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46 Cards in this Set
- Front
- Back
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A borrower is buying a house with a sales price of $210,000, but the appraisal came in at $200,000. The borrower takes out a loan of $160,000. What is the LTV? |
76% 90% 80% 75% The answer is 80%. The LTV is calculated using the lesser of the purchase price and the appraised value. In this case, the loan amount of $160,000 is divided by the appraised value of $200,000 to get 80% LTV. |
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Under the Truth in Lending Act, a creditor is defined as |
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A natural person, business, or financial organization that services mortgage loans A natural person that extends at least 10 open-end loans per calendar year A natural person, business, or financial organization that regularly extends credit to consumers A natural person, business, or financial organization that extends at least 15 open-end loans per year The answer is a natural person, business, or financial organization that regularly extends credit to consumers. A creditor is defined by TILA as “a natural person, business, or financial organization that regularly extends credit to consumers |
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Ricky and Lucy are buying a house using a conforming loan, and they have reached an agreement to receive the max concession from their seller. They have agreed on a $230,000 sales price, and are putting down 10%. What is the amount of the seller concession? |
$6,210 $6,900 $13,800 $12,420 The answer is $13,800. The seller concession allowed on a conforming loan with a 90% (or less) LTV is 6%. This number is taken from the sales price, not the loan amount. $230,000 × 6% = $13,800. |
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Bob Bachman is applying for a mortgage with MZ Mortgage. He is referred by MZ Mortgage to a title company in which MZ Mortgage has a 10% ownership interest. At what point must Bob be made aware of the relationship between the two companies? |
At the time of the referral It is not necessary, because MZ Mortgage owns less than 25% of the title company Within three business days of application Within three business days after the referral The answer is at the time of the referral. The borrower must be provided with the Affiliated Business Arrangement Disclosure at the time of referral. Only if the referral is made over the phone would MZ Mortgage have three business days to provide disclosure. Considering the information provided, “at the time of the referral” is the best answer. |
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Which of the following forms is the appraisal form used for investment properties? |
1007 1073 1004 1005 The answer is 1007. The 1004 is the Uniform Residential Appraisal Report, or URAR. There are variations for certain properties; the 1007 is used for single-family properties that are investment properties |
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The right to rescind is one that consumers may |
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Not waive Waive if they notify the creditor at the time of the loan application that they wish to do so Waive if they do so in writing in order to meet a bona fide financial emergency Waive if they complete a printed form The answer is waive if they do so in writing in order to meet a bona fide financial emergency. The right to rescind is one that consumers may waive if they do so in writing in order to meet a bona fide financial emergency. |
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A fully-documented loan for a salaried borrower should include all of the following, except |
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Year-to-date profit and loss statements W-2s for the past two years Paystubs for the most recent 30 days Complete employment information for the most recent two years The answer is year-to-date profit and loss statements. A salaried borrower would generally be asked to provide a lender with documentation of his/her past two years’ employment, W-2s for those years, and paystubs for the most recent 30 days. |
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Which of the following loans requires the collection of HMDA data? |
Refinance of a second home Financing of a recreational vehicle Student loan SBA loan The answer is refinance of a second home. HMDA data is required for purchase loans, refinance loans, and home improvement loans, as long as the loans are secured by a dwelling. |
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Leslee is a loan processor who is not required to perform her duties at the direction of or subject to the supervision and instruction of an individual who is licensed or exempt. Leslee is a(n): |
Registered loan originator Mortgage loan originator Independent contractor Licensed loan processor The answer is independent contractor. An independent contractor is an individual who performs his/her duties other than at the direction of and subject to the supervision and instruction of an individual who is licensed and registered as required under the SAFE Act or is exempt from licensing. An independent contractor may not engage in residential mortgage loan origination activities as a loan processor or underwriter unless he/she has a mortgage loan originator license. |
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VA fixed-rate loans may be made for any of the following terms, except: |
20 years 40 years 25 years 30 years The answer is 40 years. VA fixed-rate loans may be made for terms of 20, 25, and 30 years |
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The Loan Estimate is required for: |
All mortgage loans All closed-end federally related mortgage loans All nontraditional mortgage loans All open-end mortgage loans The answer is all closed-end federally related mortgage loans. The Loan Estimate is required for all closed-end federally related mortgage loans. |
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Seller concessions for conforming loans are limited to _____ and _____ on LTVs of over 90% and 90% or less, respectively |
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6%; 3% 3%; 6% 10%; 20% 3.5%; 10% The answer is 3%; 6%. Seller concessions for conforming loans are limited to 3% and 6% for LTVs of over 90% and 90% or less, respectively. |
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The federal agency that implements and enforces rules related to the origination of FHA loans is the: |
Consumer Financial Protection Bureau (CFPB) Department of Housing and Urban Development (HUD) Federal Trade Commission (FTC) National Credit Union Administration (NCUA) The answer is Department of Housing and Urban Development (HUD). The Department of Housing and Urban Development implements and enforces rules related to FHA lending. |
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What is the minimum time period that MIP must be in place for a USDA loan? |
Zero years Three years Five years Depends on LTV The answer is zero years. MIP, or mortgage insurance premiums, are only paid on FHA loans. Some other loan types are subject to PMI (private mortgage insurance). USDA loans use a funding fee and an annual premium rather than the traditional forms of MIP or PMI |
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What is the primary purpose of the Home Mortgage Disclosure Act? |
Provide borrowers with a clear explanation of the cost of a loan through disclosure of APR and finance charges Allow a borrower the opportunity to remove PMI from his/her loan Identify discriminatory lending practices and determine if financial institutions are meeting the borrowing needs of their communities Use disclosures to help consumers shop for available credit options The answer is identify discriminatory lending practices and determine if financial institutions are meeting the borrowing needs of their communities. Regulation C pertains to the Home Mortgage Disclosure Act (HMDA). Through the collection of information about loan applications and settlements, HMDA attempts to identify if companies are using discriminatory lending practices and to determine if they are meeting the mortgage lending needs of their communities. |
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Which of the following is true? |
Open-end credit plans, timeshare plans, and reverse mortgage loans are exempt from the ATR Rule Open-end credit plans, timeshare plans, and closed-end consumer credit loans are exempt from the ATR Rule Open-end credit plans are covered by the ATR Rule Reverse mortgage loans are covered by the ATR Rule The answer is open-end credit plans, timeshare plans, and reverse mortgage loans are exempt from the ATR Rule. Open-end credit plans, timeshare plans, and reverse mortgage loans are excluded from the ATR Rule. The ATR Rule applies to almost all closed-end consumer credit transactions secured by a dwelling, including attached real property. |
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Which of the following is true? |
Open-end credit plans, timeshare plans, and reverse mortgage loans are exempt from the ATR Rule Open-end credit plans, timeshare plans, and closed-end consumer credit loans are exempt from the ATR Rule Open-end credit plans are covered by the ATR Rule Reverse mortgage loans are covered by the ATR Rule The answer is open-end credit plans, timeshare plans, and reverse mortgage loans are exempt from the ATR Rule. Open-end credit plans, timeshare plans, and reverse mortgage loans are excluded from the ATR Rule. The ATR Rule applies to almost all closed-end consumer credit transactions secured by a dwelling, including attached real property. |
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The reporting form used to communicate HMDA data is called what? |
1073 Loan/Registration Application 1004 Loan/Application Register The answer is Loan/Application Register. The form used for reporting HMDA data is called the Loan/Application Register (LAR). |
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Which of the following is true? |
Open-end credit plans, timeshare plans, and reverse mortgage loans are exempt from the ATR Rule Open-end credit plans, timeshare plans, and closed-end consumer credit loans are exempt from the ATR Rule Open-end credit plans are covered by the ATR Rule Reverse mortgage loans are covered by the ATR Rule The answer is open-end credit plans, timeshare plans, and reverse mortgage loans are exempt from the ATR Rule. Open-end credit plans, timeshare plans, and reverse mortgage loans are excluded from the ATR Rule. The ATR Rule applies to almost all closed-end consumer credit transactions secured by a dwelling, including attached real property. |
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The reporting form used to communicate HMDA data is called what? |
1073 Loan/Registration Application 1004 Loan/Application Register The answer is Loan/Application Register. The form used for reporting HMDA data is called the Loan/Application Register (LAR). |
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Which of the following mortgage industry documents might the borrower be asked to sign while it still contains blank sections? |
A broker agreement A TIL disclosure A verification of employment The promissory note The answer is a verification of employment. Generally, a verification of employment is signed by the borrower with blank spaces remaining, with the understanding the borrower has signed to give permission for the employer to complete it. |
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Which of the following is true? |
Open-end credit plans, timeshare plans, and reverse mortgage loans are exempt from the ATR Rule Open-end credit plans, timeshare plans, and closed-end consumer credit loans are exempt from the ATR Rule Open-end credit plans are covered by the ATR Rule Reverse mortgage loans are covered by the ATR Rule The answer is open-end credit plans, timeshare plans, and reverse mortgage loans are exempt from the ATR Rule. Open-end credit plans, timeshare plans, and reverse mortgage loans are excluded from the ATR Rule. The ATR Rule applies to almost all closed-end consumer credit transactions secured by a dwelling, including attached real property. |
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The reporting form used to communicate HMDA data is called what? |
1073 Loan/Registration Application 1004 Loan/Application Register The answer is Loan/Application Register. The form used for reporting HMDA data is called the Loan/Application Register (LAR). |
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Which of the following mortgage industry documents might the borrower be asked to sign while it still contains blank sections? |
A broker agreement A TIL disclosure A verification of employment The promissory note The answer is a verification of employment. Generally, a verification of employment is signed by the borrower with blank spaces remaining, with the understanding the borrower has signed to give permission for the employer to complete it. |
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A consumer report is defined under which of the following federal laws? |
FACTA FCRA ECOA HMDA The answer is FCRA. FCRA defines a consumer report as any information from a consumer reporting agency that relates to a consumer’s creditworthiness, credit standing, credit capacity, character, personal characteristics, or mode of living, used or expected to be used, in order to determine eligibility for credit or insurance, or to evaluate a consumer for employment. |
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Which of the following is true? |
Open-end credit plans, timeshare plans, and reverse mortgage loans are exempt from the ATR Rule Open-end credit plans, timeshare plans, and closed-end consumer credit loans are exempt from the ATR Rule Open-end credit plans are covered by the ATR Rule Reverse mortgage loans are covered by the ATR Rule The answer is open-end credit plans, timeshare plans, and reverse mortgage loans are exempt from the ATR Rule. Open-end credit plans, timeshare plans, and reverse mortgage loans are excluded from the ATR Rule. The ATR Rule applies to almost all closed-end consumer credit transactions secured by a dwelling, including attached real property. |
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The reporting form used to communicate HMDA data is called what? |
1073 Loan/Registration Application 1004 Loan/Application Register The answer is Loan/Application Register. The form used for reporting HMDA data is called the Loan/Application Register (LAR). |
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Which of the following mortgage industry documents might the borrower be asked to sign while it still contains blank sections? |
A broker agreement A TIL disclosure A verification of employment The promissory note The answer is a verification of employment. Generally, a verification of employment is signed by the borrower with blank spaces remaining, with the understanding the borrower has signed to give permission for the employer to complete it. |
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A consumer report is defined under which of the following federal laws? |
FACTA FCRA ECOA HMDA The answer is FCRA. FCRA defines a consumer report as any information from a consumer reporting agency that relates to a consumer’s creditworthiness, credit standing, credit capacity, character, personal characteristics, or mode of living, used or expected to be used, in order to determine eligibility for credit or insurance, or to evaluate a consumer for employment. |
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What document would an underwriter rely on for detailed information concerning the collateral for a mortgage loan? |
The property appraisal The borrower’s asset statements The URLA The borrower’s employment documentation The answer is the property appraisal. An underwriter would rely on the property appraisal for detailed information concerning the collateral for a mortgage loan. |
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Which of the following is true? |
Open-end credit plans, timeshare plans, and reverse mortgage loans are exempt from the ATR Rule Open-end credit plans, timeshare plans, and closed-end consumer credit loans are exempt from the ATR Rule Open-end credit plans are covered by the ATR Rule Reverse mortgage loans are covered by the ATR Rule The answer is open-end credit plans, timeshare plans, and reverse mortgage loans are exempt from the ATR Rule. Open-end credit plans, timeshare plans, and reverse mortgage loans are excluded from the ATR Rule. The ATR Rule applies to almost all closed-end consumer credit transactions secured by a dwelling, including attached real property. |
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The reporting form used to communicate HMDA data is called what? |
1073 Loan/Registration Application 1004 Loan/Application Register The answer is Loan/Application Register. The form used for reporting HMDA data is called the Loan/Application Register (LAR). |
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Which of the following mortgage industry documents might the borrower be asked to sign while it still contains blank sections? |
A broker agreement A TIL disclosure A verification of employment The promissory note The answer is a verification of employment. Generally, a verification of employment is signed by the borrower with blank spaces remaining, with the understanding the borrower has signed to give permission for the employer to complete it. |
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A consumer report is defined under which of the following federal laws? |
FACTA FCRA ECOA HMDA The answer is FCRA. FCRA defines a consumer report as any information from a consumer reporting agency that relates to a consumer’s creditworthiness, credit standing, credit capacity, character, personal characteristics, or mode of living, used or expected to be used, in order to determine eligibility for credit or insurance, or to evaluate a consumer for employment. |
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What document would an underwriter rely on for detailed information concerning the collateral for a mortgage loan? |
The property appraisal The borrower’s asset statements The URLA The borrower’s employment documentation The answer is the property appraisal. An underwriter would rely on the property appraisal for detailed information concerning the collateral for a mortgage loan. |
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Mortgage insurance may be cancelled at what LTV percentage on a VA loan? |
Mortgage insurance is not required 80% 75% After five years The answer is mortgage insurance is not required. VA loans require a funding fee instead of mortgage insurance |
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The Jepsons have brought mortgage loan originator Stanley Rothke a check to pay for loan origination fees, the private mortgage insurance premium, and the commitment fee. These charges are |
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Paid-outside-of-closing charges Prepaid finance charges Third-party charges Mortgage loan transaction fees The answer is prepaid finance charges. A prepaid finance charge 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 charges paid by the borrower and include loan origination, discount, and commitment fees; any prepaid private mortgage insurance; underwriting, processing, tax service, and courier fees; buy-down funds; and prepaid interest |
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The Jepsons have brought mortgage loan originator Stanley Rothke a check to pay for loan origination fees, the private mortgage insurance premium, and the commitment fee. These charges are |
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Paid-outside-of-closing charges Prepaid finance charges Third-party charges Mortgage loan transaction fees The answer is prepaid finance charges. A prepaid finance charge 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 charges paid by the borrower and include loan origination, discount, and commitment fees; any prepaid private mortgage insurance; underwriting, processing, tax service, and courier fees; buy-down funds; and prepaid interest |
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When an ARM contains a limit on the amount that an interest rate can adjust, it is called a(n): |
Cap Index Margin Frequency The answer is cap. Consumer protections that limit the amount that an interest rate or payment on an ARM may change are known as caps. |
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The Jepsons have brought mortgage loan originator Stanley Rothke a check to pay for loan origination fees, the private mortgage insurance premium, and the commitment fee. These charges are |
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Paid-outside-of-closing charges Prepaid finance charges Third-party charges Mortgage loan transaction fees The answer is prepaid finance charges. A prepaid finance charge 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 charges paid by the borrower and include loan origination, discount, and commitment fees; any prepaid private mortgage insurance; underwriting, processing, tax service, and courier fees; buy-down funds; and prepaid interest |
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When an ARM contains a limit on the amount that an interest rate can adjust, it is called a(n): |
Cap Index Margin Frequency The answer is cap. Consumer protections that limit the amount that an interest rate or payment on an ARM may change are known as caps. |
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Disclosures for high-risk loans required by the Homeowners Protection Act inform the borrower that: |
The loan is considered a high-cost loan because it trips thresholds related to title insurance fees Termination of PMI is automatic at the midpoint of the amortization schedule as long as a borrower is current on his/her payments There may be a loan more suited for the borrower that is much less expensive Payment amounts may change based on interest rate changes The answer is termination of PMI is automatic at the midpoint of the amortization schedule as long as a borrower is current on his/her payments. The term “high-risk loans” pertains specifically in this case to legislation related to the HPA which facilitates the cancellation of private mortgage insurance. The HPA requires PMI on high-risk loans to be terminated automatically at the midpoint of the amortization schedule, when the borrower is current. |
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The Jepsons have brought mortgage loan originator Stanley Rothke a check to pay for loan origination fees, the private mortgage insurance premium, and the commitment fee. These charges are |
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Paid-outside-of-closing charges Prepaid finance charges Third-party charges Mortgage loan transaction fees The answer is prepaid finance charges. A prepaid finance charge 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 charges paid by the borrower and include loan origination, discount, and commitment fees; any prepaid private mortgage insurance; underwriting, processing, tax service, and courier fees; buy-down funds; and prepaid interest |
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When an ARM contains a limit on the amount that an interest rate can adjust, it is called a(n): |
Cap Index Margin Frequency The answer is cap. Consumer protections that limit the amount that an interest rate or payment on an ARM may change are known as caps. |
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Disclosures for high-risk loans required by the Homeowners Protection Act inform the borrower that: |
The loan is considered a high-cost loan because it trips thresholds related to title insurance fees Termination of PMI is automatic at the midpoint of the amortization schedule as long as a borrower is current on his/her payments There may be a loan more suited for the borrower that is much less expensive Payment amounts may change based on interest rate changes The answer is termination of PMI is automatic at the midpoint of the amortization schedule as long as a borrower is current on his/her payments. The term “high-risk loans” pertains specifically in this case to legislation related to the HPA which facilitates the cancellation of private mortgage insurance. The HPA requires PMI on high-risk loans to be terminated automatically at the midpoint of the amortization schedule, when the borrower is current. |
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In order for a home loan to be a qualified mortgage, the debt-to-income ratio may not exceed |
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43% 28% 36% 46% The answer is 43%. In order for a home loan to be a qualified mortgage, the debt-to-income ratio may not exceed 43%. |
