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Flashcards in General Knowledge Deck (746):
1

Year the Federal Reserve System was created

1913

2

This established a federal charter for banks that permitted them to make real estate loans.

Federal Reserve System

3

This established a framework for government involvement in mortgage lending.

Federal Reserve System

4

Year the Federal Home Loan Bank Act was created

1932

5

This was created to allow Federal Home Loan Banks to lend money to savings and loans, credit unions and savings banks so that they could also finance home mortgages.

Federal Home Loan Bank Act

6

Year The Banking Act was created

1933

7

This further assisted in creating the Federal Deposit Insurance Corporation (FDIC)

The Banking Act

8

Created to insure deposits and protect consumers against bank default.

Federal Deposit Insurance Corporation (FDIC)

9

This allowed banks to continue to have a source of funds to make more home loans.

Federal Deposit Insurance Corporation (FDIC)

10

The year the Federal Housing Administrative (FHA) was created

1934

11

Who created FHA

National Housing Act.

12

It was created to help the housing industry recover from the Great Depression

Federal Housing Administrative (FHA)

13

This was not originally intended to fund loans but to provide mortgage insurance so banks would not have to incur loses for defaults on home loans.

Federal Housing Administrative (FHA)

14

The creation of the this, allowed lenders to commit more funds to home mortgage loans.

Federal Housing Administrative (FHA)

15

This is the largest insurer of mortgage in the world.

FHA

16

The year Federal National Mortgage Association (FNMA or Fannie Mae) was created.

1938

17

This increased the liquidity in the market and allowed for more money to become available for lenders.

Federal National Mortgage Association (FNMA or Fannie Mae)

18

This was established to provide financial incentives to renovate and build within certain urban areas.

U.S. Department of Housing and Urban Development (HUD)

19

Analyzes a bank’s success or failure to reach out to the lending communities it serves.

Community Reinvestment Act

20

Year that FNMA was privatized and become a government-sponsored entity (GSE).

1968

21

This was created to securitize government issued mortgages.

Government National Mortgage Association (GNMA, Ginnie Mae)

22

These two entities allowed loans to become securitized and sold on the secondary market for profit.

Federal National Mortgage Association (FNMA or Fannie Mae)

Government National Mortgage Association (GNMA, Ginnie Mae)

23

The year the Federal Home Loan Mortgage Corporation (Freddie Mac, FHLMC) was created

1970

24

This was created by subprime lending and a lack of liquidity in the market.

Housing bubble

25

Before July 2006, Subprime mortgage lenders were fueled by a lack of this

Regulation

26

The year the Dodd-Frank Wall Street Reform Act was created

2010

27

This put into place many new regulations after the housing bubble burst.

Dodd-Frank Wall Street Reform Act

28

This created the Consumer Financial Protection Bureau (CFPB)

Dodd-Frank Wall Street Reform Act

29

This was created to begin proposing new federal regulations to prevent another Great Recession

Dodd-Frank Wall Street Reform Act

30

This was created to supervise the mortgage industry and enforce federal law to prevent another Great Recession

Dodd-Frank Wall Street Reform Act

31

This was created to enforce federal law in the hopes that nothing like the Great Recession of 2008 and 2009 would happen again

Dodd-Frank Wall Street Reform Act

32

An individual who for compensation or gain or in the expectation of compensation or gain Takes a residential mortgage loan application

A mortgage loan originator or MLO

33

An individual who for compensation or gain or in the expectation of compensation or gain Offers or negotiates terms of a residential mortgage loan.

A mortgage loan originator or MLO

34

An individual who for compensation or gain or in the expectation of compensation or gain Does not include an individual engaged solely as a loan processor or underwriter
except if they are an independent contractor

A mortgage loan originator or MLO

35

Does not include a person or entity solely involved in extensions of credit relating to timeshare plans.

A mortgage loan originator or MLO

36

A licensing system that was developed and is maintained by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR).

NMLS

37

The purpose of the ________ is to store the information of each licensee and allow for the movement of information between the MLO or applicant for an MLO license and the state in which they intend to be licensed.

NMLS

38

A _______ __________is a number that will identify which MLO is originating a loan by appearing on the residential loan application.

Unique identifier

39

A ________ ________ is defined as: an individual or firm (generally a firm) that brings borrowers and lenders together for loan origination.

Mortgage Broker

40

A ________ _______ typically takes loan applications and may process loans.

Mortgage Broker

41

A ________ ________ can sometimes close the loan, but they typically turn it over to the lender for underwriting and closing

Mortgage Broker

42

A ______ ______is defined as an entity that provides funds for a mortgage.

Mortgage Lender

43

________ ________also manage the credit and financial information review.

Mortgage Lenders

44

A _________ ________ may also take the loan from the application process through closing.

Mortgage lender

45

Once the lender funds a loan, unless the lender retains the loan on their books, they will break the loan into two separate rights;

The servicing rights and the mortgage

46

The lender will typically sell the mortgage to the ________ ________

Secondary market

47

The servicing rights to a loan can be sold to a ____________ __________.

Mortgage Servicer

48

A __________ __________ is a firm that performs servicing functions, including collecting mortgage payments.

Mortgage Servicer

49

A __________ __________ is a firm that performs servicing functions, including paying the borrower’s taxes and insurance.

Mortgage Servicer

50

A __________ __________ is a firm that performs servicing functions, including generally managing borrower escrow accounts.

Mortgage Servicer

51

The ______ _______ ______ is the market in which mortgage loans and mortgage-backed securities are bought and sold.

Secondary mortgage market

52

_________ ________ ________are a type of asset-backed security that is secured by a mortgage or collection of mortgages

Mortgage-backed securities

53

____________ are sold to a group of individuals that packages them into a security that investors can buy and sell on the market.

Mortgages

54

Big players on the secondary market are:

The Federal National Mortgage Association (FNMA,
Fannie Mae), The Federal Home Loan Mortgage Corporation (FHLMC, Freddie Mac) and The Government National Mortgage Association (GNMA, Ginnie Mae).

55

Both __________ and __________ are government-sponsored entities or GSE’s

Fannie Mae and Freddie Mac

56

They provide liquidity to the market by purchasing mortgages and mortgage-backed securities and selling them on the secondary market.

Fannie Mae and Freddie Mac

57

Fannie Mae and Freddie Mac will only purchase this type of loan.

Conventional Loans

58

Government-owned entity that purchases mortgages and mortgage-backed securities and sells them on the secondary market.

Government National Mortgage Association (GNMA, Ginnie Mae).

59

Government National Mortgage Association (GNMA, Ginnie Mae) will only purchase this type of loan.

Government

60

When entities purchase loans from lenders, it frees up the lender’s funds, which keeps the market moving by allowing the lender help more borrowers. This process is called what?

Mortgage Loan Life Cycle

61

The three stages of a mortgage loan life cycle.

Borrowers consideration, the primary market and the secondary market.

62

An entity that has the power to regulate the mortgage industry.

Regulatory Authority

63

They have the power to investigate, impose penalties, provide supervision or a combination of the three.

Regulatory Authority

64

Each state has its own state __________ __________ that is responsible for the supervision and enforcement of the state laws regarding the mortgage industry.

Regulatory Authority

65

At the highest level are ___________ __________ __________ that enforce federal law and supervise the mortgage industry.

Federal regulatory authorities

66

There are _________ __________ _________that are only able to regulate their state and cannot set laws beneath the federal standards.

State regulatory authorities.

67

The major enforcer and supervisor for the federal government of the mortgage industry.

Consumer Financial Protection Bureau

68

A relatively new entity created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, assigned to increase the oversight and regulatory burden of the mortgage industry.

Consumer Financial Protection Bureau

69

The key federal law that regulates the licensing process and responsibilities of mortgage loan originators.

The Secure and Fair Enforcement Act of 2008 (SAFE Act)

70

The year the SAFE Act was passed

2009

71

The text of a law that was provided to each state as a guide to creating its own state law.

Model Law

72

What two entities created the Model Law

Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage (AARMR)

73

The application for MLO licensing used my the NMLS

MU4

74

The 20-hour pre-licensing education must include:

3 hours of federal law and regulation
3 hours of ethics, which must include instruction on fraud, consumer protection, and fair
lending issues
2 hours of training related to lending standards for nontraditional mortgage product
marketplace
12 elective hours

75

A ________ ________is a lot like malpractice insurance for a doctor

Surety bond

76

At a minimum, the continuing education must include:

3 hours of federal law and regulations

2 hours of ethics – including instruction on fraud, consumer protection and fair lending
issues

2 hours of training to related to the lending standards for the non-traditional mortgage
product marketplace

77

An MLO cannot take the same continuing education course in a two-year period. This is
called the:

Successive year rule.

78

They looked to strengthen loan originator qualification requirements and regulate industry compensation practices.

Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)

79

They issued new rules to implement the Dodd-Frank Act requirements, as well as to revise and clarify existing regulations and commentary on loan originator compensation.

CFPB

80

This defines “a term of a transaction” as “any right or obligation of the parties to a credit transaction.” This means, for example, that a mortgage broker cannot receive compensation based on the interest rate of a loan or on the fact that the loan officer steered a consumer to purchase required title insurance from an affiliate of the broker, since the consumer is obligated to pay interest and the required title insurance in connection with the loan.

The Loan Originator Compensation Rule (LO Comp)

81

To prevent evasion, ____ ________prohibits compensation based on a “proxy” for a term of a transaction.

The Loan Originator Compensation Rule (LO Comp)

82

To prevent evasion,_______ _______generally prohibits loan originator compensation from being reduced to offset the cost of a change in transaction terms (often called a “pricing concession”). However, the final rule allows loan originators to reduce their compensation to defray certain unexpected increases in estimated settlement costs

The Loan Originator Compensation Rule (LO Comp)

83

To prevent incentives to “up-charge” consumers on their loans, this generally prohibits loan originator compensation based upon the profitability of a transaction or a pool of transactions. However, subject to certain restrictions, the final rule permits certain bonuses and retirement and profit-sharing plans to be based on the terms of multiple loan originators' transactions.

The Loan Originator Compensation Rule (LO Comp)

84

This was designed to address consumer confusion over mortgage broker loyalties where the brokers were receiving payments both from the consumer and the creditor.

LO Comp

85

This also requires that loan originators provide their unique identifiers under the NMLS on loan documents.

LO Comp

86

This extends existing recordkeeping requirements concerning loan originator compensation so that they apply to both creditors and mortgage brokers for three years.

LO Comp

87

________________ is considered annual or other period bonuses, awards or merchandise, services, trips or similar prizes as well as salaries, and commissions.

Compensation

88

The _________________ rule was put into place to eliminate the ability of lenders to pay loan originators based upon terms and conditions of a loan.

Loan Originator Compensation

89

For an MLO to be sure they are not steering and meet the requirements of the LO Compensation Rule the MLO must show:



The consumer is presented with loan offers for each type of transaction in which the consumer expresses an interest (that is, a fixed rate loan, adjustable rate loan, or a reverse mortgage); and
• The loan options presented to the consumer include the following:
o The lowest interest rate for which the consumer qualifies;
o The lowest points and origination fees, and
o The lowest rate for which the consumer qualifies for a loan with no risky features,
such as a prepayment penalty, negative amortization, or a balloon payment in the first seven years.

90

The most common type of mortgage available.

Fixed rate mortgage

91

A mortgage with a fixed interest rate over the entire term of the loan.

Fixed Rate Mortgage

92

A mortgage that has fixed terms of 10 years, 15 years, 20 years, 25 years or 30 years.

A Fixed Rate Mortgage

93

The only time a payment changes on a fixed rate mortgage is if one of these 3 things would happen

1. In the event of the borrower’s taxes increase
2. If the insurance increases
3. When the mortgage insurance is removed.

94

An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition.

Escrow

95

For example, the deposit by a borrower with a lender of funds to pay taxes and insurance premiums when they become due. These items are placed into what type of an account?

Escrow

96

This account is where the funds to pay taxes and insurance are held until they are due to be paid.

Escrow

97

When the taxes and insurance become due, with an Escrow account, one of 2 entities can pay them.

1. Lender
2. Servicer

98

What type of mortgage is a 30-year fixed mortgage.

Traditional Mortgage

99

A ____________ mortgage is anything other than 30-year fixed rate mortgage

Non traditional

100

A mortgage loan where the interest rate on the loan periodically adjusts.

Adjustable rate mortgage (ARM)

101

With an Adjustable Rate Mortgage, the adjustment is based upon these 3 things. an index, a margin and adjustment caps.

1. Index
2. Margin
3. Adjustment caps.

102

This mortgage starts out with an initial rate and payment.

Adjustable Rate Mortgage (ARM)

103

The initial rate and payment amount on this mortgage remains in effect for a limited period. That limited period can range from 1 month to several years.

Adjustable Rate Mortgage (ARM)

104

With most ARMs, your options for how often the interest rate and monthly payment may change, is one of the 5 following

1. Monthly
2. Quarterly
3. Yearly
4. 3 year
5. 5 years

105

On an ARM, the period between the rate changes is called what?

Adjustment period

106

An interest rate on an ARM is made up of what two parts?

The index and the margin

107

In regards to an interest rate on an ARM, this is the measure of interest rates that fluctuate with the market.

Index

108

In regards to an interest rate on an ARM, this is the amount the lender ads, that is assigned at the origination, that always stays the same.

Margin

109

The three most common indexes in the mortgage industry are:

1. The LIBOR (London Interbank Offered Rate)
2. The COFI (FHLBB 11th District Cost of Funds Index)
3. The CMT (Constant Maturity Treasury)

110

The index percent and margin percent added together is called what?

Fully-indexed rate

111

In regards to ARM, this is put into place to make sure that the borrower’s interest rate never goes up more than a certain percentage every time it adjusts.

Interest rate cap

112

The 3 different kinds of interest rate caps on ARMs

1.The first adjustment cap
2. The subsequent adjustment cap
3. The lifetime adjustment cap

113

In regards to ARMs, this allows the loan’s interest rate to adjust up or down by only a certain amount at the first adjustment.

The first adjustment cap

114

In regards to ARMs, this only allows the interest rate to adjust by a specific percentage on any other adjustments after the first adjustment

The subsequent adjustment cap

115

In regards to ARMs, this limits the amount of total upward-adjustments for the life of the loan.

The lifetime adjustment cap.

116

The three common types of ARMs.

1.Hybrid ARM
2. Interest-only ARM
3. Payment option ARM.

117

These types of ARMs are often advertised as 3/1, 5/1. 7/1 or 10/1 ARMs.

Hybrid

118

These types of ARMs are a mix between fixed rate and adjustable rate mortgages.

Hybrid

119

In regards to ARMs, taking the 3/1 for an example, the interest rate is fixed for 3 years and then adjusts every one year after that fixed period ends.

Hybrid

120

This ARM payment plan allows for the borrower to pay only the interest on their loan for specified number of years.

An interest-only (I/O)

121

Typically, _____________ ARMs allow for interest only payment for 3 to 10 years.

An interest-only (I/O)

122

In regards to ARMs, this allows the borrower to have smaller monthly payments for a certain period. After that, the monthly payment increases, even the interest rates stay the same, because the borrower is required to start paying down the principal as well as the interest.

An interest-only (I/O) ARM

123

Some __________ ARMs allow for the interest rate to adjust during the __________ period, some do not.

An interest-only (I/O) ARM

124

The ________ ________ ARM allows the borrower to choose from several payment options.

Payment option

125

The payment option ARM allows the borrower to choose from several payment options. The options typically include:
.

1. An interest-only payment
2. A minimum payment
3. A combined PMT that includes the interest payment and a payment towards the
principal.

126

This “payment option ARM” allows the borrower to pay only the interest on the loan each month.

Interest-only payment.

127

This “Payment option ARM” allows the borrower to pay a payment that can be less than the interest due that month, which may increase the amount the borrower owes on the mortgage.

Minimum Payment

128

This payment option ARM allows the borrower to pay a payment that includes the interest payment and a payment towards the
principal.

Combined PMT

129

This type of loan is usually a short-term loan that provides funds to cover the cost of building or rehabilitating a home.

Construction loan.

130

A _________ loan generally has higher interest rates than longer-term mortgage loans used to purchase homes.

Construction

131

The money borrowed through a __________ loan is typically provided in a series of advances as the construction progresses.

Construction

132

A short-term loan secured by the borrower’s current home (which is usually for sale) that allows the proceeds to be used for building or closing on a new home before the current home is sold.

Bridge loan

133

A mortgage that has a low initial monthly payment that gradually increases over a specified time frame that is determined out at the time of origination.

A graduated payment mortgage (GPM)

134

This loan uses negative amortization to allow the borrower to have an initially discounted monthly payment.

A graduated payment mortgage (GPM)

135

The purpose of this loan, is to allow a borrower with limited income that can document a likely future increase in income to buy a house sooner by starting with a smaller house payment that increases over time.

A graduated payment mortgage (GPM)

136

True or false: On a Negative Amortization loan, the amount of interest not covered is added onto the principal balance of the loan.

True

137

This occurs when a payment covers the amount of interest being accrued plus an additional amount towards the principal balance of the loan.

Regular amortization

138

An ___________ ___________ shows how much a person would have to pay monthly to pay off their loan in a specific period.

Amortization schedule

139

A type of revolving loan, that enables a homeowner to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower’s equity in their property.

A Home Equity Line of Credit or a HELOC,

140

It is an open-ended loan that allow the borrower to take money out of their home to do other things with it.

A Home Equity Line of Credit or a HELOC

141

True or false: The borrower does not need to have equity built in their home to qualify for a HELOC.

False.
The borrower must have equity already built in their home to qualify for a HELOC.

142

A HELOC generally doesn’t allow the borrower to take 100 percent of the equity out of the property, it’s usually around this percent

80

143

A _______________usually only requires interest-only payments on it and can be paid down and then the money can be taken out again.

HELOC. Home equity line of credit.

144

A mortgage that requires a larger than usual one-time payment at the end of the term.

Balloon mortgage

145

These loans generally have lower payments in the years before a big amount at the end of the loan.

Balloon Mortgage

146

This payment is more than two times the loan’s average monthly payment and can often times be thousands to tens of thousands of dollars.

Balloon payment

147

Most of these loans require one large payment that pays off your remaining balance at the end of the loan.

Balloon loan

148

In this type of a mortgage, the borrower will pay interest and principal payments for a fixed term, sometimes that term is 10 years or 15 years, it can vary. After that fixed term is over the borrower must pay off the rest of the balance of the loan.

Balloon

149

A mortgage loan that is not insured or guaranteed by the federal government or one of its agencies, such as the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), or the Rural Housing Service (RHS).

Conventional Mortgage

150

A ______________ mortgage is a mortgage that conforms with Fannie Mae and Freddie Mac guidelines.

Conforming

151

A loan that is _________________is any loan that does not conform to Fannie Mae and Freddie Mac guidelines.

Non-conforming

152

True or false:
A conventional loan can be either non-conforming or conforming.

True

153

_________________ loans can be fixed rate mortgage, adjustable rate mortgages, balloon mortgages or hybrid mortgages.

Conventional

154

Fannie Mae’s AUS is called:

Desktop Underwriter or DU

155

Freddie Mac’s AUS is called:

Prospector or LP

156

The most common loan types used in conforming lending are:

1. 30 and 15- year fixed rate mortgages
2. Adjustable rate mortgages.

157

For conventional loans, debt to income ratio if manually underwritten.

28%/36%

158

For conventional loans, what is the minimum down payment?

3%

159

On average, what is the lowest fico credit score for conventional mortgages?

640

160

Loan limit maximum for a conventional conforming mortgage:

453,100

161

Mortgage minimum to be considered a conventional non-conforming loan.

453,100

162

Required on conventional loans with less than 20% down

Private Mortgage Insurance (PMI)

163

True or False:
Appraisals are not required on Conventional loans.

False

164

True or False:
Gift Funds are allowed for Down Payment on a Conventional loan.

True

165

In regards to a conventional loan, how long do you have to wait after a Chapter 13 discharge?

2 years

166

In regards to a conventional loan, how long do you have to wait after a Chapter 7 filing?

1 year

167

In regards to a Conventional loan, what is the wait time to apply after a Foreclosure?

2 years

168

Maximum loan to Value on a Conventional cash out refinance?

85%

169

Required reserves on a conventional loan

2-4 months

170

Sellers Concessions on a Conventional loan

3%

171

True or False:
On a conventional loan, the co-borrower does not have to occupy the residence?

False

172

Employment history needed for a Conventional loan

2 years

173

Is a Conventional loan considered a consumable loan?

No

174

This type of bankruptcy provides for complete liquidation of the debtor’s debts.

Chapter 7

175

This type of bankruptcy provides for the debtor to pay back their creditors through a payment plan decided by the court.

Chapter 13

176

This is a calculation made to determine whether the borrower has the ability to pay for the loan they are attempting to receive.

Debt to Income

177

Another term for Debt to Income ratios.

Qualifying Ratios

178

This ratio simply takes the amount that the borrower will be paying for their mortgage and divides it by their gross monthly income

The Front-End Debt to Income Ratio/Housing Expense Ratio

179

This ratio takes all of the borrower’s monthly liabilities and divides it by their gross monthly income.

The Back-End Debt to Income Ratio/ Total Expense Ratio

180

Calculation where you take the loan amount and divide it by the borrower’s purchase price or the properties appraised value (whichever is lower).

Loan to Value. LTV

181

Responsible for the creation of the NMLS.

America Association of Residential Mortgage Regulators.

182

This is an arrangement between two different companies involved in providing services in the closing of a real estate transaction.

Affiliated Business Arrangement.

183

True or false:
There can be no ownership interest in an Affiliated Business Arrangement

True

184

True or false:
An Affiliated Business Arrangement does not requires a disclosure under RESPA.

False

185

The middleman between appraisers and mortgage companies.

Appraisal Management Company

186

A law in place to require financial institutions to prevent, detect and report money laundering activities

Anti-Money Laundering

187

Rate used to determine whether a loan is high- cost or higher priced.

Average Prime Offer Rate.

188

Calculates the annual percentage rate you would pay on the loan once the costs of getting the loan are factored in.

Annual Percentage Rate

189

A mortgage that will have a fixed rate for a set period and then the rate is adjusted. The rate will normally be adjusted once or twice a year.

Adjustable Rate Mortgage

190

Rule that requires lenders to determine whether a borrower has the ability to repay their loan and requires verification of the information provided to prove the ability to repay (under QM)

Ability to Repay

191

System used to automatically underwrite conforming loans.

Automated Underwriting System

192

Requires suspicious activity reports (SARS) regarding suspicious activities.

Bank Secrecy Act

193

A federal database of people who have delinquencies on any kind of federal debt.

Credit Alert Verification Reporting System

194

Federal regulator that regulates the mortgage industry. (The Boss)

Consumer Financial Protection Bureau

195

Required disclosure on ARM loans to educate the consumer about the type of loan they are on.

Consumer Handbook on Adjustable Rate Mortgages.

196

Calculated by dividing the amount of a 1st lien loan and the total line of the credit on a HELOC or total amount of a 2nd lien loan by the purchase price or the appraised value of the property whichever is less.

Combined Loan to Value

197

Required document on VA loans to determine the amount of eligibility that veteran borrower has.

Certificate of Eligibility

198

Index used on ARM loans (margin + index)

Cost of Funds Index

199

Two ratios, front end and back end.

Debt to Income

200

The AUS used by Fannie Mae.

Desktop Underwriter

201

A law in the U.S. that makes it illegal for any creditor to discriminate against any applicant based on race, religion, national origin, sex, etc.

Equal Credit Opportunity Act.

202

Prevent identity theft, puts limits on information sharing. Amendment to FCRA.

Fair and Accurate Credit Transactions Act

203

Regulates how consumer-reporting agencies use consumer information.

Fair Credit Reporting Act

204

Regulates depository institutions.

Federal Deposit Insurance Corporation

205

Collects and distributes HMDA information.

Federal Financial Institutions Examination Counci

206

The Federal Government Agency that oversees the US Housing Market.

Federal Housing Administration

207

These types of mortgages are guaranteed by the Federal Government and offered by banks/lenders.

Federal Housing Administration. FHA.

208

A corporation authorized by Congress to provide a secondary market for residential mortgages.

Federal Home Loan Mortgage Corporation

209

A government sponsored entity created by Congress to increase access to mortgage.

Federal Housing Administration (Freddie Mac)

210

Mortgages offered under Freddie Mac guidelines are called ______________ mortgages.

Conforming

211

The company that created the industry standard credit scores used by almost all lenders.

Fair Isaac Corporation. FICO

212

The _______ score is a numeric summary of the information in your credit reports that represents your potential credit risk.

FICO

213

The entity that a SAR(suspicious activity report) would be reported to.

Financial Crimes Enforcement Network FinCEN

214

A government sponsored entity created by Congress to increase access to mortgages.

Federal National Mortgage Association (Fannie Mae)

215

Mortgages offered under Fannie Mae guidelines are called ___________ mortgages.

Conforming

216

A document that the lender is required to give a prospective borrower when they apply for a loan.

Good Faith Estimate.

217

The ______ _______ _________is an estimate of all closing costs and fees required for the proposed mortgage loan.

Good Faith Estimate

218

Requires disclosure of information sharing policies.

Gramm-Leach Bliley Act

219

This is a type of mortgage on which the payment starts low and rises over time.

Graduated Payment Mortgage

220

A financial services corporation created by the US Congress (Fannie and Freddie Mac)

Government Sponsored Enterprise

221

A refinance program that allows eligible borrowers, with little to no equity in their homes, to take advantage of low interest rates and other refinancing benefits.

Home Affordable Refinance Program. HARP

222

Loan for borrowers 62 years and older. Uses the equity in their home to create cash disbursements to the borrower.

Home Equity Conversion Mortgage

223

A loan in which the lender agrees to lend a maximum amount within an agreed loan term, where the collateral is the borrower’s equity in his or her house.

Home Equity Line of Credit. HELOC

224

Requires lenders to report their lending patterns geographically to prevent redlining and reverse redlining.

Home Mortgage Disclosure Act

225

Regulates high cost home loans.

Home Ownership and Equity Protection Act

226

Regulates the cancellation of private mortgage insurance

Homeowners Protection Act

227

The primary housing and lending regulatory authority in the U.S.

U.S. Department of Housing and Urban Development. HUD

228

A payment that only covers the interest on the loan.

Interest Only

229

A non-owner occupied property that is rented out by the borrower

Investment Property

230

This refinance loan allows you to lower your interest rate on an existing VA home loan.

VA Interest Rate Reduction Refinance Loan.

231

The AUS (Automated underwriting system)used by Freddie Mac.

Loan Prospector

232

A ratio used by the lender that divides the amount of money borrowed by the appraised value of the home expressed as a percentage.

Loan-to-Value

233

These are investment instruments that are bundled by Fannie, Freddie and Ginnie Mae for sale on Wall Street.

Mortgage Backed Security

234

Mortgage insurance charged monthly on an FHA loan.

Monthly Mortgage Insurance

235

A loan that doesn’t require income or assets.

A loan that doesn’t require income or assets.

236

A loan that requires no income verification

No income verification

237

A loan on a property not occupied by the owner. (investment property, vacation/second home)

Non-owner occupied

238

A loan on a property owned by the owner.

Owner-occupied

239

The two elements that go towards repaying your loan.

Principal and Interest

240

These are the four main components of your monthly mortgage payment. Principal is the loan amount. Interest is the rate at which the finance charge you pay for borrowing is calculated. Taxes are the real estate taxes for which you are responsible, and insurance is the homeowner’s insurance that your lender requires you to have.

Principle, Interest, Taxes and Insurance

241

The loan amount.

Principal

242

The rate at which the finance charge you pay for borrowing is calculated.

Interest

243

The real estate taxes for which you are responsible

Taxes

244

The homeowner’s insurance that your lender requires you to have.

Insurance

245

If you put down less than 20 percent most lenders or banks require you to have this. This can be put into your monthly mortgage payment or calculated into your rate.

Private Mortgage Insurance

246

A penalty charged to a borrower if they pay their loan in full before the end of its term.

Prepayment Penalty

247

A type of development is designed real estate, usually a combination of housing, recreation, commercial and industrial parks all within one development or subdivision

Planned Urban Development

248

A type of loan that requires the lender to make sure that borrower can repay the loan

Qualified Mortgage

249

Report required to be made to FinCEN under the Bank Secrecy Act (BSA) when there is a suspicion of money laundering or fraud.

Suspicious Activity Report

250

The loan only requires the borrower to state their income and assets, doesn’t require verification.

Stated income, stated asset

251

Payment received by a lender on the sale of a closed mortgage loan to the secondary market

Service Release Premium

252

An important document you will receive from the lender or bank within three days of your application. Within the document certain disclosures are set forth. Such as, finance charges, annual percentage rate (APR), amount financed, total of payments, and total sales price will be disclosed.

Truth in Lending. TIL

253

This is calculated by dividing the sum of the 1st lien mortgage amount and the disbursed amount of a HELOC or 2nd lien by either the property’s purchase price or appraised value (whichever is less)

Total Loan to Value

254

New legislation as of October 2015, requires the Loan Estimate and Closing Disclosure, replaces the GFE, TIL and HUD-1 disclosures.

TILA-RESPA Integrated Disclosure Rule

255

Mortgage insurance premium paid in a lump sum upfront on an FHA loan.

Upfront Mortgage Insurance Premium

256

25 question addition to the National Test Component that replaced most individual state tests.

Uniform State Test

257

This federal government agency guarantees mortgages that assist eligible veterans in buying homes.

Department of Veterans Affairs. VA

258

Used to verify that X amount of money is in a borrower’s bank account.

Verification of Deposit

259

Used to verify that a borrower is employed.

Verification of Employment

260

Used to verify that a borrower has X mortgage.

Verification of Mortgage

261

Used to verify that a borrower pays rent and pays their rent on time.

Verification of Rent

262

Paid to the broker for giving a borrower a higher interest rate on a loan in exchange for lower up-front costs generally paid in origination fees, broker fees or discount points

Yield Spread Premium

263

When the seller of a home agrees to pay certain costs associated with the closing process on behalf of the borrower, this is referred to a ____________ ___________.

Seller Concessions

264

The cash amount that the borrower has available after making a down payment and paying closing costs for the purchase of a home.

Reserves

265

Some loan programs allow for the seller to only pay a set percentage of ___________ __________, limiting the amount of contributions paid to help cover the borrowers closing costs.

Seller Concessions

266

This is required on all conventional/conforming loans when the borrower’s down payment is less than 20 percent OR if the loan has an LTV of 80 percent or higher.

Private Mortgage Insurance

267

Insurance for conventional loans that protects the lender from incurring loss in the event of default by the borrower.

Private Mortgage Insurance (PMI)

268

Typically provided through a third-party company, however, the payment for the _______ is included within the borrower’s monthly mortgage payment.

Private Mortgage Insurance (PMI)

269

In July of 1999, _______ ________ _________ went into effect. Before this, the federal government did not regulate PMI. The Homeowners Protection Act addresses how/when PMI may be removed from a loan.

Homeowners Protection Act

270

This addresses how/when PMI may be removed from a loan.

Homeowners Protection Act

271

This provides two ways for private mortgage insurance to be cancelled/removed.

The Homeowners Protection Act

272

The two ways for private mortgage insurance to be cancelled/removed.

1. When the borrower has at least 20 percent equity in their home and has paid down the mortgage balance to 80 percent
2. When the balance owed drops to 78 percent

273

Maximum debt to income for a FHA loan

31%/43%

274

Minimum down payment on FHA loans

3.5 % (up to 97.5%LTV)

275

Minimum credit score on FHA loans

580 with 3.5% down OR
500-579 with 10%+ down

276

Is monthly mortgage insurance required on FHA loans?

Yes

277

True or false:
Upfront mortgage insurance is not required on a FHA loan.

False

278

True or false:
Appraisals are required for FHA loans.

True

279

True or false:
Gift funds are not allowed for FHA loans.

False

280

On an FHA loan, borrowers have to wait for this amount of time after a foreclosure.

3 years

281

On an FHA loan, borrowers have to wait for this amount of time after a chapter 13 discharge.

2 years

282

On an FHA loan, borrowers have to wait for this amount of time after a chapter 7 filing.

1 years

283

LTV requirements for a cash-out refinance for FHA loans.

85%maximum LTV

284

Reserves needed for FHA loans.

None

285

Maximum sellers Concessions on an FHA loan

6%

286

True or false:
A Non-occupying Co-borrower is allowed on FHA loans.

True

287

Is an FHA loan assumable?

Yes with an FHA creditworthiness check.

288

This type of loan is less strict on employment history as they are meant for people with less than perfect credit or income qualifications.

FHA

289

True or false:
FHA loans are an Owner Occupancy loan that requires borrowers to move in within 30days.

False. Must move in within 60 days.

290

FHA (Federal Housing Administration) Loans are insures by _______.

The Department of Housing and Urban Development (HUD).

291

This type of home loan is generally easier to obtain as its underwriting guidelines are more lenient than conventional guidelines.

FHA

292

True or false:
To originate FHA loans, a lender must be approved through FHA.

True

293

When a loan is insured by _________, it protects the lender from incurring damages due to an FHA loan defaulting.

HUD

294

When would a lender submit a claim form to FHA?

When a FHA loan goes into foreclosure.

295

Can FHA take over a property when if goes into foreclosure?

Yes

296

If approved as an unconditional ________ ________, the lender can underwrite and close mortgage loans without prior FHA review or approval.

Direct Endorser (DE)

297

True or false:
FHA loans do not allow for non-traditional credit and no credit score loans.

False. FHA loans do allow for non-traditional credit and no credit score loans.

298

This type of loan allows for a borrower to assume a current mortgage generally with little to no change in terms (especially the interest rate) if approved by the lender.

Assumable

299

True or false:
Assumable loans have no closing costs.

False

300

True or false:
To qualify for an assumable loan, the buyer must pay the difference, in cash, of the asking price verses the owed amount on the home.

True. For example: If a seller lists their home at $240,000 but only owes $200,000 on the loan, a borrower would need to pay $40,000 in cash, but could then assume the sellers mortgage. By doing so, they assume the sellers current mortgage term and interest rate, which may be lower than the current market rate.

301

True or false:
Assumable mortgages typically have higher closing costs.

False.
Assumable mortgages typically have fewer closing costs and can serve as a unique marketing strategy for sellers.

302

What are FHA’s “4 C’s of Underwriting” when evaluating FHA applications:

• Credit history of the borrower
• Capacity to repay the loan
• Cash assets available to close the mortgage
• Collateral, which evaluates the value of the home

303

True or false:
Court-ordered judgments must be paid off before an FHA loan can close.

True

304

Can a borrower still get an FHA loan if they have ever defaulted on a student loan?

No

305

Is it ok for a borrower to still get an FHA loan if they are delinquent or in default on any other type of federal debt?

No

306

An underwriter will use this to determine whether a borrower has ever failed to repay their federal debts or obligations.

Credit Alert Verification Reporting System (CAIVRS)

307

This type of loan allows slightly higher debt-to-income ratios when qualifying for a loan which allows for some flexibility.

FHA

308

While __________ loans are less stringent on the profile of the borrower, they are stricter on the property conditions.

FHA

309

Gift funds from a borrower’s relative or employer may be used on an FHA approved loan for this percent of the down payment.

100%

310

Gift funds from a borrower’s _______ or ________ may be used on an FHA approved loan for the entire amount of the down payment.

Relative, employer

311

FHA requires that a gift letter be signed by the donor and list these 3 things.

Name, contact information and a specific dollar amount.

312

When is the Upfront Mortgage Insurance Premium paid?

At closing

313

The Upfront Mortgage Insurance Premium is currently at _______ percent of the base loan amount.

1.7

314

When a borrower takes out a mortgage with a term of 15 years or more, what will the annual mortgage insurance premium be if:
Base loan amount is less than or equal to 625,500 and the LTV is less than or equal to 95%?

80 basis points or .80%

315

When a borrower takes out a mortgage with a term of 15 years or more, what will the annual mortgage insurance premium be if:
Base loan amount is less than or equal to 625,500 and the LTV is less greater than 95%?

85 basis points or .85%

316

When a borrower takes out a mortgage with a term of 15 years or more, what will the annual mortgage insurance premium be if:
Base loan amount is less greater than 625,500 and the LTV is less than or equal to 95%?

100 basis points or 1.00%

317

When a borrower takes out a mortgage with a term of 15 years or more, what will the annual mortgage insurance premium be if:
Base loan amount is greater than 625,500 and the LTV is greater than 95%?

105 basis points or 1.05%

318

When a borrower takes out a mortgage with a term of less than 15 years, what will the annual mortgage insurance premium be if:
Base loan amount is less than or equal to 625,500 and the LTV is less than or equal to 90%?

45 basis points or .45%

319

When a borrower takes out a mortgage with a term of less than 15 years, what will the annual mortgage insurance premium be if:
Base loan amount is less than or equal to 625,500 and the LTV is greater than 90%?

70 basis points (bps) or .70%

320

When a borrower takes out a mortgage with a term of less than 15 years, what will the annual mortgage insurance premium be if:
Base loan amount is greater than 625,500 and the LTV is less than 78%?

45 basis points(bps) or .45%

321

When a borrower takes out a mortgage with a term of less than 15 years, what will the annual mortgage insurance premium be if:
Base loan amount is greater than 625,500 and the LTV is between 78.01-90%?

70 basis points (bps)or .70%

322

When a borrower takes out a mortgage with a term of less than 15 years, what will the annual mortgage insurance premium be if:
Base loan amount is greater than 625,500 and the LTV is greater than 90%?

95 basis points (bps) or .95%

323

When a borrower takes out a FHA mortgage with a term of less than or equal to 15 years, how long do they pay Monthly Mortgage Insurance if:
LTV is at less than or equal to 78%?

11 years

324

When a borrower takes out a FHA mortgage with a term of less than or equal to 15 years, how long do they pay Monthly Mortgage Insurance if:
LTV is 78.01%-90%?

11 years

325

When a borrower takes out a FHA mortgage with a term of less than or equal to 15 years, how long do they pay Monthly Mortgage Insurance if:
LTV is greater than 90%?

The term of the loan

326

When a borrower takes out a FHA mortgage with a term that is greater than 15 years, how long do they pay Monthly Mortgage Insurance if:
LTV is at less than or equal to 78%?

11 years

327

When a borrower takes out a FHA mortgage with a term that is greater than 15 years, how long do they pay Monthly Mortgage Insurance if:
LTV is greater than 90%?

Term of the loan

328

When a borrower takes out a FHA mortgage with a term that is greater than 15 years, how long do they pay Monthly Mortgage Insurance if:
LTV is between 78.01-90%?

11 years

329

What type of insurances is purchased for conventional Loans?

Private Mortgage Insurance

330

________ __________Insurance and -________ __________Insurance Premium is paid directly to the FHA.

Monthly Mortgage, Upfront Mortgage

331

Monthly Mortgage Insurance and Upfront Mortgage Insurance Premium is paid directly to the _____.

FHA

332

True or false:
Private mortgage insurance can not be used for FHA loans.

False.

333

FHA has a maximum loan amount that they will insure, known as what!

Lending Limit

334

A common FHA refinance product.

FHA Streamline

335

______________ are utilized by borrowers with current FHA mortgages when they would like to reduce their mortgage insurance, interest rate or their payment.

Streamlines

336

The term “_______________” is used as these FHA refinances require less documentation and underwriting, and in some instances, may not require an appraisal.

Streamlines

337

True or false:
FHA Streamlines require an appraisal.

False

338

True or false:
A reverse mortgage is a type of home equity loan.

True

339

A reverse mortgage is a type of _________ _________loan.

Home equity

340

The most common type of FHA reverse mortgage

Home Equity Conversion Mortgage or HECM.

341

A __________ _________is a special type of mortgage/home equity loan developed and insured by the Federal Housing Administration (FHA) that enables older home owners to convert the equity they have in their homes into cash, using a variety of payment options to address their specific financial needs

Reverse Mortgage

342

The main qualifications of a reverse mortgage are:

1. The borrower must be over 62 years old
2. Have a principal residence that is either paid off or have a low mortgage balance that may be paid off at settlement with the proceeds from the reverse loan.

343

This type of loan will take the equity that has been accumulated over time in an elderly borrower’s home and pays it back to them through either installment payments or in a lump sum.

Reverse Mortgage

344

True or false:
Typically, reverse mortgages do not require the borrower to make any payments until the borrower dies, sells the home, or moves out permanently.

True

345

If the borrower dies, there are 3 options regarding how the reverse mortgage may be satisfied:

• The borrower’s estate/heirs may sell the home and pay off the reverse mortgage.
• The borrower’s estate/heirs may pay off the reverse mortgage and keep the property.
• The borrower’s estate/heirs may surrender the property to the lender of the reverse
mortgage.

346

On a reverse mortgage, the borrower’s estate/heirs may have up to this amount of time, depending on the lender/Note, from the borrower’s death to determine how they would like to proceed with the handling of the property.

1 year

347

The 5 payments available on a Home Equity Conversion Mortgage/ Reverse Mortgage:

1. Tenure
2. Term
3. Line of Credit
4. Modified Tenure
5. Modified Term

348

In regards to a reverse mortgage-When the borrower receives monthly payments from the lender as long as the borrower lives and continues to occupy the home as a principal residence.

Tenure

349

In regards to a reverse mortgage:
When the borrower receives monthly payments for a fixed period of time (Example: 20-year term: The borrower receives monthly payments for 20 years).

Term

350

In regards to a reverse mortgage:
The borrower can make withdrawals (up to a set maximum amount) at the borrower’s discretion.

Line of credit

351

In regards to a reverse mortgage:
A combination of the tenure and a line of credit options.

Modified tenure

352

In regards to a reverse mortgage:
A combination of the term and line of credit options.

Modified Term

353

In regards to a VA loan, what is the minimum debt to income?

41% with residual income

354

In regards to a VA loan, what is the minimum down payment?

0% on purchase transactions

355

In regards to a VA loan, what is the minimum credit score?

N/A

356

In regards to a VA loan, what is the monthly mortgage insurance?

None. They pay a guarantee fee.

357

In regards to a VA loan, what is upfront mortgage insurance?

None- they pay a guarantee fee

358

In regards to a VA loan, is an appraisal required?

Yes

359

In regards to a VA loan, are gift funds allowed for a down payment?

No down payment needed.

360

In regards to a VA loan, what is the timeframe for borrowers after Chapter 7 discharge?

2 years

361

In regards to a VA loan, what is the timeframe after chapter 14 filing?

1 year

362

In regards to a VA loan, what is the timeframe for borrowers after foreclosure?

2 years

363

In regards to a VA loan, what is the loan to value requirements on cash out refinances?

90% with 3.3% funding fee

364

In regards to a VA loan, what is the reserves?

No reserves required

365

In regards to a VA loan, what is seller Concessions?

4%

366

In regards to a VA loan, is the loan assumable?

Yes

367

In regards to a VA loan, is it an Owner Occupy loan?

Yes. Within 60 days

368

True or false:
VA loans are for the Veteran that was or is in the Military only.

False. VA loans are also available to a veteran’s surviving spouse.

369

The VA guarantees a certain portion of a VA loan, meaning that the VA will pay the lender up to ___ percent of the loan value should a borrower default n their loan.

25

370

A veteran borrower must have these 3 things to be eligible for a VA loan.

1. Suitable credit
2. Income
3. A valid Certificate of Eligibility (COE)

371

True or false:
VA loans can only be used for primary residences.

True

372

To obtain a valid COE, the Veteran borrower must have been ___________ ______________or meet certain service requirements.

Honorably discharged

373

If a borrower does not meet the minimum service requirements, they may still be eligible if they were discharged due to 1 of these 5 reasons.(

1. Hardship
2. Convenience of the government
3. Reduction-in- force
4. Certain medical conditions
5. Service-connected disability

374

Veterans can have a previously-used entitlement "restored" to purchase another home with a VA loan if:

1. The property purchased with the prior VA loan has been sold and the loan paid in full.
2. A qualified Veteran-transferee (buyer) agrees to assume the VA loan and substitute his or her entitlement for the same amount of entitlement originally used by the Veteran seller.
3. The entitlement may also be restored one time only if the Veteran has repaid the prior VA loan in full, but has not disposed of the property purchased with the prior VA loan.

375

The VA specific cap as to how much a borrower may use to finance a home.

The VA has not set a specific cap as to how much a borrower may use to finance a home.

376

The ________ _________ are the amount a qualified Veteran with full entitlement can borrower without making a down payment.

Loan limits

377

The basic entitlement that is available to the veteran is ?

$36,000

378

Most lenders will lend up to _______ times the Veteran’s available entitlement without a down payment.

4

379

True or false:
Veterans using their benefits for their first home purchase will pay the same funding fee as Veterans using their benefits for a second transaction.

False.

Veterans using their benefits for their first home purchase will pay a different funding fee than the Veterans using their benefits for a second transaction.

380

True or false:
Funding fees vary for different branches of the military.

True

381

True or false:
Funding fees may also vary for Veteran borrowers who also make a down payment .

True

382

For a VA loan for a veteran as a first time use, how much will the funding fee be if they put less than 5% down?

2.15%

383

For a VA loan for a Reservest/ National Guard as a first time use, how much will the funding fee be if they put less than 5% down?

2.40%

384

For a VA loan for a veteran as a first time use, how much will the funding fee be if they put 5- less than 10% down?

1.50%

385

For a VA loan for a Reservest/ National Guard as a first time use, how much will the funding fee be if they put 5 to less than 10% down?

1.75%

386

For a VA loan for a Reservest/ National Guard as a first time use, how much will the funding fee be if they put 10% or more down?

1.50%

387

For a VA loan for a Veteran as a first time use, how much will the funding fee be if they put 10% or more down?

1.25%

388

For a VA loan for a Reservest/ National Guard as a subsequent use, how much will the funding fee be if they put 10% or more down?

1.50%

389

For a VA loan for Veteran as a subsequent use, how much will the funding fee be if they put 10% or more down?

1.25%

390

For a VA loan for a Veteran as a subsequent use, how much will the funding fee be if they put 5- less than 10% down?

1.50%

391

For a VA loan for a Reservest/ National Guard as a subsequent use, how much will the funding fee be if they put 5- less than 10% down?

1.75%

392

For a VA loan for a Veteran as a subsequent use, how much will the funding fee be if they put less than 5% down?

3.30%

393

For a VA loan for a Reservest/ National Guard as a subsequent use, how much will the funding fee be if they put 5- less than 10% down?

3.30%

394

If a veteran borrower has a service-connected disability of _____% or more, they are never charged a funding fee regardless of whether they are a Reservist, National Guard member, or a Veteran of the other branches of the military.

10

395

True or false:
The Veteran’s benefit can also be used by a surviving spouse if the surviving spouse had a Veteran spouse die while in active duty or the Veteran spouse died from a service-connected disability.

True

396

True or false:
Funding fees have to be paid out of pocket by the veteran; they can not be financed into the total loan amount being borrowed.

False
Funding fees do not have to be paid out of pocket by the veteran; they can be financed into the total loan amount being borrowed.

397

The VA only uses the ____________ when calculating debt to income.

Back-end or DTI ratio

398

The maximum back-end debt to income ratio is ____ percent on a VA loan

41

399

This is also used to determine if a veteran has the ability to repay the loan.

Residual Income

400

This is the amount of net income remaining (after deduction of debts and obligations and monthly shelter expenses) to cover family living expenses such as food, health care, clothing and gasoline.

Residual Income

401

The acceptable thresholds for residual income are based on the _________ that the Veteran lives in.

Region

402

These VA thresholds are based on the information supplied by the _________ ___________ _________that is published by the Department of Labor.

Consumer Expenditures Survey

403

The Consumer Expenditures Survey is published by the _______ ______ ________.

Department of Labor

404

When determining a borrower’s residual income, the underwriter will have to take into consideration all members of the household, including the veteran’s ______________.

Dependents

405

When a VA appraisal is completed, it is underwritten by a ______________.

LAPP (Lender Approved Processing Program).

406

This must be submitted in conjunction with the appraisal report when originating a VA loan.

Certificate of Reasonable Value (CRV).

407

Another name for Certificate of Reasonable Value (CRV).

Notice of Value

408

The VA maintains that a ___ percent maximum origination charge may be charged on a VA loan.

1

409

Reasonable and customary fees can be charged for a VA loan including: (9)

• Appraisal fee
• Recording fees
• Credit report fee
• Prepaid items
• Flood determination
• Survey
• Title examination
• Title insurance
• Other fees authorized by the VA

410

It is unacceptable for a lender to charge any fees other than the _____ percent origination fee on a VA loan.

1

411

True or false:
The lender has the right to charge the Veteran for any attorney’s fees or escrow service fees associated with the settlement of the loan.

False

412

The VA IRRRL or VA Interest Rate Reduction Refinance Loan is similar to the ________ _________ but is offered as a VA to VA no-cash out refinance loan.

FHA streamline

413

This type of VA refinance loan does require an additional funding fee and the veteran cannot receive any additional funds out of their property.

VA IRRRL or VA Interest Rate Reduction Refinance Loan

414

Do VA IRRRL or VA Interest Rate Reduction Refinance Loans, require an appraisal?

No

415

What is the funding fee on an Interest Rate Reduction Refinance Loan (IRRRL)?

.50% for everyone

416

True or false:
The funding fee on an Interest Rate Reduction Refinance Loan (IRRRL) can vary depending on credit.

False. .50% for everyone

417

Do Interest Rate Reduction Refinance Loan’s require an appraisal?

No

418

Do Interest Rate Reduction Refinance Loan’s require an underwriting package?

No

419

The 2 ways Interest Rate Reduction Refinance Loan’s (IRRRL) can be done with no money out of pocket.

1. By including all costs in the new loan
2. By funding the new loan at an interest rate high enough to enable the lender to pay the costs.

420

With an Interest Rate Reduction Refinance Loan’s (IRRRL) can the borrower receive any cash back from the loan proceeds?

No.

421

What is the Maximum Debt to Income on a USDA Loan?

29%/41%

422

What is the Minimum Down Payment on a USDA Loan?

0% (100% financing available) on purchase transactions

423

What is the Minimum Credit Score on a USDA Loan?

N/A

424

Is Monthly Mortgage Insurance required on a USDA Loan?

No. They have a guarantee fee.

425

Is Upfront Mortgage Insurance required on a USDA Loan?

No. They have a guarantee fee.

426

What are the Income Limits on a USDA Loan?

115% of the median

427

Is an Appraisal required on a USDA Loan?

Yes

428

Are Gift Funds Allowed for Down Payment on a USDA Loan?

No down payment required

429

How long does an applicant need to wait after a Chapter 7 Discharge on a USDA Loan?

2 years

430

How long does an applicant need to wait after a Chapter 13 Filing on a USDA Loan?

1 year

431

What are the Reserves Required on a USDA Loan?

No reserves required

432

What are the Seller Concessions on a USDA Loan?

Unrestricted amount

433

The U.S. Department of Agriculture (USDA) loan is a type of mortgage that is available in what kind of areas?

Rural

434

USDA loans offer many benefits to the borrowers. What are the top 4?

1. 100 percent financing
2. Lower-than-market interest rates
3. Lower PMI rate than any other loan program.
4. No down payment

435

True or false:
USDA approved lenders can offer 15-30 year loans for USDA borrowers.

False. 30 Year loans only

436

What is a USDA Direct Loan?

A loan offered to low- very low income applicants that must go directly through the USDA.

437

The USDA guarantees this kind of loan.

USDA

438

The USDA program provides a ______ percent loan note guarantee to approved lenders.

90

439

Why does the USDA program provide only a 90 percent loan note guarantee to approved lenders?

In order to reduce the risk of extending a 100 percent loan to eligible rural homebuyers.

440

The guarantee fee on a USDA is broken up into two parts. What are they?

1. The monthly guarantee fee.
2. The initial guarantee fee.

441

On USDA loans the initial guarantee fee is how much?

1%

442

On a USDA Loan, How much is the monthly guarantee fee?

.35%

443

On a USDA Loan, can the initial guarantee fee be added into the loan amount?

Yes

444

True or false:
On a USDA Loan, if the initial guarantee fee is added into the loan amount, LTV cannot go over 100%

False.
The initial guarantee fee can be added into the loan amount and CAN push the LTV over 100 percent.

445

True or false:
The USDA only has an unlimited amount of money they can lend.

False.
The USDA only has a set amount of money they can lend on a yearly basis.

446

Often by the end of _________ the USDA they have hit there limit and suspend lending until the beginning of the next year.

October

447

A late or defective acceptance is considered a ___________.

Counteroffer

448

Unlike a lease or license, an __________ may last forever, but it does not give the holder the right to possess, take from, improve upon, or sell the land.

Easement

449

A right-of-way.

Easement

450

A right of entry for any purpose relating to the dominant estate.

Easement

451

A right to support of land and buildings

Easement

452

A right of light and air

Easement

453

A right to water

Easement

454

A right to do some act that would otherwise amount to a nuisance.

Easement

455

A right to place or keep something on the servient estate.

Easement

456

Written settlement agreement that will always accompany deed in lieu.

Deed-in-Lieu of Foreclosure

457

When the Lender waives the right to collect any deficiency based on a promissory note.

Deed-in-Lieu of Foreclosure

458

An _______________ cannot defeat the transfer of possession, but it remains after the property or right is transferred.

Encumbrance

459

In regards to a
Fixed-Period Adjustable-Rate Mortgage- The amount by which the interest rate can adjust after the fixed period is usually subject to an interest rate_______ _________.

cap structure

460

Permitting one to retain a loan of money after it has become due and payable is __________ it.

Forbearing

461

That is, _________________, within the meaning of usury laws, is the giving of further time for the return of payment of money after the date upon which it became due.

Forbearance

462

When the buyer will include an inspection contingency, requiring the home to be inspected for physical damages or problems before the sales contract is binding. This is considered a:

Contingency clause

463

True or false:
The buyer will have the right to rescind if a contingency is not met.

True

464

The rights of ingress and egress are often secured by __________.

Easements

465

A legal right to a limited use of another’s property.

Easement

466

______________ and _________ guidelines are typically more stringent than other loan programs, therefor not all borrowers will qualify for these loans.

Fannie Mae and Freddie Mac

467

Examples of who may fall into the conventional/non-conforming category. (5)

1. Less than perfect credit
2. Less than two years of job history
3. Non-traditional types of income
4. Higher DTI’s
5. Loan amounts that exceed the loan limits

468

A jumbo loan is a loan that exceeds $____________.

$453,100

469

Jumbo loans are treated as ________ but _________ _______ loans.

conventional, non- conforming

470

Subprime loans were originally designed for borrowers who had ___________________.

Less than perfect credit.

471

These loans have all but disappeared because they are one of the main causes of the mortgage meltdown.

Subprime loans

472

These loans were manually underwritten; they had little or no amortization or included negative amortization features.

Subprime loans

473

This type of loan had low credit requirements, didn’t provide private mortgage insurance or escrow features.

Subprime loans.

474

A lot of these types of loans had little verification of what the borrower was presenting as their income, assets or employment which made them incredibly risky for the lenders.

Subprime loans

475

These loans usually came with much higher interest rates (higher risk, higher interest) and usually the borrower could not afford the loan.

Subprime loans

476

True or false:
Most subprime loans are nonexistent at this point but it’s possible they will resurface.

True

477

NINA – No Income/No Asset Mortgages - Often referred to as “No Doc” mortgages. The borrower is not required to provide any financial information regarding their income or their assets. This is an example of what kind of loan?

Subprime

478

SISA- State Income/Stated Asset – SISSA loans only require the borrower to state their income and asset situation but do not require the verifications of the income or asset information. This is an example of what kind of loan?

Subprime

479

SIFA or SIVA – Stated Income/Full Asset or Stated Income/Verified Asset – SIFA or SIVA loans only require the borrower to state their income but provide asset information. This is an example of what kind of loan?

Subprime loans

480

No Doc - No additional income documents are required.
Low-Doc – Minimal income documents are required.
These are examples of what kind of loans?

Subprime

481

The Interagency Guidance on Nontraditional Mortgage Product Risks was published by federal financial regulatory agencies in what year?

2006

482

The Interagency Guidance on Nontraditional Mortgage Product Risks was published by who in 2006?

federal financial regulatory agencies

483

Why was The Interagency Guidance on Nontraditional Mortgage Product Risks written?

To provide guidance to lenders regarding nontraditional mortgage products.

484

This was written in 2006 to provide guidance to lenders regarding nontraditional mortgage products.

The Interagency Guidance on Nontraditional Mortgage Product Risks

485

The _______________________does not exactly pertain to subprime mortgage lending but it does outline good underwriting practices and consumer protection principles that all institutions should consider.

Interagency Guidance on Nontraditional Mortgage Product Risks

486

This Guidance defines nontraditional mortgage products as products that allow borrowers to defer principal and in some cases interest.

Interagency Guidance on Nontraditional Mortgage Product Risks

487

This Guidance defines nontraditional mortgage products as products with interest only features and products that have the potential for negative amortization, including products with flexible payment options.

Interagency Guidance on Nontraditional Mortgage Product Risks

488

This Guidance is concerned about payment shock, competitive pressures, and ceding underwriting standards to third-party organizations

Interagency Guidance on Nontraditional Mortgage Product Risks

489

What is payment shock?

When a borrower’s payment suddenly increases.

490

This happens in situations where the interest rate is variable or there is an introductory interest rate on a loan. The change in the interest rate causes the borrowers payment to increase and in some situations the borrower can no longer afford to pay their mortgage because the interest rate is so high. This causes the borrower to then default on the loan.

Payment shock

491

While implementing qualifying standards for nontraditional mortgage products, institutions should take into consideration the impact of ___________ ___________.

Payment shock

492

These products are not appropriate for borrowers that have high loan to value, high debt to income ratios and low credit scores.

Nontraditional

493

An analysis of the borrower’s repayment capacity should be conducted, including an evaluation of the borrower’s ability to repay the debt at the loans_______ __________ rate, while avoiding an over-reliance on credit scores.

Fully indexed

494

If a lender is going to allow no or low document loans or simultaneous seconds, the lender should document risk mitigating features such as high credit scores, lower LTVs, lower DTIs, credit enhancements and mortgage insurance. This is called what?

Risk layering

495

The Interagency Guidance on Nontraditional Mortgage Product Risks indicates that a loan with minimum owner equity, like a simultaneous second lien loan, should generally not have a payment structure that allows for delayed or negative ____________.

amortization

496

What is a simultaneous second?

A loan that takes second position.

497

This is a loan that takes second position. A common types of second liens are:

Home equity lines of credit (HELOCs)

498

A second lien is also called a: into a second mortgage.

Second Mortgage

499

When a lender originates both a first and a second lien loan at the same time.

Simultaneous second.

500

Lenders do this to avoid Private Mortgage Insurance by financing the 20% down payment into a second mortgage. This is called a:

Simultaneous second

501

The Interagency Guidance on Nontraditional Mortgage Product Risks is also called this.

The Guidance

502

The _______________ encourages that mortgage loan underwriting standards should address a substantial payment increase when determining whether a borrower has the ability to repay a nontraditional mortgage loan.

Guidance

503

A year after the Interagency Guidance on Nontraditional Mortgage Product Risks was published, the same financial regulatory agencies issued the ___________________.

Statement on Subprime Mortgage Lending.

504

The purpose of this statement was to promote consumer protection standards as well as encourage lenders to ensure that borrowers only obtain loans that they can afford to repay.

Statement on Subprime Mortgage Lending.

505

This statement includes guidelines for defining predatory lending, underwriting standards, establishing control systems and consumer protection.

Statement on Subprime Mortgage Lending

506

The Statement on Subprime Mortgage Lending standards are specifically concerned with certain ARM products, that typically have these 5 characteristics:

1. Low initial payments that adjusts to a variable index rate plus a margin for the remaining term of the loan.
2. No payment or rate caps
3. Limited or no documentation of borrowers’ income.
4. Product features likely to result in frequent refinancing
5. Substantial penalties

507

This Statement encourages lenders to give borrowers the necessary facts to understand the terms, costs, and risks associated with subprime products.

Statement on Subprime Mortgage Lending

508

According to the Statement on Subprime Mortgage Lending, MLOs should inform consumers of these 5 facts:

1. Payment Shock
2. Prepayment Penalties
3. Balloon Payments
4. Cost of Reduced Documentation Loans
5. Responsibility for Taxes and Insurance

509

Making loans based predominantly on the foreclosure or liquidation value of a borrower’s collateral rather than on the borrower’s ability to repay the mortgage according to its terms. This is an example of what?

Predatory lending.

510

Inducing a borrower to repeatedly refinance a loan to charge high points and fees each time the loan is refinanced (known as “loan flipping” or “equity skimming”). This is an example of what?

Predatory lending

511

Engaging in fraud or deception to conceal the true nature of the mortgage loan obligation, or ancillary products, from an unsuspecting or unsophisticated borrower. This is an example of what?

Predatory lending

512

It is where the borrower supplies the lender with their overall financial picture, including debt, income and assets.

Pre-Qualifying

513

Loan ___________________ does include an analysis of the borrower’s credit report and an in-depth look at the borrower’s income ability to purchase a home.

Pre-Qualification

514

An _______________ is anything produced with the intent to sell a credit plan.

Advertisement

515

• Newspapers and magazine ads
• Leaflets and flyers
• Catalogs
• Radio, TV, or public address systems
• Signs or displays
• Billboards
• Point of sale literature
• Price tags
• Cash register receipts
• Online, internet or social media
• Websites
These are all examples of what?

Advertisements

516

Things that are not considered _____________ are rate sheets use for internal purposes, education and state-required material unless it is combined with a sales offer, and brochures that explain details about a mortgage, if it is generic and does not offer completing a loan application.

Advertisements

517

If a creditor advertises directly to a borrower they are required to:
• Advertise only terms that are the____________ terms that the creditor will offer in credit plans

Specific

518

If a creditor advertises directly to a borrower they are required to:
• The ad must state the finance charge rate using the term ______ ________ ______.

Annual Percentage Rate or APR

519

If a creditor advertises directly to a borrower they are required to:
• If the APR might increase after the _________________ of the loan, the ad must be specific on this detail

Consummation

520

If a creditor advertises directly to a borrower they are required to:
• A simple annual or periodic rate applied to an unpaid balance may be advertised in ______________ with the APR, but not more _______________ than the APR

Conjunction, conspicuous

521

If the loan rate is present in the advertisement, the ___________ must also be disclosed.

Annual percentage rate (APR)

522

This is a phrase that represents the attractive features of the credit plan within the advertisement.

Trigger term

523

• 10 percent down payment
• $1000 down
• 80 percent financing

In an advertisement, these terms are considered what?

Trigger terms

524

• Trade-in with $5,000 appraised value
• Monthly payments less than $500 on all loan plans
• Pay $32.11 per $1000 borrowed
• $850 per month

In an advertisement, these terms are considered what?

Trigger terms

525

If trigger terms are found in an advertisement, the ad must also disclose all 6 of the following:

1. The price of the home
2. The amount of the down payment required
3. The number of payments necessary to repay the loan
4. The amount of the monthly payment for the entire term of the loan
5. Due dates or period of payments scheduled to repay
6. The APR

526

• Easy monthly payments
• Low down payments
• Pay bi-weekly
• Terms to fit any budget
• Financing available
• FHA or VA loans available

These are examples of what when it comes to advertisements?

Terms that do not have to have an APR listed

527

If a creditor is advertising an adjustable rate credit plan there are additional requirements for their advertising. What is the additional requirement?

The advertisement must say that the APR may increase or is subject to change.

528

True or false:
If a creditor is going to advertise, they are required to advertise every type of credit plan that is available?

False

529

True or false:
When advertising, creditors cannot hide more consumer-friendly plans in order to bait and switch products with borrowers.

True

530

True or false:
If a plan is advertised, the creditor does not always have to honor that advertisement.

False.
If a plan is advertised, the creditor must honor that advertisement.

531

If a borrower asks about a credit plan and the costs associated with it, the MLO must disclose the APR. APR must be listed ________.

First

532

The Mortgage Acts and Practice Rule or MAP Rule was created in _________.

2011

533

This rule was created in 2011 to prohibit misrepresentation in a commercial communication about any term(s) of a mortgage credit product.

The Mortgage Acts and Practice Rule, or MAP Rule.

534

There are three important terms to remember when discussing the Mortgage Acts and Practice Rule or MAP Rule:

Term
Mortgage credit product
Commercial communication

535

It is a violation of the what Rule for any person to make any material misrepresentation, expressly or by implication, in any commercial communication, regarding any term of any mortgage credit product.

Mortgage Acts and Practice Rule or MAP Rule

536

Misrepresentations about the interest charged for the mortgage credit product, the amount of interest, consumer's payments, loan amount, or total amount due is a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

537

Misrepresentations about whether the difference between the interest owed and the interest paid is added to the total amount due from the consumer, is a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

538

The misrepresentation about the annual percentage rate, simple annual rate, periodic rate, or any other rate is a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

539

The misrepresentation about the existence, nature, or amount of fees or costs to the consumer associated with the mortgage credit product, including but not limited to misrepresentations that no fees are charged, is a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

540

The misrepresentation concerning the cost, payment terms, or other terms associated with any additional product or feature that is or may be sold in conjunction with the mortgage credit product, including but not limited to credit insurance or credit disability insurance is a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

541

The misrepresentation concerning whether separate payment of taxes or insurance is required, or the extent to which payment for taxes or insurance is included in the loan
payments, loan amount, or total amount due from the consumer, is a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

542

The misrepresentation concerning any prepayment penalty associated with the mortgage credit product, including but not
limited to misrepresentations concerning the existence, nature, amount, or terms of such
penalty, are a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

543

The misrepresentation concerning the variability of interest, payments, or other terms of the mortgage credit product, including but not limited to misrepresentations using the word “fixed”, is a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

544

The misrepresentation concerning any comparison between any rate or payment that will be available for a period less than the full length of
the mortgage credit product; and
any actual or hypothetical rate or payment is a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

545

The misrepresentation concerning the type of mortgage credit product, including but not limited to misrepresentations that the product is or involves a fully amortizing mortgage is a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

546

The misrepresentation concerning the amount of the obligation, or the existence, nature, or amount of cash or credit available to the consumer in connection with the mortgage credit product, including but not limited to misrepresentations that the consumer will receive a certain amount of cash or credit as part of a mortgage credit transaction, is a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

547

The misrepresentation concerning the existence, number, amount, or timing of any minimum or required payments, including but not limited to misrepresentations about any payments or that no payments are required in a reverse mortgage or other mortgage credit product, is a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

548

The misrepresentation concerning the potential for default under the mortgage credit product, including but not limited to misrepresentations concerning the circumstances under which the consumer could default for nonpayment of taxes, insurance, or maintenance, or for failure to meet other obligations, is a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

549

The misrepresentation concerning the effectiveness of the mortgage credit product in helping the consumer resolve difficulties in paying debts, including but not limited to misrepresentations that any mortgage credit product can reduce, eliminate, or restructure debt or result in a waiver or forgiveness, in whole or in part, of the consumer's existing obligation with any person, is a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

550

The misrepresentation concerning the association of the mortgage credit product or any provider of such product with any other person or program, including but not limited to misrepresentations that the provider is, or is affiliated with, any governmental entity or other
organization, is a violation of what Rule?

Mortgage Acts and Practice Rule or MAP Rule

551

The misrepresentation concerning the product is or relates to a government benefit, or is endorsed, sponsored by, or affiliated with any government or other program, including but not limited to using formats, symbols, or logos that resemble those of such entity, organization, or program, is a violation of this Rule.

Mortgage Acts and Practice Rule or MAP Rule

552

The misrepresentation concerning the source of any commercial communication, including but not limited to misrepresentations that a commercial communication is made by or on behalf of the consumer's current mortgage lender or servicer, is a violation of this Rule.

Mortgage Acts and Practice Rule or MAP Rule

553

The misrepresentation concerning the right of the consumer to reside in the dwelling that is the subject of the mortgage credit product, or the duration of such right, including but not limited to misrepresentations concerning how long or under what conditions a consumer with a reverse mortgage can stay in the dwelling is a violation of this Rule.

Mortgage Acts and Practice Rule or MAP Rule

554

The misrepresentation concerning the consumer's ability or likelihood to obtain any mortgage credit product or term, including but not limited to misrepresentations concerning whether the consumer has been preapproved or guaranteed for any such product or term, is a violation of this Rule.

Mortgage Acts and Practice Rule or MAP Rule

555

The misrepresentation concerning the consumer's ability or likelihood to obtain a refinancing or modification of any mortgage credit product or term, including but not limited to misrepresentations concerning whether the consumer has been preapproved or guaranteed for any such refinancing or modification, is a violation of this Rule.

Mortgage Acts and Practice Rule or MAP Rule

556

The misrepresentation concerning the availability, nature, or substance of counseling services or any other expert advice offered to the consumer regarding any mortgage credit product or term, including but not limited to the qualifications of those offering the services or advice.

Mortgage Acts and Practice Rule or MAP Rule

557

Please note all covered commercial communications must be kept for a minimum of _________ from the date that the communication was made to the consumer to comply with the MAP Rule.

2 years

558

Most of the time an MLO is going to present ________ options to the borrower that they think will be suitable.

3

559

According to the Truth in Lending Act (TILA) an application is the collection of 6 pieces of information. The six pieces of information that constitute an application are:

• Name of the borrower
• Social Security Number
• Loan amount requested
• The borrower’s income
• Subject property address
• Estimated property value

560

This is one of the two major pillars of federal law that governs the origination of mortgages.

Truth In Lending Act (TILA Regulation Z)

561

The purpose of __________is to disclose the APR, loan costs, disclose payments and protect consumers from predatory lending practices.

Truth In Lending Act (TILA Regulation Z)

562

This includes the implementation of some specific disclosures, the definition of applications and the requirements for timeframes on application.

Truth In Lending Act (TILA Regulation Z)

563

________holds within it many rules, including Loan Originator Compensation.

Truth In Lending Act (TILA Regulation Z)

564

The backbone of the origination process is the loan application. This document is known as the ________ _________ _________ _______or the _______.

Uniform Residential Loan Application or the 1003.

565

The 1003 was created by ____________ __________ _________ ____________.

Federal Housing Finance Agency (FHFA)

566

Fannie Mae numbers their form ______. The exact same form is numbered by Freddie Mac as Form 65.

1003

567

Fannie Mae numbers their form 1003. The exact same form is numbered by Freddie Mac as Form _____.

65

568

This form is where all the information regarding the borrower appears. It is part of the MLOs job to make sure that this is as complete and accurate as possible.

Uniform Residential Loan Application or the 1003.

569

The _________ section of the 1003 includes the pertinent facts about the loan the applicant is applying for.

First

570

On a form 1003, this is the box where an agency case number (when applicable) and the lender case number/loan number must be placed.

First

571

When filling out a 1003, the loan amount, interest rate, term, and type of amortization must be noted in this section.

First section

572

This is an application from the borrower to the lender and is an application for a specific loan product so all the information must be clear and accurate so that when the loan enters the underwriting process the underwriter knows what loan this borrower is seeking.

Uniform Residential Loan Application or the 1003.

573

This section of the 1003 is all the information regarding the property.

Second

574

This section of the 1003 includes the property address; it also includes the number of units.

Second

575

RESPA (Real Estate Settlement Procedures Act, Regulation X) defines a residential property to be a ___-____ family single-family dwelling.

1-4

576

If the property is more than ___units, then it is considered a commercial property and the borrower will need to obtain a commercial loan.

4

577

The_______ ___________ is (sometimes) a very detailed description of where the property is located, based on plat maps (books) in that county.

Legal Description

578

True or false:
If the property is in town, or a subdivision, it could be very simply stated as LOT 148, Brighton Knoll Subdivision. This tells the recorder (who will record the mortgage deed) the documents can be found pertaining to this property.

True

579

If this information is not available at the time of application, it can be filled in later once the information is received in the processing stage.

Legal description

580

The _________ of the loan can be purchase, refinance, construction, construction-permanent, or other.

Purpose

581

On a 1003, the _______ is basically: what will the loan funds be used for?

Purpose

582

On a 1003, the 2 most common “purpose” of a Loan are?

Purchase or refinance

583

On a 1003 section 2, This line will ask if this property will be a primary residence, a secondary residence or an investment property?

Property will be:

584

On section 2 of a 1003- In case of a construction loan this section asks important details about the lot, including the original cost and year the lot was acquired.

Complete this Line if Construction or construction-permanent loan:

585

In section 2 on a 1003-This line will ask about the borrower’s ownership in the property, questions like when it was acquired, the original cost, amount of existing mortgages, purpose of the refinance, a description of any improvements that are going to be made or were made and the cost.

Complete this Line if Refinance Loan:

586

In section 2 of the 1003- This section is important because it gives important details about the current state of the home and the purpose of the borrower in obtaining the refinance. What is this line called?

Complete this Line if Refinance Loan:

587

In section 2 of a 1003- For a purchase transaction, this is where the MLO needs to know the names(s) of who all will hold ownership in this house, even if it is just one borrower, they might have a spouse or a significant other who will also hold ownership in the property. What is this line called?

Title Will be Held in What Name:

588

In section 2 of a 1003-There are a lot of ways that a title can be held, is it a single owner, or is it a married couple with rights of survivorship? A property can be “vested” in many ways. What is this line called?

Manner in Which Title Will Be Held:

589

In section 2 of 1003- This is an important section in purchase transactions; it needs to be filled out because the processor and the underwriter will need to verify the down payment funds are there prior to closing. What is this line called?

Source of Down Payment:

590

In section 3 of the 1003- The most common is the property falls into Fee Simple – this means that the borrower owns the land as well as the house on the land. A property could also be a leasehold – this means that the borrower leases the land but own the dwelling secured by the loan (Hawaii, North or South Dakota, and Massachusetts are some states that have leaseholds). The lease must have sufficient time remaining to cover the length of the mortgage. What is this line called?

The Estate Will be Held In:

591

On a form 1003- The _________ section is the borrower information section.

Third

592

On a 1003- This section includes the name of the borrower, the name of the co- borrower (if applicable), their social security numbers, home phone, date of birth, years in school, whether they are married, unmarried, or separated. It also must include the number of dependents and their ages, their present address and whether they own or rent that property (plus the # of years they have rented the property).

Third

593

Only borrowers who are married can be included on the same ______ and be considered co- borrowers.

1003

594

If there are two unmarried borrowers, two separate 1003s are required to be filled out with each of the borrower’s information. These two borrowers are called, _______________.

Co-mortgagors

595

True or false:
If 2 people, that are not married, apply for a Mortgage Loan, only one 1003 needs to be filled out.

False. One per person.

596

The Equal Credit Opportunity Act (ECOA, Regulation B) was created to do what?

Prevent discrimination in lending

597

This act was created to prevent discrimination in Lending.

The Equal Credit Opportunity Act (ECOA, Regulation B)

598

This Act prohibits discrimination based upon race, religion, natural origin, sex, marital status, and age.

The Equal Credit Opportunity Act (ECOA, Regulation B)

599

This act requires that an MLO can only ask about marital status if the application is for joint credit.

The Equal Credit Opportunity Act (ECOA, Regulation B)

600

This Act requires that an MLO can only ask about marital status if the credit transaction is secured (like a mortgage is) but they can only use the terms “married,” “unmarried”, and “separated”.

The Equal Credit Opportunity Act (ECOA, Regulation B)

601

Section 4 of the 1003 is the __________ section.

Employment

602

On a 1003- This is the section where the borrower’s employer (whether they are self-employed or not), the number of years they’ve been at their job (If it has been less than 2 years, the previous employment information must be obtained), the number of years that the borrower has been in the same profession, the position type/title/type of business that the borrower is in and the phone number for their employer.

Employment- section 4

603

On form 1003-This section is where the borrower’s income information and the borrower’s housing liabilities will be included. This is where all types of income may be filled in.

Monthly Income and Combined Housing Expense. Section 5

604

On for 1003- this section includes income, base employment income, overtime income, bonuses, commissions, dividends/interest from investments net rental income (if the borrower has rental property) and any other income that the borrower wants to be considered.

Monthly Income and Combined Housing Expense. Section 5

605

This Act prohibits a lender from requiring the disclosure of any type of child support, alimony, or separate maintenance.

The Equal Credit Opportunity Act (ECOA, Regulation B)

606

Under this Act, an MLO cannot ask a borrower whether they receive any type of child support, alimony, or separate maintenance, but the MLO can ask whether there is any other income that the borrower would like to consider for repayment of debt.

The Equal Credit Opportunity Act (ECOA, Regulation B)

607

Under ECOA, an MLO cannot ask a borrower whether they receive any type of child support, alimony, or separate maintenance, but the MLO can ask what?

Whether there is any other income that the borrower would like to consider for repayment of debt.

608

True or false:
If the borrower pays child support, alimony or separate maintenance they must disclose that information because it is considered a liability and must be taken into consideration when determining their ability to repay the loan.

True

609

On a form 1003- on the__________ side of the chart, is where the current monthly housing expenses go and the proposed monthly housing expenses will go.

Right-hand

610

On form 1003- Rent, or the first mortgage (P&I - principal and interest), any other financing (like a second mortgage), hazard insurance, real estate taxes, any mortgage insurance, and any homeowners association dues are examples of what?

Monthly housing expenses.

611

These are the parts that generally make up a mortgage payment.

PITI (principal, interest,taxes and insurance)

612

PI or P&I

Principal and Interest

613

PIT

Principal, interest and taxes.

614

Section 6 on form 1003.

Assets and liabilities section.

615

This section is where a borrower will need to disclose any assets and all liabilities that they have.

Section VI- Assets and liabilities section.

616

These are what the borrowers own, not necessarily things that are free and clear, but what they own.

Assets

617

Houses, cars, life insurance, stocks and bonds and 401K accounts are examples of a borrowers _________.

Assets

618

On form 1003, This total line should be more than the amount the borrower needs to bring to closing.

Subtotal liquid assets

619

On form 1003- All assets that are listed under the liquid assets section will need to be documented with a source (where did it come from) and seasoning (was it in the bank for at least 60 days).

Subtotal liquid assets

620

On form 1003- _____________are what the borrowers OWE, which means there is a loan against these items

Liabilities.

621

Mortgage loan debt, automobile loans or leases, credit cards with balances outstanding, commercial loans, as well as amounts owed to alimony, child support or separate maintenance payments as l examples of what?

Liabilities

622

______ ________ is assets minus the liabilities.

Net worth

623

This gives the borrower’s financial worth.

Net worth

624

On form 1003- This is where all properties owned are listed, or subject property (if a refinance transaction) is listed to show the market value, amount of the lien, the gross rental income, mortgage payments, insurance, maintenance, taxes and other, and listing the NET rental income after vacancy factor.

Schedule of Real Estate Owned.

625

On form 1003-This is a quick snapshot of the loan. This includes the costs of the loan and any cash to or from the borrower. This will let the MLO know how much money the borrower needs to bring to closing (if applicable) or it will let the MLO know how much money the borrower is receiving at closing. Keep in mind that that this is only an estimate and not final numbers.

Details of Transaction Section 7

626

On form 1003- This section is a series of important questions that require a yes or no answer to from the borrower (and co-borrower). It is important to read these questions to the borrower and let them answer the questions accordingly. The questions and their answers are reviewed by the underwriter and give the underwriter key information about the borrower. For example: “Are you obligated to pay alimony, child support or separate maintenance?” If the answer is yes, the underwriter is going to then go look to see that that information was disclosed as a liability and that it does not affect the borrower’s ability to repay the loan.

Section 8-Declarations

627

On form 1003- this section requires the borrower (and co-borrower) acknowledge and agree that the information contained in the application is accurate. It requires the borrower’s signatures as well as the date to indicate the date that it was signed.

Section 9- Acknowledgement and agreement section

628

On form 1003-This section includes a statement that the borrower should read, and requests that the borrower furnish information regarding their ethnicity, race, and sex. This information is obtained to complying with the Home Mortgage Disclosure Act (HMDA, Regulation C).

Section 10- Information for government monitoring purposes

629

On form 1003- The section also requires the MLO indicate how the application was taken (face-to-face or telephonic interview, submitted by fax or mail, or via e-mail or the internet). It requires the MLO sign their name, print their name, include the NMLS ID#, their phone number, the company that they work for, the companies NMLS ID# and the companies address.

Section 10- Information for government monitoring purposes

630

_______ requires that financial institution collect and report specific data. This specific data is used to protect borrowers from discriminatory lending practices as the data can be used to determine whether a financial institution is lending fairly in all areas that they serve.

HMDA

631

________ prohibits discrimination based on protect classes and prohibits an MLO from asking about a borrowers’ ethnicity, race and sex except for the purpose of completing this government monitoring section for HMDA.

ECOA

632

This document must be provided at the time of the application or within 3 business days of application. This document must contain a good faith estimate of loan costs and transaction terms and be in writing and contain information required under TRID.

Loan Estimate

633

This document must be delivered or placed in the mail no later than the 7th business days before consummation of the transaction. It can be delivered by hand, by mail or electronically with permission from the borrower to obtain electronic disclosures.

Loan estimate

634

The TILA-RESPA Integrated Disclosure Rule (TRID) implemented it in 2015 and it replaced the Good Faith estimate and the initial Truth in Lending Disclosure. The purpose of the disclosure was to simplify and clarify the disclosures into one disclosure that was easier and clearer for a consumer to understand.

Loan Estimate

635

This document is the six pieces of information: name, income, social security number, subject property address, an estimate of the value of the property, and the mortgage loan amount sought.

Application. 1003

636

________ includes both the Loan Estimate and Closing Disclosures. They are replacements for older disclosures required by TILA and RESPA.

TRID

637

This disclosure implemented some new rules regarding how an MLO and their lender can do business. One of those things is that a creditor cannot require or condition that the consumer submit any documents verifying information related to the application before providing the Loan Estimate.

TRID

638

Under this disclosure- creditors are not allowed to impose any fee on a consumer related to the consumer’s application for a mortgage transaction until the consumer has received the LE and has indicated an intent to proceed with the transaction. This includes application fees, appraisal fees, underwriting fee as well as any other fees imposed on the consumer. The only exception to the rule is for a bona-fide and reasonable fee for obtaining a consumer’s credit report.

TRID

639

Under this disclosure- A consumer indicates an intent to proceed with the transaction when the consumer communicates, in any manner, that the consumer choses to proceed after the LE is delivered. This can include oral communication, written communication, communication via e-mail or the signing of a pre-printed form after receipt of the LE. A consumer’s silence is not indicative of an intent to proceed. The creditor is required to document the communication of the intent to proceed.

TRID

640

On the Loan Estimate, this is a way to verify that the Loan Estimate was sent in compliance with TRID’s rules (at the time of or within 3 business days of application).

The date issued

641

When the interest rate for a loan is locked for a particular period of time.

Rate lock

642

This section of the Loan Estimate goes into the basics of the loan, that includes the loan amount, the interest rate, the monthly principal & interest payment, whether the loan has a prepayment penalty, or a balloon payment.

Loan terms

643

On the Loan Estimate, Next to each of the first three disclosed terms is a yes or no question – what are they?

1.Can this amount increase after closing?
2. Can the interest rate change after closing?
3. Can the monthly principal and interest payment go up?

644

On the Loan Estimate- This section not only gives the numbers, but gives the borrower information that is important to understanding those terms and in making their choice about the mortgage loan.

Loan Terms

645

On the Loan Estimate- This section is there to show the borrower what their payment will look like over the course of the loan.

Projected payments

646

This Act applies specifically to private mortgage insurance (PMI). According to this Act, a borrower can request that PMI be dropped from their loan once they have obtained 20 percent equity in their property. Further, it requires servicers drop PMI from the borrower’s loan (without a request from the borrower) when the borrower has obtained 22 percent equity in their property or at 78 percent LTV.

The Homeowner’s Protection Act

647

This section of the Loan Estimate, breaks down the escrow account – it includes the amount at this time that will be included in the payment for taxes and insurance. It also gives the borrower a breakdown of what is included in the escrow.

The projected payments section

648

On the loan estimate- This section adds up all the costs that will be broken down in page 2. There is also an Estimated Cash to Close, this shows the amount of money the borrower will either bring to closing or receive at closing depending on the situation. In this scenario, this is a purchase transaction and the borrower will need to bring their down payment as well as their closing costs.

Estimated Closing Costs

649

Page Two of the Loan Estimate is the ________ _________ details. It is broken out in to Loan Costs, Other Costs and Calculating Cash to Close. This is where the Loan Estimate goes into detail about the costs of the loan.

Closing cost

650

This section of the Loan Estimate includes
A. Origination Charges,
B. Services you cannot shop for,
C. Services you can shop for and
D. Total Loan Costs.

Loan Costs section

651

The ____________ charge includes the compensation to the lender and Mortgage Loan Originator, as well as the amount of discount points being used to buy down the interest rate.

Origination

652

____________ __________ are the cost to lower the borrower’s interest rate in exchange for an upfront fee.

Discount points

653

_____________ _______ lower the borrower’s closing costs in exchange for a higher interest rate.

Lender credits

654

Some lenders use this word to refer to any upfront fee that is calculated as a percentage of the borrower’s loan amount, whether or not they receive a lower interest rate.

Point

655

Some lenders also offer __________ __________ that are not connected to the interest rate, sometimes as a temporary offer or to compensate for a problem.

Lender credits

656

Services that a borrower cannot shop can include these 6 fees:

1. appraisal fees
2. credit report fees
3. flood determination fees
4. flood monitoring fees
5. tax monitoring fees
6. tax status research fees.

657

If a borrower can shop from a list of providers TRID imposes a ____ percent cumulative fee tolerance. This means that the sum of the fees cannot increase more than this percent from their original disclosure on the LE and their disclosure on the CD.

10

658

If a borrower can shop from a list of providers ________ imposes a 10 percent cumulative fee tolerance. This means that the sum of the fees cannot increase more than 10 percent from their original disclosure on the LE and their disclosure on the CD.

TRID

659

__________ also gives a no tolerance to services that a borrower can shop for that are not on a provider’s list such as a hazard insurance provider, meaning that these fees can increase by any amount from their disclosure on the LE to the CD without penalty.

TRID

660

TRID also gives a _______ tolerance to services that a borrower can shop for that are not on a provider’s list such as a hazard insurance provider, meaning that these fees can increase by any amount from their disclosure on the LE to the CD without penalty.

No

661

On this section of the Loan Estimate, this includes Taxes and Other Government Fees. These fees generally fall into the 10 percent fee tolerance (except transfer taxes – which is zero tolerance).

Other costs

662

On the loan estimate, These fall under the no fee tolerance category. It is an amount required by the Lender, that the borrower must pay in advance and are prorated. Rent is paid in advance. Mortgage interest is always paid in arrears.

Prepaids

663

Interest paid in advance. This exists because in a mortgage situation the interest is paid in arrears.

Prepaid interest

664

In most situations at the time of closing the borrower must make an initial payment into their escrow account to make sure that they have enough to pay property taxes and insurance when they come due. What is this section called on the Loan Estimate?

Initial Escrow Payment at Closing

665

This section on the Loan Estimate, can include any optional fees in this situation there is an optional owner’s title insurance policy. That means that this fee is not being required by the lender but that it might be something that the borrower should think about buying.

Other

666

On the loan estimate, This is a subtotal of both the Total Loan Costs and Total Other Costs, as well as any Lender Credits. The Lender Credit would be shown and then subtracted

Total closing costs

667

On the Loan Estimate, this section itemizes the total closing costs, any closing costs that are going to be financed into the loan, any down payment/funds from the borrower, any deposit already made, funds for the borrower, any seller credits and adjustments and other credits.

Estimated Cash to Close

668

Generally, a creditor can revise a Loan Estimate at any time before it provides the Closing Disclosure. However, the creditor must ensure that the consumer receives the final revised LE no later than ____ business days prior to closing

4

669

The creditor is permitted to rely on the charges disclosed on the revised _________ __________ to reset tolerances in more limited circumstances, meaning that a creditor can review a ________ ___________(same as above) if it stays within the original tolerances except when specific things occur.

Loan Estimate

670

An extraordinary event beyond the control of any interested party or other unexpected event specific to the consumer or the transaction- is an example of what?

Changed circumstances

671

Information specific to the consumer or the transaction that the creditor relied upon when
providing the disclosures and that was inaccurate or changed after the disclosures were provided- is an example of what?

Changed circumstances

672

The appraisal comes back lower than originally expected and the borrower no longer qualifies for the original product but does qualify for a different product with different charges for example Mortgage Insurance- this situation is an example of what?

Changed circumstance

673

If a _____________ _____________ occurred, then it is possible that it may cause one or more third-party charges subject to the 10 percent cumulative tolerance to increase then the creditor can rely on a new revised LE and reset the tolerances

Changed circumstance

674

A creditor may also provide and use a revised LE and reset tolerances if a ____________ __________ affected the borrower’s creditworthiness or the value of the property and resulted in the consumer being ineligible for an estimated loan term previously disclosed

Changed circumstance

675

A new revised LE must be provided no later than ___ business days after the date of the changed circumstance.

3

676

A new revised LE must be provided before the creditor provides the Closing Disclosure and it must be provided at least ___ business days prior to consummation.

4

677

The _____ page of the Loan Estimate ties up the loose ends. It gives the borrower some additional information about the Lender and Loan Officer but it also gives the borrower some figures to compare to other possible loan products and lenders that the borrowers may be shopping.

3rd

678

This section on a loan estimate, gives the borrower the total amount they will have paid in 5 years versus the amount of principal they will have paid off, the Annual Percentage Rate, and the Total Interest Percentage.

Comparisons

679

This is the costs of the loan expressed as a rate. It is not the interest rate! It is the cost of credit expressed as a rate.

The Annual Percentage Rate (APR)

680

This is the total amount of interest that the borrower will pay over the loan term as a percentage of your loan amount.

Total Interest Percentage (TIP)

681

The “___ ______ _____” comparison shows how much the borrower will have paid over that 5 years versus how much of that is principal.

In 5 years

682

The _______ _______is the cost that the borrower pays each year to borrow money for a mortgage.

Interest Rate

683

The __________ reflects not only the interest rate, but also the points, fees, and other charges that the borrower must pay to get the loan.

APR

684

This section, on a Loan Estimate, indicates to the borrower is that the lender may order an appraisal to determine the property’s value and that the borrower may be charged for that appraisal. It also indicates to the borrower that they will be given a copy of the appraisal promptly even if the loan does not close.

Other Considerations

685

True or false:
The borrower is entitled to pay for their own appraisal at their own cost.

True

686

This section of the Loan Estimate, indicates to the borrower whether this loan is assumable or not.

Other considerations

687

On the Loan Estimate, this section indicates to the borrower that this loan requires homeowner’s insurance on the property. It also tells the borrower that they can obtain the insurance from a company of their choice that the lender finds acceptable.

Other considerations

688

On the Loan Estimate, this section will indicate when the lender can consider a payment late; in most situations, if it is late by 15 days or more. It also indicates the amount of the late fee, which in most situations is 5 percent of the monthly principal and interest payment.

Other Considerations

689

On this section of the Loan Estimate, this indicates that refinancing this loan depends on the future financial situation of the borrower, the property value and the market conditions. It says that the borrower may not be able to refinance the loan.

Other considerations

690

On the Loan Estimate, this section dissolves the need of another disclosure originally required by RESPA – because it informs the borrower whether the lender will service this loan or whether the loan will be transferred to another servicer.

Other Considerations

691

In the other considerations section of the LE there is a section regarding appraisals. The_______ ______ _______ went into effect in 2014 and requires that the lender notify the borrower within 3 business days of application of their right to receive an appraisal and then the lender is required to promptly upon completion or at least 3 business days before consummation whichever is earlier a copy of their appraisal.

ECOA Valuations Rule

692

This notification on the other considerations on the LE, satisfies the requirement to provide that notice of a right to receive a copy of the appraisal under ECOA.

ECOA Valuations Rule

693

Another initial disclosure that usually gets sent out at the same time as the 1003 and the Loan Estimate is the ______________________________. This form is used to obtain a copy of the borrower’s tax transcripts to determine whether they can qualify for a mortgage. It is used to verify their income. See the copy of the 4506-T provided to you in the index.

Request for Transcript of Tax Return (4506-T)

694

The ______ _________ _______is another disclosure required by TRID. This document must be provided to the borrower within 3 business days of application. It is a pamphlet created to help a borrower though the mortgage process. It helps the borrower determine what the borrower needs to do to get the best mortgage for their situation, explains closing costs and what it takes to purchase home and give suggestions on how to be a successful homeowner.

Home Loan Toolkit

695

This Act is a part of the Truth in Lending Act and generally governs High-Cost and Higher Priced home loans.

The Homeownership and Equity Protection Act (HOEPA)

696

Prior to making a High-Cost and Higher Priced home loan, the borrower must undergo homeownership counseling and the creditor must receive a written certification from the homeownership counselor that they have completed the required counseling. _________ home counseling rule does not only apply to High-Cost and Higher Priced mortgages but also applies to negative amortization loans.

HOEPA’s

697

Prior to making a _________ and ____________ home loan the borrower must undergo homeownership counseling and the creditor must receive a written certification from the homeownership counselor that they have completed the required counseling. HOEPA’s home counseling rule does not only apply to High-Cost and Higher Priced mortgages but also applies to negative amortization loans.

High-Cost and Higher Priced

698

Prior to making a High-Cost and Higher Priced home loan the borrower must undergo homeownership counseling and the creditor must receive a written certification from the homeownership counselor that they have completed the required counseling. HOEPA’s home counseling rule does not only apply to High-Cost and Higher Priced mortgages but also applies to __________ ____________ loans.

Negative amortization

699

Prior to making a High-Cost and Higher Priced home loan the borrower must undergo ____________ ________________ and the creditor must receive a written certification from the _____________ __________________that they have completed the required counseling. HOEPA’s home counseling rule does not only apply to High-Cost and Higher Priced mortgages but also applies to negative amortization loans.

Homeownership counseling, homeownership counselor

700

The list of housing counselors must be sent at application or within ___ business days after receiving the application.

3

701

After the _________________ Act of 2000, electronic signatures were used as a valid signature for financial transactions with the permission of the borrower. This Act also allows for electronic records to satisfy any federal statute.

The Electronic Signatures in Global and National Commerce Act (E-Sign Act)

702

Before a financial institution can use ________________and electronic records they are required to obtain permission from the borrower. This includes providing a disclosure to the consumer explaining their rights to obtain any record in a non-electronic form and the right to withdraw consent to the use of electronic records.

E-signatures

703

True or false:
The financial institution is not required to provide a statement of software and hardware requirements for access to and retention of electronic records.

False

704

During the underwriting and processing portion of the loan process the mortgage _____________ and the ______________ are going to work together to get the borrower approved for their chosen mortgage.

Underwriter, processor

705

The ________________ is going to analyze the borrowers profile while the ________________ collects verifications and documentation to help the underwriter do a thorough analysis of the borrower.

Underwriter, processor

706

1. Money in a checking or savings account
2. Investments in stocks, bonds, mutual funds, certificates of deposit, money market funds,
and trust accounts
3. Amounts vested in a retirement savings account
4. The cash value of a vested life insurance policy
These are all examples of what?

Liquid assets

707

1. Funds that have not been vested
2. Funds that cannot be withdrawn under circumstances other than the account owner’s
retirement, employment termination or death
3. Stock held in an unlisted corporation
4. Non-vested stock options and non-vested restricted stock
5. Personal unsecured loans
6. Interest party contributions
7. Cash proceeds from a cash-out refinance transaction on the subject property
These are all examples of what?

Non acceptable sources of reserve

708

__________ are measured by the number of months of qualifying payment amount for the subject mortgage that the borrower could pay using his or her financial assets.

Reserves

709

The amount of ________ that are required on a loan are going to depend on the transaction, the occupancy status and amortization type of the subject property, the number of units in the subject property and the number of other financed properties the borrower currently owns

Reserves

710

In most situations loans are going to be underwritten by____________ or ______________, these AUS’s are going to let the underwriter know if reserves are required on a specific loan transaction.

DU (Desktop Underwriter) or LP (Loan Prospector)

711

If the loan is being ____________ ___________ (meaning the underwriter is not relying on an AUS to help with the analysis of the borrower) then it is going to be laid out in the requirements for that specific loan product with the borrower’s specific qualifications.

Manually underwritten

712

147

147

713

True or false.
All of the Bowers assets must be verified if they are required to close the loan transaction.

True

714

The underwriter is likely going to require a request for a ________ ________ _________. This is a form filled out by the borrowers depository institution that will refer to the borrower has those funds available to them.

Verification of deposit. VOD

715

For a reserve to be considered seasoned, and exceptable, the funds must be in the borrowers possession for how long?

60 days

716

True or false.
A deposit must be seasoned.

True

717

True or false. Gifted funds do not require authentication.

False. The underwriter will often require a letter from the person giving the gift, indicating that they will not be requiring the money to be repaid by the borrower

718

What are the two different types of income that can exist and be used in the mortgage industry?

Stable income and variable income

719

Base salary, consistent hourly wages, Social Security payments for retirement or long-term disability.
These are all examples of what kind of income?

Stable

720

What type of income is consistent month after month?

Stable

721

Commission, bonuses, overtime, fluctuating hourly wages, second job.
These are all examples of what type of income?

Variable

722

These types of income must be treated more carefully because they can fluctuate from month to month.

Variable

723

If the ______________ income is the declining but has stabilized, then the underwriter is going to use the lower amount of income to be safe

Variable

724

These two forms can be used to verify the borrowers income.

Tax returns, W-2

725

A form filled out by the borrower’s employer stating that they are indeed employed at that company and they do receive income from them.

VOE

726

For some bonus or overtime income, the underwriter must get a completed form _______ for the borrowers recent paystub and W-2 forms covering the most recent two year period.

1005

727

If the borrower receives commission, the underwriter is going to need To see a minimum of ____ years of commission.

2

728

If the commission income represents less than 25% of the borrowers total annual employment income, what two other forms are required by the underwriter?

1. VOE
2. Pay stubs and W-2

729

If the commission income represents more than 25% of the borrowers annual income, then the underwriter is going to need to see copies of what two sets of documentation?

1. Tax returns
2. VOE or paystub and W-2 combination

730

True or false?
If income does not have a defined expiration date the underwriter cannot conclude that the income is stable.

False.If the income does not have a defined expiration date, the underwriter can conclude that the income is stable.

731

Alimony or child support, distributions from retirement amount, mortgage differential payments.
These are all examples of what kind of income?

Types of income that do have defined expiration dates.

732

Notes receivable, public assistance, royalty payment income.
These are all examples of what kind of income?

Income that has a defined expiration date.

733

Social Security(excluding retirement in the long term disability) trust income and a VA benefits(not including retirement or long-term disability).
These are all examples of what type of income?

Income that has a defined expiration date

734

If a borrower wants to include child-support as a source of income, it must be proven that it will be continued for how many more years?

3

735

3 examples of non-taxable income verification documents.

Award letters, policy agreements, or account statements.

736

Once the underwriter has determined that the income is nontaxable, the underwriter can gross up the income by adding _____ percent of the nontaxable income to the borrowers income.

25

737

Once the underwriter has determined that the income is nontaxable, the underwriter can _________ _______\\the income by adding 25% of the non-taxable income to the borrowers income.

Gross up

738

If a rental income is derived from the subject property, the property must be one of the two following.

1. A 2 to 4 unit principal residence in which the borrower occupies one of the units.
2. A 1 to 4 unit investment property

739

If in income is derived from a ______________ property, then there is no restriction on the property type if it meets all of the requirements.

Non-subject

740

What two ways can a rental income be verified?

1. Tax returns
2. A fully executed current lease agreement

741

If the subject property is the property where the income is generated, what additional addendum to the appraisal will be required?

Single-family comparable rent schedule

742

This form compares the rent generated by the subject property in comparison to other rental properties in the area.

Single-family comparable rent schedule

743

An individual who has a ______ percent or greater ownership interest in the business is self-employed.

25

744

The stability of the borrowers income, The location in nature of the borrowers business, the demand for the product or service offered by the business, the financial strength of the business and the ability to repay.
These are all examples of a factor that must be analyzed before approving a mortgage for what type of borrower?

Self-employed

745

How many years of history is the underwriter looking for from a self-employed borrower?

2

746

True or false.
The underwriter must prepare a written evaluation of its analysis of self-employed borrowers personal income including business income or loss, reported on the borrowers individual income tax returns.

True