **false or misleading representation of products or services in marketing, advertising, or sales**. 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 efforts, usually involving various aspects of loan terms. This includes use of false or misleading advertising, use of truthful advertising in a deceptive or misleading manner, and concealing the limitations of the programs or terms being promoted.

Answer 434

The answer is **falsified applications**. Applications using fraudulent information are the most common type of mortgage fraud involving borrowers. Inconsistent information is present in over 35% of cases.

Answer 435

The answer is **Fannie Mae and Freddie Mac**. Conforming loans are subject to loan limits, down payment requirements, income requirements, debt-to-income ratios, and other underwriting guidelines established by Fannie Mae and Freddie Mac.

Answer 436

The answer is **Fannie Mae**. The Federal National Mortgage Association (FNMA), or Fannie Mae, was established in 1938 by amendments to the National Housing Act, in order to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing. It is a government-sponsored enterprise (GSE) and, since 1968, a publicly traded company.

Answer 437

The answer is **faxed or Internet documents**. Documentation and verification is perhaps the most important step in the qualifying process. Careful examination of all supporting documents is critical to preventing fraud.

Answer 438

The answer is **FCRA**. FCRA defines a consumer report as any information from a consumer reporting agency that relates to a consumer’s creditworthiness, credit standing, credit capacity, character, personal characteristics, or mode of living, used or expected to be used, in order to determine eligibility for credit or insurance, or to evaluate a consumer for employment.

Answer 439

The answer is **Federal Housing Administration**. "FHA" stands for Federal Housing Administration.

Answer 440

The answer is **Federal Reserve**. A permanent buydown is a payment of discount points to lower the interest rate for the entire term of the mortgage. One discount point is equal to 1% of the loan amount. The interest rate reduction received for buying points is not set and depends on individual lenders and the financial marketplace, rather than being determined by the Federal Reserve.

Answer 441

The answer is **federally-related mortgage loans**. RESPA applies to federally-related mortgage loans.

Answer 442

The answer is **felony convictions of company officers**. While felony convictions are certainly a consideration in determining license eligibility, it is not considered in determining financial responsibility.

Answer 443

The answer is **FHA**. In FHA loans, the FHA insures the issuing lender against loss in the event of default. The FHA funds the insurance from a mortgage insurance premium (MIP) charged to the borrower. Most FHA mortgages require payment of an upfront mortgage insurance premium (UFMIP). The UFMIP is nonrefundable (except to the extent that a portion may be applied to the UFMIP of another FHA-insured mortgage within three years). In addition, most FHA loans require payment of an annual mortgage insurance premium, payable monthly as part of the mortgage payment. This premium is based on the loan program, the loan term, and the LTV.

Answer 444

The answer is **FHA**. UFMIP is required for FHA loans, and borrowers can add this cost to the loan amount.

Answer 445

The answer is **FHFA**. HERA created and installed the FHFA (Federal Housing Finance Agency) as the conservator of the GSEs (Fannie Mae and Freddie Mac). The FHFA’s powers include the responsibility to set the conforming loan limits from year to year.

Answer 446

The answer is **financial institutions**. The Gramm-Leach-Bliley Act’s Safeguards Rule requires all financial institutions to design, implement, and maintain safeguards to ensure the security and confidentiality of customer information and protect customer information against unauthorized access. Financial institutions covered by the rule include lenders and other traditional institutions, as well as payday lenders, check-cashing businesses, professional tax preparers, auto dealers engaged in financing or leasing, electronic funds transfer networks, mortgage brokers, credit counselors, real estate settlement companies, and retailers that issue credit cards to consumers. The Financial Privacy Rule of the GLB Act governs the collection and disclosure of customers’ personal financial information by financial institutions.

Answer 447

The answer is **five**. In regard to higher-priced mortgage loans, under TILA and Regulation Z, a creditor or servicer may cancel an escrow account only upon the earlier of termination of the underlying debt obligation or five years after the loan was consummated, at the request of the consumer.

1700+ MCQs 2of4 Flashcards

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