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;
26 Cards in this Set
- Front
- Back
|
What type of loan is a jumbo loan? |
Nonconventional Non-government Nonconforming Conforming The answer is nonconforming. A jumbo loan falls outside of Fannie Mae and Freddie Mac loan limit guidelines, which makes it “nonconforming.” |
|
|
All of the following are examples of nontraditional mortgage products, as defined by the S.A.F.E. Act, except: |
A fixed-rate loan with a term of 30 years An interest-only loan with a term of 40 years An adjustable-rate mortgage with a term of 30 years A fixed-rate loan with a term of 15 years The answer is a fixed-rate loan with a term of 30 years. The S.A.F.E. Act defines a “nontraditional mortgage product” as any loan other than a 30-year, fixed-rate loan. |
|
|
The Onyewus are purchasing a home with an agreed-upon sales price of $320,000. They are putting down 20%, and have agreed to pay two points in discount to lower their rate, and two points in origination fees to their lender. What is the total cost of their points? |
$10,240 $12,800 $5,120 $6,400 The answer is $10,240. Points are paid based on the loan amount. After a 20% down payment, the total loan amount is $256,000. They have agreed to pay two points in discount and two points in origination, for a total of four points. Each point is 1% of the loan amount, so 4% of $256,000 equals $10,240. |
|
|
Under the S.A.F.E. Act, a mortgage loan originator must submit to the NMLS: |
Reports of condition Financial reports Business organization documentation Trust account information The answer is reports of condition. Each mortgage licensee must submit to the NMLS reports of condition in the form and containing the information as may be required by the NMLS. |
|
|
A hazard insurance company hosts a dinner for the employees of a mortgage broker. The designated broker encourages the employees to send clients to the insurance company. Who has violated RESPA? |
Both the hazard insurance company and the mortgage broker The hazard insurance company The mortgage broker Neither the hazard insurance company nor the mortgage broker The answer is both the hazard insurance company and the mortgage broker. Under Section 8 of RESPA, it is illegal to give or accept any fee, kickback or other thing of value under any agreement or understanding, oral or otherwise, that business relating to or part of a settlement service involving a federally related mortgage loan will be referred to any person. The term "thing of value" includes any payment, advance, funds, loan, service or other consideration, such as payments of another person’s expenses. The above is an example of an instance in which both parties are in violation of the prohibition against the payment or receipt of a thing of value in exchange for referrals. |
|
|
Which of the following statements most accurately describes HOEPA’s prepayment penalty threshold for high-cost mortgages? |
A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, and requires the prepayment penalties to exceed 2% of the amount prepaid A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 24 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 24 months after consummation, and requires the prepayment penalties to exceed 3% of the amount prepaid The answer is a loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid. A loan is a high-cost mortgage if it includes a prepayment penalty provision that is in effect for more than 36 months after consummation, or one that allows the prepayment penalties to exceed 2% of the amount prepaid. |
|
|
The Federal Home Loan Mortgage Corporation is also known as: |
Fannie Mae Ginnie Mae Freddie Mac Freddie Mae The answer is Freddie Mac. The Federal Home Loan Mortgage Corporation is known more commonly as “Freddie Mac,” and also as “FHLMC.” |
|
|
In lien theory states, the _____ holds the title to the home securing a mortgage throughout the loan term. |
Borrower Lender Title company Loan servicer The answer is borrower. In lien theory states, the borrower holds the title to the home securing a mortgage, and when the loan is paid in full, the lien on his or her home is released. |
|
|
If a purchase loan closes on January 20th, how many days of per diem interest must be collected to put the loan on schedule? |
12 10 20 31 The answer is 12. 12 days of per diem interest would be collected to place this loan on schedule for a first payment date of March 1. |
|
|
Goh Getter has developed an advertisement he wants to use to solicit more business. In the advertisement, Goh is stating specific terms relating to a mortgage loan product. Is this permissible? |
No, the terms of a particular product may not be included in an ad This is permissible if those stated terms actually are or will be arranged for a consumer It is permissible if the terms are identified as being for illustrative use only This is not permissible as the terms of the loan may change The answer is this is permissible if those stated terms actually are or will be arranged for a consumer. An advertisement may state specific credit terms only if those terms actually are or will be arranged or offered to a consumer. |
|
|
Yield spread premiums are: |
Now known as borrower credits, and may only be used to help the borrower pay closing costs No longer regulated by the Real Estate Settlement Procedures Act Allow a loan originator to be compensated in a mortgage transaction Now known as prepayment penalties, and prohibited for almost all loan transactions The answer is now known as borrower credits, and may only be used to help the borrower pay closing costs. Yield spread premiums are now known as borrower credits, and may only be used to help the borrower pay closing costs. |
|
|
Kelsey and Matt have just signed a contract to purchase a home for $360,000. Their mortgage loan is an HPML. Their creditor has discovered that the seller purchased the home four months earlier. The creditor will require a second appraisal if the seller’s purchase price was: |
$300,000 $310,000 $320,000 $330,000 The answer is $300,000. For transactions involving an HPML (higher-priced mortgage loan), a second appraisal is required if the seller acquired the home 91 to 180 days prior to the consumer’s agreement to purchase it, and the price at which the consumer agreed to purchase the home is 20% more than the price paid by the seller. 20% of $300,000 is $60,000. $300,000 + $60,000 = $360,000. |
|
|
Which of the following is not a qualified mortgage? |
A mortgage with a 40-year loan term VA loan FHA loan A mortgage with a debt-to-income ratio of 43% The answer is a mortgage with a 40-year loan term. VA and FHA loans are qualified mortgages, as are loans with DTI ratios that do not exceed 43%. Qualified mortgages may not have loan terms that exceed 30 years. |
|
|
The TRID Rule’s zero tolerance for variances between estimated and actual charges applies to which of the following fees? |
Fees paid to non-affiliated third-party settlement service providers chosen by the borrower and not included on the creditor’s recommended list of providers Fees paid for prepaid interest Fees paid to third-party providers of optional insurance products, such as credit life and credit disability insurance Fees paid to a creditor The answer is fees paid to a creditor. Fees that are subject to a zero tolerance for variances between estimated and actual fees include those for creditors, mortgage brokers, and their affiliates. |
|
|
Payments for qualified mortgages must be based on: |
The maximum interest rate that will apply over the life of the loan The fully-indexed rate The introductory rate The maximum interest rate that will apply during the first five years after the date of the first payment The answer is the maximum interest rate that will apply during the first five years after the date of the first payment. Payments for qualified mortgages must be based on the maximum interest rate that will apply during the first five years after the date of the first payment. |
|
|
The S.A.F.E. Act requires which of the following to fulfill responsibilities including participating in the NMLS, conducting background checks, and writing rules and regulations? |
A state legislature A state Attorney General A state licensing agency The federal government The answer is a state licensing agency. In having oversight and supervisory authority over loan originators, a state licensing agency must participate in the NMLS, conduct background checks, and write rules and regulations. |
|
|
The S.A.F.E. Act requires which of the following to fulfill responsibilities including participating in the NMLS, conducting background checks, and writing rules and regulations? |
A state legislature A state Attorney General A state licensing agency The federal government The answer is a state licensing agency. In having oversight and supervisory authority over loan originators, a state licensing agency must participate in the NMLS, conduct background checks, and write rules and regulations. |
|
|
The obligation for mortgage brokers to serve as the agent or the fiduciary of borrowers is: |
Imposed by the S.A.F.E. Mortgage Licensing Act Imposed by state licensing laws in some states Imposed by state licensing laws in every state Imposed by the Dodd-Frank Act The answer is imposed by state licensing laws in some states. The obligation for mortgage brokers to serve as the agent or fiduciary of borrowers is imposed by state licensing laws in some states. |
|
|
Jared is struggling to make payments on a high-cost mortgage. He returns to the mortgage lender that made the loan and applies for a loan modification. If the mortgage lender agrees to modify the loan, it may: |
Charge Jared the same fees that it would charge for a refinance Charge a loan origination fee Not charge any fees for the loan modification Not charge any fees for the loan modification if Jared is in default The answer is not charge any fees for the loan modification. HOEPA prohibits creditors, assignees, and agents of these parties from charging any fee to modify, renew, extend, or amend a high-cost home loan, and from charging a fee for payment deferrals. |
|
|
Loans that do not meet guidelines established by Fannie Mae and Freddie Mac are known as: |
Unconventional Government Nonpermissible Nonconforming The answer is nonconforming. A nonconforming loan is a conventional mortgage that exceeds the current lending guidelines established by Fannie Mae and Freddie Mac. |
|
|
The front-end ratio compares: |
Monthly mortgage payments to monthly gross income Total monthly debts unrelated to housing expenses to monthly gross income Total monthly housing expenses (including principal, interest, taxes, and insurance) to monthly gross income Total monthly debts (including housing expenses plus other debts) to monthly gross income The answer is total monthly housing expenses (including principal, interest, taxes, and insurance) to monthly gross income. The front-end ratio compares housing-related expenses to monthly gross income. |
|
|
Which of the following correctly demonstrates how to calculate the annual interest on a mortgage loan? |
Interest rate / loan balance = annual interest Periodic rate / 365 = annual interest Periodic rate × 365 = annual interest Interest rate × loan balance = annual interest The answer is interest rate × loan balance = annual interest. Annual interest is calculated by multiplying the interest rate by the loan balance. |
|
|
Van Gordon, who works in the tech industry, has decided to sell his house. He is offering to carry the contract himself and does all the negotiating necessary to reach agreement on the terms of the mortgage loan. Must Van be licensed? |
Van does not need to be licensed unless he negotiates more than one loan during any 12-month period Van is exempt from the requirement to be licensed as the property on which he is negotiating the terms of the mortgage loan was his own residence Yes, any individuals who offer or negotiate the terms of any residential mortgage loan must be licensed Van must be licensed because he will receive compensation as a result of the transaction The answer is Van is exempt from the requirement to be licensed as the property on which he is negotiating the terms of the mortgage loan was his own residence. An individual is not required to be licensed if he or she offers or negotiates the terms of a residential mortgage loan secured by a dwelling that served as his or her residence. |
|
|
Which of the following compensation practices is allowed under the Loan Originator Compensation Rule? |
Paying originators a commission for originating a loan at a higher rate than the rate for which the loan applicant qualified Allowing a mortgage broker to accept an origination fee from a borrower and a commission from the lender that funds the loan Paying all originators a 3% commission for every loan originated, regardless of the loan amount or the terms and conditions of the loan Implementing a policy that encourages loan originators to originate refinances with prepayment penalties The answer is paying all originators a 3% commission for every loan originated, regardless of the loan amount or the terms and conditions of the loan. Paying all originators a 3% commission for every loan originated, regardless of the loan amount or the terms and conditions of the loan, is allowed under the Loan Originator Compensation Rule. |
|
|
In accordance with TILA, all of the following are eligible for a three-day right to rescind, except: |
Home equity line of credit Purchase money mortgage Home improvement loan Refinance of a property that is owner-occupied The answer is purchase money mortgage. No right to rescind exists for a first mortgage to purchase a home. |
|
|
Which of the following loans may include a prepayment penalty? |
An adjustable-rate qualified mortgage A fixed-rate qualified mortgage that is not a higher-priced mortgage loan An adjustable-rate qualified mortgage that is not a high-cost mortgage A fixed-rate qualified or non-qualified mortgage The answer is a fixed-rate qualified mortgage that is not a higher-priced mortgage loan. The only loans that may include prepayment penalties are fixed-rate qualified mortgages that are not higher-priced mortgage loans. |
