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75 Cards in this Set
- Front
- Back
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What percentage ofdown payment is required on USDA loans?
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Zero, or 0%. |
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What is a temporarybuy down?
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Borrower places funds in escrow in an amount sufficient tooffset the monthly payment required by the terms of the loan for the desiredperiod. These funds temporarily reduce the payment amount, the notes ratesdoesn’t change during the buydown period. |
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What are Fannie Maeand Freddie Mac?
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Government Sponsored Enterprises, which are NOT gov’tagencies but have the implied support of the gov’t, they purchase pools ofloans that conform to their guidelines, and sell mortgage-backed securities. |
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Instead of mortgage insurance,every VA (and USDA) loan includes what type of fee?
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Funding fee. |
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FHA down paymentfunds can be from the borrower’s own funds, gift funds, or housing authoritygrants. TRUE OR FALSE?
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True. |
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What is thedifference between a mortgage broker and a mortgage banker?
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Broker arrange loans through a banker or lender and brokersdon’t fund the loans. Bankers originate and fund loans in their own name forresale in the secondary market. |
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At what LTV does theHomeownership Protection Act require the PMI is automatically discounted on aloan by the lender?
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78% LTV. A homeownercan request the lender from PMI when the LTV reaches 80% but PMI is notautomatically dropped til 78% (22% equity position).
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What is thedifference between PMI and MIP?
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PMI is Private MortgageInsurance, and is required by lenders on conventional loans where the LTV ismore than 80%. MIP is Mortgage Insurance Premium and is required on FHA loansregardless of the LTV.
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What does the acronymPUD represent?
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Planned UnitDevelopment. Most commonly a subdivision having common areas reserved for theuse of some or all of the property owners in the development.
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What is a Lock-InAgreement?
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An agreement made by a lender to hold(lock-in) a specific rate and a specified number or points while processing anapplicant’s loan.
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What is jointtenancy?
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Equal and undividedownership of a property by 2 or more individuals, taking possession togetherand acquiring title at the same time. When one co-owner dies, their interestgoes to the other co-owners.
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What is a jumbo loan?
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A loan that exceedsthe maximum loan limits backed by FNMA and FHLMC (loans in excess of $417,000).
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What is thedifference between the primary and secondary mortgage lending market?
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Primary is made up of all activities involved in theorigination and closing of loans. The secondary is where previously made loansare bundled and sold to investors.
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What is a floatagreement?
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A type of lock-inagreement that allows the interest rate or points to rise and fall with themarket while processing the loan. You may lock in rates and float points,lenders may agree to float both.
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What is a subprime loan? |
Loans made to borrowers whose debt to income ratio (DTI) orcredit characteristic do not meet the guidelines of Fannie Mae or Freddie Mac. |
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To meet the purchaseguidelines of FNMA or FHLMC, what type of insurance must a borrower havepurchased if the LTV exceeds 80%?
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PMI - PrivateMortgage Insurance.
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When identifyingproperty rights, what is the difference between Fee Simple and Leasehold?
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“Fee Simple” impliesthat the property being purchased includes the improvements and the land.“Leasehold” implies the property being purchased only includes improvements.The lands it sits on would be leased.
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What does the PITIstand for?
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Principal, Interest,Taxes and Insurance. (PITI).
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Which mortgage loandocument contains the borrower’s contractual promise to pay?
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Note (or promissorynote). Neither a mortgage or a deed of trust contains a contractual promise topay.
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The VA Funding Fee isnot charged to eligible veterans or their spouses, or spouses of veterans whodied in service (TRUE or FALSE)?
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True |
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What is an Index?
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A published interest rate that is used as thebasis upon which the note rate of an ARM will adjust. Typical indices areTreasury Bill Index (T-BILL), the 11thDistrict Cost of Sunday Indexes (COFI), and the London Interbank Offered Rate(LIBOR).
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What is a permanentbuy-down?
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The use of discountpoints to lower the rate of interest for the full term of loan.
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What is thedifference between a judicial foreclosure and a non-judicial foreclosure?
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Judicial: The mortgage includes a clause thatrequires the lender to file a lawsuit, requesting the court to enter an orderto foreclosure. Non-judicial: the deed of trust includes a power of sale clauseallowing the lender to begin foreclosure without filing suit.
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What is the financecharge?
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A uniform measurementof the cost of a loan expressed as a dollar amount.
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What is aninterest-only loan?
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A loan that requires only interest payments.At the end of the loan, the borrower essentially owes a balloon payment of theentire principal of the loan.
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What is a sellercarry-back?
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A purchasetransaction, often involving an assumable mortgage in which the party sellingthe property provides all or part of the financing.
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What is a short sale?
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When the lender agrees to a reduced payoff ona loan when the subject property is sold.
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Can a VA loan beassumed?
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Yes, VA may beassumable. The buyer must meet credit qualifications, but doesn’t have to be aveteran.
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What is the noterate?
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The stated interest rate on a mortgage or loan agreement. |
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What are ServiceRelease Premiums?
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Fees which lenders may receive for selling or transferringtheir mortgage loan servicing rights. |
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A Second Mortgage isalso known as a subordinate lien (TRUE or FALSE)?
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True, aka as a junior mortgage. |
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What is the primarydifference between the Good Faith Estimate (GFE) and the HUD-1 SettlementStatement?
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GFE is an estimate of cost at closing and the HUD-1 is thecost at closing. |
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What is a Home EquityConversion Mortgage (HECM)?
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Allows an older homeowner to use the equity intheir home to receive fixed monthly payments, line of credit or a combinationof payments and credit line. Borrowers must complete counseling with aHUD-approved HECM counselor in order to obtain the loan.
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What factor does notaffect the money received in a HECM loan?
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Age of property.
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Best appraisalapproach to use when determining value of a rental property?
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Income approach
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What issecuritization?
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The bundling ofmortgage loans to resell to investors, they become mortgage-backed securities(MBSs) and are sold on the secondary market.
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What are ServiceRelease Premiums?
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The revenue earned from the resell of pools of loans toinvestors. |
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LIBOR stands for?
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London InterbankOffered Rate.
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Margin for ARMs areset by:
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The investor/lender.
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A borrower has given$10,000 as earnest money on a home he is purchasing for $375,000. In addition,he is going to put down $78,000 from the sale of his current home, which will alsogo towards closing costs. What is the percentage of the down payment? 23%,which is the down payment and closing as cash to closing.
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(total downpaymentamount 88,000 divided by total loan amount 375000 equals 0.23, or 23%).
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A man has applied fora loan and his home appraised for $225,000. He is talking out a loan for$165,150 and has agreed to pay 1 discount point on the loan and a 2.5% brokerfee, what is the total loan amount he will pay in discount and broker fees?
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$5,780.25.
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A homeowner wants to refinancehis home, which appraised for $300,000. He has a HELOC for $40,000 with abalance of $25,000, a first mortgage with a balance of $210,000, what is theLTV, CLTV, and TLTV?
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70% LTV; 78% CLTV;83% LTV
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What type of loan isopen-ended?
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HELOC.
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Which lien takesprecedence on title?
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The mortgage recorded first. |
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What type of lien haspriority over all others?
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Taxes. |
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Who earns SRP?
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Lender.
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Margins on ARMS arenot subject to change during the entire term of the loan (TRUE or FALSE)?
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True.
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What information isnot provided on the Notice of Adverse Action Letter?
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Credit Score.
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What term isassociated with transferring title?
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Conveyance.
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What term isassociated with a lender releasing their lien upon full payment?
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Reconveyance.
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What document is usedto release a mortgage lien?
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Satisfaction of Mortgage. |
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What equity positionis PMI removed automatically?
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22%
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What law prohibitskickbacks and referral fees?
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RESPA.
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Under whatcircumstance is it okay to discriminate based on age?
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Too young to enter a legally binding contract. |
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What type of loan hasa fixed rate of 6.5% for the first five years and 7.5% for the remaining 25years?
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Variable rate. |
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How long is a LoanEstimate good from issuance?
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10 days.
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What is a permanentchange in a borrower's loan terms in response to their long term inability topay known as?
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Loan modification.
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What loss mitigationstrategy is a temporary reduction of a borrower's payment while they pay pastdue amounts?
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Forbearance.
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When does an ABA formhave to given to a client?
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At the time thereferral is made by the referring party.
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How long does the MIPstay on an FHA where a borrower puts less than 10% down?
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Lifetime of the loan. |
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What would keepproperty from transferring free and clear?
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Failing to pay off a loan (lien, aka a financialencumbrance--be careful, this question is tricky. It’s “failure to pay off aloan”). |
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What AutomatedUnderwriting System (AUS) does FHLMC (Freddie Mac) use?
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LP.
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What type of loancannot be repurchased?
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No bid.
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In order for a loanto fall under the Safe Harbor rules of a Qualified Mortgage, what is themaximum allowed debt ratio?
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43%.
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Under the QM rules,lenders must use what rate to determine if a borrower meets the ability torepay rules?
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Fully Indexed Rate or Start Rate, whichever islower.
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Lenders must notifyborrowers of their right to receive a copy of the appraisal within?
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3 days of application (and provide promptly,but no later than, 3 days prior to closing).
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What is the maximumnet adjustment allowed on the appraisal?
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15%.
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What is the fullyIndexed rate on a 3/1 buydown with a start rate of 4%?
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7%. |
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325 BPS translates towhat interest rate?
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3.25%.
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What amount doesFlood Insurance cover?
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100% of structure.
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What is the minimumamount of flood insurance required?
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80% of dwelling.
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A for-profit entityoffering to assist a borrower with a loan modification, short sale, orprincipal reduction is known as? |
MARS (Mortgage Assistance Relief Service).
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When can a MARScollect payment for service?
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After the modification is complete.
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Title X of theDodd-Frank Act created which new regulatory entity?
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CFPB (Consumer Financial Protection Bureau). |
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What percentage of acompany must an applicant own in order to request their tax returns forverification of income?
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25% or more. |
