HOPA

Question 1

What does HOPA cover?

Answer 1

Residential mortgage loans

Question 2

What is the borrower cancellation requirement under HOPA?

Answer 2

PMI must be cancelled on the cancellation date if the borrower submits the request in writing and has a good payment history, and provides evidence that the value of the property has not declined and there is no subordinate lien on the dwelling.

Question 3

At what point can the PMI be cancelled on a loan?

Answer 3

When the LTV reaches 80% of the original value, by request, if the borrower is current and property has not declined in value (appraisal may be required).

Question 4

Good payment history on the loan means that the borrower has not made a mortgage payment that was __ days or longer past due during the __-month period preceding either the cancellation date or the date the borrower submits a request for cancellation, whichever is later.

Answer 4

60
24

OR

30
12

Question 5

PMI must automatically terminate when the principal balance reaches __% of the original property value. This is known as the _______ date.

Answer 5

78

termination

Question 6

If the borrower is not current on the loan payments on the termination date, the lender must terminate PMI on the ______________ beginning after the borrower becomes current on the payments required by the terms of the mortgage.

Answer 6

first day of the month

Question 7

The termination date is based on what amortization schedule for fixed/variable rate loans?

Answer 7

• The initial amortization schedule for fixed rate loans

- The amortization schedule in effect for ARMs

Question 8

The bank must return all unearned premiums for PMI not later than __ days after the termination or cancellation of PMI. Mortgage insurers must return unearned premiums to the servicer within __ days after notification by the servicer of termination or cancellation of PMI.

Answer 8

45

30

Question 9

Termination and cancellation provisions of HOPA do not apply to any ___-____ mortgage loans as determined by the lender or agency at the time of consummation.

Answer 9

high-risk

Question 10

Final termination of PMI for high-risk mortgages occur at the ___-____ of the amortization schedule of the mortgage.

Answer 10

mid-point

Question 11

Except for high-risk mortgages, the lender must provide what HOPA disclosure to the borrower at the time of consummation?

Answer 11

an amortization schedule and a notice that the borrower may cancel PMI during their loan.

Question 12

T/F: If the mortgage is a high-risk mortgage at the time of the transaction, the lender will provide a notice to the borrower (per HOPA) that PMI will not be required in any case, at 78% LTV of the amortization schedule of the loan, if the borrower is current on payments required by the mortgage.

Answer 12

F. PMI won’t be required at the mid-point of the amortization schedule.

Question 13

If PMI is required, the servicer must send a written statement ____ that states the rights of the borrower to cancel or terminate PMI and an address and telephone number the borrower may use to contact the servicer to determine whether the borrower may cancel the PMI.

Answer 13

annually

Question 14

T/F: The annual HOPA PMI disclosure may be provided on the annual escrow statement or the annual IRS Form 1098.

Answer 14

T

Question 15

Within __ days after PMI is required to be canceled or terminated, the servicer must send the borrower a written notice that states

• That the PMI has been terminated and the borrower no longer has PMI on the mortgage.
• No further premiums, payments, or fees will be due in connection with PMI.

Answer 15

30

Question 16

First National Bank’s mortgage department generally requires the purchase of PMI when the borrower is making less than a 20% down payment. Which of the following disclosures is NOT required in connection with PMI?

a. A GFE
b. An initial PMI disclosure
c. An annual notice disclosure of the borrower’s PMI rights
d. A notice when the mortgage reaches its half-way point

Answer 16

a. A GFE

Although a GFE is probably required on most of the mortgages First National Bank makes, it is not given in connection with required PMI.

Question 17

Marie Fosse has a mortgage with lender-required PMI. On March 15, 2004, the principal on her loan was at 78% of the value of her home. She was 30 days past due on her loan on March 15. On July 15, 2004, her loan will be at the half-way point of its amortization schedule. On May 15, she catches up with her payments and is current on her loan at that time. Which of the following statements is true?

a. The lender should have terminated the PMI on March 15
b. The lender should terminate the PMI by May 15
c. The lender should terminate the PMI by June 1
d. The lender should terminate the PMI by July 15

Answer 17

c. The lender should terminate the PMI by June 1

Question 18

John Downey has a mortgage at First National that is covered by HOPA. His loan has a fixed rate. On Oct 1, 2015, his loan will be half-way through its amortization schedule. If the loan still has PMI on it at this point, and his payments are current, what is First National’s responsibility?

a. The bank has no responsibility to do anything.
b. The bank must terminate the PMI and notify the borrower
c. The bank must notify the borrower and give him a chance to request termination of PMI
d. The bank must provide a new annual disclosure statement within 30 days.

Answer 18

b. The bank must terminate the PMI and notify the borrower

The half-way point of the loan is the final termination date, and the bank must cancel the PMI.

Question 19

How is PMI cancelled when the loan reaches 78% LTV?

Answer 19

This is automatic (no request is needed), so long as the borrower is current.

Question 20

A borrower whose loan has private mortgage insurance (PMI) may request the lender to cancel the PMI under which of the following circumstances?

a. In writing on or after the cancellation date if payments are current
b. At any time during the life of the loan
c. At any time during the life of the loan when payments are current
d. Verbally on or after the cancellation date

Answer 20

a. In writing on or after the cancellation date if payments are current