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53 Cards in this Set
- Front
- Back
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Which of the following prefixes indicates the purchase of flood insurance is mandatory? |
A and D A and V V and D B, C, and D The answer is A and V. The “A” and the “V” prefixes indicate the zones in which flood insurance is mandatory. In zone “D,” flood insurance is available if a homeowner chooses it, but no other zones require flood insurance. |
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The responsibilities of a loan servicer include: |
Disbursing escrow funds, managing trust accounts, and adjudicating foreclosure proceedings Sending closing documents, collecting escrow funds, and obtaining loan funds for clients Accepting payments, disbursing escrow funds, maintaining records, and managing delinquent accounts Accepting applications, disbursing interest and principal, and maintaining origination records The answer is accepting payments, disbursing escrow funds, maintaining records, and managing delinquent accounts. Loan servicers handle many tasks, including accepting payments, disbursing escrow funds, maintaining records, and managing delinquent accounts. |
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All of the following correctly pair federal laws with their implementing regulations, except: |
The Equal Credit Opportunity Act and Regulation B The Real Estate Settlement Procedures Act and Regulation X The Gramm-Leach-Bliley Act and Regulation V The Truth in Lending Act and Regulation Z The answer is The Gramm-Leach-Bliley Act and Regulation V. The Gramm-Leach-Bliley Act is implemented by Regulation P. |
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The Comparisons table on the Loan Estimate provides all of the following information, except: |
The amount of loan costs paid in the first five years of the loan term The amount paid for private mortgage insurance before the LTV ratio reaches 78% The amount of principal paid in the first five years of the loan term The amount of total interest paid over the loan term The answer is the amount paid for private mortgage insurance before the LTV ratio reaches 78%. The comparisons table does not show the amount paid for PMI before the LTV ratios reaches 78%. |
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Lisa and Ryan are moving out of state and have sold their home. Unfortunately, the closing on their old home is not for another two months, and they need funds to begin making payments on their new home, which they have closed on and plan to move into immediately. Their lender is likely to suggest that they secure: |
A construction-to-permanent loan A subprime loan An interest-only loan Bridge financing The answer is bridge financing. Bridge financing is used to help homeowners who are selling one home and buying another to make payments on their new home loan while waiting for the closing date on their old home to arrive. |
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When a creditor revises a Loan Estimate, it must deliver the revised disclosure to the loan applicant: |
No later than seven business days prior to consummation On the same date that it delivers a Closing Disclosure No later than four business days prior to consummation At the same time that the revisions are made The answer is no later than four business days prior to consummation. When a creditor revises a Loan Estimate, it must deliver the revised disclosure to the applicant no later than four business days prior to consummation. |
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The _____ is responsible for determining if a property is in a flood zone, and the _____ is responsible for verifying that proper flood insurance is in place. |
Underwriter; appraiser Appraiser; underwriter Appraiser; title insurer Underwriter; title insurer The answer is appraiser; underwriter. The appraiser is responsible for determining whether a property is located in a flood zone, and the underwriter verifies that proper flood insurance is in place. |
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The _____ is responsible for determining if a property is in a flood zone, and the _____ is responsible for verifying that proper flood insurance is in place. |
Underwriter; appraiser Appraiser; underwriter Appraiser; title insurer Underwriter; title insurer The answer is appraiser; underwriter. The appraiser is responsible for determining whether a property is located in a flood zone, and the underwriter verifies that proper flood insurance is in place. |
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Which of the following is a lender unable to consider during the qualification process? |
The borrower is 65 years old The borrower has had several jobs in the last two years The borrower’s credit score is 618 The assets of the borrower are in a retirement account The answer is the borrower is 65 years old. According to ECOA, a lender may not consider a borrower’s age for the purposes of credit qualification. |
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XYZ Mortgage is transferring servicing rights for all of its mortgages to a new servicer. RESPA requires what disclosure to be sent to the borrowers affected? |
Affiliated Business Disclosure Servicing Transfer Statement Escrow Servicing Notice FTC Service Disposal Notice The answer is Servicing Transfer Statement. RESPA requires that a client be provided a Servicing Transfer Statement at least 15 days prior to the transfer of the loan to a new servicer. |
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Which of the following is not prohibited under the Telemarketing Sales Rule? |
Threatening to arrest a borrower if he/she does not pay a bill Making misleading statements Transmitting a telephone number so that the recipient can identify it through Caller ID Placing calls before 8:00am or after 9:00pm The answer is Transmitting a telephone number so that the recipient can identify it through Caller ID. It is not prohibited under the TSR to call a consumer and have the number able to be read on the Caller ID. In fact, it is required. |
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Which of the following is not prohibited under the Telemarketing Sales Rule? |
Threatening to arrest a borrower if he/she does not pay a bill Making misleading statements Transmitting a telephone number so that the recipient can identify it through Caller ID Placing calls before 8:00am or after 9:00pm The answer is Transmitting a telephone number so that the recipient can identify it through Caller ID. It is not prohibited under the TSR to call a consumer and have the number able to be read on the Caller ID. In fact, it is required. |
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A conditional refinance provision might be a feature of what type of loan? |
Option ARM 15-year fixed Interest-only ARM Balloon The answer is balloon. A balloon loan may be eligible for refinance if it carries a conditional refinance provision. This means the loan may qualify for refinance if certain conditions are met, including: borrower must live in the house; no second liens in place; must be current and not have been late in 12 months; new rate cannot exceed 5% over the note; docs must be signed and fees paid. |
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Which of the following is not prohibited under the Telemarketing Sales Rule? |
Threatening to arrest a borrower if he/she does not pay a bill Making misleading statements Transmitting a telephone number so that the recipient can identify it through Caller ID Placing calls before 8:00am or after 9:00pm The answer is Transmitting a telephone number so that the recipient can identify it through Caller ID. It is not prohibited under the TSR to call a consumer and have the number able to be read on the Caller ID. In fact, it is required. |
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A conditional refinance provision might be a feature of what type of loan? |
Option ARM 15-year fixed Interest-only ARM Balloon The answer is balloon. A balloon loan may be eligible for refinance if it carries a conditional refinance provision. This means the loan may qualify for refinance if certain conditions are met, including: borrower must live in the house; no second liens in place; must be current and not have been late in 12 months; new rate cannot exceed 5% over the note; docs must be signed and fees paid. |
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Which of the following is true regarding acceptable sources for down payment? |
All gifts may be used, regardless of source Gifts from relatives are permitted Gifts from the seller are permitted No gifts may be used, regardless of source The answer is gifts from relatives are permitted. Acceptable sources for down payment include gifts from relatives and gifts from domestic partners (although Fannie Mae and Freddie Mac require a 12-month relationship history). Gifts from the seller are not an acceptable source of down payment. |
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Which of the following is not prohibited under the Telemarketing Sales Rule? |
Threatening to arrest a borrower if he/she does not pay a bill Making misleading statements Transmitting a telephone number so that the recipient can identify it through Caller ID Placing calls before 8:00am or after 9:00pm The answer is Transmitting a telephone number so that the recipient can identify it through Caller ID. It is not prohibited under the TSR to call a consumer and have the number able to be read on the Caller ID. In fact, it is required. |
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A conditional refinance provision might be a feature of what type of loan? |
Option ARM 15-year fixed Interest-only ARM Balloon The answer is balloon. A balloon loan may be eligible for refinance if it carries a conditional refinance provision. This means the loan may qualify for refinance if certain conditions are met, including: borrower must live in the house; no second liens in place; must be current and not have been late in 12 months; new rate cannot exceed 5% over the note; docs must be signed and fees paid. |
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Which of the following is true regarding acceptable sources for down payment? |
All gifts may be used, regardless of source Gifts from relatives are permitted Gifts from the seller are permitted No gifts may be used, regardless of source The answer is gifts from relatives are permitted. Acceptable sources for down payment include gifts from relatives and gifts from domestic partners (although Fannie Mae and Freddie Mac require a 12-month relationship history). Gifts from the seller are not an acceptable source of down payment. |
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If a borrower sells personal property in order to raise money for down payment, and the underwriter questions whether the value of the items sold is realistic, the underwriter may: |
Deny the loan until another source of down payment can be identified Take the item in trade for cash value Have an appraisal done on the item, or ask for further documentation Add the value in question to the loan amount if further documentation cannot be provided The answer is have an appraisal done on the item, or ask for further documentation. The underwriter will ask to see documentation if the value of personal property being sold is called into question. This may include an appraisal of the property, and/or some further documentation. |
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Which of the following is not prohibited under the Telemarketing Sales Rule? |
Threatening to arrest a borrower if he/she does not pay a bill Making misleading statements Transmitting a telephone number so that the recipient can identify it through Caller ID Placing calls before 8:00am or after 9:00pm The answer is Transmitting a telephone number so that the recipient can identify it through Caller ID. It is not prohibited under the TSR to call a consumer and have the number able to be read on the Caller ID. In fact, it is required. |
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A conditional refinance provision might be a feature of what type of loan? |
Option ARM 15-year fixed Interest-only ARM Balloon The answer is balloon. A balloon loan may be eligible for refinance if it carries a conditional refinance provision. This means the loan may qualify for refinance if certain conditions are met, including: borrower must live in the house; no second liens in place; must be current and not have been late in 12 months; new rate cannot exceed 5% over the note; docs must be signed and fees paid. |
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Which of the following is true regarding acceptable sources for down payment? |
All gifts may be used, regardless of source Gifts from relatives are permitted Gifts from the seller are permitted No gifts may be used, regardless of source The answer is gifts from relatives are permitted. Acceptable sources for down payment include gifts from relatives and gifts from domestic partners (although Fannie Mae and Freddie Mac require a 12-month relationship history). Gifts from the seller are not an acceptable source of down payment. |
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If a borrower sells personal property in order to raise money for down payment, and the underwriter questions whether the value of the items sold is realistic, the underwriter may: |
Deny the loan until another source of down payment can be identified Take the item in trade for cash value Have an appraisal done on the item, or ask for further documentation Add the value in question to the loan amount if further documentation cannot be provided The answer is have an appraisal done on the item, or ask for further documentation. The underwriter will ask to see documentation if the value of personal property being sold is called into question. This may include an appraisal of the property, and/or some further documentation. |
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If a broker is preparing to publish an ad to bring in new clients, with which law should he/she be familiar? |
TILA FNMA FCRA FACTA The answer is TILA. The Truth-in-Lending Act governs advertising for credit. Ads for mortgages fall under this legislation. |
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Servicers are required to respond to a _____ from a borrower within five days. |
Loan application Qualified written request Request for servicing transfer Notice of rescission The answer is qualified written request. Servicers are required to respond to a qualified written request from a borrower within five days. |
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Servicers are required to respond to a _____ from a borrower within five days. |
Loan application Qualified written request Request for servicing transfer Notice of rescission The answer is qualified written request. Servicers are required to respond to a qualified written request from a borrower within five days. |
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Under the GLB Act, a customer relationship is established: |
As soon as a borrower inquires about a loan When the borrower’s loan is funded Once the loan servicing begins Upon application The answer is upon application. Under the Gramm-Leach-Bliley Act, a customer relationship begins as soon as a borrower provides non-public personal information. For the purposes of mortgage lending, this happens at application. |
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Servicers are required to respond to a _____ from a borrower within five days. |
Loan application Qualified written request Request for servicing transfer Notice of rescission The answer is qualified written request. Servicers are required to respond to a qualified written request from a borrower within five days. |
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Under the GLB Act, a customer relationship is established: |
As soon as a borrower inquires about a loan When the borrower’s loan is funded Once the loan servicing begins Upon application The answer is upon application. Under the Gramm-Leach-Bliley Act, a customer relationship begins as soon as a borrower provides non-public personal information. For the purposes of mortgage lending, this happens at application. |
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Two types of loans used to finance the construction of a property are: |
Pre-construction and full construction Fully-amortized and interest-only Interim and permanent construction Construction-to-permanent and stand-alone construction The answer is construction-to-permanent and stand-alone construction. Construction-to-permanent and stand-alone construction loans are two options used to finance the construction of a home being built. Both have advantages and disadvantages based on the borrower’s needs and the timeline of the construction. |
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Servicers are required to respond to a _____ from a borrower within five days. |
Loan application Qualified written request Request for servicing transfer Notice of rescission The answer is qualified written request. Servicers are required to respond to a qualified written request from a borrower within five days. |
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Under the GLB Act, a customer relationship is established: |
As soon as a borrower inquires about a loan When the borrower’s loan is funded Once the loan servicing begins Upon application The answer is upon application. Under the Gramm-Leach-Bliley Act, a customer relationship begins as soon as a borrower provides non-public personal information. For the purposes of mortgage lending, this happens at application. |
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Two types of loans used to finance the construction of a property are: |
Pre-construction and full construction Fully-amortized and interest-only Interim and permanent construction Construction-to-permanent and stand-alone construction The answer is construction-to-permanent and stand-alone construction. Construction-to-permanent and stand-alone construction loans are two options used to finance the construction of a home being built. Both have advantages and disadvantages based on the borrower’s needs and the timeline of the construction. |
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How often must a borrower renew owner’s title insurance? |
With each refinance When the house is sold to the next owner Owner’s title insurance expires every seven years It is not necessary to renew The answer is it is not necessary to renew. Owner’s title insurance is good for the period of time that a borrower owns the home, meaning it must only be purchased once and does not require renewal. |
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Servicers are required to respond to a _____ from a borrower within five days. |
Loan application Qualified written request Request for servicing transfer Notice of rescission The answer is qualified written request. Servicers are required to respond to a qualified written request from a borrower within five days. |
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Under the GLB Act, a customer relationship is established: |
As soon as a borrower inquires about a loan When the borrower’s loan is funded Once the loan servicing begins Upon application The answer is upon application. Under the Gramm-Leach-Bliley Act, a customer relationship begins as soon as a borrower provides non-public personal information. For the purposes of mortgage lending, this happens at application. |
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Two types of loans used to finance the construction of a property are: |
Pre-construction and full construction Fully-amortized and interest-only Interim and permanent construction Construction-to-permanent and stand-alone construction The answer is construction-to-permanent and stand-alone construction. Construction-to-permanent and stand-alone construction loans are two options used to finance the construction of a home being built. Both have advantages and disadvantages based on the borrower’s needs and the timeline of the construction. |
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How often must a borrower renew owner’s title insurance? |
With each refinance When the house is sold to the next owner Owner’s title insurance expires every seven years It is not necessary to renew The answer is it is not necessary to renew. Owner’s title insurance is good for the period of time that a borrower owns the home, meaning it must only be purchased once and does not require renewal. |
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A loss payee clause protects whom? |
The lender in the event the property is damaged by fire or other risks The borrower from losing all of his/her investment The lender in the event the borrower defaults on the loan The borrower by using mortgage insurance to offset interest rate adjustment The answer is the lender in the event the property is damaged by fire or other risks. The loss payee clause in a hazard insurance policy protects the lender’s investment in the event that the collateral is damaged by fire or other risks. This means that if there is a fire or other loss, the lender is paid first to cover its investment. |
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Servicers are required to respond to a _____ from a borrower within five days. |
Loan application Qualified written request Request for servicing transfer Notice of rescission The answer is qualified written request. Servicers are required to respond to a qualified written request from a borrower within five days. |
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Under the GLB Act, a customer relationship is established: |
As soon as a borrower inquires about a loan When the borrower’s loan is funded Once the loan servicing begins Upon application The answer is upon application. Under the Gramm-Leach-Bliley Act, a customer relationship begins as soon as a borrower provides non-public personal information. For the purposes of mortgage lending, this happens at application. |
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Two types of loans used to finance the construction of a property are: |
Pre-construction and full construction Fully-amortized and interest-only Interim and permanent construction Construction-to-permanent and stand-alone construction The answer is construction-to-permanent and stand-alone construction. Construction-to-permanent and stand-alone construction loans are two options used to finance the construction of a home being built. Both have advantages and disadvantages based on the borrower’s needs and the timeline of the construction. |
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How often must a borrower renew owner’s title insurance? |
With each refinance When the house is sold to the next owner Owner’s title insurance expires every seven years It is not necessary to renew The answer is it is not necessary to renew. Owner’s title insurance is good for the period of time that a borrower owns the home, meaning it must only be purchased once and does not require renewal. |
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A loss payee clause protects whom? |
The lender in the event the property is damaged by fire or other risks The borrower from losing all of his/her investment The lender in the event the borrower defaults on the loan The borrower by using mortgage insurance to offset interest rate adjustment The answer is the lender in the event the property is damaged by fire or other risks. The loss payee clause in a hazard insurance policy protects the lender’s investment in the event that the collateral is damaged by fire or other risks. This means that if there is a fire or other loss, the lender is paid first to cover its investment. |
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Which form of fraud is most prevalent involving borrowers in the mortgage process? |
Falsified applications Foreclosure rescue scams Identity theft Straw sellers The answer is falsified applications. Applications using fraudulent information are the most common type of mortgage fraud involving borrowers. Inconsistent information is present in over 35% of cases. |
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The primary purpose of ECOA is to: |
Make credit available to borrowers who are less than qualified Make sure credit is available to all creditworthy applicants Make sure credit is not denied because of a lack of income stability Prevent denial of credit due to a potential borrower’s past credit history The answer is make sure credit is available to all creditworthy applicants. The primary purpose of ECOA is to promote the availability of credit for all creditworthy applicants. |
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The primary purpose of ECOA is to: |
Make credit available to borrowers who are less than qualified Make sure credit is available to all creditworthy applicants Make sure credit is not denied because of a lack of income stability Prevent denial of credit due to a potential borrower’s past credit history The answer is make sure credit is available to all creditworthy applicants. The primary purpose of ECOA is to promote the availability of credit for all creditworthy applicants. |
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The implementing regulations for the Home Mortgage Disclosure Act are known as: |
Regulation X HDA Regulation C Section 32 The answer is Regulation C. The regulations promulgated under HMDA are known as Regulation C. |
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In calculating an adjustment for an ARM, the fully-indexed rate is determined by adding: |
The margin to the start rate The start rate to the index The index to the lifetime cap The margin to the index The answer is the margin to the index. The fully-indexed rate determines the movement of an ARM (absent the caps). In order to arrive at the fully-indexed rate, you simply add the margin and index together. |
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In calculating an adjustment for an ARM, the fully-indexed rate is determined by adding: |
The margin to the start rate The start rate to the index The index to the lifetime cap The margin to the index The answer is the margin to the index. The fully-indexed rate determines the movement of an ARM (absent the caps). In order to arrive at the fully-indexed rate, you simply add the margin and index together. |
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The priority of liens is based on: |
The order of recordation The newest debt paid first Lien holders must file for payment after a default The order of recordation, unless a tax lien or subordination agreement changes the order The answer is the order of recordation, unless a tax lien or subordination agreement changes the order. Liens are paid in order based on the recording date, oldest first. However, tax liens take priority, and a subordination agreement can change the order between creditors. |
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An underwriter examines title documents for issues that may cloud the title or affect marketability. All of the following are items that may affect title, except: |
Easements Land locks Leaseholds Completion notice The answer is completion notice. A completion notice is required of an appraiser, typically to document the completion of new construction prior to closing a loan on the property. Easements, land locks, and leaseholds are all examples of title issues that may affect marketability or cloud title. |
