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89 Cards in this Set
- Front
- Back
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Concerning ARMs, margin is best defined as: |
A number, expressed as a percentage, that represents a lender’s operating costs and profit margin The amount of compensation earned by a mortgage professional for originating an ARM The range of flexibility an interest rate has between caps on traditional ARMs The maximum – up or down – that an interest rate can ever adjust on an ARM The answer is a number, expressed as a percentage, that represents a lender’s operating costs and profit margin. Concerning ARMs, “margin” is best defined as a number, expressed as a percentage, that represents a lender’s operating costs and profit margin. |
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Under RESPA, in order to provide the escrow analysis statement, a borrower’s escrow account must be analyzed |
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Annually Monthly Quarterly Twice a year The answer is annually. The purpose of the aggregate escrow analysis is to ensure that the proper amount is being held in escrow or reserve accounts (i.e., accounts to hold funds on behalf of borrowers for the payment of taxes and insurance). Under Regulation X, a servicer may hold funds to cover two months of taxes, insurance, and mortgage insurance, as applicable, and may only collect one month’s worth of escrowed items in each payment, unless there is a shortage in the account. All accounts must be analyzed once every 12 months and any overage over $50 refunded to the borrower within 30 days or credited towards the borrower’s next year’s escrow payments |
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The front-end ratio is also known as the: |
Back-end ratio Housing ratio Principal ratio Total debt ratio The answer is housing ratio. The front-end ratio is also known as the housing ratio. |
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Investigations conducted by state licensing authorities may include all of the following, except: |
Interviews with employees of an entity Examination of mortgage applications Suspension of a license without notice of a right to a hearing Scheduling a review of advertising examples used by the licensee The answer is suspension of a license without notice of a right to a hearing. As a result of an investigation, state licensing authorities may not suspend a license without making the licensee aware of why an action may be taken and that the licensee may request a hearing |
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While verifying identity, there are several consistent indicators that suggest identity theft. Which of the following is not an example? |
Co-borrowers call each other by nicknames that do not relate to the names on the application Credit history is inconsistent with the borrower’s age Social Security Number given on the application is consistent with that found on the credit report, W-2s, and paystubs Income documents appear to have poor printer alignment The answer is Social Security Number given on the application is consistent with that found on the credit report, W-2s, and paystubs. Mortgage fraud can sometimes be difficult to detect; however, checking names on an application against names on credit reports and supporting documentation as well as the borrower’s age is important. Additionally, if the supporting documents appear to be altered or tampered with, further investigation should occur |
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While verifying identity, there are several consistent indicators that suggest identity theft. Which of the following is not an example? |
Co-borrowers call each other by nicknames that do not relate to the names on the application Credit history is inconsistent with the borrower’s age Social Security Number given on the application is consistent with that found on the credit report, W-2s, and paystubs Income documents appear to have poor printer alignment The answer is Social Security Number given on the application is consistent with that found on the credit report, W-2s, and paystubs. Mortgage fraud can sometimes be difficult to detect; however, checking names on an application against names on credit reports and supporting documentation as well as the borrower’s age is important. Additionally, if the supporting documents appear to be altered or tampered with, further investigation should occur |
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HOEPA is federal legislation enacted by Congress through amendments to: |
FACTA ECOA TILA HMDA The answer is TILA. The Home Ownership and Equity Protection Act is part of TILA. Created in 1994, it was the first legislation specifically created to combat predatory lending. Its regulations are found in Section 32 of Regulation Z. |
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Under the Gramm-Leach-Bliley Act, which of the following is considered nonpublic information? |
Former owners of a particular property The street address of the property a borrower intends to purchase The assessed value of a subject property A loan applicant’s current loan balances The answer is a loan applicant’s current loan balances. Under the Gramm-Leach-Bliley Act, a loan applicant’s current loan balances would be considered nonpublic information |
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"5/25" and "7/23" are commonly used to designate loans including which of the following? |
A hybrid adjustable rate feature A balloon payment A subordinate lien A temporary interest rate buy-down The answer is a balloon payment. "5/25" and "7/23" are commonly used to designate loans that include a balloon payment |
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"5/25" and "7/23" are commonly used to designate loans including which of the following? |
A hybrid adjustable rate feature A balloon payment A subordinate lien A temporary interest rate buy-down The answer is a balloon payment. "5/25" and "7/23" are commonly used to designate loans that include a balloon payment |
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Which of the following is true of a loan that allows for negative amortization? |
The payments are not sufficient enough to cover the interest due, so the principal balance increases The interest rate decreases because payments are not sufficient enough to pay the interest due The principal amount increases because the borrower’s payments cover more than the interest due The payments are less than necessary to cover the interest due, so the principal does not increase The answer is the payments are not sufficient enough to cover the interest due, so the principal balance increases. A loan that allows for negative amortization has a principal balance that goes up because the payments are not sufficient enough to cover interest due |
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Special second appraisal requirements apply for a loan that is a(n): |
VA loan Higher-priced mortgage loan Adjustable-rate mortgage Refinance The answer is higher-priced mortgage loan. Special second appraisal requirements apply for a loan that is a higher-priced mortgage loan. |
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Special second appraisal requirements apply for a loan that is a(n): |
VA loan Higher-priced mortgage loan Adjustable-rate mortgage Refinance The answer is higher-priced mortgage loan. Special second appraisal requirements apply for a loan that is a higher-priced mortgage loan. |
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A licensee subject to an investigation or examination may not engage in any of the following, except: |
Providing computer records Knowingly removing or withholding records Providing records that have had information redacted Failing to cooperate with an investigation The answer is providing computer records. Providing records electronically is an acceptable method of keeping records available for examination |
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Which of the following rules requires mortgage professionals to take reasonable steps to ensure that service providers are able to maintain appropriate protection for the privacy of consumer information? |
The Qualified Mortgage Rule The ATR Rule The Safeguards Rule Title X of the Dodd-Frank Act The answer is The Safeguards Rule. The Safeguards Rule requires mortgage professionals to take reasonable steps to ensure that service providers are able to maintain appropriate protection for the privacy of consumer information |
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LL Mortgage Company is advertising “120% LTV Home Equity Loans!” In order to ensure compliance with Regulation Z, which of the following statements is also required? |
Shop for options with lower loan-to-value ratios Interest on high loan-to-value ratios is not deductible Interest on the portion of credit exceeding market value is deductible at 50% of the normal value Consult a tax adviser regarding deductibility of interest The answer is consult a tax adviser regarding deductibility of interest. Advertising rules under Regulation Z provide that advertisements for loans exceeding the home’s fair market value must clearly and conspicuously state “The interest on the portion of credit that exceeds market value is NOT deductible.” The advertisement must also state that the borrower should consult a tax advisor regarding the deductibility of interest and charges. |
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LL Mortgage Company is advertising “120% LTV Home Equity Loans!” In order to ensure compliance with Regulation Z, which of the following statements is also required? |
Shop for options with lower loan-to-value ratios Interest on high loan-to-value ratios is not deductible Interest on the portion of credit exceeding market value is deductible at 50% of the normal value Consult a tax adviser regarding deductibility of interest The answer is consult a tax adviser regarding deductibility of interest. Advertising rules under Regulation Z provide that advertisements for loans exceeding the home’s fair market value must clearly and conspicuously state “The interest on the portion of credit that exceeds market value is NOT deductible.” The advertisement must also state that the borrower should consult a tax advisor regarding the deductibility of interest and charges. |
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On an FHA loan, a borrower is required to make a down payment of at least |
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5% 3.50% 0% 1.50% The answer is 3.50%. On an FHA loan, a borrower is required to bring a minimum down payment of 3.5%. |
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LL Mortgage Company is advertising “120% LTV Home Equity Loans!” In order to ensure compliance with Regulation Z, which of the following statements is also required? |
Shop for options with lower loan-to-value ratios Interest on high loan-to-value ratios is not deductible Interest on the portion of credit exceeding market value is deductible at 50% of the normal value Consult a tax adviser regarding deductibility of interest The answer is consult a tax adviser regarding deductibility of interest. Advertising rules under Regulation Z provide that advertisements for loans exceeding the home’s fair market value must clearly and conspicuously state “The interest on the portion of credit that exceeds market value is NOT deductible.” The advertisement must also state that the borrower should consult a tax advisor regarding the deductibility of interest and charges. |
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On an FHA loan, a borrower is required to make a down payment of at least |
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5% 3.50% 0% 1.50% The answer is 3.50%. On an FHA loan, a borrower is required to bring a minimum down payment of 3.5%. |
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An “encumbrance” is: |
Transfer of title from one owner to another Transfer of ownership without any guarantees or warranties Cancellation of a contract A claim against a property that can affect the ability to transfer title The answer is a claim against a property that can affect the ability to transfer title. An encumbrance is a claim against a property that can affect the ability to transfer title |
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LL Mortgage Company is advertising “120% LTV Home Equity Loans!” In order to ensure compliance with Regulation Z, which of the following statements is also required? |
Shop for options with lower loan-to-value ratios Interest on high loan-to-value ratios is not deductible Interest on the portion of credit exceeding market value is deductible at 50% of the normal value Consult a tax adviser regarding deductibility of interest The answer is consult a tax adviser regarding deductibility of interest. Advertising rules under Regulation Z provide that advertisements for loans exceeding the home’s fair market value must clearly and conspicuously state “The interest on the portion of credit that exceeds market value is NOT deductible.” The advertisement must also state that the borrower should consult a tax advisor regarding the deductibility of interest and charges. |
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On an FHA loan, a borrower is required to make a down payment of at least |
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5% 3.50% 0% 1.50% The answer is 3.50%. On an FHA loan, a borrower is required to bring a minimum down payment of 3.5%. |
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An “encumbrance” is: |
Transfer of title from one owner to another Transfer of ownership without any guarantees or warranties Cancellation of a contract A claim against a property that can affect the ability to transfer title The answer is a claim against a property that can affect the ability to transfer title. An encumbrance is a claim against a property that can affect the ability to transfer title |
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Don is refinancing his home in order to save money. If the loan goes through, his payment will drop from $2,000/month (PITI) to $1,500/month (PITI). Don’s gross income each month is $6,800, but he has a $300 car payment, a $150 credit card payment, and monthly alimony payments of $1,300. What is Don’s housing ratio on the proposed loan? |
29% 48% 22% 31% The answer is 22%. “Housing ratio” refers to the cost of Don’s housing expenses monthly, divided by his gross monthly income. In this case, his proposed housing expense (PITI) will be $1,500/month. $1,500 / $6,800 = 22%. |
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LL Mortgage Company is advertising “120% LTV Home Equity Loans!” In order to ensure compliance with Regulation Z, which of the following statements is also required? |
Shop for options with lower loan-to-value ratios Interest on high loan-to-value ratios is not deductible Interest on the portion of credit exceeding market value is deductible at 50% of the normal value Consult a tax adviser regarding deductibility of interest The answer is consult a tax adviser regarding deductibility of interest. Advertising rules under Regulation Z provide that advertisements for loans exceeding the home’s fair market value must clearly and conspicuously state “The interest on the portion of credit that exceeds market value is NOT deductible.” The advertisement must also state that the borrower should consult a tax advisor regarding the deductibility of interest and charges. |
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On an FHA loan, a borrower is required to make a down payment of at least |
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5% 3.50% 0% 1.50% The answer is 3.50%. On an FHA loan, a borrower is required to bring a minimum down payment of 3.5%. |
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An “encumbrance” is: |
Transfer of title from one owner to another Transfer of ownership without any guarantees or warranties Cancellation of a contract A claim against a property that can affect the ability to transfer title The answer is a claim against a property that can affect the ability to transfer title. An encumbrance is a claim against a property that can affect the ability to transfer title |
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Don is refinancing his home in order to save money. If the loan goes through, his payment will drop from $2,000/month (PITI) to $1,500/month (PITI). Don’s gross income each month is $6,800, but he has a $300 car payment, a $150 credit card payment, and monthly alimony payments of $1,300. What is Don’s housing ratio on the proposed loan? |
29% 48% 22% 31% The answer is 22%. “Housing ratio” refers to the cost of Don’s housing expenses monthly, divided by his gross monthly income. In this case, his proposed housing expense (PITI) will be $1,500/month. $1,500 / $6,800 = 22%. |
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Mortgage loan originator Janine Jetson has had a complaint filed against her. Upon receiving a request from her state licensing agency, Janine must: |
Make her books and records available to the agency Respond to the complaint Post an additional bond Request a hearing The answer is make her books and records available to the agency. Each loan originator must make available, upon request by the state licensing agency, the books and records relating to the operations of the originator. |
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Which of the following mortgage broker policies would violate fair lending laws? |
Originating loans only for customers who live within 100 miles of the broker’s location Refusing to originate loans in an earthquake zone Refusing to originate loans in ZIP codes known to be economically depressed Doing business only with customers who are seeking loans for residential properties The answer is refusing to originate loans in ZIP codes known to be economically depressed. Refusing to originate loans in ZIP codes known to be economically depressed would violate fair lending laws |
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LL Mortgage Company is advertising “120% LTV Home Equity Loans!” In order to ensure compliance with Regulation Z, which of the following statements is also required? |
Shop for options with lower loan-to-value ratios Interest on high loan-to-value ratios is not deductible Interest on the portion of credit exceeding market value is deductible at 50% of the normal value Consult a tax adviser regarding deductibility of interest The answer is consult a tax adviser regarding deductibility of interest. Advertising rules under Regulation Z provide that advertisements for loans exceeding the home’s fair market value must clearly and conspicuously state “The interest on the portion of credit that exceeds market value is NOT deductible.” The advertisement must also state that the borrower should consult a tax advisor regarding the deductibility of interest and charges. |
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On an FHA loan, a borrower is required to make a down payment of at least |
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5% 3.50% 0% 1.50% The answer is 3.50%. On an FHA loan, a borrower is required to bring a minimum down payment of 3.5%. |
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An “encumbrance” is: |
Transfer of title from one owner to another Transfer of ownership without any guarantees or warranties Cancellation of a contract A claim against a property that can affect the ability to transfer title The answer is a claim against a property that can affect the ability to transfer title. An encumbrance is a claim against a property that can affect the ability to transfer title |
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Don is refinancing his home in order to save money. If the loan goes through, his payment will drop from $2,000/month (PITI) to $1,500/month (PITI). Don’s gross income each month is $6,800, but he has a $300 car payment, a $150 credit card payment, and monthly alimony payments of $1,300. What is Don’s housing ratio on the proposed loan? |
29% 48% 22% 31% The answer is 22%. “Housing ratio” refers to the cost of Don’s housing expenses monthly, divided by his gross monthly income. In this case, his proposed housing expense (PITI) will be $1,500/month. $1,500 / $6,800 = 22%. |
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Mortgage loan originator Janine Jetson has had a complaint filed against her. Upon receiving a request from her state licensing agency, Janine must: |
Make her books and records available to the agency Respond to the complaint Post an additional bond Request a hearing The answer is make her books and records available to the agency. Each loan originator must make available, upon request by the state licensing agency, the books and records relating to the operations of the originator. |
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Which of the following mortgage broker policies would violate fair lending laws? |
Originating loans only for customers who live within 100 miles of the broker’s location Refusing to originate loans in an earthquake zone Refusing to originate loans in ZIP codes known to be economically depressed Doing business only with customers who are seeking loans for residential properties The answer is refusing to originate loans in ZIP codes known to be economically depressed. Refusing to originate loans in ZIP codes known to be economically depressed would violate fair lending laws |
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Which of the following is not a threshold that the Home Ownership Equity Protection Act (HOEPA) has established to identify loans as high-cost mortgages? |
APR threshold Points and fees threshold Subprime interest rate threshold Prepayment penalty threshold The answer is subprime interest rate threshold. HOEPA uses APR, points and fees, and prepayment penalty thresholds to identify high-cost mortgages |
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LL Mortgage Company is advertising “120% LTV Home Equity Loans!” In order to ensure compliance with Regulation Z, which of the following statements is also required? |
Shop for options with lower loan-to-value ratios Interest on high loan-to-value ratios is not deductible Interest on the portion of credit exceeding market value is deductible at 50% of the normal value Consult a tax adviser regarding deductibility of interest The answer is consult a tax adviser regarding deductibility of interest. Advertising rules under Regulation Z provide that advertisements for loans exceeding the home’s fair market value must clearly and conspicuously state “The interest on the portion of credit that exceeds market value is NOT deductible.” The advertisement must also state that the borrower should consult a tax advisor regarding the deductibility of interest and charges. |
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On an FHA loan, a borrower is required to make a down payment of at least |
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5% 3.50% 0% 1.50% The answer is 3.50%. On an FHA loan, a borrower is required to bring a minimum down payment of 3.5%. |
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An “encumbrance” is: |
Transfer of title from one owner to another Transfer of ownership without any guarantees or warranties Cancellation of a contract A claim against a property that can affect the ability to transfer title The answer is a claim against a property that can affect the ability to transfer title. An encumbrance is a claim against a property that can affect the ability to transfer title |
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Don is refinancing his home in order to save money. If the loan goes through, his payment will drop from $2,000/month (PITI) to $1,500/month (PITI). Don’s gross income each month is $6,800, but he has a $300 car payment, a $150 credit card payment, and monthly alimony payments of $1,300. What is Don’s housing ratio on the proposed loan? |
29% 48% 22% 31% The answer is 22%. “Housing ratio” refers to the cost of Don’s housing expenses monthly, divided by his gross monthly income. In this case, his proposed housing expense (PITI) will be $1,500/month. $1,500 / $6,800 = 22%. |
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Mortgage loan originator Janine Jetson has had a complaint filed against her. Upon receiving a request from her state licensing agency, Janine must: |
Make her books and records available to the agency Respond to the complaint Post an additional bond Request a hearing The answer is make her books and records available to the agency. Each loan originator must make available, upon request by the state licensing agency, the books and records relating to the operations of the originator. |
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Which of the following mortgage broker policies would violate fair lending laws? |
Originating loans only for customers who live within 100 miles of the broker’s location Refusing to originate loans in an earthquake zone Refusing to originate loans in ZIP codes known to be economically depressed Doing business only with customers who are seeking loans for residential properties The answer is refusing to originate loans in ZIP codes known to be economically depressed. Refusing to originate loans in ZIP codes known to be economically depressed would violate fair lending laws |
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Which of the following is not a threshold that the Home Ownership Equity Protection Act (HOEPA) has established to identify loans as high-cost mortgages? |
APR threshold Points and fees threshold Subprime interest rate threshold Prepayment penalty threshold The answer is subprime interest rate threshold. HOEPA uses APR, points and fees, and prepayment penalty thresholds to identify high-cost mortgages |
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“UFMIP” stands for: |
Uniform Funded Mortgage Insurance Premium Upfront Mortgage Insurance Premium Uniform Financed Mortgage Insurance Premium Uniform Front-End Mortgage Insurance Premium The answer is Upfront Mortgage Insurance Premium. “UFMIP” stands for “Upfront Mortgage Insurance Premium.” |
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LL Mortgage Company is advertising “120% LTV Home Equity Loans!” In order to ensure compliance with Regulation Z, which of the following statements is also required? |
Shop for options with lower loan-to-value ratios Interest on high loan-to-value ratios is not deductible Interest on the portion of credit exceeding market value is deductible at 50% of the normal value Consult a tax adviser regarding deductibility of interest The answer is consult a tax adviser regarding deductibility of interest. Advertising rules under Regulation Z provide that advertisements for loans exceeding the home’s fair market value must clearly and conspicuously state “The interest on the portion of credit that exceeds market value is NOT deductible.” The advertisement must also state that the borrower should consult a tax advisor regarding the deductibility of interest and charges. |
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On an FHA loan, a borrower is required to make a down payment of at least |
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5% 3.50% 0% 1.50% The answer is 3.50%. On an FHA loan, a borrower is required to bring a minimum down payment of 3.5%. |
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An “encumbrance” is: |
Transfer of title from one owner to another Transfer of ownership without any guarantees or warranties Cancellation of a contract A claim against a property that can affect the ability to transfer title The answer is a claim against a property that can affect the ability to transfer title. An encumbrance is a claim against a property that can affect the ability to transfer title |
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Don is refinancing his home in order to save money. If the loan goes through, his payment will drop from $2,000/month (PITI) to $1,500/month (PITI). Don’s gross income each month is $6,800, but he has a $300 car payment, a $150 credit card payment, and monthly alimony payments of $1,300. What is Don’s housing ratio on the proposed loan? |
29% 48% 22% 31% The answer is 22%. “Housing ratio” refers to the cost of Don’s housing expenses monthly, divided by his gross monthly income. In this case, his proposed housing expense (PITI) will be $1,500/month. $1,500 / $6,800 = 22%. |
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Mortgage loan originator Janine Jetson has had a complaint filed against her. Upon receiving a request from her state licensing agency, Janine must: |
Make her books and records available to the agency Respond to the complaint Post an additional bond Request a hearing The answer is make her books and records available to the agency. Each loan originator must make available, upon request by the state licensing agency, the books and records relating to the operations of the originator. |
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Which of the following mortgage broker policies would violate fair lending laws? |
Originating loans only for customers who live within 100 miles of the broker’s location Refusing to originate loans in an earthquake zone Refusing to originate loans in ZIP codes known to be economically depressed Doing business only with customers who are seeking loans for residential properties The answer is refusing to originate loans in ZIP codes known to be economically depressed. Refusing to originate loans in ZIP codes known to be economically depressed would violate fair lending laws |
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Which of the following is not a threshold that the Home Ownership Equity Protection Act (HOEPA) has established to identify loans as high-cost mortgages? |
APR threshold Points and fees threshold Subprime interest rate threshold Prepayment penalty threshold The answer is subprime interest rate threshold. HOEPA uses APR, points and fees, and prepayment penalty thresholds to identify high-cost mortgages |
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“UFMIP” stands for: |
Uniform Funded Mortgage Insurance Premium Upfront Mortgage Insurance Premium Uniform Financed Mortgage Insurance Premium Uniform Front-End Mortgage Insurance Premium The answer is Upfront Mortgage Insurance Premium. “UFMIP” stands for “Upfront Mortgage Insurance Premium.” |
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The term “table funding” refers to: |
A situation in which a loan without a rescission period closes and funds the same day A situation in which a loan funds and is returned to the lender because of a borrower refusing to sign at the table The funding of pools of loans that create securitization A type of lending arrangement where brokers are permitted to originate, close, and fund loans using the lender's warehouse line of credit The answer is a type of lending arrangement where brokers are permitted to originate, close, and fund loans using the lender's warehouse line of credit. Mortgage brokers sometimes engage in table funding which allows them to, in theory, be a lender on a loan and close in their own name. Once the loan closes, it is quickly assigned to another entity. |
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LL Mortgage Company is advertising “120% LTV Home Equity Loans!” In order to ensure compliance with Regulation Z, which of the following statements is also required? |
Shop for options with lower loan-to-value ratios Interest on high loan-to-value ratios is not deductible Interest on the portion of credit exceeding market value is deductible at 50% of the normal value Consult a tax adviser regarding deductibility of interest The answer is consult a tax adviser regarding deductibility of interest. Advertising rules under Regulation Z provide that advertisements for loans exceeding the home’s fair market value must clearly and conspicuously state “The interest on the portion of credit that exceeds market value is NOT deductible.” The advertisement must also state that the borrower should consult a tax advisor regarding the deductibility of interest and charges. |
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On an FHA loan, a borrower is required to make a down payment of at least |
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5% 3.50% 0% 1.50% The answer is 3.50%. On an FHA loan, a borrower is required to bring a minimum down payment of 3.5%. |
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An “encumbrance” is: |
Transfer of title from one owner to another Transfer of ownership without any guarantees or warranties Cancellation of a contract A claim against a property that can affect the ability to transfer title The answer is a claim against a property that can affect the ability to transfer title. An encumbrance is a claim against a property that can affect the ability to transfer title |
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Don is refinancing his home in order to save money. If the loan goes through, his payment will drop from $2,000/month (PITI) to $1,500/month (PITI). Don’s gross income each month is $6,800, but he has a $300 car payment, a $150 credit card payment, and monthly alimony payments of $1,300. What is Don’s housing ratio on the proposed loan? |
29% 48% 22% 31% The answer is 22%. “Housing ratio” refers to the cost of Don’s housing expenses monthly, divided by his gross monthly income. In this case, his proposed housing expense (PITI) will be $1,500/month. $1,500 / $6,800 = 22%. |
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Mortgage loan originator Janine Jetson has had a complaint filed against her. Upon receiving a request from her state licensing agency, Janine must: |
Make her books and records available to the agency Respond to the complaint Post an additional bond Request a hearing The answer is make her books and records available to the agency. Each loan originator must make available, upon request by the state licensing agency, the books and records relating to the operations of the originator. |
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Which of the following mortgage broker policies would violate fair lending laws? |
Originating loans only for customers who live within 100 miles of the broker’s location Refusing to originate loans in an earthquake zone Refusing to originate loans in ZIP codes known to be economically depressed Doing business only with customers who are seeking loans for residential properties The answer is refusing to originate loans in ZIP codes known to be economically depressed. Refusing to originate loans in ZIP codes known to be economically depressed would violate fair lending laws |
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Which of the following is not a threshold that the Home Ownership Equity Protection Act (HOEPA) has established to identify loans as high-cost mortgages? |
APR threshold Points and fees threshold Subprime interest rate threshold Prepayment penalty threshold The answer is subprime interest rate threshold. HOEPA uses APR, points and fees, and prepayment penalty thresholds to identify high-cost mortgages |
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“UFMIP” stands for: |
Uniform Funded Mortgage Insurance Premium Upfront Mortgage Insurance Premium Uniform Financed Mortgage Insurance Premium Uniform Front-End Mortgage Insurance Premium The answer is Upfront Mortgage Insurance Premium. “UFMIP” stands for “Upfront Mortgage Insurance Premium.” |
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The term “table funding” refers to: |
A situation in which a loan without a rescission period closes and funds the same day A situation in which a loan funds and is returned to the lender because of a borrower refusing to sign at the table The funding of pools of loans that create securitization A type of lending arrangement where brokers are permitted to originate, close, and fund loans using the lender's warehouse line of credit The answer is a type of lending arrangement where brokers are permitted to originate, close, and fund loans using the lender's warehouse line of credit. Mortgage brokers sometimes engage in table funding which allows them to, in theory, be a lender on a loan and close in their own name. Once the loan closes, it is quickly assigned to another entity. |
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John and Tina are purchasing a home using an FHA loan. They are excited because, while the price they agreed to pay is $215,000, they just got word that the appraised value came in at $225,000. What is the minimum down payment that John and Tina must make on this loan? |
$7,875 $7,255 $7,525 $3,500 The answer is $7,525. FHA loans require a minimum borrower investment of 3.5% That amount is calculated by the lesser of the purchase price or the appraised value. |
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LL Mortgage Company is advertising “120% LTV Home Equity Loans!” In order to ensure compliance with Regulation Z, which of the following statements is also required? |
Shop for options with lower loan-to-value ratios Interest on high loan-to-value ratios is not deductible Interest on the portion of credit exceeding market value is deductible at 50% of the normal value Consult a tax adviser regarding deductibility of interest The answer is consult a tax adviser regarding deductibility of interest. Advertising rules under Regulation Z provide that advertisements for loans exceeding the home’s fair market value must clearly and conspicuously state “The interest on the portion of credit that exceeds market value is NOT deductible.” The advertisement must also state that the borrower should consult a tax advisor regarding the deductibility of interest and charges. |
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Germaine Hopper has not maintained a state loan originator license for five years. However, during the last three years of that five-year period, she was employed as a registered loan originator with the Anywhere Bank. Is Germaine required to retake the licensing test when she decides to apply for a new state license? |
Yes, she must retake the test because she had not maintained a license for over five years No, her time as a registered loan originator is not counted as part of the time her license has not been maintained No, once passed, an applicant does not have to take the test again Yes, test results are only valid in the year they are taken The answer is no, her time as a registered loan originator is not counted as part of the time her license has not been maintained. A state-licensed loan originator who fails to maintain a valid license for a period of five years or longer must retake the licensing test. However, any time during that five-year period in which the individual was acting as a registered loan originator is not included when determining whether or not the licensing test must be retaken. Because Germaine worked as a registered mortgage loan originator for three out of the five years she was inactive, she is only considered to have been without a license for two years, meaning she does not have to retake the licensing exam. |
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On an FHA loan, a borrower is required to make a down payment of at least |
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5% 3.50% 0% 1.50% The answer is 3.50%. On an FHA loan, a borrower is required to bring a minimum down payment of 3.5%. |
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An “encumbrance” is: |
Transfer of title from one owner to another Transfer of ownership without any guarantees or warranties Cancellation of a contract A claim against a property that can affect the ability to transfer title The answer is a claim against a property that can affect the ability to transfer title. An encumbrance is a claim against a property that can affect the ability to transfer title |
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Don is refinancing his home in order to save money. If the loan goes through, his payment will drop from $2,000/month (PITI) to $1,500/month (PITI). Don’s gross income each month is $6,800, but he has a $300 car payment, a $150 credit card payment, and monthly alimony payments of $1,300. What is Don’s housing ratio on the proposed loan? |
29% 48% 22% 31% The answer is 22%. “Housing ratio” refers to the cost of Don’s housing expenses monthly, divided by his gross monthly income. In this case, his proposed housing expense (PITI) will be $1,500/month. $1,500 / $6,800 = 22%. |
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Mortgage loan originator Janine Jetson has had a complaint filed against her. Upon receiving a request from her state licensing agency, Janine must: |
Make her books and records available to the agency Respond to the complaint Post an additional bond Request a hearing The answer is make her books and records available to the agency. Each loan originator must make available, upon request by the state licensing agency, the books and records relating to the operations of the originator. |
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Which of the following mortgage broker policies would violate fair lending laws? |
Originating loans only for customers who live within 100 miles of the broker’s location Refusing to originate loans in an earthquake zone Refusing to originate loans in ZIP codes known to be economically depressed Doing business only with customers who are seeking loans for residential properties The answer is refusing to originate loans in ZIP codes known to be economically depressed. Refusing to originate loans in ZIP codes known to be economically depressed would violate fair lending laws |
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Which of the following is not a threshold that the Home Ownership Equity Protection Act (HOEPA) has established to identify loans as high-cost mortgages? |
APR threshold Points and fees threshold Subprime interest rate threshold Prepayment penalty threshold The answer is subprime interest rate threshold. HOEPA uses APR, points and fees, and prepayment penalty thresholds to identify high-cost mortgages |
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“UFMIP” stands for: |
Uniform Funded Mortgage Insurance Premium Upfront Mortgage Insurance Premium Uniform Financed Mortgage Insurance Premium Uniform Front-End Mortgage Insurance Premium The answer is Upfront Mortgage Insurance Premium. “UFMIP” stands for “Upfront Mortgage Insurance Premium.” |
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The term “table funding” refers to: |
A situation in which a loan without a rescission period closes and funds the same day A situation in which a loan funds and is returned to the lender because of a borrower refusing to sign at the table The funding of pools of loans that create securitization A type of lending arrangement where brokers are permitted to originate, close, and fund loans using the lender's warehouse line of credit The answer is a type of lending arrangement where brokers are permitted to originate, close, and fund loans using the lender's warehouse line of credit. Mortgage brokers sometimes engage in table funding which allows them to, in theory, be a lender on a loan and close in their own name. Once the loan closes, it is quickly assigned to another entity. |
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John and Tina are purchasing a home using an FHA loan. They are excited because, while the price they agreed to pay is $215,000, they just got word that the appraised value came in at $225,000. What is the minimum down payment that John and Tina must make on this loan? |
$7,875 $7,255 $7,525 $3,500 The answer is $7,525. FHA loans require a minimum borrower investment of 3.5% That amount is calculated by the lesser of the purchase price or the appraised value. |
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LL Mortgage Company is advertising “120% LTV Home Equity Loans!” In order to ensure compliance with Regulation Z, which of the following statements is also required? |
Shop for options with lower loan-to-value ratios Interest on high loan-to-value ratios is not deductible Interest on the portion of credit exceeding market value is deductible at 50% of the normal value Consult a tax adviser regarding deductibility of interest The answer is consult a tax adviser regarding deductibility of interest. Advertising rules under Regulation Z provide that advertisements for loans exceeding the home’s fair market value must clearly and conspicuously state “The interest on the portion of credit that exceeds market value is NOT deductible.” The advertisement must also state that the borrower should consult a tax advisor regarding the deductibility of interest and charges. |
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Germaine Hopper has not maintained a state loan originator license for five years. However, during the last three years of that five-year period, she was employed as a registered loan originator with the Anywhere Bank. Is Germaine required to retake the licensing test when she decides to apply for a new state license? |
Yes, she must retake the test because she had not maintained a license for over five years No, her time as a registered loan originator is not counted as part of the time her license has not been maintained No, once passed, an applicant does not have to take the test again Yes, test results are only valid in the year they are taken The answer is no, her time as a registered loan originator is not counted as part of the time her license has not been maintained. A state-licensed loan originator who fails to maintain a valid license for a period of five years or longer must retake the licensing test. However, any time during that five-year period in which the individual was acting as a registered loan originator is not included when determining whether or not the licensing test must be retaken. Because Germaine worked as a registered mortgage loan originator for three out of the five years she was inactive, she is only considered to have been without a license for two years, meaning she does not have to retake the licensing exam. |
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The practice of encouraging a consumer to purchase a home based on an inflated appraisal, or steering consumers toward high-cost products with unfavorable terms, is known as: |
Property flipping Predatory lending Property flopping Equity-based lending The answer is predatory lending. The practice of encouraging a consumer to purchase a home based on an inflated appraisal, or steering consumers toward high-cost products with unfavorable terms, is known as predatory lending. |
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According to the HPML Rule, which of the following transactions would require a second appraisal? |
A higher-priced mortgage loan that also meets qualified mortgage standards The purchase price is 10% higher than the seller’s acquisition price 100 days ago All higher-priced mortgage loans are required to have two appraisals The purchase price is 20% higher than the seller’s acquisition price 150 days ago The answer is the purchase price is 20% higher than the seller’s acquisition price 150 days ago. According to the HPML Rule, a transaction will require a second appraisal if the purchase involves a possible case of “loan flipping.” This is true when the consumer’s purchase price is 10% more than the seller’s acquisition price (if the seller acquired the property 90 or fewer days ago) or 20% more than the seller’s acquisition price (if the seller acquired the property 91 to 180 days ago). |
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On an FHA loan, a borrower is required to make a down payment of at least |
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5% 3.50% 0% 1.50% The answer is 3.50%. On an FHA loan, a borrower is required to bring a minimum down payment of 3.5%. |
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An “encumbrance” is: |
Transfer of title from one owner to another Transfer of ownership without any guarantees or warranties Cancellation of a contract A claim against a property that can affect the ability to transfer title The answer is a claim against a property that can affect the ability to transfer title. An encumbrance is a claim against a property that can affect the ability to transfer title |
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Don is refinancing his home in order to save money. If the loan goes through, his payment will drop from $2,000/month (PITI) to $1,500/month (PITI). Don’s gross income each month is $6,800, but he has a $300 car payment, a $150 credit card payment, and monthly alimony payments of $1,300. What is Don’s housing ratio on the proposed loan? |
29% 48% 22% 31% The answer is 22%. “Housing ratio” refers to the cost of Don’s housing expenses monthly, divided by his gross monthly income. In this case, his proposed housing expense (PITI) will be $1,500/month. $1,500 / $6,800 = 22%. |
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Mortgage loan originator Janine Jetson has had a complaint filed against her. Upon receiving a request from her state licensing agency, Janine must: |
Make her books and records available to the agency Respond to the complaint Post an additional bond Request a hearing The answer is make her books and records available to the agency. Each loan originator must make available, upon request by the state licensing agency, the books and records relating to the operations of the originator. |
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Which of the following mortgage broker policies would violate fair lending laws? |
Originating loans only for customers who live within 100 miles of the broker’s location Refusing to originate loans in an earthquake zone Refusing to originate loans in ZIP codes known to be economically depressed Doing business only with customers who are seeking loans for residential properties The answer is refusing to originate loans in ZIP codes known to be economically depressed. Refusing to originate loans in ZIP codes known to be economically depressed would violate fair lending laws |
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Which of the following is not a threshold that the Home Ownership Equity Protection Act (HOEPA) has established to identify loans as high-cost mortgages? |
APR threshold Points and fees threshold Subprime interest rate threshold Prepayment penalty threshold The answer is subprime interest rate threshold. HOEPA uses APR, points and fees, and prepayment penalty thresholds to identify high-cost mortgages |
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“UFMIP” stands for: |
Uniform Funded Mortgage Insurance Premium Upfront Mortgage Insurance Premium Uniform Financed Mortgage Insurance Premium Uniform Front-End Mortgage Insurance Premium The answer is Upfront Mortgage Insurance Premium. “UFMIP” stands for “Upfront Mortgage Insurance Premium.” |
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The term “table funding” refers to: |
A situation in which a loan without a rescission period closes and funds the same day A situation in which a loan funds and is returned to the lender because of a borrower refusing to sign at the table The funding of pools of loans that create securitization A type of lending arrangement where brokers are permitted to originate, close, and fund loans using the lender's warehouse line of credit The answer is a type of lending arrangement where brokers are permitted to originate, close, and fund loans using the lender's warehouse line of credit. Mortgage brokers sometimes engage in table funding which allows them to, in theory, be a lender on a loan and close in their own name. Once the loan closes, it is quickly assigned to another entity. |
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John and Tina are purchasing a home using an FHA loan. They are excited because, while the price they agreed to pay is $215,000, they just got word that the appraised value came in at $225,000. What is the minimum down payment that John and Tina must make on this loan? |
$7,875 $7,255 $7,525 $3,500 The answer is $7,525. FHA loans require a minimum borrower investment of 3.5% That amount is calculated by the lesser of the purchase price or the appraised value. |
