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100 Cards in this Set
- Front
- Back
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A creditor is defined as a person:
A) to whom a loan is made B) who extends credit to another person or business C) who recieves credit from a bank or mortgage company D) who gives a mortgage on real propert |
B. who extends credit to another person or business
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A mortgage:
A) places a lien on a real property B) is the promissory note C) creates a lien on the lender's real property D) gives the borrower the right to foreclose |
A. places a lien on a real property |
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If a loan originator were to tell a borrower that these loans are tax deductible the loan originator is:
A) providing important information B) performing his/her job responsibly C) acting outside the scope of the loan originator's license D) stating a fact that can be documented on the IRS web site |
C. acting outside the scope of the loan originator's license |
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All the following factors are used to determine a credit score EXCEPT
A) credit history B) type of credit C) amounts owed D) employment |
D. employment |
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When a mortgage is placed:
A) the mortgage must be signed by both the mortgagor and mortgagee B) it allows the mortgagee to take possession of the property C) it must be recorded within 10 days in order to be valid D) it creates a lien on the property of the mortgagor |
D. it creates a lien on the property of the mortgagor |
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The market data appraisal approach:
A) estimates value by dividing rental income by a capitalization rate B) uses comparable sales in the same geographic area C) utilizes the building cost and the land value to estimate value D) uses a gross income multiplier to estimate value |
B. uses comparable sales in the same geographic area |
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Which of the following would be included in impounds?
A) Mortgage insurance premiums B) notary fees C) title insurance premiums D) loan interest |
A. mortgage insurance premiums |
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All of the following are included in a Notice of Adverse Action EXCEPT:
A) credit scores B) loan amount and terms C) name of the credit reporting agency used D) notice that the borrower has the right to receive a free copy of the credit report |
A. credit score |
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The maximum percentage of a borrower's income from rental property that can be used to qualify for a loan is:
A) 0 B) 60% C) 75% D) 80% |
C. 75%
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What is the allowable percentage of net adjustments that can be made in an appraisal under FNMA guidelines?
A) 10% B) 15% C) 20% D) 30% |
B. 15% |
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A loan pre-qualifications becomes an application when:
A) the borrower signs the application B) a property is identified C) the borrower provides employment information D) the loan origination takes the 1003 |
B. a property is identified |
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The document that defines the terms of a loan including interest rates, principal balance and duration is a(n):
A) settlement statement B) ECOA Disclosure C) loan application D) loan brokerage agreement |
C. loan application |
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A $300,000 loan is placed at a 6% fixed interest rate with monthly payments for the first 5 years of %1,500 and payments of $1,932 for the remaining 25 years. This type of loan is known as:
A) variable rate mortgage (VRM) B) adjustable rate mortgage (ARM) C) fixed rate loan D) adjustable mortgage loan (AML) |
C. fixed rate loan |
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A balloon mortgage:
A) is fully amortized B) has adjustable interest rate C) must be paid off sooner than full amortized D) must be negativily amortized |
C. must be paid off sooner than if it was fully amortized |
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An orgination fee is also known as:
A) discount points B) loan fees C) yield spread premium D) application fee |
B. loan fees |
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A property appraised for $425,000 is sold for $400,000. The borrower will place a $300,000 loan and there is a $100,000 Home Equity Line of Credit on the property that will be paid off at closing. In this situation:
A) tha loan to value ratio is 100% B) mortgage insurance is not required C) mortgage insurance is required D) the $300,000 loan is in second position |
B. mortgage insurance is not required |
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Fannie mae is:
A) privately funded, government sponsored organization B) wholly owned by the federal government C) partially owned by the federal government and private indusrty D) a public company with shares held by the federal govnment |
B. wholly owned by the federal government |
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The difference between a loan with a 20 year amortization and a 15 year amortization is that:
A) The 20 year loan pays principal down faster B) the 15 year loan pays principal down more slowly C) the 15 year loan will cause the borrower to pay less principal and interest D) the 20 year loan will cause the borrower to pay less principal and interest |
C. the 15 year loan will cause the borrower to pay less principal and interest
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An escrow account would contain:
A) mortgage insurance premium B) principal C) interest D) title insurance premiums |
A. mortgage insurance premiums |
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In which of the following payment and income scenarios would a borrower qualify for a loan requiring a 28% debt to income ratio
A) monthly payment $1,540- monthly income $5,500 B) monthly payment $1599- monthly income $5,710 C) monthly payment $2,492- monthly income $8,900 D) monthly payment $1,148- monthly income $4,100 |
D. |
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All of the following would be acceptable size parcels under FNMA guidelines EXCEPT:
A) 2 acres B) 4 acres C) 5 acres D) 10 acres |
D. 10 acres |
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On an FHA loan, the down payment CANNOT come from
A) a gift B) government assisstance C) borrower's assests D) credit card loans |
D. credit card loans |
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The income for a person who is paid on commission is verified through:
A.. W-2 only B) w-2 plus IRS form 4506-T C) w-2 plus schedule A income D) FNMA Form 1003 |
B. w-2 plus IRS form 4506-T |
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After receiving a Notice of Adverse Action, how long does a borrower have to requesst a free copy of their credit report from the credit reporting agency?
A) 10 days B) 30 days C) 60 days D) 6 months |
C. 60 days |
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An adjustable rate loan has a start rate of 5.75% with the first adjustment occurring after 5 years. If the margin is 2.75, the index is 5% and the caps are 2/2/6 what is the new rate at the beginning of the 6th year?
A) 5.75% B) 7.75% C) 10.75% D) 11.75% |
B. 7.75% |
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A 5/1 loan is a(n):
A) fixed rate loan B) adjustable rate loan C) interest only loan D) negatively amortized loan |
B. adjustable rate loan |
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If a property is in a flood zone, flood insurance must remain on the property:
A) until the loan balance is below 80% of the property value B) until the loan is paid in full C) for 5 years from closing D) until the loan is at 78% LTV |
B. until the loan is paid in full |
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Which of the following is not considered when calculating the annual percentage rate?
A) interest payments B) origination fees C) notary fees D) discount points |
C. notary fees |
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A finance charge is:
A) the cost of obtaining the loan B) the amount financed C) impounded taxes and insurance D) a statement of the final loan costs |
A. the cost of obtaining the loan |
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The purpose of FNMA is to:
A) extend credit to first time homeowners B) insure FHA loans C) guarentee VA loans D) create a secondary market for loans to be sold |
D. create a secondary |
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A service release premium is a :
A) charge made to the mortgage lender for servicing the loan B) fee paid to a lender after closing C) fee paid to the borrower after closing D) premium charged to the borrower when loan servicing is sold |
B. fee paid to lender after closing |
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The FHA MIP is based on the:
A) loan to value balance B) principal balance C) purchase price D) borrower's income |
B. principal balance |
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All of the following affect the VA Funding Fee EXCEPT:
A) type of military service B) martial status C) loan to value ratio D) amount of down payment |
B. martial status |
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Which of the following items would have been prepaid and reduced the cash needed by a buyer at closing?
A)Earnest money B) a loan which is assumed C) a new mortgage D) adjusted items the seller has not paid |
A. earnest money |
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An option ARM mortgage could include loans that are fixed rate, adjustable rate, interest only and:
A) negative amortization B) reverse payment C) no payments D)no interest |
A. negative amortization |
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Each amortization cycle in a loan includes:
A) interest only B) principal only C) principal and interest D) principal, interest, and loan costs |
C. principal and interest |
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A $225,000 loan is placed with a total of 1% for orgination and discount. What is the amount financed?
A) $227,000 B) $ 222,750 C) $225,000 D) $220,000 |
B. $222,750 |
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Which of the following is true regarding a stated income, stated assests loan?
A) income is verified but assests are not B) assets are verified but income is not C) both assets and income are verified D) neither assets nor income are verified |
D. neither assets nor income is verified |
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A yield spread premium must be disclosed in the:
A) note B) note and HUD-1 C) note and Good Faith Estimate D) Good Faith Estimate and HUD-1 |
D. Good Faith Estimate and HUD-1 |
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A 5/25 loan is known as a (n):
A) adjustable rate mortgage (ARM) B) fixed rate mortgage C) adjustable mortgage loan D) variable rate mortgage
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A. adjustable rate mortgage (ARM) |
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A yield spread premium is:
A) paid by the borrower B) used to increase the interest rate over the lender's desired yield C) paid by the loan originator to offset costs of funding D) paid by the lender when the interest rate is higher than the lender's par rate |
D. paid by the lender when the interest rate is higher than the lender's par rate |
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A person who is 65 years of age who wants to use the equity in their home for income would obtain a(n):
A) Home Equity Line of Credit B) Reverse Mortgage C) Fully amortized loan D) adjustable rate mortgage |
B. reverse mortgage |
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A borrower would be required to obtain private mortgage insurance if the LTV exceeds:
A) 75% B) 78% C) 80% D) none of these |
C. 80% |
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A loan that exceeds the limits set by FNMA is a(n):
A) commercial loan B) jumbo loan C) confrming loan D) FHA loan |
B. jumbo loan |
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A major concern of the agencies who issued guidelines on sub-prime loans is that:
A) borrower's will not understand the associated risks B) lenders will explain the terms clearly C) loan originators will act ethically when discussing these loans D) borrower's will be able to borrow less money as compared to prime loans |
A. borrower's will not understand the associated risks |
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Assuming that the borrower has a good payment history, the earliest point at which the borrower would be able to stop paying PMI is when the loan:
A) balance fell below 78% of the orginal balance B) is paid in full C) balance was below 24% D) is over 80% of the original balance |
A. balance fell below 78% of the original balance |
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A borrower has a monthly income of $3,000 and the spouse has an annual income of $20,000. If the lender uses a qualifying ratio of 36% what is the monthly payment the borrower can qualify for?
A) 594 B) 600 C) 20160 D)1680 |
D. 1680 |
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In the purchase and finance of a manufactured home that was considered to be real estate which of the following would apply if the loan was a fixed rate mortgage?
A) the payments would change at various intervals B) the interest rate could increase or decrease C) The loan balance would be likely to increase D) the interest rate would be the same throughout the duration of the loan |
D. the interest rate would be the same throughout the duration of the loan |
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On a $180,000 loan at 5% annual interest, what is the interst due at the end of 7 months?
A) 750 B) 4500 C) 5250 D) 9000 |
C 5250 |
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A property valued at $200,000 is being refinanced with a new 70% first position loan. There is an existing Home Equity Line of Credit on the property in the amount of $30,000 that has a current outstanding balance of $20,000. The HELOC lender will agree to subordinate to the new first loan. In this situation, which of the following ratios are correct?
A) 70% LTV, 80% CLTV, 85% HLTV/TLTV B) 70% LTV, 85% CLTV, 80% HLTV/TLTV C) 80% LTV, 85% CLTV, 90% HLTV/TLTV D) 60% LTV, 80% CLTV, 85% HLTV/TLTV |
A |
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Which of the following must be disclosed in the Good Faith Estimate?
A) Annual percentage rate B) balloon payment C) Final closing costs D) amount financed |
B. balloon payment |
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Interagency guidelines for non-traditional mortgage products address:
A) creditors ability to share personal consumer information B) regulating the amount of sub-prime lending on a national basis C) mortgage products that allow borrowers to defer principal and interest D) fully amortized loans with no balloon payments |
C. mortgage products that allow borrowers to defer principal and interest |
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All of the following percentages are within the allowed final tolerance for APR EXCEPT:
A) 0% B) .1% C) .125% D) .5% |
D. .5% |
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Which of the following would be discriminatory?
A) Not lending within 25 miles of your office B) not placing loans in an earthquake zone C) refusing to originate loans in an area of economic decline D) placing only single family loans in your market area |
C. refusing to originate loans in an area of economic decline |
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All of the following statements about a Good Faith Estimate are correct EXCEPT:
A) discloses closing costs as the final and actual dollar amounts B) must be delivered to the borrower within 3 business days of application C) is required under the provisions of RESPA D) estimates the costs a borrower is likely to incur at closing |
A. discloses closing costs as the final and actual dollar amount
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The maximum tolerance allowed in the annual percentage rate under TILA for adjustable rate loans is:
A) 1/2% B) 1/4% C) 1/8% D) 1/10% |
B. 1/4% |
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All of the following are required under the truth in lending act EXCEPT:
A) tolerance in the calculation of APR within 1/2 of one percent of the actual APR B) disclosure of the annual percentage rate C) statement of finance charges D) tolerance in the calculation of APR within 1/8 percent of the actual APR |
A. tolerance in the calculation of APR with in 1/2 of one percent of the actual APR |
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The red flag rules under the fair and accurate credit act are designed to:
A) prevent the development of flipping schemes B) require disclosure of closing costs C) prevent identity theft D) require disclosure of the APR |
C. prevent identity theft |
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ECOA prohibits discrimation based on:
A) income B) debt coverage ratios C) closing costs D) disabilities |
D. disabilities |
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When may a lender inquire about the borrower's religion?
A) never B) in order to collect data under the ECOA C) if the investor requires it D) so the government can use it for census data |
A. never |
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As required by RESPA, a borrower must be given:
A) disclosure of the APR B)special information booklet on closing costs C) truth in lending statement D) 3 day right to rescind a refinance |
B. special information booklet on closing costs |
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FACTA allows a consumer to:
A) rescind a refinance loan B) place a fraud alert on their credit file C) receive a copy of the appraisal D) place their phone number on the DO NOT CALL list |
B. place a fraud alert on their credit file |
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The proper calculation tools for accurately determining an APR are:
A) approved financial calculators B) computation rules provided in regulation z C) determine by mortgage brokers D) pre-approved, on-line programs used by brokers |
B. |
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Which of the following violates the Fair Housing Act?
A) not making a loan based on a violation of occupancy standards B) denying a loan due to a borrower's poor credit history C) not allowing a loan because a borrower has defaulted on other loans to other lenders D) placing a loan for a borrower only in a neighborhood that is populated mainly by minorities |
D. |
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The Graham-Leach-Bliley Act requires a mortgage company to:
A) prevent access to consumer information by employees B) have systems in place to protect consumer info C) disclose the APR D) provide a good faith estimate of costs to the borrower |
B. |
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After receiving a Notice of Adverse Action how long does the borrower have to request a copy of the appraisal?
A) 10 days B) 60 days C) 90 days D) 6 months |
C. 90 days |
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under the TILA which is considered to be a pre-paid finance charge?
A) application fee B. title fees C) recording fees D) discount points |
D. discount points |
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Which law gives the borrower the right to review the HUD-1 settlement at least one day prior to closing?
A) TILA B) ECOA C) FACTA D) RESPA |
D. RESPA |
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Under the Gramm-Leach-Bliley act all of the following are appropriate ways to notify a borrower EXCEPT
A) posting notice in the lender's office B) via email C) by letter D) by faxing the borrower on the number suppled by the borrower |
A. |
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Arbitrary denial of real estate loan application in certain geographical areas, without considering individual applicant qualifications is:
A) blockbusting B) redlining C) good business practice D) a violation of RESPA |
B. redlining |
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A prepayment penalty must be disclosed:
A) in the note and truth in lending statement B) only in the Good Faith Estimate C) only in the note D) in both the note and mortgage |
A. |
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If an advertisment specifies an APR what component needs to remain the same in order for a consumer to make a compaison to other loans?
A) loan amount B) interest rate C) loan term D) all closing costs |
C. loan term |
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The disclosure for an Affiliated Business Arrangement must be made to a borrower:
A) within 3 days of loan application B) within 10 days of loan application C) prior to closing D) at or prior to the time of the referral |
D. |
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When a person registers their telephone number on the Do not call list the protection lasts for:
A) 1 year B) 3 years C) 5 years D) indefinitely |
D. |
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Under ECOA, the notice of appraisal must be given to the borrower:
A) within 7 days of loan application B) within 7 dyas of Notice of Adverse Action C) at the time of closing D) only if the loan is denied |
A. |
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Under TILA, the truth in lending statement must be delivered to the borrower:
A) within 3 business days of loan application B) within 7 business days of application C) after closing D) at time of the application |
A. |
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A person must be notified of a adverse action within how many days of loan application?
A) 10 B) 20 C) 30 D) 60 |
C. 30 |
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An ECOA violation would occur if a lender refused to make a loan because of a borrower's:
A) marital staus B) low income C) poor credit D) outstanding debts |
A. martial status |
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Under FACTA, a transaction account is defined as:
A) any account with activity in the last two years B) checking accounts, negotiable order or withdrawal accounts and share draft accounts C) any account for which a credit check was performed prior to opening the account D) any first or second mortgage account |
B. |
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A good faith estimate is NOT required to be given to a loan applicant:
A) if the loan is rejected within 3 days of application B) when the borrower is applying for a variable rate loan C) so long as the loan is less than $100,000 D) if the property is a single family dwelling |
A.
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Which of the following is responsible for enforcing the provisions of the graham-leach-bliliey act?
A) state agencies B) the federal reserve board C) fannie mae D) federal trade commission |
D. |
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The good faith estimate itemizes closing costs as:
A) percentages of the total loan B) dollar amounts for the individual item C) dollar amounts for the total cost D) percentages of the total costs |
B. |
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How many days does a lender have to return fees paid by a borrower when a borrower exercises the right to rescind under the truth in lending act?
A) 7 B) 10 C) 20 D) 30 |
C. 20 |
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On what type of transaction is a HUD-1A used?
A) Home purachse B) when no seller is involved C) in a cash sale D) on all federally related loans |
B. |
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If an interest rate appears in an advertisement, what else must also appear?
A) trigger terms B) down payment C) annual percentage rate D) adjustable rate disclosure |
C. annual percentage rate |
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Potential loan fraud might be indicated if the:
A) borrower's deposits are substantially different from the borrower's income B) borrower is a resident alien C) borrower lives in a high crime area D) loan amount is less than the purchase price |
A. |
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A mortgage company likes to earn between $2,500 and $4,500 per loan. A loan originator has a relative who wants to borrower $300,000. The loan is placed with $450 in loan fees and a yield spread premium of .75%. In situation the loan originator has acted:
A) ethically and legally B) ethically and illegally C) unethically and illegally D) ethically, so long as the employer gave consent |
A. |
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A real estate company owns 50% of a mortgage company and refers business to the mortgage company. If the mortgage company provides the borrower with a disclosure of the relationship, costs and the fact that use of the real esate company is not required:
A) only the real estate company has violated RESPA B) only the mortgage company has violated RESPA C) both companies have violated RESPA D) Neither companies have violated RESPA |
A. |
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The purpose of the red flag rules is to:
A) identify loan fraud B) set up measures to disclose property defects in an appraisal C) prevent identity theft D) allow consumers to file complaints with the FTC |
C. |
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If a real estate agent accepted flyers from a mortgage company and distributed them at an open house:
A) only the real estate agent is violating RESPA B) only the motgage lender is violating RESPA C) both are violating RESPA D) neither is violating RESPA |
C. |
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Which of the following situations might be an indication of loan fraud?
A) Verified debts being slightly higher than debts on the loan application B) income sufficient to make monthly payments C) the age of accounts being greater than the borrower's age D) The need for co-signers in order for the borrower to qualify |
C. |
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All of the following would be a violation of RESPA EXCEPT:
A) payment of a referral fee to an attorney who referred the borrower to the lender B) payment of a fee to a third party loan processor C) paying a fee to another lender who was unable to place the loan for the borrower D) paymnet to a real estate agent for sedning the borrower |
B. |
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If a borrower tells the lender that the seller will be carrying back a second loan, the loan originator should:
A) exercise due dilligence to make sure the mortgage is actually placeed B) have the attorney for the title company prepare form C) allow the 2nd to not appear on the HUD-1 D) suggest that the borrower and seller take care of it outside of escrow |
A. |
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Which of the following constitutes a RESPA violation?
A) providing a good faith estimate B) two mortgage brokers share a loan originator fee C) a mortgage broker pays a referral fee to a real estate broker D) improper disclosure of the APR |
C. |
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Loan fraud is investigated by the:
A) CIA B) HUD C) FBI D) FTC |
C. |
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A SARS report enumerates:
A) appraised values B) suspicious activities in financial transaction C) the number of borrowers who have defaulted on loans D) the number of loans a lender has placed that have gone into default |
B. |
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If a mortgage broker refers a friend to another mortgage broker to obtain a loan and the first mortgage broker does not perform work in the trasaction:
A) a referral fee can be paid when the loan is funded B) no referral fee is allowed C) a referral fee can be paid after the loan closed D) a maximum of $500 can be paid as a referral fee |
B. |
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Under RESPA, when may a borrower be charged a HUD-1 preparation fee?
A) when the borrower asks for additional copies B) if the borrower requests to see the HUD-1 more than 7 days prior to closing C) at the time the borrower exercises the right to rescind under the TILA D) never |
D. never |
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Under RESPA which of the following must be provided to a borrower?
A) APR B) special info booklet C) truth in lending disclosure D) right to rescind |
B, |
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Which of the following is excempt from the provision of the real estate settlement and procedure act (RESPA)?
A) mortgage loan for the contruction of a residence B) temporary loan for the construction of a residence C) loan on a 3-unit residential building D) loans intended to be sold to FNMA |
B. |
