Quiz Day 1 - Day 11

Front 1

Which government-sponsored enterprises were placed into conservatorship in 2008?

Back 1

Fannie Mae and Freddie Mac

Front 2

When depository institutions lose funds to higher-yielding investments, this is called?

Back 2

Disintermediation

Front 3

Dealing with collection issues is an aspect of ?

Back 3

Loan Servicing

Front 4

What is FNMA?

Back 4

A secondary market agency

Front 5

A lender making a conventional loan would not necessarily comply with the underwriting guidelines of the major secondary market agencies if?

Back 5

The lender intended to keep the loan in portfolio.

Front 6

The long-term goal of the Federal Housing Finance Agency is to do what to the size and power of Fannie Mae and Freddie Mac?

Back 6

Reduce

Front 7

In 2005, Fannie Mae and Freddie Mac reversed policy and began buying significant numbers of what type of loans?

Back 7

Subprime loans

Front 8

An independent mortgage company engaged in mortgage banking does what?

Back 8

Originates residential loans, but does not accept deposits

Front 9

How is the nine-member board of directors of each Federal Reserve Bank chosen?

Back 9

6 directors are elected by stockholders and 3 are appointed by the Federal Reserve Board of Governors.

Front 10

Who "owns" a Federal Reserve Bank?

Back 10

Member commerical banks within the district

Front 11

What is required under the Community Reinvestment Act?

Back 11

Depository institutions must report the number of mortgage loans issued to low and middle income borrowers.

Front 12

Economic growth that is too strong and too fast is usually accompanied by?

Back 12

Inflation

Front 13

In contrast to wholesale lenders, retail lenders?

Back 13

Deal directly with loan applicants

Front 14

The federal funds rate is the?

Back 14

Rate that banks charge each other for overnight, unsecured loans

Front 15

What is not an aspect of the federal government's fiscal policy?

Back 15

Setting key interest rates

Front 16

A residential lender is not a depository institution, but rather acts as a loan correspondent, by originating loans for large investors like insurance companies. This lender would be known as a ?

Back 16

Mortgage company

Front 17

A nonprofit organization provides banking services to the members of a large labor union. This organization would be known as a?

Back 17

Credit Union

Front 18

The bill that imposed new rules on saving and loan associations as a result of the S & L crisis was the?

Back 18

Financial Institutions Reform, Recovery, and Enforcement Act

Front 19

What 1999 legislation removed many barriers between commercial banks, investment banks, and insurance companies?

Back 19

Financial Services and Modernization Act

Front 20

To lower interest rates, the Federal Reserve would?

Back 20

Decrease reserve requirements and buy government securities

Front 21

Because the Federal Reserve will provide short-term emergency loans to banks who can't meet reserve requirements, it is known as a ?

Back 21

Lender of last resort

Front 22

Deductions for depreciation of income generating property are also known as?

Back 22

??

Front 23

The most common alternative private source of lending to buyers is?

Back 23

Sellers

Front 24

The borrower must meet the insurer's underwriting standards regarding mortgage insurance?

Back 24

True

Front 25

Borrowers are more inclined to refinance when?

Back 25

Market interest rates drop

Front 26

A mortgage must contain all of the following, except?

Back 26

The amount of the down payment

Front 27

A lender cannot enforce a promissory note without a security instrument?

Back 27

False

Front 28

A lis pendens is recorded by the mortgagee in order to ?

Back 28

Provide public notice of the foreclosure action pending against the property

Front 29

A subordination clause is most likely to be included in a?

Back 29

Loan for the purchase of vacant land, when contstruction is planned

Front 30

In a real estate transaction, a promissory note is accompanied by a ?

Back 30

Security Instrument

Front 31

With an adjustable rate mortgage, the loan's interest rate?

Back 31

may increase or decrease during the loan term

Front 32

The loan has a fixed interest rate and level monthly payments; a portion of each month's payment is applied to interest and the remainder is applied to principal, but a balloon payment will be due at the end of the term. This loan is ?

Back 32

Partially amortized

Front 33

The Posts are buying a house for $254,000. It's appraised value is $255,000, and the estimated closing costs come to $8,900. Their mortgage loan has a 90% LTV, which means that the Post are borrowing?

Back 33

$228,600

Front 34

When a borrower excercises the conversion option in an ARM, the new fixed interest rate is usually?

Back 34

The market rate at the time of conversion

Front 35

To be a holder in due course, a third party purchaser of a negotiable instrument?

Back 35

Has purchased in good faith, and without notice of any defenses against the instrument

Front 36

A life of loan cap?

Back 36

Limits the amount the interest rate may increase over the life of the loan

Front 37

The payments under a straight note are made up of?

Back 37

Interest only

Front 38

The purpose of a loan guaranty is to ?

Back 38

Protect the lender from foreclosure loss

Front 39

The Mitchells are financing the purchase of their first home with a 30 year ARM. It has an initial rate adjustment period of seven years, with annual rate adjustments from then on. This loan is which type of ARM?

Back 39

7/1 ARM

Front 40

"Deny" is not a AU risk classification?

Back 40

Yes

Front 41

The Jacksons are buying a home for $320,00, and they'll be required to pay a discount fee of three points for their $300,000 loan. The fee will amount to ?

Back 41

$9,000

Front 42

Adding an amount for property taxes and insurance to the maximum principal and interest payment to find the maximum PITI Payment is one of the steps involved in prequalifying a buyer?

Back 42

False

Front 43

Name something that is not likely to be considered an asset?

Back 43

Mixing Bowls

Front 44

A loan applicant will not necessarily need to provide address and tax information for the house being purchased during the loan application process?

Back 44

True

Front 45

How is Employment income verified?

Back 45

Verification forms sent to the employer

Front 46

Underwriting is not a step in the closing process?

Back 46

True

Front 47

Prior to the beginning house hunting, a buyer contacts a lender and completes a loan application. The lender evaluates the application and issues a letter agreeing to loan the buyer up to a specified amount when she finds a home she wants to buy. This is?

Back 47

Preapproval

Front 48

Is this a true statement? The primary purpose of Desktop Underwriter and Loan Prospector is to make loan purchase decisions?

Back 48

Yes

Front 49

What federal law requires the disclosure of a loan's annual percentgage rate in certain circumstances?

Back 49

Truth in Lending Act

Front 50

In order to determine whether a borrower is creditworthy, the underwriter considers the borrower's?

Back 50

Net Worth

Front 51

The relationship between the total finance charge and the total amount financed is expressed in a loan's?

Back 51

APR

Front 52

Income is considered durable if it can be expected to continue for a least?

Back 52

3 years

Front 53

Automated underwriting is a/an?

Back 53

Computer program that analyzes applications and recommends approval or rejection

Front 54

If a lender requires a borrower to have enough money left over after closing to cover a certain number of mortgage payments, those funds are called?

Back 54

Reserves

Front 55

When choosing a lender, buyers should do all of the following except?

Back 55

Always choose the lender who offers the lowest interest rate

Front 56

For a residential loan transaction, an appraiser will be concerned with a property's?

Back 56

Market Value

Front 57

A house has lost value because it has four bedrooms and only one bathroom, while most four bedroom houses have at least two bathrooms. This is an example of ?

Back 57

Functional obsolescence

Front 58

The cost of constructing an exact duplicate of a building, using the same materials and construction methods but at current prices, is its?

Back 58

Reproduction cost

Front 59

George Wilson is applying of a 90% conventional loan. His parents are willing to give him some money to help him buy the house. Can gift funds be applid to the required down payement for this loan?

Back 59

Yes, as long as Wilson is still paying at least 5% of the sales price out of his own resources

Front 60

Under no circumstances should an appraiser using the sales comparsion method select a comparable that sold more than?

Back 60

One year ago

Front 61

The buyer having to pay cash for the property is not a criterion for a sale under normal conditions?

Back 61

True

Front 62

A mortgage is amortized over a 30 year term, but the payment increase at annual intervals, with all of the payment increases used to pay off the principal balance. This is known as a ?

Back 62

Growing Equity Mortgage

Front 63

Affordable housing programs involving conventional loans often have?

Back 63

Maximum Income Limits

Front 64

An informal version of an appraisal performed by a real estate agent, based on the sales comparision method, is a?

Back 64

Competitive market analysis

Front 65

According to Fannie Mae, the two primary risk factors in qualifying an applicant are?

Back 65

Credit history and loan to value ratio

Front 66

An appraiser is using a comparable that is generally similar to the subject property. However, the comparable has 4 bedrooms, while the subject property has only 3 bedrooms. The appraiser will adjust the?

Back 66

Comparable's sale price downward

Front 67

The buyer will always pay a single life of the loan premium at closing regarding private mortgage insurance?

Back 67

True

Front 68

The benchmark for the housing expense to income ratio for conventional loans is traditionally?

Back 68

28%

Front 69

One of the three basic methods of appraising real estate is Quantity survey method?

Back 69

False

Front 70

Under certain conditions, the lender is required to cancel the PMI whether or not the borrower's request cancellation?

Back 70

True

Front 71

What is most likely to be treated as a compensating factor so that the loan applicant will be allowed to have income ratios that exceed the usual maximums?

Back 71

She's buying an energy efficient home

Front 72

A veteran borrower has a reamining entitlement of only $50,000. She plans to buy a $250,000 home. How large will her down payment need to be?

Back 72

$12,500

Front 73

The Lenihans are buying a single family home with a FHA loan. The FHA Insurance will require?

Back 73

An upfront premium that may be paid in cash or financed, plus most likelyan annual premium

Front 74

As a general rule, an FHA borrower's debt to income should not exceed?

Back 74

43%

Front 75

A veteran has a monthly income of $2,000. He has $200 in other recurring obligations. Each month, he has $170 withheld for federal income tax, $35 withheld for state income tax, and $110 withheld for Social Security and Medicare. If his proposed monthly housing expense is $550 per month, what is his residual income?

Back 75

$935

Front 76

Which eligible veteran may use a VA guaranteed loan?

Back 76

A veteran purchasing a duplex where he will live in one of the units

Front 77

A veteran has a monthly income of $2,000. He has $200 per month in other recurring obligations. What is his maximum PITI housing expense, using a VA guaranteed loan?

Back 77

$620

Front 78

An underwriter would be concerned with residual income when evaluating an application for?

Back 78

A VA guaranteed loan

Front 79

Which veteran would NOT be eligible for a VA guaranteed loan?

Back 79

A veteran who served 12 months of active duty during the late 1980's

Front 80

The role of the FHA is to?

Back 80

Insure loans

Front 81

The Riveras buy a house for $100,000, using a FHA insured loan. The sellers offer to pay $8,000 in discount points in order to buy down the interest rate. How much of the sellers contribution would be considered an inducement to purchase?

Back 81

$2,000

Front 82

What is the current maximum income limit for a VA loan borrower?

Back 82

There are no income limits for VA loans.

Front 83

What would be a recurring charge counted toward a borrower's debt to income ratio?

Back 83

A student loan with four payments remaining

Front 84

The Federal Housing Administration is an agency within the?

Back 84

Department of Housing and Urban Development

Front 85

The basic maximum for FHA loans not in a high cost area is?

Back 85

65% of Freddie Mac's general conforming loan limit.

Front 86

A VA loan may be used to refinance?

Back 86

A conventional, FHA, or VA loan.

Front 87

A borrower obtains an FHA-insured loan through the 203 program. She may use the loan to purchase a?

Back 87

Duplex where she will occupy one of the units.

Front 88

What federal law requires lenders to disclose information that would help detect instances of redlining?

Back 88

Home Mortgage Disclosure Act ( HMDA)

Front 89

When a lender issues its annual report in compliance with the Home Mortgage Disclosure Act, do they need to reveal the source of the borrower's income?

Back 89

No

Front 90

Which federal law applies to all consumer credit and prohibits discrimination against loan applicants?

Back 90

The Equal Credit Opportunity Act ( ECOA)

Front 91

The federal legistation that prevents discrimination against loan applicants on the basis of race is?

Back 91

The Equal Credit Opportunity Act (ECOA)

Front 92

What is the purpose of the Home Mortgage Disclosure Act?

Back 92

Requies that lenders disclose information that may provide evidence of redlining?

Front 93

This practice, prohibited under the Fair Housing Act, refers to the refusal to make loans secured by property located in neighborhoods that are associated with a particular racial or ethnic minority group?

Back 93

Redlining

Front 94

A home equity borrower has _____ days in which to rescind the loan after signing the loan agreement or receiving a disclosure statement, according to the Truth in Lending Act?

Back 94

3

Front 95

Would Mortgage Insurance Premium be included in a total finance charge?

Back 95

No

Front 96

The Truth in Lending Act is inplemented through?

Back 96

Regulation Z

Front 97

Would the appraisal fee be included in a total finance charge?

Back 97

No

Front 98

Would a loan to an individual for $1,000,000 for the purchase of a residence be subject to Truth in Lending Act disclosures?

Back 98

Yes

Front 99

What type of loans require extensive additional disclosures under the Truth in Lending Act?

Back 99

Adjustable rate mortgages

Front 100

According to the Real Estate Settlement Procedures Act, a lender must give a booklet about settlement procedures, a good faith estimate estimate of closing cost, a mortgage servicing disclosure statement to the borrower within three days of receiving a written loan application. What is something that they would not give at this time?

Back 100

A Uniform Settlement Statement

Front 101

Most predatory lending takes place in the subprime market?

Back 101

Yes

Front 102

The Real Estate Settlement Procedures Act would apply to a loan from a commerical bank used to purchase an existing single family home?

Back 102

Yes

Front 103

What document is given within 3 days of a loan application (as required under the Real Estate Settlement Procedures Act), list all charges that a borrower will pay in order to settle a loan?

Back 103

A good faith estimate of closing cost

Front 104

Who is the most likely target for a predatory lender?

Back 104

An elderly person with a lot of home equity

Front 105

Under the Real Estate Settlement Procedures Act, can a lender receive kickbacks and referral fees?

Back 105

No

Front 106

Is Blockbusting a predatory lending practice?

Back 106

No

Front 107

What best describes the content areas on the NMLS approved licensing exam?

Back 107

Federal and State laws and regulations, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues, general mortgage industry knowledge and origination.

Front 108

According to the SAFE ACT a mortgage loan originator is?

Back 108

An individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain.

Front 109

The disclosure of the MLO's license and NMLS issued unique identifier number is required in all circumstances except on personal emails to family and friends as well as posting on social media?

Back 109

True

Front 110

One who assists a consumer in obtaining or applying to obtain a residential mortgage loan best described a?

Back 110

A Mortgage Loan Originator

Front 111

When may a loan originator sign a borrower's application or related documents?

Back 111

Never

Front 112

An individual who performs his or her duties other than at the direction of and subject to the supervision and instruction of an individual who is licensed or registered as a loan orginator is?

Back 112

Independent Contractor

Front 113

For a mortgage servicer, refusing to reinstate a delinquent loan after receiving a payment made to pay all past due amounts?

Back 113

Is Prohibited

Front 114

An independent contractor may engage in residential mortgage loan origination activities as a loan processor or underwriter with a state issued loan originator license?

Back 114

False

Front 115

In general, there are two minimum standards for license renewal for state licensed loan originators. The first is that the loan originator continues to meet the minimum standards for license issuance and the other is?

Back 115

The licensee meets the annual continuing education requirements of the state

Front 116

The Nationwide Mortgage Licensing System and Registry (NMLS&R) was developed and is overseen by?

Back 116

The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators ( AARMR)