colorado practice test Flashcards
(143 cards)
1
Q
Increasing loan balances resulting from the application of periodic payments creates
A
negative amortization
2
Q
what kind of transaction would a HUD settlement booklet be provided
A
a new home purchase
3
Q
what form of insurance coverage insure an investor against homeowner default
A
PMI
4
Q
Colorado Consumer Equity Protection Act established stricter guidelines than federal law
A
HOEPA
5
Q
Homeowner counseling and borrower education has proven to lead to …
A
minimizing predatory lending issues
6
Q
Six stage loan cycle begins with
A
origination
7
Q
What agency is responsible for insuring compliance with the Colorado mortgage Broker registration act
A
DORA
Department of regulatory Agencies
8
Q
Pre-qualification involves
A
informal review of the borrowers credit
9
Q
Pre-approval involves
A
formal review
10
Q
discrimination in mortgage lending address
A
ECOA and the Fair housing Act
11
Q
What federal regulation governs procedures for handling an incomplete loan application
A
ECOA
12
Q
What should an originator do if they discover a borrower will repay gift funds
A
inform the lender
13
Q
Colorado Consumer Caution Disclosure be provided
A
3 days prior to closing
14
Q
If a loan applications is denied due to information on the applicants credit report which of the following must be included in a notice of the denial
A
statement explaining that the credit reporting agency did not make the decision to deny the consumer credit
15
Q
What loan processing step would an originator typically take to fulfill the requirements of the Patriot Act
A
obtain a copy of the applicants driver license or other identification
16
Q
Which disclosure is required under Colorado law to discourage borrowers from accepting a lending agreement with prepayment penalties provisions
A
Loan Product Choice Disclosure
17
Q
What document would a underwriter rely on for detailed information concerning the collateral for mortgage loan
A
the property appraisal
18
Q
Which entities has urged Colorado residents to purchase flood insurance
A
FEMA
19
Q
What gives a mortgagor the right to a property following fulfillment of their obligation to the mortgagee
A
defeasance clause
20
Q
Property appraisal requirements are established by what federal entity
A
Federal reserve broad
21
Q
What are two types of title insurance
A
Lenders and owners
22
Q
Who is responsible for conducting a title search
A
Abstractor
23
Q
Lenders who are subject to the disclosure requirements of RESPA are regulated by
A
HUD
24
Q
Mortgage trans action will provide a consumer with opportunity to deduct interest on there income taxes
A
purchasing a home
25
Colorado, appraiser regulation is found where
Chapter 10 of DORA real estate manual
26
Colorado an appraiser with the designation "Licensed Appraiser" is permitted to appraise non-complex properties with transaction values of no more than
$1,000,000
27
Bankruptcy chapters allows a debtor to completely liquidate their debts
chapter 7
28
Errors and omissions insurance requirement for mortgage brokers in Colorado
$100,000 with deductible no greater than $10,000
29
In Colorado a potential borrower has summited an application and paid fees but the loan does not make to closing, through no fault of the broker what is the most amount of fees that a broker may retain
$300
30
How often must a Colorado mortgage broker license be renewed
3 years
31
What protects a lender from misuse if its funds by the title company
insured lender letter
32
Colorado Mortgage Broker Licensing Act applies to individuals or companies
Individuals
33
What action is required on an FHA loan if the appraiser notes a cosmetic defect on the property
no action is necessary
34
Loan Servicer is responsible for
* maintaining detailed records of the borrowers loan payment
* disbursing funds from escrow account to pay bills related to the property
* managing delinquent accounts
35
Colorado Trustee Foreclosures on a property by what method is the property sold
through public sale
36
What would percentage of owners trigger a ABA disclosure
1%
37
Define mortgage broker
Who arranges funding or negotiates mortgage loan for potential borrower and charges a fee for these service
38
In the state of Colorado what would terminate foreclosure proceedings provide that homeowner makes any past due payments prior to sale
Filing an Intent to Cure Notice 15 days prior to the foreclosure
39
What booklet must be provided to a potential borrower who is specifically shopping for Open-End Financing
"When Your Home Is On The Line What You Should know About Home Equity Lines of Credit"
40
What is the only legal request that can be made of an appraiser
Asking the appraiser to consider additional , appropriate property information
41
True or False
The settlement cost booklet provides the borrower with information on their right to negotiate the terms of a loan and warns them that use of false information on loan application can lead to prosecution for fraud
TRUE
42
When would a Tangible Net Benefit Disclosure be provided in Colorado
When the broker is recommending a refinance transaction to a borrower
43
What mandatory disclosures are due 3 days after application
* GFE GOOD FAITH ESTAIMATE
* MORTGAGE SERVICE DISCLOSURE
* HUD SETTLEMENT BOOKLET
44
TRUE OR FALSE
With such important consumer interests to protect TILA never allows borrowers to accelerate a lending transaction by waiving the right to rescind
TRUE
45
Critics of RESPA feel the GFE is not very helpful in preparing loan applicants to meet the costs of settlement because
the estimate of costs provided on the GFE is often significantly lower then the actual costs of settlement
46
What is the purpose of a loss payee clause on hazard insurance policy
it names the lender as payee in the event of property loss
47
What is USPAP
*The uniform standard used by appraisers
*Federal Reserve Broad
THE UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE
48
What time period does a homeowner in Colorado have to cancel after signing a foreclosure consultancy agreement
75 days
49
Who requires Good Faith Estimate
RESPA
50
How long must a mortgage broker retain records in Colorado
4 years following closing
51
According to Colorado Law under what circumstance may a prepayment penalty be included in a loan covered by the Consumer Equity Protection Act
A prepayment penalty may be included if the borrower has the option of choosing a loan without a prepayment penalty
52
What fees are consider when calculating finance charges
```
PMI
Mortgage broker fee
origination fees
discount points
document preparation
```
53
What would begin a non-judicial foreclosure
Notice of Election and Demand
54
The federal agency with authority to bring enforcement action against mortgage broker for violation of Reg Z TILA
Federal trade Commission
55
What federal agency that is responsible for writing the implementing regulations for TILA is
The Board of Governors
56
The Colorado "duty of good faith" requirement mean a broker must do
* Make reasonable inquiry into a borrower current income and obligations
* Recommend mortgage products that are beneficial to a borrower
* Make an effort to ensure a borrower can repay the loan
57
A loan applicant who has been ordered by the courts to make child support payments would list those payments as which of the following on the 1003
A Liability
58
Discount points are used to do what
Lower the note rate
59
For what reason do lenders make use of the 1003 mandatory
it is required by Fannie Mae and Freddie Mac
60
What may be used to evaluate an applicants income stability
Education level
how long been employed at his current job
how long he has been in his current profession
61
the guidelines allowing an affiliated business to receive a return of ownership interest is a part of what federal regulation
REG X RESPA
62
Lender is also called "legal terms'
Mortgagee
63
Colorado mortgage broker may work as both a broker and a real state
TRUE OR FALSE
TRUE
64
Which of the following creates the requirement for uniform settlement disclosure
RESPA
65
For purpose of underwriting, Stocks, Bonds, 401k and retirement accounts may only be counted at ___ % of their face value
70%
66
What is the required in an agreement for Foreclosure Consulting in the state of Colorado
* Right to rescission
* Notarizing signatures of all parties to the contract
* Contract must written in English and accompanied by certified translation into there language spoken to the home owner
67
by providing their signature in section X of a loan application the interviewers is attesting to what
That all applicable disclosure have been provided pursuant to the application
68
who obtains the title to a Colorado residence in a foreclosure
Equity purchaser
69
comparable sale search prior to appraisal is only needed if
it may be requested as needed
70
A mortgage broker recommends a refinance transaction to a borrower will have no tangible net benefit from obtaining the refinance what Colorado requirement has been broken
Duty of good faith
71
Is Home Equity Conversation Mortgage tax deductible
true
72
Define escrow
A statement of the estimated taxes insurance premiums and other charges the borrower will pay from escrow fund during the first 12 months of the loan
73
In the state of Colorado what governs mortgages made for manufactured homes
Titles to Manufactured Homes Act
74
According to Colorado law a title company is not allowed to set their own fees for ...
obtaining a tax certificate
75
The Interagency Guidance on Nontraditional Mortgage Product Risk is
A guidance that the federal banking regulatory agencies drafted to ensure that lending institutions do not make nontraditional mortgages without adequate evaluation of the borrower institutional risk management and consumer protection
76
Legal term for a borrower or homeowner in a standard mortgage transaction
Mortgagor
77
Colorado Good Fund Law is used to ensure that
Loan funding is available at the time of closing
78
Who is responsible for paying the premium for the mortgage title insurance
Buyer
79
While waiting for a criminal background check what are Colorado mortgage broker license applicants permitted to do
they may apply for temporary license under a sponsoring broker
80
An individual negotiates a loan in the state of Colorado with out license or valid temporary license this individual is guilty of
Misdemeanor
81
How long is a temporary broker license valid in Colorado
120 days
82
Option ARMs typically recast
When the debt reaches 125% of the original amount owed or 5 years
83
How many days does the Department of Regulatory Agencies have to issue or deny a Colorado mortgage broker license
21 days
84
If a Colorado mortgage broker increase their fee prior to a loan going to settlement what must occur
Provide the borrower with a written explanation
85
Penalties for violation under HOPEA are the same as
Truth-in Lending Act
86
What forms of insurance coverage insure a homeowner against damages caused by fire
Hazard
87
In lieu of posting a Surety Bond in the sate of Colorado a licensed mortgage broker may do
Obtain a business insurance policy
88
When is a Colorado Mortgage broker Compensation Disclosure given to a borrower
3 days of application
89
The application fee for licensure under the Colorado Mortgage Broker Licensing Act is
$200
90
One of the best question an originator can ask is
Does this loan make sense
91
What best describes the purpose of a surety bond for Colorado mortgage broker licensees
to ensure a broker has access to funds for compensation of losses
92
When a Colorado mortgage broker enters a lock in agreement with a borrower how long do they have to deliver written agreement confirmation of the agreement
3 business days
93
The FBI targets mortgage fraud committed by industry insiders because
Fraudulent activity by industry insiders cause the greatest losses to the mortgage lending industry
94
Public support for the enactment of additional laws such the GLB Act to protect the privacy of personal information resulted from
the unauthorized and profitable sale of personal information by financial institutions
95
Many States predatory lending laws tend to be different than HOPEA because they
* Cover a broader range of loans
* create additional disclosure requirements
* create loan suitability standards
96
Foe mortgage brokers the legal and ethical requirements to protect the nonpublic personal information of a consumers begins when
the consumer provides personal information to the broker
97
Individuals and institutions which are exempt from the mortgage broker licensing act must complete a mandatory exemption form
TRUE OR FALSE
False
98
A misleading advertisement in Colorado can place a mortgage broker at the risk of enforcement action under what regulation(s)
TILA
CPA
FTC
99
Total damages for class action lawsuit pertaining to violations of RESPA section 6 may not exceed
1% or $500,000 of the net worth
100
Predatory lending and subprime lending are synonymous terms
| true or false
False
101
What law contributed to the development of subprime lending market
Tax reform act of 1986
102
If a Colorado homeowner has not paid their taxes for the pervious year by what date must they make a payment in order to avoid penalties
April 30
103
What does DRE stand for
Division of Real Estate
104
Colorado Broker Licensing Act includes 3 important disclosures
* Tangible Net Benefit Disclosure
* Lock-in-agreement
* Compensation Disclosure
105
What is the main purpose of DORA
Impose regulations on occupation and professions only when it is necessary to protect health safety or welfare also called (sunrise review)
106
Does DORA require those who directly supervise individuals who negotiate or originate loans to have license
Yes
107
If a mortgage broker loses their license how long do they have to wait to obtain a new license
2 years
108
When is a Tangible Net Benefit Disclosure due
Same time as application for non traditional loans (refi,interest only , ARM )
109
What is Risk Layering
Risk Layering is offering a Nontraditional Mortgage to a borrower with Poor Credit and using Reduced Documentations
110
Colorado Broker Licensing Act includes 3 important disclosures
* Tangible Net Benefit Disclosure
* Lock-in-agreement
* Compensation Disclosure
111
Lock-in-agreement can be locked for __ to __ Days
7 to 120 (but most are 30 to 60 days)
112
GAO stand for
Government Accountability Office
| Conducted study on how much consumer know about non traditional mortgage products
113
What agency is responsible for ensuring compliance with the Colorado Mortgage BrokerRegistration Act
DORA
114
What document in a mortgage loan transaction pledges a property to lender as a security for a payment of debt
Mortgage
115
What is the most important consideration for originator when hiring an appraiser
Wether the appraiser is endorsed by a lender
116
In addition to protection provided to borrowers of covered loans the colorado Consumer Equity Protection Act creates a list of prohibitions that apply to the ordination of all loans in the state
Originator may not facilitate an unconscionable loan agreement
Deceptive advertising
Misrepresentation and use of false information on a loan application
117
What is included in a Loan File
Formal written loan application
Copy of the notice of the right to receive an appraisal
GFE
118
What is the legal document that obligates a borrower to repay a mortgage loan and specifies the terms by which the repayment will occur
Promissory note
119
What would a processor need from an applicant to conduct a verification of deposit
A signed authorization to gather information
120
What is the underwriters principle responsibly
To act on behalf of the lender to determined if the borrowers meets the lenders guidelines
121
The Fair Housing Act is regulated by which of the following authorities
HUD
122
What items can cloud a title
Easement
Land-lock
Leasehold
123
When is an escrow account typically established
At settlement
124
What affiliated business violation was uncovered by a colorado official leading to resolve by HUD to put an end to the practice
Sham title reinsurance arrangement
125
What must happen before a title binder can be issued to a lender
All liens judgments and ownership must be determined
126
What agency is responsible for managing flood disaster requirements
FEMA
| Federal emergency management flood agency
127
What does a title company use to determine the amount of funds to disburse to the old lender in a refinance transaction
Payoff statement from the lien holder
128
What could result in a three year right to rescission
Failure to disclose all of the terms of the lending transaction as required by TILA
129
What guarantees a lender priority of lien
Subordination agreement
130
What is the best description of a mortgage back security
Bonds which are financed by residential mortgage payments
131
What in the general course of business negotiates loans for borrowers while a separate entity provides the funds for the loans
Mortgage broker
132
Can a Mortgage Broker Compensation Disclosure increase in fees after the disclosure was issued
only in certain circumstances
*additional charge was not reasonably foreseen
(must be done 3 days prior to close with an explanation)
133
Tenancy in common means
Shared ownership with each buyer owing a separate but equal share of the property
Do not inherit
134
Joint tenancy means
Married couples when one member of joint tenancy dies
| The other inherits
135
What type of loan does not require insurance
Subprime and VA
136
Interest on a HECM loans are tax deductible
False
137
In subprime refinance borrowers are generally taking cash against equity versus taking advantage of lower interest rates.
True or false
True
138
The interest rate tigger for first lien mortgage under HOPEA
8% points above the rate for treasury securities with a comparable rate
139
Title insurances is the preferred method of showing evidence of title
True or false
True
140
Abstract and opinion is
Summary of every record filed that affects the title of the property
141
Buyer disclosure is
If a buyer needs to sell their own property before they can complete the transaction
142
CIC
| Common Interest Community Documents
If the property is subject to a homeowners association or other kind of common interest community
143
When do loan officer have to pay a third party
No later than 30 days after the recording of the loan closed or
90 days after third party completion of task which ever comes first
