Mlo Exam

Question 0

Federal law prohibiting discrimination in granting credit to people based on sex, age, marital status, race, color, religion, national origin, or receipt of public assistance. Also called Regulation B.

Answer 0

ECOA

Question 1

Application

Answer 1

The submission of a borrower‘s financial information in anticipation of a credit decision relating to a federally related mortgage loan which includes the borrower‘s name, monthly income, social security number to obtain a credit report, the property address and estimate of value, the loan amount.

Question 2

Federal law dealing with granting of credit, access to credit information, rights of debtors, and responsibilities of creditors. Also called Regulation V.

Answer 2

FCRA

Question 3

Federal law requiring institutional lenders with assets in excess of $10 million to file an annual report of all loans made during that year. Also called Regulation C.

Answer 3

HMDA

Question 4

Part of Regulation Z Truth in Lending Act establishing disclosure requirements and prohibiting equity stripping and other abusive practices associated with high cost loans. Also called Section 32.

Answer 4

HOEPA

Question 5

Required under RESPA; details a complete disclosure of all costs associated with a closing, showing what was paid, to whom, and for what. required to be given AT settlement.

Answer 5

HUD 1

Question 6

RESPA

Answer 6

Federal law dealing with real estate closings; sets specific procedures and guidelines for disclosure of settlement costs. Lets homebuyers compare costs of services, requires specific statements/disclosures, prevents kickbacks, and limits escrows. Also known as Regulation X.

Question 7

Conforming loan

Answer 7

Loans that meet Fannie Mae/Freddie Mac standards and which can be sold on the secondary market

Question 8

Conventional loan

Answer 8

Loans not insured or guaranteed by a government entity.

Question 9

LTV

Answer 9

The amount of money borrowed compared to the value or price of the property. Use appraisal or sale price, the lower one.

Question 10

2-1 Buydown

Answer 10

A graduated payment buydown where the payments are subsidized for only two years, for example 2% the first year and 1.5% the second year.

Question 11

3-2-1 Buydown

Answer 11

A graduated payment buydown where the payments are subsidized for three years, for example, 3% the first year, 2.5% the second year, and 2% the third year.

Question 12

ARM Caps

Answer 12

Caps on interest rates and mortgage payments keep ARMs from growing out of control. If the ARM has a 2/6 cap (maximum 2% increase at any adjustment with a lifetime cap of 6% above the initial rate).

Question 13

ARM Rate

Answer 13

Index Rate + Margin = Fully Indexed ARM Interest Rate

Question 14

Housing Expense Ratio

Answer 14

A borrower’s housing expense ratio is the relationship of the borrower’s total monthly housing expense (principal, interest, taxes, and insurances) to gross monthly income, expressed as a percentage.
Total Housing Expense (PITI) ÷ Income = Ratio %

Question 15

Debt to Income Ratio

Answer 15

A borrower’s total debt service ratio is the relationship of the borrower’s total monthly debt obligations (including housing and long-term debts with more than ten payments left) to gross monthly income, expressed as a percentage.
Total Debt to Income (PITI + all recurring monthly debts) ÷ Income = Ratio %

Question 16

CLTV

Answer 16

The CLTV, sometimes called total loan-to-value (TLTV), is calculated by adding all loan amounts and dividing by the home’s appraised value or purchase price, whichever is lower.

Question 17

Blockbusting

Answer 17

The illegal practice of inducing owners to sell their homes (often at a deflated price) by suggesting that the ethnic or racial composition of the neighborhood is changing, with implication that property values will decline as a result. Also called panic selling.

Question 18

Fraud, Constructive

Answer 18

A negligent misrepresentation or concealment of a material fact; when a person carelessly fails to disclose material information, or makes false or misleading statements. Also called Negligent Misrepresentation.

Question 19

Fraud, Actual

Answer 19

Intentional misrepresentation or concealment of a material fact; when a person actively conceals material information or makes statements known to be false or misleading. Also called Deceit.

Question 20

Redlining

Answer 20

When a lender refuses to make loans secured by property in a certain neighborhood because of the racial or ethnic composition of the neighborhood.

Question 21

Steering

Answer 21

Illegal activity of channeling prospective buyers or tenants to particular neighborhoods based on their race, religion, national origin, or ancestry.

Question 22

Includes APR, finance charges, amount financed, total of payments, mandatory statement.

Answer 22

TILA Statement

Question 23

Sect 35 loans. Where the APR exceeds the average prime offer rate by at least 1.5% on first liens. 3.5% on junior liens.

Answer 23

Higher priced loans as defined by TILA

Question 24

High Cost Loans

Answer 24

Trigger #1: APR is greater than 6.5% on 1st loans less than 50k.8.5% on 2nd. Trigger #2: points and fees are greater than $625 or 5% of total transaction.

Question 25

Dodd Frank Wall Street Reform Act 2010

Answer 25

Title X, designated as the Consumer Financial Protection Act, and Title XIV, designated as the Mortgage Reform and Anti-Predatory Lending Act.

Question 26

Do not call registry

Answer 26

Prohibits calls after 31 days of request 16k fine per incident Can call up to 18 months since last purchase Can call up to 3 months after consumer submits app/inquiry

Question 27

FHA loans up to $729,750 have annual mortgage insurance is what percentage of loan?

Answer 27

1. 2% if down payment is greater than 5%. | 1. 25% if down payment is less than 5%.

Question 28

When can loan origination fee be imposed?

Answer 28

3 business days after mailing disclosures

Question 29

HMDA

Answer 29

Reg C. Requires that race origin be marked on app to ensure lenders are meeting the needs of their communities.

Question 30

Gram Leach Biley Act

Answer 30

1. Financial privacy rule 2. Safeguards rule Pretexting rule

Question 31

FHA

Answer 31

Insured by govt. no prepay penalty. Prim res for 12 months min.

Question 32

Housing expense ratio and debt to income ratio

Answer 32

Convention loans 28% and 36% FHA 31% and 43% VA 41% DTI.

Question 33

What is the UFMIP percentage on all FHA loans?

Answer 33

1.75%

Question 34

Disclosures required within 3 business days of app

Answer 34

RESPA. 1. Special information Booklet 2. GFE settlement costs 3. MSDS servicing TILA 1. TIL statement 2. Charm for arms 3 when your house is in the line ( heloc)

Question 35

RESPA disclosures

Answer 35

``` 3 days HUD settlement costs book, GFE, MSDS Before settlement AfBA charges, HUD 1 (if requested by client) At Settlement HUD and Escrow settlement statement After settlement Annual escrow statement, service trans statement ```