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60 Cards in this Set
- Front
- Back
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According to TILA, a variation of up to what amount is permitted for the annual percentage rate in a regular fixed-rate mortgage transaction? |
0.25% 0.5% 0.125% .75% The answer is 0.125%. Under TILA and Regulation Z , the APR is considered accurate generally if it is not more than one eighth of one percentage point (0.125%) above or below the APR determined in accordance with legal requirements (i.e., in accordance with the actuarial method or the United States Rule method), or in an irregular transaction, if it is not more than one quarter or one percentage point (0.25%) above or below the annual percentage rate determined in accordance with legal requirements. |
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A deed of trust requires that borrowers obtaining owner-occupied loans occupy the property within how many days? |
30 days 90 days 45 days 60 days The answer is 60 days. Under most deeds of trust, including most FHA and VA loans, a borrower who intends to occupy the property as his or her primary residence must move in within 60 days after closing |
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If a borrower waives the right to receive a copy of an appraisal: |
They must receive a copy within 30 days of closing The lender is never required to give the borrower a copy of the appraisal They must receive a copy seven days before closing They must receive a copy at or before consummation The answer is they must receive a copy at or before consummation. Under ECOA, a creditor is required to provide an applicant with a copy of all appraisals and other written valuations developed in connection with an application for credit that is to be secured by a first lien on a dwelling. A copy of each appraisal or other written valuation must be provided the earlier of promptly upon completion or three business days prior to consummation of the transaction for closed-end credit or account opening for open-end credit. An applicant may waive the timing requirement and agree to receive a copy at or before consummation or account opening |
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Which of the following fees would NOT be used in calculating the APR? |
Closing fee Underwriting fee Mortgage insurance Title insurance The answer is title insurance. The annual percentage rate (APR) represents the relationship of the total finance charge to the total amount financed, as a yearly rate. It is not the same as the nominal rate (i.e., the interest rate shown in the note), as it includes all finance charges, not just interest. Among other charges, finance charges include points, loan fees, and mortgage insurance premiums, but not title insurance premiums |
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Which of the following fees would NOT be used in calculating the APR? |
Closing fee Underwriting fee Mortgage insurance Title insurance The answer is title insurance. The annual percentage rate (APR) represents the relationship of the total finance charge to the total amount financed, as a yearly rate. It is not the same as the nominal rate (i.e., the interest rate shown in the note), as it includes all finance charges, not just interest. Among other charges, finance charges include points, loan fees, and mortgage insurance premiums, but not title insurance premiums |
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Misrepresenting information or intentionally not disclosing material facts necessary for an originator to consider for loan approval is: |
Negligence Legal and unethical Mortgage fraud Redlining The answer is mortgage fraud. Making written false statements, using fictitious, forged, or altered documents, or concealing material facts relating to any aspect that would influence the approval of the loan are all aspects of mortgage fraud - specifically, loan documentation fraud. Mortgage fraud is a violation of federal law resulting in severe disciplinary measures, including up to five years in jail and/or a $100,000 fine for fraud and false statements, and up to 30 years in jail and/or a $1 million fine for a false mortgage loan application, conspiracy to commit fraud, fraud/swindles, or bank fraud. |
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Which of the following fees would NOT be used in calculating the APR? |
Closing fee Underwriting fee Mortgage insurance Title insurance The answer is title insurance. The annual percentage rate (APR) represents the relationship of the total finance charge to the total amount financed, as a yearly rate. It is not the same as the nominal rate (i.e., the interest rate shown in the note), as it includes all finance charges, not just interest. Among other charges, finance charges include points, loan fees, and mortgage insurance premiums, but not title insurance premiums |
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Misrepresenting information or intentionally not disclosing material facts necessary for an originator to consider for loan approval is: |
Negligence Legal and unethical Mortgage fraud Redlining The answer is mortgage fraud. Making written false statements, using fictitious, forged, or altered documents, or concealing material facts relating to any aspect that would influence the approval of the loan are all aspects of mortgage fraud - specifically, loan documentation fraud. Mortgage fraud is a violation of federal law resulting in severe disciplinary measures, including up to five years in jail and/or a $100,000 fine for fraud and false statements, and up to 30 years in jail and/or a $1 million fine for a false mortgage loan application, conspiracy to commit fraud, fraud/swindles, or bank fraud. |
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Which of the following is true regarding a lender's ability to collect an appraisal fee? |
This is not allowed until closing This is allowed as long as the borrower has received the Loan Estimate and expressed an intent to proceed This is allowed as long as the borrower has expressed an intent to proceed This is allowed as long as the Loan Estimate has been mailed The answer is this is allowed as long as the borrower has received the Loan Estimate and expressed an intent to proceed. A consumer may not be charged any fee in connection with a mortgage loan application, except a reasonable and bona fide credit report fee, before receipt of the Loan Estimate and prior to indicating an intent to proceed with the loan. |
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Which of the following fees would NOT be used in calculating the APR? |
Closing fee Underwriting fee Mortgage insurance Title insurance The answer is title insurance. The annual percentage rate (APR) represents the relationship of the total finance charge to the total amount financed, as a yearly rate. It is not the same as the nominal rate (i.e., the interest rate shown in the note), as it includes all finance charges, not just interest. Among other charges, finance charges include points, loan fees, and mortgage insurance premiums, but not title insurance premiums |
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Misrepresenting information or intentionally not disclosing material facts necessary for an originator to consider for loan approval is: |
Negligence Legal and unethical Mortgage fraud Redlining The answer is mortgage fraud. Making written false statements, using fictitious, forged, or altered documents, or concealing material facts relating to any aspect that would influence the approval of the loan are all aspects of mortgage fraud - specifically, loan documentation fraud. Mortgage fraud is a violation of federal law resulting in severe disciplinary measures, including up to five years in jail and/or a $100,000 fine for fraud and false statements, and up to 30 years in jail and/or a $1 million fine for a false mortgage loan application, conspiracy to commit fraud, fraud/swindles, or bank fraud. |
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Which of the following is true regarding a lender's ability to collect an appraisal fee? |
This is not allowed until closing This is allowed as long as the borrower has received the Loan Estimate and expressed an intent to proceed This is allowed as long as the borrower has expressed an intent to proceed This is allowed as long as the Loan Estimate has been mailed The answer is this is allowed as long as the borrower has received the Loan Estimate and expressed an intent to proceed. A consumer may not be charged any fee in connection with a mortgage loan application, except a reasonable and bona fide credit report fee, before receipt of the Loan Estimate and prior to indicating an intent to proceed with the loan. |
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The Uniform Residential Appraisal Report is commonly known as the: |
1003 1040 1004 4506 The answer is 1004. For FHA, VA, and conforming loans, appraisers will use the Uniform Residential Appraisal Report (URAR), also known as Fannie Mae Form 1004 and Freddie Mac Form 70. |
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Which of the following fees would NOT be used in calculating the APR? |
Closing fee Underwriting fee Mortgage insurance Title insurance The answer is title insurance. The annual percentage rate (APR) represents the relationship of the total finance charge to the total amount financed, as a yearly rate. It is not the same as the nominal rate (i.e., the interest rate shown in the note), as it includes all finance charges, not just interest. Among other charges, finance charges include points, loan fees, and mortgage insurance premiums, but not title insurance premiums |
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Misrepresenting information or intentionally not disclosing material facts necessary for an originator to consider for loan approval is: |
Negligence Legal and unethical Mortgage fraud Redlining The answer is mortgage fraud. Making written false statements, using fictitious, forged, or altered documents, or concealing material facts relating to any aspect that would influence the approval of the loan are all aspects of mortgage fraud - specifically, loan documentation fraud. Mortgage fraud is a violation of federal law resulting in severe disciplinary measures, including up to five years in jail and/or a $100,000 fine for fraud and false statements, and up to 30 years in jail and/or a $1 million fine for a false mortgage loan application, conspiracy to commit fraud, fraud/swindles, or bank fraud. |
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Which of the following is true regarding a lender's ability to collect an appraisal fee? |
This is not allowed until closing This is allowed as long as the borrower has received the Loan Estimate and expressed an intent to proceed This is allowed as long as the borrower has expressed an intent to proceed This is allowed as long as the Loan Estimate has been mailed The answer is this is allowed as long as the borrower has received the Loan Estimate and expressed an intent to proceed. A consumer may not be charged any fee in connection with a mortgage loan application, except a reasonable and bona fide credit report fee, before receipt of the Loan Estimate and prior to indicating an intent to proceed with the loan. |
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The Uniform Residential Appraisal Report is commonly known as the: |
1003 1040 1004 4506 The answer is 1004. For FHA, VA, and conforming loans, appraisers will use the Uniform Residential Appraisal Report (URAR), also known as Fannie Mae Form 1004 and Freddie Mac Form 70. |
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Which of the following is least likely to be a sign of mortgage fraud? |
The applicant appears to be quite young but makes a high salary Signatures on documents provided by the applicant do not match one another Identification documents provided are blurry, hard to read, and appear to be photocopies or faxed documents Information on W-2s does not match the income of the applicant The answer is the applicant appears to be quite young but makes a high salary. Red flags for mortgage fraud include the presentation of suspicious documents (blurry, hard to read, and/or appear to be photocopies or faxed) and discrepancies between documents (signatures which do not match, discrepancies in statements of income, assets, etc.). There is no global correlation between age and income, and a young applicant with a high salary is not a red flag indicating mortgage fraud. |
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Which of the following in an ad for residential mortgage financing would trigger additional disclosures? |
"VA financing available" "Affordable payments" "5.75% APR" "5% down payment" The answer is "5% down payment." Under TILA, an ad must disclose a number of additional credit terms if it contains a trigger term. A trigger term includes certain credit terms specifically cited in an ad, including the amount or percentage of any down payment (e.g., "5% down," "95% financing," "$6,200 down"), except when the amount of the down payment is zero; the number of payments or period of repayment (e.g., "360 monthly payments," "a 30-year loan"); the amount of any payment (e.g., “payments of less than $1,400 per month”); and the amount of any finance charge (e.g., “total financing costs of less than $3,000”) |
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Which of the following in an ad for residential mortgage financing would trigger additional disclosures? |
"VA financing available" "Affordable payments" "5.75% APR" "5% down payment" The answer is "5% down payment." Under TILA, an ad must disclose a number of additional credit terms if it contains a trigger term. A trigger term includes certain credit terms specifically cited in an ad, including the amount or percentage of any down payment (e.g., "5% down," "95% financing," "$6,200 down"), except when the amount of the down payment is zero; the number of payments or period of repayment (e.g., "360 monthly payments," "a 30-year loan"); the amount of any payment (e.g., “payments of less than $1,400 per month”); and the amount of any finance charge (e.g., “total financing costs of less than $3,000”) |
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Under which of the following situations would an appraiser use the income approach to appraise a property? |
The property is in an area which is primarily rental properties All comparable sales for the property are rental properties The new buyer is going to use the property as a rental property The property is being used by the seller as an investment property The answer is the new buyer is going to use the property as a rental property. The income (or capitalization) approach is used to appraise properties that produce rental income (e.g., apartments, office buildings, and rental units). It bases the value of the property on the net income the owner will receive and a rate of return (capitalization rate) the owner should find acceptable. The estimated net income is calculated by subtracting an allowance for vacancies and bad debts from scheduled gross income to arrive at effective gross income, and then subtracting fixed expenses, operating expenses, and reserves to replace items that will wear out |
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Which of the following is not true of the S.A.F.E. Act? |
Pre-licensing education under the Act includes hours in law, ethics, and nontraditional mortgage products Consumers can research records of a loan originator’s disciplinary actions Individual states may determine whether experienced MLOs can have education hours waived The S.A.F.E. Act requires licensees to submit to a comprehensive background check The answer is individual states may determine whether experienced MLOs can have education hours waived. Licensing requirements under the S.A.F.E. Act include both a comprehensive background check and 20 hours of NMLS-approved pre-licensing education, which include three hours of federal law and regulations, three hours of ethics, and two hours of training related to lending standards for the nontraditional mortgage product. The Nationwide Multistate Licensing System and Registry (NMLS or NMLSR) allows consumers to research information on licensees, including a loan originator’s disciplinary actions. The authority granted to individual states does not include waiving education hours, which are among the minimum licensing requirements pertaining to all loan originator licensees |
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Which of the following is true concerning the refundability of a VA funding fee? |
VA funding fees are refundable if the borrower is overcharged VA funding fees are refundable if the borrower is active military VA funding fees are never refundable VA funding fees are refundable if the borrower is a wounded veteran The answer is VA funding fees are refundable if the borrower is overcharged. VA loans are made by approved lenders and guaranteed by the U.S. Department of Veterans Affairs. The guarantee is similar to mortgage insurance in that it limits the lender's exposure to loss in the event of a borrower's default that results in foreclosure. However, the veteran borrower is charged a nonrefundable upfront funding fee that can be financed, instead of a mortgage insurance premium. The funding fee is only refundable if the borrower was overcharged. There are some exceptions to the imposition of a funding fee, including for veterans with disabilities. A veteran receiving VA compensation for a service-connected disability is exempt from the fee requirement. |
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Which of the following is not true of the S.A.F.E. Act? |
Pre-licensing education under the Act includes hours in law, ethics, and nontraditional mortgage products Consumers can research records of a loan originator’s disciplinary actions Individual states may determine whether experienced MLOs can have education hours waived The S.A.F.E. Act requires licensees to submit to a comprehensive background check The answer is individual states may determine whether experienced MLOs can have education hours waived. Licensing requirements under the S.A.F.E. Act include both a comprehensive background check and 20 hours of NMLS-approved pre-licensing education, which include three hours of federal law and regulations, three hours of ethics, and two hours of training related to lending standards for the nontraditional mortgage product. The Nationwide Multistate Licensing System and Registry (NMLS or NMLSR) allows consumers to research information on licensees, including a loan originator’s disciplinary actions. The authority granted to individual states does not include waiving education hours, which are among the minimum licensing requirements pertaining to all loan originator licensees |
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Which of the following is true concerning the refundability of a VA funding fee? |
VA funding fees are refundable if the borrower is overcharged VA funding fees are refundable if the borrower is active military VA funding fees are never refundable VA funding fees are refundable if the borrower is a wounded veteran The answer is VA funding fees are refundable if the borrower is overcharged. VA loans are made by approved lenders and guaranteed by the U.S. Department of Veterans Affairs. The guarantee is similar to mortgage insurance in that it limits the lender's exposure to loss in the event of a borrower's default that results in foreclosure. However, the veteran borrower is charged a nonrefundable upfront funding fee that can be financed, instead of a mortgage insurance premium. The funding fee is only refundable if the borrower was overcharged. There are some exceptions to the imposition of a funding fee, including for veterans with disabilities. A veteran receiving VA compensation for a service-connected disability is exempt from the fee requirement. |
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A lender’s prime rate is determined by: |
The Federal Reserve Federal law The lender itself The National Association of Underwriters The answer is the lender itself. While interest rates are affected by actions taken by the Federal Reserve (the Fed), the Federal Reserve does not directly influence the interest rates that lenders charge borrowers. Each lender will set its own prime rates (i.e., the lowest rates it charges for its best customers), as well as rates for loans to other customers based on its costs and desired profit margin. |
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Which of the following is not true of the S.A.F.E. Act? |
Pre-licensing education under the Act includes hours in law, ethics, and nontraditional mortgage products Consumers can research records of a loan originator’s disciplinary actions Individual states may determine whether experienced MLOs can have education hours waived The S.A.F.E. Act requires licensees to submit to a comprehensive background check The answer is individual states may determine whether experienced MLOs can have education hours waived. Licensing requirements under the S.A.F.E. Act include both a comprehensive background check and 20 hours of NMLS-approved pre-licensing education, which include three hours of federal law and regulations, three hours of ethics, and two hours of training related to lending standards for the nontraditional mortgage product. The Nationwide Multistate Licensing System and Registry (NMLS or NMLSR) allows consumers to research information on licensees, including a loan originator’s disciplinary actions. The authority granted to individual states does not include waiving education hours, which are among the minimum licensing requirements pertaining to all loan originator licensees |
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Which of the following is true concerning the refundability of a VA funding fee? |
VA funding fees are refundable if the borrower is overcharged VA funding fees are refundable if the borrower is active military VA funding fees are never refundable VA funding fees are refundable if the borrower is a wounded veteran The answer is VA funding fees are refundable if the borrower is overcharged. VA loans are made by approved lenders and guaranteed by the U.S. Department of Veterans Affairs. The guarantee is similar to mortgage insurance in that it limits the lender's exposure to loss in the event of a borrower's default that results in foreclosure. However, the veteran borrower is charged a nonrefundable upfront funding fee that can be financed, instead of a mortgage insurance premium. The funding fee is only refundable if the borrower was overcharged. There are some exceptions to the imposition of a funding fee, including for veterans with disabilities. A veteran receiving VA compensation for a service-connected disability is exempt from the fee requirement. |
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A lender’s prime rate is determined by: |
The Federal Reserve Federal law The lender itself The National Association of Underwriters The answer is the lender itself. While interest rates are affected by actions taken by the Federal Reserve (the Fed), the Federal Reserve does not directly influence the interest rates that lenders charge borrowers. Each lender will set its own prime rates (i.e., the lowest rates it charges for its best customers), as well as rates for loans to other customers based on its costs and desired profit margin. |
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For a face-to-face referral, an affiliate business relationship must be disclosed: |
At or before the time of the referral At the time of the loan application Within three days of the loan application Within three days of the referral The answer is at or before the time of the referral. When a settlement service provider refers a borrower to one or more affiliates with whom it has an ownership or other beneficial interest, an Affiliated Business Arrangement (AfBA) Disclosure Statement must be given on a separate piece of paper to the borrower at or before the time the referral is made (if in person, writing, or electronically), within three business days after a referral made by telephone (provided an abbreviated verbal disclosure of the existence of the arrangement and the fact that a written disclosure will be provided within three business days is made during the telephone referral), or at the time the Loan Estimate is provided, in the case of a referral by a lender (including one to an affiliated lender). |
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Which of the following is not true of the S.A.F.E. Act? |
Pre-licensing education under the Act includes hours in law, ethics, and nontraditional mortgage products Consumers can research records of a loan originator’s disciplinary actions Individual states may determine whether experienced MLOs can have education hours waived The S.A.F.E. Act requires licensees to submit to a comprehensive background check The answer is individual states may determine whether experienced MLOs can have education hours waived. Licensing requirements under the S.A.F.E. Act include both a comprehensive background check and 20 hours of NMLS-approved pre-licensing education, which include three hours of federal law and regulations, three hours of ethics, and two hours of training related to lending standards for the nontraditional mortgage product. The Nationwide Multistate Licensing System and Registry (NMLS or NMLSR) allows consumers to research information on licensees, including a loan originator’s disciplinary actions. The authority granted to individual states does not include waiving education hours, which are among the minimum licensing requirements pertaining to all loan originator licensees |
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Which of the following is true concerning the refundability of a VA funding fee? |
VA funding fees are refundable if the borrower is overcharged VA funding fees are refundable if the borrower is active military VA funding fees are never refundable VA funding fees are refundable if the borrower is a wounded veteran The answer is VA funding fees are refundable if the borrower is overcharged. VA loans are made by approved lenders and guaranteed by the U.S. Department of Veterans Affairs. The guarantee is similar to mortgage insurance in that it limits the lender's exposure to loss in the event of a borrower's default that results in foreclosure. However, the veteran borrower is charged a nonrefundable upfront funding fee that can be financed, instead of a mortgage insurance premium. The funding fee is only refundable if the borrower was overcharged. There are some exceptions to the imposition of a funding fee, including for veterans with disabilities. A veteran receiving VA compensation for a service-connected disability is exempt from the fee requirement. |
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A lender’s prime rate is determined by: |
The Federal Reserve Federal law The lender itself The National Association of Underwriters The answer is the lender itself. While interest rates are affected by actions taken by the Federal Reserve (the Fed), the Federal Reserve does not directly influence the interest rates that lenders charge borrowers. Each lender will set its own prime rates (i.e., the lowest rates it charges for its best customers), as well as rates for loans to other customers based on its costs and desired profit margin. |
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For a face-to-face referral, an affiliate business relationship must be disclosed: |
At or before the time of the referral At the time of the loan application Within three days of the loan application Within three days of the referral The answer is at or before the time of the referral. When a settlement service provider refers a borrower to one or more affiliates with whom it has an ownership or other beneficial interest, an Affiliated Business Arrangement (AfBA) Disclosure Statement must be given on a separate piece of paper to the borrower at or before the time the referral is made (if in person, writing, or electronically), within three business days after a referral made by telephone (provided an abbreviated verbal disclosure of the existence of the arrangement and the fact that a written disclosure will be provided within three business days is made during the telephone referral), or at the time the Loan Estimate is provided, in the case of a referral by a lender (including one to an affiliated lender). |
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Finance charges that are withheld from the proceeds of the loan are considered to be: |
P.O.C. charges Third-party fees Prepaid finance charges Periodic interest charges The answer is Prepaid finance charges. A prepaid finance charge (PFC) is any finance charge paid separately, in cash or by check, before or at consummation of a transaction or withheld from the proceeds of the loan at any time. They are direct loan charges paid by the borrower (not a third party) that must be included in computing the annual percentage rate. |
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A mortgage broker is unable to assist a client and refers him to another mortgage broker for origination services. The second broker pays the referring broker a fee for providing the lead. Which of the following is correct? |
Payment of the fee is illegal The fee is legal as long as the brokers have a pre-existing agreement in place The fee is legal as long as the brokers do not have a pre-existing agreement in place for payment of referral fees The fee is illegal unless the brokers provide a disclosure to the client The answer is payment of the fee is illegal. Under Section 8 of RESPA, it is illegal to give or accept any fee, kickback, or other thing of value under any agreement or understanding, verbal or otherwise, that business relating to or part of a settlement service involving a federally-related mortgage loan will be referred to any person. A business entity may not pay any other business entity, or the employees of any other business entity, for the referral of real estate settlement service business |
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Under which of the following scenarios could a borrower cancel a transaction after closing has already occurred? |
A borrower closes on a refinance transaction for a primary residence on Monday and changes his mind the following Monday. The week contained no holidays and all disclosures were proper. A borrower closes on a refinance transaction for an owner-occupied vacation home on Monday and changes his mind two days later. A borrower closes on a refinance transaction for his primary residence and did not receive the proper rescission notice. The borrower changes his mind and wants to cancel 18 months later. A borrower closes on a purchase transaction for a primary residence, but changes his mind within three days of closing. The answer is a borrower closes on a refinance transaction for his primary residence and did not receive the proper rescission notice. The borrower changes his mind and wants to cancel 18 months later. TILA gives a consumer a right of rescission, allowing him or her to cancel the loan contract within a specified period of time for any reason if the loan is secured by the borrower’s principal residence and is a refinance transaction for a first or subordinate mortgage. The right of rescission does not apply to a residential mortgage transaction for a purchase or initial construction of a dwelling. In order to rescind, the consumer must forward a completed rescission form to the creditor no later than midnight of the third business day after the last of certain events occur, including consummation of the transaction, delivery of all material TILA disclosures, or delivery of notice of the right to rescind. If the creditor failed to provide the required disclosures and notice of the right of rescission, the rescission period may be extended up to the date of the first of the following: three years after the consummation of the transaction, the transfer of all of the consumer’s interest in the property, or the sale of the property. |
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Which of the following issues is not addressed in the standard deed of trust and note for an owner-occupied primary residence? |
Insurance on the property How quickly a borrower must occupy the property Keeping hazardous substances on the property Actual amounts for taxes and insurance The answer is actual amounts for taxes and insurance. In the typical real estate sales transaction, the seller gives the buyer a deed at closing and the buyer gives the lender a promissory note and a security instrument (i.e., a mortgage or trust deed) that creates a lien on the property. The promissory note is both a promise to repay the money borrowed with interest and evidence of the debt. It shows the payor and payee, the amount owed, the rate of interest and whether it is fixed or adjustable, the due date(s) for payment, and the terms of the loan. The mortgage or trust deed secures repayment of the note. Its covenants address topics that include occupancy, insurance, and hazardous materials, but it does not typically specify actual amounts for taxes and insurance. |
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Fiduciary duties include all but which of the following? |
Loyalty Good faith Creating a zero-cost borrower credit Putting the borrower’s interests first The answer is creating a zero-cost borrower credit. A licensee’s fiduciary duties toward a client include loyalty and good faith, disclosure of material facts, and holding the client's interests above those of the licensee. |
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Under HOEPA, verifying the consumer's repayment ability in an open-end, high-cost mortgage: |
Is recommended, but not required Is based on verifying income, assets, and current obligations Is based on the borrower's notarized financial statement Must be carried out by an independent third party The answer is is based on verifying income, assets, and current obligations. A lender extending mortgage credit subject to HOEPA in an open-end high-cost mortgage may not extend credit based on the value of the consumer’s collateral without regard to repayment ability as of the date of consummation, including consideration of current and reasonably-expected income, employment, assets other than the collateral, current obligations, and mortgage-related obligations (i.e., expected property taxes, premiums for mortgage-related insurance required by the lender, and similar expenses). This prohibition does not apply to temporary (bridge) loans that have terms of 12 months or less. |
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Under HOEPA, verifying the consumer's repayment ability in an open-end, high-cost mortgage: |
Is recommended, but not required Is based on verifying income, assets, and current obligations Is based on the borrower's notarized financial statement Must be carried out by an independent third party The answer is is based on verifying income, assets, and current obligations. A lender extending mortgage credit subject to HOEPA in an open-end high-cost mortgage may not extend credit based on the value of the consumer’s collateral without regard to repayment ability as of the date of consummation, including consideration of current and reasonably-expected income, employment, assets other than the collateral, current obligations, and mortgage-related obligations (i.e., expected property taxes, premiums for mortgage-related insurance required by the lender, and similar expenses). This prohibition does not apply to temporary (bridge) loans that have terms of 12 months or less. |
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Which of the following approaches to appraisal is most likely to include depreciation to the improvements? |
Market Comparable Cost Income The answer is cost. The cost approach can be used for any property, but because of the knowledge of construction costs that is required, it is most often used to appraise value for new buildings, where costs are easy to obtain, and for properties such as churches and public service buildings, which cannot be compared to others that have sold or to those that produce income. The appraiser estimates the value of the land and the depreciated value of the improvements on the land separately, and then adds the two values to arrive at an estimate of the property’s total value. The depreciated value is equal to the cost to replace or reproduce the improvements less depreciation |
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Under HOEPA, verifying the consumer's repayment ability in an open-end, high-cost mortgage: |
Is recommended, but not required Is based on verifying income, assets, and current obligations Is based on the borrower's notarized financial statement Must be carried out by an independent third party The answer is is based on verifying income, assets, and current obligations. A lender extending mortgage credit subject to HOEPA in an open-end high-cost mortgage may not extend credit based on the value of the consumer’s collateral without regard to repayment ability as of the date of consummation, including consideration of current and reasonably-expected income, employment, assets other than the collateral, current obligations, and mortgage-related obligations (i.e., expected property taxes, premiums for mortgage-related insurance required by the lender, and similar expenses). This prohibition does not apply to temporary (bridge) loans that have terms of 12 months or less. |
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Which of the following approaches to appraisal is most likely to include depreciation to the improvements? |
Market Comparable Cost Income The answer is cost. The cost approach can be used for any property, but because of the knowledge of construction costs that is required, it is most often used to appraise value for new buildings, where costs are easy to obtain, and for properties such as churches and public service buildings, which cannot be compared to others that have sold or to those that produce income. The appraiser estimates the value of the land and the depreciated value of the improvements on the land separately, and then adds the two values to arrive at an estimate of the property’s total value. The depreciated value is equal to the cost to replace or reproduce the improvements less depreciation |
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Which of the following can be used by state regulators to determine whether a licensee demonstrates the financial responsibility and general fitness to command the confidence of the community to engage in the mortgage business? |
Credit report, net worth, payment of federal licensing fees Credit report, net worth, surety bond, payment into a state fund Credit report, surety bond, payment of exemption fees Credit report, payment into a professional fund, $1 million credit line The answer is credit report, net worth, surety bond, payment into a state fund. The S.A.F.E. Act mandates that states include a minimum net worth requirement or surety bond requirement for applicants, or require the applicant to pay into a state recovery fund. Licensing requirements also include criminal history and credit background checks, including a credit report. These are all factors used to establish a licensee’s financial responsibility and general fitness. |
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Under HOEPA, verifying the consumer's repayment ability in an open-end, high-cost mortgage: |
Is recommended, but not required Is based on verifying income, assets, and current obligations Is based on the borrower's notarized financial statement Must be carried out by an independent third party The answer is is based on verifying income, assets, and current obligations. A lender extending mortgage credit subject to HOEPA in an open-end high-cost mortgage may not extend credit based on the value of the consumer’s collateral without regard to repayment ability as of the date of consummation, including consideration of current and reasonably-expected income, employment, assets other than the collateral, current obligations, and mortgage-related obligations (i.e., expected property taxes, premiums for mortgage-related insurance required by the lender, and similar expenses). This prohibition does not apply to temporary (bridge) loans that have terms of 12 months or less. |
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Which of the following approaches to appraisal is most likely to include depreciation to the improvements? |
Market Comparable Cost Income The answer is cost. The cost approach can be used for any property, but because of the knowledge of construction costs that is required, it is most often used to appraise value for new buildings, where costs are easy to obtain, and for properties such as churches and public service buildings, which cannot be compared to others that have sold or to those that produce income. The appraiser estimates the value of the land and the depreciated value of the improvements on the land separately, and then adds the two values to arrive at an estimate of the property’s total value. The depreciated value is equal to the cost to replace or reproduce the improvements less depreciation |
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Which of the following can be used by state regulators to determine whether a licensee demonstrates the financial responsibility and general fitness to command the confidence of the community to engage in the mortgage business? |
Credit report, net worth, payment of federal licensing fees Credit report, net worth, surety bond, payment into a state fund Credit report, surety bond, payment of exemption fees Credit report, payment into a professional fund, $1 million credit line The answer is credit report, net worth, surety bond, payment into a state fund. The S.A.F.E. Act mandates that states include a minimum net worth requirement or surety bond requirement for applicants, or require the applicant to pay into a state recovery fund. Licensing requirements also include criminal history and credit background checks, including a credit report. These are all factors used to establish a licensee’s financial responsibility and general fitness. |
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For FHA loans, the annual mortgage insurance premium (MIP) will differ based on whether the term of the loan is more or less than: |
15 years 20 years 25 years 30 years The answer is 15 years. For FHA loans, the annual mortgage insurance premium (MIP) will differ based on whether the term of the loan is more or less than 15 years |
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Under HOEPA, verifying the consumer's repayment ability in an open-end, high-cost mortgage: |
Is recommended, but not required Is based on verifying income, assets, and current obligations Is based on the borrower's notarized financial statement Must be carried out by an independent third party The answer is is based on verifying income, assets, and current obligations. A lender extending mortgage credit subject to HOEPA in an open-end high-cost mortgage may not extend credit based on the value of the consumer’s collateral without regard to repayment ability as of the date of consummation, including consideration of current and reasonably-expected income, employment, assets other than the collateral, current obligations, and mortgage-related obligations (i.e., expected property taxes, premiums for mortgage-related insurance required by the lender, and similar expenses). This prohibition does not apply to temporary (bridge) loans that have terms of 12 months or less. |
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Which of the following approaches to appraisal is most likely to include depreciation to the improvements? |
Market Comparable Cost Income The answer is cost. The cost approach can be used for any property, but because of the knowledge of construction costs that is required, it is most often used to appraise value for new buildings, where costs are easy to obtain, and for properties such as churches and public service buildings, which cannot be compared to others that have sold or to those that produce income. The appraiser estimates the value of the land and the depreciated value of the improvements on the land separately, and then adds the two values to arrive at an estimate of the property’s total value. The depreciated value is equal to the cost to replace or reproduce the improvements less depreciation |
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Which of the following can be used by state regulators to determine whether a licensee demonstrates the financial responsibility and general fitness to command the confidence of the community to engage in the mortgage business? |
Credit report, net worth, payment of federal licensing fees Credit report, net worth, surety bond, payment into a state fund Credit report, surety bond, payment of exemption fees Credit report, payment into a professional fund, $1 million credit line The answer is credit report, net worth, surety bond, payment into a state fund. The S.A.F.E. Act mandates that states include a minimum net worth requirement or surety bond requirement for applicants, or require the applicant to pay into a state recovery fund. Licensing requirements also include criminal history and credit background checks, including a credit report. These are all factors used to establish a licensee’s financial responsibility and general fitness. |
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For FHA loans, the annual mortgage insurance premium (MIP) will differ based on whether the term of the loan is more or less than: |
15 years 20 years 25 years 30 years The answer is 15 years. For FHA loans, the annual mortgage insurance premium (MIP) will differ based on whether the term of the loan is more or less than 15 years |
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Jimmie is purchasing a home with a purchase price of $350,000. He has been approved for a loan with an 85% LTV. What is his down payment? |
$52,500 $297,500 $50,000 $35,000 The answer is $52,500. The relationship of the loan amount to the value or sales price of the property securing the loan is called the loan-to-value ratio. The loan-to-value ratio (LTV) relates the loan to the lesser of the appraised value or sales price. If Jimmie has been approved for a loan with an 85% LTV, his down payment must cover the remainder of the purchase price, or 15%: 15% × $350,000 = $52,500 |
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Under HOEPA, verifying the consumer's repayment ability in an open-end, high-cost mortgage: |
Is recommended, but not required Is based on verifying income, assets, and current obligations Is based on the borrower's notarized financial statement Must be carried out by an independent third party The answer is is based on verifying income, assets, and current obligations. A lender extending mortgage credit subject to HOEPA in an open-end high-cost mortgage may not extend credit based on the value of the consumer’s collateral without regard to repayment ability as of the date of consummation, including consideration of current and reasonably-expected income, employment, assets other than the collateral, current obligations, and mortgage-related obligations (i.e., expected property taxes, premiums for mortgage-related insurance required by the lender, and similar expenses). This prohibition does not apply to temporary (bridge) loans that have terms of 12 months or less. |
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Which of the following approaches to appraisal is most likely to include depreciation to the improvements? |
Market Comparable Cost Income The answer is cost. The cost approach can be used for any property, but because of the knowledge of construction costs that is required, it is most often used to appraise value for new buildings, where costs are easy to obtain, and for properties such as churches and public service buildings, which cannot be compared to others that have sold or to those that produce income. The appraiser estimates the value of the land and the depreciated value of the improvements on the land separately, and then adds the two values to arrive at an estimate of the property’s total value. The depreciated value is equal to the cost to replace or reproduce the improvements less depreciation |
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Which of the following can be used by state regulators to determine whether a licensee demonstrates the financial responsibility and general fitness to command the confidence of the community to engage in the mortgage business? |
Credit report, net worth, payment of federal licensing fees Credit report, net worth, surety bond, payment into a state fund Credit report, surety bond, payment of exemption fees Credit report, payment into a professional fund, $1 million credit line The answer is credit report, net worth, surety bond, payment into a state fund. The S.A.F.E. Act mandates that states include a minimum net worth requirement or surety bond requirement for applicants, or require the applicant to pay into a state recovery fund. Licensing requirements also include criminal history and credit background checks, including a credit report. These are all factors used to establish a licensee’s financial responsibility and general fitness. |
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For FHA loans, the annual mortgage insurance premium (MIP) will differ based on whether the term of the loan is more or less than: |
15 years 20 years 25 years 30 years The answer is 15 years. For FHA loans, the annual mortgage insurance premium (MIP) will differ based on whether the term of the loan is more or less than 15 years |
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Jimmie is purchasing a home with a purchase price of $350,000. He has been approved for a loan with an 85% LTV. What is his down payment? |
$52,500 $297,500 $50,000 $35,000 The answer is $52,500. The relationship of the loan amount to the value or sales price of the property securing the loan is called the loan-to-value ratio. The loan-to-value ratio (LTV) relates the loan to the lesser of the appraised value or sales price. If Jimmie has been approved for a loan with an 85% LTV, his down payment must cover the remainder of the purchase price, or 15%: 15% × $350,000 = $52,500 |
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Which of the following best describes the available options for an individual who is applying for a loan originator license but does not pass the required written test? |
The applicant may take the test up to two additional times, with at least 30 days between each attempt The applicant may try to pass the test a second time, but must wait at least six months The applicant may attempt to pass the test again up to three times within a five-year period before needing to retake the pre-licensing course The applicant may be issued a provisional license for a period of six months, but must maintain a surety bond of twice the normal amount The answer is the applicant may take the test up to two additional times, with at least 30 days between each attempt. An individual may take the licensing test three times, but to retake the exam, he or she must wait at least 30 days after the date of the preceding test. If he or she fails three consecutive tests, he or she must wait at least six months before taking the test again |
