☑️ Chapter 5: Government Loan Programs Flashcards by Delia Archer

Government Loan Programs:
FHA Insured Loans:
The Federal Housing Administration (FHA) insures loans for single-family and multi-family homes made by approved lenders. Mortgage insurance, you’ll recall, provides lenders with protection against losses when borrowers default.
A common misconception about FHA loans is that they are targeted to lower-income borrowers or first-time homebuyers only, but this is not the case. The FHA does _____ have INCOME limits to determine who is eligible for its loans. Anyone who is a U.S. citizen, permanent resident, or non-permanent resident with a qualifying work visa, and who meets the lending guidelines, may qualify for an FHA-insured loan. However, the FHA SETS the MAXIMUM mortgage amount that it will ______.

A. NOT
B. Insure

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Government Loan Programs:
FHA Insured Loans:
The FHA is part of the Department of Housing and Urban Development (HUD). Oversight of FHA loan programs is through HUD’s ______, which has three business areas related to real estate transactions:
• Single-family housing
• Multi-family housing
• Regulatory programs, such as the ______ Act.
HUD issues regulations and establishes guidelines for approving lenders AUTHORIZED to make FHA loans giving them a DIRECT ENDORSEMENT (DE). Its regulations have the force and effect of the law. The FHA DEFINES the loan programs and sets guidelines for the programs in accordance with HUD’s regulations.

A. HUD’s Office of Housing
B. Fair Housing Act

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Government Loan Programs: FHA Insured Loans:
FHA Approved Lenders:
The purpose of the _____ PROGRAM, as authorized under the ______ ACT, is to SIMPLIFY and EXPEDITE the process by which mortgagees can obtain mortgage INSURANCE endorsements from HUD.

A. Direct Endorsement Program
B. National Housing Act (NHA)

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Government Loan Programs: FHA Insured Loans:
FHA Approved Lenders:
Lending institutions that make FHA-insured loans must first be approved. Once approved as an _____ FHA Direct Endorsement Lender (Direct Endorser or DE), the lender is AUTHORIZED to underwrite and close mortgage loans ______ prior submission for FHA review or approval. This includes all aspects of the mortgage loan application, property analysis, and borrower underwriting.

A. Unconditional
B. Without

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Government Loan Programs: FHA Insured Loans:
HUD Homeownership Centers:
Four regional U.S. Homeownership Centers process FHA loans and oversee the selling of HUD-owned homes acquired through foreclosure or deeds in lieu of foreclosure. Homeownership Centers are organized to serve specific states:
REMEMBER: PADS

REMEMBER: PADS
A. Philadelphia, PA
B. Atlanta, GA
C. Denver, CO
D. Santa Ana, CA

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Government Loan Programs: FHA Insured Loans:
HUD Homeownership Centers:
A ______ Of Participation is an action taken by a HUD Field Office or the Deputy Assistant Secretary for Single-Family or Multi-family Housing that EXCLUDES and PREVENTS a person or company that FAILS to COMPLY with the HUD program STANDARDS from FURTHER participation in a HUD program area. This list may include borrowers, mortgage professionals, title agencies and appraisal companies.
> Unless otherwise NOTED, LDPs are effective NATIONWIDE and generally EXPIRE in ____ year. Going forward, parties ISSUED an LDP are PROHIBITED from _____ participation in the HUD program.
Therefore, MLOs NEED to CHECK the LDP list BEFORE attempting to process an FHA loan application.
In addition to the LDP list, the _______, which is the primary authority of procurement for the federal government, provides the _____ website which is used to determine if individuals or companies on the government’s Lists of Parties EXCLUDED from Federal _____ (GSA) or NON-_______ (SAM) Programs are SUSPENDED or DEBARRED from ANY participation in HUD programs.

A. Limited Denial of Participation (LDP)
B. One
C. new
D. General Services Administration (GSA)
E. System for Award Management (SAM)
F. Procurement (GSA)
G. Non-procurement (SAM)

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Government Loan Programs: FHA Insured Loans:
Underwriting Standards for FHA Loans:
When evaluating an application for an FHA loan, underwriters and/or lenders consider FHA’s “4 Cs of Underwriting:”
•______ of the borrower, which indicates the borrower’s willingness to repay debt
•______ to repay the loan, which includes income and employment history
• _______ assets available to close the mortgage
•_______ which evaluates the value of the home

A. Credit history
B. Capacity
C. Cash
D. Collateral

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Government Loan Programs: FHA Insured Loans:
Underwriting Standards for FHA Loans:
Although an underwriter likes to see a stellar credit history, some prior credit issues might NOT be a problem. As with other mortgages, however, _____-ordered judgments must be paid off FIRST. In addition, a borrower who has DEFAULTED on a______ loan or is DELINQUENT or in DEFAULT on any _____ debt would NOT qualify for an FHA loan. This is confirmed through the _______ WEBSITE, which is a federal database of DELINQUENT federal debtors that allows federal agencies to REDUCE the RISK to federal loan and loan guarantee programs.

A. court
B. student
C. federal
D. Credit Alert Verification Reporting System (CAIVRS)

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Government Loan Programs: FHA Insured Loans:
Underwriting Standards for FHA Loans:
If checking ________ reports shows alerts of participating federal lending agencies with an applicant for credit benefits, or for a position of trust in support of the administration of a federal CREDIT program, has a federal LIEN, JUDGEMENT, or federal loan that is currently in _____ or ______, or has had a claim PAID by a reporting agency.
NOTE: A borrower who had a claim PAID by HUD or the VA on a prior _____ mortgage loan will also APPEAR on this LIST.
• The borrower will be INELIGIBLE for an FHA-insured mortgage for _____ years after the claim was PAID, regardless of the ELAPSED time from the date of FORECLOSURE.

A. CAIVRS
B. default
C. foreclosure
D. defaulted
E. three

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Government Loan Programs: FHA Insured Loans:
Underwriting Standards for FHA Loans:
FHA is less stringent when it comes to a borrower’s level of ________. While no minimum or maximum income is required for an FHA loan, the borrower must have sufficient income to service the debt on the home mortgage and all other credit obligations. This is determined by housing expense and total debt-to-income ratios, which are slightly _______ liberal than those allowed for conventional loans.

A. Income
B. More

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Government Loan Programs: FHA Insured Loans:
FHA Underwriting Guidance:
HUD Housing handbooks provide detailed underwriting guidance on FHA loan programs. In particular, MLOs making single-family FHA loans will likely become very familiar with the Handbook 4000.1, FHA Single Family Housing Policy Handbook. In addition, HUD regularly publishes _______ as a way to communicate program changes, commentary on regulations, and other critical information to lenders and MLOs.
Note: Guidelines discussed in this chapter generally apply to standard FHA _____ loans on single-family homes.
Other FHA loan types may have different guidelines or additional criteria.

A. Mortgagee Letters
B. 203(b)

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Government Loan Programs: FHA Insured Loans:
FHA TOTAL Mortgage Scorecard:
The ________ Mortgage Scorecard was developed by HUD to EVALUATE the CREDIT risk of FHA loans that are submitted to an AUTOMATED underwriting system such as FNMA Desktop Underwriter® and FHMLC Loan Product Advisor.
TOTAL evaluates the overall creditworthiness of the applicants based on these variables:
• Credit _____
• Monthly housing _____
• Number of monthly payments in _____
• ______ ratio
• Loan ____

A. Technology Open To Approved Lenders (TOTAL)
B. score
C. expense
D. reserve
E. Loan-to-value (LTV)
F. term

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Government Loan Programs: FHA Insured Loans:
FHA TOTAL Mortgage Scorecard: When combined with the functionalities of the AUS, TOTAL indicates a RECOMMENDED level of UNDERWRITING and DOCUMENTATION to determine a loan’s ELIGIBILITY for insurance by the FHA as follows:
•________: which means that the loan IS eligible for the FHA endorsement
•_______: which requires the lender to MANUALLY underwrite the loan

A. Accept/Approve
B. Refer

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Government Loan Programs: FHA Insured Loans:
FHA TOTAL Mortgage Scorecard:
It is the FHA’s policy that no borrower will be denied an FHA-insured mortgage loan SOLELY based on a RISK assessment generated by the TOTAL Mortgage Scorecard.
In cases where mortgage loans CANNOT be rated by FHA’s TOTAL Mortgage Scorecard, the loan is _______ by TOTAL or is manually DOWNGRADED; this means that the loan must be _______ underwritten by the underwriter.
When FHA’s standard qualifying ratios for TOTAL ______ payment-to-income and TOTAL ______ payment-to-income are EXEEDED, lenders must cite at least _____ compensating factor.

A. REFERRED
B. Manually
C. mortgage
D. fixed
E. One

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Government Loan Programs: FHA Insured Loans:
Mortgage Payment Expense to Effective Income Ratio:
A borrower’s ________ ratio is the relationship of the borrower’s TOTAL monthly HOUSING expense to INCOME, expressed as a percentage.
The FHA considers a borrower’s income ADEQUATE for a loan if the proposed total mortgage payment does not EXCEED_____% of gross stable monthly INCOME. The same as a conventional loans, the FHA’s maximum mortgage payment INCLUDES the principal, interest, taxes, and insurance (PITI) as well as any required monthly homeowners association dues or mortgage insurance premiums (MIPs).
When the MLO knows a borrower’s stable monthly income, they can multiply that by the housing expense ratio to determine the maximum _______ expense the borrower can afford.
Example: if a borrower has a stable monthly income of $3,200, then the MLO would multiply the maximum housing expense by the Maximum Housing Expense Ratio which is _____% on an FHA loan which makes Maximum Monthly Mortgage Housing Expense $_____.
Here is another way to use this ratio. When the MLO knows the total housing expense, they can determine IF the borrower’s INCOME is sufficient to qualify under the loan guidelines when they use the same formula.

A. housing expense ratio
B. 31% on an FHA Loan
C. Monthly Housing
D. 31% or .31
E. $3,200 x .31 = $992

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Government Loan Programs: FHA Insured Loans:
FHA TOTAL Mortgage Scorecard:
Effective March 18, 2019, FHA’s TOTAL Mortgage Scorecard was updated to address the higher ______ rate of MANUALLY underwritten mortgages.
SPECIFICALLY, loans with a COMBINATION of less than a ____ CREDIT SCORE and greater than ___% DTI ratios that received a ______ are required to undergo a higher level of underwriting scrutiny and documentation to gain APPROVAL.

A. Default
B. 620
C. 43% DTI Ratios
D. REFER

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Government Loan Programs: FHA Insured Loans:
Total Debt-to-Income Ratio:
A borrower’s total debt-to-income ratio is the RELATIONSHIP of the borrower’s total monthly _____ Obligations (including housing and other long-term debts that will not be canceled) to INCOME, expressed as a percentage.

A. DEBT

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Government Loan Programs: FHA Insured Loans:
Total Debt-to-Income Ratio:
This back end ratio is given PRIORITY consideration by the TOTAL Mortgage Scorecard, ensuring the borrower’s total expenses DO NOT EXCEED ____% of monthly income.
For MANUALLY underwritten loans, a MAXimum FRONT-end ratio and a maximum BACK-end ratio that may NOT be EXCEEDED based on the borrower’s CREDIT SCORE.

A. 43%

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Government Loan Programs: FHA Insured Loans:
Total Debt-to-Income Ratio:
The HUD Handbook 4000.1 RESTRICTS the use of COMPENSATING factors for borrowers with credit SCORES of ______ or higher. Borrowers NOT meeting this standard are LIMITED to use of the MAXimum FHA ratios of _____% and _____%.

A. 580
B. 31% and 43%

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Government Loan Programs: FHA Insured Loans:
Total Debt-to-Income Ratio:
A. Borrower Credit Score:
NO credit score or credit scores BELOW 580:
a1. May NOT exceed the standard ____% and ____% ratios.

B. Borrower Credit Score:
Credit scores of 580 or HIGHER with ONE compensating factor.
b1. May be APPROVED for ratios as HIGH as ____% and ____%.

C. Borrower Credit Score:
Credit scores of 580 or HIGHER with TWO compensating factors.
c1. May be APPROVED for ratios as HIGH as ____% and ____%.

A. May NOT exceed the standard 31%/43% ratios
B. May be approved for ratios as HIGH as 37%/47%
C. May be approved for ratios as HIGH as 40%/50%

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Government Loan Programs: FHA Insured Loans:
FHA Compensating Factors:
For a MANUALLY underwritten loan (i.e., loan not using an automated underwriting system), if a loan applicant EXCEEDS either or BOTH of the permissible ratios of ___% / ___%, the lender MUST document COMPENSATING factors that MITIGATE (or decrease the severity of ) the RISK:
Compensating Factors:
1. _______ Efficient Homes
2. Verified and Documented Cash ______
3. Minimal ______ in Housing Payment
4. No _______ Debt
5. Significant ______ Income
Not Reflected in Effective Income
6. ______ Income

A. 31% / 43%
a1. Energy
a2. Reserves
a3. Increase
a4. Discretionary
a5: Additional
a6. Residual

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Government Loan Programs: FHA Insured Loans:
FHA Compensating Factors:
For mortgages on NEW CONSTRUCTION, the borrower is eligible for the _____ ratios when the property MEETS or EXCEEDS the whichever is HIGHER out of:
• The 2006 International Energy ________ Code (IECC)
• Any successor energy code standard that has been adopted by ______ for its minimum property standard
• The applicable ______ year used by the state or local building code
• For mortgages on EXISTING CONSTRUCTION, the borrower is eligible for the ______ ratios when the property meets either of the following conditions:
• Homes that currently score a “_____” or higher on the Home Energy Score scale
• Homes where documented cost-effective energy IMPROVEMENTS, as identified in the _______ Report, would INCREASE a home’s score to a “6” or higher are completed PRIOR to CLOSING, or in association with ________, Energy Efficient Mortgage (EEM), Solar and Wind programs permits, or FHA’s ___ loan which borrowers use finance up to $35,000 into their mortgage to repair, improve, or upgrade their home.

A. EEH Stretch ratios 33% / 45 %
a1. Conservation
a2. HUD
a3. International Energy Conservation Code (IECC)
B. EEH stretch ratios
b1. 6
b2. Home Energy Score Report
b3. Weatherization
C. FHA 203(k) Loan

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Government Loan Programs: FHA Insured Loans:
FHA Compensating Factors:
FHA Approved Compensating Factor that is subject to the following requirements:
• Reserves are equal to or exceed _____ total monthly mortgage payments with ONE or TWO units
• Reserves are equal to or exceed ______ total monthly mortgage payments with THREE or FOUR units
> Reserves are calculated as the borrower’s total assets, as described in asset requirements SUBTRACTING:
• The total FUNDS required to CLOSE the mortgage
• GIFTS
• Borrowed FUNDS
• CASH received at CLOSING in a CASH-OUT REFINANCE transaction or INCIDENTAL cash received at CLOSING in the mortgage transaction.

A. Verified and Documented Cash Reserves
a1. three
a2. six

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Government Loan Programs: FHA Insured Loans:
FHA Approved Compensating Factor that is subject to the following requirements:
The NEW total monthly mortgage payment does NOT EXCEED the current total monthly housing payment by more than $____ or ____%, whichever is LESS; and
• There is a documented 12-month housing payment HISTORY with NO more than one ____-day LATE payment.
In CASH-OUT transactions, all payments on the mortgage being refinanced must have been PAID within the _____ DUE for the PREVIOUS 12 months.
• If the borrower has NO CURRENT housing payment, mortgagees may ______ cite this as a compensating factor.

A. Minimal Increase in Housing Payment
B. $100 or 5%
C. 30 day
D. month
E. NOT

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Government Loan Programs: FHA Insured Loans: FHA Compensating Factors: FHA Approved Compensating Factor that is subject to the following requirements: • The borrower's housing payment is the ONLY ____ account with an outstanding balance that is NOT paid off monthly, • The credit report shows ESTABLISHED credit lines in the borrower's name open for at least _____ months, and • The borrower can document that these accounts have been PAID OFF in full monthly for at least the past ____ months. > Borrowers who have NO established credit other than their housing payment, NO other credit lines in their name OPEN for at least SIX months, or who cannot document that all other accounts are paid off in full monthly for at least the past SIX months, DO NOT qualify under this criterion. Credit lines NOT in the borrower's name but for which they are an ______ user do NOT qualify under this criterion.

A. No Discretionary Debt B. open C. six D. six E. authorized

Government Loan Programs: FHA Insured Loans: FHA Compensating Factors: FHA Approved Compensating Factor that is subject to the following requirements: • The mortgagee must verify and document that the borrower has received this INCOME for at least ____ year, and it will likely CONTINUE AND; • The income, if it were included in gross effective income, is sufficient to REDUCE the qualifying ratios to NOT more than _____% / _____%. > Income from non-______ spouses or other parties NOT obligated for the mortgage may NOT be counted under this criterion. This compensating factor may be cited ONLY in conjunction with ANOTHER compensating factor when qualifying ratios EXCEED _____% / _____% but NOT by MORE than _____% / _____% in an FHA loan.

A. Significant Additional Income Not Reflected in Effective Income B. 1 Year C. 37%/47% D. borrowing E. 37%/47% but NOT by MORE than 40%/50%

Government Loan Programs: FHA Insured Loans: FHA Compensating Factors: FHA Approved Compensating Factor that is subject to the following requirements: ______ Income: May be cited as a compensating factor provided it can be DOCUMENTED and is at least EQUAL to the applicable amounts for household size and geographic region found on the “______ By Region” in the VA Lenders Handbook. The MORTGAGEE must count ALL members of the household of the occupying borrower WITHOUT regard to the nature of their relationship and without regard to whether they are joining on the title or the note to determine "______." The mortgagee may OMIT any individuals from "family size" who are fully supported from a source of verified income that is NOT Included in the _____ income in the mortgage analysis.

A. Residual Income B. Table of Residual Incomes By Region C. Family Size D. Effective

Government Loan Programs: FHA Insured Loans: Property Guidelines for FHA Loans: Among the important property guidelines for FHA loan approval are: •________ of the property. •________ of the property. •________ permitted where the property is located. •________ REMEMBER: ECMO

REMEMBER: ECMO A. Eligibility B. Condition C. Maximum Mortgage Amount D. Occupancy

Government Loan Programs: FHA Insured Loans: FHA property ELIGIBILITY Guidelines: Eligible one- to four-family dwellings include: • DETACHED or SEMI-DETACHED dwellings (with additional requirements for dwellings that are _____ detached) • ROWHOUSES • MULTIPLEX dwellings • Individual CONDOMINIUM units (approved) • Some MANUFACTURED housing

A. NOT

Government Loan Programs: FHA Insured Loans: FHA property ELIGIBILITY Guidelines: Additionally, HUD guidelines indicate that utilities and other facilities should be _______ for each unit and must include: • A continuing supply of safe, potable ____ • Sanitary facilities and a safe method of _____ disposal • ______ adequate for health and comfort • _______ hot water • Conventional _____ source for lighting and equipment

A. Independent B. water C. sewage D. Heating E. Domestic F. electrical

Government Loan Programs: FHA Insured Loans: FHA Property CONDITION Eligibility Guidelines: At a minimum, the site CONDITIONS of a property must be FREE of HEALTH and SAFETY hazards. FHA Handbooks provide Minimum Property _______ for NEW construction and Minimum Property ______ for EXISTING properties. An appraiser will NOTE any issues and make RECOMMENDATIONS about the need to engage qualified property inspectors as necessary to ensure that the property complies with FHA's MPR, or MPS, together with the estimated cost to _____ the loan amount.

A. Minimum Property STANDARDS (MPS) B. Minimum Property REQUIREMENTS (MPR) C. CURE

Government Loan Programs: FHA Insured Loans: FHA Property CONDITION Eligibility Guidelines: Typical conditions that would require _______ inspection or testing by qualified individuals or entities include: • Infestation/evidence of _____ • Inoperative or ______ plumbing, heating, or electrical systems • Structural failure in ____ members • Leaking or worn-out ____ • Cracked masonry or _____ damage • ______ problems The lender determines which REPAIRS for existing properties MUST be FIXED for the property to be ELIGIBLE for FHA-insured financing. REQUIRED repairs include those that are necessary to: • Protect the health and _____ of the occupants. • Protect the ______ of the property. • Correct physical deficiencies or conditions affecting ______.

A. Further B. termites C. inadequate D.framing E. roofs F. foundation G. Drainage H. Safety I. Security J. Structural Integrity

Government Loan Programs: FHA Insured Loans: FHA OCCUPANCY Eligibility Guidelines: Borrowers with FHA loans are required to establish BONA FIDE ______ of the property as their PRINCIPAL residence within ____ days of signing a SECURITY instrument (e.g., mortgage, trust deed). Furthermore, they are REQUIRED to LIVE in the house for at least ____ year. Generally, a borrower may have ONLY ____ FHA loan out at a time, although SOME exceptions may be made.

A. Bona Fide Occupancy B. 60 Days C. One D. One

Government Loan Programs: FHA Insured Loans: FHA OCCUPANCY Eligibility Guidelines: When there is a CO-BORROWER who will NOT occupy the property as a PRIMARY residence, the MAXImum mortgage is LIMITED to ______% LTV. However, if the NON-OCCUPYING co-borrower is a FAMILY member or someone with documented evidence of a longstanding and substantial relationship SEPARATE from the loan transaction, the ________ financing is available.

A. 75% LTV B. Maximum

Government Loan Programs: FHA Insured Loans: FHA Maximum Mortgage Loan Amount Eligibility Guidelines: Although there are NO income limits on FHA loans, HUD LIMITS the MAXimum loan amount sometimes called a LOAN _____ or can also be called the LOAN ____ that MAY be INSURED in a SPECIFIC community. When determining limits, BOUNDARIES may be based on county, zip code, or metropolitan _____. The MAXIMUM FHA loan amount LIMITS are reviewed every ___ years. Example: The 2022 FHA Loan Amount LIMITS for most SINGLE-family homes start at $______ and go as HIGH as $______ for costlier areas of the country. NOTE: There are DIFFERENT loan ceilings for ONE-, TWO-, THREE-, and FOUR-family dwellings.

A. Loan Ceiling or Base B. statistical areas (MSAs) C. 3 D. **$420,680** E. **$970,800**

Government Loan Programs: FHA Insured Loans: FHA Maximum Mortgage Amount Eligibility Guidelines: HIGH-COST area limits are subject to a ceiling that is BASED on a PERCENT of the FREDDIE MAC loan limits. Section #_____ of the _______ Act provides that mortgage limits for: A. B. C. D. REMEMBER: VAHG In these states the Loan Amount BASE may be ADJUSTED up to _____% of the ceilings. A current schedule of maximum FHA loan limits may be accessed from the HUD website.

REMEMBER: VAHG A. Section 214 B. National Housing Act (NHA) C. Virgin Islands D. Alaska E. Hawaii F. Guam G. 150%

Government Loan Programs: FHA Insured Loans: FHA Loan Regulations: FHA Required Minimum Investment: A borrower seeking an FHA loan MUST make a MINIMUM required investment of at least _____% down payment of the home's purchase PRICE or appraised VALUE, whichever is LESS with a maximum LTV of ____% LTV, from an ACCEPTABLE source. This assumes that the borrower has a credit SCORE of at least ____.

A. 3.5% Down Payment B. 96.5% LTV C. 580 Credit Score

Government Loan Programs: FHA Insured Loans: FHA Loan Regulations: FHA Required Minimum Investment: Note that lenders can sell the FHA mortgages on the secondary markets and may choose to impose HIGHER standards than the ____ approved MAXIMUM to protect themselves from losses. This EXTRA protection refers to the creditor's additional requirements over and above FHA guidelines, commonly known as LENDER ______. HUD authorized additional requirement conditions for the following options: • Borrowers with a minimum decision credit score AT or ABOVE 580 are eligible for _____ loan financing. • Borrowers with a minimum decision credit score between 500 and 579 are limited to _____% LTV. • Borrowers with a minimum decision credit score of LESS than 500 are _____ eligible for FHA-insured mortgage financing. • Borrowers with a NON-TRADITIONAL credit history or INSUFFICIENT credit are ELIGIBLE for _____ financing but must meet the underwriting guidance in HUD 4000.1.I.A.5.a.B. 1&2. • Borrowers using 203(h), Mortgage Insurance for _____, are eligible for 100 PERCENT financing and NO DOWN PAYMENT is required, provided that the borrowers have a MINIMUM credit score of ______.

A. HUD B. lender overlays C. Maximum D. 90% LTV E. NOT F. MAXIMUM G. Mortgage Insurance for Disaster Victims H. 500

Government Loan Programs: FHA Insured Loans: FHA Loan Regulations: FHA Required Minimum Investment: ________, are eligible for 100 percent financing and NO down payment is required, provided that the borrowers has a MINIMUM credit score of 500. NONE of the required minimum _____ investment can be provided by the seller of the property, any other person, or entity who financially benefits from the transaction, or from any person who is reimbursed by any prohibited source.

A. Mortgage Insurance for Disaster Victims B. cash down payment

Government Loan Programs: FHA Insured Loans: FHA Loan Regulations: FHA Required Minimum Investment: Closing costs (includes closing costs, prepaid expenses, and discount points) may NOT be used to help meet the required minimum _____. However, a borrower may qualify for a down payment assistance grant from a state or municipal agency, non-profit organization, etc.

A. investment

Government Loan Programs: FHA Insured Loans: FHA Gift Eligibility Guidelines: The entire required minimum investment can be a ______ gift from a relative, an employer or labor union, a charitable organization, or a close friend with a clearly defined and documented interest in the borrower. The gift donor may not be a person or entity with an interest in the sale of the property, such as the seller, a real estate agent or broker, or a builder/associated entity. Gifts from these sources are considered _____ to purchase and must be subtracted from the sales price. A lender must document any borrower ______ through a ______, signed by the donor and borrower, that shows the donor's name and contact information, specifies the dollar amount of the gift and states the nature of the relationship to the borrower and that no repayment is required.

A. Non-Repayable B. Inducements C. Gift Funds D. Gift Letter

Government Loan Programs: FHA Insured Loans: FHA Secondary Financing: The FHA will _____ first mortgage transactions that also include secondary financing, subject to certain restrictions. These restrictions can be found in the FHA Single Family Housing Policy Handbook. FHA Secondary Financing: Section 203(b)(9)(C) of the National Housing Act does not prohibit the FHA from insuring mortgages originated as part of the homeownership programs of federal, state, or local government or their agencies or instrumentalities (hereinafter referred to as "government entities") when the government entities also directly provide funds toward the required minimum cash investment. These funds typically come in the form of silent or disappearing second liens, often from home ownership or government housing agencies. [See HUD Handbook 4000.1.IA.4.d.i.I/ FHA Secondary Financing: The FHA reserves the right to refuse to insure the first mortgage if there is any secondary financing that does not serve the needs of the intended borrower or where the costs to participants outweigh the benefits derived by the borrower.

A. Insure

Government Loan Programs: FHA Insured Loans: FHA Seller/Third-Party Contribution Limits: The SELLER and/or INTERESTED third party may contribute up to ____% of the lesser of the property's sales price or the appraised value toward the buyer's closing costs, prepaid expenses, discount points, and other financing concessions. This limit also includes: • Third-party payment for permanent and temporary interest rate ______ and other payment supplements NOTE: that borrowers MUST QUALIFY at the _____ rate on TEMPORARY buydowns) • Payments of mortgage ______ for fixed-rate mortgages • Mortgage payment ______ insurance • Payment of the ______ mortgage insurance premium (UFMIP)

A. 6% B. buydowns C. note D. interest E. protection F. upfront

Government Loan Programs: FHA Insured Loans: FHA Seller/Third-Party Contribution Limits: Such contributions CANNOT be used to _____ the borrower's required MINIMUM investment. Payment of real estate commissions or fees, typically PAID by the SELLER under local or state law or local custom, is NOT considered an _____ THIRD-party contribution. Contributions exceeding ____% are considered _________, which requires that every _____ contributed OVER the limit must be SUBTRACTED from the property's sales _____ BEFORE applying the appropriate ____ ratio.

A. reduce B. interested C. 6% D. Inducements to Purchase E. Dollar F. price G. LTV

Government Loan Programs: FHA Insured Loans: FHA Loan Assumption Eligibility Guidelines: Most FHA loans made prior to December 15, 1989 are FULLY assumable for a nominal ______ fee since they do NOT have an _____ clause. The HUD definition of assumption is “Assumption refers to the transfer of an EXISTING mortgage obligation from an _____ Borrower to the ____ Borrower:" Recall that an _______ Clause allows the lender to exercise certain RIGHTS upon the _____ or TRANSFER of an INTEREST in the property; These RIGHTS include: call the note _____, change the _____ rate, or charge an _____ fee. However, it is important to NOTE that the original borrower is NOT ______ from liability unless FHA agrees to the assumption. FHA loans endorsed on or after December 15, 1989 may include an ALIENTATION clause. Such loans MAY be assumable; however, the lender will require a _______ review of the new borrower as well as a fee. With these loans, assumptions WITHOUT credit approval may be grounds for the _____ Clause being enacted in the mortgage. Therefore, any offers involving mortgage assumptions must be INVESTIGATED thoroughly with the lender who MUST supply a _____ RELEASE of liability and perhaps even with legal counsel.

A. handling B. alienation clause or due on sale C. existing D. assuming E. Alienation or due on sale F. sale G. due H. interest I. assumption J. Released K. Creditworthiness L. ACCELERATION M. specific

Government Loan Programs: FHA Insured Loans: FHA Prepayment Penalties: HUD regulations DO NOT ALLOW ______ penalties on FHA loans. A borrower may prepay a mortgage, in whole or in part, on the _____ of any month. However, if the payment is received after the first of the month, the lender may, at his discretion, collect the REMAINDER of the month's INTEREST for mortgages made before January 21st, 2015. For an FHA-insured mortgage closing after this date, the FHA has ALIGNED their former policy with that of the ______ policy on prepayment penalties, which ALLOWS a mortgagee who is receiving a full and final payment to charge interest ONLY through the DATE of _____ of the PAYOFF FUNDS.

A. prepayment B. First C. CFPB D. Receipt

Government Loan Programs: FHA Insured Loans: FHA Mortgage Insurance Premium: The _______ should NOT to be confused with PMI for conventional loans because they have different guidelines. This insurance is required for all _____ loans, REGARDLESS of the down payment, which includes an INITIAL premium called the _____ Mortgage Insurance Premium or the _____ Mortgage Insurance Premium which is based on the ANNUAL AVERAGE OUTSTANDING LOAN ____ divided into ____ monthly payments. The UFMIP on 15- and 30-year PURCHASE and REFINANCE transactions for case numbers assigned on or after April 9, 2012 is ONLY _____% of the loan amount.

A. Mortgage Insurance Premium (MIP) B. FHA C. Up-Front Mortgage Insurance Premium (UFMIP) D. Annual Mortgage Insurance Premium (MIP) E. Balance F. 12 D. 1.75%

Government Loan Programs: FHA Insured Loans: FHA Mortgage Insurance Premium: FHA Mortgage Insurance Premium EXCEPTIONS exist for the following: • STREAMLINE REFINANCE and SIMPLE REFINANCE mortgages used to refinance a previous FHA-endorsed mortgage on or before May 31, 2009. A. UFMIP is _____ bps or _____% of the loan amount B. Annual MIP is _____ bps. • Hawaiian Home Lands (Section 247) - A. UFMIP range from _____% to _____% depending on loan term and whether the MIP is financed. B. Annual MIP is $_____ • Indian Lands (Section 248) - A. UFMIP is $ _____ B. Annual MIP is _____ as shown normally. • Home Equity Conversion Mortgage (HECM)(Section 255) - A. UFMIP is _____% of the maximum claim amount. B. Annual MIP is CALCULATED based on the _____ balance.

A. 1 bps (Or 01% of loan amount) B. 55 bps C. 2.344% - 3.8% D. $0 (There is NO MIP) E. $0 (There is NO UFMIP) F. assessed G. 2% H. outstanding

Government Loan Programs: FHA Insured Loans: FHA Financing MIP: If the UFMIP for a 15-year or 30-year loan is paid in CASH at CLOSING, it may be paid by the borrower or by the seller or other third party within limits; however, it must all be PAID in ______ reserves or the ENTIRE price of the premium MUST be financed. The ______Act LIMITS the total FHA-insured first mortgage to _____% of the LESSER of the sales price or appraised value, which would include the financing of the _____ Mortgage Insurance Premium WITHIN that LIMIT.

A. Cash B. Housing And Economic Recovery Act (HERA) C. 100% D. Up-Front Mortgage Insurance Premium (UFMIP)

Government Loan Programs: FHA Insured Loans: FHA Cancellation: For FHA loans made after January 1, 2001, MIP is automatically CANCELED when the LTV reaches ____% of the original value and for 30-year mortgages, the annual MIP must have also been paid for at least ___ years). Borrowers may be able to make ADDITIONAL or EARLY payments of PRINCIPAL to REDUCE the LTV to the ____% threshold where MIP is AUTOMATICALLY canceled. _____ MIP CANNOT be CANCELED. For loans made after June 3, 2013, The _____ will COLLECT the ANNUAL MIP for the _____ duration permitted.

A. 78% B. 5 C. 78% D. Financed E. Maximum

Government Loan Programs: FHA Insured Loans: FHA Cancellation: HUD Handbook 4000.1 states that a MORTGAGEE and a MORTGAGOR may REQUEST that the FEDERAL HOUSING _____ - the Assistant Secretary for Housing or HUD to terminate the monthly MIP _____. In the event of EARLY TERMINATION , the mortgage would NO longer be governed by the FHA insurance program's RULES and regulations, including the FHA's _________ Mitigation Requirements: Each borrower must sign a “BORROWER’S CONSENT TO ________ OF FHA MORTGAGE INSURANCE” and MUST acknowledge that the FHA insurance program rules and regulations, including the FHA's Loss Mitigation requirements, will ____ longer be available to them.

A. Federal Housing Commissioner B. CONTRACT C. Loss D.Voluntary Termination E. NO

Government Loan Programs: FHA Insured Loans: FHA Regulations: As you review the regulations covered or as you encounter others, be aware that laws regulating FHA loans continually evolve. Any changes to program details-for example, product availability, mortgage insurance premiums, seller contribution limits, credit score requirements, down payments, etc. are communicated through _______ letters sent to MLOs.

A. Mortgagee Letters

Government Loan Programs: VA-Guaranteed Loans: VA-Guaranteed Loans are guaranteed by the _____ government through the ________, which is part of the Department of Veterans Affairs (VA). The VA's main purpose in guaranteeing loans is to help meet the housing needs of eligible ______ who have served or are currently serving on active duty in the U.S. Armed Forces, which includes the Army, Navy, Air Force, Marine Corps, Coast Guard, Reserves, or National Guard. VA loans are available to eligible veterans for the purchase of OWNER-occupied SINGLE-family homes and for MULTI-family dwellings up to FOUR units if the veteran intends to OCCUPY at least ONE of the units as the primary residence.

A. federal B. Veterans Benefits Administration C. veterans

VA-Guaranteed Loans: The VA rarely loans money DIRECTLY to borrowers. It may do so in ISOLATED RURAL areas where financing isn't readily available, but usually, a veteran MUST borrow money from a VA-approved _______. Lenders may APPLY to become Automatic ______, which gives them the authority to close VA-guaranteed loans _____ the PRIOR approval of the VA. They are responsible for supervising the entire mortgage process through closing, performing underwriting functions (credit examination, appraisal review, etc.), and then submitting the loan to the VA after closing for guaranty.

A. lender B. Automatic Endorsers B. Without

VA-Guaranteed Loans: "VA will apply the same standards for ALL married couples for VA loan guarantees regardless of the ______ of spouses. VA is in the PROCESS of updating ALL forms that request MARITAL status and DEPENDENT information in order to CLAIFY that same-sex married couples and their “______” are eligible for benefits, including by replacing references to "husband" or "wife" with "______" and providing appropriate REFERENCES to children of same-sex marriages." The VA offers a variety of benefits and services that depend on a Veteran's marital status, including certain benefits to a veteran's "spouse" or the "____ spouse." The VA will generally ACCEPT a claimant's statement that they are married but may INVESTIGATE further if an assertion appears _____. This SAME procedure applies REGARDLESS of whether the claimant is in an opposite-sex marriage or a same-sex marriage. The VA provides access to an online LENDER’S HANDBOOK.

A. Sex or Gender B. dependents C. spouse D. surviving E. unreliable

VA-Guaranteed Loans: VA Eligibility Guidelines: Although the lender will examine the borrower's credit history, amount of income, and other factors before approving the loan, the PRIMARY requirement to be approved for a VA loan is the borrower's ______ eligibility, which is based on the borrower's length of continuous active service and other factors, such as WHEN they ENLISTED and IF they served during WARTIME.

A. Military

VA-Guaranteed Loans: VA Eligibility Guidelines: SPOUSES of veterans who DIED while on active duty or from service-related disabilities and did NOT remarry before reaching age _____ years old or before December 16, 2003 may ALSO be eligible for a VA loan as are spouses of veterans who are a _____ or _____. There may also be situations where the spouse of a totally DISABLED veteran may be ELIGIBLE where the disability was NOT the cause of _______. A current list of eligibility requirements is available from the VA website.

A. 57 B. POW or MIA C. DEATH

VA-Guaranteed Loans: VA DOCUMENTATION Eligibility Guidelines: Lenders may not process or close a VA loan without verifying the eligibility of the borrower. This is done through the Certificate of _____, which is ISSUED by the VA. The lender or the borrower may apply online for this document or through the mail using VA Form _____, which is a REQUEST for a Certificate of Eligibility.

A. Certificate of Eligibility (COE) B. Form 26-1880

VA-Guaranteed Loans: VA DOCUMENTATION Eligibility Guidelines: To receive a Certificate Of _____, the veteran must be able to document their service as follows: • Discharged veterans who served in a regular component of the Armed Forces. Certificate of _____ or _____ from Active Duty, also called the ______, issued by the DEPARTMENT of _______ to identify the character of service and reason for discharge (honorable, dishonorable, etc.) • DISCHARGED members of the Army or Air National Guard that were NEVER ACTIVATED will PROVIDE the: a. NGB Form _____: Report of SEPARATION and Record of SERVICE b. NGB Form _____: RETIREMENT Points Accounting and PROOF of character of SERVICE • ACTIVE duty personnel or individuals who are STILL members of the Reserve/Guard. A _____ of SERVICE signed by, or by the direction of, the adjutant, personnel office, or commander of the unit or higher headquarters to which they are attached If a veteran does NOT possess any discharge/separation documentation, the veteran may submit a Form _____.

A. Certificate Of Eligibility (COE) B. Release or Discharge C. DD-214 D. Defense E. NGB Form 22 F. NGB Form 23 G. Statement H. Form 180

VA-Guaranteed Loans: VA MAXIMUM Loan Limit: The VA does NOT limit the price a veteran can PAY for a house as long as the house APPRAISES for the loan amount but does LIMIT the amount it will GUARANTEE in the event of DEFAULT up to ____% of the purchase price or the established reasonable value, whichever is LESS. A veteran's MAXIMUM ______ amount, known as ______, represents the PORTION of the loan that the VA guarantees in the event of DEFAULT by the borrowing veteran. Therefore, veterans can generally purchase a home priced up to _____ times the amount of their entitlement with NO DOWN PAYMENT.

A. 25% B. guaranty C. Entitlement D. 4X

VA-Guaranteed Loans: VA Maximum Loan Limit: All eligible veterans receive $_____ of basic entitlement. Since the VA REQUIRES a minimum ____% of GUARANTY to meet secondary market requirements, the maximum loan amount a veteran would be eligible for using just basic entitlement would be $144,000 ($36,000 × 4 = $144,000). However, to account for the rise in the cost of homes, the Veteran's Benefits Improvement Act of 2008 provided that every eligible veteran receive a ______ entitlement up to 25% of the GSE conforming loan limit for single-family homes in the county where the property is located.

A. $36,000 B. 25% C. BONUS

VA-Guaranteed Loans: VA Maximum Loan Limit: As part of the BLUE WATER _____ Act Of 2019 (BWNVVA), effective January 1, 2020 Government Sponsored Enterprise (GSE) CONFORMING County loan limits DO NOT apply for veterans with FULL VA HOME LOAN ________. However, County loan limits APPLY to veterans who have previously USED and NOT restored their VA loan entitlement to PURCHASE, REFINANCE, or CONSTRUCT a home above $_________ with partial entitlement or NO entitlement.

A. Blue Water Navy Vietnam Veterans Act of 2019 B. ENTITLEMENT C. $144,000

VA-Guaranteed Loans: VA Maximum Loan Limit: _____ can be RESTORED when the property is SOLD, or the loan paid off including as part of a refinance. In 2022, the single-family home loan MAXIMUM, applicable to veterans with PARTIAL entitlement, for most counties is $______. This limit is significantly HIGHER in DESIGNATED HIGHER _____ counties; for example, the 2022 loan limit in Marin County, CA, which is just north of San Francisco, is $970,800. A list of VA annual loan limits by county may be accessed from its website.

A. Entitlement B. **$647,200** C. Limit

VA-Guaranteed Loans: VA Maximum Loan Limit: The veteran's current AMOUNT of eligible entitlement will be documented in the Certificate of _____. If the veteran's entitlement is INSUFFICIENT or if the purchase price/appraised value of the home exceeds the current VA loan limit for that county--the veteran can make a ______ down payment so that the combination of entitlement and down payment equals the required guaranty of ____%. NOTE: ____ that was built in an property that is owned by the Veteran can also CONTRIBUTE to the 25% GUARANTY requirement for REFINANCE loans.

A. Certificate of Eligibility (COE) B. Cash B. 25% C. Equity

VA-Guaranteed Loans: VA Maximum Loan Limit: Where veterans have ONLY ______ entitlement, the maximum guaranty will be the LESSER of 25% of the LOAN amount or 25% of the COUNTY loan LIMIT; MINUS the previous entitlement USED and NOT _____. Where the remaining entitlement is calculated to be $0 or LESS, the borrower has ____ ENTITLEMENT remaining.

A. Partial B. restored C. NO

VA-Guaranteed Loans: VA Down Payment Requirement: Because VA mortgage loans can be for the ____ reasonable value of the property, generally, _____ down payment is required for a veteran with full entitlement. However, under the following circumstances a down payment is required: • If the purchase price _____ the reasonable value of the property, a down payment in the amount of the difference between the purchase price and reasonable value must be made in cash from the borrower's resources. • VA requires a down payment on all _____ Payment Mortgages. • If a veteran has less than full entitlement available, a lender may require a down payment in order to make the loan meet GRADUATED or other secondary market requirements. The "rule of thumb" for GNMA is that the VA guaranty, or a combination of VA guaranty plus down payment and/or equity, must cover at least _____% of the loan.

A. FULL B. NO C. Exceeds D. GNMA E. 25%

VA-Guaranteed Loans: VA Borrower Qualifying Standards: Once a veteran's eligibility is confirmed, UNDERWRITERS making VA loans must qualify the borrower to ensure that they are a satisfactory credit risk and have the means to repay the loan. This is accomplished by looking at both the borrower's debt-to-income ratio and the _______ INCOME. If legally married, a spouse's income may also be considered for qualification purposes. However, a non-married co-borrower is _____ allowed on a VA-guaranteed loan unless they are also an eligible veteran who will occupy the home as a primary residence.

A. NOT B. Residual Income

VA-Guaranteed Loans: VA Total Debt-to-Income Ratio: One difference from CONVENTIONAL underwriters is that VA underwriters on VA loans do _____ generally consider the HOUSING EXPENSE RATIO, also called the FRONT-END ratio. Instead, underwriters FOCUS on the _________ ratio, or BACK-END ratio, when evaluating a potential borrower. In general, they also have more WIGGLE ROOM than conventional loans, generally looking for a total DTI that does NOT EXCEED ____%.

A. NOT B. total debt-to-income (DTI) C. 41%

VA-Guaranteed Loans: VA Total Debt-to-Income Ratio: TAX-FREE INCOME may be "_____" to calculate the DEBT-to-INCOME ratio ONLY, using current income tax withholding tables to determine an appropriate adjustment. Tax-free income generally includes certain VA military ALLOWANCES, CHILD SUPPORT payments, WORKERS COMPENSATION benefits, DISABILITY RETIREMENT payments, and certain types of PUBLIC ASSISTANCE payments. The amount of "GROSS-UP" is typically NO more than _____% of the TAX-FREE income, in relation to the federal and state INCOME TAX LIABILITY of the borrower's OTHER income.

A. Grossed-Up B. 25%

VA-Guaranteed Loans: VA Residual Income: In addition to the DEBT-to-INCOME ratio, a VA underwriter must ensure that an eligible borrower has the appropriate BALANCE of ____ flow REMAINING for FAMILY support. This is determined by looking at RESIDUAL income, which is the AMOUNT of income REMAINING after SUBTRACTING taxes, housing expenses, and ALL recurring debts and obligations. RESIDUAL income uses the ____ EFFECTIVE income in its calculation, _____ the GROSS income. This analysis also takes the ____ of the veteran's FAMILY into consideration when determining whether the residual income MEETS the VA's minimum requirements.

A. Cash B. Net C. NOT D. SIZE

VA-Guaranteed Loans: Property Guidelines for VA Loans: > An EXISTING home, which has been PREVIOUSLY owner-occupied or had ALL onsite and offsite IMPROVEMENTS fully completed for or MORE than ____ year, is ELIGIBLE for a VA loan. > NEWLY COMPLETED properties completed in _____ than ONE year and NEVER owner-occupied are ELIGIBLE for a VA loan ONLY IF it is COVERED by a ONE-year ______ WARRANTY, and it is ENROLLED in a HUD-accepted _____-year INSURED protection plan > BUILT by a VETERAN as the general CONTRACTOR, for their own OCCUPANCY. Some manufactured homes may also be eligible. The VA's loan ______ (MPRs) provide general acceptability criteria for properties that will become the security for VA-guaranteed loans.

A. More B. less C. VA Builder's C. ten D. minimum property requirements (MPRs)

VA-Guaranteed Loans: VA Property Guidelines: Establishing the Reasonable Value: Every appraisal made for VA purposes must be reviewed either by the lender's VA-AUTHORIZED ______(SAR), or by a VA STAFF appraiser. The SAR typically is EMPLOYED by the VA-authorized LENDER to REVIEW the appraisal performed by an INDEPENDENT VA-approved appraiser. AFTER the review, the SAR issues a ________ (NOV) or a _______(CRV) that is given to the veteran to provide to the MLO. Every NOV or CRV must include a LIST of any conditions and requirements that MUST be satisfied for the property to be _______ for VA loan guaranty.

A. Staff Appraisal Reviewer (SAR) B. Notice of Value (NOV) C. Certificate of Reasonable Value (CRV) D. ELIGIBLE

VA-Guaranteed Loans: VA Property Guidelines: Establishing the Reasonable Value: The ______ (Appraisal) or the SALES PRICE, whichever is LESS defines the maximum MORTGAGE amount a veteran may have on a VA-guaranteed loan for that PROPERTY. > IF the price of the property EXCEEDS the established reasonable value (appraisal value), the veteran MUST contribute the DIFFERENCE in CASH to buy that property. The loan amount MUST_____ EXCEED the established reasonable value, EXCEPT to _______ the required FUNDING fee.

A. Established Reasonable Value B. NOT C. FINANCE

VA-Guaranteed Loans: VA Property Guidelines: Occupancy: The law requires a veteran who is obtaining a VA-guaranteed loan to CERTIFY that they intend to personally OCCUPY the property as their home. As of the date of certification, the veteran must: • Personally _____ in the property as their home, or • Intend, upon COMPLETION of the loan and ACQUISITION of the dwelling, to PERSONALLY move into the property and use it as their home within a REASONABLE amount of time, which by REQUIREMENT means within _____ days after the loan closing. Single or married service members, while DEPLOYED from their permanent duty station, are considered to be in a TEMPORARY _____ status and able to MEET the OCCUPANCY requirement.

A. LIVE B. 60 Days C. DUTY

VA-Guaranteed Loans: VA Loan Regulations: Variable Funding Fee: While there are NO UPFRONT or monthly mortgage INSURANCE premiums required for VA loans, borrowers must pay a NON-REFUNDABLE ONE-TIME ______ FUNDING FEE at closing for GUARANTEEING the loan. The funding fee is WAIVED for _____ veterans and SURVIVING spouses of veterans who died in SERVICE or FROM service connected DISABILITIES. NOTE: The funding fee is WAIVED if the veteran has a DISABILITY of ____% or MORE.

A. Variable Funding Fee B. disabled C. 10%

VA-Guaranteed Loans: VA Loan Regulations: Variable Funding Fee: The VARIABLE funding fee may be _____ or PAID in cash. If it is financed, the Funding fee ______ must be ADDED to the LOAN _____. The FEE is BASED on the veteran's STATUS, the number of times the veteran has USED the VA home loan program, and the amount of any DOWN payment.

A. financed B. percentage C. amount

VA-Guaranteed Loans: VA Loan Regulations: VA Closing Costs: The veteran _____ pay a MAXIMUM of reasonable and customary amounts for ANY and ALL of the itemized fees and charges designated by the VA including: • FLOOD ZONE determination • RECORDING fees • CREDIT report • PRE-PAID items • HAZARD insurance The veteran _____ be CHARGED for the following fees and charges under VA regulations: • ATTORNEY’S fees • BROKERAGE fees • APPRAISAL and COMPLIANCE inspections • SURVEYS • TITLE EXAMINATION and title INSURANCE • Special MAILING fees for REFINANCING loans • MORTGAGE Electronic REGISTRATION System (MERS) FEE • PREPAYMENT penalties • Builder's HUD/FHA INSPECTION fees > In addition to the itemized charges, the lender may charge a ____ fee, NOT to EXCEED ____% of the loan amount, to cover the lender's costs and services for ORIGINATING the loan. If the loan does NOT ______ for ANY reason, the lender MUST refund this ___% flat fee.

A. CAN B. CANNOT C. FLAT D. 1% E. 1% F. CLOSE

VA-Guaranteed Loans: VA Loan Regulations: VA Seller Concessions: A SELLER ______ is ANYTHING of VALUE ADDED to the TRANSACTION by the BUILDER or SELLER for which the BUYER pays NOTHING additional AND which the seller is NOT customarily EXPECTED or REQUIRED to pay or provide. Any seller concession or COMBINATION of concessions that EXCEEDS ___% of the established reasonable value of the property is considered EXCESSIVE and UNACCEPTABLE for ____-guaranteed loans. The reason for this restriction is to prevent concessions from enticing unwary and unqualified veterans into home mortgages they cannot afford.

A. Seller Concession B. 4% C. VA

VA-Guaranteed Loans: VA Loan Regulations: VA Secondary Financing: The VA permits SECONDARY financing ______ with a VA-guaranteed FIRST loan for a variety of purposes;: Example: CLOSING COSTS or DOWN PAYMENT unless the down payment is REQUIRED to cover an ______ purchase price BEYOND the VA's established REASONABLE value.

A. simultaneous B. EXCESS

VA-Guaranteed Loans: VA Loan Regulations: VA Prepayment Penalties: The VA does ____ allow clauses for PRE-PAYMENT penalties to be included in VA loans. (However, the VA may allow these clauses for ______ financing.) VA loans MAY be paid off EARLY with NO additional charges or penalties of any kind.

A. NOT B. Secondary

USDA Rural Development Programs: Section 502 Loans: Section ______ loans are for single-family homes. This program _____ loans made by approved PRIVATE lenders or makes DIRECT loans if NO local lender is available.

A. Section 502 B. GUARANTEES

USDA Rural Development Programs: Section 502 Loans: Section ____ loans can be used to: • PURCHASE an EXISTING home. • ______ a NEW home. • RENOVATE or REPAIR an _____ home. • _______ an EXISTING home. • PURCHASE and PREPARE a _______ for a HOME, including SEWAGE and WATER facilities.

A. Section 502 Loans B. CONSTRUCT C. EXISTING D. RELOCATE E. SITE

USDA Rural Development Programs: Section 502 Loans: Under the Section 502 programs, ELIGIBLE houses must be Modest in ____, ____, and _____ defined as having a market value that DOES NOT EXCEED the applicable area loan LIMIT and does NOT contain certain PROHIBITED features. > Specific to Section 502 ______ Loans that are offered directly by USDA, applicants must: • Be WITHOUT decent, safe, and sanitary housing. • Be UNABLE to OBTAIN a loan from other resources on terms and conditions that they can be reasonably expected to MEET. • Agree to OCCUPY the property as their PRIMARY residence. • Have the LEGAL capacity to INCUR a loan obligation. • Meet CITIZENSHIP or eligible NON-CITIZENSHIP requirements. • Not be SUSPENDED or DEBARRED from participation in federal programs. > Properties financed with _____ loan funds must: • Generally, be 2,000 square FEET or LESS. • Not have a market value OVER the applicable area loan LIMIT. • NOT have in-ground swimming pools. • Not be DESIGNED for INCOME-PRODUCING activities.

A. Size, Design, and Cost B. DIRECT C. Direct

USDA Rural Development Programs: Section 502 Loans: Specific to USDA Section ______ Guaranteed Loans that are offered by lenders such as banks, applicants must: • Meet income-eligibility (cannot exceed ____% of the MEDIAN household income). • Agree to personally OCCUPY the dwelling as their primary residence. • MUST Be a U.S. Citizen, U.S. non-citizen national, or QUALIFIED Alien.

A. USDA Section 502 Guaranteed Loans B. 115%

USDA Rural Development Programs: Section 502 Loans: Properties financed with _____ Guaranteed Loans must meet the following requirements: • Must be located within an ELIGIBLE RURAL area • Must be a single-family dwelling may include detached, attached, PUD, condo, modular, and manufactured • MUST meet HUD 4000.1 minimum standards • No set maximum purchase PRICE based solely on applicant REPAYMENT ability • No set ACREAGE limits. Acreage amount must be common for the area • No SEASONING requirements SO "_____" properties ARE ALLOWED

A. Section 502 Guaranteed Loans B. Flipped

USDA Rural Development Programs: Section 502 Loans: Applicants for Section 502 loans-guaranteed and direct- must MEET certain INCOME requirements based on the _______ (AMI). Assuming that the applicant meets the income eligibility and the house is in an approved area, the borrower may receive ____% financing, based on the appraised value or acquisition cost, whichever is LESS. The terms of the loan will be different depending on whether it is a GUARANTEED loan or a DIRECT loan.

A. area median income (AMI) B. 100%

USDA Rural Development Programs: Section 502 Loans: For ALL USDA SECTION 502 LOANS, MORTGAGE INSURANCE RATES are: •______% upfront fee paid at closing, based on the loan size. •______% annual fee, based on the remaining principal balance. NOTE: that the ANNUAL MIP FEE is for the LIFE of the loan. It does NOT end when the USDA Section 502 ______ reaches a certain point like some other loan programs. Applicants for Section 502 guaranteed loans may have an INCOME of UP TO ____% of the area median income (AMI). To check property eligibility and income limits for Section 502 Direct and Guaranteed loans, visit the USDA website.

A. 1% B. 0.35% C. Loan-to-Value D. 115%

Summary: FHA-insured loans are for owner-occupied single-family and multi-family dwellings with _____ or fewer units, made by approved lenders. FHA loans require _____ down payments and less stringent qualifying standards than conventional loans. FHA ______ Endorsers can underwrite FHA loans without prior approval . The FHA sets a maximum mortgage amount, depending on the geographic AREA.

A. Four B. Lower C. Direct

Summary: HUD issues regulations for FHA loans, including: • Required MINIMUM investment of _____% of the LESSER of the purchase price or the appraised value • UFMIP required ____% for most purchase and refinance loans, PLUS a monthly MIP on annual average loan balance up to ____%) • Monthly mortgage insurance PAYMENT terms VARY with the amount of the DOWN payment and the AMORTIZATION term of the loan • ASSUMABLE ONLY with lender approval for loans on or after December 15, _____ • Prepayment penalties are ____ allowed but the lender can require PAYOFF be made on the DUE date OR collect an EXTRA month's interest • Items paid by the seller are negotiable but the seller's contribution is limited to ____% or points.

A. 3.5% B. 1.75% C. 0.85% D. 1989 E. NOT F. Seller’s Contribution Limit: 6%

Summary: VA-guaranteed loans help eligible veterans buy homes often with NO down payment. The veteran MUST occupy the home. The VA does NOT limit home PRICE but LIMITS the GUARANTY amount that the lender can RECOVER for DEFAULT to ____% of the loan amount when a borrower has FULL entitlement available. When entitlement was previously USED and NOT RESTORED the GUARANTY may be limited to 25% of the maximum LOAN limit in the county where the property is located MINUS the ______ previously used.

A. 25% B. guaranty

Summary: The VA loan rules include: • The borrower needs a copy of the discharge papers called the _____ and the Certificate of Eligibility called the _____ . • The VA issues the _______ (NOV) or ________ (CRV) based on the APPRAISAL; if price EXCEEDS the estimate of reasonable value, the veteran must PAY the difference with an additional CASH down payment/PREVIOUS equity • Secondary financing may be PERMITTED • Required ______ funding fee paid in cash or financed can be WAIVED for disabled veterans); BUT if NOT disabled the lender flat fee is LIMITED to ___% of the loan amount • NO limit on seller CONTRIBUTION to ______ costs BUT there is a ___% limit on seller CONCESSIONS • _______ by eligible veterans ONLY with VA approval (for loans after March 1, 1988) • Prepayment penalties are _____ allowed • Veteran may _____ entitlement if the loan is paid OFF, home is SOLD, and mortgage ASSUMED by a eligible veteran

A. DD-214 B. COE C. Notice of Value D. Certificate of Reasonable Value E. Variable F. 1% F. closing G. 4% H. ASSUMABLE H. NOT I. Restore

Summary: Rural Development is an agency under the USDA that offers various assistance programs for both businesses and homebuyers in RURAL communities, which can include small towns and areas hit by NATURAL disasters. The USDA Rural Development's ______ Programs Section 502 loans for single-family homes GUARANTEES loans made by PRIVATE lenders or makes DIRECT loans if ____ local lender is available.

A. Housing and Community Facilities B. NO

Summary: Eligible borrowers can get 100% financing WITHOUT having to mortgage insurance but must pay a GUARANTEE FEE of ____% of the loan amount. Applicants for USDA Section ______ Guaranteed Loans may have an income of up to _____% of the area median income (AMI).

A. 1% B. Section 502 Guaranteed Loans C. 115%

Summary: The VA also REQUIRES that the "TIME TO ____ CLOSING COSTS" is CALCULATED to VERIFY the BENEFIT to a veteran.

A. RECOUP (Regain money SPENT or LOST)

Summary: ____ and ____ loans and many ______ lenders impose a REQUIREMENT that a REFINANCE loan MUST provide a BENEFIT to the CONSUMER to AVOID lenders engaging in ILLEGAL loan FLIPPING and PREDATORY lending.

A. FHA B. VA C. Conventional

VA-Guaranteed Loan: Seller Concessions: Considered Seller Concessions and Subject to a 4% Limit: a. Payment of the buyer's VA _____ fee b. Prepayment of the buyer's property taxes and/or ____ c. _____ (such as a television or microwave oven) d. Payment of extra points to provide _____ interest rate buydowns e. Provision of escrowed funds to provide ______ interest rate buydowns f. Payoff of credit balances or ______ on behalf of the buyer

A. Funding B. Insurance C. Gifts D. Permanent E. Temporary F. Judgements

VA-Guaranteed Loan: Seller Concessions: NOT Considered Seller Concessions and NOT Subject to a 4% Limit: a. Payment of the buyer's _____ costs b. Payment of _____ as appropriate to the market

A. Closing B. Points

Vocabulary: A veteran's maximum guaranty AMOUNT for a LOAN guaranteed by the VA.

A. Entitlement

Vocabulary: A mortgage loan insured by the Federal Housing Administration that protects the lender against losses from default.

A. FHA-Insured Loan

Vocabulary: ____ Insurance Fund is a FUND established to INSURE mortgage loans UNDERWRITTEN through the FHA SINGLE-family mortgage and _______ (HECM) programs. It is funded by borrowers with BOTH an ______ as well as MONTHLY premium.

A. Mutual Mortgage Insurance Fund B. Home Equity Conversion Mortgage (HECM) C. UpFront

Vocabulary: The remaining amount of a borrower's income after subtracting taxes, housing expenses, and all recurring debts and obligations.

A. Residual Income

Vocabulary: This operates over 50 financial assistance programs for a variety of rural applications. For example, through single-family housing programs, families and individuals have the opportunity to buy, build, repair, or own safe and affordable homes located in rural America. LOW INTEREST, FIXED-RATE homeownership loans are provided to qualified persons DIRECTLY by this agency. Financing is also offered at FIXED rates and loan terms from a PRIVATE financial institution and guaranteed by this agency through the government for qualified persons.

A. USDA Rural Development Financial Assistance Programs

Vocabulary: A mortgage loan made by lenders to eligible veterans that is guaranteed by the U.S. Department of Veterans Affairs and protects the lender up to a specified dollar amount.

A. VA-Guaranteed Loan

Chapter Quiz: An eligible borrower applies for an FHA loan on a house with an appraised value of $100,000 and a purchase price of $96,000. What is the required minimum investment? A. $3.000 B. $3,360 C. $3,500 D. $4,800

B. $3,360 - The minimum down payment (3.5%) for FHA-insured loans is calculated using the lower of the sales price or appraised value. $96,000 x .035 = $3,360.

Chapter Quiz: An upfront mortgage insurance premium is required: A. for all FHA loans. B. only when the buyer cannot pay the required down payment in cash. C. only when the LTV exceeds 80%. D. only when the LTV exceeds 90%.

Chapter Quiz: A.MIP is REQUIRED on ALL FHA loans. - The UPFRONT mortgage insurance premium is required for ALL FHA loans, regardless of the loan program or LTV.

Chapter Quiz: To qualify for an FHA loan, a borrower should have a maximum housing expense ratio of and a total debt-to-income ratio of: A. 28%; 36% B. 29%; 36% C. 29%; 41% D. 31%;43%

Chapter Quiz: D.31%; 43%. - According to FHA's underwriting manual, the debt-to-income ratios for an FHA-insured loan are 31% for the housing ratio and 43% for the total debt-to-income ratio.

Chapter Quiz: A residual income calculation shows the: A. amount of cash flow available for maintenance and utilities. B. cash flow remaining for family support. C. funds remaining for the proposed PITI payment. D. true composite debt-to-income ratio.

B. cash flow remaining for family support. - When the residual is calculated, the amount of cash flow remaining for the veteran to pay for family support (e.g., auto insurance, clothing, food, entertainment, other debt) is computed. This amount is compared with the residual table to ensure the veteran will have ample monies for the items needed.

Chapter Quiz: FHA-insured loans are funded by: A. approved lenders. B. the FDIC. C. the FHA. D. HUD.

A. approved lenders. - FHA-insured loans are funded by lenders that are approved by the FHA. The loans are insured by the FHA.

Chapter Quiz: The annual area median income for a county is $50,000. Using USDA-guaranteed financing, what is the maximum amount of gross annual income that the borrower can earn and qualify? A. $50,000 B. $55,000 C. $57,500 D. $62,500

C. $57,500 - A borrower using USDA financing can earn no more that 115% of the area median income that is established in the area where the borrower wishes to purchase. • Calculate: $50,000 x 1.15% = $57,500

Chapter Quiz: What is the maximum flat fee that a lender may charge for origination on a VA loan? A. 1% B. 2% C. 3.5% D. There is NO limit; the fee is negotiable.

A. 1% - The VA considers a 1% flat fee to be the maximum a lender can charge the veteran for origination services, including processing, document preparation fee, etc. These fees are typically charged to the seller and are not considered part of the 1% flat fee IF the SELLER or interested THIRD party pays the costs.

Chapter Quiz: Full VA entitlement can generally be restored to a veteran: A. if any disabled veteran assumes the loan. B. if an eligible veteran substitutes his entitlement for the seller's. C. under no circumstances. D. when the loan is paid down to below 50% LTV.

B. if an eligible veteran substitutes his entitlement for the seller's. - If a seller has an existing VA loan, a buyer with a sufficient amount of entitlement may assume the existing loan on its original terms, with the approval of VA or the lender. When the assumption is approved, the buyer's eligibility is substituted for the selling veteran's eligibility, and the seller's entitlement used for the purchase is restored.

Is this Considered a VA Loan Seller Concessions and Subject to a 4% Limit? YES or NO • Payment of the buyer's VA FUNDING fee • Prepayment of the buyer's property TAXES and/or INSURANCE • GIFTS (such as a television or microwave oven) • Payment of EXTRA points to provide PERMANENT interest rate BUYDOWNS • Provision of ESCROWED funds to provide TEMPORARY interest rate BUYDOWNS • Payoff of CREDIT balances or JUDGEMENTS on behalf of the buyer

A. Yes These are Seller Concessions that are LIMITED to a 4% Max

Is this Considered a VA Loan Seller Concessions and Subject to a 4% Limit? YES or NO • Payment of the buyer's CLOSING costs. • Payment of points as APPROPRIATE to the market.

A. NO These are NOT Seller Concessions so they are NOT LIMITED to a 4% Max

VA Loan Regulations: VA Loan Assumption: For VA loans committed and closed ON or AFTER March 1, _____, VA loan ASSUMPTIONS are NOT allowed unless the veteran FIRST has the assumption APPROVED by the Department of ________ or its authorized agent (i.e., loan holder). If an assumption is APPROVED by the VA or the loan holder, the _____ veteran is RELEASED from LIABILITY in the event the ASSUMER defaults on the loan, resulting in a LOSS to the VA.

A. 1988 B. Department of Veterans Affairs C. original

VA Loan Regulations: VA Loan Assumption: ENTITLEMENT associated with an ASSUMPTION may only be RESTORED to the veteran if these conditions are met: • The ASSUMER is an eligible _____. • The assumption has been ______ by the loan holder or the VA. • The ASSUMER agrees to ______ their own VA home loan entitlement for the ORIGINAL VETERANs entitlement and OCCUPIES the property as their PRIMARY residence.

A. Veteran B. APPROVED C. SUBSTITUTE

☑️ Chapter 5: Government Loan Programs Flashcards

(115 cards)