Compucram Missed Test Questions

Front 1

An adjustable rate loan's rate is;

Back 1

tied to a specific index. Adjustable rate mortgages permit the lender to periodically adjust the interest rate based on a predetermined index to reflect fluctuations in the cost of money.

Front 2

In order to ensure a loan closes, a mortgage loan originator conceals the fact that the down payment is made with borrowed funds. This could be considered;

Back 2

actual fraud. If a broker decided to ignore a critical fact, he could be accused of actual fraud.

Front 3

The term 'Par rate" is best described as;

Back 3

requires no discount points and pays no YSP. The par rate has no cost to the borrower and pays no rebate to the broker.

Front 4

Which is NOT under the responsibility of and enforced by the Consumer Financial Protection Bureau CFPB;

Back 4

Federal Fair Housing Act. The Federal Fair Housing Act is overseen by the Department of Housing and Urban Development (HUD).

Front 5

Which type of entity originates mortgages using a line of credit, WITHOUT any depositors funds, and services the loans until a pool of loans can be sold?

Back 5

Mortgage Banker. Mortgage bankers service their loans until a pool of acceptable size is reached; they then release servicing to their investors. Mortgage bankers do NOT have depositors.

Front 6

The appraiser determines the home's value based on differences between the home and recent;

Back 6

sold homes in the area.

Front 7

UFMIP on an FHA loan is;

Back 7

1.75% of the base loan amount.

Front 8

RESPA does NOT require the lender to disclose;

Back 8

APR, RESPA required disclosures are GFE and HUD-1, the Mortgage Servicing Disclosure, the Initial and Annual Escrow Statements, and the AfBA Disclosure.

Front 9

A gift letter for down payment money states what to the lender?

Back 9

The gift is not expected to be paid. If an applicant lacks the necessary funds to close a transaction, a gift of the required amount from relatives is usually acceptable to the underwriter. The gift letter, signed by the donor, should clearly state that the money represents a gift and does not have to be repaid.

Front 10

Which act transferred responsibility for rulemaking and enforcement of identity theft red flag rules to the SEC and CFTC for the entities they regulate.

Back 10

Dodd-Frank Act. On July 21, 2011, the Dodd-Frank Act transferred responsibility fro identity theft red flag rules and guidelines to the SEC and CFTC for the entities they regulate.

Front 11

The state regulatory authority may suspend a loan originator license if the licensee has;

Back 11

Failed to remit his renewal fee by the annual deadline. Failing to pay the renewal fees owed by the deadline would constitute grounds for suspending a MLO's license.

Front 12

A loan originator who provides false information on a loan application regarding a borrowers receipt of disability income is;

Back 12

misrepresenting his client.

Front 13

A document that conveys ownership of real property from the grantor to the grantee is known as a;

Back 13

deed.

Front 14

The annual percentage rate APR is also referred to as;

Back 14

effective rate of interest.

Front 15

A mortgage servicer must wait __ days before she is allowed to file for foreclosure or trustee's sale, if the borrower has not submitted an application for assistance.

Back 15

120.

Front 16

Actual charges at settlement listed on the HUD-1 Statement can increase more than 10% from the estimates shown on the GFE for;

Back 16

homeowner's insurance. The charge for homeowner's insurance shown in Block 11 of the GFE is not subject to a tolerance level for change.

Front 17

In a construction loan, which two measures are used to determine the final loan size?

Back 17

Loan to cost and loan to value. In a construction loan, two measures of the real estate will be used to determine the final loan size: Loan to value and loan to cost (as well as income, credit, and asset verification,

Front 18

If the APR is off by more than ____ from the initial GFE, the TIL Statement must be re-disclosed to the borrower.

Back 18

.125%. If the APR increases more than .125% from the initial disclosed APR, the TIL statement must be re-disclosed.

Front 19

What is the maximum LTV on a Rural Development loan?

Back 19

100%.

Front 20

The Federal National Mortgage Association Fannie Mae is designed to increase;

Back 20

availability of money to primary lenders

Front 21

When qualifying a borrower for a loan, what type of loan requires the family size be considered in calculating maximum allowable monthly payment?

Back 21

VA. VA requires the reporting of residual income based on family size. The larger the number of family members, the more money must be left over for typical expenses other than debt repayment.

Front 22

The term that describes a second mortgage holder agreeing to accept second position in a refinance transaction is;

Back 22

subordination. Subordination is the process of a second lien holder moving back into second position in a refinance.

Front 23

If a borrower does not have the required amount to pay closing fees, a mortgage loan originator may lawfully;

Back 23

lower the fee amount by forfeiting a portion of the broker's commission.

Front 24

Under the SAFE Act, each state has authority to;

Back 24

write state specific rules or regulations or adopt procedures related to licensing of persons covered under this Act.

Front 25

An FHA buyer may;

Back 25

use a gift for the entire down payment. FHA loans are not just for low income borrowers. They can be used to purchase a one-to-four family residence. FHA loans do require a down payment but allow borrower's to use a gift to cover that.

Front 26

What term is used to verify the payment history for a current home loan?

Back 26

VOM. The Verification of Mortgage form.

Front 27

Which law requires a loan servicer to notify a borrower before the servicing of that loan is transferred to someone else?

Back 27

RESPA. RESPA requires a Servicing Transfer Statement to be sent to the consumer if the loan servicer sells or assigns the servicing rights of the loan to another service provider.

Front 28

What provision in a mortgage enabling the lender to demand full repayment if the borrower sells the mortgaged property or partial interest in a mortgaged property?

Back 28

Due on Sale Clause. The lender has a right to demand full payment on a property in the event of the sale of that property. The clause that permits this is known as due on sale clause. Also referred to as Alienation Clause.

Front 29

Title insurance protects both a title and the process of the closing against risk of defects, forgeries, and errors that occur during what time period?

Back 29

From the time the land was first registered to the time of closing.

Front 30

A reduction in a property's value resulting from a decline in physical condition (sometimes caused by the weather or by ordinary wear and tear) is called;

Back 30

physical deterioration. Physical deterioration is caused by a combination of life of the property and normal wear and tear. It can be either curable or incurable.

Front 31

What is the name of a common USDA loan program?

Back 31

Section 502 loans. These loan programs may be used to construct, purchase, renovate, or even move an existing house.

Front 32

For which situation would the sales comparison approach be best?

Back 32

A condo in a complex with high turnover. The sales comparison approach is not suitable for special purpose properties and other unusual or unique properties for which there are not recent sale data to analyze.

Front 33

Which type of survey marks out the driveways, walks, and foundation?

Back 33

Construction. A construction survey marks out the driveways, walks, and foundation for the various contractors that will do the actual building.

Front 34

Which organization helps to develop model legislation applicable to the administration and regulation of mortgage lending, servicing, and brokering?

Back 34

AARMR. One of the primary goals of the American Association of Residential Mortgage Regulators (AARMR) is to promote a better understanding of mortgage regulation, including the development of model legislation.

Front 35

The Red Flags Rule is part of the;

Back 35

Fair and Accurate Credit Transactions Act. Red Flags Rule was based on section 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003.

Front 36

Which law was enacted to eliminate requiring the use of certain third party settlement providers as a condition of getting a loan?

Back 36

RESPA. RESPA was intended to help consumers become better shoppers for settlement services and to eliminate unnecessary increases in the costs of certain settlement services due to kickbacks and referral fees.

Front 37

A loan originator who discovers in the process of verification that a borrower has underreported his current debt obligations should refuse to process the loan based on the;

Back 37

Ability to Repay Rule. According to the ability to repay rule, a creditor shall not make a loan unless the creditor makes a reasonable and good faith determination at or before consummation that the consumer will have a reasonable ability to repay the loan according to the terms.

Front 38

An objective of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 is to;

Back 38

Eliminate unfair practices relating to compensation paid to mortgage loan originators. The Federal Reserve Board crafted a ruling, the Federal Reserve Loan Originator Compensation Rule, which, as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, set standards to prevent unfair practices by mortgage loan originators related to compensation paid by borrowers.