Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
25 Cards in this Set
- Front
- Back
|
Which of the following is a limit on the amount that the interest rate can increase or decrease at the first adjustment date for an ARM? |
Initial rate cap Periodic rate cap Lifetime rate cap Payment cap The answer is initial rate cap. The initial rate cap is a limit on the amount by which the interest rate can increase or decrease at the first adjustment date for an ARM. |
|
|
A borrower of a closed-end loan with a three-day right to rescind may exercise this right at any time until midnight on the third business day after: |
Consummation, delivery of the notice of the right to rescind, or delivery of all material disclosures, whichever is later Consummation or delivery of the required rescission notice, whichever is earlier Delivery of the notice of the right to rescind or delivery of all material truth-in-lending disclosures, whichever is later Delivery of the notice of the right to rescind or delivery of all material truth-in-lending disclosures, whichever is earlier The answer is consummation, delivery of the notice of the right to rescind, or delivery of all material disclosures, whichever is later. In a closed-end loan transaction that offers the right to rescind, rescission may be exercised at any time until midnight on the third business day after consummation, delivery of the notice of the right to rescind, or delivery of all material disclosures, whichever is later. |
|
|
Which of the following would be subject to the ATR Rule? |
A purchase money mortgage A reverse mortgage loan A construction loan A purchase money mortgage made by a housing finance agency The answer is a purchase money mortgage. A purchase money mortgage would be subject to the ATR Rule. |
|
|
Determining that an individual licensee has not shown financial responsibility includes all but which of the following? |
Judgments as a result of medical expenses A pattern of seriously delinquent accounts in the past three years Current outstanding tax liens Foreclosures within the past three years The answer is judgments as a result of medical expenses. Judgments related to medical expenses are not considered in assessing an applicant’s level of financial responsibility. |
|
|
The S.A.F.E. Act defines a loan processor as: |
An individual who performs clerical duties subject to the supervision of a licensed and/or registered loan originator An individual employed by a state-licensed mortgage broker An individual employed by a depository institution An individual who has applied for licensing as a loan originator, but who has not yet completed all the licensing requirements The answer is an individual who performs clerical duties subject to the supervision of a licensed and/or registered loan originator. The S.A.F.E. Act defines a loan processor as an individual who performs clerical duties subject to the supervision of a licensed and/or registered loan originator. |
|
|
Using misleading language in an advertisement (for example, using language that suggests that an advertised loan is “fixed” when it actually is not) is a practice specifically prohibited under: |
Regulation B Regulation Z FCRA Regulation C The answer is Regulation Z. Regulation Z includes prohibitions against misleading and false advertising, including a prohibition against misleading advertising of “fixed” rates and payments. |
|
|
“E-Sign Act” is short for: |
The Electronic Signatures Legitimization Act The Electronic Signatures in Global and National Commerce Act The Electronic Safety of Giving Net Authorization Act The Electronic Safety in Global and National Transactions Act The answer is The Electronic Signatures in Global and National Commerce Act. “E-Sign Act” is short for the Electronic Signatures in Global and National Commerce Act. |
|
|
An 80-10-10 loan is an example of a: |
Construction loan Reverse mortgage loan Higher-priced mortgage loan Piggyback loan The answer is piggyback loan. An 80-10-10 loan is an example of a piggyback loan. |
|
|
Ted Lange wants to build a tiki bar in his backyard next to the pool. In order to do this, he is going to take out a home equity line of credit. He believes that he will need about $20,000 to build the bar as envisioned. His home’s current value is $405,000, and he has a first mortgage with a balance of $130,000. The bank agrees to extend him a line of credit for $50,000, since he has quite a bit of equity in his home. What is Ted’s CLTV if he draws $20,000 as anticipated? |
44% 37% 32% 39% The answer is 37%. Ted’s plan was to build a $20,000 tiki bar. Adding the $20,000 draw to his current $130,000 first mortgage balance leaves a $150,000 total encumbrance. Dividing that by the value of the home ($405,000) brings a combined-loan-to-value of 37%. |
|
|
The diligent matching of loan programs with the current financial circumstances of each customer is known as: |
Tangible net benefit Loan standards Finance corroboration Loan suitability The answer is loan suitability. “Loan suitability” is the term used when matching a borrower’s circumstances with an appropriate product for his/her needs. This also leads to determining whether or not there is an actual tangible net benefit. |
|
|
Money paid to a mortgage lender for the purpose of paying a third party may not be |
:
Misrepresented or accounted for untruthfully Charged in an amount equal to the cost of the third party services Collected from a borrower to pay for title services Disclosed to the borrower prior to collection The answer is misrepresented or accounted for untruthfully. Money paid to a mortgage lender for the purpose of paying a third party may not be misrepresented or accounted for untruthfully. |
|
|
For a fee, a real estate licensee offers a mortgage company the names and telephone numbers of all of the people who attended an open house, but the mortgage company does not accept the offer. Who is in violation of RESPA? |
The mortgage company The real estate licensee Both the mortgage company and the real estate licensee Neither the mortgage company nor the real estate licensee The answer is the real estate licensee. The real estate licensee is in violation of RESPA. The real estate licensee is attempting to provide referrals of business to a mortgage licensee in exchange for a fee, in direct violation of RESPA's prohibition against such activity. By refusing to accept the offer, the mortgage company avoids also violating the law. |
|
|
Regulations in Section 32 of TILA deal strictly with: |
The interactions between mortgage professionals and real estate agents Consumer protections triggered by high-cost loans covered under HOEPA The amount a borrower should expect to be charged as an annual percentage rate Licensing standards placed in effect by the Housing and Economic Recovery Act The answer is consumer protections triggered by high-cost loans covered under HOEPA. Section 32 of Regulation Z (TILA) deals with added provisions and protections that are required if a loan meets or exceeds any one (or more) of three thresholds: either a points and fees threshold, an APR threshold, or a prepayment penalty threshold. Loans meeting or exceeding any of these thresholds are subject to the provisions required by the Home Ownership and Equity Protection Act (HOEPA, which is Section 32 of TILA). |
|
|
VA loans require a funding fee under all of the following conditions, except: |
The veteran makes a 10% down payment The veteran is disabled The veteran is using his/her eligibility for a second time The veteran is using his/her eligibility for the first time The answer is the veteran is disabled. A veteran who is disabled does not pay a funding fee. |
|
|
The acronym “CHARM” stands for: |
Cost Handbook for Adjustable-Rate Mortgages Credit History on Adjustable-Rate Mortgages Customer Highlights for Adjustable-Rate Mortgages Consumer Handbook on Adjustable-Rate Mortgages The answer is Consumer Handbook on Adjustable-Rate Mortgages. The acronym “CHARM” stands for “Consumer Handbook on Adjustable-Rate Mortgages.” |
|
|
The factors involved in determining the movement on an ARM loan include: |
Frequency of change, caps, index, rate Rate, caps, index, margin Frequency of change, caps, index, margin Rate, index, margin, lifetime cap The answer is frequency of change, caps, index, margin. There are four factors involved in determining an ARM’s movement. They are frequency of change, caps, index, and margin. |
|
|
In addition to information about disciplinary and enforcement action taken against a mortgage loan originator, the NMLS may also make available for public access: |
A mortgage loan originator’s home address The number of loans originated by a loan originator The mortgage loan originator’s employment history Former clients of the mortgage loan originator The answer is the mortgage loan originator’s employment history. Information or material held by the NMLS relating to the employment history and/or disciplinary and enforcement actions taken against a mortgage loan originator is not protected by confidentiality laws. Such information/material is available for public access. |
|
|
Which of the following describes an air loan? |
A loan is obtained with inflated property values A loan that is repeatedly refinanced with no benefit to the borrower A loan that is presented to the borrower with hidden fees A fictitious borrower obtains a mortgage and secures it with fictitious property The answer is a fictitious borrower obtains a mortgage and secures it with fictitious property. An air loan is an instance in which a fictitious borrower obtains a mortgage and secures it with fictitious property. |
|
|
Which of the following statements describes a lending practice that is prohibited by HOEPA and its implementing regulations? |
Originating a subprime mortgage Redlining and reverse redlining as a standard company policy Offering prime mortgages to borrowers in the subprime mortgage market Making a lending decision based solely on the amount of equity in a loan applicant’s home The answer is making a lending decision based solely on the amount of equity in a loan applicant’s home. HOEPA prohibits lending decisions based solely on the amount of equity in a loan applicant’s home and requires consideration of repayment ability. This prohibition is intended to discourage reverse redlining. |
|
|
Which of the following types of loans is not a conventional mortgage? |
Nonconforming loan Non-qualified mortgage FHA loan Subprime loan The answer is FHA loan. Conventional loans include a wide range of loan types except for government-insured and guaranteed loans such as FHA loans, USDA loans, and VA loans. |
|
|
Which document actually contains the borrower’s promise to repay the loan? |
The deed The note The mortgage The TIL The answer is the note. Neither the mortgage nor the deed of trust actually contain the borrower’s contractual promise to repay the loan. The note, or promissory note, is the borrower’s promise to repay the loan. |
|
|
What is the LTV for a loan in the amount of $525,000 and a property with an appraised value of $750,000? |
70% 75% 68% 80% The answer is 70%. To determine LTV, simply divide the loan amount by the value of the property. $525,000 / $750,000 = 70% |
|
|
Bill Grunion is required to renew his license for the coming year. In order to have his renewal approved, Bill must meet all the following requirements, except: |
Continue to meet the minimum standards for license issuance Satisfy the annual continuing education requirement Pay all required fees for renewal of the license Have originated at least 15 loans in the preceding license period The answer is have originated at least 15 loans in the preceding license period. To renew a license, a state-licensed loan originator must continue to meet the minimum standards for license issuance, satisfy the annual continuing education requirements, and pay all required renewal fees. |
|
|
Which of the following is least likely to be a sign of fraudulent behavior? |
The applicant currently rents an apartment, but is purchasing a second home by the beach The consumer is making a significant cash down payment Signatures on various documents do not match Identification documents appear to be smudgy photocopies The answer is the consumer is making a significant cash down payment. A consumer who makes a significant cash down payment is not necessarily engaging in fraudulent behavior. |
|
|
Under Regulation Z, an advertisement for a home equity line of credit that exceeds the fair market value of a home must include which of the following statements? |
Interest on the portion of the credit that exceeds market value is deductible at 50% of its normal value Only a portion of interest that is charged in excess of $10,000 annually is deductible from income taxes The borrower should consult a tax advisor regarding deductibility of interest The borrower may no longer deduct interest on a home equity line of credit The answer is the borrower should consult a tax advisor regarding deductibility of interest. An advertisement for a home equity line of credit that exceeds the fair market value of a home must include a statement that the borrower should consult a tax advisor regarding deductibility of interest. |
