Erin's Safe Test Flash Cards 07/23 2/5

Front 1

Always include the APR in an advertisement when________?

Back 1

A rate is present or quoted.

Front 2

How long does anumber stay on the DNR?

Back 2

Permanently unlessconsumer removes number or the number is assigned to another person.

Front 3

Who takes theinitiative to place or remove a phone number on the DNR?

Back 3

The consumer.

Front 4

What are the wordsbehind SAFE?

Back 4

Secure and Fair Enforcement

Front 5

What federal Actrequires creditors to allow consumers to OPT OUT of the sale of theirnon-public information (NPI)?

Back 5

Gramm-Leach BlileyAct.

Front 6

What federal Actrequires that creditors create a policy to safeguard consumers NPI?

Back 6

Gramm-Leach Bliley Act.

Front 7

Under the SAFE Act,how many hours or education are required for pre-licensing and continuingeducation?

Back 7

20 hours, and 8hours.

Front 8

Which action is aviolation of the GLBA?

Back 8

Obtaining customer information by false pretenses (known aspre-texting).

Front 9

How often can an MLbe investigated by authorities?

Back 9

As often asnecessary.

Front 10

The SAFE ACT definesa nontraditional mortgage as?

Back 10

Anything other than a 30 year fixed rate loan.

Front 11

What is the waitingperiod for a person who seeks to license as an MLO that had a prior felonypardoned?

Back 11

No waiting period.

Front 12

Felony convictions inthe last ___ years would keep a person from being able to obtain an MLOlicense?

Back 12

7 years.

Front 13

MLO licensees whoteach an approved NBMLS course get ___ hours CE credit for every ___ they teach?

Back 13

2 for 1.

Front 14

Of the 8 hours annualCE needed to renew an MLO’s license, how many hours are devoted to ethics andfraud?

Back 14

2 hours.

Front 15

The NMLS acceptsapplications for licensing for all 50 states and US-occupied territories butdoes not have the authority ______ or _____ a license.

Back 15

Approve or Deny.

Front 16

What is the maximumstate regulatory civil penalty that can be levied?

Back 16

$25,000.

Front 17

Offering orsoliciting applications, negotiating rates and terms with borrowers are all jobfunctions of what type of person?

Back 17

MLO (Mortgage Loan Originators)

Front 18

MLO’s that work for adepository are defined as?

Back 18

Federally registered MLOs.

Front 19

MLO’s that work for alicensed lender or broker are defined as?

Back 19

State-licensed MLOs.

Front 20

What is used topermanently identify an MLO?

Back 20

NMLS UniqueIdentifier.

Front 21

Licensed MLO’s maywork for how many entities?

Back 21

Only 1.

Front 22

Contract processorsand UWs licensed as an MLO may work for how many companies?

Back 22

Unlimited.

Front 23

A business card isconsidered an ___________ according to the SAFE Act?

Back 23

Advertisement.

Front 24

MLOs must retake theSAFE exam if they fail to maintain a license for a period of _____ years?

Back 24

5 years.

Front 25

How long must an MLOwait to retake a SAFE exam if they fail?

Back 25

30 days in between each failed attempt.

Front 26

How long must an MLOwait to retake the SAFE exam if they fail a third time?

Back 26

6 months.

Front 27

What prohibitedpractice is defined as requiring a borrower to sign an exclusive contract forservices where the MLO is paid whether or not the loan is found (funded?)?

Back 27

Best Efforts Contract.

Front 28

What is defined as advertising a lower rate thanwhat is actually available?

Back 28

Bait and Switch.

Front 29

Reports of conditionmust be submitted to the NMLS on an _______ basis?

Back 29

Annual.

Front 30

Licenses expireannually on what date?

Back 30

December 31st.

Front 31

Mortgage lenders______ loans while Mortgage Brokers _____ loans?

Back 31

Make/Arrange.

Front 32

The CSBS and AARMRown the State Regulatory Registry (SRR) which operates which state licensingsystem?

Back 32

NMLS/R.

Front 33

What is thedifference between the Loan Estimate and the Closing Disclosure?

Back 33

The Loan Estimate provides estimated cost to close and theClosing Disclosure shows the actual costs at closing.

Front 34

What is a loanmodification?

Back 34

A permanent change inthe terms of a loan (either term, interest rate, or both) in response to aborrower’s long-term inability to make payments.

Front 35

What is a fully amortizingloan?

Back 35

A loan on which thepayments cover the principal and interest required to pay the loan balance offthe schedule.

Front 36

What is a balloonmortgage?

Back 36

Mortgage thatrequires the borrower to make one large payment at the end of the loan term.This payment may also be referred to as a “call”, “demand”, or “bullet”.

Front 37

Is the margin on anARM a fixed number or is it subject to change during the term of the loan?

Back 37

The margin in an ARMis fixed (Index + Margin = New Rate).

Front 38

What is an adjustmentperiod?

Back 38

The agreed-uponadjustment frequency established in the ARM.

Front 39

What is a lifetimerate cap?

Back 39

A limit on the amountan interest rate can change over the life of an ARM (aka rate ceiling).

Front 40

COFI, LIBOR, T-Billare all examples of?

Back 40

An Index usually associated with an ARM.

Front 41

What is theconforming loan limit for a one-family property?

Back 41

$417,000 (limit goes up to $625,500 for high-cost areas).

Front 42

What is a periodicrate cap?

Back 42

A limit on the amountthat the interest rate can change during any adjustment periods.

Front 43

What is an initialrate cap?

Back 43

A limit on the amountthat the interest rate can increase during the first adjustment period for anARM.

Front 44

What is negativeamortization?

Back 44

A monthly mortgagepayment is not large enough to pay all of the interest due on the mortgage,therefore the balance is not reduced, also known as deferred interest.

Front 45

In a bi-weeklymortgage payment plan, how many extra mortgage payments are made every year?

Back 45

One extra payment. Bi-weekly collects payments every twoweeks resulting in 13 payments.

Front 46

What is a“conforming” loan?

Back 46

A conventional loan(one NOT insured by the gov’t) that meets the guidelines for purchaseestablished by FNMA or FHLMC.

Front 47

What is a variablerate mortgage?

Back 47

A mortgage with aninterest rate that may change one or more times during the life of the loan.

Front 48

What is anon-conforming loan?

Back 48

A conventional loan that does not meet the FNMA or FHLMCguidelines.

Front 49

Whichnon-conventional loan has a funding fee?

Back 49

VA has a funding fee.The fee ranges from .5 - 3.3 but is waived for a qualifying disabled veteran.Remember, a non-conventional loan is one that IS insured by the federal gov’t.

Front 50

What is the maximumloan guaranty from the VA?

Back 50

The maximum VA homeloan guarantee is 25% of conforming VA home loan amount.

Front 51

What is a paymentcap?

Back 51

A limit on the amountthe payment can change during one adjustment period on an ARM.

Front 52

What is aconventional loan?

Back 52

A loan NOT insured bythe gov’t (NOT FHA, VA, or USDA).

Front 53

What is the maximumentitlement amount for a veteran?

Back 53

4 times the amountlisted on the COE.

Front 54

Does the FHA (FederalHousing Administration) make loans?

Back 54

NO. FHA and VA do not make loans. FHA insures, VAguarantees.

Front 55

Whichnon-conventional loan is made for the purpose of assisting low-income borrowerspurchasing homes in rural areas?

Back 55

USDA (US. Departmentof Agriculture) aka Guaranteed Rural Housing Loans.

Front 56

The Dept of VeteransAffairs requires each veteran to obtain a Certificate of Eligibility? (True orFalse).

Back 56

True, aka the COE.

Front 57

Can a borrower get anFHA insured loan for a condo?

Back 57

Yes, in addition to the primary fixed rebateprogram for the purchase or refinance of 1-4 family dwellings, FHA offersprograms for the purchase of a condo.

Front 58

What is thedifference between a nonconforming loan and a non-conventional loan?

Back 58

Non-conforming loans are govt insured loans whilenon-conforming loans are conventional loans (non-govt’s loans) that don’t meetFNMA and FHLMC UW guidelines.

Front 59

What is the timeframe a borrower has to take possession and move into the house after closing?

Back 59

60 days.

Front 60

FNMA and FHLMC allowborrowers to obtain “Seller Financing” in conforming loan transactions? (TRUEor FALSE)?

Back 60

True, FNMA and FHLMCdo allow borrowers to obtain seller financing, also known as concessions.Seller concessions are limited to 6% with a buyer paying 10% or higher downpayment or limited to 3% for less than 10% down.

Front 61

Define a “sellercarry-back”?

Back 61

A purchasetransaction, often involving an assumable mortgage, in which the party sellingthe property provides all or part of the financing--also known as OwnerFinancing.

Front 62

Define a “FullyIndexed Rate”?

Back 62

In an ARM, theinterest rate indicated by adding the current index value and the margin.

Front 63

Define “amortization”?

Back 63

Periodic payments ona loan requiring payment of enough principal and interest to ensure completerepayment of the loan by the end of the loan term.

Front 64

What charges areNEVER included when calculating Finance Charges?

Back 64

Examples of somestandard items that are never included in finance charges are: charges payablein comparable cash transactions, such as fees for appraisals, documentpreparation, title insurance, pest inspections, seller’s points and membershipfees.

Front 65

What charges areALWAYS included when calculating Finance Charges?

Back 65

Transaction fees, origination fees, consumer points, andbroker fees.

Front 66

Define “RateDiscount”?

Back 66

Also known as a“permanent buydown”, a rate discount allows the borrower to pay a discountpoint(s) to permanently reduce the rate of the mortgage.

Front 67

Define “point”?

Back 67

1% of the loan amountis equal to a point. Example, 1 point on a $100,00 loan would be equal to$1,000 and 3 points would be equal to $3,000.

Front 68

When must theaffiliated business arrangement disclosure be given to the borrower?

Back 68

Before or at the time or the referral by the referringparty.

Front 69

Define “buy down”?

Back 69

The paying of fees(buying) to reduce (down) the payments on a mortgage and qualifying for alarger loan. A buy down may be permanent or temporary.

Front 70

Define “creditor”?

Back 70

A person or entity to whom an obligation is owed, such as aloan.

Front 71

What is thedifference between a Finance Charge and the Annual Percentage Rate?

Back 71

A Finance Charge is auniform measurement of the cost of a loan expressed in a dollar amount and anAPR is a measurement of the cost of a loan, including interest and financedcosts of closing, expressed in a yearly percentage.

Front 72

Mortgage brokers feesare always included in the finance charge?

Back 72

(TRUE OR FALSE) TRUE

Front 73

A 10-year-oldproperty is being sold. What is the best approach for an appraiser to evaluatethe property?

Back 73

Market approach isalso known as Sales Comparison Approach or Market Data Approach.

Front 74

Which type ofautomated UWs do Fannie Mae and Freddie Mac use?

Back 74

FNMA uses DesktopUnderwriter (DU) and FHMLC uses Loan Prospector (LP).

Front 75

What is the “worstcase scenario” for an ARM?

Back 75

The worst casescenario is the highest interest rate the loan could produce over the life ofthe loan based on the interest rate and adjustments caps.

Front 76

What is a COFI loan?

Back 76

an adjustable ratemortgage (ARM) that uses the Cost of Funds Index for interest rate adjustments.

Front 77

What is a fullyindexed rate?

Back 77

Also known as theFully Indexed Accrual Rate, or FIAR. This is the “real;” or “true” interestrate of an ARM. ARMS often have introductory or temporarily discounted rates.The fully indexed rate is the result of adding the index and margin.

Front 78

What is “tenancy bythe entirety”?

Back 78

One of the ways to own property by more than one person(concurrent ownership). The co-owners must be husband and wife, both of whomown the whole property. When one of the two dies, their interest goes to thesurviving spouse.