Chapter 1 Laws Regulation Flashcards
(164 cards)
Residential Mortgage Loan include which of the following?
A. Loan for a personal, family or household dwelling that’s secured by a mortgage or deed of trust and vacant land
B. Loan for a personal, family or household dwelling that’s secured by a mortgage or deed of trust and construction
C. Loan for a personal, family or household dwelling that’s secured by a mortgage or deed of trust only
D. Loan for a personal, family or household dwelling that’s secured by a lien
A
What is a HELOC is considered an A. PrimaryClosed-End Debt B. Secondary Closed-End Debt C. Primary Open-End Debt C. Secondary Open End Debt
Answer: C
A HELOC is an Open end Secondary Lien
A HEL is a A. PrimaryClosed-End Debt B. Secondary Closed-End Debt C. Primary Open-End Debt C. Secondary Open End Debt
Answer: B
A HEL is a closed end secondary lien
A borrower is entitled to request and obtain a copy of the HUD-1Settlement Statement how many days before closing? A. 1 B. 3 C. 5 D. 7
Answer D
The HUD-1 Settlement Statement itemizes the costs and disbursements tothe buyer and seller and must be made available, upon request by the borrower (for reverse mortgages) one business day prior to closing. The Closing Disclosure must be delivered three business days before closing.
The servicer has how many days to notify the borrower if the servicing rights have been sold and are being transferred to another company? A. 3 B. 5 C. 10 D. 15
Answer: D
According to RESPA, the loan servicer must notify the borrower 15 days before the effective date of the loan transfer.
How many days does a lender have after receipt of an application to notify the applicant of its action on the application? A. 10 B. 15 C. 30 D. 60
C
How many days does an applicant have after receipt of an adverse actionnotice to request a statement of reasons from the lender? A. 10 B. 15 C. 30 D. 60
D
Pay attention to applicant or MLO or lender
Which of the following must never be changed under any circumstances?
A. Loan origination charge, including processing and underwriting fees, Interest rate, state Local Taxes
B. Loan Origination charge, interest rate on an unlocked loan, appraisal
A
****You are working on a file referred to you by a realtor. The realtor calls you to see if there is going to be any problem getting the customer qualified. The realtor wants to know what the borrower’s credit scores are before presenting the offer.
The most appropriate course of action is to:
A. refer the realtor to the borrower.
B.never disclose a borrower’s information to a realtor.
C. obtain permission from the borrower to disclose the information.
D. tell the realtor the credit score.
A
****A borrower wants to purchase a 2nd home and tells you that they intend to rent the property out when they are not living in it. You have reviewed their financial information and realize that the borrower would qualify for financing if the property is classified as a2nd residence. However, if the property is classified as an investment property, the borrower is unlikely to qualify. What should you do?
A. Classify the property as a rental property even though the borrower intends to reside there part of the year.
B. Classify the property as a 2nd residence; since the borrower intends to use the property for part of the year, this is acceptable.
C. Classify the property as a 2nd residence because it is not legal for the borrower to
personally reside in a property classified as a rental for any length of time.
D. Deny the borrower because it is neither legal to rent out a 2nd residence or reside in a rental property for any length of time.
A
****What kind of authority does the Consumer Financial Protection Bureau have:
A. None
B. Limited authority subject to the regulators of the Federal Reserve
C. Rule making and enforcement authority over many consumer financial laws
D. Unlimited power over all federally insured financial institutions
C
Which of the following would qualify for a qualified mortgage?
A. positive amortization, maximum 30-year loan term, 3percent cap on fees, interest-only mortgages
B. Negative amortization, maximum 30-year loan term, 3percent cap on fees, no balloon or interest-only mortgages
C. positive amortization, maximum 30-year loan term, 3.5% cap on fees, no balloon or interest-only mortgages
D. positive amortization, maximum 30-year loan term, 3% cap on fees, no balloon or interest-only mortgages
answer D.
Facts about QM
(positive amortization, maximum 30-year loan term, 3percent cap on fees, no balloon or interest-only mortgages
The rule defines small creditors as businesses with less than $2
billion in assets and fewer than 500 closed-end, first-lien residentialmortgages in the previous year is defined by which of the following
A. FHA
B. QM ATR
C. RHS
D. Fannie Mae
Answer: QM loan Small Creditor Exception
Which of the following is allowed to originate balloon mortgages in rural or under-served areas and not sell loan weighing three years if made by small creditors. A. TIlA B. RESPA C. QM D. Conventional
C
According to Qualified Mortgages, which of the following is True?
A. No Balloon Payments under any circumstances
B. Can originate balloon mortgages in rural or under-served areas and not sell loan within three years if made by small creditors.
C. Can originate balloon mortgages in rural or under-served areas if the creditor is a major depository institution.
D. Only if the loan is made with good faith
B
According to ATR, how long must customer file be kept? A. 2 Years B. 3 Years C. 5 years D. 25 Months
B
What do ability to pay cover?
A. closed end, Primary and Investment Property
B. Closed End, Residential, Open and Money Mortgage
C. Closed End, Refinance. HELOC, and Money Mortgage
D. Closed End, Secondary Lien, Jumbo Loans
A
What is exempt from ability to repay rule?
A. Home Equity, Reverse Mortgages, Construction Loan. Commercial Loan and money Mortgages
B. Home Equity, Refinance Mortgages, Construction Loan and vacant land, and timeshare
C. Home Equity, Reverse Mortgages, Construction Loan and vacant land, and timeshare
D. Home Equity, Reverse Mortgages, Construction Loan and vacant land, and Money Mortgage
Answer: C
The ability to repay exempts the following
Home Equity, Reverse Mortgages, Construction Loan and vacant land, and timeshare
What is the thing that Loan originator not allowed to say to those who is getting an interest only loan?
A. You will pay off your principal in five years
NA
What type of disclosure do you give to a loan with no land? A. No disclosure needed B. TILA Disclosures C. LE and CD D. GFE
Answer: B. A home such as mobile home not attached to land is called a chattel nd covered by the TILA Disclosures
***What is the best case scenario of a mortgage process ABC Broker mortgage the loan, XYZ company funds and services it
NA
**Qualified Mortgage (QM)- LO can be protected by safe harbor if loan is a QM and
A. Income verified and documented
B. No negative amortization or allowing deferred principal payments
C. No balloon payment (except for rural area)
D. Construction Loan
A
***which is true of subordinate liens A. second mortgage loans often carry higher interest rates than first mortgage loans. B. Longer term than primary C. Shorter term than primary D. Paid off sooner than the primary loan
Answer A.
Subordinate loans have higher interest rate and paid after the primary loan
What is the punitive charges for failure to comply with ECOA?
A. $10,000 in individual actions and the lesser of $500,000 or 1 percent of the MLO net worth in class actions.
B. $10,000 in individual actions and one year in jail.
C. 1,000 and/or 30,000 year in jail
D. $10,000 in individual actions and the lesser of $500,000 or 1 percent of thecreditor’s net worth in class actions.
Answer D $10,000 in individual actions and the lesser of $500,000 or 1 percent of thecreditor’s net worth in class actions.