General Mortgage Knowledge

Question 1

Fannie Mae Full Name

Answer 1

Federal National Mortgage Association

Question 2

Freddie Mac Full Name

Answer 2

Federal Home Loan Mortgage Corporation

Question 3

Chartered by the federal government to buy mortgages originated by Savings Associations.

Answer 3

Freddie Mac

Question 4

Fannie Mae Underwriting System

Answer 4

Desktop Underwriter

Question 5

Freddie Mac Underwriting System

Answer 5

Loan Prospector

Question 6

Most conventional mortgages are NOT

Answer 6

Assumable, they do not have a “due on sale clause”

Question 7

On a conventional conforming loan. how much of the down payment is required from the borrower?

Answer 7

5%

Question 8

Late fees are either 4% or 5% of the…

Answer 8

Principal and Interest, Not PITI

Question 9

PITI is…

Answer 9

Principal, interest, Taxes, and Hazard, Flood, and Mortgage Insurance

Question 10

Escrow impounds are collected by

Answer 10

The lender as part of the monthly mortgage payment,

Question 11

Escrow impounds include…

Answer 11

Monthly amount for property taxes, hazard insurance and flood insurance, if required.

Question 12

Fannie Mae requires the non-qualifying spouse to…

Answer 12

Sign the mortgage or any other

documentation required to evidence that the spouse is relinquishing all rights to the property.

Question 13

Fannie Mae requires GUARANTEED FUNDS such as:

Answer 13

a cashier’s check from a bank or
reputable financial institution to pay the closing costs; personal checks are not
acceptable.

Question 14

Fannie Mae emphasizes the borrowers:

Answer 14

continuity of stable income vs. stability of

employment.

Question 15

Fannie Mae requires the borrower to have a:

Answer 15

social security number or Individual Taxpayer Identification Number.

Question 16

Fannie Mae requires the lender to obtain a written…

Answer 16

credit report for each borrower

on the loan application who has an individual credit record.

Question 17

Fannie Mae will not accept a co-borrower’s income for qualifying purposes, unless:

Answer 17

The co-borrower also signs the note.

Question 18

Verification of Bank Balance:

Answer 18

Fannie Mae 1006

Question 19

Verification of Payroll:

Answer 19

Fannie Mae 1005

Question 20

A form that summarizes the applicant’s data and will usually be the top sheet in the loan package when it is sent to the underwriter.

Answer 20

Fannie Mae 1008 Tranmittal Summary

Question 21

Fannie Mae will NOT purchase:

Answer 21

Most balloon mortgages

Question 22

Fannie Mae will purchase mortgages secured by:

Answer 22

Residential Properties in urban, suburban or rural areas

Question 23

Fannie Mae does NOT purchase mortgages on:

Answer 23

Agricultural-type properties

Question 24

Fannie Mae recommends using how many credit score:

Answer 24

Two

Question 25

Alt-A Loans are characterized by:

Answer 25

Reduced documentation, high rations, or limited assets

Question 26

A senior mortgage (first mortgage) has what position?

Answer 26

Superior Lien Position

Question 27

A junior mortgage (subsequent mortgage) has what position?

Answer 27

A subordinate lien position

Question 28

There is an unlimited possible number of:

Answer 28

Junior Mortgages and no restriction terms

Question 29

Two Common Indices

Answer 29

US Treasury Securities and LIBOR

Question 30

A non-amortizing interest-only loan. The balance is due at the end of the term in a balloon payment.

Answer 30

A Term Mortgage

Question 31

In a reverse mortgage:

Answer 31

The balance of loan rises as equity shrinks

Question 32

No income requirements in:

Answer 32

Reverse Mortgages

Question 33

Reverse Mortgages require that the homeowner...

Answer 33

Meet with a counselor

Question 34

A traditional Mortgage is defined as:

Answer 34

A 30 year fixed

Question 35

A Package Mortgage can either be:

Answer 35

Amortizing or Non-Amortizing

Question 36

A loan with an adjustable interest rate, but with payments that never change; instead, as the rate increases or decreases, the balance decreases slower of faster as payments are made

Answer 36

Variable Balance Mortgage

Question 37

A type of seller financing in which the seller finances enough money to cover the existing loan balance as well as any additional funds needed by the borrower.

Answer 37

A Wrap Around Mortgage

Question 38

When the seller extends credit to the buyer to finance the purchase of property.

Answer 38

Seller Financing

Question 39

Given by the buyer to a seller to secure part or all of the money borrowed to purchase the property. A seller may take part of the purchase price as a mortgage to help the sale.

Answer 39

Seller Carry Back / Purchase Money Mortgage

Question 40

This is a fixed rate mortgage set up like a 30-year conventional mortgage loan with payments that increase regularly. It has a fixed interest rate and increasing payments so that the loan balance is paid off more quickly.

Answer 40

Growing Equity Mortgage

Question 41

Rate adjustment periods

Answer 41

Interval at which interest rate changes.

Question 42

Interest rate caps

Answer 42

Limits the number % points interest rate can rise or fall

Question 43

An ARM, an introductory rate that is lower than the fully indexed rate at the time of closing is called a...

Answer 43

Teaser rate

Question 44

Purchase Money Mortgage

Answer 44

When a borrower obtains a mortgage from the seller to purchase a home.

Question 45

Credit documents must be no more than..

Answer 45

120 days old on the date the note is signed

Question 46

A first-time home buyer is someone who is purchasing an owner-occupied primary residence and who has not had an ownership interest in an owner-occupied property for the past...

Answer 46

Three years

Question 47

A guarantor or co-signer is a credit applicant who does not have an ownership interest in the security property, but who signs the mortgage note and thus..

Answer 47

has a joint liability | for the note with the borrower who is the owner of the note.

Question 48

Choice by the lender not to take action even though the borrower is in default of the loan.

Answer 48

Forbearance

Question 49

Requires that the loan balance is paid off when the | title is transferred.

Answer 49

Due-On-Sale Clause

Question 50

Provision in a mortgage enabling a lender to | demand full repayment if the borrower transfers the loan.

Answer 50

Alienation Clause

Question 51

Conforming loans typically do not provide for prepayment penalties. However, if the loan does contain a prepayment penalty,

Answer 51

It must be disclosed in the note and must be clearly disclosed on the Loan Estimate and Closing Disclosure.

Question 52

Under federal law, prepayment penalties are now restricted solely to...

Answer 52

fixed-rate qualified mortgages and may not be charged after the first three years of the loan term.

Question 53

Method used to transfer title for a property following full repayment of a loan.

Answer 53

Reconveyance Deed

Question 54

The mortgage defeasance clause requires the lender to send a...

Answer 54

Satisfaction of Mortgage notice to the borrower within sixty days of paying off the loan

Question 55

Allows the borrower to pay all or part of the loan before it is due without penalty.

Answer 55

Prepayment Privilege Clause

Question 56

Permits future additional advances from the same loan.

Answer 56

Open End Clayse

Question 57

Partial Release

Answer 57

Allows the developer's lien to be released as the parcel is sold.

Question 58

An individual with power of attorney who is able to sign the contract if one of the parties is not able or competent to sign.

Answer 58

ATTORNEY-IN-FACT

Question 59

The party tranferring contactual right to another

Answer 59

Assignor

Question 60

The party recieving the contactual rights

Answer 60

Assignee

Question 61

AN assignor can keep the...

Answer 61

Serving rights along with the mortgage and note to the asignee

Question 62

The owner of a property

Answer 62

Grantor

Question 63

Party recieving the title transfer

Answer 63

Grantee

Question 64

Written instrument used to convey title or transfer ownership

Answer 64

Deed

Question 65

May be placed in the deed and control the use of property

Answer 65

Deed Restrictions

Question 66

A structure or portion of a structure that extends over the boundary line of a property onto another parcel

Answer 66

Enroachment

Question 67

Loan program relying only on the value of the home and borrowers credit history.

Answer 67

No Doc

Question 68

The borrower provided information on his/her income; however, no documentation was required, or verification on the actual income figures was performed. Assets, employment and other requirements were verified by the lender.

Answer 68

Stated Income, Verified Assets (SIVA)

Question 69

No income information was considered; however, assets were verified. Although income was not verified, the lender verified that the borrower was employed.

Answer 69

No Income, Verified Assets (NIVA)

Question 70

The borrower provided information about his/her income and assets. However, no documentation was provided, and the lender performed no verification of the information. Although income was not verified, the lender verified that the borrower was employed.

Answer 70

Stated Income, Stated Assets (SISA)

Question 71

No income or assets information was provided by the borrower, nor verified by the lender. Although income was not verified, the lender verified that the borrower was employed.

Answer 71

No Income, No Assets (NINA)

Question 72

Conforming loans require an underwriting analysis of a borrower’s debt ratios – ratio of housing debt-to-income and ratio of total debt-to-income. In this type of nontraditional loan, the borrower’s debt ratios were not considered.

Answer 72

No Ratio

Question 73

the borrower may pay off the loan in full in order to avoid a foreclosure sale of the property.

Answer 73

Redemption Period

Question 74

Assumption in which the original borrower is released from all liability.

Answer 74

Novation

Question 75

Has priority over all other liens and must be paid off first in the case of foreclosure.

Answer 75

Real Estate Tax Liens

Question 76

Loss Mitigation Options Includes

Answer 76

Refinancing, Loan Modification, Short Sale, and deed in lieu

Question 77

In evaluating flood insurance terms, the risk of flood potential are identified by

Answer 77

Special Flood Hazard Area

Question 78

High Risk Flood ZOnes

Answer 78

A and V

Question 79

Moderate Flood Zones

Answer 79

B or X

Question 80

Low Risk Flood Zones

Answer 80

C or X

Question 81

Flood Insurance must be purchased from..

Answer 81

the National Flood Insurance Program

Question 82

Homeowners Insurance requires buyers to...

Answer 82

pay the first years insurance in full prior to closing

Question 83

When a lender sells a mortgage loan to another lender, this is called...

Answer 83

Assignment of Mortgage

Question 84

Occurs when a lender obtains funds for closing from a line of credit extended by a commercial bank

Answer 84

Warehouse funding

Question 85

Allows a broker to originate and close a loan under his | or her name. After closing, the mortgage and note are immediately assigned to that investor.

Answer 85

Table Funding

Question 86

When the lender deals directly with the borrower | without any middlemen.

Answer 86

Direct Investor

Question 87

Is charged to the borrower at closing to cover the costs of determining whether or not the property is in a flood zone.

Answer 87

Flood Certification Fee

Question 88

Work done by the borrower which has value. The work must be listed on the appraisal to be eligible.

Answer 88

Sweat Equity

Question 89

Sweat Equity is not...

Answer 89

An acceptable source of funds

Question 90

Who pays for the title policies?

Answer 90

Either the seller or the borrower

Question 91

Protects the homeowner (mortgagor) and the lender (mortgagee) against defects that occurred in the past: undisclosed liens, heirs, fraudulent documents, etc.

Answer 91

Title Insurance