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COMBO 1

Combo 1

by cbroshar, Jun. 2014

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clauses may obligate the broker to indemnify the lender against losses and return all benefits (i.e., fees, commissions, etc.) received, arising out of:	-acts or omissions of the broker or persons representing the broker, including any misrepresentation or fraud in the origination, processing, closing and funding of a mortgage loan; -early default by the borrower or some other event triggering a repurchase obligation, including a material misrepresentation in which the broker or its mortgage loan originator participated; -demand by an investor to indemnify or make the investor whole with respect to a mortgage loan; or -repayment of the loan within the first six months after the recording date
What are some of the problems having to do with originators and there responsibilities or consequences of a loan?	-The broker is compensated for originating a loan as long as the lender accepts it -He may not be penalized if he does not actually commit any misrepresentation and the borrower defaults later in the term of the loan -he might be less concerned with the suitability of the loan for the borrower or with the accuracy of information presented in the mortgage application than the lender is. -The broker’s primary concern is to provide enough information so the mortgage lender will fund the loan and compensate the broker **These all create a conflict between his opportunity for personal financial gain and the proper performance of his responsibilities.
Evidence that has been used to prove the principal-agent problem?	Loans originated by brokers -are more likely to prepay faster and to default than similar borrowers who obtained loans through retail sources. -are charged a higher interest rate in order to compensate the lenders for the higher risk of default and prepayment created by the principal-agent problem.
Among the brokerage practices decried by consumer advocates are the following: i.e. Some of the things that supporters of the Principal-agent theory say brokers are doing	-Marketing higher-than-market-rate loans in low-income neighborhoods -Convincing elderly homeowners to refinance homes that have a low mortgage balance -Locking consumers into high interest rate loans with substantial prepayment penalties -Convincing borrowers to borrow more than they can afford using negative amortization or large balloon payments -Loan flipping -Lending without regard for the ability to repay
Predatory lending	-extension of credit to borrowers who cannot afford the credit on the terms being offered. -features designed to “strip away,” or reduce, a borrower’s equity in the collateral and increase the likelihood of foreclosure
Forms of predatory lending	-Targeting -Steering -asset-based lending -Packing -Excessive rates and fees -Padding costs: -Flipping: -Prepayment penalties:	8
Targeting	Predatory lenders and mortgage brokers: -target a person with limited access to mainstream sources of credit who is vulnerable to abusive practices, -use fraudulent, deceptive or high-pressure sales tactics to get him to accept loans that are not affordable or in his best interest. -inadequately disclose the true costs, risks and appropriateness of the transaction to the borrower. -Often they will use bait-and- switch tactics
Steering	-Steering is the practice of directing a borrower toward a subprime loan when he could qualify for a more standard loan. -It is estimated that almost 50 percent of subprime borrowers could have qualified for loans with lower fees and rates. -Steering can also refer to directing borrowers to a settlement service provider with whom the broker or lender has a relationship, either because of financial benefit to the broker or lender or because that service provider will help bend rules to get a loan approved.
Asset-based lending	-Lending without regard to repayment ability -The lender simply relies on its ability to seize the borrower’s equity in the collateral to satisfy the debt and to recover the high fees associated with the loan.
Packing	The inclusion in the loan principal amount of costs such as points, mortgage broker fees, prepayment penalties on a prior loan, and charges for additional related products such as single -premium credit life insurance, WITHOUT THE BORROWERS INFORMED CONSENT
Excessive rates and fees	-Charging excessive rates to a borrower who qualifies for lower rates and/or fees offered by the lender is considered predatory behavior. -Often have fees in excess of 5 percent of the loan amount even though such fees do not have anything to do with the credit risk of the borrower. -Only time they may be justified is risk-based pricing
Padding Costs	- Charging borrowers for a detailed appraisal when only a drive-by appraisal was done - charging the borrower recording fees and other fees, such as document preparation fees or credit report fees, many times the actual cost. -charging broker fees when the borrower never met or knew of the broker. -itemizing charges that are duplicative or should be included under other charges.
Flipping	(churning) -repeated refinancing of a loan within a short period of time, without any real benefit to the borrower.
Prepayment Penalties (misuse)	-Prepayment penalties used to discourage a borrower from refinancing to obtain a loan at a lower interest rate when his credit improves to the point where he can move out of the subprime market or to simply obtain an affordable loan.
To address prepayment penalties ____ placed restrictions on loans subject to ____ and other high priced mortgage loans. What are the restrictions?	-The penalty cannot apply beyond two years after loan consummation -For a HOEPA-regulated loan, there can be no prepayment penalty.
What are some HOEPA regulations (and Reg. Z) designed to protect lenders against predatory lending?	Loan Terms: No negative amortization Balloon Payments: A loan term less than 5 years with regular payments & payment schedule cannot be made if the payments do not fully amortize the loan Mandatory arbitration clauses: Should not be allowed. They force to the borrower to go through an arbitrator (kind of like a mediator) if they are having problems with an unfair or deceptive loan. A more fair practice would be to let an informed borrower voluntarily agree if/when he considers it helpful with a dispute with a lender
The laws and regulations designed to defer predatory lending and uphold legal and ethical responsibility include:	-the Equal Credit Opportunity Act (ECOA) and Regulation B. No discrimination of race, color, religion, national origin, sex, marital status or age -Fair Credit Reporting Act (FCRA), Rules for credit reporting and creditworthiness of applicants. -Fair Housing Act. No discrimination in sale, rental/financing of any home on race, color, religion, national origin, sex, familial status or handicap. -Home Mortgage Disclosure Act (HMDA) and Reg. C,. Require specific information is available to the public when mortgages are sold on the secondary market. -HOEPA. Requires specific disclosures on loans with APRs more than 6.5 percentage points on first liens, and more than 8.5 percentage points on subsequent liens, above the average prime offer rate. -Real Estate Settlement Procedures Act (RESPA). Must give fees involved in mortgage. Prohibits abusive settlement pacts (including paying for referrals) -TILA & Reg Z. Must give honest terms & rates to make it easer to compare loans
Ethics often are not as ___ as laws.	Clear cut
Fiduciary responsibilities	-Those of loyalty and trust owed by a person who holds funds in trust for another or by a person acting as an agent of another -You are an "agent," of the borrower and should act in their best interest.
Fiduciary responsibilities dilema	-Deciding whether the broker represents a lender, himself or an applicant.
caveat emptor	-"Buyer beware" -A beliefe that the buyer is responsible for using due diligence to determine whether is purchase is beneficial or suitable
Greatest ethical challenges faced by morgtage lending businesses. What are the pressures that sometimes cause unethical behavior?	-Personal need to achieve success & provide one's own financial security - Competition in industry, leading to "make sales at all costs," forgoing ethics. -Quotas/managers/standards pressuring LO's to produce. -Methods of compensation (commission, bonuses, etc) -Lack of company support for ethical behavior (policies, enforcement/communication of policies, training) -Confusion over rates/points interaction. Borrower overlooks higher points & added costs to get lower rate. Fails to anticipate consequences of introductory rate. -Unethical demands made by borrowers
_______ is the practice of directing a borrower toward a subprime loan when he could qualify for a more standard loan	A: Steering
_______ is including in the loan principal amount such costs as points, mortgage broker fees, prepayment penalties on a prior loan, and charges for additional related products, without the borrower’s informed consent.	A: Packing
_______ is repeated refinancing of a loan within a short period of time, primarily to generate additional loan points, loan fees, prepayment penalties, and fees from financing the sale of credit-related products.	A: Flipping
Equity Stripping	-Un-needed financing fees which take money out of the borrower's equity.
A big dilemma, regarding the reach of laws and regulations?	A: They only define the minimum type and level of conduct practitioners may use without penalty from society.
Ethics.. - is a branch of philosophy dealing with legal behavior. -defines how a person must act. -provides a guideline for answering questions when a choice of actions is available. -All of the above	A: provides a guideline for answering questions when a choice of actions is available. (An abstract definition of ethics is that it is a branch of philosophy dealing with moral behavior. Ethics is the general pattern of beliefs as to how a person should act. It provides a guideline for answering questions when a choice of actions is available. When a choice of actions is available, the choice selected can then be based on certain ethical criteria, which establish acceptable means of attaining the objective.)
Establishing requirements for credit reporting and creditworthiness of applicants -is covered by federal law, including the Fair Credit Reporting Act -is not an issue in regard to mortgage lending. -is not required by law, and must be carried out by individual lenders for ethical practice. -is covered by state law only.	A: Is covered by federal law, including the Fair Credit Reporting Act
Is a mortgage broker considered to be an agent of the borrower?	A: Only in some states, while in others this is not the case
One ethical issue in regard to mortgage lending is that, unlike other parties, ________ have no long-term interest in the performance of the loan.	The mortgage broker or mortgage loan originator
A loan originator is discussing the features of a home equity consolidation loan with an applicant. In doing so, he relates to the applicant that the interest on the loan is tax deductible. This is	A: Not permissible, as the LO is not qualified to provide tax advice
Extension of credit to borrowers who cannot afford the credit on the terms being offered is considered by most regulators to be	A: Predatory lending
The federal law which requires specific information to be made available to the public, regarding selling mortgages on the secondary market is?	A: HMDA
Regulation N is???	- The Mortgage Acts and Practices Rule, or -MAPs Rule
According to Reg. N:	It is a violation of the advertising regulations for any person to make a material misrepresentation, expressly or by implication, in any commercial communication, regarding any term of any mortgage credit product.
When can a wavier be obtained (or attempted to be obtained) from a consumer to give up an protection or rights under Regulation N?	A: Never
Suitability	-Responsibility, even if not required by statutes, to ensure that he is providing loan programs that are suitable for an applicant. -Just because you have given borrowers their disclosures, does not mean you should expect them to always arrive at a beneficial decision on their own
In determining suitability of a loan for an applicant, an originator should:	-evaluate the applicant’s qualifications. -identify the applicant’s personal and financial objectives. -align loan programs with the applicant’s circumstances -perform financial and homeownership counseling, where applicable.
ATR - What does it stand for, Who instated it, and what does it say?	Ability to Repay, a provision of the Dodd Frank Act -It is now prohibited for a creditor to make a consumer credit transaction secured by a dwelling without determining the borrower’s ability to repay the loan according to its terms.
Three things a borrower should be reminded of during processing:	-No guarantees of approval -Additional documentation may be required -The expected closing date in the sales agreement is really no more than a target date
A broker or loan originator's duties the the lender include:	-processing applications based on the lender’s underwriting guidelines. -following up to ensure conditions contained in commitment letters are satisfied in a timely manner. -expediting processing so the loan can close within the period of any rate lock. -carrying out any cancellation procedures competently and professionally -guarding against mortgage loan fraud and other practices that may harm the lender or investor purchasing the loan.
The number one ethical problem cited in surveys of professionals and managers is _____ or _______ representation of products or services in marketing, advertising or sales efforts.	A: False or misleading
If a borrower refuses a loan, he will lose upfront fees paid in the loan process and may have to forfeit his _______ money deposit.	A: Earnest
NAMB	NATIONAL ASSOCIATION OF MORTGAGE BROKERS
UDAAPs	Unfair, deceptive, or abusive acts or practices
A misleading representation, omission, act or practice is considered deceptive when, among other conditions, it is -Malicious -Material -Intentional -Repeated	A: Material (A representation, omission, act or practice is deceptive when it misleads or is likely to mislead the consumer; the consumer's interpretation of the representation, omission, act or practice is reasonable under the circumstances; and the misleading representation, omission, act or practice is material.)
Before attempting to take a complete loan application, the mortgage broker has a responsibility to do all of the following EXCEPT -evaluate the applicant's qualifications. -conduct an investigation to determine the truthfulness of the applicant's application. -identify the applicant's personal and financial objectives. -perform financial and homeownership counseling, where applicable.	A: conduct an investigation to determine the truthfulness of the applicant's application. (Once a broker has made contact with a potential loan applicant, he must make sure that he is providing the applicant with loan programs that are most suitable for the applicant. Before attempting to take a complete loan application, he should evaluate the applicant's qualifications, identify the applicant's personal and financial objectives, align loan programs with the applicant's circumstances and perform financial and homeownership counseling, where applicable.)
All of the following are examples of prohibited misleading advertising EXCEPT -a mailer that attempts to create a visual impression that it is sent from a government agency, though it is fact generated by a commercial mortgage lender. -a mailed flyer with a mortgage loan refinancing offer in an envelope stating "Preapproved!" although, in fact, there is no preapproval in place for the consumer. -an ad that refers a consumer to a consumer protection website which is not operated by the lender in order to compare average mortgage loan rates. -a commercial communication that claims to originate from the consumer's current mortgage lender, although it is actually from a different lender.	A: an ad that refers a consumer to a consumer protection website which is not operated by the lender in order to compare average mortgage loan rates. (Examples of prohibited misleading advertising include the association of the mortgage credit product or any provider of the product with any other person or program, including misrepresentations that the provider is, or is affiliated with, any government entity or organization; misrepresenting that a commercial communication is made by or on behalf of the consumer's current mortgage lender or servicer; and misrepresenting whether the consumer has been preapproved or guaranteed for a loan refinancing or modification. There is no prohibition against referring a consumer to an external website where more information is available.)
The number one ethical problem cited in surveys of professionals and managers is	A: false or misleading representation of products or services in marketing, advertising or sales.
A mortgage broker and mortgage loan originator's duties to the lender include all of the following EXCEPT -processing applications based on the lender's underwriting guidelines. -originating loans only for those applicants which promise most profit for the lender. -guarding against mortgage loan fraud and other practices that may harm the lender. -expediting processing so the loan can close within the period of any rate lock.	A: originating loans only for those applicants which promise most profit for the lender.
The Truth in Lending Act (TILA) is ____ of the ____ Act.	Title I of the Consumer Credit Protection Act, was enacted in 1968 in order to promote the informed use of credit.
How does TILA affect the amount of interest or loan fees a lender may charge?	This law does not limit the amount of interest or loan fees a lender may charge. Any limits on interest rates would be imposed by state usury laws.
Basic requirement/goal of TILA?	TILA requires that lenders provide accurate and truthful information to consumers relating to the cost and terms of credit being offered so they may more easily compare various credit offers.
The regulation associated with TILA?	Regulation Z
The Dodd-Frank Act granted rule making authority, as well as the authority to supervise and enforce compliance with TILA and its implementing regulations by entities under its jurisdiction, to who?	Consumer Financial Protection Bureau (CFPB)
Who issued Regulation Z?	The Federal Reserve System (FRB)
HERA	Housing and Economic Recovery Act
MDIA	Mortgage Disclosure Improvement Act
TILA applies to any individual or business that offers or extends credit, whether directly or through a mortgage broker, when:	-the credit is for personal/family/household use -the offering or extension of credit is done regularly; -The credit is under a written contract more than four installments; and -Is in more than 4 installments
Among other exclusions, TILA does not apply to credit extended:	-Primarily for business, commercial or agricultural purposes. -To other than a natural person. -In excess of the applicable threshold, unless it is secured by real property, or personal property to be used as the consumer's principal dwelling
TILA describes a creditor as:	- a person, including a lender and a table- funding mortgage broker, who regularly extends credit that is subject to a finance charge or is payable by written agreement in more than four installments, -Or a credit card issuer
In a RESPA loan secured by borrower's dwelling, other than an HELOC, TIL disclosure statement must be delivered or mailed when:	-within three business days after receipt of a written application; and -no later than the seventh business day before the transaction is consummated.
The TIL disclosure explains certain ____ found in the loan documents using ______ _____. Also create a ___ of the loan.	- Explains _certain_ wording, using _understandable terms_. -Provides borrower with a clear picture of the loan (i.e., its type, length, payment schedule and a good faith estimate of loan costs).
If TILA disclosures are given as part of a larger group of documents, how must they be presented how?	-Grouped together -Segregated from any other information not directly related to the required disclosures.
The place in a large document where the TILA disclosures are located is referred as the ____.	Federal box.
The most important disclosures:	-APR -Finance charge -Amount financed -The total of the payments
What is a nominal rate? How is it different from other rates?	-It is the interest rate shown on the loan -Does not include all the finance charges (it is just the original interest rate)
APR vs Nominal rate. How do they compare, typically?	-The APR is USUALLY higher than the note rate.
Two different APR's can't becompared, if what?	-They are for loans with different terms. -Ex: the APR for a 15-year loan cannot be compared to the APR for a 30-year loan. -Because APR is based on the term of the loan.
The disclosed APR must not be above or below the actual APR by more than:	-1/8 of a percent in a regular transaction (12.5 basis points) -1/4 of a percent in an irregular transaction (25 basis points)
The ______ are a tool produced by the ___ used to determine a loan's APR.	-Regulation Z Annual Percentage Rate Tables -Produced by CFPB (Consumer Financial Protection Bureau). *(Most interest rate calculators do not satisfy the requirement.)
The finance charge is?	The cost of consumer credit as a dollar amount, made up of two things: -Prepaid finance charges; plus -charges paid over the term of the loan (e.g., the total interest and mortgage insurance premiums, if any, which would be paid over the term of the loan, if paid according to the payment schedule).
Is it a finance charge? Interest	-Yes
Is it a finance charge? Points paid by the seller.	No
Is it a finance charge? Points, loan fees, assumption fees, finder’s fees and similar charges paid by the consumer	Yes
Is it a finance charge? Security interest charges	No
Is it a finance charge? Mortgage broker fees (whether paid by the consumer directly to the broker or to the lender for delivery to the broker) Even if the lender does not require the use of a mortgage broker or retains any portion of the charge?	-Yes -Yes
Is it a finance charge? Taxes and fees actually paid to public officials for determining the existence of or for perfecting, releasing or satisfying a security interest;	No (it is a security interest charge, which is not included as a finance charge)
Is it a finance charge? Premiums or other charges for any guarantee or insurance protecting the lender against the consumer’s default or other credit loss	Yes
Is it a finance charge? The premium for insurance in lieu of perfecting a security interest	No, (it is a security interest charge, which not included in the finance charges)
Is it a finance charge? Fees and amounts charged by a third party (i.e., a person other than the lender)	-Yes, if the lender: -requires the use of the third party in the extension of credit, even if the consumer can choose the third party;or -*keeps a portion of the third-party charge (The portion kept would be included in the transaction’s finance charge.)
Is it a finance charge? Any tax charged for recording a security instrument or document evidencing indebtedness.	No (it is a security interest, which is not included in the finance charges)
Is it a finance charge? Fees charged by a third party that conducts the loan closing (e.g., a settlement agent, attorney or escrow or title company).	Yes, if the lender: -requires the particular services for which the consumer is charged; -requires the imposition of the charge; or -keeps a portion of the third-party charge, which would be part of the finance charge
Is it a finance charge? Premiums for credit life, accident, health or loss-of-income insurance, or other debt cancellation coverage.	Yes, unless: -the lender does not require the coverage and discloses this fact in writing; -the premium for the initial term of coverage and the term of the insurance are disclosed; and -one of the consumers signs or initials a written request for the coverage after receiving the disclosures
Is it a finance charge? Fees for title examination, abstract of title, title insurance, property survey and similar purposes	No
Is it a finance charge? Premiums for property or liability insurance.	Yes, unless: -the coverage may be obtained from a person of the consumer’s choice and this fact is disclosed; or -if the coverage is obtained from or through the lender, the premium for theinitial term of coverage and the term of the insurance are disclosed
Is it a finance charge? Preparing loan-related documents, such as deeds, mortgages and reconveyance or settlement documents	No
Is it a finance charge? Notary services and credit reports	No
Is it a finance charge? property appraisal or inspections to assess the value or condition of the property, including fees related to pest infestation or flood hazard determinations, if the service is performed prior to closing	No
Is it a finance charge? Required amounts to be paid into escrow or trustee accounts	No, if they would not otherwise be included in the finance charge
Prepaid finance charge definition	(PFC). -Any finance charge paid separately (cash/check) before closing or with-held from the proceeds from the loan at any time. -Direct charges paid by the borrower -Not paid by a third party (paid by the borrower) -Must also be computed into the annual percentage rate.
Another term for "closing costs"	Prepaid finance charge (PFC)
Prepaid finance charges may include:	-loan origination, discount and commitment fees; -any prepaid private mortgage insurance (PMI) premium, FHA upfront mortgage insurance premium (UFMIP), VA funding fee or USDA guaranty fee; -Courier, underwriting, processing, tax fees (if paid to the lender) (CUPT) -Prepaid interest -	5
What is the amount financed?	-The actual amount of credit the borrower will receive from the creditor. -Not to be confused with the loan amount -The loan amount less any prepaid finance charges (e.g., the loan origination fee and discount points).
If a borrower applied for a $200,000 loan and paid $7,000 in prepaid finance charges, the amount financed would appear as ____.	$193,000.
Total of payments	The total of payments is usually the total of the finance charge (prepaid and ongoing charges scheduled to be paid over the term of the loan) and the amount financed. If the loan is an adjustable-rate mortgage (ARM), the amount may be subject to change if the annual percentage rate changes.
Additional Information, if required on a TILA. Name as many as possible. (answers cont'd on hints)	-Name+address of the lender preparing disclosures. -Itemization of the amount financed (separate from other required doc's) -(Pledged account mortgage) statement "APR doesn't reflect the effect of any savings account required to be maintained as a condition of the loan" -Payment schedule + total of payments scheduled to repay the obligation (i.e., the number, amount and timing of payments, including principal, interest and mortgage insurance premiums) -Existence of any demand feature -"**If the APR may increase after consummation" docs -Total sales price, if seller is lender -If charges for credit life, accident, & othr insurance aren't included finance charge, disclosure of the premium and the fact that the insurance is not required to obtain credit -The fact that lender will have a security interest either in property being acquired/owned -The fact that there is no guarantee that the applicant will be able to refinance or to lower his rate or payments	-$ or % charge of any late payments -Statement of any late payment -The assumption policy, stating whether a buyer of the dwelling may assume the remaining loan balance on the original terms -Reference to appropriate contract documents for additional information about nonpayment, default, the right to accelerate the maturity of the obligation and prepayment rebates or penalties
In a closed-end transaction secured by real property or a dwelling, the disclosed finance charge and any disclosure affected by the finance charge (e.g., the APR) are considered accurate if...	-the finance charge is understated by $100 or less or if it is overstated.
In a regulation Z covered loan, If the APR may increase after the consummation of a closed-end loan or during an open-end credit plan...	The maximum interest rate must be stated in the contract
Before receiving the TIL Disclosure, what fees in connection to the mortgage loan app may be charged to the buyer?	-A reasonable and bona fide credit report fee -No others, until after receipt of the TIL Disclosure
When is the borrower considered to have received a TIL Disclosure, if it was mailed?	Three business days after mailing.
-If an event before loan consummation (i.e., closing) makes the TIL Disclosure inaccurate, the lender must provide corrected disclosures if the APR at the time of consummation varies from the disclosed APR by more than:	1/8% in a regular loan (0.125 percent) in a regular transaction 1/4% (.25%) in an irregular transaction
The provisions of the MDIA provide that...	-The consumer must RECEIVE the corrected disclosures at least three business days before consummation. -If mailed consumer is considered to have received them three business days after they are mailed or delivered.
The business days related to mailing disclosures to the consumer and those related to waiting periods are defined as	-Any days but Sundays or federal holidays. -Even if a mortgage business is closed on Saturdays, the consumer could be expected to have received the disclosures in the mail.
The loan cannot be consummated until..	The loan cannot be consummated until both the 7 business-day waiting period and the 3 business-day waiting period have been satisfied. (although someone may have received their disclosures within the three business days after application, consummation still may not occur before the seventh business day following delivery.
When can a waiting period (3 or 7 day rule) be modified or waived?	-If the consumer gives the lender a dated, handwritten (not preprinted) statement describing a bona fide personal financial emergency -The statement must specifically modify or waive the waiting period -Must be signed by each consumer primarily liable on the legal obligation
For an ARM, the borrower must be given information about...	-The index, margin, and frequency of the rate adjustments -Other pertinent facts about the loan
When does an ARM need additional disclosures? When should they be given?	-When secured by borrower's principal residence, and -It has a term exceeding one year -Should be given at the time an application form is provided or before the consumer pays a nonrefundable fee, whichever is earlier.
Additional disclosures for an ARM with term >1 year, secured by borrower's primary residence? (part of answer is given on back) (try to get as many as possible)	- CHARM Booklet!!! (or a similar booklet) -A loan information disclosure for each variable rate a borrower may be interested in, including: Rate/payment/term can change. Index/formula used to make adjustments & source of info about the index/formula explanation of how the interest rate and payment will be determined, including an explanation of how the index is adjusted (e.g., by the addition of a margin); a statement that the consumer should ask about the current margin value and current interest rate; the fact that the interest rate will be discounted and a statement that the consumer should ask about the amount of the interest rate discount; frequency of interest rate and payment changes; rules relating to changes in the index, interest rate, payment amount and outstanding loan balance, including; fact that the loan program contains a demand feature; *type of information that will be provided in notices of adjustments and the timing of such notices;	a statement that disclosure forms are available for the lender’s other variable-rate loan programs; One of the two "scenarios" Explanation how buyer can calculate payments w/most recent payment in the example or the initial interest rate used to calculate the max rate and payment
CHARM Booklet	"The Consumer Handbook on Adjustable Rate Mortgages"
When can an TILA disclosures be given in electronic form?	When the applicant is accessed by the consumer in electronic form. Disclosures may be given to them on or with the application
Disclosures required (in relation to the APR) for an open-end home equity plan:	-Fact that the APR, payment, or term may change due to the variable rate -Statement that the APR does not include costs other than interest -Index used in making rate adjustments and a source of information about the index -Frequency of changes in the APR
Another set of disclosures with final costs must be given when?	Upon settlement of the loan
After consummation of the loan, what scenarios would a borrower need to be presented with new disclosures?	-Refinancing -Assumption -Adjustments, if the interest rate is adjusted (given at least once a year if the payment hasn't changed, or 25-120 calendar days before a different payment would be due.)
For disclosures as a result of adjustments on variable rate loans, what must be disclosed?	-Explanation that the time period of the current rate is ending, and a new one is about to begin -Effective date of the adjustment, and when future adjustments are scheduled to occur -Any other changes to loan terms, features, or options taking effect on that day (e.g. expiration of interest-only or payment-option features.) -A table showing current and new interest rates and payments, and date of the first payment due with the new rate
(?)Advertising of consumer credit is regulated and disclosures of interest rates and points are required by which regulation?	Regulation Z of Truth in Lending (Regulation Z applies to advertising of consumer credit, requiring disclosure of all specific credit terms and use of the APR)
(?)A TIL Disclosure provided for a home loan shows all of the following EXCEPT -the appraisal fee. -the APR. -the amount financed. -the amount of the monthly payments.	A: The appraisal The TILA disclosure shows the APR, monthly payments and amount financed (the loan amount less finance charges). For real property loans, it does not include property appraisal fees.
(?) Which of the following would be considered part of the finance charge when figuring the annual percentage rate under the Truth-in-Lending Act (Regulation Z)? -Discount points -Credit report fee -Notary fee -Title insurance premium	Under Truth in Lending, the lender must disclose all finance charges which might include buyer's points, loan fees, finder's fees paid to the person bringing the borrower to the lender, service charges, mortgage insurance premiums and interest. He must add these charges together and calculate them as a percentage of the loan balances during the term of the loan to arrive at the APR. Actual costs not retained by lenders (title fees, legal fees, closing costs, property taxes, appraisal fees, recording fees, notary fees, etc.) are not considered finance charges and are not included in the APR.
(?In a comparison of annual percentage rates for two separate loan programs, what should be the same for both loans?	A: The term of each loan Because an APR is based on the term of the loan, the APR for a 15-year loan cannot be compared to the APR for a 30-year loan. The APRs being compared must be for loans with the same term.
(?)TILA regulations would apply to a loan -for the purchase of a family summer home. -for the purchase of a vineyard. -obtained to purchase an apartment building. -to open a restaurant.	A: For the purchase of a family summer home (TILA applies only to credit to be used for personal, family or household purposes. The credit also must be offered by an entity that extends it to consumers on a regular basis, must be subject to a finance charge, and must be payable under a written contract in more than four installments. TILA does not apply to credit extended for business, commercial or agricultural purposes.)
(?)According to TILA, a loan cost paid separately before or at consummation of a transaction or withheld from the proceeds of a loan is	A: A prepaid finance charge (TILA defines the finance charge as the cost of consumer credit as a dollar amount. It includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as a condition of getting the loan. It includes interest paid over the life of the loan as well as prepaid finance charges. TILA defines a prepaid finance charge (e.g., points, origination fees and mortgage broker fees) as any finance charge paid separately in cash or by check before or at consummation of a transaction, or withheld from the proceeds of the credit at any time. Closing costs are the other costs of settlement of a real estate transaction, disclosed under RESPA.)
(?)An ARM disclosure includes all of the following EXCEPT -the interest rate once the initial interest rate period expires. -the period between adjustments -the initial interest rate. -the length of the period of the initial interest rate.	A: the interest rate once the initial interest rate period expires. (The rate after the starting initial rate cannot be included in the disclosure, as it will not be determined until later. The lender must disclose the initial rate and the period for that rate, as well as the frequency of rate change.
(?)The early TIL Disclosure must be provided to a borrower at least how many business days prior to closing?	A: 7 prior to closing (and 3 after application)
(?) All of the following are considered finance charges EXCEPT -initial mortgage insurance premium. -discount points. -loan origination fee. -home inspection fee paid by the borrower.	A: Home inspection fee paid by the borrower ( Finance charges are costs of obtaining the loan. They include all fees paid by the borrower to and kept by the lender, (e.g., the loan origination fee and discount points). They also include the cost of any mortgage broker fees and premiums for life insurance or mortgage insurance required by the lender. Fees charged a consumer by a settlement agent, attorney, or escrow or title company conducting the closing are finance charges only if the lender requires the particular services, requires the imposition of the charge, or retains a portion of the charge. They do not include other costs incurred to close the sale (e.g., home inspection fees).)	Hint: Which one is money that isn't going to be kept by the lender?
(?)According to the Truth in Lending Act, when does refinancing occur?	A: When an existing obligation is satisfied and replaced by a new obligation.
(?)Interest, service charges, transaction charges, buyer's points, loan fees and mortgage insurance are examples of what is included in the dollar amount called	A: The finance charge
(?)Which of the following documents provides the borrower with information about prepayment penalties? -Truth in Lending Disclosure Statement -1003 Loan Application Form -HUD-1 Settlement Statement -Escrow analysis	A: Truth in Lending Disclosure Statement(The TIL Disclosure includes the creditor's name and address; amount financed; finance charge; APR; variable rate information, if applicable; payment schedule and the total of the payments; any demand feature; total sales price, if the seller is the creditor; prepayment penalty, if any; late payment policy; description of the secured property; insurance requirements; contract reference; assumption policy; and any required deposit.)
(?) TIL disclosures include?	-creditor's name and address -amount financed -finance charge -APR -variable rate information -if applicable -payment schedule and the total of the payments -any demand feature -total sales price, if the seller is the creditor -prepayment penalty, if any -late payment policy -description of the secured property -insurance requirements -contract reference; assumption policy -and any required deposit.
(?)How late can a consumer receive CORRECTED disclosures?	A: 3 business days prior to consumnation
(?)Which of the following appears in the Truth in Lending Disclosure Statement? -The loan term -The property purchase price -The fully-indexed ARM rate -The anticipated ARM rates for the first five years	A: The loan term (The TILA disclosure includes the features of the loan, including its term.)
(?)The Truth in Lending Disclosure given to an applicant for a 30-year home loan must be supplemented by additional disclosures when -the loan is an adjustable rate mortgage. -the mortgage broker must pay third-party providers. -the loan contains prepayment penalties. -the interest rate is not locked in.	A: The loan is an ARM (Additional disclosures are required for an adjustable-rate mortgage (ARM) loan secured by the borrower's principal place of residence, if it has a term exceeding one year and a rate that will fluctuate after settlement of the loan. These include the Consumer Handbook on Adjustable Rate Mortgages.)
Fees that cannot increase at the time of settlement (listed on GFE)	-Origination charge -Charges for locking an interest rate, while the rate is locked -The adjusted origination charge, while the rate is locked -Transfer taxes
Fess that cannot increase by more than 10% at the time of settlement (listed on GFE)	-Settlement services, when the lender chooses the service provider -Lender required services, title services, and title services when the borrower uses a provider identified by the originator -Government recording charges
Fees that can change on a GFE at the time of Settlement	-Required services that a borrower can shop for -Title services and lender's title insurance -Owner's title insurance -Initial deposit for the borrower's escrow account -Daily interest charges -Homeowners insurance
If a LO charges a borrower an amount that wrongfully exceeds the amount on the GFE, what do they do?	-They have 30 days to cure the excess charge by reimbursing the excess amount to the borrower.
If a LO gives a revised GFE, they must	-Document the reasons for any changes -Retain the documents about the revision for at least 3 years after settlement
What are the "changed circumstances," in which a revised GFE can be issued?	-Acts of God, war, disaster, or other emergency -Information relied on that was used to provide the GFE is inaccurate (e.g. info about borrower's credit, amount of the loan, estimated value of property) -New information particular to the borrower that was no relied on in providing the GFE -Other circumstances particular to the borrower/transaction incudling boundary disputes, need for flood insurance, or environmental problems.
When must a revised GFE be given?	within 3 business days of the LO becoming aware of the new information
Settlement Cost Booklet Due Date	3 business days Only has to be given to one borrower (any one of them)
Purpose of Settlement Cost Booklet	-Explains the settlement process -Tells borrower they have the rights to negotiate terms of a loan -Reviews the protections offered by RESPA -Warns borrowers that giving false info on a loan app can lead to loss of home, poor credit rating, and even criminal prosecution if found for fraud
Booklet given to borrowers shopping for open line of credit	"When your home is on the line: What you should knw about Home Equity Line of Credit"
Mortgage Servicing Disclosure Statement Due Date	3 Business Days after application Only for first-lien mortgages
Mortgage Servicing Disclosure Statement contents	Whether the the loan servicing can be sold, assigned, trasnferred. Must include -Applicant's acknowledgement (all signatures) that they received the disclosure -Say they will be, (or there is a possibility) that they will sell the rights to service the loan -Statement for table funders hasn't serviced one in past 3 years, or for other linders the percent they did in last 3 years -Borrowers rights with regards to complaint resolution
Form/format for servicing disclosure statement	Found in Appendix of Regulation X
The HUD-1 Purpose...	-The actual costs of the settlement. -"Settlement Statement"
HUD-1 Due	-At the time of closing -Or borrower can request 1 business day prior
HUD-1A is..	Settlement statement for transactions not involving a seller
HUD-1 must include	The actually final dollar amount for the costs associated with settlement. (The GFE is just an ESTIMATE. Both forms have corresponding numbered fields for comparison)
Section 10 of RESPA includes (disclosures/statements)..	-Initial Escrow Statement -Annual Escrow Statement
Initial Escrow Statement due date	45 days after the account has been set up
Other requirements by Section 10 of RESPA	TO prevent overcharging for escrows... -Annual escrow account analysis -Limiting a cushion a borrower must maintain to 1/6 of total annual disbursement -Generally, refund any surplus over $50 within 30 days after analysis reveals a surplus
Servicing Disclosure Statement is covered under?	Section 6 of RESPA
Servicing Disclosure's Purpose?	-Provide notice of transfer of servicing of a loan -Provide protocol for any customer complaints with the servicer
Servicing Disclosure due date?	-15 days prior to the transfer -New servicer must also provide disclosure within 15 days after transfer -Cannot assess late fees for 60 days after transfer
How long must lenders retain RESPA disclosures?	5 years -Mortgage Servicing Disclosure statement -HUD1/1A -Affiliated Business Arrangement DIsclosures
What section of RESPA lists prohibited lender practice?	Section 8
Things prohibited by RESPA in Section 8	-Exchange of things of value for business referrals -Fee splitting -Unreasonable charges -Illegal "agreement or understanding"
Which of the following is true of the recording of mortgage documents? -Only the note is recorded. -Both the note and the mortgage are recorded. -Recording of a mortgage establishes its lien priority. -Recording provides actual notice of a document's existence.	A: Recording of a mortgage establishes its lien priority (The note is not recorded. The mortgage or trust deed is recorded in order to provide constructive (not actual) notice that the property is encumbered by a lien and establish the priority of that lien in relation to any other liens against the property. Constructive notice exists when information is available to an interested person. Actual notice occurs when a person actually knows the document exists and what its contents are.)
An applicant received TILA disclosures in person on Monday, May 1, and then received corrected disclosures that were personally delivered on Wednesday, May 3. The earliest the transaction may be consummated is -May 4 -May 6 -May 9 -May 3	A: May 9 (The applicant must receive early disclosures no later than the seventh business day before consummation, and he must receive corrected disclosures no later than three business days before consummation. The loan cannot be consummated until both the seven-business-day waiting period and the three-business-day waiting period have expired. Although Saturday, May 6, is the third business day after the applicant received the corrected disclosures, consummation may not occur before Tuesday, May 9, the seventh business day following delivery or mailing of the early disclosures)
Which law requires distribution of the CHARM booklet to certain mortgage loan applicants?	A: Truth in Lending Act
The Statement on Subprime Mortgage Lending provides that stated-income and reduced-documentation loans should be accepted only if there are documented mitigating factors. All of these could be considered mitigating factors EXCEPT -favorable payment performance. -a higher interest rate that will cover additional anticipated losses. -substantial verified and documented liquid reserves or assets. -stable financial condition.	A: Higher interest rate
ECOA allows a creditor to ask an applicant about which of the following for the purpose of deciding whether and how much credit to extend? -Number of dependents -Applicant's country of origin -Applicant's intention to have children -Applicant's sex	A: Number of dependents (applicant's sex and country of origin is acceptable only to gather information for government monitoring purposes. A lender is permitted to inquire about the number and ages of an applicant's dependents or about dependent-related financial obligations or expenditures, provided such information is requested without regard to any prohibited basis (e.g., with regard to calculating residual income for a VA loan).)
After a loan is sold in the secondary market, the originating lender may be required to repurchase the loan because of -a change in the index rate for an ARM. -an alienation clause. -a prepayment penalty. -a buyback agreement.	A: A buyback agreement (A loan that is sold in the secondary market may be subject to a buyback or repurchase agreement. This provides that the investor may return the loan to the originating lender if the borrowers default within a specified period of time, there is evidence of loan fraud, or the loan does not comply with regulatory requirements.)
Double selling is a form of mortgage fraud perpetrated by: - Real estate licensee -Mortgage broker or loan originator -Borrower -Mortgage lender	A: A mortgage broker or loan originator (double selling, a loan originator accepts the legitimate application and documents from a buyer and submits them to two lenders to have them each fully fund the loan. Neither the applicant nor the lenders know the application has been submitted to more than one lender.)
Under ECOA, a creditor includes -any person who makes a residential mortgage loan. -any person who regularly extends, renews or continues credit. -any person who makes a consumer loan. -a seller who finances the purchase of his home.	A: any person who regularly extends, renews or continues credit. (Under ECOA, a creditor is a person who, in the ordinary course of business, regularly participates in a credit decision, including setting the terms of the credit, whether it involves business credit or consumer credit. This includes any person who regularly extends, renews or continues credit (e.g., mortgage banker, bank, credit union, small loan and finance company, retail store, credit card company). This question applies to Module 9 - Fair and Equal Credit and Lending Laws.)
In a closed-end transaction secured by real property or a dwelling, the disclosed finance charge and any disclosure affected by the finance charge (e.g., the APR) are considered accurate if the finance charge is not understated by more than?	A: $100
May Bea is applying for a loan that is to be secured by her principal dwelling. The mortgage broker may do which of the following with regard to an appraisal of the property she is trying to purchase, which comes in $5,000 below her offering price? -Ask the appraiser to provide additional information about the basis for a valuation. -Imply to the appraiser that his current or future retention depends on the amount at which he values the dwelling. -Refuse to compensate the appraiser because he did not value the dwelling at the amount needed for loan approval. -Inform the appraiser of the minimum value needed for loan approval.	A: Ask the appraiser to provide additional information about the basis for a valuation.
Studies related to the principal-agent problem show that, when compared to similar borrowers who obtained loans through retail sources, borrowers of loans originated by brokers are -charged lower interest rates. -more likely to default on their loans -typically no different in any significant way. -less likely to prepay their loans.	A: More likely to default on their loans (The relative lack of consequences for a lender's agent subjects the mortgage delivery system to what economists and political scientists call the principal-agent problem. Evidence of this problem has been produced in studies showing that borrowers of loans originated by brokers are more likely to prepay faster and to default than similar borrowers who obtained loans through retail sources; and are charged a higher interest rate in order to compensate the lenders for the higher risk of default and prepayment created by the principal-agent problem. This question relates to the Ethics and Consumer Protection Module.)
In a loan transaction involving a mortgage broker, then -the lender is responsible for ascertaining whether the GFE has been provided. -the GFE must be provided by the lender. -the mortgage broker is responsible for ascertaining whether the GFE has been provided. -the GFE must be provided by the mortgage broker.	A: The lender is responsible for ascertaining whether the GFE has been provided (In the case of a loan transaction involving a mortgage broker, the GFE may be provided by either the lender or the mortgage broker. However, the lender is responsible for ascertaining whether the GFE has been provided. This question applies to Module 5 - Federal Real Estate Settlement Procedures Act Part 1.)
Which law requires a loan originator to provide a special information booklet to a borrower?	A: RESPA (RESPA requires that a lender or mortgage broker provide the borrower with a special information booklet prepared by HUD within three business days of receiving a mortgage loan application.)
The CSBS-AARMR Guidance recommends reducing payment shock by -lowering the fully indexed rate. -limiting the spread between any introductory interest rate and the fully indexed rate. -making the loan collateral-dependent. -raising the initial interest rate.	A: limiting the spread between any introductory interest rate and the fully indexed rate. (The CSBS-AARMR Guidance states that payment shock can be reduced if the spread between any introductory interest rate and the fully indexed rate is limited. This spread determines whether or not a loan balance has the potential to reach the negative amortization cap before the end of the initial payment option period (usually five years).)
Misrepresenting the amount or the terms of a prepayment penalty in an ad for a mortgage credit product	A: Is a violation of advertising regulations
Under the Gramm-Leach-Bliley Act a privacy notice may be delivered in any of the following ways EXCEPT -By posting on the institutions website -In person -By posting in the office -By mail	A: By posting in the office (The privacy notice may be delivered by mail, in person or by posting on the institution's website, provided the consumer acknowledges receipt of the notice.)
A money laundering device which consists of making cash deposits or withdrawals at dollar values of $10,000 or less, making them at multiple teller windows on a single banking day, or making them at multiple branch locations or by multiple individuals into a single account on a single day, is called	A: Structuring (Structuring is making cash deposits or withdrawals at dollar values of $10,000 or less, making them at multiple teller windows on a single banking day, or making them at multiple branch locations or by multiple individuals into a single account on a single day.)
A consumer who needs credit before the end of a TILA waiting period to meet a bona fide personal financial emergency may -modify or waive either the seven-business-day waiting period or the three-business-day waiting period. -modify or waive only the three-business-day waiting period -modify or waive only the seven-business-day waiting period -not modify or waive any waiting period.	A: Modify/waive either the seven or three day waiting period
Lucky Lenders grants Tota Loss mortgage loan, believing that the money for the down payment and closing costs was Tota's own. In fact, Tota had borrowed these funds from the seller, secured by a second mortgage which was not disclosed or recorded. This is a fraud for property scheme called?	A: Silent second (With the "silent second" scheme, a primary lender grants a loan to a borrower who the lender believes has invested his own money in the down payment and closing costs. However, the borrower has actually borrowed the needed funds from the seller secured by an undisclosed and unrecorded (i.e., silent) second mortgage.)
A GFE may be provided to an applicant by any of the following means EXCEPT -fax, email, or other electronic means if the applicant agrees. -oral recitation of the contents of the GFE followed by delivery of a written copy within five business days. -placing it in the mail. -hand delivery.	A: oral recitation of the contents of the GFE followed by delivery of a written copy within five business days. (A loan originator must provide a GFE to the applicant within three business days by hand delivery; mail; or fax, email or other electronic means if the applicant agrees.)
A mortgage lender affiliated with a title company offers its customers the title company's services for $100 below the cost of what the services would be if ordered directly. If the customer is not required to use that title company's services and is given an AfBA Disclosure Statement, who would be in violation of RESPA?	A: Neither (It is permissible for service providers to refer business to affiliated businesses, provided there are written disclosures to the borrower of the business relationship that make it clear that the borrower is not required to use the services of the affiliated business.)
Which of the following best describes negative amortization? -An increase in the loan balance due to failure to pay scheduled interest when due. -The result of principal and interest payments not covering all of the interest being charged -An increase in monthly payments due to an increase in the index rate for an ARM. -A decrease in property values to a level below the current loan balance.	A: The result of principal and interest payments not covering all of the interest being charged. (Negative amortization occurs when the amount owed increases, even when the borrower makes all required payments on time, because his monthly mortgage payments are not large enough to pay all of the interest charged.)
According to the Truth in Lending Act, a loan applicant does NOT have the right to rescind a loan transaction if his home is used to guarantee repayment and the loan -is a second mortgage. -is a home equity line of credit. -is used to purchase the home. -refinances the loan to buy the home.	A: Is used to the purchase the home (Under TILA, in certain loan transactions involving a borrower's principal residence as a guarantee for repayment, the borrower may rescind the transaction, for whatever reason, within a specified period of time. This right does not apply to a first mortgage in which the credit is used to buy the residence (or any extension or renegotiation of the mortgage). It does apply to second mortgages, home improvement loans, home equity loans or lines of credit, and refinancing. This question applies to Module 8 - Federal Truth in Lending Act Part 2.) *You can change your mind about taking money out of your house, but you can't change your kind about BUYING the house*
Dawn Surly-Light is a mortgage broker who has a 10% interest in the Escalade Escrow Company. If Dawn refers borrowers to Escalade, does she have to give them an AfBA disclosure according to RESPA?	A: Yes, because any interest over 1% in a settlement service provider necessitates an AfBA Disclosure.
An APR must be disclosed within what percentage of the actual APR in a regular transaction??	A: 1/8%
A creditor advertising a 30-year mortgage with a 10% down payment must include all of the following information in the same advertisement EXCEPT? -Estimate of settlement service charges -Amount or percentage of the down payment -Annual percentage rate -Terms of repayment	A: Estimate of the settlement service charges
The Truth in Lending Disclosure Statement is -a loan commitment. -a guarantee of finance charges. -an estimate of finance charges for a particular loan. -a loan agreement.	A: An estimate of finance charges for a particular loan (The Truth in Lending Disclosure Statement shows the finance charge. This is the dollar amount the credit will cost the borrower. It includes any charge payable directly or indirectly by the borrower and imposed directly or indirectly by the creditor for the extension of credit.)
On the GFE, the limit for negative amortization is expressed as -A dollar amount -A range -A percentage of the original loan amount -An annual percentage of the loan	A: A dollar amount (On the GFE, the limit for negative amortization must be expressed as a dollar amount rather than a percentage.)
In answering the question "Can your interest rate rise?" the loan originator must enter the maximum rate -by which it may rise over the life of the loan. -to which it can rise in one year. -to which it can rise over the life of the loan. -by which it may rise in one year.	A: to which it can rise over the life of the loan. (If the rate can rise, the loan originator must enter the maximum rate to which it can rise over the life of the loan. This is not the lifetime interest rate cap, the rate by which it may rise, but the sum of the initial rate plus any lifetime interest rate cap. )
Which of the following determines whether flood insurance is required for a particular property? -The appraiser -The title company -The lender -FEMA	A: The lender (FEMA produces the maps showing the floodplains, but it does not determine whether a particular property is in a floodplain. The lender is charged with the responsibility for making this determination. It may do so directly or pay for a third party to do the work. )
Loans that are not backed by government insurance or guarantees are called -conforming. -conventional. -A-grade. -prime.	A: Conventional
The Truth in Lending Act does all of the following EXCEPT -impose restrictions on home equity lines of credit. -enable consumers to compare costs of obtaining credit. -limit interest rates creditors may charge. -allow consumers to rescind certain loans.	A: Limit interest rates creditors may charge (TILA does not set interest rates. It does require disclosures to enable consumers to compare costs of credit offered, provide rescission rights for some transactions, and impose restrictions on home equity lines of credit.
The Federal Reserve directly controls which of the following interest rates? -Note -Par -Discount -Prime	A: Discount (Along with adjusting the federal funds rate at which members can borrow from each other, the Federal Reserve can adjust the discount rate, which is the rate it charges members to borrow money. Lenders select their own prime rates, which are the rates they charge their best borrowers. They also set their own par rates, which are the rates at which no discount points are charged. The note rate is the rate of interest specified for a particular loan in the mortgage note.)
Requesting a consumer to sign a waiver of his rights under Regulation N -is prohibited. -requires that the waiver be notarized. -requires the licensee to provide the consumer with a written explanation of these rights. -is permitted with no further requirements.	A: Is prohibited
Under the rules for the Do-Not-Call Registry, a mortgage broker may make an unsolicited call to a client or customer with whom he has established a business relationship for up to how many months after his last transaction?	18
A mortgage loan originator can be asked to provide loan prequalification or preapproval. Which of the following is true regarding these activities? -Preapproval provides assurance that the borrower can obtain a loan. -Preapproval is granted only after a property has been appraised and inspected. -Prequalification indicates that the buyer is qualified for the loan needed to purchase the identified property. -Preapproval is a letter provided after analysis of the applicant's credit, including verification of income and assets.	A: Preapproval is a letter provided after analysis of the applicant's credit, including verification of income and assets. (Prequalification is an estimate of the loan amount for which the buyer can qualify based on his income under the lender's standards. The preapproval letter is provided after analysis of the applicant's credit. However, prequalification provides no assurance that the borrower can obtain a loan, as it is subject to such conditions as the applicant's financial condition and creditworthiness not changing significantly before closing, a property being found of a value to support the loan, and a title report indicating marketable title.)
What informs a customer about his rights under the Truth in Lending Act to cancel a loan?	A: Notice of right to rescend
The document that includes all borrower information is - The HUD-1 -The 1003 -The 1004 -The 1210	A: 1003
Excessive rates and fees are considered predatory when -the borrower qualifies for lower rates and/or fees offered by the lender. -the borrower might qualify for lower rates and/or fees offered by other lenders. -they exceed 1% of the loan amount, -they are based on risk-based pricing.	A: The borrower qualifies for lower rates and/or fees offered by the lender ( Although risk-based pricing may justify higher rates and fees, charging excessive rates to a borrower who qualifies for lower rates and/or fees offered by the lender is considered predatory behavior. Typical loans may have upfront fees around 1 percent of the loan amount; predatory loans often have fees in excess of 5 percent of the loan amount even though such fees do not have anything to do with the credit risk of the borrower. This question relates to the Ethics and Consumer Protection Module.)
Red flags regarding insufficient borrower income include new housing expense which exceeds ___ percent of current housing expense.	A: A: 150
One purpose of Title I of the Consumer Credit Protection Act is to ensure that consumers -receive meaningful disclosures of credit terms. -are not overcharged. -are treated equally in the processing of their application. -are provided with an estimate of settlement costs prior to closing.	A: Receive meaningful disclosures of credit terms (are provided with an estimate of settlement costs prior to closing.)
In regard to customers opening bank accounts, Section 326 of the USA Patriot Act requires -that customer identities be verified when opening bank accounts. -that the identities of these borrowers be reported monthly to federal authorities. -hat only U.S. citizens be permitted to open bank accounts -that customers be permitted to protect the privacy of identity when opening an account.	A: that customer identities be verified when opening bank accounts. (Section 326 of the USA Patriot Act establishes requirements for verifying customer identities at the time an account is opened. )
An ARM has a current rate of 4.50%. It has a 1/5 cap and a margin of 2%. If the current Treasury bill rate of 3-1/8% is its index rate, what would the new ARM rate be when it is adjusted?	A: 5-1/8%
The Truth in Lending Act is within which law?	A: Consumer Credit Protection Act (The Truth in Lending Act is Title I of the Consumer Credit Protection Act. It was enacted in 1968 in order to promote the informed use of credit.)
Under the Bank Secrecy Act, a Currency Transaction Report which is not filed electronically must be filed within __ days following the day on which the reportable transaction occurred.	A: 15
Allowed variance of comps	20%
FNMA/FHLMC requirements for investment properties	6 months PITI in reserves
Hazard insurance cover minimum for FNMA	100%