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8 Cards in this Set
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Under RESPA, the servicer may require a borrower to pay into an escrow account to cover disbursements that are unanticipated or disbursements made before the borrower’s monthly payments are available in the account, a cushion or reserve that must be no greater than _____ of the estimated total annual disbursements from the escrow account. |
One half One third One sixth One twelfth The answer is one sixth. Under RESPA, a lender may require the borrower to establish an escrow account at closing. The loan servicer may require a borrower to pay into the account to cover disbursements that are unanticipated or disbursements made before the borrower’s monthly payments are available in the account. This is the escrow cushion or reserve, which must be no greater than one sixth of the estimated total annual disbursements from the escrow account. |
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Stan has been in his house for 15 years and built up $100,000 in equity. He decides to do some remodeling and pay off some bills, and he wants to use a closed-end home equity loan to pay for it. He meets with Lending Guys and, because he has a great credit history, gets loan approval right away. Two weeks later he signs the documents. Which of the following is true?
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Stan may rescind the loan at any time during the term of the loan Stan’s loan is not subject to provisions of the Real Estate Settlement Procedures Act Stan may rescind the loan within 3 business days of consummation Stan was required to provide Lending Guys with a Certificate of Completion prior to signing his final documents, indicating that he has completed homeownership counseling with a HUD-approved provider The answer is Stan may rescind the loan within 3 business days of consummation. A borrower refinancing a primary dwelling with an open or closed end loan may cancel (rescind) the loan within 3 business days following closing. This right does not extend to the entire term. A borrower is NOT required to complete homeownership counseling unless the loan is a high-cost home loan. |
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For which of the following reasons would it be permissible to refuse to take an application from a potential borrower? |
The applicant has poor credit and you do not feel there is any way that he will meet lender guidelines You do not "click" with the applicant and would rather not do business with him The lender does not accept applications from the neighborhood where the applicant lives The applicant has alluded to the fact that he is submitting false documents in order to qualify for a larger loan The answer is the applicant has alluded to the fact that he is submitting false documents in order to qualify for a larger loan. A loan originator should not be an accessory to fraud by taking an application based on what he knows or strongly suspects to be fraudulent information. In all other cases, credit decisions should be left to the lender and/or its underwriting department, and should never be based on discriminatory factors or personal whims (not “clicking” with the applicant or denying access to credit based on neighborhood). |
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Which of the following is true regarding APR tolerance levels? |
The APR is considered accurate if it is not more than one eighth of one percentage point (.125%) above or below the APR determined in accordance with legal requirements APR tolerance levels are not a feature of federal law The APR is considered accurate generally, if it is not more than one half of one percentage point (.5%) above or below the APR determined in accordance with legal requirements Any change in the APR requires re-disclosure The answer is The APR is considered accurate if it is not more than one eighth of one percentage point (.125%) above or below the APR determined in accordance with legal requirements. The APR is considered accurate generally, if it is not more than one eighth of one percentage point (.125%) above or below the APR determined in accordance with legal requirements (i.e., in accordance with the actuarial method or the United States Rule method); and in an irregular transaction, if it is not more than one quarter of one percentage point (.25%) above or below the annual percentage rate determined in accordance with legal requirements. |
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Mortgage insurance insures against losses incurred as a result of: |
A borrower's late payment Fire Foreclosure Natural disaster The answer is foreclosure. Private mortgage insurance (PMI) is an insurance policy issued to provide protection to the mortgage lender in the event of financial loss due to a borrower's default that results in foreclosure. In the event of a foreclosure, the insurance company will either purchase the loan or let the lender foreclose and pay the lender for its losses up to the face amount of the policy. |
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“straw buyer” is |
A buyer who is a victim of identity theft A buyer who uses another individual’s identity in order to obtain a mortgage for which he or she is not eligible A buyer who accepts a fee for the use of his or her Social Security Number and other personal information on a mortgage application A buyer who intends to purchase property but does not intend to occupy it The answer is a buyer who accepts a fee for the use of his or her Social Security Number and other personal information on a mortgage application. A straw buyer is a person who purchases the property or applies for the loan in his or her own name for the actual borrower and is typically paid for the use of his or her personally identifying information. |
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Under the Fair Housing Act: |
Lending decisions cannot be made based on residency status Charging different fees based on race is prohibited Lenders must provide clear, plain-language disclosures Lenders are required to report demographic information to the federal government The answer is charging different fees based on race is prohibited. The Fair Housing Act prohibits discrimination in the sale, rental, and financing of any residential housing based on race, color, religion, national origin, sex, familial status, or mental or physical handicap, and therefore, prohibits charging different fees based on race. Residency status is not a protected category under the Fair Housing Act. Disclosure requirements are not imposed by the Fair Housing Act. Government reporting requirements are covered under the Home Mortgage Disclosure Act (HMDA). |
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This term refers to the practice of adjusting certain types of non-taxable income during underwriting.
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Flopping Inflating Ballparking Grossing up The answer is grossing up. Certain types of income may be grossed-up during underwriting. Underwriters may gross-up Social Security income, child support, and some other forms of income, subject to limitations based on product type and other guidelines. |
