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25 Cards in this Set
- Front
- Back
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In which of the following scenarios would it be appropriate to conduct an appraisal using a cost approach? |
An appraisal is done on a new home being built for a first-time homebuyer A borrower wants to refinance his/her primary residence to lower the cost An investor is having an appraisal done on his/her rental A buyer is determining the value of a home he/she has under contract The answer is an appraisal is done on a new home being built for a first-time homebuyer. The cost approach is generally used on new home construction (among other reasons). This approach arrives at a value by estimating the value of the land, as if vacant, and adding the cost to build the house. |
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Which of the following is least likely to happen if a loan is found to be fraudulent by the servicer? |
Broker must buy back the loan Lender calls the loan due Originator must pay back commissions Interest rate is increased on the loan The answer is interest rate is increased on the loan. If a loan is discovered to be fraudulent by the servicer, a broker may be required to buy the loan back, repay any commissions earned on it, and the lender may actually call the loan due. However, it is very unlikely that a lender would raise the rate and continue collecting payments. |
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It is acceptable under RESPA regulations for a title company to provide a mortgage broker with: |
Tickets to a pro football game A weekend stay for two at a spa Season tickets to a local theater A notepad imprinted with the title company’s information The answer is a notepad imprinted with the title company’s information. RESPA prohibits the exchange of “things of value” which can include money, discounts, special rates or terms, stock, tickets to sporting or theater events, or trips at another’s expense. An imprinted notepad is not considered something of value. |
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A fee may be charged for preparing or delivering a Closing Disclosure if: |
The consumer requests a revised copy The consumer requests one or more duplicate copies A fee may not be charged for preparing or delivering a Closing Disclosure The fee does not exceed .5% of the loan amount The answer is a fee may not be charged for preparing or delivering a Closing Disclosure. A fee may not be charged for preparing or delivering a Closing Disclosure. |
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The term “adjustment interval” refers to: |
The amount an ARM can adjust between the start rate and rate ceiling The time it takes for a margin to move from start rate to rate ceiling The time period between adjustments for an ARM The movement of the index to which an ARM is tied The answer is the time period between adjustments for an ARM. Adjustment interval is the time period between ARM adjustments. |
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On which portion of the loan application would one find a street address and legal description of the property? |
Section X Section XV Section III Section II The answer is Section II. Section II of the 1003, “Property Information and Purpose of Loan,” provides information about the property, including its street address and a legal description. |
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The 1004 is the form number for: |
URLA CSBS FNMA URAR The answer is URAR. The 1004 is the form number for the Uniform Residential Appraisal Report (URAR). |
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Which of the following may be an indication of predatory lending? |
A borrower with a 720 credit score uses borrower credits to offset closing costs A borrower with a 610 credit score is offered a subprime loan A borrower with a 580 credit score is offered a loan with credit life premiums included A borrower with a 560 credit score is given a rate that is 2% above a “standard” rate The answer is a borrower with a 580 credit score is offered a loan with credit life premiums included. Tacking on unnecessary insurance premiums such as “credit life” is a practice that predatory lenders often use to increase profits. |
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When a loan originator accepts a referral fee from a real estate agent, both are in violation of what section of RESPA? |
Section 10 Section 12 Section 6 Section 8 The answer is section 8. Section 8 of RESPA deals with the prohibition against giving or receiving anything of value pursuant to an agreement or understanding. |
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Cindy Williams applied for a loan with MPT Mortgage. After 20 days, she received an Adverse Action Notice informing her that she had been denied. Three months later, Cindy received a women’s clothing catalog in the mail at an address only known to MPT Mortgage as a result of her filling out a loan application. The lender has likely violated which federal law? |
TILA GLB Act FTC Disposal Rule RESPA The answer is GLB Act. This scenario implies that the lender shared non-public personal information with a third party for reasons other than the intent with which it was given to the lender. Selling information given to apply for financial products to a third party who intends to market unrelated products or services to the customer is a violation of the GLB Act. |
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A home equity conversion mortgage (HECM) is a type of _____ that is made pursuant to guidelines established by the _____. |
Reverse mortgage/Federal Trade Commission Home equity loan/CFPB Reverse mortgage/FHA Home equity loan/HUD The answer is reverse mortgage/FHA. HECMs are reverse mortgages that are offered in compliance with program guidelines set by the FHA and HUD. |
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Once a loan application is received, a creditor may not require additional information or verification until: |
The Closing Disclosure is provided The origination fee is paid The loan closes The Loan Estimate is provided The answer is The Loan Estimate is provided. Once an application is received, a creditor must issue the Loan Estimate to a loan applicant and may not require additional information or verification until that document is provided. |
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The term “grossing up” means a borrower’s non-taxed income is allowed to be increased by as much as: |
125% 15% 28% 25% The answer is 25%. Borrowers with non-taxed income are allowed to increase their earnings by 25% for qualification purposes. This means they would multiply by 125% - not increase income by 125%. |
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The act of guiding homebuyers in a particular direction based on demographics is prohibited by: |
ECOA and RESPA The Fair Housing Act and ECOA TILA and RESPA RESPA and the Fair Housing Act The answer is The Fair Housing Act and ECOA. The Fair Housing Act and ECOA both prohibit the practice of “steering,” which is directing or recommending a buyer or borrower in a particular direction based on their demographics. |
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When a borrower is delinquent, RESPA servicing rules require loan servicers to meet all of the following requirements, except: |
Make live contact with the borrower within 36 days of the delinquency Make written contact with the borrower within 45 days of the delinquency Make live contact with the borrower within 15 days of the delinquency Include information on loss mitigation options in written correspondence regarding the delinquency The answer is make live contact with the borrower within 15 days of the delinquency. Delinquency requires live contact within 36 days, and written contact within 45 days that describes loss mitigation options. |
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FACTA requires an initial Fraud Alert to be kept in a consumer’s file for what period of time? |
One year Seven years One month Until removed by the borrower The answer is one year. FACTA requires an initial Fraud Alert to be kept in a consumer’s file for a period of one year. An Extended Fraud Alert, meaning there is an actual identity theft report submitted, is required for seven years. |
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In an ARM, margin is determined by: |
The lender and represents the amount of commission paid to the broker The lender and represents the lender’s operating costs and profit margin The broker and is the amount of profit split between the broker and lender The underwriter and represents the percentage of error allowable for debt-to-income ratio The answer is the lender and represents the lender’s operating costs and profit margin. The margin is a fixed number set by the lender and is not subject to change. It represents the lender’s operating costs and profit margin, and varies from lender to lender. |
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If a lender is comfortable with existing data on a property being used as collateral for a rate and term refinance, what might be permitted? |
A waiver of the rescission period A silent second A property inspection waiver A streamline close The answer is a property inspection waiver. A property inspection waiver may be allowed if the lender is comfortable with existing data on a property used as collateral for a rate/term refinance. |
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Sally and Ben have lived in their home for ten years and are considering shortening their term. Which of the following appraisal approaches would be best? |
Income approach Cost approach Market comparison approach Sales comparison approach The answer is sales comparison approach. The sales comparison approach is most commonly used and involves the comparison of three similar, recently-sold properties. |
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Which of the following would be considered a credit report red flag? |
Names on credit report match names on application There is a DBA or an AKA The debts the applicant disclosed are accurately reflected on the credit report Paystubs, W-2s, or other income docs are handwritten The answer is there is a DBA or an AKA. The presence of a DBA (doing business as) or AKA (also known as) would be a credit report red flag. |
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While taking an application, an originator learns that his potential borrower receives income from a public assistance program. Without even running a full pre-qualification, the originator tells the would-be borrower that he cannot help someone who is receiving public assistance. This originator is in violation of the: |
Equal Credit Opportunity Act Fair Housing Act Equal Housing Act Fair Credit Transaction Act The answer is Equal Credit Opportunity Act. Under ECOA, originators may not base a decision to extend credit on the fact that an applicant receives income from a public assistance program. |
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According to the Telemarketing Sales Rule, which of the following is permitted? |
Trying several times to return the call of someone responding to an advertisement Not transmitting a telephone number on caller ID Initiating a call to someone on the Do-Not-Call List Calling a consumer who did business with the licensee 24 months ago The answer is trying several times to return the call of someone responding to an advertisement. A mortgage professional is permitted to contact consumers for a period of three months following a relationship that is based on an inquiry by the customer. |
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For which of the following reasons would a borrower be more likely to choose a 15-year fixed loan over a 30-year fixed? |
To minimize the monthly payment amount To maximize the tax credit for mortgage interest To minimize closing costs To pay less interest over the life of the loan The answer is to pay less interest over the life of the loan. A 15-year mortgage shortens the amortization period and therefore decreases the amount of interest paid over the life of the loan. While the term of the loan would not make a difference in total principal paid back, the interest amount would be considerably less on a $200,000 loan for a 15-year term than for a 30-year term. |
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For which of the following does rescission not exist? |
A refinance of a principal residence Opening a home equity line of credit A refinance in which a husband has requested a rescission waiver without his wife’s signature A purchase of a principal residence with a conventional loan The answer is a purchase of a principal residence with a conventional loan. Rescission does not exist for a purchase of a principal residence with a conventional loan. |
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A rent credit is used in a purchase transaction: |
If the seller is “renting back” after closing until he/she is ready to move into the new home If the buyer has to rent a place to live until the purchase is settled When the seller credits a portion of previous rent paid as a source of down payment When there is a delay in settling, and the builder is forced to put the buyer up in a hotel The answer is when the seller credits a portion of previous rent paid as a source of down payment. A rent credit is used to help a borrower with down payment when purchasing a home he/she previously rented. The previous owner would credit a portion of the rent toward the down payment. |
