quizlet stuff Flashcards
For qualified mortgages, the creditor must underwrite the loan using the highest possible principle and interest payment that may apply during the first _____ years of the loan
Five
This is when a senior lien permits a junior lien to have payoff priority
Subordination
In Title Theory states the buyer of the property actually grants a power of sale right to a trustee and generally conveys legal title to this trustee at consummation or closing and evidenced by a _________
Deed of trust
Should the lender not be made whole in the foreclosure process, the lender may be able to seek additional relief known as “recourse” through the courts by seeking a ________
Deficiency Judgement
This type of foreclosure, also known as statutory foreclosure, is allowed by many states if the mortgage includes a power of sale clause
Non-Judicial
Which of the following is not a government sponsored entity? (GSE)
Mortgage Guaranty Insurance Corporation (MGIC)
In what year was the Federal National Mortgage Association (Fannie Mae) established?
1938
In 1971, which GSE was the first to issue a conventional mortgage-backed security
Freddie Mac
Legislative enactments, such as U.S public and private laws, are known as
Statutory Law
What does the Acronym U.S.C. stand for
United States Code
What governs the process by which Federal agencies propose and establish new regulations
Administrative Procedures Act
Executive promulgations, such as executive orders & agency regulations, interpretations, orders, etc., are known as
Administrative Law
An official publication of the law and competent evidence admissible in all state and federal courts and tribunals of the United States is known as
Slip Law
Which of the following is a term that is allowed on a qualified mortgage?
Term of 15 years
Generally, a loan cannot be a qualified mortgage if the points and fees paid by the consumer exceed _______ percent of the total loan amount.
Three
At a minimum, how many underwriting factors must a creditor consider when underwriting a qualified mortgage?
Eight
Special payment calculation rules apply for qualified loans with balloon payments, interest-only payments, or negative amortization (must qualify using maximum possible rate/payment in the first ______ year(s) of the term
Five
The Housing and Economic Recovery Act of 2008 (HERA) established this entity:
Federal Housing Finance Agency (FHFA)
What was the purpose of the Federal Home Loan Bank Act of 1932?
To provide access to home mortgage funding through 12 Federal Home Loan Banks
In 1971, which GSE was the first to issue a conventional mortgage-backed security?
Freddie Mac
____________ foreclosure occurs judicially but differs from more common judicial foreclosure action in that the title to the property is granted to the lender by the court as opposed to the court ordering an auction.
Strict
With a single family dwelling, the primary determinant in the appraiser’s opinion of value is most likely to be which value approach?
The sales comparison approach
Which person in the loan process is required to initiate the appraisal?
The lender
USPAP is updated every _______ years so that appraisers have the information they need to deliver unbiased and thoughtful opinions of value.
Two
Comparable sales that have closed within the last _______ months should be used in the appraisal
12
In the Sales Comparison Approach, the Appraiser ultimately selects a single comparable of _____ or more comparables selected in the comparative analysis to drive the opinion of value
Three
The _________ must ensure that the title is generally acceptable and that the mortgage constitutes a lien of the required priority on a fee simple or leasehold estate in the property
Title Insurance Policy
On a title insurance policy, which schedule defines the standard and general exceptions for the policy?
Schedule B
The ____________ is a contract in which a title company agrees to issue a policy subject to the conditions, exceptions, and exclusions shown in the commitment
Preliminary Title Commitment
On a title insurance policy, which schedule defines the insured and the real estate covered by the policy
Schedule A
A lender who wants the title insurer to be responsible for the agent’s acts in connection with closing must separately contract with the title insurer for such additional protection. This creditor protection is evidenced by which of the following?
The closing protection letter
Cash to close, Monthly Payments, and Foreseeable and unforeseeable homeownership expenses are examples of _______
Transaction costs
Which of the following is an illegal question when taking a mortgage application?
You’re awful young to be buying a home, can your parents co-sign?
Which disclosure details the costs and expenses at application?
Loan Estimate
The uniform residential loan application is also known as the __________
1003
Presenting good options and engaging the customer in the solution are part of ________
product selection
Which of the following is NOT a mortgage product?
VA loan
What is the minimum credit score for an FHA 203B program?
500
What is the maximum financing percentage on a VA loan?
100%
What is the standard UFMIP for FHA loans?
1.75%
which entity issues housing bonds?
State Housing Finance Agencies (HFAs)
Which determination must an underwriter make when considering a borrowers income?
Ability to repay
What is the loan to value on a loan where sales price/appraised value is $350,000 and the loan amount is $280,000?
80%
Which is not a key area of underwriting analysis?
Tangible gross benefit
Which law enacted the ability to repay rules?
Dodd-Frank
What would the debt-to-income ratio be for a borrower with $4000 per month in income and total debts, including PITI of $1600?
40%
What are the qualifying debt ratios for a USDA loan?
29/41
What are the qualifying debt ratios for an FHA loan?
31/43
What is the per diem interest on a loan amount of $100,000 and interest rate of 5.5% based on a 365 day year? Round up to nearest cent
15.07
What are the qualifying ratios for a VA loan?
41
Which is not a factor in credit scoring?
income
What is the most popular credit scoring model?
FICO
What is the standard range of credit scoring base FICO scores?
300-850
What is the passing percentage for the national MLO licensing test?
75%
The length of the national test component with uniform state content has _____ questions
120
Of the 120 questions on the national test, how many questions are actually scored?
115
How many questions are in the uniform state test component of the of the national test?
25
Which of the following transactions are NOT subject to the provisions on loan officer compensation under TILA?
A six unit apartment building
To remain exempt from the TILA originator rule, sellers who finance can extend credit no more than ______ times per year
five
Which of the following would be exempt from licensing requirements?
Seller Financers
Which of the following is NOT an acceptable way to compensate Mortgage Loan Originators ?
The total fees paid out on a percentage basis per loan
Acceptable ways to compensate loan originators is known as the ______ rule
Safe Harbor
Which is not one of the three duties with respect to employing an individual loan originator?
Making sure the employee has ample marketing materials to be successful
Which of the following is NOT subject to the Zero tolerance rule under TRID
Any third-party services the consumer can shop for
Which disclosures are used on the most closed-end federally related transactions?
Loan Estimate and closing disclosure
On a fixed-rate/closed-end loan, what is the maximum tolerance that applies to an annual percentage rate before re-disclosure is required?
0.1250%
Any company that controls, is controlled by, or is under common control with another company as set forth in the Bank Holding Company act of 1956 (12 U.S.C. 1841 et seq) is known as an
affiliate
Which type of transaction would a good faith estimate, truth in lending disclosure, and HUD-1 still be used on?
A HELOC
How many days from the application does a Loan Originator have to provide a loan estimate to borrowers ?
3 business days
On a closed end, federally related transaction on a primary residence, what disclosure is used at application to inform the borrower about the loans details?
Loan Estimate (LE)
This is the most costly type of fraud:
Fraud for profit
The __________ record keeping and reporting requirements establish a financial trail for investigators to follow as they track criminals, their activities, and their assets.
Bank Secrecy Act
__________ was created in 1990 to support federal, state, local, and international law enforcement by analyzing the information required under the Bank Secrecy Act (BSA), one the the nations most important tools in the fight against money laundering.
FinCen
What are the two main distinct areas of Mortgage Fraud?
Fraud for Profit and Fraud for Housing
Federal Mortgage fraud prosecutions span many statues with penalties up to
Life in federal prison and $10,000,000 in fines
Which occurs when borrowers, to obtain favorable loan terms, claim that a subject property will be their primary residency instead of vacation homes or investment properties?
Occupancy fraud
Which occurs when borrowers fail to list significant financial liabilities, such as other mortgages, car loans, or student loans in mortgage loan applications without complete liability information?
Liability fraud
Which includes misrepresenting whether, where, and for how long borrowers have been employed; whether borrowers are unemployed or collecting unemployment benefits; and whether borrowers are independent contractors or business owners?
Employment fraud
When opening an account, a financial institution must have this type of program to ensure the account is not being fraudulently opened:
Customer identification program
Which entity has the ability to implement, administer, and enforce compliance with the Bank secrecy act?
Director of financial crimes enforcement network (FINCEN)
In order for a housing facility or community to qualify as housing for older persons under $100.304, at least ______ percent of its occupied units must be occupied by at least one person 55 years of age or older
80%
If a loan application is incomplete, how many days from application does a Loan Originator have to provide a notice of incompleteness to borrowers?
30 days
Which is not a covered type of discrimination under the fair housing act?
Location
A creditor shall provide a copy of all appraisals promptly upon completion or _____ business days prior to the consummation of the transaction, whichever is earlier
Three
The primary missions of FinCEN is best described as
FinCEN’s mission is to safeguard the financial system from illicit use
The fair housing act describes the discriminatory effect as
disparate impact on a group of persons
Ecoa has 8 protected classes
Sex, race, religion, color, national origin, age, marital status, and public assistance
Which three protected classes are ONLY protected by Ecoa?
Age, marital status, public assistance.
Ecoa disclosures must be kept for _______
25 months
Civil actions may be filed for Ecoa violations for up to ______ months
24 months
If application for credit is approved, borrower should receive appraisal no later than ________ business days, prior to doc signing.
3 business days
What are the seven protected classes of the Fair Housing Act?
Sex, race, religion, color, natural origin, disability, and family status
Of the seven protected classes of the Fair Housing Act which are the 2 classes ONLY protected by the fair housing act
Disability and family status
What three laws are under the Fair Housing Act
Blockbusting, steering, and redlining
Loan estimate is also known as _________
The good faith estimate
What are the four initial disclosures that Respa says need to be released at or within three days of an application?
Home loan toolkit (Respa doc)
Loan Estimate (TILA doc, respa just says when we release it)
Mortgage Services Disclosure Statement (Respa)
List of HUD approved home counselors. (Respa)
Home loan toolkit is for ________ only
Purchases
When borrowers don’t believe the escrow, loan officers, Etc, the CFPB says you have to give them this list of HUD counselors to talk to
List of HUD approved home counselors
This tells what the lenders intent is whether they intend on servicing the loan themselves or not
Mortgage servicing disclosure statement
What disclosures does Respa say you have to give out before settlement
ABA disclosure (1% or more) (Respa)
Closing disclosure formally HUD. (they use this twice) (TILA)
When does respa say a person gets their servicing transfer statement?
Borrower is not penalized for the first ________ days
15 days prior to transfer
60
Loan estimate combines the ________ with the ________
Good faith estimate
Initial truth in lending statement
The terms on the loan estimate form must be available for _________ business days
10
What does TIP stand for
Total interest percentage
What does APR stand for
Annual Percentage rate
_________ is shown to the loan estimate form only
Rate lock or “The lock”
Closing disclosure used to be called the
This is no longer an estimate it is actual ________ now
HUD
Fees
The _______ is responsible for providing the statement to the borrower
The _______ is responsible for providing the statement to the seller
Creditor (Lender)
Settlement Agent (Title Agent)
_________ can give the borrower a new three day waiting.
Valid change in circumstance
What are examples of a valid change in circumstance
Change in the loans APR
Change in the loan product
The addition of a prepayment penalty
TILA disclosures must be kept for _____ years (but there are some exceptions)
2 years
HOEPA stands for
Home Ownership and Equity Protection Act
HOEPA loans are part of which law
TILA
When must an Affiliated business arrangement (ABA) disclosure be made
Immediately or prior to Docs
A budget mortgage is a ________ mortgage. When you pay this mortgage you pay _______
PITI Mortgage
Everything
What does PITI stand for
Principal interest taxes insurance
What does CFPB stand for
Consumer Financial Protection Bureau
What is the purpose of CFPB
To promote Financial stability through accessibility and transparency
The ______ does not report to the CFPB because it does not deal with money and banking
Fair Housing Act
CFPB was created by _______ and _______
The DODD Frank act
Consumer Finance protection act
The purpose of ____ is to help consumers become better Shoppers for Settlement Services. Settlement Services is escrow stuff
Respa (Reg X)
Respa does not cover
All cash sales, rental property for more than four units, commercial property, and property of 25 acres or more (agricultural)
Violating respa could result to
A $10,000 or more fine
And or imprisonment up to one year
Which respa section deals with Mortgage Services/mortgage servicing abuses
RESPA Section 6
The company that is hired to handle the payments and pay the taxes/insurance
A mortgage servicer
Prohibits kickbacks, fee splitting, and unearned fees
Prohibits accepting/giving anything of value
RESPA section 8
RESPA section 9 says seller can choose all service EXCEPT _______
Title
Suing for up to three times is known as _______
Which section of respa allows home buyers to sue up to three times the amount
Treble damages
RESPA section 9
Deals with escrow accounts, sets limits on the amount that A lender may require a borrower to put into an escrow account for purposes of paying taxes, Hazard insurance, and other related charges
RESPA section 10
Each month lenders cannot take any more than _____ of annual disbursement (annual amount of taxes and insurance)
What law says this?
1/12th (because there is 12 months in a year)
Respa section 10
At closing, lenders can take a cushion of up to ______ months (1/6th the annual amount
What law says this?
2 months
Respa section 10
What is a statement of when they took out taxes/insurance?
What law says they have to do this?
Annual escrow analysis
Respa section 10
On a complete application there are how many initial items of info?
Once lender gets all of these they have to give out the __________
6 items of info
Initial Disclosures
What are the six initial items of info on the application?
- Name of borrower/borrowers
- SSN of borrower
- Gross Monthly Income
- Loan Ammount Sought
- Address of subject property
- Estimate of property value
What are the six NMLS steps
- NMLS # (Unique Identifier)
- 20hr Course
- Schedule Exam (National Exam with UST
- Complete MU4 application (Individual Application)
- Submit finger prints
- Pay for credit report
The unique identifier WILL appear on these 4 documents
the 1003 loan application
Promissory notes
Mortgage
Trust Deeds
HMDA info is found on section ______ of the ______ loan application
Section 10
1003 loan application
The unique identification identifier WILL NOT appear on
Appraisal Reports
if an application for credit is denied based on the appraisal/value, ECOA says borrower has ________ to request a copy. And lender has _______ days to deliver
90 days to request
30 days to deliver
What regulation allows the borrower to “change the value” stated in the appraisal?
ECOA (Reg B)
HMDA stands for?
What regulation is HMDA?
Home Mortgage Disclosure Act
Regulation C
(Allows Regulators to see where discrimination takes place)
What does RESPA stand for?
What regulation is RESPA?
Real Estate Settlement Procedures ACT
Regulation X or (REXPA)
PMI stands for?
PMI is on ________ loans, NOT government.
Private Mortgage Insurance
Conventional
TILA deals with _______, _______, and ________
Credit, APR, and advertising of consumer loans
HPA stands for?
HPA deals with?
Homeowners Protection Act
PMI
PMI is required when the borrower puts less then _______% down
less than 20% down
PMI protects the ________
Lender
SAFE stands for?
Secure and fair Enforcement Act
The ECOA prohibits disparate treatment. Which of the following best describes disparate treatment as defined by ECOA and its implementing Regulation B
additional documentation requirements on public assistance recipients
HERA stands for
HERA is the law that created the _____ act
Housing and economic recovery act
Created the SAFE act
The MAP ACT, regulates commercial communication entities within FTC jurisdiction. Which of the following entities would not be subject to the rule?
Federally insured depository lenders
Consummation is referred to in TILA and its implementing regulation Z. Consummation is the point in time the borrower becomes contractually or legally obligated to the creditor. What federal statute defines consummation as found in reg z?
Consummation for purposes of regulation z is defined by state law, not federal law
Any person or persons who violate the provisions of RESPA action shall be fined not more than $_________ or imprisoned for not more than _______, or both
$10,000 / One year
If a settlement service provider refers settlement services to another company that they have an ownership interest in, they have a/an?
Affiliated business arrangement
_______________ includes any service provided in connection with a real estate settlement
Settlement services
Which federal law is intended to protect consumers from excessive or unreasonable pricing of services from settlement providers?
Respa
Which federal law regulates escrows to control creditors from making excessive escrow collections?
Respa
Which is NOT a trigger term under TILA?
The maximum loan amount
Under HOEPA, a __________ is defined as a loan secured by a consumer’s principal dwelling with a higher APR than that of comparable low-risk transactions.
Higher-Priced Mortgage Loan
An advertising stating a triggering term does NOT need to list:
The note rate being charged on the transaction
Which of the following is NOT subject to HOEPA requirements?
Secondary Residence
Prior to making High Cost Home loan that permits negative amortization to a first time borrower, a creditor must confirm that the consumer received which document?
HUD Homeownership Counseling List
Which of the following would be excepted from the E-sign act?
A will
What is required for a business to obtain prior to sending information electronically that a law requires to be in writing?
Consent or confirmation
Which of the following is not allowed to be provided for an electronic signature?
Adverse action
What was the purpose of the E-Sign act?
To promote the use of electronic signatures in commercial transactions
Fact Act stands for
Fact Act is about
Fair and accurate credit transactions
Identity theft
Policy to keep others from gaining access to your info under false pretenses
Pretexting
A policy that governs the collection of non-public info and how it’s shared with affiliates?
Financial Privacy
ECOA Rule
Creditors must notify applicants of their lending decision within ________ of the filing of a complete application
Within 30 days (borrower has 30 days to get an answer on an application)
What law says they have to give you the opportunity to opt in or opt out of having your personal info shared?
financial privacy
_______ deals with discrimination when granting credit
_______ deals with discrimination in the sale/lease of property
ECOA (Credit)
Fair Housing (Sale/Lease)
THe APOR today is 4%. Dan applied for a loan and got approved at 26%. Is this a section 32 or section 35?
A section 32 because it exceeded the APOR by more than the 6.5% and 8.5%
Higher priced loans - section 35 is triggered when loans exceed the average Prime offer rate by
________ for first lien jumbo loan
________ on first mortgage lien
________ for a subordinate mortgage lien
2.5% for first lien jumbo loan (loan amount over $417,000)
1.5% on a first mortgage lien
3.5% for a subordinate mortgage lien
High cost loans section 32 is triggered when-
The APR exceeds the APOR by more than ____ on first lien loans of $50,000 or higher
or more than ___ on first lien loans of less then $50,000
or when the APR exceeds the APOR by more then ____ on second lien loans
-If total fees charged exceed ____ of the total loan amount
6.5% on first lien loans of $50,000 or higher
or more than 8.5% on first lien loans of less then $50,000
-or when the APR exceeds the APOR by more then 8.5% on second lien loans
-If total fees charged exceed 5% of the total loan amount
Section 32 are high _______ loans
Section 35 are high ______ loans
cost
priced
What does (APOR) Average Prime offer rate mean
Means what the average rates today are
Helps determine if a loan is section 32 or section 35
What does HOEPA stand for
What is HOEPA part of
Home Ownership and Equity Protection act
TILA (Reg z)
Creditor must consider ___________ types of info when establishing a borrower’s ability to repay a mortgage loan
What are these types of info when establishing a borrower’s ability to repay a mortgage loan?
8 types of info
- Current income and assets
- Current employment status
- Borrowers credit history
- Monthly payment for the mortgage
- Borrowers monthly payments or other simultaneous mortgage loans
- Monthly payments for other mortgage related expenses
- Other debts of the borrower
- Monthly debt payments compared to the borrower’s monthly income (OTI cannot exceed 43%)
Triggering terms examples
“20% Down, pay only $700 month”
“1% finance charge”
They do not include APR
What does a lender need to qualify for Safe Harbor?
No doc loans/NINA loans not allowed
Max debt to income ratio is 43%
Points/fees cannot be charged more than 3%
Loam terms cannot be over 30 years
Interest only/ Negative Amortization loans not allowed
Prohibits use of teaser rates
Requires adjustable rate mortgage be underwritten to the max interest rate that can be charged during first 5 years of the loan term
Prepayment penalties are prohibited except for certain fixed rate qualified loans
Either a mortgage qualifies A lender for Safe Harbor or doesn’t. If they get it then they get money back if borrower goes into foreclosure this is an example of _________?
Qualified Mortgage
If a lender issues a qualified mortgage it receives _________
Safe Harbor (Legal protection if the borrower goes into foreclosure later)
If add includes APR, does it need to include other disclosures?
No
If an ad include triggering terms it also must include
% of down payment
Terms of repayment
Annual precentage rate
What is a triggering term?
Do they require disclosure?
Any number used to describe credit terms and their number is NOT APR
Yes triggering terms required disclosure since it does not mention APR
What is the difference between business and calendar days?
0-9 days = business
10 and over = calendar
Business day according to TILA is
What is a business day regarding the Initial Loan Estimate?
All calendar days except Sunday and holidays
Any day the creditors office is open for business
Redisclosure can ONLY be waived in the case of a ________
This can only be determined by the ________
Bona Fide Financial Emergency
Lender
If a rate goes up or down by more than _______ or ________ you have to redisclose
1/8 or 1/4
If I say I can get someone approved for 4.5% but later the paperwork is saying 6% do we need to redisclose and why
Yes we need to redisclose because the rate Changed by more than 1/8% or more than 1/4%
APR is accurate if no varience above or below the inital disclosure by more than ________ for a regular (30 yr fixed) transaction and _______ for an irregular (not 30 yr fixed) transaction
1/8% (.125 for regular
1/4% for irregular
Consumer must receive corrected disclosure at least _________ business days before loan can be consummated if there was a significant variance in the APR. This always means three additional days
What is this known as?
Three business days
This is known as a redisclosure
What is the 3/7/3 rule?
Initial disclosure within 3 business days
Earliest loan can close is 7 business days after disclosure
Redisclosure is another 3 business days
The earliest a loan can close is _________ after disclosures are delivered or put in the mail
7 days
What law says initial disclosures are required within the first three business days of receipt of completed application?
The Mortgage Disclosure Improvement Act (MDIA)
Mortgage disclosure Improvement Act is a part of _________
TILA
In addition to requiring a written information security program, the safeguards rule requires a business to do all of the following except:
Hire a third-party vendor to monitor information security risks
Which document is required to be provided to customers under the Gramm-Leach-Bliley act?
Annual privacy policy notice
An internal do-not-call request must be honored for _____ years from the time the request is made.
5 years
The _____ and the ____ regulate telemarketing practices:
FTC and FCC
Unless a telemarketer has a person’s prior consent to do otherwise, it is violation of the Rule to make outbound telemarketing calls to the person’s home outside the hours of ____________.
8am and 9pm
Sellers and telemarketers have to update their call lists - that is, delete all numbers in the national do not call registry from their lists - at least every ______ days
31 days
The Telecommunications Sales Rule (TSR) (as amended) requires sellers and telemarketers, in complying with the do-not-call provisions of the TSR, to use a version of the national do not call registry obtained from the commission for no more than _____ days.
31 days
On a Purchase Loan, what is Original Value based upon when a borrower is seeking to cancel mortgage insurance?
Lesser sales price or appraised value at time of closing
What is the main purpose of the Homeowners protection act of 1998?
Provides borrowers with a right to cancel PMI coverage
Under the fair credit reporting act, a creditor may not obtain or use _______ pertaining to a consumer in connection with any determination of the consumers eligibility or continued eligibility for credit.
Medical Information
Under the homeowners protection act of 1998, what does LPMI stand for?
Lender paid mortgage insurance
When looking to remove private mortgage insurance, good payment history is needed. The term “good payment history” means:
No 60 day late payments during the 24 month period before cancellation eligibility or borrower requested cancellation No 30 day late payments during the 12-month period before cancellation eligibility or borrower requested cancellation.
What is the main purpose of the red flags rule?
Requires many businesses and organizations to implement a written identity theft prevention program
On a refinance loan, what is the original value based on when a borrower is seeking to cancel mortgage insurance?
Appraised value at closing
