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44 Cards in this Set
- Front
- Back
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Which of the following is a limit on the amount that the interest rate can change, up or down, on any adjustment date? |
Initial rate cap Periodic rate cap Lifetime rate cap Payment cap The answer is periodic rate cap. The periodic rate cap is a limit on the amount by which the interest rate can change, up or down, on any adjustment date. |
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Borrowers have the right to rescind a transaction in which a security interest is given in their primary residence until the later of midnight on the _____ business day following the consummation of the transaction or delivery of the required disclosures and rescission forms. |
Fifth Third Seventh Tenth The answer is third. Borrowers have the right to rescind a transaction in which a security interest is given in their primary residence until the later of midnight on the third business day following the consummation of the transaction or delivery of the required disclosures and rescission forms. |
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Before engaging in a refinance transaction, consumers and mortgage professionals should consider whether the transaction: |
Is for a qualified mortgage Has a tangible net benefit to the loan originator Has a tangible net benefit to the borrower Will reach closing in time for the borrower to use the funds as he or she wishes The answer is has a tangible net benefit to the borrower. Before engaging in a refinance transaction, consumers and mortgage professionals should consider whether the transaction has a tangible net benefit to the borrower. |
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Which of the following entities or individuals is responsible for determining financial responsibility requirements for state-licensed originators, lenders, or brokers? |
The NMLS The state regulator The governor The legislature The answer is the state regulator. The NMLS consolidates and makes licensing records available to state regulators to use for licensing decisions. |
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Which of the following entities or individuals is responsible for determining financial responsibility requirements for state-licensed originators, lenders, or brokers? |
The NMLS The state regulator The governor The legislature The answer is the state regulator. The NMLS consolidates and makes licensing records available to state regulators to use for licensing decisions. |
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In the appraisal process, it is unethical and unlawful to: |
Request an appraiser to consider additional information on the subject property or comparables Forward information to an appraiser about recent sales in the area Refuse payment of an appraiser due to breach of contract Threaten or pressure an appraiser to promise a specific value The answer is threaten or pressure an appraiser to promise a specific value. It is unlawful to threaten or pressure an appraiser to promise a specific value for an appraisal. |
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Which of the following entities or individuals is responsible for determining financial responsibility requirements for state-licensed originators, lenders, or brokers? |
The NMLS The state regulator The governor The legislature The answer is the state regulator. The NMLS consolidates and makes licensing records available to state regulators to use for licensing decisions. |
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In the appraisal process, it is unethical and unlawful to: |
Request an appraiser to consider additional information on the subject property or comparables Forward information to an appraiser about recent sales in the area Refuse payment of an appraiser due to breach of contract Threaten or pressure an appraiser to promise a specific value The answer is threaten or pressure an appraiser to promise a specific value. It is unlawful to threaten or pressure an appraiser to promise a specific value for an appraisal. |
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A covered loan under HOEPA is commonly known as a: |
Non-prime Non-conventional Low-cost, high-fee High-cost mortgage The answer is high-cost mortgage. Section 32 of the Truth-in-Lending Act contains information and provisions with regard to high-cost mortgage loans. These loans are identified by APR, points and fees, and/or prepayment penalties that meet or exceed thresholds set to a level deemed excessive. |
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Which of the following entities or individuals is responsible for determining financial responsibility requirements for state-licensed originators, lenders, or brokers? |
The NMLS The state regulator The governor The legislature The answer is the state regulator. The NMLS consolidates and makes licensing records available to state regulators to use for licensing decisions. |
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In the appraisal process, it is unethical and unlawful to: |
Request an appraiser to consider additional information on the subject property or comparables Forward information to an appraiser about recent sales in the area Refuse payment of an appraiser due to breach of contract Threaten or pressure an appraiser to promise a specific value The answer is threaten or pressure an appraiser to promise a specific value. It is unlawful to threaten or pressure an appraiser to promise a specific value for an appraisal. |
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A covered loan under HOEPA is commonly known as a: |
Non-prime Non-conventional Low-cost, high-fee High-cost mortgage The answer is high-cost mortgage. Section 32 of the Truth-in-Lending Act contains information and provisions with regard to high-cost mortgage loans. These loans are identified by APR, points and fees, and/or prepayment penalties that meet or exceed thresholds set to a level deemed excessive. |
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The provisions of the GLB Act specifically require compliance with the: |
MARS Rule Safeguards Rule PATRIOT Act Truth-in-Lending Act The answer is the Safeguards Rule. The provisions of the GLB Act specifically require compliance with the Safeguards Rule. |
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A balloon mortgage that includes a conditional refinance provision allows the borrower to: |
Request that the loan be refinanced and converted to a 30-year fixed-rate loan Rescind the transaction if the loan becomes too expensive Request modification of the terms of the loan when it reaches maturity Refinance the loan if he or she is in default The answer is request modification of the terms of the loan when it reaches maturity. A balloon mortgage that includes a conditional refinance provision allows the borrower to request modification of the terms of the loan when it reaches maturity. |
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Which of the following entities or individuals is responsible for determining financial responsibility requirements for state-licensed originators, lenders, or brokers? |
The NMLS The state regulator The governor The legislature The answer is the state regulator. The NMLS consolidates and makes licensing records available to state regulators to use for licensing decisions. |
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In the appraisal process, it is unethical and unlawful to: |
Request an appraiser to consider additional information on the subject property or comparables Forward information to an appraiser about recent sales in the area Refuse payment of an appraiser due to breach of contract Threaten or pressure an appraiser to promise a specific value The answer is threaten or pressure an appraiser to promise a specific value. It is unlawful to threaten or pressure an appraiser to promise a specific value for an appraisal. |
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A covered loan under HOEPA is commonly known as a: |
Non-prime Non-conventional Low-cost, high-fee High-cost mortgage The answer is high-cost mortgage. Section 32 of the Truth-in-Lending Act contains information and provisions with regard to high-cost mortgage loans. These loans are identified by APR, points and fees, and/or prepayment penalties that meet or exceed thresholds set to a level deemed excessive. |
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The provisions of the GLB Act specifically require compliance with the: |
MARS Rule Safeguards Rule PATRIOT Act Truth-in-Lending Act The answer is the Safeguards Rule. The provisions of the GLB Act specifically require compliance with the Safeguards Rule. |
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A balloon mortgage that includes a conditional refinance provision allows the borrower to: |
Request that the loan be refinanced and converted to a 30-year fixed-rate loan Rescind the transaction if the loan becomes too expensive Request modification of the terms of the loan when it reaches maturity Refinance the loan if he or she is in default The answer is request modification of the terms of the loan when it reaches maturity. A balloon mortgage that includes a conditional refinance provision allows the borrower to request modification of the terms of the loan when it reaches maturity. |
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Mary and Larry are purchasing a house for $198,000. They are obtaining a conforming loan and making a down payment of $20,000. How much should they expect to receive in seller help if the seller agrees to contribute the maximum amount? |
$11,880 $5,940 $10,680 $12,440 The answer is $11,880. The max seller contribution in this scenario is 6% (the down payment is more than 10%). The 6% is taken from the purchase price of $198,000, which is $11,880. |
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Which of the following would not be considered in the loan application process? |
Previous housing payment history Income history Current liabilities A bankruptcy from 15 years ago The answer is a bankruptcy from 15 years ago. A bankruptcy from over ten years ago would not be considered in a borrower’s credit qualification. |
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Which of the following is not a consideration when determining the financial responsibility of a licensee? |
Net worth Surety bond or state fund Credit score Felony convictions of company officers The answer is felony convictions of company officers. While felony convictions are certainly a consideration in determining license eligibility, it is not considered in determining financial responsibility. |
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Which of the following would not be considered in the loan application process? |
Previous housing payment history Income history Current liabilities A bankruptcy from 15 years ago The answer is a bankruptcy from 15 years ago. A bankruptcy from over ten years ago would not be considered in a borrower’s credit qualification. |
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Which of the following is not a consideration when determining the financial responsibility of a licensee? |
Net worth Surety bond or state fund Credit score Felony convictions of company officers The answer is felony convictions of company officers. While felony convictions are certainly a consideration in determining license eligibility, it is not considered in determining financial responsibility. |
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When dealing with third-party service providers, banks and nonbanks must establish risk management programs that include all but which of the following elements? |
Conducting due diligence to assess the service providers’ ability to comply with the law Entering contracts with service providers that include enforceable consequences for failing to comply with the law Establishing compensation programs that withhold payment for services until the service provider can demonstrate compliance with the law Reviewing the service provider’s employee training programs, particularly for those employees that have direct contact with consumers The answer is establishing compensation programs that withhold payment for services until the service provider can demonstrate compliance with the law. Establishing compensation programs to withhold payment for services is not a required element of a risk management program. |
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Which of the following would not be considered in the loan application process? |
Previous housing payment history Income history Current liabilities A bankruptcy from 15 years ago The answer is a bankruptcy from 15 years ago. A bankruptcy from over ten years ago would not be considered in a borrower’s credit qualification. |
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Which of the following is not a consideration when determining the financial responsibility of a licensee? |
Net worth Surety bond or state fund Credit score Felony convictions of company officers The answer is felony convictions of company officers. While felony convictions are certainly a consideration in determining license eligibility, it is not considered in determining financial responsibility. |
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When dealing with third-party service providers, banks and nonbanks must establish risk management programs that include all but which of the following elements? |
Conducting due diligence to assess the service providers’ ability to comply with the law Entering contracts with service providers that include enforceable consequences for failing to comply with the law Establishing compensation programs that withhold payment for services until the service provider can demonstrate compliance with the law Reviewing the service provider’s employee training programs, particularly for those employees that have direct contact with consumers The answer is establishing compensation programs that withhold payment for services until the service provider can demonstrate compliance with the law. Establishing compensation programs to withhold payment for services is not a required element of a risk management program. |
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Second appraisal requirements for higher-priced mortgage loans were put in place in an attempt to curb the practice of: |
Reverse redlining Property flipping Equity stripping Steering The answer is property flipping. Second appraisal requirements were put in place under the HPML Rule for certain higher-priced mortgage loan transactions in an attempt to curb the practice of property flipping. |
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Mortgage insurance premiums are required for: |
All conventional loans with an LTV greater than 80% The first five years of the loan term as long as equity position is less than 20% All FHA loans All FHA loans until 20% equity position is attained The answer is All FHA loans. Mortgage insurance premiums are required for all FHA loans. |
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A wholesale lending arrangement that permits a mortgage broker to originate, close, and fund a loan using a warehouse line of credit is called: |
Warehouse lending Table lending Table funding Warehouse servicing The answer is table funding. Table funding essentially allows a broker to act as the lender on the transaction, prior to transferring the loan immediately after closing to the lender that extended the credit line. The credit line used for funding is then replenished. |
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An ARM loan has a 4.00% start rate, and it is time for the first adjustment to be made. It has a periodic cap of 1% and a lifetime cap of 5%. What is the highest that the interest rate could be after the first adjustment? |
9% 7% 5% Impossible to answer without the margin and index known The answer is 5%. An ARM with a start rate of 4.00% and a periodic cap of 1% (no initial cap) could move no higher than 5% on its first movement. |
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An originator’s unique identifier must be shown on all but which of the following documents? |
Business signage Mortgage loan applications Advertisements Business cards The answer is business signage. The unique identifier of any person originating a residential mortgage loan must be clearly shown on all residential mortgage loan application forms; solicitations or advertisements, including business cards or websites; and any other documents as established by rule, regulation, or order of the state licensing agency (MSL.210). |
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A scenario in which a person forces the sale of a home at a much lower value than its true worth, then resells the home at its true value, is known as: |
Property flopping Property flipping Short sale Air loan The answer is property flopping. A scenario in which a person forces the sale of a home at a much lower value than its true worth, then resells the home at its true value, is known as property flopping. |
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In order to comply with the advertising rules found in Regulation Z, creditors that advertise rates and payments for mortgages must: |
Make the required disclosures with equal prominence and in close proximity to the advertised rates or payments Use model forms Follow the rules for formatting advertisements that the CFPB prescribes Disclose all of the terms for the mortgage loan that the creditor is advertising The answer is make the required disclosures with equal prominence and in close proximity to the advertised rates or payments. In order to comply with the advertising rules found in Regulation Z, creditors that advertise rates and payments for mortgages must make the required disclosures with equal prominence and in close proximity to the advertised rates or payments. |
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Which of the following best describes the types of conventional mortgages that are available? |
Forward mortgages and reverse mortgages Prime loans and subprime loans Conforming loans and nonconforming loans Traditional mortgages and nontraditional mortgages The answer is conforming loans and nonconforming loans. There are two types of conventional mortgage loans: conforming loans, which meet GSE loan limits and standards, and nonconforming loans, which do not meet GSE loan limits and standards (for example, “jumbo” loans). |
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Which of the following best describes the types of conventional mortgages that are available? |
Forward mortgages and reverse mortgages Prime loans and subprime loans Conforming loans and nonconforming loans Traditional mortgages and nontraditional mortgages The answer is conforming loans and nonconforming loans. There are two types of conventional mortgage loans: conforming loans, which meet GSE loan limits and standards, and nonconforming loans, which do not meet GSE loan limits and standards (for example, “jumbo” loans). |
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“MBS” stands for: |
Mortgage borrowing standards Mortgage balance subordination Mortgage beneficiary securitization Mortgage-backed securities The answer is mortgage-backed securities. In the secondary mortgage market, mortgage-backed securities are an investment vehicle in which expected payment streams from mortgage loans make up the profit paid out to investors. MBSs are a product of the secondary market. |
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Which of the following best describes the types of conventional mortgages that are available? |
Forward mortgages and reverse mortgages Prime loans and subprime loans Conforming loans and nonconforming loans Traditional mortgages and nontraditional mortgages The answer is conforming loans and nonconforming loans. There are two types of conventional mortgage loans: conforming loans, which meet GSE loan limits and standards, and nonconforming loans, which do not meet GSE loan limits and standards (for example, “jumbo” loans). |
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“MBS” stands for: |
Mortgage borrowing standards Mortgage balance subordination Mortgage beneficiary securitization Mortgage-backed securities The answer is mortgage-backed securities. In the secondary mortgage market, mortgage-backed securities are an investment vehicle in which expected payment streams from mortgage loans make up the profit paid out to investors. MBSs are a product of the secondary market. |
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Conforming loan guidelines generally include DTI ratios of: |
26% / 38% 31% / 43% 28% / 41% 28% / 36% The answer is 28% / 36%. The standard conforming DTI ratios for Fannie Mae and Freddie Mac are 28% (housing) and 36% (total debt). |
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A state is conducting an examination of mortgage loan originator Basil Thyme. During the examination, the agency is authorized to do all of the following, except: |
Administer oaths or affirmations Control access to Basil’s office Subpoena witnesses Require production of relevant documents The answer is control access to Basil’s office. In conducting an examination or investigation, the state licensing agency is authorized to administer oaths or affirmations; subpoena witnesses; require the production of relevant documents; and control access to any documents and records of any person under examination or investigation. |
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This is defined as the intentional perversion of the truth for the purpose of inducing another person or entity to rely on it in order to part with something or surrender a legal right. |
Mortgage fraud Industry insider fraud Identity theft Predatory lending The answer is mortgage fraud. Mortgage fraud is defined as the intentional perversion of the truth for the purpose of inducing another person or entity to rely on it in order to part with something or surrender a legal right. |
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A lender is trying to lure customers with advertisements for “Minimum Monthly Payments to Meet Any Budget!” This advertisement must also include an equally prominent statement in close proximity which alerts consumers that: |
The loan may not be paid off by the end of the loan term The loan is only advised for borrowers with a short-term interest in the dwelling used to secure the loan The borrower should seek homeownership counseling prior to applying for the loan A balloon payment may result from minimum periodic payments The answer is a balloon payment may result from minimum periodic payments. The advertisement must include a statement that a balloon payment may result from minimum periodic payments. |
