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Flashcards in Test Questions Deck (87):
1

A lien gives you the right to . . .

The right to take and hold or sell the property of a debtor, as security or payment for a debt or duty

2

The right to take and hold or sell the property of a debtor, as security or payment for a debt or duty, is known as

. . . a lien

3

The portion of principal and interest due on a loan that is written off when deemed to be noncollectable is known as

. . . a charge-off

4

A Charge-off is . . .

The portion of principal and interest due on a loan that is written off when deemed to be noncollectable.

5

Example of a document that can be used to pledge real estate as collateral to secure a promise to repay a debt?

A Mortgage

6

how can A [MORTGAGE] Document be used as a pledge ?

real estate as collateral to secure a promise to repay a debt?

7

To offer to negotiate or arrange a mortgage loan between a buyer and a lender, to issue a commitment for a mortgage loan, or to assist in placing or finding a mortgage loan for a buyer is also known as

Originating a Mortgage Loan

8

Originating a Mortgage Loan - Summary of Process

To offer to negotiate or arrange a mortgage loan between a buyer and a lender, to issue a commitment for a mortgage loan, or to assist in placing or finding a mortgage loan for a buyer.

9

What clause gives a lender the right to declare the entire loan balance due immediately because of borrower default or for violation of other contract provisions?

The Acceleration Clause

10

The Acceleration Clause

Gives a lender the right to declare the entire loan balance due immediately because of borrower default or for violation of other contract provisions.

11

The major buyers in the secondary mortgage market are

Fannie Mae || Freddie Mac

12

Fannie Mae & Freddie Mac are the two major buyers in which mortgage market

The Secondary Mortgage Market

13

What clause gives a lender the right to charge the borrower a penalty for paying off the loan early?

The Prepayment Clause

14

The Prepayment Clause gives the lender the right to -

- charge the borrower a penalty for paying off the loan early?

15

Which government agency backs VA loans?

Department of Veterans Affairs [VA]

16

Department of Veterans Affairs [VA]

The government agency that backs VA loans.

17

Under a land contract, who holds title to the land?

The Vender [Seller]

18

The seller in a land contract is called the -

- Vender

19

The buyer in a land contract is called the

- Vendee

20

Usury law prevents lenders from charging -

- Maximum Interest Rate

21

Which entity is best suited to meet all borrowers' needs and goals while taking into account their financial situations?

Mortgage Brokers

22

Total cost of financing a loan in percentage terms is the

Annual Percentage Rate [APR]

23

Annual Percentage Rate [APR] is -

- the Total cost of financing a loan in percentage terms.

24

A Reverse Mortgage -

- provides borrowers 62 years or older with a monthly check and the balance is owed at the end of the loan term or when the borrower dies.

25

What does a Blanket Mortgage cover?

The type of mortgage that covers more than one parcel or lot and is often used for subdivision developments.

26

What calculation is used to determine a point?

1% of the Loan Amount

27

What is a Point?

A point is 1% of the loan amount (e.g., 2 points paid on a loan amount of $100,000 = $2,000).

28

The succession of conveyances of the title to real property is known as the

chain of title

29

The act of allowing an interest rate and discount points to fluctuate with changes in the market is known as

a [FLOAT]

This is known as floating the interest rate or not locking in the rate

30

The total amount needed to complete the purchase of a home is known as the

acquisition cost

31

The Acquisition Cost

The purchase price plus all closing costs and pre-paid. This is the total amount needed to complete the purchase.

32

The Certificate of Redemption

The document that is evidence the property has been bought back by the owner, within a set time limit after losing it in a judicial sale after a foreclosure action.

33

An MLO can disburse the mortgage loan proceeds via direct deposit to customer's account.

True or False

True.

Disbursing the mortgage loan proceeds via direct deposit to customer's account is certainly allowable

34

A mortgage broker also owns a title company. Is this business arrangement allowed?

Yes.

RESPA allows a mortgage broker to own a title company; however, the title company must be an actual company with a place of business, have employees, etc. If the title company is used in the same transaction, that relationship must be disclosed.

35

Regulations related to high-cost home loans do not apply to - [TYPE OF LOAN]

- Reverse Mortgage Loans

36

As a result of the Mortgage Disclosure Improvement Act, how soon can a residential loan close?

MDIA requires that borrowers wait until the 7th business day after delivery of required disclosures before a loan can close, except possibly in the case of a bona fide financial emergency.

37

Borrowers must wait until the 7th business day after delivery of required disclosures before a loan can close [DUE TO WHAT ACT]

MDIA - Mortgage Disclosure Improvement Act

38

A lender has how many days to notify the borrower of the status of her loan?

30 DAYS

39

Number of days a Lender has to notify the borrower of the status of her loan.

Per [WHICH ACT]

Lender must provide the borrower with the STATUS of their loan application once, within 30 days of the application.

per ECOA

40

What federal law prohibits making a high cost loan to a customer without verifying the customer's ability to repay the loan?

[HOEPA] The Home Ownership and Equity Protection Act

[HOEPA] establishes disclosure requirements, that prohibits deceptive and unfair practices in lending, and requires verification of a borrower's ability to repay a high-cost loan.

41

Disclosing income such as child support and alimony is NOT required of the borrower. When this type of income is disclosed on the application, what act requires that it be considered in the approval process?

The Equal Credit Opportunity Act requires that, if the borrower wishes to disclose this information on the loan application, it must be used in the underwriting decision.

42

After a loan closing, the funds are disbursed. When are the funds disbursed for an owner-occupied, residential refinance?

For refinances, there is a three business-day rescission period.

43

what is considered a [BUSINESS DAY] in purposes of rescission DO

INCLUDES: Monday. Tuesday. Wednesday. Thursday. Friday. Saturday.

EXCLUDES: Sunday. Federal Holidays.

44

Regulation Z in regards to Advertising interest rates

Regulation Z requires that once you state any type of credit terms in advertising such as 8% interest, you must disclose all finance charges and total annual percentage rate (APR).

45

Teaser Rate

the Introductory rate that the lender approves on a mortgage loan. This is a short-term rate and can adjust according to the terms and conditions outlined in the note.

46

In an Advertisement with APR included, what else is required to be disclosed?

If the APR is included in the advertisement, no additional disclosures are required.

47

Each licensed branch must designate a -

- branch manager who is required to have at least three years of experience in the mortgage business, within the five years immediately preceding the application.

48

The word [FIXED] In an Advertisement is required to be accompanied by -

According to advertising guidelines, if the word fixed is used, the word fixed must be accompanied by the [FIXED TIME PERIOD]

The term 'fixed', must appear AFTER the term 'adjustable rate' or 'variable rate'.

49

[TILA] does NOT apply to what types of Loans

TILA does not apply to:

- business loans
- commercial loans
- agricultural loans
- loans payable with four or less installments and without a finance charge
- loans made to corporations
- loans made to partnerships
- loans made to associations
- loans made to agencies.

The lender does have to follow the rules of TILA when the loan is for a residential property.

50

Client Withholds material Information - Is The MLO held Responsible ?

An MLO cannot be held responsible if a client withholds material information but the MLO should look for credit inquires which may raise a red flag. Also, inquires must be explained.

51

Income that cannot be Verified

Any income that cannot be verified cannot be used to qualify a borrower, so disregarding it would not be illegal.

Alimony and child support may or may not be used as viable income if it will not continue for three years in the future.

52

Monthly Income for an Hourly Worker [EQUATION]

To find the monthly income for an hourly worker, multiply the hourly rate by 40 to find the weekly rate; multiply that by 52 weeks per year then divide by 12 months:
[HOURLY RATE = H] [WEEKLY RATE = W] [YEARLY RATE = Y] [MONTHLY RATE = M]

[H x 40 = W]
[W x 52 = Y]
[Y / 12 = M]
[MONTHLY INCOME/HOURLY WORKER]

53

What regulation forbids the seller to require the use of a particular title company as a condition of sale?

Regulation X

54

Which act requires the lender to provide the borrower a reason for rejection of credit in writing within 30 days of loan application?

Equal Credit Opportunity Act [ECOA]

55

What is the ONLY question an MLO can ask an applicant regarding their relationship status?

A loan originator may only ask the applicant if they are married or unmarried.

56

Which rule requires all financial institutions to design, implement, and maintain safeguards to protect customer information while it is in the custody and control of the institution and its agents?

The Safeguards Rule (15 U.S.C. 6801- 6809)

57

On an owner-occupied residential refinance (and on a second mortgage), how many business days does the borrower have of right of rescission?

There is always a three-business day right of rescission. During that time, the borrower can change his mind and cancel the transaction.

58

[????] Regulation Z

Truth In Lending Act [TILA] Regulation Z

59

S.A.F.E. Act is Part of the -

- the SAFE Act is a key component the Housing and Economic Recovery Act of 2008.

60

The Privacy Rule of the GLB Act requires that financial institutions provide the borrower with a Consumer Privacy policy [TIME FRAME]

before disclosing information to a non-affiliated third party.

61

The right of rescission provided under Regulation Z is the right to -

- cancel or terminate the contract. The right of rescission is provided to some borrowers under Regulation Z.

62

Rescission -

Rescission is cancellation or termination of a contract. The right of rescission is provided to some borrowers under Regulation Z.

63

Right of Rescission [REGULATION]

Regulation Z

64

The SAFE Act -

is designed to enhance consumer protection and reduce fraud by requiring states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators.

65

The [ACT] establishes minimum standards for licensing and registering mortgage loan originators

The SAFE Act

66

What is the main function of the SAFE Act?

The [SAFE Act] establishes minimum standards for licensing and registering mortgage loan originators

67

ECOA is primarily a -

- anti-discrimination law

68

The Consumer Financial Protection Bureau on October 3, 2015, implemented the newly combined disclosure that meets the disclosure requirements of TILA and [????]

[RESPA]

69

CFPA Combined [TILA & RESPA] to make -

- TRID

70

The [????] combined the disclosure
requirements of [???? & ????] to make the
newly implemented disclosure [????].
This new disclosure replaced the [????]
and the [????] forms.

[CFPB]
[TILA & RESPA]
[TRID]
[GFE] & [TILA] Forms

71

What loan type is NOT included in the Home Mortgage Disclosure Act?

Vacant Land Loans

72

What is the only website authorized by the FTC from which consumers can get their free credit report each year?

The only vendor authorized by the FTC and the credit reporting agencies under the Fair and Accurate Credit Transactions Act to provide this service for free is

[www.annualcreditreport.com]

73

[www.annualcreditreport.com]

The only website authorized by the FTC from which consumers can get their free credit report each year.

74

The APR reflects the -

- total cost to borrow money.

75

Which cost would be included in the APR calculation on the closing disclosure forms?
[Down Payment. Escrow Deposit.
Mortgage Insurance. Pest Inspection Fee.]

The APR reflects the total cost to borrow money. Mortgage insurance is one of those costs, but the others are merely costs associated with buying property, not necessarily with a mortgage, and so would not be part of the APR calculation shown on the closing disclosure.

76

The [LAW] defines a high cost loan.
[also known as a Section 32 loan]

[HOEPA]

Section 32 of Regulation Z prohibits excessive points and fees. Such high cost loans are defined in the Home Ownership and Equity Protection Act [HOEPA]

77

Consumers who did not receive a LE or CD prior to close receive an extended period of rescission of [EXTENSION]

[3 YEARS]

78

The Fair Housing Act requires lenders to display what in all branch offices?

Equal Housing Lender Poster, which indicates to the public that the lender is in compliance with the Act.

79

Who investigates mortgage fraud in the United States?

[FBI]

The FBI investigates matters relating to fraud, theft, and embezzlement occurring within or against the national or international financial community.

80

Who usually commits Mortgage Fraud

The increased reliance by financial institutions and others on third-party mortgage brokers has resulted in mortgage fraud at a high level, especially fraud committed by [company insiders.]

81

[SEXUAL ORIENTATION]

- is not included as a protected class by the federal Fair Housing Act.

82

The [PRIVACY RULE] is a provision of the [ACT]

The Gramm-Leach-Bliley Act

83

he Privacy Rule requires that financial institutions provide the consumer with a Consumer Privacy Policy disclosure

According to the Gramm-Leach-Bliley Act, this disclosure is required to be provided annually as long as the relationship continues.

84

The Gramm-Leach-Bliley Act is officially titled the -

Financial Modernization Act of 1999.

85

The federal Fair Housing Act of 1968 is also known as

Title VIII of the Civil Rights Act.

86

An air-loan scheme

involves [NON-EXISTENT LOANS]

87

How do you avoid trigger words -

by using Generic statements that do not state specific loan information are exempt from additional disclosing of referencing specific information concerning loan terms.