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40 Cards in this Set
- Front
- Back
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Which of the following would not be considered in the loan application process? |
Previous housing payment history Income history Current liabilities A bankruptcy from 15 years ago The answer is a bankruptcy from 15 years ago. A bankruptcy from over ten years ago would not be considered in a borrower’s credit qualification. |
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Which of the following might raise a red flag during the underwriter’s review of the appraisal? |
Photos that appear to show the address of the property on the mailbox Dated prior to the sales contract Effective age of the property aligns with that of comparables Completion notice is dated after the original appraisal The answer is dated prior to the sales contract. An appraisal dated prior to the sales contract is a red flag. |
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What is the best definition of an Initial Escrow Statement? |
A statement of the amount of escrow the borrower must bring to the closing table A disclosure that explains escrow to the borrower A statement provided to the borrower following the first payment of any charges from the escrow fund A statement of the estimated taxes, insurance premiums, and other charges the borrower will pay from the escrow fund during the first 12 months of the loan The answer is a statement of the estimated taxes, insurance premiums, and other charges the borrower will pay from the escrow fund during the first 12 months of the loan. The Initial Escrow Statement is a statement of the estimated taxes, insurance premiums, and other charges the borrower will pay from the escrow fund during the first 12 months of the loan. Borrowers typically receive this notification at the time of closing; however, the lender has 45 days from the date of closing to deliver the Initial Escrow Statement to the borrower |
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A revised Loan Estimate may be provided if an applicant waits more than _____ after the creditor provides a Loan Estimate before indicating an intent to proceed. |
Three business days Ten business days Five days 24 hours The answer is ten business days. A revised Loan Estimate may be provided if an applicant waits more than ten business days after the creditor provides a Loan Estimate before indicating an intent to proceed |
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A loan with a term of less than one year that is related to the purchase or construction of a home is known as: |
A subprime loan A bridge loan A balloon mortgage A nontraditional loan The answer is a bridge loan. Temporary financing related to the construction or purchase of a home is typically referred to as a bridge loan, although these types of loan may have a balloon feature. |
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A loan with a term of less than one year that is related to the purchase or construction of a home is known as: |
A subprime loan A bridge loan A balloon mortgage A nontraditional loan The answer is a bridge loan. Temporary financing related to the construction or purchase of a home is typically referred to as a bridge loan, although these types of loan may have a balloon feature. |
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Which of the following pieces of personal information is a borrower asked to provide voluntarily on the loan application? |
Race, age, and marital status Race, ethnicity, and sex Sex and childbearing plans Marital status and age The answer is race, ethnicity, and sex. Section X, Information for Government Monitoring Purposes, of the 1003 requests information regarding the applicant’s sex, race and ethnicity |
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A loan with a term of less than one year that is related to the purchase or construction of a home is known as: |
A subprime loan A bridge loan A balloon mortgage A nontraditional loan The answer is a bridge loan. Temporary financing related to the construction or purchase of a home is typically referred to as a bridge loan, although these types of loan may have a balloon feature. |
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Which of the following pieces of personal information is a borrower asked to provide voluntarily on the loan application? |
Race, age, and marital status Race, ethnicity, and sex Sex and childbearing plans Marital status and age The answer is race, ethnicity, and sex. Section X, Information for Government Monitoring Purposes, of the 1003 requests information regarding the applicant’s sex, race and ethnicity |
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The term “adjustment frequency” or “adjustment interval” is associated with: |
The spread between a lender’s margin and its cost The 60-day period after a transfer of servicing that a customer has to send his or her first payment The adjustments of an ARM loan The percentage amount an ARM can increase from its start rate to its rate ceiling The answer is the adjustments of an ARM loan. An ARM loan, whether fixed at the start or fully-adjustable from the start, carries with it a specific “adjustment frequency,” also sometimes referred to as an “adjustment interval.” Both of these define the amount of time either before an ARM begins to adjust, or between adjustments. |
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A loan with a term of less than one year that is related to the purchase or construction of a home is known as: |
A subprime loan A bridge loan A balloon mortgage A nontraditional loan The answer is a bridge loan. Temporary financing related to the construction or purchase of a home is typically referred to as a bridge loan, although these types of loan may have a balloon feature. |
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Which of the following pieces of personal information is a borrower asked to provide voluntarily on the loan application? |
Race, age, and marital status Race, ethnicity, and sex Sex and childbearing plans Marital status and age The answer is race, ethnicity, and sex. Section X, Information for Government Monitoring Purposes, of the 1003 requests information regarding the applicant’s sex, race and ethnicity |
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The term “adjustment frequency” or “adjustment interval” is associated with: |
The spread between a lender’s margin and its cost The 60-day period after a transfer of servicing that a customer has to send his or her first payment The adjustments of an ARM loan The percentage amount an ARM can increase from its start rate to its rate ceiling The answer is the adjustments of an ARM loan. An ARM loan, whether fixed at the start or fully-adjustable from the start, carries with it a specific “adjustment frequency,” also sometimes referred to as an “adjustment interval.” Both of these define the amount of time either before an ARM begins to adjust, or between adjustments. |
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In verifying a loan applicant’s income and/or assets, a creditor must rely upon: |
The applicant’s signed and notarized statement Reliable third-party records such as paystubs and tax returns The applicant’s credit report exclusively An independent investigation conducted by the creditor The answer is reliable third-party records such as paystubs and tax returns. In verifying a loan applicant’s income and/or assets, a creditor must rely upon reliable third-party records such as paystubs, tax returns, employment information, and records from financial institutions. |
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A loan with a term of less than one year that is related to the purchase or construction of a home is known as: |
A subprime loan A bridge loan A balloon mortgage A nontraditional loan The answer is a bridge loan. Temporary financing related to the construction or purchase of a home is typically referred to as a bridge loan, although these types of loan may have a balloon feature. |
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Which of the following pieces of personal information is a borrower asked to provide voluntarily on the loan application? |
Race, age, and marital status Race, ethnicity, and sex Sex and childbearing plans Marital status and age The answer is race, ethnicity, and sex. Section X, Information for Government Monitoring Purposes, of the 1003 requests information regarding the applicant’s sex, race and ethnicity |
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The term “adjustment frequency” or “adjustment interval” is associated with: |
The spread between a lender’s margin and its cost The 60-day period after a transfer of servicing that a customer has to send his or her first payment The adjustments of an ARM loan The percentage amount an ARM can increase from its start rate to its rate ceiling The answer is the adjustments of an ARM loan. An ARM loan, whether fixed at the start or fully-adjustable from the start, carries with it a specific “adjustment frequency,” also sometimes referred to as an “adjustment interval.” Both of these define the amount of time either before an ARM begins to adjust, or between adjustments. |
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In verifying a loan applicant’s income and/or assets, a creditor must rely upon: |
The applicant’s signed and notarized statement Reliable third-party records such as paystubs and tax returns The applicant’s credit report exclusively An independent investigation conducted by the creditor The answer is reliable third-party records such as paystubs and tax returns. In verifying a loan applicant’s income and/or assets, a creditor must rely upon reliable third-party records such as paystubs, tax returns, employment information, and records from financial institutions. |
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A borrower receives a bi-weekly paycheck in the amount of $2,300. The co-borrower earns a semi-monthly paycheck in the amount of $2,500. What is the monthly qualifying income of this couple? |
$9,983.33 $10,400 $9,600 $10,983.33 The answer is $9,983.33. This question uses both bi-weekly and semi-monthly income, so you must be careful with calculations. The borrower receives bi-weekly pay of $2,300, which must be multiplied by 26, giving an annual salary of $59,800. The co-borrower receives semi-monthly income of $2,500, which must be multiplied by 24, giving an annual salary of $60,000. Combine both, and you have a household salary of $119,800. Divide this by 12, and you arrive at a qualifying income of $9,983.33. |
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A loan with a term of less than one year that is related to the purchase or construction of a home is known as: |
A subprime loan A bridge loan A balloon mortgage A nontraditional loan The answer is a bridge loan. Temporary financing related to the construction or purchase of a home is typically referred to as a bridge loan, although these types of loan may have a balloon feature. |
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Which of the following pieces of personal information is a borrower asked to provide voluntarily on the loan application? |
Race, age, and marital status Race, ethnicity, and sex Sex and childbearing plans Marital status and age The answer is race, ethnicity, and sex. Section X, Information for Government Monitoring Purposes, of the 1003 requests information regarding the applicant’s sex, race and ethnicity |
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The term “adjustment frequency” or “adjustment interval” is associated with: |
The spread between a lender’s margin and its cost The 60-day period after a transfer of servicing that a customer has to send his or her first payment The adjustments of an ARM loan The percentage amount an ARM can increase from its start rate to its rate ceiling The answer is the adjustments of an ARM loan. An ARM loan, whether fixed at the start or fully-adjustable from the start, carries with it a specific “adjustment frequency,” also sometimes referred to as an “adjustment interval.” Both of these define the amount of time either before an ARM begins to adjust, or between adjustments. |
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In verifying a loan applicant’s income and/or assets, a creditor must rely upon: |
The applicant’s signed and notarized statement Reliable third-party records such as paystubs and tax returns The applicant’s credit report exclusively An independent investigation conducted by the creditor The answer is reliable third-party records such as paystubs and tax returns. In verifying a loan applicant’s income and/or assets, a creditor must rely upon reliable third-party records such as paystubs, tax returns, employment information, and records from financial institutions. |
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A borrower receives a bi-weekly paycheck in the amount of $2,300. The co-borrower earns a semi-monthly paycheck in the amount of $2,500. What is the monthly qualifying income of this couple? |
$9,983.33 $10,400 $9,600 $10,983.33 The answer is $9,983.33. This question uses both bi-weekly and semi-monthly income, so you must be careful with calculations. The borrower receives bi-weekly pay of $2,300, which must be multiplied by 26, giving an annual salary of $59,800. The co-borrower receives semi-monthly income of $2,500, which must be multiplied by 24, giving an annual salary of $60,000. Combine both, and you have a household salary of $119,800. Divide this by 12, and you arrive at a qualifying income of $9,983.33. |
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A broker has originated two loans this month, one of which is for his father. Both borrowers are equally qualified and are looking for exactly the same loan. If the broker charges his father a total of $500 in origination fees, what is the origination fee that should be charged to the other borrower? |
It varies; everything in the mortgage business is negotiable The origination fee should be less than 3% of the loan amount if he is well qualified Origination fees are not charged to family members If the borrowers are equally qualified, fees should be comparable The answer is if the borrowers are equally qualified, fees should be comparable. Ethically speaking, if borrowers are equally qualified and choosing the same products, fees should be comparable. |
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RESPA applies to: |
Reverse mortgages Construction loans Federally-related mortgage loans Loans for business, commercial, or agricultural purposes The answer is federally-related mortgage loans. RESPA applies to federally-related mortgage loans. |
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An investigator spends three weeks researching Steve Sample, who is applying for a job. He meets Steve’s neighbors, current co-workers, and former teachers and mentors. After interviewing upwards of 30 individuals, the investigator submits his report to the company considering Steve for a position. This is an example of |
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FBI mortgage fraud investigation CRA disclosure Private investigation methodology Investigative consumer report The answer is investigative consumer report. A consumer report using information obtained through personal interviews is known as an investigative consumer report and is meant to give insight into a person’s character, general reputation, personal characteristics, and mode of living |
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A type of reverse mortgage offered to low-income borrowers for a designated purpose, such as to pay taxes or to complete a home repair, is known as a: |
Single purpose reverse mortgage Home equity conversion mortgage Proprietary mortgage Designated use reverse mortgage The answer is single purpose reverse mortgage. Low-income borrowers may be eligible for single purpose mortgages that they can use to meet expenses such as taxes and home repairs. |
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A type of reverse mortgage offered to low-income borrowers for a designated purpose, such as to pay taxes or to complete a home repair, is known as a: |
Single purpose reverse mortgage Home equity conversion mortgage Proprietary mortgage Designated use reverse mortgage The answer is single purpose reverse mortgage. Low-income borrowers may be eligible for single purpose mortgages that they can use to meet expenses such as taxes and home repairs. |
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Recording of the deed happens where? |
At closing At the borrower’s house At the Office of the County Recorder Within the office of the Supervisor of Banks The answer is at the Office of the County Recorder. Recording is when the deed, deed of trust, or other recordable documents are submitted to the County Recorder (or County Clerk) for filing. |
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The system that an underwriter uses to help streamline the underwriting process is called: |
YSP AUS MBS ABA The answer is AUS. Much of the underwriter’s decision-making has now been taken over by an automated underwriting system. These are known by many names, but all do the same thing: they make automated underwriting decisions based on lender guidelines and information entered into the AUS. |
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All of the following may be considered application red flags, except: |
Reasonable commuting mileage Address is a P.O. Box Education is not consistent with profession Significant changes between handwriting used throughout the documents The answer is reasonable commuting mileage. If mileage for commuting purposes is realistic, no red flags would be drawn. For example, if the borrower lives relatively close to the workplace, it is acceptable. |
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After receiving a mortgage application, a creditor must send a notice of decision to the applicant within: |
10 days 20 days 30 days 90 days The answer is 30 days. Notice of action taken on a mortgage loan application is due within 30 days. |
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Which of the following correctly describes entities that have obligations under the Fair Credit Reporting Act? |
CRAs, Experian, and FHA FHFA, CRAs, and furnishers of information to CRAs CRAs, furnishers of information to CRAs, and users of consumer reports Users of consumer reports and lenders regulated by RESPA and TILA The answer is CRAs, furnishers of information to CRAs, and users of consumer reports. The FCRA creates a number of obligations for users and furnishers of credit information as well as the credit reporting agencies (CRAs) which receive and report credit information. |
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If a loan agreement includes terms requiring the borrower to pay the remaining loan balance in one larger payment at the end of the loan term, this is known as a(n): |
Recast Interest-only feature Balloon payment Graduated payment schedule The answer is balloon payment. If a loan agreement includes terms requiring the borrower to pay the remaining loan balance in one larger payment at the end of the loan term, this is known as a balloon payment |
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If a loan agreement includes terms requiring the borrower to pay the remaining loan balance in one larger payment at the end of the loan term, this is known as a(n): |
Recast Interest-only feature Balloon payment Graduated payment schedule The answer is balloon payment. If a loan agreement includes terms requiring the borrower to pay the remaining loan balance in one larger payment at the end of the loan term, this is known as a balloon payment |
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A document that changes the order of priority of mortgage liens is referred to as the: |
Deed of trust Payee clause Promissory note Subordination agreement The answer is subordination agreement. A subordination agreement changes the order in which creditors are paid in the event of foreclosure. |
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If a loan agreement includes terms requiring the borrower to pay the remaining loan balance in one larger payment at the end of the loan term, this is known as a(n): |
Recast Interest-only feature Balloon payment Graduated payment schedule The answer is balloon payment. If a loan agreement includes terms requiring the borrower to pay the remaining loan balance in one larger payment at the end of the loan term, this is known as a balloon payment |
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A document that changes the order of priority of mortgage liens is referred to as the: |
Deed of trust Payee clause Promissory note Subordination agreement The answer is subordination agreement. A subordination agreement changes the order in which creditors are paid in the event of foreclosure. |
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Tina Louise works as a clerk at a law firm and is paid bi-weekly in the amount of $1,700. Each quarter, she also receives a bonus of exactly $3,200 for her share of a program specifically designed to reward the excellent work by the firm’s support staff. This bonus has been consistent for three years. What is Tina’s qualifying monthly income? |
$3,683 $4,466 $4,750 $3,400 The answer is $4,750. To calculate qualifying income, first, annual salary is calculated, including the bonus (in effect for three years), and then divided by 12 months. $1,700 × 26 = $44,200. Then the bonus: $3,200 × 4 = $12,800. Add the two, $44,200 + $12,800 = $57,000. Divide $57,000 by 12 = $4,750 |
