Mixed Study Facts Flashcards
(499 cards)
1
Q
Question 1:
What law deals with credit, APR & advertising of consumer loans?
A
TILA/REGULATION Z
2
Q
Question 2:
Which regulation prohibits kickbacks?
A
RESPA
3
Q
Question 3:
Which regulation requires the lender to cancel PMI when the loan reaches 78% LTV?
A
Answer 3:
HPA – Homeowners Protection Act
4
Q
Question 4:
Which regulation prohibits fee splitting?
A
Answer 4:
RESPA
5
Q
Question 5:
“X” is the letter used to describe which Regulation?
A
Answer 5:
RESPA
6
Q
Question 6:
RESPA is the acronym used to describe which Law?
A
Answer 6:
Real Estate Settlement Procedures Act
7
Q
Question 7:
What type of mortgage requires a non-refundable funding fee?
A
Answer 7:
VA Loan
8
Q
Question 8:
What is the provision in a mortgage enabling a lender to demand full repayment if the borrower DEFAULTS on the loan?
A
Answer 8:
Acceleration Clause
9
Q
Question 9:
What is the provision in a mortgage enabling a lender to demand full repayment if the borrower TRANSFERS the loan?
A
Answer 9:
Alienation Clause
10
Q
Question 10:
What does CFPB Stand for?
A
Answer 10:
Consumer Financial Protection Bureau
11
Q
Question 11:
What two laws created the CFPB?
A
Answer 11:
Dodd Frank Act and Consumer Finance Protection Act
12
Q
Question 12:
Which regulation is designed to help meet the Credit Needs of the Communities in which it operates?
A
Answer 12:
CRA – Community Reinvestment Act
13
Q
Question 13:
Under ECOA rules and regulations, how many days does the borrower have to request a copy of an appraisal report if the application was denied?
A
Answer 13:
90 days
14
Q
Question 14:
Under ECOA rules and regulations, if an application for credit is denied, and if requested by the borrower -how many days does the lender have to provide a copy of an appraisal report?
A
Answer 14:
30 days
15
Q
Question 15:
If a loan application is APPROVED, under ECOA rules and regulations, when MUST a copy of the appraisal be provided to the borrower?
A
Answer 15:
3 business days prior to the loan closing
16
Q
Question 16:
Conforming Loans follow the guidelines of which regulators?
A
Answer 16:
Fannie Mae and Freddie Mac
17
Q
Question 17:
Which regulation requires the lenders to
“BE EQUAL” when extending credit to borrowers?
A
Answer 17:
ECOA – Regulation B
18
Q
Question 18:
How old must a borrower be to qualify for a Reverse Mortgage?
A
Answer 18:
62 years old
19
Q
Question 19:
Which regulation has the primary function of preventing Identity Theft?
A
Answer 19:
FACT Act
20
Q
Question 20:
Which regulation has SECTION 114 Rules?
A
Answer 20:
FACT Act
21
Q
Question 21:
Which regulation requires the creditor to verify the VALIDITY of any change of address received?
A
Answer 21:
SECTION 114 of the FACT Act
22
Q
Question 22:
What is the payment method used in a reverse mortgage that allows the homeowners to receive a monthly check while living in the property?
A
Answer 22:
TENURE Method
23
Q
Question 23:
What is the fraud scheme where a borrower uses someone else’s name to purchase the property, but that person WILL NOT be living at the property?
A
Answer 23:
Straw borrower
24
Q
Question 24:
What type of lender “insures” mortgages?
A
Answer 24:
FHA approved lenders
25
Question 25:
What type of lender “guarantees” mortgages?
Answer 25:
VA approved lenders and USDA approved lenders
26
Question 26:
What is the entity that loans money to fund purchases in rural areas?
Answer 26:
USDA/Dept. of Agriculture
27
Question 27:
What is the value remaining in property after all liens and debts have been paid?
Answer 27:
Equity
28
Question 28:
A borrower is refinancing his home. How much time does Reg Z give him to change his mind (rescind)?
Answer 28:
3 days
29
Question 29:
Which Regulation established the 3-day right of rescission rule?
Answer 29:
TILA/REG Z
30
Question 30:
Redlining is part of which regulation/Law?
Answer 30:
Fair Housing Act
31
Question 31:
Blockbusting is part of which regulation/Law?
Answer 31:
Fair Housing Act
32
Question 32:
Steering is part of which regulation/Law?
Answer 32:
Fair Housing Act
33
Question 33:
Trying to convince a homeowner to SELL his home by implying that another race/ethnicity is moving in the neighborhood is called?
Answer 33:
Blockbusting/panic selling
34
Question 34:
Trying to convince a homeowner to PURCHASE in a particular neighborhood based on his race, religion or ethnicity is called?
Answer 34:
STEERING
35
Question 35:
Refusing to make loans on a property in a certain neighborhood for discriminatory reasons is called?
Answer 35:
Redlining
36
Question 36:
What does HOEPA stand for?
Answer 36:
Home Ownership and Equity Protection Act
37
Question 37:
HOEPA Loans are part of which larger regulation?
Answer 37:
Reg Z/TILA
38
Question 38:
High Cost Loans are part of which larger regulation?
Answer 38:
Reg Z/TILA
39
Question 39:
High Priced Loans are part of which larger regulation?
Answer 39:
Reg Z/TILA
40
Question 40:
Section 32 Loans are part of which larger regulation?
Answer 40:
Reg Z/TILA
41
Question 41:
Section 35 Loans are part of which larger regulation?
Answer 41:
Reg Z/TILA
42
Question 42:
MDIA ACT is part of which larger regulation?
Answer 42:
Reg Z/TILA
43
Question 43:
Mortgage Disclosure Improvement Act is part of which larger regulation?
Answer 43:
Reg Z/TILA
44
Question 44:
What is another name for Annual Percentage Rate?
Answer 44:
Effective Rate
45
Question 45:
What is another name for Interest Rate?
Answer 45:
Note Rate or Nominal Rate
46
Question 46:
PITI divided by Gross Monthly income is referred to as what?
Answer 46:
Housing Ratio or Front-End DTI
47
Question 47:
PITI + monthly debt divided by Gross Monthly income is referred to as what?
Answer 47:
Total Obligation Ratio – Back-end Ratio
48
Question 48:
How long must TILA Disclosures be kept?
Answer 48:
2 years (exceptions – LE is kept for 3 years, and CD is kept for 5 years)
49
Question 49:
What is the maximum amount of time that NEGATIVE info can remain on a credit report?
Answer 49:
7 years
50
Question 50:
What is the maximum amount of time that a bankruptcy can remain on a credit report?
Answer 50:
10 years
51
Question 51:
Which law/regulation states that a Bankruptcy can only remain on your credit for a MAX of 10 years?
Answer 51:
FCRA – Fair Credit Reporting Act – Reg V
52
Question 52:
Which law/regulation states that negative information can only remain on your credit for a MAX of 7 years?
Answer 52:
FCRA – Fair Credit Reporting Act – Reg V
53
Question 53:
Which law allows a consumer who has had her credit card used by an identity thief to place a credit freeze on her credit report?
Answer 53:
FACT ACT
54
Question 54:
Which law requires creditors to TRUNCATE debit and credit card info on receipts?
Answer 54:
FACT ACT
55
Question 55:
Which regulation requires that loan officers must take measures to secure and dispose of (burn and/or shred) a borrower’s sensitive credit information?
Answer 55:
FACT ACT
56
Question 56:
Which regulation states that if a borrower is denied credit, he can receive a FREE copy of his credit report?
Answer 56:
FCRA – Fair Credit Reporting Act
REG V
57
Question 57:
Which regulation states that if a borrower is unemployed, he can receive a FREE copy of his credit report?
Answer 57:
FCRA – Fair Credit Reporting Act – Reg V
58
Question 58:
Which regulation states that if a borrower is on SSI or Disability, he can receive a FREE copy of his credit report?
Answer 58:
FCRA – Fair Credit Reporting Act – Reg V
59
Question 59:
Which regulation states that if a borrower has been the victim of fraud, he can receive a FREE copy of his credit report?
Answer 59:
FCRA – Fair Credit Reporting Act – Reg V
60
Question 60:
Which regulation states that a borrower can receive a FREE copy of his credit report once a year (no reason or requirement necessary)?
Answer 60:
FACT Act
61
Question 61:
During the loan process, if you ask a borrower if he is single…which law are you violating?
Answer 61:
ECOA – Regulation B
62
Question 62:
Which regulation states that the only correct way to ask about a borrower’s martial status is: are you married, unmarried or separated?
Answer 62:
ECOA – Regulation B
63
Question 63:
Who is responsible for providing the closing disclosure to the borrower?
Answer 63:
The Creditor/Lender
64
Question 64:
Who is responsible for providing the closing disclosure to the Seller?
Answer 64:
Settlement Agent/Title Agent
65
Question 65:
Which regulation requires the borrower to receive the Loan Estimate?
Answer 65:
TILA – REG Z
66
Question 66:
Which regulation requires the borrower to receive the Closing Disclosure?
Answer 66:
TILA – REG Z
67
Question 67:
Which regulation requires the borrower to receive the Loan Estimate within 3 business days?
Answer 67:
RESPA – Regulation X
68
Question 68:
Which regulation requires the borrower to receive the Closing Disclosure within 3 business days?
Answer 68:
RESPA – Regulation X
69
Question 69:
As it relates to the loan estimate – what is the definition of a Business day?
Answer 69:
Any day that the Creditor’s office is open for business
70
Question 70:
According to TILA/REG Z – what is the definition of a Business day?
Answer 70:
Any calendar day except for Sunday and Legal Holiday
71
Question 71:
During the loan process, where do you find HMDA government monitoring information?
Answer 71:
Section 8 of the 1003 application, it is called Demographic Information
72
Question 72:
What does HMDA stand for?
Answer 72:
Home Mortgage Disclosure Act
73
Question 73:
What appraisal approach is used when appraising property that has been destroyed by a natural disaster?
Answer 73:
Cost Approach or replacement cost approach
74
Question 74:
In the sales comparison approach, how many comps are required?
Answer 74:
3
75
Question 75:
What is another name for the Financial Services Modernization Act of 1999?
Answer 75:
Graham Leach Bliley Act
76
Question 76:
How many days does a CREDITOR have to notify a consumer of the status of a credit application (denied, approved, need more info)?
Answer 76:
30 days
77
Question 77:
Which regulation states that a creditor has 30 days to notify a consumer of an application approval or denial?
Answer 77:
ECOA – REG B
78
Question 78:
How many hours of Ethics is required to be taught in the 20hr Pre-licensing course?
Answer 78:
3 hours
79
Question 79:
How many hours of Ethics is required to be taught in the 8hr Continuing Education course?
Answer 79:
2 hours
80
Question 80:
How many hours of Federal Law is required to be taught in the 20hr Pre-licensing course?
Answer 80:
3 hours
81
Question 81:
How many hours of Federal Law is required to be taught in the 8hr Continuing Education course?
Answer 81:
3 hours
82
Question 82:
A mortgage that includes more than one parcel of land is called what?
Answer 82:
Blanket Mortgage
83
Question 83:
A mortgage that includes appliances such as a stove or refrigerator is called what?
Answer 83:
Package Mortgage
84
Question 84:
Which closing document itemizes the final closing cost and items paid in connection with the loan for the borrower?
Answer 84:
Closing Disclosure
85
Question 85:
Which law deals with APR and Advertising of credit terms?
Answer 85:
TILA – REG Z
86
Question 86:
What is the official name for the 3/7/3 rule?
Answer 86:
Mortgage Disclosure Improvement Act or MDIA Act
87
Question 87:
What regulation requires the lender to perform an escrow analysis?
Answer 87:
RESPA – REG X
88
Question 88:
Which law states that it is a violation to discriminate against a potential borrower on public assistance?
Answer 88:
ECOA – REG B
89
Question 89:
What two classes are protected under Fair Housing Act - but NOT under ECOA?
Answer 89:
Disability/Handicap & Familial Status
90
Question 90:
What three classes are protected under ECOA but NOT under Fair Housing?
Answer 90:
Age, Marital Status, and Public Assistance
91
Question 91:
What is another name for a non-conforming loan?
Answer 91:
Jumbo Loan
92
Question 92:
What is another name for a Jumbo loan?
Answer 92:
Non-Conforming Loan
93
Question 93:
The front Ratio for an FHA loan is 31%... what is the back ratio?
Answer 93:
43%
94
Question 94:
The front Ratio for a Conventional loan is 28%... what is the back ratio?
Answer 94:
36%
95
Question 95:
The Ratio for a VA loan is?
Answer 95:
41%
96
Question 96:
What is another name for the Bank Secrecy Act?
Answer 96:
The anti-money laundering act
97
Question 97:
What is another name for the Anti-Money Laundering Act?
Answer 97:
Bank Secrecy Act
98
Question 98:
Which law requires banks (financial institutions) to keep records of deposits of $10,000 made in cash?
Answer 98:
Anti-Money Laundering Act/Bank Secrecy Act
99
Question 99:
Which law requires MLOs to file suspicion activity that might be a sign of tax evasion, money laundering, or other possible criminal activity exceeding $5,000?
Answer 99:
Anti-Money Laundering Act/Bank Secrecy Act
100
Question 100:
If you fail the test, how long must you wait before retaking the exam?
Answer 100:
Required 30-day waiting period before retaking a failed test
101
Question 101:
What does AUS stand for?
Answer 101:
Automated Underwriting System
102
Question 102:
What does SAFE Act stand for?
Answer 102:
Secure & Fair Enforcement Act
103
Question 103:
What does HERA stand for?
Answer 103:
Housing & Economic Recovery Act
104
Question 104:
What does HPA stand for?
Answer 104:
Homeowner’s Protection Act
105
Question 105:
What does GLBA stand for?
Answer 105:
Graham Leach Bliley Act
106
Question 106:
What type of property is covered under RESPA?
Answer 106:
1 – 4 unit Residential Property
107
Question 107:
Which regulation allows lenders to OBTAIN information regarding a borrower’s ethnicity, to help identify possible discriminatory patterns?
Answer 107:
HMDA – Regulation C
108
Question 108:
When can a borrower request cancellation of PMI?
Answer 108:
When LTV Reaches 80%
109
Question 109:
When must the lender automatically cancel PMI?
Answer 109:
When the LTV reaches 78%
110
Question 110:
What is the primary market?
Answer 110:
Where borrowers/consumers obtain mortgage loans
111
Question 111:
What is the secondary market?
Answer 111:
Where lenders buy & sell loans from one another
112
Question 112:
Name the two Government Sponsored Enterprises (GSEs)?
Answer 112:
Fannie Mae
Freddie Mac
113
Question 113:
Which GSE is the Federal National Mortgage Association?
Answer 113:
Fannie Mae
114
Question 114:
Which GSE is the Federal Home Loan Mortgage Association?
Answer 114:
Freddie Mac
115
Question 115:
| TILA applies when credit is payable by written agreement in __________ installments?
Answer 115:
More than 4 installments
116
Question 116:
Which AUS system does Fannie Mae use?
Answer 116:
Desktop Underwriter (DU)
117
Question 117:
Which AUS system does Freddie Mac use?
Answer 117:
Loan Product Advisor (formerly Loan Prospector)
118
Question 118:
How often must National DNC and internal DNC list be updated?
Answer 118:
Every 31 days and records must be maintained for 24 months
119
Question 119:
An appraisal is valid for _____ months?
Answer 119:
An appraisal is valid for 6 months (updated 1/1/2020). It must be re-certified if the appraisal will be 4 months (120 days) old or more at closing.
120
Question 120:
What is the penalty for violating the DNC Act?
Answer 120:
$46,517
121
Question 121:
Which regulation allows the borrower to sue for 3x’s the amount paid for title insurance?
Answer 121:
RESPA Section 9
122
Question 122:
If money was collected, and a borrower rescinds, how long does escrow have to return the funds?
Answer 122:
20 days
123
Question 123:
MLOs seeking to become licensed in other states or who seek to move from a bank to a non-bank lender will be allowed ____ days of transitional (temporary) authority.
Answer 123:
These individuals are allowed to originate loans while completing any state-specific requirements for licensure such as education or testing for up to 120 days while they are applying to the state agency for their new license.
124
Question 124:
What is the only fee that can be collected prior to delivery of the Loan Estimate?
Answer 124:
Credit Reporting fee
125
Question 125:
Once an individual is unlicensed for ________ years as an MLO, most states require that the individual retake the 20hrs of pre-licensing education in order to have his MLO license reinstated.
Answer 125:
Once an individual is unlicensed for three (3) years as an MLO, most states require that the individual retake the 20hrs of pre-licensing education in order to have his MLO license reinstated.
126
Question 126:
What law requires that the equal housing lender slogan and/or logo be placed on all advertising?
Answer 126:
Fair Housing Act
127
Question 127:
How long does a person have to sue for a violation under the Fair Housing Act?
Answer 127:
1 year
128
Question 128:
Once unlicensed for ______ years, the individual must retake and pass the National Exam.
Answer 128:
Once unlicensed for five (5) years, the individual must retake and pass the National Exam.
If the individual has worked as a registered MLO during this unlicensed period, he is credited for that time.
129
Question 129:
What is the site where you can receive a free copy of your credit report, according to the FACT Act?
Answer 129:
www.Annualcreditreport.com
130
Question 130:
The lender must provide the borrower with a list of then ______ HUD approved counselors.
Answer 130:
The lender must provide the borrower with a list of then (10) HUD approved counselors.
131
Question 131:
What regulation is designed to protect consumer’s non-public information (NPI) and how it can and cannot be shared?
Answer 131:
GLBA
132
Question 132:
Which law requires lenders to verify the date of birth, SS# and ethnicity of a person getting a loan in the United States?
Answer 132:
U.S. Patriot Act
133
Question 133:
If you fail the test 3 times, what is the waiting period to retest?
Answer 133:
Six (6) Months/180 days
134
Question 134:
Under HMDA, how long must a lender keep the Loan Application Register (LAR)?
Answer 134:
3 years
135
Question 135:
What day does your license expire each year?
Answer 135:
December 31st
136
Question 136:
What is the renewal period to keep your license current?
Answer 136:
NOV 1 – DEC 31st
137
Question 137:
What are the two (2) types of mortgages that require that the homeowner meet with a counselor – to ensure that the he/she understands how the program works.
Answer 137:
Reverse mortgages & Higher-Priced (Section 35/HMLS) mortgages.
138
Question 138:
Which Act requires companies to give consumers privacy notices?
Answer 138:
Gramm-Leach-Bliley
139
Question 139:
Which act was implemented to promote financial stability and to protect consumers from abusive practices?
Answer 139:
Dodd Frank Act
140
Question 140:
What is RESPA Section 6 responsible for?
Answer 140:
Mortgage Servicing
141
Question 141:
What is RESPA Section 8 responsible for?
Answer 141:
Kickbacks, Fee Splitting & Unearned fees
142
Question 142:
What is RESPA Section 9 responsible for?
Answer 142:
Title Insurance
143
Question 143:
What is RESPA Section 10 responsible for?
Answer 143:
Escrow Accounts
144
Question 144:
What is the max mortgage term (length) allowed for a mortgage to be classified as a Qualified Mortgage?
Answer 144:
30 years
145
Question 145:
Until the loan estimate has been delivered, what fee can an MLO charge?
Answer 145:
Credit Report
146
Question 146:
Estimate of charges and terms for settlement services must be available for at least _________ business days from the time the Loan Estimate is provided?
Answer 146:
10
147
Question 147:
If a new (revised) Loan Estimate is required because of a changed circumstance, it must be disclosed and received by the borrower ________ days prior to consummation of the loan?
Answer 147:
Four (4) days!
The “initial” loan estimate is due at or “within” 3 days of the application.
A “revised” loan estimate is due “within” 3 days of the notice of change.
But in ALL CASES, it must be delivered four (4) days prior to consummation!
Because the soonest a loan can close (per the MDIA Act is 7 days! (3 + 4 = 7)
148
Question 148:
Flood Insurance must be purchased from the _____________.
Answer 148:
Flood Insurance must be purchased from the National Flood Insurance Program (NFIP).
149
Question 149:
The minimum amount of flood insurance required for a home in a flood zone is $_______.
Answer 149:
$100,000
150
Question 150:
The max amount of flood insurance required for a home in a flood zone is $_______.
Answer 150:
$250,000
151
Question 151:
The loan estimate must be retained for how long?
Answer 151:
3 years
152
Question 152:
What does HMDA stand for?
Answer 152:
Home Mortgage Disclosure Act
153
Question 153:
What does NOV stand for?
Answer 153:
Notice of Value
154
Question 154:
What does CRV stand for?
Answer 154:
Certificate of Reasonable Value
155
Question 155:
What does the “R” stand for in the acronym NMLSR
Answer 155:
REGISTRY
156
Question 156:
What is a Mortgage Call Report (MCR)?
Answer 156:
Quarterly Report required by MLO Company and Mortgage Brokers
157
Question 157:
Loan originator organizations must keep compensation records for how many years?
Answer 157:
3 years
158
Question 158:
Mortgage companies must submit a residential loan origination activity report to the NMLSR every:
Answer 158:
Three months
159
Question 159:
Which Act specifically prohibits blockbusting?
Answer 159:
The Fair Housing Act
160
Question 160:
What law protects homeowners from foreclosure-prevention scams?
Answer 160:
Mortgage Assistance Relief Services Rule
161
Question 161:
Which law requires financial institutions to keep detailed records of cash transactions exceeding $10,000 (withdrawing, depositing or transporting).
Answer 161:
Bank Secrecy Act/Anti-Money Laundering (BSA/AML)
162
Question 162:
What type of federal report is filed when financial institutions detect suspicious activity?
Answer 162:
Suspicious Activity Report
163
Question 163:
Which law requires businesses to print only the last five card numbers on a credit card receipt?
Answer 163:
FACT Act
164
Question 164:
What happens if the acceptable variance between the Loan Estimate and the Closing Disclosure is exceeded?
Answer 164:
The excess is refunded to the borrower within 60 days
165
Question 165:
A higher-priced home loan is one that has:
Answer 165:
APR exceeds the average prime rate by at least:
1. 5% for first-lien mortgage
2. 5% for a first lien Jumbo loan, or
3. 5% for a subordinate mortgage lien.
166
Question 166:
What is the shortest time in which a mortgage purchase loan can close?
Answer 166:
7 business days
167
Question 167:
Which law states that MLOs are required to report any suspicious activity exceeding $5,000 that may be a sign of tax evasion, money laundering, or other possible criminal activity.
Answer 167:
Bank Secrecy Act/Anti-Money Laundering (BSA/AML)
168
Question 168:
Denise reviewed her credit report and discovered a few discrepancies and would like to dispute them – once disputed, how long does the credit reporting agency have to respond to the dispute?
Answer 168:
30 days
169
Question 169:
The Red Flags Rules are also known as
________
Answer 169:
| The Red Flags Rules are also known as Section 114 rules under the FACT Act
170
Question 170:
| What law requires ARM borrowers to receive the Consumer Handbook on Adjustable Rate Mortgages?
Answer 170:
TILA
171
Question 171:
| Which law requires that the “Know Before You Owe” booklet be given to the borrower?
Answer 171:
RESPA
172
Question 172:
| Lenders must maintain an escrow account for higher-priced (Section 35) mortgages for a minimum of:
Answer 172:
5 years
173
Question 173:
| What is the Fannie Mae appraisal report form?
Answer 173:
URAR - 1004 Form
174
Question 174:
| What lien has the highest priority and is paid off first when a property is sold?
Answer 174:
Property Tax
175
Question 175:
| What document is assigned along with the mortgage?
Answer 175:
Promissory note
176
Question 176:
What term describes the process of a senior mortgage lien-holder voluntarily changing into a junior mortgage lien-holder?
Answer 176:
Subordination
177
Question 177:
What does Ginnie Mae do?
Answer 177:
Guarantees Ginnie-Mae mortgage-backed securities
178
Question 178:
Which law requires lenders to train employees to recognize the Red Flags of identity theft?
Answer 178:
FACT Act
179
Question 179:
Which law entitles a borrower to a copy of his appraisal report?
Answer 179:
ECOA
180
Question 180:
According to the GLB Act, a person who completes a single transaction with a creditor is known as a(n) customer or a consumer?
Answer 180:
A consumer
181
Question 181:
| The lowest possible interest rate for an ARM loan is known as the:
Answer 181:
Floor
182
Question 182:
If an applicant works 30 hours every week and is paid $25.00 per hour, what is the applicant’s monthly income?
Answer 182:
$3,250
$25.00 x 30hrs a week x 52weeks in year / 12
183
Question 183:
| What law prohibits discrimination in the sale & lease of property?
Answer 183:
Fair Housing Act
184
Question 184:
| The term “20 basis points” expressed as a percentage is:
Answer 184:
0.20%
185
Question 185:
The late fee for a conventional loan is:
Answer 185:
| 5% of principal and interest
186
Question 186:
A funding fee is required for a:
Answer 186:
VA loan
187
Question 187:
The mortgagee is the:
Answer 187:
Lender
188
Question 188:
| Who does Fannie Mae hold responsible for the quality of an appraisal?
Answer 188:
Lender
189
Question 189:
| Which law prohibits discrimination by lenders when extending credit?
Answer 189:
Equal Credit Opportunity Act
190
Question 190:
A property sold for $200,000 and was appraised at $180,000. The borrower received a loan for $150,000. What is the loan-to-value?
Answer 190:
83.3%
($150,000/$180,000)
191
Question 191:
| How many days does a lender have to send an adverse action notice?
Answer 191:
30 days
192
Question 192:
The enforcement of a lien is known as a:
Answer 192:
Foreclosure
193
Question 193:
What minimum percentage of ownership qualifies an individual as self-employed?
Answer 193:
25%
194
Question 194:
Which law defines the right of rescission?
Answer 194:
Truth-in-Lending
195
Question 195:
| How long after the application date must social security payments continue to be received in order to count as income?
Answer 195:
3 years
196
Question 196:
Which clause in a mortgage allows a lender to increase the interest rate?
Answer 196:
Escalation
197
Question 197:
DVA appraisal is known as a:
Answer 197:
CVR or NOV
198
Question 198:
Which types of loans are meant for rural areas?
Answer 198:
USDA – Section 502
199
Question 199:
The purchase price of a home is $200,000 and the loan amount is $180,000. The borrower pays 6% interest with 1 discount point and 1 origination point. What is the cost of the points?
Answer 199:
$3,600
($180,000 x 2%)
200
Question 200:
What is the maximum allowable amount of DVA seller concessions?
Answer 200:
4%
201
Question 201:
The late fee for DVA loan is:
Answer 201:
4% of principal and interest
202
Question 202:
What is the clause in a mortgage that is also known as a “due on sale” clause?
Answer 202:
Alienation
203
Question 203:
Alimony payments must continue to be received for how long after the application date if they are to be included as income?
Answer 203:
3 years
204
Question 204:
Credit reports are good for how many days after they are pulled for qualifying purposes?
Answer 204:
120 days
205
Question 205:
Which law protects an individual’s confidential information?
Answer 205:
Gramm-Leach-Bliley Act
206
Question 206:
The Mortgage Servicing Disclosure Statement must be sent to the borrower within how many business days of receiving a loan application?
Answer 206:
3 days
207
Question 207:
| After an escrow account analysis, money must be refunded if the over-paid amount equals or exceeds:
Answer 207:
$50
208
Question 208:
| The maximum escrow cushion that a lender can require is:
Answer 208:
Equal to 2 months (1/6th)
209
Question 209:
The fluctuating economic indicator used in an ARM is the?
Answer 209:
INDEX
210
Question 210:
The Home Mortgage Disclosure Act (HMDA) was implemented by the:
Answer 210:
Federal Reserve Board
211
Question 211:
Tax liens can be kept in the credit report for?
Answer 211:
7 years
212
Question 212:
The range of possible credit score is:
Answer 212:
300-850
213
Question 213:
The Red Flag Rule is concerned with:
Answer 213:
Identity theft
214
Question 214:
| Which type of mortgage is funded by the United States Department of Agriculture?
Answer 214:
Section 502 loans/USDA Loans
215
Question 215:
| What type of mortgage requires that the lender provide the borrower with the CHARM booklet?
Answer 215:
Adjustable Rate Mortgages
216
Question 216:
| For how many years must a lender retain the Escrow Cancellation Notice?
Answer 216:
2 years
217
Question 217:
| For how many years must a lender retain the Partial Payment Policy?
Answer 217:
2 years
218
Question 218:
The mortgagor is the:
Answer 218:
Borrower
219
```
Question 219:
Which law (regulation) is designed to create financial stability?
```
Answer 219:
The Dodd Frank Act
220
Question 220:
| Which appraisal approach is BEST for appraising vacant land, new construction or for unusual or special purpose?
Answer 220:
Cost Approach
221
Question 221:
What establishes the lien position?
Answer 221:
Date and time of recording
222
Question 222:
| What type of mortgage has a fixed interest rate and increasing payments?
Answer 222:
Growing equity mortgage
223
Question 223:
A graduated payment mortgage:
Answer 223:
Has payments that start low and increase over time
224
Question 224:
If there is no minimum monthly credit card payment, what percent of the balance is used in the calculation of monthly debt?
Answer 224:
5%
225
Question 225:
The Fannie Mae Total Obligations Ratio (back-end ratio) is:
Answer 225:
36%
226
Question 226:
A borrower is paid $3,500 bi-weekly – what would be considered the gross monthly income?
Answer 226:
$7,583.33
$3,500 x 26 ÷ 12 = $7,583.33 per month
227
Question 227:
Company or individual who, for a fee, places loans with lenders, but does not service such loans is called a ___________?
Answer 227:
Mortgage Broker
228
Question 228:
| Fannie Mae generally wants how many months of liquid financial reserves after closing?
Answer 228:
2 months
229
Question 229:
The Penalty for Mortgage Fraud is ___________.
Answer 229:
$1,000,000 or imprisoned not more than 30 years, or both.
230
Question 230:
A co-borrower whose income is used to qualify must sign the:
Answer 230:
Mortgage and the note
231
Question 231:
Which form is used to summarize the information in the loan package on an FHA loan?
Answer 231:
Fannie Mae 1008 – Transmittal Summary
232
Question 232:
An appraisal must be re-certified if it is older than:
Answer 232:
4 months
233
Question 233:
The most probable price which a property should bring in an open market is:
Answer 233:
Market value
234
Question 234:
The appraisal approach that best applies to vacant land is:
Answer 234:
Sales Approach
235
Question 235:
The appraisal approach that best applies to a school is:
Answer 235:
Cost Approach
236
Question 236:
Who handles complaints regarding mortgage loan rejections?
Answer 236:
CFPB
237
Question 237:
What gives someone other than the owner the right to be on the property for a specific purpose?
Answer 237:
Easement
238
Question 238:
What is a clause in the deed that limits the future use of a property?
Answer 238:
Deed restriction
239
Question 239:
| The most common type of legal description for residential subdivisions is:
Answer 239:
Lot and block
240
Question 240:
The most accurate type of legal description for residential subdivisions is:
Answer 240:
Metes and bounds
241
Question 241:
What type of funding occurs when a lender obtains funds from a line of credit at a commercial bank?
Answer 241:
Warehouse funding
242
Question 242:
The late fee for FHA and DVA loans is:
Answer 242:
4%
243
Question 243:
When a lender sells a mortgage loan to another lender this is called:
Answer 243:
Assignment of mortgage
244
Question 244:
What type of mortgage fraud scam occurs when a buyer borrows the down payment from seller without the lender’s knowledge?
Answer 244:
Silent second
245
Question 245:
What can result in a $1,000,000 fine and 30 years in prison?
Answer 245:
Acts of mortgage fraud
246
Question 246:
After loan servicing is transferred, the new servicer cannot assess late fees for a period of ____ if the payment is made to the previous lender by mistake:
Answer 246:
60 days
247
Question 247:
Which document is used in place of a mortgage to secure the payment of a promissory note? (This method is used in many states.)
Answer 247:
A deed of trust
248
Question 248:
“APR” means…
Answer 248:
Annual percentage rate. This is the cost of credit expressed as a percentage.
249
Question 249:
A Reconveyance Clause is:
Answer 249:
The method used to transfer title for a property following full payment of a loan. Reconveyance is typically used with deed of trust.
250
Question 250:
A Subordinate lien is:
Answer 250:
The same as a second mortgage. It may also be called a junior lien.
251
Question 251:
What is a mortgage?
Answer 251:
A legal document that connects a promissory note with the collateral used to secure the note.
252
Question 252:
A deed is:
Answer 252:
A legal instrument that conveys title to real property.
253
Question 253:
An amortization schedule is:
Answer 253:
A table providing the periodic payments needed to pay off a loan by the end of its term. The payments include principal and interest.
254
Question 254:
Qualified mortgages may not have Back-end DTI exceeding:
Answer 254:
43%
255
Question 255:
What is a note?
Answer 255:
A legal document that obligates a borrower to repay a loan. It specifies the terms by which the repayment will occur. It may also be called a promissory note.
256
Question 256:
DVA underwriters use a debt ratio of:
Answer 256:
41%
257
Question 257:
Discount points are paid to?
Answer 257:
The lender at closing to reduce the note rate of the loan
258
Question 258:
Securitization is used to?
Answer 258:
Pool similar types of loans to create mortgage-backed securities for sale on the financial market. These securities are used to create a renewable source of funds for lenders.
259
Question 259:
When does “Dry Settlement” occur?
Answer 259:
Parties meet to execute documents, but funds are not disbursed.
260
Question 260:
When does “Wet Settlement occur”
Answer 260:
Parties meet to execute documents and funds are subsequently disbursed.
261
Question 261:
Name four (4) involuntary liens that could be filed on a property.
Answer 261:
Tax liens
Mechanics liens
Judgements
Attachments
262
Question 262:
What type of lien is a voluntary lien on property?
Answer 262:
A mortgage is a voluntary lien
263
Question 263:
What is the definition of “Real Property”?
Answer 263:
Land and anything that is permanently affixed to it.
264
Question 264:
Tom Brown is a nurse at the local hospital. He has worked the night shift for three years and plans to continue this schedule. His base pay is $29.50 per hour with a 5% shift differential. He averages 35 hours per week. What is his qualifying income?
Answer 264:
$4,697.87
Calculate the shift differential first: $29.50 * 5% = 1.475.
So, he gets an additional $1.475 per hour.
So, $1.475 + $29.50 = $30.975. $30.975 * 35hrs x 52weeks / 12 = $4,697.87
265
Question 265:
If the purchase price is $300,000 and the loan amount is $250,000 and the appraisal value is $275,000…what is the LTV?
Answer 265:
90%
($250,000 / $274,000)
266
Question 266:
Suppose the payment is late on a conventional loan and the monthly principal is $1,000, the monthly interest is $500, the monthly taxes are $125, and the monthly insurance is $25.00…what is the amount of the late payment?
Answer 266:
$75 ($1,500 x 5%)
* Remember – late charges are not calculated on the taxes and insurance!
267
Question 267:
Suppose the payment is late on an FHA loan and the monthly principal is $1,500, the monthly interest is $150, the monthly taxes are $105, the MIP is $210, and the monthly insurance is $33.00…what is the amount of the late payment?
Answer 267:
$66
($1,500 + $150 x 4%)
268
Question 268:
Monthly PITI payments are $1,400 and the borrower’s gross monthly income is $5,000. His other debts are $200 a month. What is the Housing Expense Ratio?
Answer 268:
28% ($1,400 ÷ $5,000)
269
Question 269:
Monthly PITI payments are $1,400 and the borrower’s gross monthly income is $5,000. His other debts are $200 a month. What is the Debt-to-Income Ratio?
Answer 269:
| 32%
$1,400 + $200 ÷ $5,000
270
Question 270:
What type of property is NOT covered by RESPA rules and regulations?
Answer 270:
All cash sales, rental units of more then 4, property 25 acres or more & commercial property.
271
Question 271:
According to RESPA Section 6 - a servicer must make contact with a borrower after how many days of a missed payment?
Answer 271:
36 days
272
Question 272:
A lender/servicer must inform the borrower of the available loss mitigation options after _____________ days of
missed payments?
Answer 272:
45 days
273
Question 273:
| Which regulation allows the borrower to sue for “treble” damages?
Answer 273:
RESPA Section 9
274
Question 274:
What law requires the lender to provide an annual summary of the activity associated with the borrower’s impound account?
Answer 274:
RESPA Section 10
275
Question 275:
The servicing transfer statement must be provided to the borrower ___________ prior to
transfer.
Answer 275:
15 days
276
Question 276:
| What are the six (6) items that make a “complete” application?
```
Answer 276:
ALIENS-
Address,
Loan Amount,
Income,
Estimated Value,
Name,
Social Security
```
277
Question 277:
The “Know Before You Owe” disclosure must be provided within ____________ days of a
complete application?
Answer 277:
3 days
278
Question 278:
| The “Know Before You Owe” disclosure must be provided for what type of transactions?
Answer 278:
Purchase Only
279
Question 279:
If the application is withdrawn within the first _________ days or the lender declines the application within the first _________ days, the lender is NOT required to provide the ____________ to the borrowers.
Answer 279:
3,3, initial disclosure
280
Question 280:
________________ occurs
if the lender chooses the hazard insurance company when the borrower allows the policy to lapse.
Answer 280:
Forced-placed insurance
281
Question 281:
| Which items have a zero (0) tolerance between the Loan Estimate and the Closing Disclosure?
Answer 281:
| Real estate transfer taxes, loan origination fees, interest rates, appraisal and credit report
282
Question 282:
| Which items have a 10% tolerance between the Loan Estimate and the Closing Disclosure?
Answer 282:
Government recording fees, title insurance
283
Question 283:
On what document would you find information regarding the “RATE LOCK”?
Answer 283:
The Loan Estimate ONLY
284
Question 284:
What is the penalty for violating RESPA?
Answer 284:
$10,000 and/or up to
1-year in jail
285
Question 285:
Which Regulation is Regulation “Z”?
Answer 285:
Truth In Lending Act (TILA)
286
Question 286:
Which disclosure requires that entities that purchase or acquire mortgage loans to notify the borrower and provide the name, address and telephone number of the new owner within 30 days of acquisition?
Answer 286:
Transfer of Ownership Disclosure
287
Question 287:
| The total “interest” being charged on the loan, expressed as a percentage is known as the ____________________?
Answer 287:
Total Interest Percentage (TIP)
288
Question 288:
| If a borrower was not properly notified of his/her right to rescind, how long can the rescission period be extended?
Answer 288:
Three (3) years
289
Question 289:
| How many copies of the “Right to Rescind” must each borrower receive?
Answer 289:
Two
290
Question 290:
| What law requires that the borrower receive the Right to Recession notice?
Answer 290:
TILA (Reg Z)
291
Question 291:
What does APOR stand for?
Answer 291:
Average Prime Offer Rate
292
Question 292:
| When is a loan considered a Section 32 (High Cost) Loan?
Answer 292:
A loan will be considered a High Cost (Section 32) loan if its APR exceeds the APOR by more than 6.5% for a first lien or 8.5% for a subordination lien, or when the total points and fees payable in conjunctions with the loan exceed 5% (8% for loans of $20,000 or less).
293
Question 293:
| When is a loan considered a Section 35 (High priced) Loan?
Answer 293:
A loan will be considered a High Priced (Section 35) loan if it’s APR exceeds the APOR by more than 1.5%, 2.5% for jumbo first-lien loans and 3.5% for subordinate liens.
294
Question 294:
| What type of loans “require” an impound account?
Answer 294:
Section 35 High Priced Loans
295
Question 295:
| When is the CHARM booklet required?
Answer 295:
| When the consumer received an adjustable rate mortgage
296
Question 296:
| What is the regulation/rule that states that a loan originator cannot receive Dual Compensation?
Answer 296:
Loan Originator compensation rule
297
Question 297:
Which law states that a loan originator can only be paid a commission by one source, either the borrower or the lender – but not both?
Answer 297:
Loan Originator compensation rule
298
Question 298:
| If a lender issues a Qualified Mortgage, it is assumed that the borrower has satisfied what rule?
Answer 298:
The Ability-To-Repay (ATR) rule
299
Question 299:
| What is the max debt-to-income ratio allowed for a mortgage to be considered a qualified mortgage?
Answer 299:
43%
300
Question 300:
| What is the max term (length) allowed for a mortgage to be considered a qualified mortgage?
Answer 300:
30 years
301
Question 301:
| What is the max debt-to-income ratio allowed for a mortgage to be considered a qualified mortgage?
Answer 301:
43%
302
Question 302:
What type of mortgage is not allowed to have toxic features such as: interest only, negative amortization, no income/no asset income qualifications or prepayment penalties?
Answer 302:
Qualified Mortgage
303
Question 303:
What law are you violating if you ask a borrower (on a credit application) if he or she is planning to have any more kids in the future?
Answer 303:
ECOA – Reg B
304
Question 304:
| What law states that married spouses can keep separate credit bureau files, if requested?
Answer 304:
ECOA (REG B)
305
Question 305:
Which law states that if a Loan Originator is taking an application “face-to-face” he/she must complete the Government Monitoring Section (Section X) of the 1003 application?
Answer 305:
ECOA (REG B)
306
Question 306:
| Which law states that an adverse action notice (denial) must be in writing?
Answer 306:
ECOA (REG B)
307
Question 307:
If an applicant receives an adverse action notice – he can request a statement of “more specific” reason within _______________
of receipt of the notice?
Answer 307:
60 days
308
Question 308:
ECOA states that creditors cannot discriminate against the __________ of the borrower’s income, however, they can discriminate against the _____________ of the borrower’s income.
Answer 308:
| Source, Amount
309
Question 309:
| How long must ECOA records be kept?
Answer 309:
25 months
310
Question 310:
| How long does a consumer have to sue for a violation under ECOA?
Answer 310:
24 months
311
Question 311:
| Which law states that a borrower is entitled to receive a free copy of his credit score once a year?
Answer 311:
None. Credit “score” is never free
312
Question 312:
| How long do “unpaid” taxes appear on a credit report?
Answer 312:
Forever
313
Question 314:
| If a consumer has questions regarding his/her application, who should be contacted?
Answer 314:
The lender
314
Question 315:
| If a consumer has questions regarding his/her credit scores, who should be contacted?
Answer 315:
The credit reporting agency(ies)
315
Question 316:
If a consumer is denied credit, what law states that the credit must provide the name, address, and telephone number of the credit reporting agency used to make the decision?
Answer 316:
FCRA – Regulation V
316
Question 317:
What law requires lenders to provide the borrower with the National Credit Score Disclosure, which informs him/her of which credit score was used to approve the mortgage loan?
Answer 317:
FACT Act
317
Question 318:
| What law is the loan originator violating if he leaves the clients file on his desk at the end of the day?
Answer 318:
FACT Act
318
Question 319:
| If a consumer’s file is no longer needed, what is the proper way to dispose of it?
Answer 319:
Burn or Shred it
319
Question 320:
| What law requires lenders to file monthly reports regarding the ethnicity, race, and sex of all applicants?
Answer 320:
HMDA – Regulation C
320
Question 321:
An individual who obtains or has obtained a financial product or service from financial institution for person, family or household reasons is referred to as a ______________________
according to the GLBA Act?
Answer 321:
Consumer
321
Question 322:
An individual/consumer with a continued relationship with a financial institution is referred to as a _______________ according to the GLBA Act?
Answer 322:
Customer
322
Question 323:
| Gaining information under false pretense is referred to as ____________ under the GLBA?
Answer 323:
Pretexting
323
Question 324:
According to the DNC list, telemarketers (including loan originators) must search the national DNC list ever _______________ days.
Answer 324:
Every 31 days
324
```
Question 325:
A SAR (suspicious activity report) must be filed by a mortgage loan originator (MLO) when a person engages in suspicious activity of $_______________ or more?
```
Answer 325:
$5,000
325
Question 326:
Which law increases the ability of law enforcement agencies to search telephone, email, medical and financial records of consumers?
Answer 326:
USA Patriot Act
326
Question 327:
| Which law is responsible for the establishment of the anti-money laundering act?
Answer 327:
USA Patriot Act
327
Question 328:
| Which law was established to identify and prevent redlining?
Answer 328:
Home Mortgage Disclosure Act (HMDA)
328
Question 329:
| How long must commercial advertising records be kept?
Answer 329:
2 years
329
Question 330:
What law was created to prohibit money laundering and financing of terrorist?
Answer 330:
USA Patriot Act
330
Question 331:
What is the name of the document that indicates the amount that the Veteran is entitled to?
Answer 331:
Certificate of Eligibility (COE), which shows the amount of his entitlement.
331
Question 332:
What is the maximum flat fee that a lender can charge for a VA loan to cover lending cost?
Answer 332:
Lender may charge a flat fee, up to 1% of the loan amount, to cover the lender’s costs.
332
Question 333:
An abusive practice in which a loan is refinanced without any tangible net benefit to the borrower is called?
Answer 333:
Loan Flipping
333
Question 334:
FHA imposes restrictions requiring the borrower not to resale the property for the first _________ days.
Answer 334:
90 days
334
Question 335:
FHA requires the lender to investigate the transfer history of property for the _______________ before resale, in an attempt to identify potential flipping schemes.
Answer 335:
Three years
335
Question 336:
What type of loans have PMI (Private Mortgage Insurance)?
Answer 336:
| Conventional loans where the borrower puts less than 20% down payment
336
Question 337:
| What type of loans have Up Front Mortgage Insurance Premium?
Answer 337:
FHA Loans
337
Question 338:
| In a conventional loan, how much of the down payment must come from the borrowers own (personal) funds?
Answer 338:
5% of the down payment
338
Question 339:
What does the Debt Services portion of the monthly payment include?
Answer 339:
Debt Services includes the principal and interest portion only (P&I)
339
Question 340:
What is a HECM?
Answer 340:
Home Equity Conversion Mortgage (aka) an FHA reverse mortgage
340
Question 341:
When is a reverse mortgage due?
Answer 341:
Borrowers dies, sells the home, or cease to live in the home for 12 consecutive months
341
Question 342:
What type of mortgage is it when the borrower is not required to make a payment, but the balance of the loan rises, and the equity shrinks?
Answer 342:
Reverse Mortgage
342
Question 343:
What type of mortgage is it when the balance continues to grow, even though the borrower is making the full payment each month?
Answer 343:
Negative amortization
343
Question 344:
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 from the borrower is called a __________________.
Answer 344:
Wraparound mortgage
344
Question 345:
What type of mortgage is also called a self-liquidating mortgage and is designed to pay off the entire balance at the end of the loan?
Answer 345:
Fully-amortized mortgage
345
Question 346:
A mortgage that is a combination of fixed and adjustable. For example, 5/25 – is known as a __________________ mortgage?
Answer 346:
Hybrid Mortgage
346
Question 347:
A written instrument used to convey title or transfer ownership?
Answer 347:
Deed
347
Question 348:
The document that protects the homeowner against defects that occurred in the past, such as undisclosed liens, heirs, fraudulent documents, etc. is called ____________________?
Answer 348:
Title insurance
348
Question 349:
A _________________ loan is a short-term cash out loan made on the equity in the applicant’s current property in order to allow them to close on the purchase of a new transaction.
Answer 349:
Bridge loan
349
Question 350:
The area medium income (AMI) cannot exceed __________ in order to be approved for a USDA/Section 502 loan?
Answer 350:
115%
350
Question 351:
What type of loan program provides 100% financing in rural or farm communities/areas?
Answer 351:
USDA Loans
351
Question 352:
If a credit report doesn’t show the required minimum payment amount, the lender must use ___________________ for underwriting purposes?
Answer 352:
5% of the outstanding balance
352
Question 353:
If a borrower rents a room for $1,500 a month, how much would the underwriter count as income?
Answer 353:
$1,125.00
$150,000 x 75% = $1,125
353
Question 354:
If a borrower receives $1,500 a month child support income, how much would the underwriter count as income?
Answer 354:
$1,875.00
$1,500 x 1.25% = $1,875
354
Question 355:
If a borrower receives $1,200 a month SSI income, how much would the underwriter count as income?
Answer 355:
$1,500.00
$1,200 x 1.25% = $1,500
355
Question 356:
Calculate 3 points if the loan amount is $500,000 and the sales price is $525,000.
Answer 356:
$15,000
$500,000 x 3% = $15,000
356
Question 357:
On a conventional loan where the borrower is making a down payment of $20,000, how much of the down payment must be from the borrower’s own funds?
Answer 357:
$1,000
5% of the down payment must be from the borrower’s own funds. $20,000 x 5% = $1,000
357
Question 358:
| An individual that meets the definition of a loan originator, but works for a bank is called a ___________________?
Answer 358:
Registered Loan Originator
358
Question 359:
To be approved as a Loan Originator, a licensee must not have been found guilty of any felony in the past ____________ years.
Answer 359:
7 years
359
Question 360:
The only exception to a person being granted a license if he/she has been found guilty of a felony in the past 7 years (or if the felony deals with money crimes) is if he/she has received a __________________.
Answer 360:
Pardon
360
Question 361:
What are the three (3) protection options each state must have in place for loan originators?
Answer 361:
Minimum net worth, surety bond or reserve account
361
Question 362:
What is the penalty for violating the Safe Act?
Answer 362:
| $30,058 as of January 2022
previously $25,000
362
Question 363:
When must the borrower receive the Initial Escrow Account Disclosure?
Answer 363:
Within 45 days after the closing date (if it was not received at closing)
363
Question 364:
When must the borrower receive Affiliated Business Arrangement Disclosure (afba)?
Answer 364:
When the referral is made (immediately) if not then, prior to doc signing.
364
Question 365:
When must the borrower receive the Privacy Policy Notice?
Answer 365:
At first contact, and thereafter, once a year as long as he/she remains a customer
365
Question 366:
An applicant is purchasing a home for $100,000 utilizing FHA financing. The home appraises for $98,000. What is the minimum dollar amount that the borrower must contribute as a down payment on this transaction?
Answer 366:
$98,000 x 3.5%
366
Question 367:
How long would an unpaid tax lien remain on a consumer’s credit report?
Answer 367:
Forever
367
Question 368:
What is the penalty for knowingly violating the TRID rules?
Answer 368:
$1,000,000 per day
368
Question 369:
What are the two agencies that created the NMLS System?
Answer 369:
AARMR and the CSBS
American Association of Residential Mortgage Regulators and the Conference of State Bank Supervisors
369
Question 370:
Mary wants to obtain FHA insured financing on her primary home. Her housing expense will be $800.65. She also has the following debt: $192.65 (auto payment) and $40 (credit account). Based on her debt, what would be Mary’s required stable monthly income to qualify for this loan using the total debt-to-income ratio?
Answer 370:
$2,403.02.
You MUST know the ratios for FHA to do this problem. The back-end (total DTI) for FHA is 43%.
$800.65 + 192.65 + $40 = $1,033.30
$1,033.30/43% = $2,403.02
370
Question 371:
For an ARM, an introductory rate that is lower than the fully indexed rate at the time of closing is called a _________ rate?
Answer 371:
Teaser Rate
371
Question 372:
According to the TRID Rules, if the Closing Disclosure is mailed to the borrower, when is it considered received?
Answer 372:
Three (3) days after it was mailed/sent
372
Question 373:
What is the formula for calculating the CLTV?
Answer 373:
1st Mortgage + 2nd Mortgage ÷ the sales price or appraised value (whichever is lower)
373
Question 374:
What is the monthly PMI on a 90% LTV loan for a property valued at $500,000 if the monthly PMI factor is .60%?
Answer 374:
$225.00
$500,000 x 90% x .60% ÷ 12
374
Question 375:
Harold is refinancing his home. The property appraised for $260,000, and Harold’s loan amount is $195,000. What is the Loan-to-value for this transaction?
Answer 375:
75%
375
Question 376:
What is the penalty when a loan applicant makes a false statement on the 1003?
Answer 376:
May face a five-year jail term
376
Question 377:
3/1, 5/1, 7/1 and 10/1 ARMs; these are examples of what types of mortgage?
Answer 377:
These are adjustable-rate mortgages, in which, rate is fixed for three year, five year, seven year and 10 year periods, respectively, but may adjust annually after that.
Also called Hybrid ARMS
377
Question 378:
What is the official name for the 1003 form ?
Answer 378:
Form 1003 is also known as the Uniform Residential Loan Application (URLA).
Freddie Mac also uses the same application form and is known as the Freddie Mac Form 65.
378
Question 379:
What is a 1031 Exchange?
Answer 379:
A tax deferred exchange of “like” real estate, used to offset or avoid capital gain tax.
379
Question 380:
What is the name of the form that the IRS uses to retrieve past tax returns, W-2, and 1099 transcripts that are on file with the IRS?
Answer 380:
4506-T FORM
380
Question 381:
What documents is a summary of recorded transactions, concerning a particular property?
Answer 381:
Abstract of Title
381
Question 382:
What is the clause/condition in a mortgage that gives the lender the right to require immediate repayment of the loan balance if regular mortgage payments are not made or for breach of other conditions of the mortgage?
Answer 382:
Acceleration Clause
382
Question 383:
Interest earned but not yet paid is called what?
Answer 383:
Accrued Interest
383
Question 384:
What is included in Acquisition Costs?
Answer 384:
Purchase price, plus closing costs, minus seller credits.
384
Question 385:
What type of mortgage, is a mortgage in which, the interest rate is adjusted periodically based on a pre-selected index?
Answer 385:
Adjustable Rate Mortgage (ARM)?
385
Question 386:
An opinion of market value as of a specific date is known as what?
Answer 386:
Appraisal
386
Question 387:
The date that the interest rate changes on an adjustable rate mortgage (ARM) is known as what?
Answer 387:
Adjustment Date
387
Question 388:
The measurement of the full cost of a loan, including interest and loan fees, expressed as a yearly percentage rate is known as what?
Answer 388:
Annual Percentage Rate (APR)
388
Question 389:
If there is greater than one percent (1%) ownership interest of a party in both the business referring out the service and the business receiving the referral, what document is required?
Answer 389:
Affiliated business arrangement (ABA)
389
Question 390:
Loan payment, divided into equal periodic payments, calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance is known as what?
Answer 390:
Amortization
390
Question 391:
| What does the Consumer Reporting Agency (or Bureau) do?
Answer 391:
An organization that handles the preparation of reports used by lenders to determine a potential borrower’s credit history.
The agency gets data for these reports from a credit repository and other sources.
The Big 3: Experian, Equifax and Trans Union
391
Question 392:
What is a Contingency?
Answer 392:
A condition that must be satisfied, before a contract is legally binding, before a sale can close.
Real estate sales contracts often have a specific date or number of days, in which, the contingencies must be removed.
392
Question 394:
The “When Your Home Is In The Line” disclosure is required by which regulation?
Answer 394:
TILA – Regulation Z
393
Question 394:
What is a Conventional Loan?
Answer 394:
A mortgage not insured by FHA or guaranteed by VA.
394
Question 395:
When would a Conversion Clause/Option be used?
Answer 395:
A provision in an ARM allowing the loan to be converted to a fixed-rate at some point during the term. Usually, conversion is allowed at the end of the first adjustment period. The conversion feature may cost extra. Also referred to as a Convertible ARM
395
Question 396:
What is a Conveyance?
Answer 396:
The transfer of a deed
Or possibly a lease or mortgage.
396
Question 397:
Covenants, Conditions and Restrictions (CC&Rs) are what type of documents?
Answer 397:
A document defining the use,
requirements and restrictions of a property.
397
Question 398:
What is a Credit Report?
Answer 398:
A report documenting the credit history and current status of a borrower’s credit standing.
398
Question 399:
How long can a registered MLO, who is transferring from a depository institution, in order to become a state-licensed MLO originate mortgages, prior to completing the 20hr course?
Answer 399:
120 days
Transitional Authority
399
Question 400:
What is a CRV?
Answer 400:
Certificate of Reasonable Value.
A property appraisal performed by a VA-approved appraiser that established the limit on the principal of the VA loan.
400
Question 401:
When should an ARM disclosure be provided to a borrower?
Answer 401:
Some disclosures under TILA are specific to adjustable- rate mortgage loans (ARMs). Loan services must provide a borrower with an ARM at least 60 days' notice before an interest rate change occurs if that change will result in a new payment
401
Question 402:
Who receives the CHARM Handbook?
Answer 402:
The Consumer Handbook to Adjustable-Rate Mortgages (“CHARM” booklet) must be presented to the consumer within three days of applying for an ARM (adjustable rate mortgage) loan. (TILA)
402
Question 403:
What is an Assessment?
Answer 403:
A local tax, levied against a property, for a specific purpose, such as: a sewer or street lights.
403
Question 404:
The transfer of a mortgage from one person to another is known as what?
Answer 404:
Assignment
404
Question 405:
A document showing the financial situation-assets, liabilities and net worth of a person at a specific point in time is known as what?
Answer 405:
balance sheet
405
Question 406:
What is a Basis point?
Answer 406:
A unit of measure: 1/100th of one percent
For example, the difference between a 9.0 percent loan and a 9.5 percent loan is 50 basis points
406
Question 407:
What is a Bi-weekly Payment Mortgage?
Answer 407:
A plan to reduce the debt every two weeks (instead of the standard monthly payment schedule). There are 26 bi-weekly payments a year
407
Question 408:
What is a Blanket Mortgage?
Answer 408:
A mortgage that covers more than one parcel of land
408
Question 409:
Bona fide is also known as what?
Answer 409:
“In good faith” - A “bona fide” offer, is an offer made in good faith.
409
Question 410:
Who’s considered a Borrower (Mortgagor)?
Answer 410:
The borrower/mortgagor is the one who applies for and receives a loan, in the form of a mortgage, with the intention of repaying the loan in full.
410
Question 411:
What are Caps (Payment)?
Answer 411:
Consumer safeguards, which limit the amount of change to the interest rate, for an adjustable rate mortgage
411
Question 412:
Who receives a Certificate of Eligibility?
Answer 412:
The document given to qualified veterans, which entitles them to VA guaranteed loans for homes, business and mobile homes.
412
Question 413:
What is a Certificate of occupancy?
Answer 413:
Document, issued by local government agency, stating that a property meets the requirements of health and building codes.
413
Question 414:
What is a Certificate of Reasonable Value (CRV)?
Answer 414:
An appraisal issued by the Veterans Administration showing the property’s current market value
414
Question 415:
What is the Chain of title?
Answer 415:
The chronological order of conveyance of a property, from the original owner to the present owner
415
Question 416:
What is a Clear title?
Answer 416:
A marketable title, free of clouds and disputes
416
Question 417:
COFI/Cost of Funds Index is used to calculate what?
Answer 417:
An index used to calculate the rate of an adjustable-rate mortgage.
The rate adjusts based on a cost-of-funds index often the 11th District Cost of Funds.
417
Question 418:
What is Combined Loan-to-Value (CLTV)?
Answer 418:
The ratio of the total mortgage liens against the subject property, to the lesser of either the appraised value or the sales price
418
Question 419:
Conforming Loans are what type of loans?
Answer 419:
A mortgage loan under the maximum amount of loans that FNMA (Fannie Mae) and FHLMC (Freddie Mac) are legally allowed to buy
419
Question 420:
When are Construction Loans used?
Answer 420:
A short-term interim loan to pay for the construction of buildings or homes
420
Question 421:
What is the name of the agency who is enforces laws that protect consumers of financial products and services such as mortgages, credit cards and deposit accounts?
Answer 421:
Consumer Financial Protection Bureau (CFPB)
421
Question 422:
What is a Rate Lock?
Answer 422:
A commitment issued by a lender, to a borrower guaranteeing a specified interest rate and lender costs for a specified period of time
422
Question 423:
The Real Estate Settlement Procedures Act (RESPA) protects who?
Answer 423:
A consumer protection law, which requires lenders to give borrowers advance notice of closing costs/settlement services.
Also known as Regulation X
Memory tool: REXPA
423
Question 424:
What is Real Property?
Answer 424:
Land and everything, which is Permanently Affixed to it
424
Question 425:
Reclamation is the right of which person?
Answer 425:
The right of the person, with title to a property, to recover it from the debtor in case of a bankruptcy
425
Question 426:
Reconveyance transfers a property to whom?
Answer 426:
The transfer of property back to the owner when a mortgage is fully repaid
426
Question 427:
What is a Recording?
Answer 427:
The act of entering documents concerning title to a property into public records
427
Question 428:
Refinance/Refinancing a loan occurs when?
Answer 428:
Obtaining a new mortgage loan on a property, already owned, often to replace existing loans on the property
428
Question 429:
Regulation B (ECOA) is also known as what?
Answer 429:
The equal Credit Opportunity Act.
Makes it unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex, marital status, or age public assistance program
429
Question 430:
Regulation V (FCRA) regulates what?
Answer 430:
The Fair Credit Reporting Act.
The Fair Credit Reporting Act (FCRA) is a United States federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information.
Memory tool: V= Very Fair
430
Question 431:
Regulation Z (TILA) was designed to promote what?
Answer 431:
The Truth in Lending Act
designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner
Memory Tool: TILA- TILA the GodZilla
431
Question 432:
Rescission gives the homeowner the right to do what?
Answer 432:
The cancellation of a contract.
432
Question 433:
What is a Reverse Annuity Mortgage (RAM)?
Answer 433:
A form mortgage, in which, the lender makes periodic payments to the borrower, using the borrower’s equity in the home as collateral for and repayment of the loan.
More commonly called a HECM (Home Equity Conversion Mortgage) or simply a Reverse Mortgage.
433
Question 434:
What is a Reverse Mortgage (HECM)?
Answer 434:
HECM or Home Equity Conversion Mortgage
Reverse mortgages unlock the equity in the home.
Multiple payout options
For borrowers 62+
434
Question 435:
The Safe Act (2008) was designed for what?
Answer 435:
Secure and Fair Enforcement for Mortgage Licensing Act
The S.A.F.E. Mortgage Licensing Act is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators.
435
Question 436:
Who issues a Satisfaction of Mortgage?
Answer 436:
The document issued by the mortgage when the mortgage loan is paid in full.
Also called a “release of mortgage.”
436
Question 437:
What is a Second Mortgage?
Answer 437:
A mortgage made subsequent to another mortgage and subordinate to the first one
437
Question 438:
Who’s part of the Secondary Mortgage Market?
Answer 438:
The market, into which, primary mortgage lenders sell the mortgages they make to obtain funds to originate more new loans.
This includes investors such as Fannie Mae, Ginnie Mae and Freddie Mac.
438
Question 439:
What is a Security?
Answer 439:
The property that will be pledged as collateral for a loan
439
Question 440:
A Seller Carry Back is what type of agreement?
Answer 440:
An agreement in which the owner of a property provides financing often in combination with an assumable mortgage.
440
Question 441:
Who is a Servicer?
Answer 441:
An organization that collects principal and interest payments from borrowers and manages the borrower’s escrow accounts
441
Question 442:
What is Servicing?
Answer 442:
All the steps and operations a lender performs to keep a loan in good standing, such as collection of payments, payment of taxes, insurance, property inspections and the like.
442
Question 443:
What are Settlement/Settlement Costs?
Answer 443:
Expenses over and above the price of the property that are incurred by buyers and sellers when transferring ownership of a property. Also called Closing Costs.
Closing costs normally include an originator fee, property taxes, charges for title insurance and escrow costs, appraisal fees, etc.
Closing costs will vary according to the area country and the lenders used.
443
Question 444:
Who creates Sweat Equity?
Answer 444:
Equity created by a purchaser performing work on a property being purchased
444
Question 445:
A Tax Lien is a claim against what?
Answer 445:
A claim against a property for unpaid taxes
445
Question 446:
What is a Tax Sale?
Answer 446:
Public sale of property, by a government authority, as result of nonpayment of taxes
446
Question 447:
A Title shows what?
Answer 447:
A document, which gives evidence of an individual’s ownership of property
447
Question 448:
A Total Expense Ratio (back-end ratio/total debt ratio) includes what?
Answer 448:
Total obligations (PITI + all debt) divided by the gross monthly income – expressed as a percentage.
448
Question 449:
What is the law that requires that the Annual Percentage be disclosed to a home buyer, shortly after they apply for the loan?
Answer 449:
TILA
Also known as Regulation Z.
Memory tool: TILA the GodZilla
449
Question 450:
Evaluating a loan application package and making the decision, whether to make a loan to a potential home buyer, based on credit, employment, etc. is a process known as?
Answer 450:
Underwriting
450
Question 451:
What federal legislation allows the borrower to challenge the value stated in an appraisal report?
Answer 451:
ECOA – Regulation B
451
Question 452:
Pretexting is prohibited based on what law/regulation?
Answer 452:
GLBA
452
Question 453:
Which regulation states that it is a violation to discriminate against a borrower who’s only income is social security benefits?
Answer 453:
ECOA
453
Question 454:
What is a Deposit/Earnest Money Deposit?
Answer 454:
Cash paid when a formal sales contract is signed.
The deposit is usually held by a third party until the sale is complete.
454
Question 455:
Depreciation happens when?
Answer 455:
When the value of property declines
455
Question 456:
What are Discount Points?
Answer 456:
Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g., two points on a $100,000 mortgage would cost $2000).
456
Question 457:
What was the purpose of the Dodd-Frank Act?
Answer 457:
Purpose:
- To promote financial stability
- To end “too big to fail”
- To protect taxpayers by ending bailouts
- To protect consumers from abusive practices
Established the Consumer Financial Protection Bureau (CFPB)
457
Question 458:
Which law requires notification to the borrower before the servicing of the loan is transferred to someone else?
Answer 458:
RESPA
458
Question 459:
What’s an Encumbrance?
Answer 459:
A legal right or interest in a property that affects title and lessens the property value.
Encumbrances can take the form of claims, liens, unpaid taxes and so on.
459
Question 460:
The value remaining in property after all liens and debts are considered is known as what?
Answer 460:
EQUITY
460
Question 461:
What type of ARM allows the borrower to change from an adjustable rate mortgage to a fixed rate mortgage?
Answer 461:
CONVERTIBLE ARM
461
Question 462:
The FACT Act (2003) was an amendment to what earlier law?
Answer 462:
- Fair and Accurate Credit Transactions Act amended Fair Credit Reporting Act (Reg V).
- The act allows consumers to request and obtain a free credit report one every twelve months from each of the three nationwide consumer credit reporting companies.
- The act also contains provisions to help reduce identity theft.
462
Question 463:
A veteran’s entitlement for a VA loan is specified in what document?
Answer 463:
The Certificate of Eligibility (COE) is the document issued by the VA that specifies the amount of loan guarantee for which the veteran is eligible
463
Question 464:
The APR on a Loan Estimate for a 30-year fixed-rate loan is 6.25% and the APR on the Closing Disclosure is 6.5%. After redisclosure, the borrower must wait ___________ to close the loan.
Answer 464:
THREE BUSINESS DAYS
464
Question 465:
According to the GLB Act, an individual who obtains or has obtained a financial product or service from a financial institution is known as a what?
Answer 465:
CONSUMER
465
Question 466:
If Martin sells his home five months after purchasing the property, the sale price must exceed Martin’s acquisition cost by more than _____ to require a second appraisal.
Answer 466:
20%
A seller who acquired a home within six months of resale and is selling the home for more than 20% of the original acquisition cost must have a second property appraisal performed on the property.
466
Question 467:
What is the Federal Reserve?
Answer 467:
The central bank of the United States and major regulatory agency for many commercial banks.
Commonly referred to as “The Fed”.
467
Question 468:
Fee simple is what type of ownership?
Answer 468:
Absolute ownership of real property
468
Question 469:
What is a written agreement between lienholders on a property that changes the priority of mortgages, judgments, and other lien?
Answer 469:
A subordination agreement is a written agreement between lienholders on a property that changes the priority of mortgages, judgments, and other liens.
469
Question 470:
What is a First Mortgage?
Answer 470:
The primary lien against a property
470
Question 471:
A Fixed Rate (Mortgage) has what type of interest rate?
Answer 471:
An interest rate is fixed for the term of the loan
471
Question 472:
Flood Insurance is what type of insurance?
Answer 472:
A form of hazard insurance required by lenders to cover properties in flood zones
472
Question 473:
What is FNMA?
Answer 473:
- The Federal National Mortgage Association is a secondary mortgage institution.
- FNMA buys VA, FHA and conventional mortgages from primary lenders.
- Also known as “Fannie Mae.”
473
Question 474:
What is Forbearance?
Answer 474:
Grace period given when a lender postpones foreclosure, to give the borrower time to catch up on overdue payments.
474
Question 475:
Foreclosure is known as?
Answer 475:
A legal process, by which, the lender or the seller forces a sale of a mortgaged property, because the borrower has not met the terms of the mortgage.
Also known as a repossession of property.
475
Question 476:
Freddie Mac is a nickname for who?
Answer 476:
The nickname most commonly used for the Federal Home Loan Mortgage Corporation
476
Question 477:
A Fully Amortized ARM is what type of rate?
Answer 477:
An adjustable rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance at the interest accrual rate over the amortization term.
477
Question 478:
Ginnie Mae (GNMA) is also known as what?
Answer 478:
The nickname most commonly used for the Government National Mortgage Association
478
Question 479:
Government National Mortgage Association (GNMA) is also known as what?
Answer 479:
Also known as “Ginnie Mae.”
Provides sources of funds for residential mortgages insured or guaranteed by FHA or VA.
479
Question 480:
A type of flexible payment mortgage, where the payments increase for a specified period of time and then level off is known as __________________.
Answer 480:
A Graduated Payment Mortgage (GPM)
480
Question 481:
Usury is interest charged when?
Answer 481:
Interest charged in excess of the legal rate established by law
481
Question 482:
What is a Variable Rate Mortgage (VRM)?
Answer 482:
Another name for an Adjustable Rate Mortgage (ARM)
482
Question 483:
A document, signed by the borrower’s financial institution (BANK), verifying the status and balance of his/her financial accounts is known as what?
Answer 483:
A Verification of Deposit (VOD)
483
Question 484:
A document, signed by the borrower’s employer, verifying his/her position, salary overtime, bonuses and the likelihood of continued employment is known as what?
Answer 484:
A Verification of Employment (VOE)
484
Question 485:
A document, signed by the borrower's servicer, verifying the status of the mortgage is called what?
Answer 485:
A Verification of Mortgage (VOM)
485
Question 486:
A document, signed by the borrower's landlord, verifying their rental/lease payment history is called what?
Answer 486:
A Verification of Rent (VOR) is signed by who?
486
Question 487:
A Margin is added to what to determine the fully-indexed rate?
Answer 487:
The amount a lender adds to the index on an adjustable rate mortgage to establish the fully-indexed rate.
The margin is the lender’s profit.
Index + Margin = adjusted interest rate.
487
Question 488:
What is a Marketable Title?
Answer 488:
A title which is free and clear of liens, clouds or other defects, which would prevent the sale of the property.
488
Question 489:
A Mechanic’s Lien is used when?
Answer 489:
A mechanic’s lien is a security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property.
The lien exists for both real property and personal property.
It is considered a cloud on title.
489
Question 490:
MIP (Mortgage Insurance Premium) is purchased by whom?
Answer 490:
Insurance from FHA, to the lender, against incurring a loss, if the borrowers were to default.
Insurance purchased by borrower to insure against default on an FHA loans.
MIP protects the LENDER
490
Question 491:
A Monthly Housing Expense includes what?
Answer 491:
Total monthly expense of principal, interest, taxes, hazard insurance and mortgage insurance (PITI).
It also includes any HOA (Home Owners Association) dues. (PITIA)
491
Question 492:
What is a Mortgage?
Answer 492:
A legal document, which pledges a property to the lender as security for payment of a debt
492
Question 493:
The Mortgage Disclosure Improvement Act (MDIA) 2008 amended what?
Answer 493:
- An amendment to Reg. Z.
- Requires disclosures (LE) to be sent to the borrower within three (3) business days after receiving borrowers' application.
- The loan may not close until after the seventh (7th) business day after disclosures have been delivered or mailed to the borrower.
493
Question 494:
Who is a Mortgagee?
Answer 494:
The lender in a mortgage loan transaction
494
Question 495:
What is Private Mortgage Insurance?
Answer 495:
Money paid to insure the mortgage when the down payment is less than 20 percent
495
Question 496:
Who is a Mortgagor?
Answer 496:
The borrower or homeowner.
496
Question 497:
What is Negative Amortization?
Answer 497:
- When your monthly payments are not large enough to pay all the interest due on the loan.
- This unpaid interest is added to the unpaid balance of the loan.
- If the borrower does not increase payments, the home buyer will end up owing more than the original amount of the loan.
497
Question 498:
A Non-Conforming Loan cannot be sold to who?
Answer 498:
- A conventional loan that cannot be sold to Fannie and Freddie Mac.
- Often, these loans are larger than the conforming loan amount.
498
Question 499:
A Notice of Default (NOD) is given to who?
Answer 499:
Written notice to a borrower, that a default has occurred, and that legal action may be taken.
499
Question 500:
What is the Office of Comptroller Currency?
Answer 500:
The federal financial regulatory body, which oversees the nation’s federally chartered banks and savings institutions.
